Arvind Limited

INVESTOR PRESENTATION
25th October 2008

ARVIND LIMITED
Financial Performance
 The Arvind Mills Limited
• In spite better operational Q II
performance the earnings Particulars 2008-09 2007-08 Change %
of the company continue Net Sales/Income from Operations 599 564 age 6%
to be depressed on Other Income 35 2 2050%
account of rapid rise in Revenues 634 565 12%
the input cost of cotton
and power
Total Expenditure :
Consumption of Raw Materials 218 209 4%
• The major contributory to Employees Cost 63 60 6%
the lower performance is
Power & Fuel 74 47 57%
the interest cost along
with the loss on account Stores Consumption 65 62 5%
foreign exchange Other Expenses 114 107 6%
transactions and EBIDTA 100 80 25%
outstanding Interest & Finance Cost (Net) 66 34 97%
Cash Accruals 34 46 -27%
• Other income is on Depreciation/Impairment 29 35 -16%
account of profit from sale Exceptional Items 2 0
of land and sale of shares Profit from Ordinary Activities before tax 2 11 -80%
in company which holds Taxes 1 1
another piece of land Net Profit from Ordinary Activities after tax 2 11 -84%
Arvind Mills Sales Mix
 Debt Profile

Statement of Total Borrowing as on 30-09-2008 Rs. In Crs

In Rupees Rate of Int In FC Rate of Int Total Rate of Int
Long Term Debt 1086 8.60% 146 7.82% 1231 8.51%
Working Capital Debt 419 10.35% 300 7.00% 719 8.95%
Total 1505 9.09% 446 7.27% 1951 8.67%
Borrowing Proportion 77% 23%

• Long term borrowings also include borrowing

under TUF scheme amounting to Rs. 244 Crores
Business Analysis
Denim

• The realization in denim Denim Volume & Realisation

business continues to go up as
the product mix continues to 25.00 120
114
improve 20.85
103 20.12102
105
109
19.34100 100
20.00 18.60 96
93
17.22 17.49
16.22 16.21
80
• The cost escalation envisaged 15.00
for cotton might not be as high 60

as originally anticipated 10.00

40

5.00
• The key markets of US and 20

Europe are in flux and 0.00 0

maintaining the volumes at Oct -Dec 06 Jan - Mar 07 Apr - Jun 07 Jul-Sep 07 Oct - Dec 07 Jan -Mar 08 Apr -Jun 08 Jul-Sep 08

current level will be a huge

challenge for the business Volume Realisation
Shirting

Shirting Volume & Realisation

• The business is doing well even in
face of stiff competition and
operational parameters are stable

• The business continues to suffer 7.00 140

6.26
from further 17-18% increase in 6.00
5.92 5.88 5.89 5.90
5.56 135
5.12
5.39
133 134 133
the cost of energy 5.00 130
129
4.00 126 125

• With the cotton situation looking 3.00 121 121 120

up the cost of raw material is not 2.00 116 115

of concern anymore 1.00 110

0.00 105
Oct -Dec 06 Jan -Mar 07 Apr -Jun 07 Jul-Sep 07 Oct -Dec 07 Jan -Mar 08 Apr -Jun 08 Jul-Sep 08

Volume Realisation
Shirts

Shirts Volume & Realisation

• The business continues to do
well in the current quarter and
the realization is at historical 1.20 450

high in rupee even at the 1.00 400 396 0.97 0.96 406 400
0.91 0.89387 387
Rs.40 to dollar 0.76
362 360 357 350
0.80
0.70 0.69
300
0.57
0.60
• The drop in volume is primarily 250
0.40
due to change in product mix 200

and a sluggish July month 0.20 150

0.00 100
Oct -Dec 06 Jan -Mar 07 Apr -Jun 07 Jul-Sep 07 Oct -Dec 07 Jan -Mar 08 Apr -Jun 08 Jul-Sep 08

Volume Realisation
Jeans
JeansVolume & Realisation
• The average realization
continue to improve through
1.40 500
the quarter 449
1.28
1.21 450
1.20 432
407 397 401 400
383 1.01 378
1.00 0.92 346 350
• The volumes are lower during 0.78
0.83
300
0.80
the quarter due to productivity 0.63 250
losses and delay in certain 0.60
0.44
200

order 0.40 150

100
0.20
50
• The business continues to be 0.00 0
Oct - Dec 06 Jan -Mar 07 Apr -Jun 07 Jul-Sep 07 Oct - Dec 07 Jan -Mar 08 Apr - Jun 08 Jul-Sep 08
impacted by shortage of
manpower

Volume Realisation
Knits
KnitsVolume & Realisation
• The new management team at
knits is delivering very good 2.00 1.88 250

results and has brought around 1.80 1.68

1.54
tremendous operational 1.60
190 1.45 1.43
197
187
200

improvements 1.40 175

1.24
175
156 1.18 157 155
1.20 150

1.00
• The order book position is 0.84
0.80 100
robust and profitable
0.60

0.40 50
• Certain structural changes are 0.20
likely to bring further cost 0.00 0
benefits in the business Oct -Dec 06 Jan -Mar 07 Apr -Jun 07 Jul-Sep 07 Oct -Dec 07 Jan -Mar 08 Apr -Jun 08 Jul-Sep 08

Volume Realisation
Brands & Retail

• The sales have increased by 37% 138.19

over corresponding quarter 132.87
previous financial year 112.02
100.59 95.93
• Two more large format MegaMart 79.85 80.37
were opened in Pune and 70.79
Bangalore during the quarter

• The first MegaMart 100% private

brand showroom was opened

• The first franchisee MegaMart

show room was opened

• Decision to convert Excalibur and

Newport as private brands of
MegaMart was implemented
Business Environment
Foreign Exchange Hedging
Cotton Prices
Cotton Cost

• The cotton cost have come off substantial highs and

continue to fall during last two weeks of global
commodity meltdown

• In absence of purchase support the prices in domestic

market are also weakening substantially

• Even though cotton cost for the company would be

higher than the previous financial year average , but it
will be substantially lower than the original anticipation
Energy Cost

• Cost of power cost at Naroda is Rs. 5.27 per Kwh and at

Santej is Rs.8.35 per Kwh as against previous year
average of 4.10 and 4.80 respectively

• Non availability of gas is significantly driving up the cost

of steam

• Our efforts to obtain alternative gas is likely to yield

positive results and company is hopeful of situation
resolving by end of current financial year
Brand & Retail Environment

• Retail environment was very sluggish during previous quarter and

first two months of current quarter
– Last two weeks have been substantially better and the market is
delivering like to like stores growth
• Retailers distress
– Large inventory pile up with retailers across the country
– A string of closed and unprofitable stores across the retail segment
• Post Diwali uncertainty
– In light of global meltdown and domestic slowdown the post Diwali
scenario is uncertain
• Real Estate
– After three years of rapid rise the commercial real estate is under
pressure and presenting interesting opportunities
Arvind Brand & Retail – Management
Response

• Retail Sales
– Management is tracking sales on daily basis and suitably
adjusting the short term strategies
– A structured sourcing plan for ensuring minimum inventory
accumulation already put up
– Primary shipments to MBO’s and retailers only on the basis of
feedback of secondary sales
Global Meltdown and Impact

• The current global meltdown could impact fabric and garment sales
to customers from US and Europe
• Early signs of uncertainty is forcing buyers to postpone
commitments
• Most of the large customers of the company are going through a
rough patch
• Response
– Start aggressively pushing volume business at a price point to create
cushion for order fluctuations
– Restart the commodity market and sharply priced orders
– End expensive front end engagement in the overseas market
– Monitor the commercial position on daily basis and limit the global
outstanding exposure
Outlook

• The company would like to maintain a cautious outlook

due to difficult global conditions
– Even though the cost factors might improve substantially
maintaining volumes could be a challenging task

• The company is very confident of growing the Value

Apparel retail business under the MegaMart umbrella.
– in difficult times value retailers do much better business globally
and same is seen in the Indian markets too
Thank You