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Arex Industries


Arex Industries is in the business of manufacturing garment labels for use in readymade garments.

The demand for readymade garments is growing at a decent rate, which bodes well for the industry.

The company reported decent growth in revenues and operating profits over the last five years – reporting about 10cr of operating profits on revenues of about 25cr in the last financial year.  It operated with a moderate debt load of about 13cr (as at 30th September, 2011), which could get uncomfortable if the operating environment becomes worse.

The company is primarily exposed to intense competition within its industry from the unorganised sector.  Moreover, the company’s product is low value-added, which results in a lack of pricing power.  It is exposed to rising yarn prices.  It is also vulnerable to excise duty hikes/other adverse policies by the government (as done in the last year).  Being a net exporter, a strengthening INR could be adverse for profitability although exports currently constitute only about 4% of revenues.  

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