Positive Q2 results bring cheer to denim players

Though the branded apparel industry has been dealing

with issues like excise duty, high raw material costs and low consumer buying, the denim fabric industry have witnessed good growth. Their bottom lines have increased with positive second quarter results on the back of better inventory management this year. The big names that booked profits include Ahmedabad-based textile conglomerate Arvind, who booked a net profit of Rs 62 crores, as against Rs 39 crores in the corresponding second quarter last year, witnessing an increase of 58 per cent, Chennai-based KG Denim registered a 160 per cent growth (at Rs 3.98 crores) in its net profit, up from Rs 1.53 crores for the corresponding period last year. Ahmedabad-based Nandan Exim saw its bottom line rise by 73 per cent at Rs 7.59 crores for the second quarter of the financial year 2011-12 as against Rs 4.38 crores last year. This means almost all the denim players who were able to tactfully handle their inventories saw an upbeat second quarter.

The good results are also attributed to the fact that while domestic demand was steady, it was the decline in China’s competitiveness that helped Indian denim makers do good business. Decreasing prices of cotton and yarn proved to be an added advantage. The increase in net profits for denim companies has come at the time when the industry is in the process of adding another 100 million metres of capacity this year.