Quarterly Report : Q1 FY18 Wazir Textile Index (Textile Sector Performance Update) September 2017
Contents 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 2
Wazir Textile Index (WTI) Q1 FY18
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 S.No Company Name Annual 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 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 4 Source: Moneycontrol * Sales constitutes total operating income
Wazir Textile Index (WTI) Q1 FY18 WTI Sales WTI EBITDA 109.7 113.0 100 103.9 77.7 100 Base year (Q1 FY16) Q1 FY17 Q1 FY18 Base year (Q1 FY16) Q1 FY17 Q1 FY18 WTI Cost 122.2 130.5 111.2 118.9 100 100 100 106.2112.9 - RM Cost Employee Cost Other Cost Base year (Q1 FY16) Q1 FY17 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. 5
Quarterly Financial Performance Q1 FY18
Overall revenue has increased while EBITDA margin has declined in Q1 FY18 Growth % 1,466 1,613 1,426 1,480 1,386 1,310 Quarterly Sales* Trend Q1 FY18 (Rs Cr.) 10% 4% -5% 0.2% 3% 5% -2% 10% -8% 18% 1,166 1,168 941 968 985 1,037 724 706 540 595 647 593 553 652 Arvind Vardhman Welspun India Trident JBF Industries SRF RSWM Raymond Indo Rama Synthetics Quarterly EBITDA Margin Trend Q1 FY18 Sutlej Industries 15% 11% 22% 14% 26% 18% 21% 20% 7% 5% 25% 17% 14% 6% 3.3% 1.3% 0.2% 0.6% 14% 11% Arvind Vardhman Welspun India Trident JBF Industries SRF RSWM Raymond Indo Rama Synthetics Q1-FY17 Q1-FY18 Sutlej Industries 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. 7 Source: Moneycontrol * Sales constitutes total operating income
Quarterly analysis Major expenses as % of sales Raw Material Cost % of sales 41% 44% 47% 55% 44% 50% 47% 47% 79% 80% 47% 54% 54% 57% 42% 44% 79% 77% 55% 58% Arvind Vardhman Welspun India Trident JBF Industries SRF RSWM Raymond Indo Rama Synthetics Sutlej Industries Employee Cost % of sales 13% 13% 7% 8% 8% 9% 12% 13% 2% 2% 8% 9% 12% 13% 17% 17% 4% 4% 11% 11% Arvind Vardhman Welspun India Trident JBF Industries SRF RSWM Raymond Indo Rama Synthetics Sutlej Industries Other Costs % of sales 31% 32% 23% 23% 22% 22% 21% 20% 11% 13% 20% 20% 20% 24% 40% 39% 16% 16% 19% 20% Arvind Vardhman Welspun India Trident JBF Industries SRF RSWM Raymond Indo Rama Synthetics Sutlej Industries Q1-FY17 Q1-FY18 8 Source: Moneycontrol
Consolidated analysis for the selected top players Consolidated Sales Rs. Cr 10,122 3% 9,833 Q1-FY17 Q1-FY18 On consolidated level, Sales have increased by 3% in Q1 FY18 as compared to Q1 FY17 Consolidated EBITDA margin decreased by 4.6 percentage points for the selected top companies Average EBITDA % 16.6% 12.0% Q1-FY17 Q1-FY18 Average RM cost have increased along with increase in prices compared to previous quarter Average employee cost have increased because of increase in labour wages. Other expenses also increased in Q1 FY18 Average RM Cost - % of Sales 51.8% 54.9% Average Employee Cost - % of Sales 9.8% 9.2% Average Other Expenses - % of Sales 22.4% 23.2% Q1-FY17 Q1-FY18 Q1-FY17 Q1-FY18 Q1-FY17 Q1-FY18 9 Source: Moneycontrol
Market Update
Apr'15 May'15 June'15 July'15 Aug'15 Sep'15 Oct'15 Nov'15 Dec'15 Jan'16 Feb'16 Mar'16 Apr'16 May'16 June'16 July'16 Aug'16 Sep'16 Oct'16 Nov'16 Dec'16 Jan'17 Feb'17 Mar'17 Apr'17 May'17 June'17 July'17 Apr'15 May'15 June'15 July'15 Aug'15 Sep'15 Oct'15 Nov'15 Dec'15 Jan'16 Feb'16 Mar'16 Apr'16 May'16 June'16 July'16 Aug'16 Sep'16 Oct'16 Nov'16 Dec'16 Jan'17 Feb'17 Mar'17 Apr'17 May'17 June'17 Key Economic Indicators India s GDP (at constant prices*) Rs. Lakh Cr. 5.7 % 29.40 31.10 Growth India s real GDP has grown by 5.7% in Q1 FY18 compared to Q1 FY17 200 150 100 Q1 FY17 Index of Industrial Production (IIP*) Q1 FY18 Average IIP for textiles has declined by 2% while IIP for apparel has declined by 3% in Q1 FY18 compared to Q1 FY17 Textiles Apparel 115 110 105 100 Wholesale price index (WPI*) Average WPI for textiles has shown an increase of 3.5% in Q1 FY18 compared to Q1 FY17 Textiles 11 Source: RBI, Economic Advisor Govt. of India * Base Year 2011-12
India s T&A* exports have increased by 8% in Q1 FY18 India s Textile and Apparel Exports (In US$ mn.) India s T&A Top Export Markets (% value share) Categories Q1 FY17 Q1 FY18 % Change Q1 FY18 Apparel 4,391 4,906 12% Fabric 1,145 1,148 0% 20% USA Fibre 426 632 48% Filament 268 270 1% Home Textiles 1,247 1,280 3% Yarn 986 879-11% 48% 49% Q1 FY17 21% 7% 6% 5% 12% 15% UAE UK Bangladesh Germany Others Others 385 438 14% Grand Total 8,848 9,553 8% 5% 6% 6% 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 12 Source- DGCI&S * T&A- Textile & Apparel
India s T&A imports have increased by 23% in Q1 FY18 India s Textile & Apparel Imports (In US$ mn.) Categories Q1 FY17 Q1 FY18 % Change Apparel 144 139-3% India s T&A Top Import Markets (% value share) Q1 FY18 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% 34% 3% 4% 35% 4% Q1 FY17 2% 4% 10%7% 13% 42% 42% China & HK USA Bangladesh Australia Vietnam Others 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. 13 Source- DGCI&S
T&A imports of US and EU-28 has declined in Q1 FY18-0.20% 25.21 25.17 Overall Imports and Top import Countries of USA in Q1 FY18 (US$ Bn) 0.90% 8.87 8.95 3.70% 4.80% -4.50% 2.73 2.83 1.82 1.91 1.34 1.28 World China Vietnam India Bangladesh Q1 FY17 Q1 FY18-0.8% 28.25 28.03 Overall Imports and Top import Countries of EU-28* in Q1 FY18 (US$ Bn) 4.4% 7.79 8.13 4.9% 6.01 6.30 1.7% 1.4% 4.07 4.14 4.01 4.07 World China Germany Italy Bangladesh 14 Source- OTEXA, EUROSTAT * EU-28 data excludes intra EU trade
Raw material prices remained largely stable in Q1 FY18 even though on an average they are higher than Q1 FY17 200 180 160 140 120 100 80 60 Fibre Prices Rs./Kg Average price change in Q1 FY18 as compared to Q1 FY17 15% increase in raw cotton 10% increase in VSF 3% increase in PSF Raw Cotton VSF PSF 240 230 220 210 200 190 180 170 160 150 Yarn Prices Rs./Kg 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 Cotton Yarn PV Yarn PC Yarn 15 Source: Ministry of Textiles
Annexure : Wazir Textile Index (WTI) Explanation
Wazir Textile Index (WTI): Measuring financial performance of Indian textile sector 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 WTI EBITDA WTI Cost : Consolidated sales index of top ten companies : Consolidated EBITDA index : Consolidated index for cost of Raw material, employee & others 17
Glossary 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 18
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