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Vardhaman expects cotton prices to fall, revises earnings estimate

Vardhaman Textiles has cut its earnings per share estimate. There are two reasons for this. One is that it expects international cotton prices to fall up to eight per cent. Second is the uncertainty with regards to GST.

Since the area under cultivation next year is expected to be much higher, and the overall crop seems to be better compared to this year, there is an expectation of higher inventory and so a drop in prices. The company feels that going by all the input credits available on the services and other things, there may not be any adverse impact on the cotton yarn side.

Vardhaman makes almost all types of yarn, barring a few synthetic yarns like 100 per cent polyester. Otherwise it is a pioneer in cotton, cotton blended, cellulosic. Vardhaman has 1.1 million spindles and it makes 6,00,000 tons of yarn a day. Of the total capacity one-third goes for captive consumption. Another one-third goes for the Indian market. And one-third goes for exports. The company uses innovative fiber blends and it has special products to cater to customers’ needs. Today 50 per cent of its production is of value added yarns for India.

For the third quarter of financial year 2017 Vardhaman Textiles’ consolidated revenue for the quarter saw a 0.3 per cent year on year decline.

 
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