Increased penetration in exports market, coupled with capacity expansion has pushed Nandan Denim Limited (NDL)'s net profit for third quarter ended December 31, 2014 of fiscal 2015-16 by 38 per cent. Part of the leading conglomerate Chiripal Group, the denim fabric maker NDL has registered a Q3 net profit of Rs 12.63 crore in FY '15 as against Rs 9.15 crore in the corresponding period last year.
Established in 1972, the Chiripal Group is diversified across several businesses such as Textiles, Petrochemicals, Chemicals, Packaging, Infrastructure and Education.
The company's total income for the third quarter grew by 25.74 per cent to stand at Rs 277.59 crore for the quarter ended December 31, 2014 as compared to Rs 220.76 crore for the corresponding period last year. As per the company, the growth is on account of penetration in the export market, revenue generation from shirting segment, commissioned in January 2014 and scale of operations on account of expanded denim fabric facility with better sale realisations.
With a long-term focus on sustainable and profitable growth, NDL has earmarked a capacity expansion plan of Rs 612 crore. While as on November 2014, it has incurred expenditure of Rs.262.53 crore, the capex is scheduled to be completed by March 2016.
"This capacity expansion will enable the company to strengthen its domestic market share, expand its exports business and have an increased focus on value-added segments. The company will be favorably placed to tap the growing domestic and international denim demand. Further, our backward integration process is expected to be margin accretive while improving operational flexibility, execution consistency and quality standards. We believe that with improving asset turnover and operating margins will lead to positive operating leverage and better return ratios," said Deepak Chiripal, chief executive officer of Nandan Denim Ltd.
For the nine-months period ended on December 31, 2014 of FY '15, NDL reported revenue growth by 24.9 per cent to Rs 818.23 crore, EBIDTA grew by 19.1 per cent to Rs 127.89 crore and PAT grew by 34 per cent to Rs 36.07 crore.
During 9M FY '15, export constituted 14 per cent of its revenue and going forward the company intends to further increase its share in the international trade. NDL derived 12 per cent of its revenues from shirting business.
Meanwhile, the Board of Directors has declared an interim dividend of six per cent (Rs 0.60 per equity share of face value of Rs 10/- each fully paid up). The company has been consistent in paying 12 per cent dividend to the shareholders for the previous three years.
Meanwhile, Chiripal added that the on-going capacity expansion is on schedule and we expect the same to be completed by March 2016.
