The Lok Sabha elections and a workers' strike at a key Gujarat factory weighed on the first quarter performance of garments-maker Arvind Ltd. The company reported a decline in revenue, net profit and operating profit as well as contraction in margin.
Consolidated net profit fell 37.3% to Rs 44 crore in the April-June quarter, as compared to Rs 70 crore over the same period last year, according to an exchange filing on Monday. Revenue and earnings before interest, tax, depreciation and amortisation dropped 1.2% and 16.9%, respectively.
Arvind Q1 Results (Consolidated, YoY)
Revenue down 1.2% to Rs 1,831 crore versus Rs 1,853 crore.
Net profit down 37.3% to Rs 44 crore versus Rs 70 crore.
Ebitda down 16.9% to Rs 150 crore versus Rs 180 crore.
Ebitda margin at 8.2% versus 9.7%.
The workers' unrest impaired the performance at the Santej factory—the company's largest textile facility—for 21 days during May-June. The strike was later called off, and workers gradually resumed duty, restoring normalcy to operations, Arvind said in a statement.
"The strike affected our main businesses, including the woven segment, denim segment, and the industrial and human protection parts of the AMD segment. This resulted in capacity loss and challenges in executing existing orders," the company said.
The strike had an approximate impact of Rs 200 crore on revenue and Rs 60 crore on Ebitda, including about Rs 11 crore in increased costs such as air freight and additional worker costs incurred to mitigate the strike's effects, the statement said.
Textile division revenue stood at Rs 1,350 crore, while advance material division reported an income of Rs 329 crore.
The gross debt reduced by Rs 55 crore, though the long-term debt increased by Rs 64 crore. This is on account of new long-term loan of Rs 150 crore taken for creation of a war chest to deal with the unfolding situation; of this, Rs 100 crore have since been repaid, the company said.
Arvind has set a capex target of Rs 400-450 crore for fiscal 2025. It expects a 25% growth in volume per quarter in the garment segment. The AMD vertical is projected to recoup its losses in quarters two and three and return to a 20% growth track.
Shares of Arvind closed 3.26% lower at Rs 374.10 apiece on Monday, after the announcement of the results, as compared to a flat ending in the benchmark BSE Sensex.
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