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Wazir Textile Index (Textile Sector Performance Update)

September 2017

Quarterly Report : Q1 FY18

2

Wazir Textile Index – Q1 FY18

Quarterly Financial Performance – Q1 FY18

Market Update

• Key Economic Indicators

• Export – Import Trend

• Raw Material Price Trend

Annexure: Wazir Textile Index – Explanation

Contents

Wazir Textile Index (WTI) – Q1 FY18

4

List of companies included as part of financial analysis

Top listed textile companies in terms of sales turnover in FY17 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

S.No Company NameAnnual Sales* - FY17

(Rs Cr)

1 Arvind 5,956

2 Vardhman 5,728

3 Welspun India 5,639

4 Trident 4,687

5 JBF Industries 3,913

6 SRF 3,883

7 RSWM 2,987

8 Raymond 2,826

9 Indo Rama Synthetics (India) 2,468

10 Sutlej Industries 2,250

* Sales constitutes total operating income

5

100 100 100 111.2 118.9

106.2 122.2 130.5

112.9

-

RM Cost Employee Cost Other Cost

WTI Cost

Base year (Q1 FY16) Q1 FY17 Q1 FY18

Wazir Textile Index (WTI) – Q1 FY18

• In Q1 FY18, overall sales increased by 3% compared to Q1 FY17, while EBITDA decreased significantly by 25%.

• EBITDA decreased due to high Impact of employee cost and RM cost increase.

100

109.7113.0


100 103.9

77.7


WTI Sales WTI EBITDA

Quarterly Financial Performance – Q1 FY18

7

Overall revenue has increased while EBITDA margin has declined in Q1 FY18

• Sutlej Industries has shown the highest sales growth rate of 18% over the last years Q1, while Indo Rama Synthetics witnessed the highest decline, falling 8% over the same period.

• Except Indo Rama Synthetics, all other top companies have shown decline in their EBITDA margins in Q1 FY18.

15%22%

26%21%

7%

25%

14%

1.3% 0.6%

14%11% 14%18% 20%

5%

17%

6%0.2%

3.3%11%

Arvind Vardhman WelspunIndia

Trident JBF Industries SRF RSWM Raymond Indo RamaSynthetics

SutlejIndustries

Quarterly EBITDA Margin Trend – Q1 FY18

Q1-FY17 Q1-FY18

1,466 1,426 1,3861,166 941 985

724540

647 553

1,6131,480 1,310

1,168 968 1,037706 595 593 652


Trident JBF Industries SRF RSWM Raymond Indo RamaSynthetics

SutlejIndustries

Quarterly Sales* Trend – Q1 FY18 (Rs Cr.)

10% 0.2%-5%4% 3% 5% -2% 10% -8% 18%


Growth %

* Sales constitutes total operating income

8

41% 47% 44% 47%

79%

47% 54%42%

79%55%44% 55% 50% 47%

80%54% 57%

44%

77%58%


Trident JBFIndustries

SRF RSWM Raymond Indo RamaSynthetics

SutlejIndustries

Raw Material Cost– % of sales

Quarterly analysis – Major expenses as % of sales

13%

7% 8%12%

2%

8%12%

17%

4%

11%13%8% 9%

13%

2%

9%13%

17%

4%

11%




SutlejIndustries

Employee Cost– % of sales

31% 23% 22% 21%11%

20% 20%40%

16% 19%32%

23% 22% 20% 13% 20% 24%39%

16% 20%




SutlejIndustries

Other Costs – % of sales

Q1-FY17 Q1-FY18


9

Consolidated analysis for the selected top players

9,833

10,122

Q1-FY17 Q1-FY18

Consolidated Sales – Rs. CrOn consolidated level, Sales have

increased by 3% in Q1 FY18 as compared to Q1 FY17

Average RM cost have increased along with increase

in prices compared to previous quarter

Consolidated EBITDA margin decreased by 4.6 percentage points for

the selected top companies

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

Other expenses also increased in Q1 FY18

16.6%

12.0%

Q1-FY17 Q1-FY18

Average EBITDA %

51.8%

54.9%

Q1-FY17 Q1-FY18

Average RM Cost - % of Sales

9.2%

9.8%

Q1-FY17 Q1-FY18

Average Employee Cost -% of Sales

22.4%

23.2%

Q1-FY17 Q1-FY18

Average Other Expenses -% of Sales


3%

Market Update

11

Key Economic Indicators

Average IIP for textiles has declined by 2% while IIP for apparel has declined

by 3% in Q1 FY18 compared to Q1 FY17

Source: RBI, Economic Advisor Govt. of India

100105110115

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Wholesale price index (WPI*)

Textiles

Average WPI for textiles has shown an increase of

3.5% in Q1 FY18 compared to Q1 FY17

India’s real GDP has grown by 5.7% in Q1 FY18

compared to Q1 FY17

29.40 31.10

Q1 FY17 Q1 FY18

India’s GDP (at constant prices*)

5.7 % Growth

100

150

200

Ap

r'15

May

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Jun

e'1

5

July

'15

Au

g'1

5

Sep

'15

Oct

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v'1

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Dec

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Jan

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Feb

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May

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Jun

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July

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Sep

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Dec

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Jan

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Feb

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Mar

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May

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7

Index of Industrial Production (IIP*)

Textiles Apparel

Rs. Lakh Cr.

* Base Year 2011-12

12

20%

15%

6%

6%5%

48%

USA

UAE

UK

Bangladesh

Germany

Others

21%

12%

7%6%

5%

49%

India’s T&A* exports have increased by 8% in Q1 FY18

Source- DGCI&S

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

* T&A- Textile & Apparel

Categories Q1 FY17 Q1 FY18 % Change

Apparel 4,391 4,906 12%

Fabric 1,145 1,148 0%

Fibre 426 632 48%

Filament 268 270 1%

Home Textiles 1,247 1,280 3%

Yarn 986 879 -11%

Others 385 438 14%

Grand Total 8,848 9,553 8%

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

Q1 FY18

Q1 FY17

• Export of all the categories except yarn has grown in Q1 FY18 as compared to Q1 FY17.• Highest growth was observed in exports of fibre growing at a rate of 48%. • Exports of yarn fell significantly by 11% • USA and UAE are the two largest export markets with a cumulative share of ~35%. Share of UAE has

increased slightly

13

India’s T&A imports have increased by 23% in Q1 FY18

Source- DGCI&S

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

• Imports growth of 23% in Q1 FY18 was primarily attributed to a significant increase in fibre imports by 99% over Q1 FY17. Imports of filament yarn and fabric has also increased.

• However, imports of other major categories yarn, home textiles & apparel declined significantly.

• China continues to be the largest import partner for India. Import share of USA has increased significantly from 7% to 13% in Q1 FY18 while import share of Bangladesh declined from 10% to 4% in Q1 FY18.

Categories Q1 FY17 Q1 FY18 % Change

Apparel 144 139 -3%

Fabric 498 603 21%

Fibre 294 584 99%

Filament 119 156 31%

Home Textiles 68 59 -13%

Yarn 171 101 -41%

Others 150 139 -7%

Grand Total 1,444 1,780 23%

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

42%

13%4%

4%3%

34%

China & HK

USA

Bangladesh

Australia

Vietnam

Others

42%

7%10%4%

2%

35%

Q1 FY18

Q1 FY17

14

25.21

8.87

2.73 1.82 1.34

25.17

8.95

2.83 1.91 1.28

World China Vietnam India Bangladesh

Q1 FY17 Q1 FY18

3.70%

28.25

7.796.01

4.07 4.01

28.03

8.136.30

4.14 4.07

World China Germany Italy Bangladesh

T&A imports of US and EU-28 has declined in Q1 FY18

-0.20%

0.90%

-0.8%

4.9%

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

-4.50%4.80%

4.4%

1.7% 1.4%

Overall Imports and Top import Countries of EU-28* in Q1 FY18 (US$ Bn)

Overall Imports and Top import Countries of USA in Q1 FY18 (US$ Bn)

15

Raw material prices remained largely stable in Q1 FY18 even though on an average they are higher than Q1 FY17

150160170180190200210220230240

Yarn Prices Rs./Kg

Cotton Yarn PV Yarn PC Yarn

Average price change in Q1 FY18 as compared to Q1 FY17

• 10% increase in cotton yarn• 11% increase in PV yarn• 9% decrease in PC yarn

Source: Ministry of Textiles

60

80

100

120

140

160

180

200

Fibre Prices Rs./Kg

Raw Cotton VSF PSF

Average price change in Q1 FY18 as compared to Q1 FY17

• 15% increase in raw cotton • 10% increase in VSF• 3% increase in PSF

Annexure :Wazir Textile Index (WTI) – Explanation

17

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 will be 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

Wazir Textile Index (WTI): Measuring financial performance of Indian textile sector

18

EBITDA – Earnings Before Interest Tax Depreciation & Amortization

EU – European Union

FY – Financial Year

Q1 FY 18 – April 2017 to June 2017

Q1 FY 17 – April 2016 to June 2016

GDP – Gross Domestic Product

HK – Hong Kong

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

19

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