Arvind Ltd's Q1 loss narrows to Rs 11 cr from nearly Rs 100 cr a year ago

Better show on account of growth in exports and signs of recovery in domestic markets

Arvind Limited has seen its consolidated net loss narrow down to Rs 11.42 crore for quarter ended June 30, 2021, from Rs 97.31 crore in the said quarter last year. The better show was largely on account of growth in exports and signs of recovery in domestic markets.

Moreover, the consolidated net loss attributable to equity holders of the parent company stood at Rs 8.35 crore for Q1 of FY22 as against Rs 95.31 crore for Q1 of FY21. Arvind Limited's consolidated revenue from operations, on the other hand, grew by as much as 140 per cent to Rs 1,439.43 crore in first quarter of fiscal year 2021-22, from Rs 599.28 crore in the corresponding period of previous fiscal year, according to the company's filings with the stock exchanges.

Among its business segments, the company saw textiles, comprising denim, woven and garment businesses, grow by 170 per cent to Rs 1,176 crore during the quarter, followed by an 81 per cent growth in its Advanced Materials Division (AMD) to Rs 193 crore. Its net debt, however, rose to Rs 2,141 crore in June 30, 2021 from Rs 1,950 crore in March 2021.

Within the textiles domain, while denim volumes grew 2.8x on year-on-year on the back of strong export demand, woven volumes grew by 3.3x, followed by 1.8x growth in garment volumes. Backed by robust export demand that offset domestic softness sequentially, average price realisation in denim improved to Rs 202 per meter in Q1FY22 from Rs 195/m in Q4FY21.

According to Arvind Ltd, input costs continued to increase sharply, but were partially offset by improved price realisation and higher efficiencies. Textile performance was relatively strong given the impact of the second wave of the Covid-19 pandemic, both in domestic markets as well as factory closures that impacted the supply side.

On the other hand, fabric margins also recovered well despite steep increase in raw material prices whereas garment volumes were impacted with Q1 revenues being only +57 per cent YoY.

Going forward, the firm sees export demand remaining strong even as domestic revival gains momentum with order book seeing traction. Within exports, key markets in the EU, UK and the US remain strong though they may get impacted if recent signs of Covid resurgence gather steam. In the domestic market, with the second wave impact tapering off, manufacturing activities are returning to normalcy.

Moreover, while continued increase in input costs is likely to impact margins, as market absorbs increased pricing absolute margins will recover albeit with a lag effect, the company informed. Meanwhile, the company expected to reduce debt to near Q4FY20 levels in the second quarter of the current fiscal year.