Vardhman Textiles

Vardhman can run excellent factories and still see profits swing because one number outside the factory gate - the cotton-to-yarn spread - can dominate the year. Textiles are a reminder that scale cannot eliminate a commodity cycle. Vardhman spins yarn and makes fabric at enormous scale, with integration that helps control cost and quality. Yet profitability still depends heavily on cotton prices, yarn realisations and global demand. When spreads recover, earnings can rebound sharply without dramatic volume growth. When spreads collapse, even a well-run mill feels the pain.

The one thing to remember: This is a spread business: cotton/fibre costs versus yarn and fabric realisations drive profits.