Wazir Textile Index

Sep 2018

Quarterly Report : Q1 FY 2018-19 Textile Sector Performance Update

2

• Wazir Textile Index – Q1 FY19

• Quarterly Financial Performance – Q1 FY19

• Market Update

• Key Economic Indicators

• Export – Import Trend

• Raw Material Price Trend

• Annexure: Wazir Textile Index – Explanation

Contents

Wazir Textile Index (WTI) – Q1 FY19

4

S. No. Company Name Annual Sales* - FY18 (Rs Cr)

1 Arvind 6,420

2 Vardhman 5,851

3 Welspun India 4,977

4 SRF 4,582

5 Trident 4,564

6 Raymond 3,012

7 RSWM 2,940

8 KPR Mills 2,512

9 Sutlej Industries 2,462

10 Indo Rama Synthetics 2,256

List of Companies included as part of financial analysis

Top listed textile companies in terms of sales turnover in FY18 have been included for financial analysis

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

Source: Moneycontrol * Sales constitutes total operating income, standalone financials have been considered for analysis

5

Wazir Textile Index (WTI) – Q1 FY19

WTI Sales WTI EBITDA

100110.5 113.9 119.8

Base year(Q1 FY16)

Q1 FY17 Q1 FY18 Q1 FY19

100106.2

81.088.9

Base year(Q1 FY16)

Q1 FY17 Q1 FY18 Q1 FY19

100 100 100 112.0 119.5 107.2123.1 132.5

113.3128.9 137.5118.1

RM Cost Employee Cost Other Cost

WTI Cost

Base year (Q1 FY16) Q1 FY17 Q1 FY18 Q1 FY19

• In Q1 FY19, overall sales increased by 5%, as compared to Q1 FY18

• EBIDTA levels have rebounded and increased by 10% in Q1 FY19 compared to Q1 FY18

• Raw material and employee costs have continued to increase

Quarterly Financial Performance – Q1 FY19

7

Overall Revenue and EBIDTA margin revived slightly in Q1 FY19

1,6131,480 1,310

1,037 1,168

595 706556

652 593

1,671 1,581

1,329 1,4461,131

609710

761 615

356

Arvind Vardhman WelspunIndia

SRF Trident Raymond RSWM KPR Mills SutlejIndustries

Indo RamaSynthetics

Quarterly Sales* Trend – Q1 FY19 (Rs Cr.)

4% 39%1%7% -3% 2% 1% 37% -6% -40%

11%14%

18% 17% 20%

0.2%6%

18%11%

3%

11%17% 18% 18% 17%

0.4%

8%

18%

8%

-1%Arvind Vardhman Welspun

IndiaSRF Trident Raymond RSWM KPR Mills Sutlej

IndustriesIndo RamaSynthetics

Quarterly EBITDA Margin Trend – Q1 FY19

Q1 FY18 Q1 FY19

• Sales of top companies have revived slightly in first quarter of FY 2018-19.• SRF has shown the highest sales growth of 39% in Q1 FY19, while Indo Rama Synthetics witnessed

the highest decline, falling 40% over the same period.• Except Trident, Sutlej Textiles and Indo Rama Synthetics, EBITDA margins of all other top companies

have increased in Q1 FY19.

Source: Moneycontrol * Sales and EBITDA are as per operating performance of companies

8

Quarterly Analysis -Major expenses as % of sales

44% 55% 50% 54% 47% 44% 57% 62% 58%77%

47% 53% 52% 55% 45% 45% 56% 60% 58%77%

Arvind Vardhman WelspunIndia

SRF Trident Raymond RSWM KPR Mills SutlejIndustries

Indo RamaSynthetics

Raw Material Cost – % of sales

13%8% 9% 9%

13%17%

13%10% 11%

4%

12%8% 9% 7%

13%18%

13% 10% 13%

5%

Arvind Vardhman WelspunIndia

SRF Trident Raymond RSWM KPR Mills SutlejIndustries

Indo RamaSynthetics

Employee Cost – % of sales

32% 23% 22% 20% 20%39%

24%11%

20% 16%30% 22% 21% 20% 24%

36%24%

11%22% 18%

Arvind Vardhman WelspunIndia

SRF Trident Raymond RSWM KPR Mills SutlejIndustries

Indo RamaSynthetics

Other Costs – % of sales

Q1-FY18 Q1-FY19

Source: Moneycontrol

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Consolidated analysis for the selected top players

9,710

10,209

Q1 FY18 Q1 FY19

Consolidated Sales – Rs. Cr On consolidated level, Sales have increased by 5% in Q1 FY19 as

compared to Q1 FY18

Consolidated EBITDA margin increased marginally by 0.6 percentage points for the selected top companies

13.1%

13.6%

Q1 FY18 Q1 FY19

Average EBITDA %

Average RM cost declined marginally as

compared to first quarter of previous year

Average employee cost remained almost

stagnant

Other expenses also declined marginally

52.8%

52.6%

Q1 FY18 Q1 FY19

Average RM Cost - % of Sales

10.6%

10.5%

Q1 FY18 Q1 FY19

Average Employee Cost -% of Sales

Source: Moneycontrol * Percentage Points

5%0.6 pp*

23.5%

23.3%

Q1 FY18 Q1 FY19

Average Other Expenses -% of Sales

Market Update

11

Key Economic Indicators

Average IIP for textiles has declined by 0.4% while average IIP for

apparel has declined by 5% in Q1 FY19 compared to Q1 FY18, although it is

on an upward trend

100105110115120

Wholesale price index (WPI*)

Textiles

Average WPI for textiles has increased slightly by 1% in Q1 FY19 compared

to Q1 FY18

India’s real GDP has grown by 8.2% in Q1 FY19

compared to Q1 FY18

31.18 33.74

Q1 FY18 Q1 FY19

India’s GDP (at constant prices*)8.2%

Growth

100.0

120.0

140.0

160.0

180.0

200.0

Index of Industrial Production (IIP*)

Textiles Apparel

Rs. Lakh Cr.

Source: RBI, Economic Advisor Govt. of India *Base Year 2011-12

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India’s overall T&A* exports have declined by 1% in Q1 FY19, Apparel exports declined heavily by 17%

However, Fibre, Filament and Yarn exports witnessed significant increase

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

• Export of all the categories except apparel and fabric have grown in Q1 FY19 as compared to Q1FY18. Overall T&A exports declined by 1% in first quarter of FY 2018-19.

• Apparel exports saw a decline of 17% this quarter. Decline in apparel exports is largely attributed tosubdued global demand as well as reduced competitiveness of Indian apparel exporters post GST,due to reduction in duty drawback.

• Cotton yarn exports increased significantly by 54%.• USA , UAE, China and UK remains the top export destinations for India’s T&A products.

Source: DGCI&S *T&A – Textile & Apparel

21%

7%

6%

6%

6%

54%

USA

UAE

China

UK

Bangladesh

Others

20%

15%2%

6%6%

50%

India’s T&A Top Export Markets

% Value Share

Q1 FY18

Q1 FY19

Categories Q1 FY18 Q1 FY19 % change

Apparel 4,906 4,050 -17%

Yarn 879 1,297 48%

Home Textiles 1,280 1,294 1%

Fabric 1,148 1,145 0%

Fibre 632 854 35%

Filament 270 352 30%

Others 438 491 12%

Total 9,553 9,481 -1%

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India’s T&A* imports have increased by 5% in Q1 FY19.

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

• Import of all categories except Fibre and Home Textiles have increased in Q1 FY19.• Apparel imports increased sharply by 40%, primarily due to impact of reduced effective import

duties post GST for imports from countries like Bangladesh, China.• China continues to be the largest import partner for India, however imports from China declined by

10% y-o-y.• Egypt emerged as a significant supplier of T&A products in Q1FY 2018-19 , accounting for 5% share.

Source: DGCI&S *T&A – Textile & Apparel

34%

11%6%5%

4%

39%China

USA

Bangladesh

Egypt

Vietnam

Others

40%

13%4%3%

39%

India’s T&A Top Import Markets

% Value Share

Q1 FY18

Q1 FY19

Apparel imports increased significantly by 40% in Q1 FY19

Categories Q1 FY18 Q1 FY19 % change

Fabric 603 661 10%

Fibre 583 502 -14%

Filament 156 167 7%

Apparel 140 196 40%

Yarn 101 114 14%

Home Textiles 59 58 -2%

Others 139 171 23%

Total 1,781 1,869 5%

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T&A imports of USA and EU has increased in FY19 till date

51.1

15.6

7.6 6.8 4.1 2.5 1.5 1.5 1.4 1.1 0.8

53.1

15.4

8.2 7.3 4.2 2.5 1.7 1.6 1.5 1.2 0.8

World China Bangladesh Turkey India Pakistan Cambodia Vietnam Morocco Tunisia USA

FY18 (Jan-May) FY19 (Jan-May)

7.4%

-1.5%

3.4%2.8%

Overall Imports and Top import Countries of EU-28*

6.8%8.5% 6.1% 4.9% 10.3% -1.6%

3.9%

in US$ Bn

49.4

…

5.7 3.9 2.7 2.4

2.3 1.4 1.2

1.0 0.8

51.5

17.3

6.1 3.9 2.8

2.4 2.3 1.4 1.2

1.2 0.9

World China Vietnam India Bangladesh Indonesia Mexico Pakistan Honduras Cambodia Italy

FY18 (Jan-Jun) FY19 (Jan-Jun)

7.5%

2.9%

4.7%1%

Overall Imports and Top import Countries of USA

-2% 0.7% 3.8% -0.4% 17% 18.4%

4.2%

in US$ Bn

Source: OTEXA, EUROSTAT * EU-28 data excludes intra EU trade

16.8

15

Average raw material prices increased in Q1 FY19 compared to Q1 FY18

150160170180190200210220230240250

Ap

r'15

Jun

e'15

Au

g'15

Oct

'15

Dec

'15

Feb

'16

Ap

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g'17

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'17

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'17

Feb

'18

Ap

r'1

8

Jun

'18

Yarn Prices Rs./Kg

Cotton Yarn PV Yarn PC Yarn

Average price change in Q1 FY19 as compared to Q1 FY18• 4% increase in cotton

yarn • 6% increase in PV yarn• 5% increase in PC yarn

6080

100120140160180200220

Ap

r'15

Jun

e'15

Au

g'15

Oct

'15

Dec

'15

Feb

'16

Ap

r'16

Jun

'16

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'16

Dec

'16

Feb

'17

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r'1

7

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e'17

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g'17

Oct

'17

Dec

'17

Feb

'18

Ap

r'18

Jun

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Fibre Prices Rs./Kg

Raw Cotton VSF PSF

Average price change inQ1 FY19 as compared toQ1 FY18• 2% increase in raw

cotton• 7% increase in VSF• 26% increase in PSF

Source: Ministry of Textiles

Annexure:

Wazir Textile Index (WTI) -Explanation

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• Wazir Textile Index has been developed for assessing the overall financial performance of the textile sector on a continuous basis.

• This index takes the collective performance of top ten textile companies (by sales) of 2015-16 as the base/benchmark which is represented by the base Index number 100.

• Base value of 100 is assigned separately to each quarter performance and full year performance in 2015-16, and correspondingly financial performance of the textile industry is benchmarked to this base number to assess quarterly (Q1), half yearly (H1), nine monthly (9M) and yearly performance (FY) for future years against the set benchmark.

• Overall textile index includes the following three components:

• WTI Sales : Consolidated sales index of top ten companies

• WTI EBITDA : Consolidated EBITDA index

• WTI Cost : Consolidated index for cost of Raw material, employee & others

Measuring financial performance of Indian Textile Sector

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• EBITDA – Earnings Before Interest Tax Depreciation & Amortization

• EU – European Union

• FY – Financial Year

• Q1 FY19 – April 2018 to June 2018

• Q1 FY18 – April 2017 to June 2017

• GDP – Gross Domestic Product

• PV – Polyester Viscose

• PC – Polyester Cotton

• PSF – Polyester Staple Fibre

• RM – Raw Material

• T&A – Textile & Apparel

• US – United States of America

• UK – United Kingdom

• VSF – Viscose Staple Fibre

• WTI – Wazir Textile Index

• YOY – Year on Year

Glossary

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