Arvind hopeful of new sportswear and indigo units gaining momentum

Arvind Ltd., headquartered in Ahmedabad, ranks amongst the top suppliers of fabric worldwide. With an annual production capacity of more than 100 million meters in denim and 140 million meters in woven fabric, the company supplies fabric to several leading brands, both in India and overseas. Through its subsidiary, Arvind Fashions Ltd., it has built a strong portfolio of quality brands. It is also the garment maker of choice to many leading brands across the globe with manufacturing capacity of more than 56 million pieces annually.

Mr. Sanjay S. Lalbhai, Chairman

Mr. Sanjay Lalbhai, Chairman, said: “Arvind’s newly opened apparel manufacturing facilities in Ranchi and Ahmedabad started shipping commercial orders. In addition our existing facilities in Bangalore and Ethiopia also saw capacity expansion and scale-up. The net result was a capacity addition of 4 million pieces that resulted in 34 million pieces of garments shipped to our customers during the year. In addition we also produced 18 million pieces of essentials. As many of our new facilities ramp-up efficiencies during FY2020, we expect to exit the year at the run-rate of over 55 million pieces (excluding essentials). Further we will continue to strengthen our long-term cut and sew partnerships with some of the top global garment manufacturers. In summary we are seeing strong momentum in our efforts to be strategic tier-1 supply partners to leading global brands.”

Arvind also has the presence in Telecom business directly and through subsidiaries and joint venture companies. Recently, the group forayed into Technical Textiles on its own and in a joint venture with leading global players. The company, through its subsidiary, is also engaged in manufacturing and fabrication of process equipment as well as in water treatment business.

Arvind delivered an overall topline of Rs. 7,226 crores, 5% up compared to the previous year. Wovens, advanced materials and other segments delivered positive growth, while denim and knits faced headwinds. Overall EBITDA stood at Rs. 800 crores, which was up 7% compared to the previous year.

Business performance summary

The year 2018 was a momentous one in the history of Arvind. The company demerged two of its businesses into separately listed entities – Arvind Fashions and Anup Engineering (the heavy fabrication business, which has been a division of Arvind). As such, the remaining portfolio of Arvind Ltd. is focused on the key textile businesses – Denim, Wovens, Knits and Voiles. In addition, it also includes Advanced Materials, Envisol, Internet and a few other smaller businesses.

Mr. Kulin Lalbhai, Executive Director, Arvind Ltd.
Mr. Punit Lalbhai, Executive Director, Arvind Ltd.

During the year, Arvind’s core textile and apparel business continued implementing its stated strategy of growing around four clear pillars – verticalization, innovation, advanced materials and B2C business growth. In terms of vertical business growth, the year saw expansion of the company’s factories in and around Bangalore, opening up of new plants in Ranchi and Ahmedabad and scaling up of its Ethiopia operations. As a result, the proportion of fabrics that it sells as full vertical apparel solution increased to about 9% and is poised to grow rapidly in the coming financial year.

The company continued to introduce new innovative products, including knitted indigo dyed apparel that promises to bring denim like aesthetic in the comfort of a knitwear apparel.

On the woven products side, the focus of innovation was around experimentation with new sustainable fibres, creative blends and a significant reduction in use of dyes, chemicals and, in turn, water. The B2C business was restructured this year and all channels were brought under one common leadership to drive a concerted and integrated strategy.

Arvind’s Advanced Material Division primarily comprises three business clusters: Human Protection (fire-resistant fabrics and garments, work wear, etc.), industrial products (filtration, conveyor belt fabric, coated products, auto-interiors, etc.) and advance composites. This business delivered strong growth across all the clusters through improvement of share-of-wallet, distribution expansion and enhanced product range. Several new tie-ups were formed during the year. Their impact will be visible over the next few quarters.

Arvind Envisol, the company’s water and waste-water treatment division, saw historic growth driven by follow-up orders from Ethiopia and significantly improved traction in India. This business is focused on expanding its footprint in other international markets, as well as growing its consumables and O&M business across all segments.

Outlook

Arvind will continue solidifying its core textiles business on four large pillars of growth as shared earlier. It will continue to grow its asset light garment business model as part of the vertical integration strategy. Its first round of expansion of garmenting facilities which will conclude this year would enable the company to enhance its position as key supply partner in top customer accounts globally.

The company expects new product lines such as sportswear and indigo knits to gain market traction and volumes during the year. Advanced materials will continue to expand its product portfolio and generate robust double-digit growth in top-line, while maintaining its margin model.