The company has recorded all-time high revenue of Rs 818 crore, higher by 75% compared to FY 2020-21
Kitex Garments Ltd., the second largest infants’ garments manufacturing company in the world, has announced robust performance and record turnover for the financial year ended March 31, 2022. The company has recorded all-time high revenue of Rs 818 crore, higher by 75% compared to FY 2020-21. Profit after tax (PAT) for the year was at 128.28 crore, higher by 114% compared to FY 2020-21. The company’s new projects in Telangana are in progress as per the scheduled timeline.
Sabu M. Jacob, Chairman and Managing Director of Kitex Garments Ltd., said, “Strong growth with access to infants’ garments segment despite the inflationary trends in materials costs helped the company achieve record turnover and through effective cost control measures we have been able to achieve higher profits.”
Leading rating agency ICRA has recently shared a detailed note on Kitex and how the new expansion projects would impact the company’s future performance. The Kitex Group is in the process of setting up two greenfield large integrated manufacturing units in Telangana across two phases in Warangal and Sitarampur, which are expected to be fully commercialised by June 2023 and June 2024, respectively. While the unit at Warangal is likely to cater to the childrenswear segment, the group proposes to diversify into other products including infant socks, fleece garments and premium T-shirts and inner wear for adults from the unit at Sitarampur.
Kitex Garments Limited (KGL) was incorporated in 1992 and is managed by Sabu Jacob. The company is a part of the larger AnnaKitex Group, which has diversified interests across various sectors. KGL, along with its group company, KCL (which holds a 15.9% stake in the company), manufactures and exports infant wear to apparel retailers based out of the US and other developed markets. The group has a fully integrated manufacturing facility at Kizhakkambalam (Kerala) with a capacity to manufacture around 235 million pieces per annum.
The Kitex Group established a marketing and design unit based out of the US in FY 2015 (equally held by KGL and KCL) to diversify its business profile and reduce dependence on its key customers. In 2021, Kitex had announced investment of Rs 2,600 crore for setting up integrated textile units in Telangana across two phases. The capital investment is to be funded largely by term loans from banks (70% of the project cost), with the rest to be met with internal accruals. The expansion would strengthen the group’s market position in the infant wear segment and support its business diversification and growth targets over the long term.
Kitex has established a good position in the infant wear segment and strong relationship with large customers in the US market, its strong operating efficiencies backed by high levels of automation and integrated manufacturing set-up, driving healthy profitability and an expected improvement in business diversification upon commissioning of the proposed capacities. The company’s strong market position and long relationships with customers, and favourable demand conditions owing to an increasing shift in procurement of large customers in the US and EU markets from China towards other markets including India provide some comfort.
Over the years, Kitex has acquired significant technical capabilities in this segment and developed the expertise to concurrently manage multiple large orders. It has established a modern integrated facility to meet the high-quality standards of large foreign retailers. The group’s operations are integrated owing to its presence across knitting, processing and garmenting segments of the value chain, enhancing operational efficiencies. Besides, presence in the value-added segment (printing and embroidery), coupled with strong operational infrastructure with high level of automation results in better-than-average industry margins for incumbent players like the Kitex Group.
The group is in the process of diversifying its business profile, with the ongoing capacity expansion expected to improve its product diversification, customer diversification and geographical diversification over the medium-to-long term. The group plans to venture into new value-added product categories including infant socks, fleece garments and premium T-shirts and inner wear for adults, which would reduce its dependence on the infant wear segment.