Announces consolidation of AMD business and Capex of Rs. 450 crores for FY25
Arvind Ltd., a leading textile-to-retail conglomerate, has announced significant changes in its leadership team. Effective from May 6, 2024, Mr. Susheel Kaul has been appointed as Managing Director & President (Textiles), while Mr. Sanjay Lalbhai assumes the role of Chairman. Additionally, Mr. Punit Lalbhai and Mr. Kulin Lalbhai have been designated as Vice Chairmen.
Mr. Susheel Kaul brings with him a wealth of experience, having been associated with Arvind Ltd. since 1993. He joined the company as a Management Trainee after completing his Post Graduation in Textiles from The Indian Institute of Technology, Delhi. Over the years, he has held various key positions within the organization, demonstrating his expertise in Quality Assurance, Product Development, Operations, and Business Process Reengineering. Notably, Mr. Kaul has been instrumental in spearheading the growth of Arvind’s Khakhis and Shirting businesses, eventually assuming the role of President & CEO – Textiles & Apparel.
Arvind is a textile to retail conglomerate with focus on textiles, apparels, advanced materials, environmental solutions, telecom and Omni-channel commerce. Arvind Limited is an integrated solutions provider in textiles with strong fibre to fashion capabilities for a global customer base. It is also a design powerhouse implementing innovative concepts and generating intellectual property. It ranks amongst the top suppliers of fabric worldwide.
Capex plans
With a robust performance in Quarter four of FY24, which sets the benchmark for quarters ahead and basis current order book and pipeline, we expect FY25 to deliver a strong set result across key parameters of volume and revenue resulting in growth in EBITDA with healthy margins and returns. We expect to grow our traditional textile business at a more secular rate aligned to GDP, while the AMD business is expected to grow at 20% CAGR.
A new path in our growth journey is being charted with a discretionary Capex program for next three years till FY27, of which ₹400 – ₹450 Cr is budgeted for FY25. The investments will go towards capacity increase in AMD, Garments and augment product differentiation capabilities & maintenance in Fabric business. The capex also includes investment in sustainability programs like renewable energy, which will help Arvind’s the share of renewable power to improve from current 47% to go close to 90%. The Capex plan will be funded mostly from internal accruals. Our long term debt will remain at similar levels. With resumed investments in growth, incremental profitability, margins and improving financial position, Arvind is rightfully on its way to reach a ROCE profile of 20%+ and touch new heights in all-round value creation for the stakeholders.
Consolidation of AMD businesses
As per the plan, all business units currently reported in Advanced Material (AMD) segment of Arvind Ltd is getting consolidating under one umbrella structure. The rechristened legal entity called the “Arvind Advanced Material Ltd” (AAML) will now house all the businesses namely Human Protection, Industrial and Composite units through step down subsidiaries under a scheme of arrangements, which is effective from 01st of April 2024.
The Advanced Material division gained tremendously from the parentage of Arvind Ltd and will continue to get tail wind for growth both organic and inorganic way, which will require capital allocation and balance sheet strength. This is particularly true for nascent business ventures like Defense, Mobility solutions and Sports equipment which requires prequalification criteria including the sustainability credentials to grow in scale. Also important is the synergistic benefits accruing to the “Human Protection” business benefiting from a large and diverse fibre to fabric base with deep processing capabilities, which help in achieving economies of scale, innovation and development of new products.
The new structure is an internal realignment of businesses & entities to address growth imperatives and take advantage of new opportunities thus does not change the consolidated view of Arvind.
Focus on Sustainability
In line with the mantra for Sustainability, which is an inherent way of everyday life at Arvind to align with the sustainable development goals, the denim plant at Naroda commissioned a biomass-based boiler which will reduce emission by 50,000 tCO2 a year and will enable the plant to operate coal free. This builds upon other ongoing sustainability programs related to water, energy, chemical usage and farm projects, and further cements our position as an industry leader on this topic.
Strong performance
Arvind Limited registered an all-round strong operational and financial performance in FY24. The strategy of verticalization through One Arvind, product mix optimization and business model transition to a customer-centric approach has been enabling growth engines and started yielding tangible results.
During quarter four of FY24, a strong performance was delivered by Arvind Ltd, as guided during earlier quarters, amidst sustained challenges in the global geopolitics and macroeconomic environment, with volumes across segments of Textile and Advanced Material division (AMD) clocking a healthy growth. While Denim registers a 13% growth, Full Garments registers 41% growth and, AMD combined product volume registers 17% growth.
This volume growth led to a healthy revenue growth in Q4. Overall Revenue for the quarter stood at ₹2075 Cr against ₹1881 Cr in Q4 FY23, which is a growth of 10% on a YoY basis. Full year FY24 revenue stood at ₹7738 Cr. AMD business registered revenue of ₹1428 Cr for the full year.
