Arvind’s Profits Up On Better Denim Performance – 3rd Quarter 2009

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The improvement in denim market has started to reflect on the balance sheets of denim mills in India

image Arvind  Mills from India has recently declared its financial results and has shown a profit of Rs 12.25 crores(USD 2.6 million approx.) for the third quarter as against a loss of Rs 33.17 crores(USD 7.5 million) in the corresponding period last year. Though the results are strictly not comparable because of demerger of its brands and retail business, they do reflect the positive sentiment on denim.

Here are some figures on denim fabrics :

  • Growth of 36% in volumes over last year.
  • 16% growth in export volume .
  • Increase in domestic sale to 60% as against 54% last year – This also reflects the strong domestic market for denim in India.

The figures do bode well for the denim industry in India and we should see other companies also bringing out great results.

However, there are two factors which have been dampening the otherwise rosy scenario of denim industry :

  1. Cotton Prices: Cotton prices have been firming up since the beginning of the season – almost 25% + and are not expected to mellow down in the coming months. Being a major component of the denim cost, the prices of cotton immediately affect the bottomline.
  2. Weakening Dollar : The exchange rate of dollar against the Indian Rupee had reached levels of about INR 49- 49.50 per dollar. However, with strengthening rupee , the exchange rate has slid to about Rs 46 – a reduction of almost 6% +. This is perhaps one of the reasons why Arvind is focusing more on domestic market – of course not forgetting a 20% + growth rate in domestic demand of denim in India .

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