Vardhman Textile hosted
a conference call on January 22, 2025. In the conference call the company was
represented by Mr Neeraj Jain –Joint managing Director, Ms Sagarika Jain
–Executive Director, Mr Rajeev Thapar-CFO, Mr Sushil Jhamb-Director raw
material and Mr Mukesh Bansal-Head-Fabric Marketing.
Key takeaways of the call
Revenues:
The spinning business continued to face challenges
with higher raw material prices while the fabric business is performing better
resulting in better performance of the company in Q3FY2025 when compared to
Q3FY2024.
Revenues for the quarter stood at Rs 2465.3
crore a growth of 5.8% YoY.
Volume data:
Yarn
The
company produced 65827 Metric ton in Q3FY2025 v/s 65849 metric ton in Q3FY2024
and the company sold 66175 Metric ton in Q3FY2025 v/s 63048 metric ton in Q3FY2024.
Grey fabric
The
company produced 523 lac meters in Q3FY2025 v/s 541 lac meters in Q3FY2024 and
the company sold 529 lac meters in Q3FY2025 v/s 542 lac meters in Q3FY2024.
Processed fabric:
The
company produced 443 lac meters in Q3FY2025 v/s 439 lac meters in Q3FY2024 and
the company sold 439 lac meters in Q3FY2025 v/s 332 lac meters in Q3FY2024
Cotton prices:
International
cotton prices are around 67-68 US cents which has declined when compared to
previous quarter. Also, Indian cotton prices have declined from Rs 58000-60000
per candy to 53000-54000/candy.
However,
the company is using the cotton which was purchased in the last season at
around Rs 53000-54000/candy. Also, the yarn prices have not increased as such
the margins have not increased on a QoQ basis.
The
company usually carries 6-7 months cotton inventory and it expects cotton
inventory of similar range in the current season as well.
Bangladesh: There was some disruption in Bangladesh. However, company volume
was not impacted due to the disruption.
Cotton Arrivals: Cotton arrivals should be around 31 billion bales in line with
last year in the current season.
CAPEX: The company has announced a total CAPEX of Rs 3400 crore of which
work for around Rs 2800 crore is being carried out and the company expects the
same to be completed by Oct-Nov of 2026.
Fabric
business is operating at 100% capacity utilization. The company has planned for
line 4 for fabric which is expected to be completed by September 2026.
Yarn demand: There is no much concern on yarn demand both in domestic and
international markets.
Yarn Supply: Small capacities have stopped functioning. As per an estimation
around 6.5 million spindles in India have stopped functioning which is around
15% of the total yarn capacity due to subdued prices.
Yarn prices: Yarn prices were around US $ 3.25 cents per kg six months back
which has reduced to US $ 3.0 cents currently.
Margins: Margins for Indian yarn manufacturers are lower because the
domestic cotton prices are higher by 12 cents per kg (ie 80 cents per kg ) when
compared to new York futures cotton price which is at US $ 67-68 cents per kg.
Also the
government has laid import duty on cotton to the tune of 11% which makes
imported cotton also costlier. As such margins for Indian spinners are lower
when compared to Vietnam.
Yarn
Exports: The country was exporting 100 million kg of yarn which is continuing
and there is no decline.
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