Release Date: July 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Garmenting division reported a 25% volume growth, adding new customers and categories.
- Overall revenue for Q1 FY25 stood at INR1,831 crores with an EBITDA of INR150 crores.
- Despite the strike, the Garmenting unit showed resilience and reported strong numbers.
- The company maintained its gross margin across all businesses.
- Arvind Ltd (BOM:500101, Financial) reduced its gross debt by INR55 crores during the quarter.
Negative Points
- A 21-day strike at the Santej facility resulted in a significant production loss, impacting revenue by INR200 crores and EBITDA by INR60 crores.
- EBITDA margin dropped to 8.2% due to the strike and elevated overhead costs.
- The Textile segment's EBITDA margin was significantly impacted, dropping to 7.4%.
- AMD division was also partially affected by the strike, impacting revenue by INR70 crores and EBITDA by INR15 crores.
- The company incurred additional costs of INR11 crores due to airfreight and worker-related expenses to mitigate the strike's effects.
Q & A Highlights
Highlights of Arvind Ltd (BOM:500101) Q1 FY25 Earnings Call:
Q: What is the CapEx expectation for this year?
A: The CapEx plan remains unchanged despite a temporary slowdown. We aim to hit the INR450 crores figure guided at the beginning of the year. (Satya Prakash Mishra, Head of IR)
Q: How many retail stores are you planning to open this year?
A: We plan to open around 40 to 50 stores, aiming to reach close to 200 stores by the end of the year. (Punit Lalbhai, Vice Chairman, Executive Director)
Q: What revenue did Arvind Envisol contribute this quarter, and what is the expectation going forward?
A: Arvind Envisol contributed around INR60 crores this quarter. We expect to close the year between INR310 crores and INR350 crores. (Punit Lalbhai, Vice Chairman, Executive Director)
Q: What is the outlook on the Bangladesh situation? Is it impacting business operations?
A: There have been some temporary impacts, but no long-term effects are expected as of now. The situation is being monitored closely. (Punit Lalbhai, Vice Chairman, Executive Director)
Q: Can you provide figures for Return on Capital Employed (ROCE) for the Textile and AMD divisions?
A: ROCE figures will be published along with the balance sheet in Q2. (Punit Lalbhai, Vice Chairman, Executive Director)
Q: Why did Garment segment revenues grow only 3% YoY despite a 25% volume growth?
A: This is mainly due to a product mix change. The knitwear segment, which has lower value, witnessed significant growth. (Punit Lalbhai, Vice Chairman, Executive Director)
Q: What were the elevated overheads mentioned in the remarks?
A: Elevated overheads included airfreight costs, job charges for external production, and contract labor costs incurred due to the strike. (Satya Prakash Mishra, Head of IR)
Q: Are we at normalized utilizations after the strike?
A: Yes, utilizations are as high as they can be. (Punit Lalbhai, Vice Chairman, Executive Director)
Q: What is the plan for the vacancy after Mr. Ashish Kumar's resignation?
A: We will bring in the right leadership at the earliest. In the interim, I will head the division, and there will be no short-term disruption. (Punit Lalbhai, Vice Chairman, Executive Director)
Q: What is the targeted debt repayment for FY25?
A: The focus will be more on CapEx rather than further reducing long-term debt. Debt levels may remain plus/minus 10% the same. (Satya Prakash Mishra, Head of IR)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
