The period from April to June 2020 (Q1 of the current fiscal) was the most difficult quarter for the apparel and fashion industry in India due to the nationwide lockdown from 25 March onwards that went on to adversely affect business operations, as COVID-19 cases kept increasing in large numbers. Majority of textile and apparel manufacturing companies, even those with proven track records, witnessed losses during this period.
Having said that, not all businesses had to bear the brunt of the pandemic; some could manage to beat the crisis and earn profit. Three Kolkata-based leading intimatewear companies – Rupa & Company, Dollar Industries and Lux Industries – showed good profit during the said period.
Some key reasons for the same include a huge reduction in the cost of raw materials consumed, subcontracting/jobbing expenses, employee expenses and other expenses. Almost zero spending on TV advertisements during this period was also a major reason that these companies could save on their expenditures. Furthermore, product offerings by these companies, price ranges of products and their marketing strategies make masses their client base.
Dollar Industries thrives on restricting expenditures
The balance sheets of well-performing companies tell their own stories. In Q1 of the FY21, Dollar Industries’ total revenue for the quarter saw a degrowth of 31.53 per cent at Rs. 160.17 crore as compared to Rs. 233.94 crore during the same period of the last financial year. Similarly, there was 31.51 per cent degrowth in operating revenue, as for the first quarter of the current fiscal year, it remained at Rs. 159.99 crore as compared to Rs. 233.59 crore for Q1 of FY20. Despite this decline, PAT (profit after tax) of the company in Q1 of the current fiscal increased, as it stood at Rs. 16.43 crore compared to Rs. 12.90 crore for Q1 FY2 (at a growth of 27.47 per cent).
Talking to Apparel Resources, Vinod Kumar Gupta, MD, Dollar Industries Limited, shared, “In our case, numerous calculated decisions have contributed to the said figures/numbers like during the pandemic, we have restricted our marketing and promotional activities. Secondly, we have received an immense amount of support from our debtors about minimised interest costs. Additionally, during the initial months of the nationwide lockdown, we had to exercise pay cuts and minimise administration costs.” He further added that the company has now resumed operations with almost 100 per cent manpower and the situation is gradually normalising.
Rupa & Company benefits from increased sales for casualwear range</h3
The results of Rupa & Company were even more positive, as not only the company’s standalone net profit increased 140.50 per cent to Rs. 22.27 crore in the quarter ended June 2020 as against Rs. 9.26 crore during the previous quarter ended June 2019, the sales also rose 9.84 per cent to Rs. 205.43 crore in this quarter as against Rs. 187.02 crore during the last year’s quarter.
Throwing light on the same, Ramesh Agarwal, Director and CFO of the company, shared, “We reduced our overall cost a lot, especially regarding advertisement and travelling. At the same time, wherever we could save – be it our interest cost or finance cost, we did our best. The reduced salary was also an important reason to reduce the cost. On the other hand, the sale of our casualwear also increased in this period.”
Lux Innerwear leverages sound financial health
Lux Innerwear’s standalone net profit was Rs. 31.49 crore in the quarter ended June 2020 as against Rs. 19.98 crore during the corresponding period of last year. So far as the sale is concerned, it was down from Rs. 259.57 crore to Rs. 240.98 crore. A candid Ajay Kumar Patodia, CFO of the company, informed, “We got the advantage of being a debt-free company, so we saved a lot on interest and didn’t even use moratorium. Another thing that worked in our favour was that we got the approval to start production in the last week of April, and till then the stock was clear with our supply chain partners, so we even got advanced payment for orders.”
Evidently, the pandemic hasn’t been a good experience for various businesses and industries across the globe, but it has indeed provided an opportunity to companies to work differently. With nosediving revenues, several companies are trying to cut costs and adopt other measures to decrease other consequential expenses as well. The companies are restoring to innovative means to draw their customers.
Now that the markets are opening up, the workforce is resuming their jobs and expenditures will naturally rise, an important question arises – how are the companies geared up to continue to ensure their profit margins? It was interesting to note that all of them are thinking in this direction and taking various steps to ensure their business growth… like Dollar Industries recently launched its new brand identity, and just a few days back, it launched anti-viral masks and innerwear for men in collaboration with HealthGuard, Australia.
Ramesh Agarwal concludes on an optimistic note, “Yes, expenditure will increase in future, but not as they used to be, as now cost-cutting is going to be everyone’s focus. And the sale will grow which will be a big support.”