Analyst Meet / AGM     23-Jan-25
Conference Call
Vardhman Textiles
Total CAPEX of around Rs 3400 crore for modernization and expansion

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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