MIRA
INFORM REPORT
|
Report Date : |
08.03.2007 |
IDENTIFICATION
DETAILS
|
Name : |
ARVIND MILLS
LIMITED |
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Registered
Office : |
Railwaypura Post, Naroda Road, Ahmedabad –
380 025, Gujarat, India. |
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Country: |
India |
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Financials (as
on): |
31.03.2006 |
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Date of
Incorporation : |
01.06.1931 |
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Com. Reg. No.: |
04-93 |
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CIN No.: [Company
Identification No.] |
L17119GJ1931PLC000093 |
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TAN No.: [Tax Deduction & Collection Account No.] |
AHMT00462A |
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Legal Form : |
It is a Public
Limited Liability Company. The
company’s shares are listed on the Stock Exchanges. |
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Line of
Business : |
Manufacturers and
Marketers of Cloth (including fents, rags, etc.), Yarn, Waste, EPABX Lines and
Garments]. |
RATING &
COMMENTS
|
MIRA’s Rating
: |
Ba |
RATING |
STATUS |
PROPOSED
CREDIT LINE |
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|
41-55 |
Ba |
Overall operation is considered normal. Capable
to meet normal commitments. |
Satisfactory |
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Maximum Credit
Limit : |
USD 61000000 |
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Status : |
Satisfactory |
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Payment
Behaviour : |
Usually Correct |
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Litigation : |
Clear |
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Comments : |
Subject is the
flagship company of the Lalbhai Group manufacturing and marketing cloth, Grey
Knitted Fabrics and Yarn. Directors are
respectable and renowned industrialists. Trade relations are fair. Payments
are correct and as per commitments. The company can
be considered normal for business
dealings at usual trade terms and conditions. |
LOCATIONS
|
Registered
Office : |
Railwaypura Post, Naroda Road, Ahmedabad –
380 025, Gujarat, India. |
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Tel. No.: |
91-79-22121408 /
22203030 / 22200206 |
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Fax No.: |
91-79-22124314 /
22120267/ 22371396 / 22372342 / 22379184 / 22201608 |
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E-Mail : |
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Website : |
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Corporate
Office : |
Naroda Road,
Ahmedabad – 380025, Gujarat , India |
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Tel. No.: |
91-79-22203030 |
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Fax No.: |
91-79-22201270 |
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Factory : |
v Santej, Taluka Kalol, District Mehsana -
382 721, Gujarat, India v Naroda Road, Ahmedabad - 380 025, Gujarat,
India (Two Units) Tel. No. 91-79-2212 1408/2377 002 Fax No. 91-79-2212
4314/2212 0267/2237 1396/2237 2342/2237 9184 v Khatrej, Taluka Kalol, District Mehsana -
382 721, Gujarat, India v Khokhra, Memdabad, Ahmedabad - 380 008,
Gujarat, India v Gut No. 172, Daravali Village, Taluka
Mulshi, District Pune - 412 018, Maharashtra, India v
55,
Whitefield Road, Mahadevapura Post, Bangalore - 560 048, Karnataka,
India |
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Branch Office
: |
MUMBAI Neptune House, 2nd Floor, Opp. Bandra Talkies, SV Road,
Mumbai – 400050, Maharashtra, India DELHI 8 Community Centre, Saket, New Delhi– 110017, India BANGALORE Grace Mansion, 25 Infantry Road, Bangalore – 560001, Karnataka KOLKATA 100, Park Street, Laxmi Nivas, 2nd Floor, Kolkata , West
Bengal, India
USA Arvind Worldwide (USA) Inc., 130, West 42nd Street, Suite
No. 603, 6th floor, NY 10036, New York, USA SRI LANKA Sri Lanka Liason Office BANGLADESH C/o Sidko Limited.
Asoka Spintex Premises, Naroda Road,
Ahmedabad – 380025, Gujarat |
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Other Division
: |
Santej Road, Near Khatrej, Taluka Kalol, Dist Gandhinagar - 382721 Khakhi Division Knits Division Santej Road, Near Khatrej, Taluka Kalol, Dist Gandhinagar - 382721
Ankur Textiles Arvind Brands Limited Du Parc Trinity 8th Floor, 17, M. G. Road,Bangalore – 560001, Karnataka, India Tel: 91-80-22973131 Denim Division Tel: 91-79-22203030 |
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Garment Export
Division : |
10th Floor, Du Parc Trinity, 17 MG Road, Bangalore -560001, Karnataka,
India |
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Tel No.: |
91-80-251123900/5 |
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Fax No.: |
91-80-251123909 |
International
Offices
DIRECTORS
|
Name: |
Mr. Arvind N. Lalbhai |
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Designation: |
Chairman |
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Age: |
84 Years |
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Qualification: |
Science Graduate |
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Date of
Joining: |
March, 1974 |
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Other
Directorship: |
Ø
Arvind Products Limited – Chairman Ø
Atul Limited – Chairman Ø
Birla VXL Limited – Director Ø
JK Industries Limited – Director Ø
Lokprakashan Limited – Director |
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Name: |
Mr. Sanjay S. Lalbhai
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Designation: |
Managing Director |
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Age: |
51 Years |
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Qualification: |
Science Graduate, Master’s Degree in Business Management |
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Date of
Joining: |
March, 1977 |
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Other Directorship: |
Ø
Arvind Clothing Limited – Director Ø
Arvind Fashions Limited – Director Ø
Arvind Brands Limited – Director Ø
Arvind Products Limited – Director Ø
Amtrex Hitachi Appliances Limited – Chairman Ø
Anagram Wellington Asset Management Company Limited – Director Ø
Anagram Housing Finance Limited – Director Ø
H. K. Finechem Limited – Director Ø
Amol Dicalit Limited – Director Ø
Gujarat Infrastructure Limited – Director Ø
Mahindra Gujarat Tractor Limited - Chairman |
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Name: |
Mr. Jayesh K. Shah
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Designation: |
Director and Chief Financial Officer |
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Age: |
44 years |
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Qualification: |
Commerce Graduate and Chartered Accountant |
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Date of
Joining: |
01.07.1993 |
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Name: |
Mr. Jaithirth Rao
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Designation: |
Director |
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Age: |
52 years |
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Qualification: |
Masters Degree form the University of Chicago and IIM- Ahmedabad |
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Name : |
Mr. Deepak M Satwalekar |
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Designation : |
Director |
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Name : |
Mr. V. K. Pandit |
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Designation : |
Nominated by IDBI |
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Name : |
Mr. K M Jaya Rao |
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Designation : |
Nominee (ICICI) |
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Name : |
Mr. R V Bhimani |
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Designation : |
Company Secretary |
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Name : |
Mr. Sudhir Mehta |
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Designation : |
Director |
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Name : |
Mr. Tarun Sheth |
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Designation : |
Director |
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Name : |
Mr. S. R. Rao |
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Designation : |
Nominee (Exim) |
MAJOR SHAREHOLDERS
/ SHAREHOLDING PATTERN
As on 30th
June, 2006
|
Names
of Shareholders |
No. of Shares |
Percentage of Holding |
|
Shareholding of Promoter and Promoter Group |
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Indian
|
|
|
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Individuals / Hindu Undivided Family |
296460 |
0.14 |
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Bodies Corporate |
71195012 |
34.14 |
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Mutual Funds / UTI |
12669487 |
6.08 |
|
Financial
Institutions/Banks |
1980089 |
0.95 |
|
Insurance Companies |
17490494 |
8.39 |
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Foreign Institutional Investors |
50091510 |
24.02 |
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Any Other(specify)Foreign Banks/IFCW |
1315996 |
0.63 |
|
Bodies Corporate |
8334684 |
4.00 |
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Individual shareholders holding nominal share capital up to Rs. 0.1
Millions |
38703010 |
18.56 |
|
Individual
shareholders holding nominal share capital in excess of Rs. 0.1 Millions |
4392834 |
2.11 |
|
Any
Other (specify) NRIs/OCBs |
2067173 |
0.99 |
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Total |
208536749 |
100.00 |
BUSINESS DETAILS
|
Line of
Business : |
Manufacturers and
Marketers of Cloth (including fents, rags, etc.), Yarn, Waste, EPABX Lines
and Garments]. |
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Products : |
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GENERAL
INFORMATION
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No. of
Employees : |
Around 6000 |
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Bankers : |
v State Bank of Saurashtra, Ahmedabad,
Gujarat v State Bank of India, Ahmedabad, Gujarat v Bank of Baroda, Ahmedabad, Gujarat v UCO Bank, Ahmedabad, Gujarat v State Bank of Patiala, Ahmedabad, Gujarat v Credit Lyonnais, Ahmedabad, Gujarat v Deutsche Bank, Ahmedabad, Gujarat v HDFC Bank, Ahmedabad, Gujarat v The Bank of Nova Scotia, Ahmedabad,
Gujarat v Standard Chartered Grindlays Bank,
Ahmedabad, Gujarat v Bank of America, Ahmedabad, Gujarat v ICICI Bank Limited, Ahmedabad, Gujarat |
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Banking Relations : |
Satisfactory |
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Auditors : |
Sorab S. Engineer
& Company Chartered
Accountants |
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Address : |
381, Dr. D.
Naoroji Road, Fort, Mumbai - 400 023, Maharashtra, India |
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Associates : |
v Anup Engineering Limited Engaged in manufacturing of equipments for
chemical, petrochemical,
pharmaceutical, fertilizer, dairy and allied industries. v Lalbhai Realty Limited Engaged in real estate
business v Amtrex Appliances Limited Engaged in manufacturing of room air conditioner. It has technical collaboration with
Hitachi, Japan. v Arvind Intex Limited v Anagram Finance Limited v Arvind Polycot Limited v Atul Products Limited v Amtrex Appliances Limited v Lalbhai Exports Limited |
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Subsidiaries : |
v Asman Investments Limited v Arvind Products Limited v Arvind Brands Limited v Arvind Clothing Limited v Arvind Fashions Limited v Asman Investments Limited v Lifestyle Fabrics Limited v Omnitalk Wireless Solutions Limited v Syntel Telecom Limited v Arvind Worldwide Inc. USA v Arvind Worldwide (M) Inc., Mauritius v Arvind Overseas (M) Limited, Mauritius v Big Mill Lauffenmuhle GmbH, Germany v Arvind Spinning Limited |
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CAPITAL STRUCTURE
Authorised Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
|
|
|
|
|
230000000 |
Equity Shares |
Rs. 10/- |
Rs. 2300.000 millions |
|
9000000 |
Preference Shares
|
Rs.100/- |
Rs.
900.000 millions |
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Total |
|
Rs. 3200.000 millions |
Issued, Subscribed & Paid-up Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
|
|
|
|
|
265480000 |
Equity Shares |
Rs. 10/- |
Rs. 2654.800millions |
FINANCIAL DATA
[all figures are in Rupees Millions]
ABRIDGED BALANCE
SHEET
|
SOURCES
OF FUNDS |
31.03.2006 |
31.03.2005 |
31.03.2004 |
|
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SHAREHOLDERS FUNDS |
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|
|
|
|
1] Share Capital |
2654.800 |
2614.000 |
2648.700 |
|
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2] Reserves &
Surplus |
12664.700 |
10197.500 |
9164.600 |
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NETWORTH
|
15319.500 |
12811.500 |
11813.300 |
|
|
LOAN FUNDS |
|
|
|
|
|
1] Secured Loans |
16883.800 |
14912.300 |
11073.300 |
|
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2] Unsecured
Loans |
1529.900 |
1911.900 |
2480.700 |
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TOTAL BORROWING
|
18413.700 |
16824.200 |
13554.000 |
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|
|
|
|
|
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TOTAL
|
33733.200 |
29635.700 |
25367.300 |
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APPLICATION OF FUNDS
|
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|
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|
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FIXED ASSETS [Net Block]
|
13096.000 |
13816.900 |
14514.900 |
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Capital work-in-progress
|
795.900 |
1030.700 |
456.200 |
|
|
|
|
|
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INVESTMENT
|
3481.000 |
1530.200 |
1464.000 |
|
|
|
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CURRENT ASSETS, LOANS & ADVANCES
|
|
|
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Inventories
|
4792.600
|
5111.500
|
3803.800 |
|
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Sundry Debtors
|
3682.800
|
3191.100
|
2354.000 |
|
|
Cash & Bank Balances
|
95.900
|
128.700
|
127.000 |
|
|
Loans & Advances
|
12286.400
|
7585.000
|
4455.600 |
Total Current Assets
|
20857.700 |
16016.300 |
10740.400 |
|
Less : CURRENT
LIABILITIES & PROVISIONS
|
|
|
|
|
|
|
Current Liabilities
|
4046.500
|
2434.700
|
1734.900 |
|
|
Provisions
|
450.900
|
323.700
|
73.300 |
Total Current Liabilities
|
4497.400 |
2758.400 |
1808.200 |
|
Net Current Assets
|
16360.300 |
13257.900 |
8932.200 |
|
|
|
|
|
|
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TOTAL
|
33733.200 |
29635.700 |
25367.300 |
|
PROFIT & LOSS
ACCOUNT
|
PARTICULARS |
31.03.2006 |
31.03.2005 |
31.03.2004 |
Sales Turnover [including other income]
|
16397.000 |
17397.900 |
15647.700 |
|
|
|
|
|
Profit/(Loss) Before Tax
|
1363.800 |
1293.000 |
1013.000 |
Provision for Taxation
|
92.200 |
19.500 |
45.500 |
Profit/(Loss) After Tax
|
1271.600 |
1273.500 |
967.500 |
|
|
|
|
|
Total Expenditure
|
12146.300 |
16104.900 |
14634.700 |
QUARTERLY /
SUMMARISED RESULTS
|
PARTICULARS |
30.06.2006 (1st Qtr.) |
30.09.2006 (2nd Qtr.) |
31.12.2006 (3rd Qtr.) |
|
Sales Turnover |
3545.700 |
3932.100 |
4478.700 |
|
Other Income |
47.500 |
5.600 |
1152.500 |
|
Total Income |
3593.200 |
3937.700 |
5631.200 |
|
Total Expenditure |
2802.200 |
3119.400 |
3827.400 |
|
Operating Profit |
791.000 |
818.300 |
1803.800 |
|
Interest |
348.400 |
377.900 |
398.600 |
|
Gross Profit |
442.600 |
440.400 |
1405.200 |
|
Depreciation |
372.400 |
382.700 |
347.100 |
|
Tax |
3.200 |
2.200 |
10.200 |
|
Reported PAT |
67.000 |
55.500 |
1047.900 |
200606 Quarter 1
Notes
EPS is Basic & Diluted Status of Investor Complaints for the quarter
ended June 30, 2006 Complaints Pending at the beginning of the quarter Nil
Complaints Received during the quarter 19 Complaints disposed off during the
quarter 19 Complaints unresolved at the end of the quarter Nil 1. The limited
review or above unaudited financial results as required under Clause 41 of
listing agreement has been carried out by statutory auditors. 2. The above
results were reviewed by the Audit Committee and taken on record by the Board
of Directors at their meeting held on July 27, 2006. 3. In accordance with the
transitional provisions of the Accounting Standard -15 (Revised-2005) on
'Employee Benefit issued by The Institute of Chartered Accountants of India,
effective from April 01 2006, additional liability on account of compensated leave
of employees will be adjusted against the opening balance of Revenue Reserve at
the year end in view of the present Accounting Policy followed by the Company,
no adjustment is necessary for any other retirement benefits. 4. In view of the
Composite Scheme of Arrangement proposed by the Company, pending approvals, the
Company does not expect any liability towards Deferred Tax and as such no
provision is considered necessary for the quarter. Further in view of proposed utilization of Share Premium Account under the said
Scheme no provision is considered necessary for Lease Expenses amounting to Rs
9.8 million for the quarter. 5. Other Income for the quarter includes profit on
sale of investment of Rs 42.60 million 6. Figures of the previous quarter/year
have been regrouped wherever necessary.
200609 Quarter 2
Notes
Expenditure Includes (Increase)/Decrease in Stock in Trade Rs
(209.60)million Consumption of Raw Materials & Finished Goods Purchased Rs 1437.00
million Staff Cost Rs 387.50 million Power and Fuel Rs 411.00 million Stores
Consumption Rs 467.40 million Other Expenditure Rs 580.30 million Foreign
Exchange (Gain)/Loss Rs 45.80 million Tax Includes Provision for Current Tax Rs
6.20 million Fringe Benefit Tax Rs 2.20 million MAT Credit Entitlement
Rs(6.20)million EPS is Basic & Diluted Status of Investor Complaints for
the quarter ended September 30, 2006 Complaints Pending at the beginning of the
quarter Nil Complaints Received during the quarter 24 Complaints disposed off
during the quarter 24 Complaints unresolved at the end of the quarter Nil 1.
The limited review of above unaudited financial results as required under
Clause 41 of listing agreement has been carried out by statutory auditors. 2.
The above results were reviewed by the Audit Committee and taken on record by
the Board of Directors at their meeting held on October 31, 2006. 3. In
accordance with the transitional provisions of the Accounting Standard -15
(Revised-2005) on 'Employee Benefit issued by The Institute of Chartered
Accountants of India, effective from April 01 2006, additional liability on
account of compensated leave of employees will be adjusted against the opening
balance of Revenue Reserve at the year end. In view of the present Accounting
Policy followed by the Company, no adjustment is necessary for any other
retirement benefits. 4. In view of the Composite Scheme of Arrangement proposed
by the Company, pending approvals, the Company does not expect any liability
towards Deferred Tax and as such no provision is considered necessary for the
quarter. Further in view of proposed utilisation of Share Premium Account under
the said Scheme no provision is considered necessary for Lease Expenses
amounting to Rs 9.80 million for the quarter and Rs 19.60 million for the six
months. 5. Figures of the previous quarter/year have been regrouped wherever
necessary.
200612 Quarter 3
Notes
Expenditure Includes (Increase)/Decrease in Stock in Trade Rs
(348.20)million Consumption of Raw Materials & Finished Goods Purchased Rs
1558.80 million Staff Cost Rs 579.20 million Power and Fuel Rs 495.70 million
Stores Consumption Rs 484.60 million Other Expenditure Rs 999.00 million
Foreign Exchange (Gain)/Loss Rs (56.70)million Tax Includes Provision for
Current Tax Rs 94.60 million Fringe Benefit Tax Rs 10.20 million MAT Credit
Entitlement Rs(94.60)million EPS is Basic & Diluted Status of Investor
Complaints for the quarter ended December 31, 2006 Complaints Pending at the
beginning of the quarter Nil Complaints Received during the quarter 30
Complaints disposed off during the quarter 30 Complaints unresolved at the end
of the quarter Nil 1. The limited review of above unaudited financial results
as required under Clause 41 of listing agreement has been carried out by
statutory auditors. 2. The above results were reviewed by the Audit Committee
and taken on record by the Board of Directors at their meeting held on January
25, 2007. 3. In accordance with the transitional provisions of the Accounting
Standard -15 (Revised-2005) on 'Employee Benefit issued by The Institute of
Chartered Accountants of India, effective from April 01 2006, additional
liability on account of compensated leave of employees wil be adjusted against
the opening balance of Revenue Reserve at the year end. In view of the present
Accounting Policy followed by the Company, no adjustment is necessary for any
other retirement benefits. 4. Pursuant to the Composite Scheme of De-merger of
Garment Business Division of Arvind Brands Limited (a wholly owned subsidiary company) and Amalgamation of Arvind Fashion Limited (a wholly owned subsidiary company) with
respective effect form April 01, 2005, with Arvind Mills Limited sanctioned by the H'bel High Court of
Gujarat, the results of the Company for the quarter and nine months incude
figures of Demerged Division and amalgamated company for the same period
respectively and hence not comparable with figures of previous quarter/period
5. Provision for Deferred Tax if any will be made at the end of the year. 6.
Pursuant to Composite Scheme of Arrangement Sanctioned by the Hon'ble High
Court of Gujarat the Company has utilized Share Premium to
the extent of Rs 2482.40 million. 7. The Company has, based on valuation made
by approved values, revalued the fixed assets of the Company as at October 01,
2006 except the Garment Division acquired under the composite scheme. The net
increase amounting to Rs 245.20 million has been credited to Revaluation
Reserve. 8. Non recurring and Extra Ordinary items for the quarter represent
(a) Profit on Sale of Business of the Amalgamated Company amounting to Rs
106.93 crores (Net of Provisions) and (b) One time CENVAT reversal of Rs 58.3
millions due to availment of Zero Duty Option. 9. Figures of the previous quarter/year
have been regrouped wherever necessary.
KEY RATIOS
|
PARTICULARS |
31.03.2006 |
31.03.2005 |
31.03.2004 |
|
Debt Equity Ratio |
1.25 |
1.23 |
1.20 |
|
Long Term Debt Equity Ratio |
0.84 |
0.86 |
0.90 |
|
Current Ratio |
1.94 |
1.95 |
1.79 |
|
TURNOVER RATIOS |
|
|
|
|
Fixed Assets |
0.75 |
0.82 |
0.73 |
|
Inventory |
3.28 |
3.82 |
3.86 |
|
Debtors |
4.72 |
6.14 |
6.28 |
|
Interest Cover Ratio |
2.02 |
2.08 |
1.74 |
|
Operating Profit Margin (%) |
26.18 |
23.38 |
26.35 |
|
Profit Before Interest and Tax Margin (%) |
16.63 |
14.62 |
16.15 |
|
Cash Profit Margin (%) |
17.39 |
16.24 |
16.76 |
|
Adjusted Net Profit Margin (%) |
7.83 |
7.48 |
6.56 |
|
Return on Capital Employed (%) |
8.52 |
9.05 |
9.64 |
|
Return on Net Worth (%) |
9.17 |
10.59 |
8.39 |
STOCK PRICES
|
Face Value |
Rs. 10/- |
|
High |
Rs. 46.50/- |
|
Low |
Rs. 44.55/- |
LOCAL AGENCY
FURTHER INFORMATION
The company was
incorporated on 1st June, 1931 at Ahmedabad in Gujarat having Company
Registration Number 93.
Subject is the
flagship company of Lalbhai Group, which was incorporated to manufacture cotton
textiles.
Subject for long
has been one of the leading cotton manufacturing companies in the country
producing conventional suiting fabrics, shirting fabrics and sarees and had
moved into denim manufacturing in 1980's.
Subject has a wide
product range, which includes Suitings, Shirtings, Sarees and Dress Materials
and has diversified into Denim manufacture and is the 5th largest
denim manufacturer in the world.
Subject has tie-ups
with H I Lee and Cluett International, USA to manufacture denim jeans and Arrow
shirts respectively.
The denim project
went on stream in 1991.
Subject's recent tie-ups
include its technical and marketing alliance with F M Hammerie Von-Ogensever
Waltungs, Australia, the USA based Alamac Knit Fabrics and Spinners and Webexi
Dict Turt, Switzerland. Other brand
portfolio are Flying Machine, Ruggers, Newport, Ruf-and-Tuf, Excalibur, etc.
During 1985 the
company diversified into electronics by setting up a plant to manufacture
electronic telephone exchanges (EPABX). It also entered into marketing
pharmaceutical products and B&W and colour television sets under the name
Pyramid. Rohit Mills, a sick textile
unit was merged with the company with effect from 1st November, 1996
and renamed Asoka Cotsyn division. The
company now proposes to merge Arvind Intex, a subsidiary company engaged in
cotton spinning activities, in which it holds a stake of 49.89%.
The company had
also ventured into production of video magnetic tape of VHS Standards in
1988. In this regard, the company had
signed an agreement with Victor Company of Japan for technical assistance and
licence for production and marketing of videotapes.
The company has
taken over the management of Nagri Mills Company Limited and proposed to
modernize the existing capacity.
The green field
textile project at village Santej with a capacity of processing 34 million meters
per annum had commenced commercial production with effect from 1st April, 1999.
It also started operating two captive Co-generation Power plants after test
runs in the 2nd and 3rd quarter of 1998-99.
The company
commissioned its' shirtings facility at Santej during the first quarter of 2000
and the Knits facility was commissioned in the third quarter of 2000.
The company was
also planning a rights issue and sale of non-core assets if lenders agree to
the restructuring proposal prepared by KSA Techno Pak, an Indo-US consultant
and Jardine Fleming, now Chase Jardine Fleming.
It intends to raise
Rs. 1000 millions through the rights issue and Rs. 750 millions through sale of
assets, mostly real estate. The money would be used to buy back debt. The restructuring
proposal is strictly subject to the lenders agreeing to sell back a minimum of
Rs. 5500 millions debt and the company would raise new debt to part-finance the
buyback.
HISTORY
Arvind Mills (AML). the flagship company of Lalbhai Group
was incorporated in 1931 to manufacture cotton textiles. AML, for long has been
one of the leading cotton manufacturing company in the country producing
conventional suiting fabrics, shirting fabrics, sarees has moved into denim
manufacturing in 1980's is currently the largest denim manufacturer in the
world.
The company with both international and local brands is one of the leading
player in the domestic ready to wear garment industry. The company has the
rights to market international brands such as Arrow, Lee, Flying Machine etc in
India. The company has also owns popular brands such as Newport, Ruggers,
Excalibre and Ruf & Tuf. It has tied-up with H I Lee for Lee brand in denim
Jeans and with Cluett International, US, for Arrow Shirts for manufacturing and
marketing in India.
Subject's recent tie-ups include its technical and marketing alliance with F M
Hammerie Von-Ogensver Waltungs, Austria, the US-based Alamac Knit Fabrics &
Spinners and Webexi Dict Turt, Switzerland. The denim project went on stream in
1991. Subjectin 1985 has diversified into electronics by setting up a plant to
manufacture electronic telephone exchanges (EPABX). It also entered into
marketing pharmaceutical products and B&W and colour television sets under
the name Pyramid.
The company has taken over the management of Nagri Mills Co. Limited. The
company has merged Rohit Mills, a sick textile unit with it effective from Nov
1, 1996. and renamed Rohit mills as Asoka Cotsyn. The green field textile
project at village Santej with a capacity of processing 34 million meters per
annum has commenced commercial production with effect from 1st April, 1999. It
also started operating two captive Co-generation Power plants after test runs
in the 2nd and 3rd quarter of 1998-99.
The Company commissioned its Shirtings facility at Santej during the first
quarter of 2000 and the Knits facility was commissioned in the third quarter of
2000. The company intends to raise Rs 1000 million through the rights issue and
Rs 750 million through sale of assets, mostly real estate. The money would be
used to buy back debt. The restructuring proposal is strictly subject to the
lenders agreeing to sell back a minimum of Rs 5500 million debt and the company would raise new debt to
part-finance the buyback.
It has acquired a sick cotton mill Ankur Textiles. Arvind Overseas (Mauritius)
Limited, a subsidiary of subject is setting up a 2.1 Million pieces p. a
garment manufacturing plant which is expected to be commissioned during
2003-04. Subject has set up a new 100% subsidiary 'Arvind Spinning Limited' to
manufacture yarn in Mauritius for AOML. In order to overcome the debt burden
the company made a Debt Restructuring programme and as per the scheme it made
payment of Rs.4630 million to the lenders who opted for Debt buyback scheme.
Subsequently the total debt stands reduced to Rs.1340 million as on March,
2003.
In 2004-05 the company has wound-up the business of Arvind Overseas (Mauritius)
Limited and Arvind Spinning Limited based at Mauritius. Further these plants
are moved to India. Asman Investments Limited and Lifestyle Fabrics do not have
any significant operating business. The company has planned to acquire the
entire stake of Arvind Brands Limited, which was held by ICICI Ventures and
make its a wholly owned subsidiary. The value of the 53.4% stake has been fixed
at Rs.1060 million s and this acquisition will be completed by the end of first
quarter of the succeeding year.
The company has set up a Textile Park at Santej with 102 looms being installed
as part of the Phase I. Further the Park has a capacity of supplying around
18.5 million meters of fabric per annum. The company has planned to expand its
denim operations through a new plant with a capacity of 10 million meters per
annum. The process of de-bottlenecking certain production processes of Shirting
Fabric and setting up the out sourcing model has been as per schedule.
During 2004-05 the company has enhanced its installed capacity of Spindles,
Rotors, Stitching Machines, Knitting Machines and Garments by 11696 Nos, 264
Nos, 144 Nos, 1 Nos and 1000000 Pcs. With this expansion the total installed
capacity of Spindles, Rotors, Stitching Machines, Knitting Machines and
Garments has increased to 107040 Nos, 7824 Nos, 485 Nos, 63 Nos and 2000000 Pcs.
OPERATIONS
The directors are pleased to inform you that financial year
2005-06 has been a good year for the company. The company's performance was at
par with the previous financial year and has achieved suitable results.
Sales and operating income was at Rs.15920 Million s as against Rs.16550
Million s in the previous financial year, a drop of 4%. This is mainly on back
of volume pressure on denim and price pressure on both denim & shirting.
Operating profit was Rs.4080 Million s as against Rs.3810 Million s in the
previous financial year, a growth of 7%. The increase in earnings compared to
the revenues is due to the lower Cotton and Energy costs during the current
financial year.
The key developments of the year are summarized below:
v The Jeans plant
with an installed capacity of 4 Mn Jeans commenced its operations
v Volume &
price pressure on Denim in the Domestic market
v A new Denim
collection was launched which was aimed at the Super Premium brands of the USA,
v Europe, Japan
& Korea. The response to this collection was good and it has opened new
avenues for the Denim division.
v Cotton cost was
less which benefited us throughout the year.
v The company
filed two patents during the year for improvement in spinning technology and
processing of fibers other than cotton.
v The company has
registered a profit after tax at Rs.1270 Million s, which remains unchanged
compared
v to the previous
financial year.
v A detailed
analysis of the financial results is given in the Management Discussion and
Analysis Report which forms part of this report.
FINANCE
During the year, the company has prepaid Term Loans installments amounting to
Rs.2190 million s. The prepayment was made from the fresh borrowings of Rs.500
million s at lower rate of interest and balance out of the internal accruals.
This is over and above the scheduled repayment of Term Loan installments
falling due during the current year. The Company has also made fresh borrowing
of Rs. 19000 millions for funding capital expenditure and other requirements.
Long Term Debt including lease of the company stands reduced from Rs. 10980
million s as on 31st March 2005 to Rs. 10700 million s as on 31st March 2006.
SUBSIDIARIES
A detailed discussion on subsidiary companies and their performance during the year
is contained in the Management Discussion and Analysis Report which forms part
of this Report.
Pursuant to Accounting Standard
AS-21 issued by the Institute of Chartered Accountants of India the Company has
prepared Consolidated Financial Statements of the Company and its subsidiaries
are included in the Annual Report.
In view of closure of the business and disposal of the business undertaking,
the accounts of Arvind Overseas (Mauritius) Limited, Arvind Spinning Limited
and Lifestyle Fabrics Limited have not been prepared on the going on concern
basis. Hence, the accounts of these subsidiary companies have not been
consolidated with accounts of the company as per the provisions of the
Accounting Standard 21 relating to consolidation of accounts.
CORPORATE GOVERNANCE
The Company is committed to the tenets of good Corporate Governance and has
taken adequate steps to ensure that the requirements of Corporate Governance as
laid down in Clause 49 of the Listing Agreement are complied with.
A separate report on Corporate Governance and a Management Discussion and
Analysis Report are being published as a part of the Annual Report of the
Company.
The Auditors of the Company have certified that conditions of Corporate
Governance as stipulated under Clause 49 of the Listing Agreement are complied
by the Company and their Certificate is annexed to the Report on Corporate
Governance.
FINANCIAL PERFORMANCE AND
REVIEW
The analysis and comparison of the financials shall bring forth the positives
in growth in denim volumes in the first half of the year and sudden drop in
realizations in the second half of the year, a detailed analysis follows:
Sales & Operating Income
The Revenue numbers show a decline of 4% over the last year primarily due to lower
volume of denim off take and significant drop in prices during second half of
the current year. In spite of the decline in both volume and realization, the
Denim constituted 60% of the total where as shirting and garments contributed
19% and 12% respectively. The shirting and knits business continue to be
stable. With the 4 Million pieces jeans manufacturing capacity in Bangalore
becoming operational share of garments in overall sales will go up in the
coming year.
The 19% drop in raw material cost as compared to last year was both on account
of lower volume of denim as well an impact of low cost of cotton through the
year.
OPERATIONS REVIEW AND PRODUCT
PERFORMANCE
The company continues to have the following product line under its textile
umbrella:
Fabrics - Denim, Khakis, Shirting, Knits
Garments - Shirts, Jeans,
trousers and knitted garments
The current financial year was
characterized by a robust demand and realization in the first half of the year.
The second half of the year was subdued in terms of volume but suffered
substantial reverses in the realization. The over supply situation in the
Indian market led to a sharp drop in realizations in the domestic market in the
second half of the financial year. The company had beginning middle of last
year embarked on a programme of offering premium denim to the high priced
brands in US, Europe and Japan. The initiative has had few successes and now
the company is moving towards creating a front end infrastructure in both
Europe and US to provide further impetus to these initiatives. The volumes in
the middle of the year suffered a setback due to lower off take by certain key
US Brands; this was primarily due to inventory build up at their retail end.
The volumes from these brands are returning to normal levels. While the demand
had slowed down a bit the situation in the region got affected due to
oversupply and the volumes in the commodities market are also under
pressure.
Shirting volumes which had suffered in the second half of the previous financial
year have returned to normal levels during current financial year. Further with
more and more sales moving towards vertical route, the sales of fabric to
outside party has come down. Our product offering has been accepted as mid to
premium product and we have been able to initiate business at large scale with
few of the super premium US brands during the year.
Garments
Shirts factory in Bangalore which suffered in the last two quarters of
the previous financial year and the first half of the current financial year
has stabilized. Currently the plant is running at optimum utilization at
current product mix. The conversion charges earned by the division are one of
the highest being paid in the country. A separate ancillary unit has been set up
to serve the need of Indian brands, which are now outsourcing their
requirement.
Knits garmenting volume for the current year grew by 11% and business has
achieved stability in terms of quality and productivity. Improved internal
efficiencies have also contributed in better margins in spite drop in overall
price levels.
The newly commissioned Jeans plant is just into the operation for two months of
current quarter and will contribute to both top line and the bottom line from
the first quarter of next financial year. The plant has one of the best laundry
in the country and has its unique selling proposition. The plant is currently
in operation at full capacity on current productivity levels.
Outlook
The near term outlook for the company remains muted due to subdued denim volume
and realization. The shirting business is also likely to witness some price
pressure. The earnings are likely to be impacted by the lower than the required
availability of Natural Gas for power generation from the contracted party.
Whereas the revenue impetus would come from garment business and rapidly
growing brands business.
In medium to long term companies dependency on the core fabric business will
come down. The garments business is likely to be expanded by about 80-85% every
year and the Brands business will grow at an average rate of 30-35%. At these
rates the core fabric business will start driving less than 40% of total
revenues and less than 50% of the total earnings in three to five years
time.
The Evolution
1930 was a year the world suffered a traumatic depression. Companies across the
globe began closing down. In UK and in India the textile industry in particular
was in trouble. At about this time, Mahatma Gandhi championed the Swadeshi
Movement and at his call, people from all India began boycotting fine and
superfine fabrics, which had so far been imported from England. In the midst of
this depression one family saw opportunity. The Lalbhais reasoned that the
demand for fine and superfine fabrics still existed. And any Indian company
that met this demand would surely prosper. The three brothers, Kasturbhai,
Narottambhai and Chimanbhai decided to put up a mill to produce this superfine
fabric. Next they looked around for state-of-the-art machinery that could produce
such high quality fabric. Their search ended in England. The best technology of
that time was acquired at a most attractive price. And a company called
Subjectwas born.
Subjectstarted with a share capital of Rs 2,525,000 ($55,000) in the year 1931.
With the aim of manufacturing the high-end superfine fabrics Arvind invested in
very sophisticated technology. With 52,560 ring spindles, 2552 doubling
spindles and 1122 looms it was one of the few companies in those days to start
along with spinning and weaving facilities in addition to full-fledged
facilities for dyeing, bleaching, finishing and mercerizing. The sales in the
year 1934, three years after establishment were Rs 4.576 million s and profits
were Rs 0.282 million s. Steadily producing high quality fabrics, year after
year, Arvind took its place amongst the foremost textile units in the country.
In the mid 1980’s the textile industry faced another major crisis. With the
power loom churning out vast quantities of inexpensive fabric, many large composite
mills lost their markets, and were on the verge of closure. Yet that period saw
Arvind at its highest level of profitability. There could be no better time,
concluded the Management, for a rethink on strategy. The Arvind management
coined a new word for it new strategy – Renovision. It simply meant a new way
of looking at issues, of seeing more than the obvious and that became the
corporate philosophy. The national focus paved way for international focus and
Arvind’s markets shifted from domestic to global, a market that expected and
accepted only quality goods. An in-depth analysis of the world textile market
proved an eye opener. People the world over were shifting from synthetic to
natural fabrics. Cottons were the largest growing segments. But where
conventional wisdom pointed to popular priced segments, Renovision pointed to
high quality premium niches. Thus in 1987-88 Arvind entered the export market
for two sections. Denim for leisure and fashion wear. And high quality fabric
for cotton shirtings and trousers. By 1991 Arvind reached 1600 million meters
of Denim per year and it was the third largest producer of denim in the world.
In 1997 Arvind set up a state-of-the-art shirting, gabardine and knits facility,
the largest of its kind in India, at Santej. With Arvind’s concern for
environment a most modern affluent treatment facility with zero affluent
discharge capability was also established.
Year 2005 is a watershed year for textiles. With the mulitifiber agreement
getting phased out and the disbanding of quotas, international textile trade is
poised for a quantum leap. In the domestic market too, the rationalizing of the
cenvat chain and the growth of the organized retail industry is likely to make textiles
and apparel see an explosive growth.
Arvind has carved out an aggressive strategy to verticalize its current
operations by setting up world-scale garmenting facilities and offering a
one-stop shop service, of offering garment packages, to its international and
domestic customers.
With the Indian economy poised for rapid growth, Arvind brands with its
international licenses of Lee, Wrangler, Arrow and Tommy Hilfiger and its own
domestic brands of Flying Machine, Newport, Excalibur and Ruf & Tuf, is
setting it’s vision on becoming the largest apparel brands company in India.
The company with
both international and local brands is one of the leading players in the
domestic ready-to-wear garment industry.
It has the rights to market international brands such as Arrow, Lee,
Flying Machine, etc. in India. It also
owns popular brands such as Newport, Ruggers, Excalibre and Ruf & Tuf.
It tied up with H I Lee for Lee brand in Denim Jeans and with Cluett
International, USA for Arrow Shirts for manufacturing and marketing in India.
The company is in
trade terms with the following:
v
Atul
Enterprises
v
Albaj
Engineering Corporation
v
B. Trikamlal
& Company
v
Climax
Marketing Private Limited
v
Fourwent
Engineering Company
v
Geekay
Corporation
v
Chamunda
Fabrication
v
Chipko Bonding
Systems
v
Siddhi
Polymers Private Limited
v
Archem
Industries
v
Arjyot
Chemicals Private Limited
v
Synergy
Chlorinations Private Limited
v
Bhagat
Engineering Works
v
Bhavik
Industries
v
Shree Laxmi
Engineering
v
Gemini
Polyplast Industries
v
Sun Industries
v
Khodiyar
Industries
v
R-Tex
Enterprise
As Per Web Details
Profile
The
Subjectwas set up with the pioneering effort of the Lalbhai brothers in 1931.
With the best of technology and business acumen, Arvind has become a true Indian
multinational, having chosen to invest strategically, where demand has been
high and quality required has been superlative. Today, The Subject is the
flagship company of Rs.20 billion (US$ 500 million) Lalbhai Group.
Subjecthas set the pace for changing global customer demands for textiles and
has focused its attention on select core products. Such a focus has enabled the
company to play a dominant role in the global textile arena. With its presence
across the textile value chain, the company endeavors to be a one-stop shop for
leading garment brands.
Forevision and Technology has brought Arvind to be one of the top three
producers of Denim in the world, and on its way becoming the Global Textile
Conglomerate. Arvind is already making its presence felt in Shirting’s, Knits
and Khakhis fabrics apart from being all set to create ripples in the ready to
wear Garments world over.
The company's fixed
assets of important value include land freehold and leasehold, buildings,
machinery, machinery given on lease, motor vehicles and office machinery and
dead stock.
Press
Releases
Arvind
Mills net at Rs 360 million
Bureau
AHMEDABAD:
Textile major Subject has reported a net profit of Rs 360 million on a turnover of Rs 414 million for the third quarter of the current year.
The sales have risen 19 per cent during the October-December quarter of 2004-05
as compared with Rs 3490 million in the
same period last year. The net profit has jumped from Rs 190 million in the last financial year to Rs 360 million this year, a company press release said here
on Thursday.
Arvind Mills to
relocate Mauritius plant
Their Corporate Bureau
13 August 2004
Mumbai: Arvind Mills
is planning to shift its existing denim and garments manufacturing facilities
from Mauritius to India by December 2004, it said in a release.
The company,
through its subsidiary companies, has eight million meters of denim
manufacturing facility and two million pieces of jeans plant at Mauritius and
the total investment was to the tune of Rs 400 million.
The company would
augment its denim manufacturing capacity to 105 million meters in the country
after the plant is shifted, the release said.
The company is also
setting up a 2.1 million jeans plant at Bangalore,
which would be increased to about four million pieces on account of shifting of
capacities from Mauritius, it added.
Arvind Mills to
set up new mills
Pradeep Rane
4 May 2004
As part of its
efforts to take advantage of dismantling of quota regime from January 2005,
textile major Subject is planning to set up new plants in Bangalore and
Ahmedabad. The company is raising its garments capacity to 14.4 million pieces
by end of FY 2005.
The plan includes
capacity addition in jeans, khakis and an expansion of its knitted garments
factory at Ahmedabad. Arivind is taking several initiatives to capture the
enormous upside expected out of WTO opportunities post 2005.
To raise its
garments capacity to 14.4 million pieces by end of FY 2005, the company is
plannig to set up new facilities - a 2.1 million pieces jeans factory, and a
1.5 million pieces khakis factory in Bangalore. Both these are expected to be
completed by end-FY 2005. Also, the existing knitted garments factory at
Ahmedabad is being expanded to 4.2-million piece capacity.
"Clearly, AML
is on track with its several initiatives targeted at capturing the enormous
upside expected out of the dismantling of the quota regime effective
Jan-2005," says a leading securities research firm.
Also the textile reconstruction fund
notified by the central government would offer AML an opportunity to further
reduce interest costs. The scheme would help the company to reduce its
effective interest rate for textile companies to 8-9 per cent in order to
enhance its competitive edge. AML has an opportunity to get Rs6 billion of its
existing borrowings refinanced under this scheme, leading to an annual saving
of Rs180 million to 240 million per annum.
The company is also
trying to reduce its power costs as it is seeking to shift to natural gas from
high cost naphtha for its captive power plants. The company has recently
entered into a 3-year agreement with one of the natural gas suppliers. Supplies
are expected to commence in Q2FY05, and would yield substantial savings in fuel
costs. It is estimated that annual savings on this count to be between Rs300m
and 400m.
The company has
reported 11 per cent YoY decline in sales to Rs3.48bn and 34 per cent drop in
net profits to Rs152m in financial year '04. In terms of positive contributors
— interest charges declined 39 per cent YoY and forex gains of an estimated
between Rs160 and Rs180mn were booked during the quarter.
CMT REPORT
(Corruption, Money Laundering & Terrorism]
The Public Notice information has been collected from various sources
including but not limited to: The Courts, India Prisons Service,
Interpol, etc.
1] INFORMATION ON
DESIGNATED PARTY
No exist designating subject or any of its beneficial owners, controlling
shareholders or senior officers as terrorist or terrorist organization or whom
notice had been received that all financial transactions involving their assets
have been blocked or convicted, found guilty or against whom a judgement or
order had been entered in a proceedings for violating money-laundering,
anti-corruption or bribery or international economic or anti-terrorism sanction
laws or whose assets were seized, blocked, frozen or ordered forfeited for
violation of money laundering or international anti-terrorism laws.
2] Court Declaration :
No records exist to suggest that subject is
or was the subject of any formal or informal allegations, prosecutions or other
official proceeding for making any prohibited payments or other improper
payments to government officials for engaging in prohibited transactions or
with designated parties.
3] Asset Declaration :
No records exist to suggest that the property or assets of the subject
are derived from criminal conduct or a prohibited transaction.
4] Record on Financial
Crime :
Charges or conviction
registered against subject: None
5] Records on Violation of
Anti-Corruption Laws :
Charges or
investigation registered against subject: None
6] Records on Int’l
Anti-Money Laundering Laws/Standards :
Charges or
investigation registered against subject: None
7] Criminal Records
No
available information exist that suggest that subject or any of its principals
have been formally charged or convicted by a competent governmental authority for
any financial crime or under any formal investigation by a competent government
authority for any violation of anti-corruption laws or international anti-money
laundering laws or standard.
8] Affiliation with
Government :
No record
exists to suggest that any director or indirect owners, controlling
shareholders, director, officer or employee of the company is a government
official or a family member or close business associate of a Government
official.
9] Compensation Package :
Our market
survey revealed that the amount of compensation sought by the subject is fair
and reasonable and comparable to compensation paid to others for similar
services.
10] Press Report :
No press reports / filings exists on
the subject.
CORPORATE
GOVERNANCE
MIRA INFORM as part of its Due Diligence do provide comments on
Corporate Governance to identify management and governance. These factors often
have been predictive and in some cases have created vulnerabilities to credit
deterioration.
Our Governance Assessment focuses principally on the interactions
between a company’s management, its Board of Directors, Shareholders and other
financial stakeholders.
CONTRAVENTION
Subject is not known to have contravened any existing local laws,
regulations or policies that prohibit, restrict or otherwise affect the terms
and conditions that could be included in the agreement with the subject.
FOREIGN EXCHANGE
RATES
|
Currency |
Unit
|
Indian Rupees |
|
US Dollar |
1 |
Rs.44.27 |
|
UK Pound |
1 |
Rs.85.54 |
|
Euro |
1 |
Rs.58.23 |
SCORE & RATING
EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
7 |
|
PAID-UP CAPITAL |
1~10 |
6 |
|
OPERATING SCALE |
1~10 |
6 |
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
9 |
|
--PROFITABILIRY |
1~10 |
5 |
|
--LIQUIDITY |
1~10 |
5 |
|
--LEVERAGE |
1~10 |
5 |
|
--RESERVES |
1~10 |
7 |
|
--CREDIT LINES |
1~10 |
5 |
|
--MARGINS |
-5~5 |
-- |
|
DEMERIT POINTS |
|
|
|
--BANK CHARGES |
YES/NO |
YES |
|
--LITIGATION |
YES/NO |
NO |
|
--OTHER ADVERSE INFORMATION |
YES/NO |
NO |
|
MERIT POINTS |
|
|
|
--SOLE DISTRIBUTORSHIP |
YES/NO |
NO |
|
--EXPORT ACTIVITIES |
YES/NO |
YES |
|
--AFFILIATION |
YES/NO |
YES |
|
--LISTED |
YES/NO |
YES |
|
--OTHER MERIT FACTORS |
YES/NO |
YES |
|
TOTAL |
|
55 |
This score serves as a reference to assess SC’s credit risk
and to set the amount of credit to be extended. It is calculated from a
composite of weighted scores obtained from each of the major sections of this
report. The assessed factors and their relative weights (as indicated through
%) are as follows:
Financial
condition (40%) Ownership
background (20%) Payment
record (10%)
Credit history
(10%) Market trend
(10%) Operational
size (10%)
RATING
EXPLANATIONS
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
>86 |
Aaa |
Possesses an extremely sound financial base with the strongest
capability for timely payment of interest and principal sums |
Unlimited |
|
71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit transaction.
It has above average (strong) capability for payment of interest and
principal sums |
Large |
|
56-70 |
A |
Financial & operational base are regarded healthy. General
unfavourable factors will not cause fatal effect. Satisfactory capability for
payment of interest and principal sums |
Fairly Large |
|
41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
|
26-40 |
B |
Unfavourable & favourable factors carry similar weight in credit consideration.
Capability to overcome financial difficulties seems comparatively below
average/normal. |
Small |
|
11-25 |
Ca |
Adverse factors are apparent. Repayment of interest and principal sums
in default or expected to be in default upon maturity |
Limited with
full security |
|
<10 |
C |
Absolute credit risk exists. Caution needed to be exercised |
Credit not
recommended |
|
NR |
In view of the lack of information, we have no basis upon which to
recommend credit dealings |
No Rating |
|