Rupee fall to boost industry exports by 14-20%: Arvind

The rupee depreciation has made the Indian textile sector very competitive with respect to its competitors, says Sanjay Lalbhai, chairman and managing director, Arvind.

Speaking to CNBC-TV18, Lalbhai says the challenging environment in Bangladesh in the form of labour unrest, wage increases, compliance, etc too poses a great opportunity to Indian textile companies.
"The industry is poised to take benefit because of our competitiveness, the depreciation of rupee is definitely going to help the entire value chain be it cotton exports, yarn exports, fabric exports or be it readymade garments," adds Lalbhai. Below is the edited transcript of Lalbhai’s interview to CNBC-TV18. Q: You are the poster boy of textile exports and the rupee deprecation is believed to have done a lot of wonders to exporting companies. Can you run us through whether life has become easier for the exports division at Arvind?
A: I think the entire industry fundamentals have changed. I think the deprecation of rupee has made us very competitive. We now expect large investments to happen in garmenting because Bangladesh is also going through difficult period because of their strike, labour movement, wage increases and compliance issues. So, with all this and the rupee depreciating I think India’s competitiveness, the textile industry is poised for very good growth and profitability. Q: Can you drill that down to your own company for the current year or for the next year, how much might revenues grow in the current year and next? More importantly export revenues?
A: We have had a blackout period. I think the growth will come back, the indicative numbers for India's exports in the first quarter are only 8 percent. However, going forward I think it should start growing at 14-20 percent. So, the industry is poised to take benefit because of our competitiveness, the depreciation of rupee is definitely going to help the entire value chain be it cotton exports, yarn exports, fabric exports or be it readymade garments. Q: Can you give us a broad indication what might be the kind of growth, how much better than the previous year because of the rupee depreciation even if you only spoke about exports?
A: In the short run all our contracts are done, we are running at full capacity so I don't think our growth can come in because the capacity is just not there and any good company is fully sold out. So, deprecation of rupee can improve our profitability but it cannot dramatically increase our top-line because we are already running at full capacity. Q: Focusing on your balance sheet, if you do have increased profitability you are gearing has already reduced quite significantly and there are estimates that it could go to around 0.8 times by FY16. What is the debt deleveraging plan for Arvind considering that you all are possibly seeing increased traction from developed markets?
A: We are not concerned about our debt levels, they are becoming comfortable. The company is generating enough free cash and our EBITDA to total debt is constantly coming down. So, this will continue, we will keep on growing at a good pace. The same numbers and the same guidance continues, we will only try and see as to whether because of the new fundamentals, we can pass forward a few things and whether we can grow in garments more aggressively. So, those are the kind of tweaking of our strategy for the next two-three years. We will consider that because of the kind of changed macro economic situation.