Arvind Ltd eyes 100% growth in four years

The Ahmedabad-based world's largest denim producer, Arvind Ltd is eyeing to double its turnover to Rs8,000 crore by 2014-15 by focusing on domestic market, retail and brands. Having diversified from denim-and-textile only to fashion, retail, brands and real estate, the company's turnover for first time crossed the mark of Rs4000 crore in 2010-11, with a market capital of Rs1860 crore.

Announcing quarter ended and annual results, the chairman and managing director of Arvind Ltd said that in the next four financial years, company is expecting to grow at the rate of 20% to 25% to reach the mark of Rs8,000 crore turnover by 2014-15. "In 2010-11, our textiles revenue grew by 20% led by robust 29% growth in denim and 20% growth in shirting, khaki fabrics. Of the total turnover of Rs4,000 crore, contribution of textiles business was 72%, brands & retails 18% and others, including real estate, contributed 10%," he said.

For financial year 2010-11, the profit after tax of the company went up by 233% to Rs165 crore from Rs50 crore in 2009-10. The net profit of the company for quarter ended on March 2011 increased by 217% to Rs63 crore from Rs20 crore in the corresponding period of previous fiscal. "From this year onwards, we have started focusing on business to consumer (B2C) segment instead of business to business (B2B) segment. By selling directly to customers in domestic market, our margins have increased. In 2009-10, our margins were 12.6% which increased to 13.6% in 2010-11," said Lalbhai.

Talking about doubling the turnover of the company, Lalbhai said that the textile business will increase by Rs1,000 crore. "The present total turnover is Rs4,000 crore in which textile business contributes 72% to Rs2,935 crore. This share will reduce to 50% to around Rs4000 crore. Rest 50% of the business we are expecting to come from retail, brands, real estate and others. Right now, with sales of around Rs800 crore, brands contributes 18% to total turnover. We are expecting brands alone will increase to Rs2,500 crore and its contribution will be more than 30%," said Lalbhai.

After joint venture with Tata Housing for real estate project, Arvind is expecting a substantial growth in realty business too. "Apart from four existing real estate projects, including the joint venture with Tata Housing, we are also scanning some other locations. But we will like to remain in Gujarat for realty business," he said.
Presently, the debt of Arvind Ltd has remained around Rs2,200 crore.

"Few years back, when the turnover of Arvind was around Rs2,500 crore, the debt was Rs2,200 crore. After pushing up our turnover to Rs4,000 crore, our debt has remained at same level. This year, we are expecting to either reduce the debt by another Rs200 crore or we may maintain it. For us, debt is no more an issue. But we have decide to grow without borrowings and if fund is required, we will source from internal accruals," said Lalbhai.