Starting 1993, Artistic Denim Mills (PSX:ADMM) has since become a big name in the textile sector. It is one of the key players in the denim industry, offering premium fabrics with unique colours and shades, and garments with an extensive array of washes. The company has a market capitalisation of over Rs 5.4 billion.
Artistic Denim reports its business under one single segment, but it has three main operating segments - spinning, weaving, and garments. The spinning unit is equipped with 18,000 spindles producing 1.6 million kg of yarns per month.
The company's dyeing unit employs German machinery capable of processing 140,000 metres in one run. The weaving unit consists of Airjet looms with great flexibility in processing fabrics of different weights, with a total of 154 looms and an annual capacity of almost 24 million meters of fabric. After this, there is the process of finishing, cutting, stitching, and finishing and packaging. The company also has its own power generation set-up with power production capacity of 15MW and a water treatment plant with a flow rate of 1,900 cubic meter/h.
Artistic Denim markets its products to high-end customers all over the globe, frequenting fashion events the world over. Its fabrics and garments - Lycra, HyperStretch, Pure Dark Indigo, and so on - have a huge international following.
Prior Performance
Artistic Denim Mills has seen a continuous and almost linear top line growth over the past five fiscal years; the company has been improving its sales like clockwork. Profits have also largely been increasing each year, though the recent year saw a decline in net profits (owing to higher finance costs and decrease in other income that year). But by and large, the growth seems robust, all things considered.
The most salient feature of ADM (and denim manufacturers in general) is that it is almost entirely export-oriented. The company's export orders have been growing every year, and amount to over 94 percent of top line as of FY15. This is particularly commendable given the state of the textile industry - lack of competitiveness owing to high cost of doing business and an overvalued Rupee. Its main markets are the US and EU. The company's sensitivity analysis reveals that a 10 percent appreciation in US Dollar rate would impact sales by almost Rs 50 million. Regional competition from China, Bangladesh and India is another threat to the denim prospects. With all this weighing down on the growth, it is unfortunate for denim manufacturers that there isn't much of a market for denim in Pakistan.