Surat: BSE-listed company R & B Denims Ltd. (BSE: 538119), one of the most influential textile houses with the largest vertically integrated textile manufacturing facilities of over 30 million meters capacity of denim, has done major expansion with new Air jet Looms – Dobby Machines. It has started to manufacture the prominent luxury level of Denim Fabric with a Width of 85 Inches. The company is expected to generate very good margins from the current operating margins with this technology. Currently, the company’s clients include major brands such as Arvind, Killer, Lifestyle, Reliance Retail, etc. By adopting this new technology, the company will be able to gain an advantage over its competitors, as it is not available to many Denim Manufacturers, which will provide the company with an advantage in serving both domestic as well as international consumers.
Earlier, the company delivered a steady performance in Q2 FY 23. Revenues from continuing operations stood at ₹14711.5Lakhs, EBITDA at ₹2337.32 Lakhs. Profit after Tax from the continuing business was ₹ 1240.60 Lakhs. Despite the decrease in revenue from Q1, we maintained our profits by focusing on cost reduction, flexible working capital management, and improving productivity and efficiencies.
It is expected that R & B Denim Ltd. will continue to grow despite a challenging environment as a result of its robust business model and its strategic ability to navigate through challenging times. The Denim Market is impacted by domestic and export issues. Denim products are attracting more and more people regardless of age and gender, and it is anticipated that the denim industry will grow rapidly in the near future.
It is imperative that the company continues to invest in Research and Development to maintain its competitive advantage and consistently deliver value to stakeholders in order to enhance technological advancements and quality improvement through the use of its state-of-the-art, ultramodern equipment, as well as its fully equipped research and development laboratory, in order to sustain profit margins and increase operational efficiency. With the new machine installations, the company is expecting a significant increase in revenue and profitability in Q4 as a result of these installations.
In FY 22-23 till Q2, the company produced 74 Lakhs Meters of Denim Fabric, equivalent to 46 Lakhs pairs of Jeans.
In FY 22-23, the company participated in the Denim Show in Delhi, which gave promising results in getting a new customer base and helped to increase demand for products in the domestic Market. Its Previous Participation at exhibitions outside India increased Company’s exports in FY 22 by 225% compared to FY 21. Even with the diminishing market, till Sep’22, it has been able to export 40% of the total export sales we achieved in FY 21-22. As on Sept’22, exports represent 21% of its total sales which the company further expects to Increase as the market heads towards Normalization.
On the export side, denim is largely impacted by inventory build-up in the US; once inventory starts to clear up, we think they should start normalising, perhaps later in quarter 4. On the domestic front, the Volatility of cotton prices and the inability to increase the product’s price with the rise in Input cost has resulted in volume shrinkage. As Cotton has started to normalize now, the company expects that it should correct itself by January end, and revenue will follow how cotton normalizes.
