Nandan Denim Ltd Management Discussions.

Global economy overview

The global economy continued to grow at a robust pace despite facing several headwinds. The global economy grew at an estimated 3.6% during CY 2018. While the labour market grew at a fairly good rate, the investment and trade growth proved softer than anticipated, financial market conditions tightened and confidence continued to ease. In the advanced economies, consumer price inflation remained subdues on account of drop in commodity prices. This was however, offset by currency depreciations which passed through the emerging economies which passed through the higher domestic process. Market sentiments also improved in the emerging markets, reflecting a stabilization and subsequent recovery in portfolio flows.

The economy is further anticipated to grow at 3.2% in 2019 before returning back to 3.5% in 2020. The downfall in the GDP for the coming year is on account of various headwinds faced by the countries during 2018. Further, the second half of 2019 is projected to pick up pace on an ongoing build-up of policy stimulus in China, recent improvements in global financial market sentiment and waning of the challenged present in the Euro area. The stressful conditions of the emerging market economies including Argentina and Turkey is also anticipated to stabilize gradually. (Source: IMF)

Indian economy overview

The Indian economy registered a GDP growth rate of 6.8% in 2018-19 on the back of steady improvement in major sectors, consistency in government and private consumption and pick in investments during the year. The economy demonstrated a sharp recovery from demonetization and GST implementation, propelling the economic growth. Direct tax revenue remained resilient in FY 2019 as improved compliance boosted the collection of personal income tax and healthy earnings bolstered corporate tax collections. GST collection fell short of its target, mainly because tax rates on various commodities were reduced during the year. The private consumption expenditure grew by ~10%, despite sluggishness in the rural consumption on account of subdued crop prices, slow growth in rural wages, and stress on nonbank lendeर Private investments also increased slightly, reflecting an uptick in capacity utilization, and increased production of capital goods.

The economy is anticipated to grow up to 7% in 2019 aided by continued recovery of investment and robust consumption in a more expansionary stance of monetary policy and some expected boost from fiscal policy. Further, continued implementation of structural reforms and easing of infrastructure bottlenecks are also expected to provide impetus to the growth. In addition to this, fiscal consolidation will also help to reduce countrys elevated public debt. Reforms to hiring and dismissal regulations would help incentivize job creation and absorb the countrys large demographic dividend. (Source: IMF)

The Textile Industry

Global Scenario

The global textile market is valued around US$ 858 billion in 2018 and is anticipated to grow at a CAGR of 5% between 2019-2025 to reach US$ 1207 billion by 2025. It is one of the largest and economically the most stable industry in the world. The US and EU are the largest importers of apparel accounting for 60% of total global imports, followed by Japan with a share of 7-10%.

Despite increase in global yarn production in US (3%) and Brazil (12%), the overall production decreased by 9% between Q4 CY 2017 and Q1 CY 2018. The global yarn stock production have decreased in Asia (-11%), Africa (-13%) and Europe (-1.5%). As per the report of Export Promotion Bureau of Bangladesh, export of readymade garments jumped 15.7% YoY to $17bn during RS.1 CY 2018, while that of Knitwear exports rose 14% YoY to US$ 8.7 billion. Woven garment exports also increased by 17% to reach $8.4bn during the time frame. (Source: The Textile Magazine Oct- Nov 2018, Apparel Views Magazine - January 2019).

The global denim market is also developing and expanding at a significant rate. The growth of this sector is driven by various macro and micro-economic factoर Denim manufacturers are adapting leading fibre technology globally, that has enabled them to offer denim jeans products for the active wear besides, work wear and casual wear. The global denim jeans market is valued approximately at US $ 4.7 billion for CY 2018. It is projected that the denim industry would observe a sturdy growth rate of more than 8.5% between CY 2019-2022. (Source: Market Watch)

Employment generation is an essential part of the global textile and apparel sector. During RS.1 CY 2018, nearly 120 million people were employed especially in developing economies such as India, Pakistan and China. The global textile industry has been shifting from labour intensive manufacturing processes to automated production facilities. Automation has enabled textile manufacturing companies to leverage their production and reduce production costs. (Source: KPMG)


The outlook for the global textiles industry is on an increasing trend for the coming years. The global denim is expected to reach $79,211 million by 2023. Since automation production facilities are introduced in the current year, it is projected that around 1.2 million industrial robots to be deployed by 2025. Development of fashion retail outlets and supermarkets in developing economies such as India and China is expected to increase the global textile demand in the near future. Asia Pacific region is giving trade impetus with the highest growth rate in the Industry. The growth of the market will be driven by increasing population, changing demographics and lifestyle, growth of onLine/digitaL market space and introduction of new technologies. (Source: Grandview Research)

Indian Scenario

India is considered as the largest producer of textiles and the second largest exporter of cotton in the world. The Indian textile industry includes spinning, apparel and garments sectoर It has expanded state-of-the-art machinery and outstanding production technologies. Lubrication is an integral part of this sector in order to conduct smooth functioning of these modern machines and to ensure their maximum productivity and operational efficiency.

The textile industry is considered as a key component of the Indian economy, contributing around 4% to Indias GDP and 13% to the countrys export earnings during FY 19. The export of textile and apparel grew by 1.66% to US$ 35.969 billion from US$ 35.381 billion in previous year. While, the export of textile products grew by 6.19% from US$ 18.674 billion in FY 2018 to US$ 19.830 billion in FY 2019. However, export of apparels de-grew by 3.40% to US$ 16.138 billion in the year under review as compared to US $ 16.706 billion in the previous year. (Confederation of Indian Textile Industry (CITI), The Textile Magazine)

The textile sector is one of the largest sources of employment generation in the country, with 45 million people employed directly. Amongst the 45 million people employed in the Indian textile sector, 70% of the workforce comprises of female employees. As per Textile Ministry, the sector is Likely to require 17 million additional workforces by 2022. This strategy of the Ministry involves boosting exports through diversification of markets, placing India in value chain and promotion of collaborative exports. (Make in India, Ministry of Textiles, The Textile Magazine Oct-Nov 2018)

Government Initiatives

The Textile Ministry of India has attributed to make an investment of H 690 crore (US$ 106.58 million) for setting up 21 readymade garment manufacturing units in seven states for development and modernization of Indian textile sector as on August 2018. Under "Make in India" initiative, the Ministry of Textiles is implementing Integrated Processing Development Scheme (IPDS) to enable the textile processing sector in meeting appropriate technology including marine, riverine and Zero Liquid Discharge (ZLD). The GOI has decided to lower GST rates across textiles on all sectors by FY 2022, which will bring down prices and curb textile imports. (Make in India, the Textile Magazine Oct-Nov 18)


The Future of Indian Textile industry is booming with innovations taking centre stage. This sector is currently estimated at around US$ 150 billion, is projected to be US $ 230 billion by FY 2020. The decrease in the Chinese textile market due to high textile production cost has given India an added advantage to grab the market share of China, which comprise around 60% of the global export market. The domestic market for apparels and lifestyle products is expected to accelerate to US$ 160 billion by 2025.The Indian textile is projected to depict a stable growth backed by firm input prices, healthy capacity utilization and steady domestic demand.

India is projected to be a key growth market for the technical textile sector due to its cost-effectiveness, durability and versatility of technical textiles. The market size of the textile machinery industry is expected to be H 35000 crore from the present H 22000 crore in the next five years. The textile industry is on the verge of a digital transformation. Digitalization has largely helped many textile factories to efficiently use raw material, reduce waste, decrease energy consumption and reduce machine footprint. (Source: The Textile Magazine Oct - Nov 2018)

Indian Denim Market

India is among the leading denim manufacturing countries in the world, with a capacity of about 1500 million mts of denims p.a. The demand for denim apparels is increasing rapidly due to its versatility among young populace. During RS.1 FY 2019, the denim sector observed a marginal pressure due to oversupply, with 15-20% of the total capacity of denims remaining underutilized. Cotton forms around 35% of the total raw material requirement for denim manufactureर The current domestic denim consumption for FY 2019 is 750 to 800 million meters, expanding at an annual rate of 12%. (Source: The Textile Magazine July 2018, India Ratings & Research)

The denim apparel production activities are segregated in Delhi, Mumbai, Bangalore and Ahmedabad. Indias cotton exports are projected to rise by 43% to 10 million bales for FY 2018-19 on strong overseas demand for denim apparels. The Indian denim sector is on the verge of increasing its share of exports from its current 35%. (Source: Wazir Advisors, The Textile India Progress, August 2018)

Growth Prospects

The denim sector is regarded as the most progressive sector in todays textile industry with the following growth prospects:

Variations: Denim has a lot of variations apart from manufacturing jeans. There is an increasing demand amongst Indian customers for denim shirts, dresses, denim bags, jackets etc.

Purpose: Nowadays denim serves almost all purposes. It has a lot of diversified color ranges and it can be used as a formal wear or a casual wear. This diversification has made an economic sense to buy denim apparels more.

Convenience: Denim most importantly has a low maintenance cost and easy availability.

Change in Tastes and Preferences: Consumers, especially women, uses denim as their daily wear, thereby increasing the demand for the product exponentially.

Organized Retail Sector and E-Commerce: Demand for denims have accelerated due to the rapid increase of shopping malls and the rise of online shopping portals.

Price: The price of denim apparels depends on variety of factors such as the quality of material, texture, comfort, cut and wash. There has been a wide range of prices, from extremely cheap jeans for daily wear to luxury expensive denims. (Source: Textile Magazine)

Market Trends in the Denim Sector

The denim market in India has been flourishing with invention of more styles, colors and some innovative trends. Some of the key trends are:

• In India most of the denim manufacturers concentrate on the domestic markets as the value realization remains higher in the domestic market than in export markets.

• Recently the industry has observed entrance of new denim fabric manufacturers which is projected to make denim market more competitive on the basis of an increasing price trend in the coming years.

• Cotton is the sole choice of fabric for denim apparel production. Nowadays polyester is also being used as weft threads in blended denim fabrics.

• The demand for stretch denim is growing rapidly in the Indian market due to its comfort and fit features.

Color constraint is no longer a barrier. Indian youth has started accepting denim in different colors apart from the traditional blue jeans. (Source: Technopak Advisors, The Textile Magazine)

The denim sector is considered amongst the most emerging and promising categories in the apparel market of India. The increasing awareness of sustainable fashion facilitates additional opportunity to promote denim as an end product of natural cotton fibre which is considered as more ecofriendly. (Source: Technopak Advisors)


About Us

Nandan Denim Limited (NDL), based in Ahmedabad, is routed under the conglomeration of the leading Chiripal Group. It has one of the largest denim fabric manufacturing capacities in the world. From being a pure denim manufacturer, over time, NDL has diversified its products into shirting and other fabrics. The denim fabrics designed by the company is inspired the heritage of indigo sculpting and Gandhi. It has leveraged its business prospects by investing in cutting edge manufacturing technologies from leading suppliers globally, which has translated into higher capacity utilization and lower waste generation. Preservation of greeneries is a key initiative taken by NDL, where they have built their own greenbelt with over 25000 trees.


* Established market position as the largest domestic denim manufacturer

* Consistent growth in scale, supported by periodical addition to installed capacity

4 Installed denim capacity of 110 million meters per annum (mmpa)

Tie-up with more than 40 distributors across the country including some exclusive distributors ^ Decent growth in operating income

* Prevalent overcapacity in the domestic denim industry may pressurise realizations

* High working capital due to high inventory level

* Dependency on single product i.e. denim fabric.

Growth in disposal income, teenage population and acceptability of denim as an all occasion clothing is expected to lead to double digit growth in denim demand.

• Incentives under central and state textile polices may lead to boost in margins and returns

• Growth in global denim demand, leading to increase in export sale

• Fluctuating raw material prices can have an adverse impact on gross margins

• Change in trends and preferences of consumers ^ Threats from unorganised sector

Customer oriented Organization

NDL has made an endless effort to be the number one choice of customers globally. The identity of the company is purely rooted in the Indian subcontinent, because of their ambition to serve and deliver the best to everyone. NDL has an agenda to always be ahead of the fashion curve as per the tastes and preferences of its customeर The sole mission of the company is to develop Nandan as a fashion brand in itself.

In-house manufacturing amenities

The Company has in house manufacturing facilities at its plants located at Piplej and Bareja in Ahmedabad. NDL has the largest vertically integrated production facility right from manufacturing Yarn to Fabric under one roof. One of the benefits of bringing manufacturing in-house is that it will have more control over the production process. The company has fully integrated manufacturing facilities from spinning, weaving, dyeing, processing, and finishing. Company offers wide product range. It has also been awarded quality certification ISO 9001-2000.

Nandan Denim manufactures quality fabric from cotton fiber with in-house research & development backing the innovations and production techniques involved. Its world- class facilities are ably backed by a solid infrastructure to make process more productive, people more efficient and products unbeatable in quality.

State of the Art infrastructure

Nandan Denim has state of the art manufacturing facilities and integrated infrastructure to make the unit globally competitive with highest industry standards. With state of the art infrastructure and technological support, Nandan Denim promptly caters to the varying needs of the denim industry.

Product Mix

NDL has a blended product mix comprising of denims, cotton fabrics and khakis. It comprises of 100% cotton, special open end yarn, core spun yarn and 100% dyed yarns. The net revenue from operations of the company for FY 19 stood at H 1,456 Cr.

CAPACITY FY 16 FY 17 FY 18 FY 19
Spinning (TPD) 70 141 141 141
Yarn Dyeing (TPD) 10 10 10 10
Denim 99 110 110 110
Shirting 10 10 10 10


NDL has breached into denim fabric manufacturing with a production capacity of 110 Million Meters Per Annum (MMPA). They have transformed their reinvented classic denim lines into core classics as per recent fashion trends. The net sales of denim stood at H 856 Cr. in FY 19 accounting for 59% share in total revenue mix of the Company.


Apart from denim fabric manufacturing, NDL has the capacity to produce 10 million meters of shirting fabric per annum. Different blends with cotton tencel, viscose, model, linen are utilized by the craftsmen of the company to give an enriched finish to the fabric. A concept of sulphur has been introduced by the designing team, which will help in the washing techniques for basics to casual shirts.

Financial Performance

During the year under review, the Company experienced healthy growth on YoY basis in revenue and profitability on account of growth in downstream industry and robust inflow of ordeर In accordance with the SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations 2018, the Company is required to provide details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios, along with detailed explanations therefore. Table 1 provides a summary of the financial parameters along with key ratios affecting the Company.

Table 1: Summary of Key financial Parameters and ratios

Particulars FY 2019 FY 2018 YoY Change
Revenue from operations (H in lakhs) 1456.05 1588.92 8.36%
PAT (H in lakhs) 46.06 21.77 1.12%
EBITDA (H in lakhs) 225.54 149.97 50.39%
Key Ratios
Debtors Turnover (in times) 5.33 7.80 (32)%
Inventory Turnover (in times) 6.27 6.85 (8)%
Interest Coverage Ratio (in times) 1.69 1.81 (7)%
Current Ratio (in times) 1.36 1.26 8%
Debt/Equity Ratio (in times) 1.23 1.35 (9)%
Operating Profit Margin (%) 10.30 14.19 (389) bps
Net Profit Margin (%) 1.52 2.92 (140) bps
Return on Net Worth (%) 4.6 10.2 (560) bps

The decline in ratios is mainly due to decline in turnover, profits, etc. considering the prevailing market conditions.

Innovation and Design

Nandan Denims Ltd focuses on manufacturing innovative denim apparels apart from the traditional blue denims as per the changing tastes and preferences of customeर The company comprises of its own set of talented and skilled designing team, which has introduced diversification in designs for the regular blue denims. NDL has inculcated an amazing combination of the popular crosshatched fitted denims, textured and linen blended denims. It is united with a vision to provide continuous value through innovation, expertise, excellence and achieve the highest value of customer satisfaction.

Predominant Quality

NDL manufactures quality fabric cotton fiber with due research and development backed by advanced production techniques. The finished product undergoes stringent quality measures for customer satisfaction. For homogeneous mixing of cotton, an advanced bale management software has been introduced by the company to test and categorize the cotton. Before getting dispatched, each set of fabric undergoes an impeccable quality check through international AATC and ASTM test methods. These methods involve in checking the tensile strength, washing speed, shrinkage, weight and movement, followed by a chemical test.


Recycling is crucial and even the smallest step can have significant benefits on the environment. Although recycling has been going on for the past few years, recycling efforts need to be increased considering the amount of waste disposed of every day. The textile industry is very water intensive and waste water is recycled to its full extent. Water is used for cleaning the raw material and for many flushing steps during the whole production.

Everyone needs to play a role in minimizing the effects of pollution and emissions. Since we are saving resources and are sending negligible trash to the Landfills, which helps in reducing air and water pollution.


NDL has the largest vertically integrated production facility manufacturing from spinning to fabric production. The company has achieved world recognition and exports to nearly 27 countries. It supplies to key global brands such as Polo, Target, Joe Fresh, Pull & Bear etc. It pertains a strong global network of around 15 distributors across 8 countries viz; Peru, Mauritius, Hong Kong, Dubai, Thailand, Bangladesh, New York and Columbia.


Textile industry in India has gone through a difficult phase in the past few years considering structural reforms. It has been a challenging time for denim industry but denim has always been a strong commodity. The growing trend of denim wear necessitates Denim manufacturers to develop new products based on specific consumer needs. The future for the Indian textile industry looks promising, buoyed by both strong domestic consumption as well as export demand. High economic growth has resulted in higher disposable income. With consumerism and disposable income on the rise, the retail sector shall experience a rapid growth in the coming times. This may lead to rise in demand for products mainly textile products, creating a huge domestic market. The growing focus of the modern apparel industry on conception, production, promotion, and marketing is projected to fuel the denim industry in the future. Manufacturers engaged in the industry are trying to produce popular and good visual effect denim through improving technology. We shall continue to be a ‘quality driven organisation and be persistent with our quality levels. We shall continue to grow successfully in existing markets and in new territories. We are resolved to reach our goals with passion and determination.