Textile Sector Performance Update

Textile Sector Performance Update Nine Monthly Report : 2016-17

March 2017

2

Financial Performance Update

• Quarterly Financial Performance – Q3 FY17

• Nine Monthly Financial Performance – 9M FY17

Market Update

• Key Economic Indicators

• Export – Import Trend

• Raw Material Price Trend

Contents

Financial Performance Update

4

List of companies included as part of financial analysis

S.No Company NameAnnual Sales - FY16

(Rs Cr)

1 Vardhman Textiles 5,814

2 Arvind 5,514

3 Welspun India 4,962

4 Trident 3,715

5 JBF Industries 3,704

6 SRF 3,683

7 RSWM 2,979

8 Raymond 2,911

9 Indo Rama Synthetics (India) 2,567

10 Sutlej Industries 2,302

Top listed textile companies in terms of sales turnover in FY16 have been included for financial analysis

Note: Companies that have shown significant negative deviation in numbers or those which have not yet reported the financialshave not been included in the overall analysis

Source: Company Annual Reports

Quarterly Financial Performance – Q3 FY17

6

Overall revenue has increased while EBIDTA margin has declined in Q3-FY17

• Welspun has shown the highest revenue growth rate of 25% while that of Raymond and RSWM declined by 9% and 7%, respectively.

• Except Vardhman & Trident, all the companies have shown decline in EBIDTA margin.

20%15%

24%19%

10%

22%

12% 11%4%

12%

24%

13%

22% 20%

6%

21%

9%4%

-3%

12%

Vardhman Arvind WelspunIndia

Trident JBF Industries SRF RSWM Raymond Indo RamaSynthetics

SutlejIndustries

Quarterly EBIDTA Margin Trend – Q3 FY17

Q3-FY16 Q3-FY17

1,445 1,331 1,233898 897 860 756 776 603 552

1,454 1,464 1,3211,126 963 908 703 705 572 540



SutlejIndustries

Quarterly Revenue Trend – Q3 FY17 (Rs Cr.)1% 25%7%10% 7% 6% -7% -9% -5% -2%

Source: Moneycontrol

Growth %

7

49% 39% 46% 48%75%

50% 56%42%

78%58%

44% 41% 47% 48%

79%

47% 56%41%

81%56%


Trident JBFIndustries

SRF RSWM Raymond Indo RamaSynthetics

SutlejIndustries

Raw Material Cost– % of sales

Quarterly Analysis – Major expenses as % of sales

8%12%

9%12%

2%

9%11% 11%

4%

11%8%

14%9%

13%

2%

9%13% 14%

5%

12%




SutlejIndustries

Man Power Cost– % of sales

23%33%

21% 21% 13% 20% 21%36%

14% 19%23%33%

21% 19% 13%22% 22%

41%

17% 20%




SutlejIndustries

Other Costs – % of sales

Q3-FY16 Q3-FY17


8

Consolidated analysis for the selected top players

9,351

9,757

Q3-FY16 Q3-FY17

Consolidated Sales – Rs. CrOn consolidated level, Sales have increased by 4% in Q3 FY17 as compared to Q3 FY16

Average raw material cost have decreased along with decrease in raw material prices.

Consolidated EBITDA margin decreased by 1.2 percentage point for the selected top companies

Average manpower cost have increased because of increase in labour wages.

Other expenses also increased in Q3 FY17

16.1%

14.9%

Q3-FY16 Q3-FY17

Average EBITDA %

52.1%

51.7%

Q3-FY16 Q3-FY17

Average RM Cost - % of Sales

8.9%

9.9%

Q3-FY16 Q3-FY17

Average Manpower Cost -% of Sales

22.9%

23.5%

Q3-FY16 Q3-FY17

Average Other Expenses -% of Sales


9 Months Financial Performance – 9M FY17

10

Overall revenue has increased while EBIDTA margins have declined in 9M FY17

• Trident has shown the highest revenue growth rate of 26% while that of RSWM is negative 0.4%• Except Vardhman, Trident & Sutlej Industries, all the companies have shown decline in EBIDTA margin.

20%15%

26%20%

11%

23%

13%8%

3.4%

12%

23%

13%

24%20%

7%

23%

12%

4%-0.5%

14%



SutlejIndustries

9 Months EBIDTA Margin Trend – 9M FY17

9M-FY16 9M-FY17

4,225 3,962 3,574 2,738 2,628 2,741

2,190 2,044 1,878 1,722

4,339 4,414 4,241

3,450 2,850 2,792 2,181 2,053 1,918 1,652



SutlejIndustries

9 Months Revenue Trend - 9M FY17 (Rs Cr.)3%

26%19%11%

8% 2% -0.4% 0.5% 2% -4%

Growth %


11

9 Monthly Analysis – Major expenses as % of sales

7%12%

8%11%

2%8%

11% 12%

4%10%

8%

13%8%

12%

2%

9%12% 14%

4%

12%




SutlejIndustries

Man Power Cost– % of sales

24%33%

21% 22%13% 20% 21%

38%

14% 18%23%32%

22% 20% 12%21% 21%

38%17% 19%




SutlejIndustries

Other Costs – % of sales

9M-FY16 9M-FY17

49% 40% 45% 47%74%

50% 54%42%

78%59%

46% 41% 47% 47%

79%

48% 55% 44%

79%55%




SutlejIndustries

Raw Material Cost– % of sales


12

Consolidated analysis for the selected top players

27,702

29,889

9M-FY16 9M-FY17

Consolidated Sales – Rs. Cr On consolidated level, Sales have increased by 8% in 9M FY17 as compared to 9M FY16

Average raw material cost have remained stable with marginal increase

Consolidated EBITDA margin decreased by 0.7 percentage points for the selected top companies

Average manpower cost have increased along with increase in labour wages.

Other expenses have decreased marginally

16.4%

15.7%

9M-FY16 9M-FY17

Average EBITDA %

51.8%

51.9%

9M-FY16 9M-FY17

Average RM Cost - % of Sales

8.7%

9.5%

9M-FY16 9M-FY17

Average Manpower Cost -% of Sales

23.1%

22.9%

9M-FY16 9M-FY17

Average Other Expenses -% of Sales


Market Update

14

Key Economic Indicators

IIP for textile has grown by 1% while IIP for apparel has declined by 4% in Apr-Dec 2016-17 as compared to Apr-Dec 2015-16

Source: RBI, Economic Advisor Govt. of India

138.0140.0142.0144.0

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Wholesale price index (WPI)

Textiles

WPI for textiles has shown an increase of 1% between Apr’16 and Dec’16

India’s GDP has shown a growth of 7.0% in Apr-Dec 2016-17 as compared to Apr-Dec 2015-16

77.32

82.72

Apr-Dec 2015-16 Apr-Dec 2016-17

India’s 9M FY17 GDP (at constant prices)

7.0 % Growth

0.0

100.0

200.0

300.0

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Index of Industrial Production (IIP)

Textiles Apparel

Rs. Lakh Cr.

15

21%

13%

6%

5%5%

50%

US

UAE

UK

Bangladesh

Germany

Others

20%

13%

6%6%4%

50%

India’s T&A* exports have decreased by 5% in 9M FY17

Source- DGCI&S

India’s Textile and Apparel Exports (In US$ mn.)

• Export of all categories have reduced in in Apr-Dec 2016-17 as compared to Apr-Dec 2015-16

• Highest fall is observed in Fibre and Yarn with 24% & 11% drop, respectively• USA and UAE are the two largest export markets

* T&A- Textile & Apparel

Categories Apr-Dec 2015-16 Apr-Dec 2016-17 %Change

Fibre 1,919 1,460 -24%

Filament 784 797 2%

Yarn 3,319 2,949 -11%

Fabric 3,656 3,325 -9%

Apparel 12,461 12,435 0%

Home Textiles 3,829 3,789 -1%

Others 1,272 1,236 -3%

Grand Total 27,241 25,991 -5%

India’s T&A Top Export Markets (% value share)

9M FY17

9M FY16

16

38%

9%7%

7%

3%

36%

China

Australia

US

Bangladesh

Vietnam

Others

43%

3%5%7%3%

39%

India’s T&A imports have increased by 5% in 9M FY17

Source- DGCI&S

India’s Textile & Apparel Imports (In US$ mn.)

• Imports have reduced for all categories except Apparel & Fibre• Fibre imports have increased significantly by 46%• Yarn imports have declined significantly by 23% • China is the largest import partner for India, however import share of Australia has

increased significantly in 9M FY17 due to 12 times increase in cotton imports from Australia

Categories Apr-Dec 2015-16 Apr-Dec 2016-17 %Change

Fibre 1,080 1,576 46%

Filament 422 419 -1%

Yarn 352 271 -23%

Fabric 1,510 1,401 -7%

Apparel 430 453 5%

Home Textiles 280 222 -21%

Others 448 421 -6%

Grand Total 4,522 4,763 5%

India’s T&A Top Import Markets (% value share)

9M FY17

9M FY16

17

86.0

33.9

8.7 5.4 4.2

79.5

29.9

8.6 5.3 4.0

World China & HK Vietnam India Bangladesh

Apr-Dec 2015-16 Apr-Dec 2016-17

-1.1%

89.8

32.8

11.5 6.1 2.6

90.2

31.4

12.46.2 2.8

World China & HK Bangladesh India Vietnam

Apr-Dec 2015-16 Apr-Dec 2016-17

T&A imports of US has declined while imports of EU-28 has remained stable with marginal increase

Overall Imports and Top import Countries of USA-7.6%

-11.8%

0.4%

7.8%

Overall Imports and Top import Countries of EU-28

Source- OTEXA (For USA) and EUROSTAT (For EU-28)

-4.8%-1.9%

-4.3%

1.6% 7.7%

US$ bn

US$ bn

18

Raw material prices have increased for cotton and viscose while for polyester there is slight decline

150160170180190200210220230

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Yarn Prices Rs./Kg

Cotton Yarn PV Yarn PC Yarn

Average Price Change in in 9M FY17 as compared to 9M FY16• 3% increase in cotton yarn• 2% increase in PV yarn• 8% decrease in PC yarn

Source: Ministry of Textiles

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Fibre Prices Rs./Kg

Raw Cotton VSF PSF

Average Price Change in 9M FY17 as compared to 9M FY16• 16% increase in raw cotton • 6% increase in VSF• 7% decrease in PSF

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EBIDTA – Earnings Before Interest Depreciation Tax & Amortization

EU – European Union

FY – Financial Year

GDP – Gross Domestic Product

HK – Hong Kong

Q3 FY 17 – October 2016 to December 2016

Q3 FY 16 – October 2015 to December 2015

9M FY16 – April 2015 to December 2015

9M FY17 – April 2016 to December 2016

PAT –Profit After Tax

PV – Polyester Viscose

PC – Polyester Cotton

PSF – Polyester Staple Fibre

T&A – Textile & Apparel

US – United States of America

UK – United Kingdom

VSF – Viscose Staple Fibre

YOY – Year on Year

Glossary

20

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Textile Sector Performance Update