Arvind sees no impact from fire at unit, sees strong H1FY17

A fire has broken out at a voiles unit of Arvind Ltd, Chairman and Managing Director Sanjay Lalbhai told CNBC-TV18.He added that he does not expect any internal disruptions from the fire and that the unit and inventory had been insured.Speaking to CNBC-TV18 in an interview, Lalbhai also talked about the company's performance in the fiscal year gone by, and added that he expects Arvind to post strong operating performance in the first half of 2016-17.Below is the transcript of Sanjay Lalbhai’s interview with Latha Venkatesh and Sonia Shenoy on CNBC-TV18.Sonia: Can you tell us what the intensity of this fire was? Were any lives lost? Was any disruption to your manufacturing?A: We are very happy to state that there was no loss of life at all and it was a grey godown on the third floor which caught fire and there is not likely to be any disruption to the production for this unit.Latha: It is a warehouse that caught fire?A: Yes, it was the grey fabric warehouse which caught fire.Latha: You have an estimate of the monetary loss in terms of goods?A: No, all those things will have to be figured out, so I would not want to state the exact amount and things like that. But all that I can say is that it is not, our production has restarted. The machines were not damaged and there was no loss of life, so that is very important.Latha: If you can give us a ballpark idea of whether this is 1 percent or half a percent of your total raw material. If you can give us some help, I am not asking for an exact number at all. As well, whether it is insured and therefore, the losses mitigated.A: Yes, absolutely. Everything is insured. So, there is absolutely no question of any kind of financial loss and suppose you have 80 lakh meters of grey fabrics, around 20 lakh meters to that extent were destroyed in this fire. So, it is not likely to have any kind of impact on our production or sales.Sonia: Since we have you with us, we also wanted to ask you a little bit about your numbers, because the quarter gone by was very good for you. Your revenue growth was about 14 percent and your investors or shareholders would want to know what the future for the company looks like. So, can you just give us an estimate of what H1 will look like?A: As you know, we are not giving any kind of guidance on the future quarters, but what I could say is that the business is looking reasonably okay though the domestic markets, April was very good, May was slow for everyone. Possibly it is being attributed to very hot weather all around India. So, we are hopeful that June should be much better than normal. And everyone is waiting for normal monsoon and some more announcements from the government. So, if all that is to happen, we are looking at a strong kind of year for this year.Latha: I just wanted to know this 20 lakh metres of greys that is not available now, will there be a time lag before you reprocure it and find a place to stock it and therefore, is there some disruption in the production schedule later on in the month or later on in the week? Is this, in any way, going to become a factor in your financials for this quarter?A: Firstly, Ankur is Rs 400 crore in our Rs 9,000 crore business. So, let us put it in perspective. This 80 lakh metre grey fabric, 20 lakh has been destroyed and we have a very unique model of outsourcing everything from outside, so there are no internal production disruptions. So, it is a process house, we value add and most of the kind like ancillarisation of automobile industry, we will not invest it in any kind of weaving and most of the yarn is also outsourced. So, grey fabric comes in, we process it and we give it out. So, there is a huge outside ancillary partners, units, which are producing for us. Now it would be too early for me to say that there will absolutely no disruption or there may be no loss of production depending on what is lost and what is not lost. But, let us put it in perspective that out of Rs 400 crore sales, it is just a small part of grey fabric that has been burned.Sonia: On your performance going ahead, you said that you hoped that June and July would be good months, but so far, what has the trend been like in terms of what is really leading to an upmove? Is it more from your power brands business, is it from your other segments, where are you seeing the segmental improvement?A: Our brands are doing as well as we have planned and now, all our fabric business is running at full. So, it is going as per plan and we are pretty much happy with the way things are. But we do believe that there is an opportunity of the markets really doing much better, because the markets have been quite subdued for the entire last year. And in the context of very subdued markets, you have seen that our last quarter was a very good quarter for our brand in retail business.Latha: I just wanted to get one more point in. What is the percentage of exports to domestic sales? You said the domestic markets have not picked up. What is the percentage of exports and how is that market doing?A: The exports are doing pretty well for us. It is pretty strong and it is around almost equal, 50-50. So, the domestic markets, I am not saying that we have any problem because we are selling 100 percent of our installed capacity. It is just that I am saying that the markets are not buoyant. So, if you really generally ask around, Denim is doing very well. But the other categories for all of our competitors, they would be finding it pretty difficult market to operate in.