Public Ltd. companies: Profit reduced for many, some made good money

Last fiscal 2020-21 has been the most challenging year for companies with especially many public limited companies in textile and apparel industry facing huge loss. But interestingly there are some companies which have still managed to perform well in these conditions and their turnover as well as profit has increased compared to that in the previous year. This scenario has not been limited to companies of any particular segment or product category. Indeed such examples can be seen across the textile value chain.

The vertical integrated company and leading apparel exporter KPR Mills has more than doubled its consolidated profit after tax (PAT) for March ’21 quarter while its profit was 37 per cent more in FY ’21. Similarly Welspun India has also achieved 128 per cent more profit in Q4 ’21 while for FY ’21, the company had seen 10 per cent higher profit.

Along with the benefit of large scale operations, KPR Mills enjoys the benefit of vertical operations which is the major reason for its continuous strong performance. During the lockdown, increased demand for home products has helped Welspun India in its growth.

Pure apparel exporting companies like Pearl Global and Gokaldas Exports have also seen reasonably good results as they are in profit but no doubt their profit reduced by around 19 per cent in annual results. On the other hand, Kerala-based Kitex Garments, the world’s second largest infantwear manufacturer witnessed significant fall in its revenue for Q4 of FY ’21 as it declined by 24 per cent to Rs. 112 crore, as against a net profit of Rs. 146 crore it reported in the corresponding period of the previous fiscal year.

The company reported 49.3 per cent decline in net profit at Rs. 9.73 crore in March 2021 quarter, as against a net profit of Rs. 19.22 crore in the same quarter previous year. For FY ’21, its revenue has been Rs. 455.39 crore, while for FY ’20, the same was Rs. 739.21 crore. Similarly, its net profit for FY ’21 has been Rs. 59.90 crore compared to Rs. 108.67 crore in FY ’20.

There are some of the textile companies for whom Q4 has proved to be especially fruitful while their overall profit for FY ’21 has significantly reduced. Good recovery in demand of yarns and fabrics in both domestic and international markets during last few months helped them to give significant results in Q4.

For example, the revenue of SVP Global Ventures Limited, Mumbai for Q4 of FY ’21 stands at Rs. 571.1 crore as compared to Rs. 321.3 crore in Q4 of FY ’20 with a Y-o-Y growth of 77.8 per cent. The consolidated PAT for Q4 of FY ’21 stands at Rs. 38.3 crore with Y-o-Y growth of 561.8 per cent. Its revenue for FY ’21 stands at Rs. 1,422.4 crore compared to Rs. 1443.7 crore of last fiscal. Hence, its net profit for FY ’21 stands at Rs. 24.85 crore compared to Rs. 51.14 crore in FY ’20.

The management of the company is of the view that focuses on sustaining the growth momentum and constantly evaluating prospects to expand its business is one of the reasons for its growth. The operational efficiencies, better product mix and cost rationalisation led to a considerable increase in margins on a sustainable basis. The company is known for manufacturing of polyester, polyester & cotton blend and 100 per cent cotton yarn.

Denim giant Nandan Denim, Ahmedabad has also reported a net profit of Rs. 15 crore for the Q4 of FY ’21 as against a net loss of Rs. 8 crore it reported in the year-ago period. While its revenue for the quarter rose by 21 percent to Rs. 372 crore, as against Rs. 308 crore in the same period of last fiscal.

But the company’s revenue for the year declined by 28 percent to Rs 1,090 crore as compared to previous fiscal’s Rs 1,524 crore. Similarly for FY ’21, the company reported a net loss of Rs 19 crore as against net loss of Rs. 1 crore during the previous year ended March 2020.

Hence the important question is how some companies made more profit in this year or were able to remain profitable, minimise the negative impact and so on. Improved operating efficiencies and cost cutting strategies have primarily helped in this growth for all the companies, in fact across the industry.

As far as product categories are concerned, categories like home furnishing, activewear, innerwear have seen good growth and the same was expected also.

No doubt, being one of the basic needs, innerwear is a segment which hardly has seen any impact due to recession or pandemic. And this is one of the main reasons for the growth of this segment. Innerwear brands of Kolkata have been coming up with enthusiastic results and Lux Industries in fact crossed US $ 1 billion market capitalisation. Rupa and Company Limited has also reported highest ever revenues and profits in FY ’21 and it was possible due to more sales, modified product mix.

For few companies, individual steps proved to be very helpful as decrease in both short and long term debt has resulted in decrease in finance cost for them.

Also Read: Lux Industries crosses US $ 1 billion market capitalisation in the fast-growing innerwear market

Given below are a list of few companies from all segments, regions of textile and apparel industry

Net profit of companies (all figures in Rs.crore)