MIRA
INFORM REPORT
|
Report Date : |
12.09.2007 |
IDENTIFICATION DETAILS
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Name : |
ARVIND MILLS
LIMITED |
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Registered
Office : |
Railwaypura Post, |
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Country: |
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Financials (as
on): |
31.03.2007 |
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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
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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 55000000 |
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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
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Registered
Office : |
Railwaypura Post, |
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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 : |
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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, v
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, v
Khokhra,
Memdabad, Ahmedabad - 380 008, v
Gut
No. 172, v
55, |
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Branch Office
: |
MUMBAI Neptune House, 2nd Floor, Opp. Bandra Talkies, 8 Community Centre, Saket,
KOLKATA 100,
Arvind Worldwide (USA) Inc., 130, Sri Lanka Liason Office C/o Sidko Limited.
Asoka Spintex Premises, |
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Other Division
: |
Khakhi Division Knits Division
Ankur Textiles Arvind Brands Limited Du Parc Trinity 8th Floor, 17, Tel: 91-80-22973131 Denim Tel: 91-79-22203030 |
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Garment Export
Division : |
10th Floor, Du Parc Trinity, |
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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: |
Ř Arvind Products
Limited – Chairman Ř Atul Limited –
Chairman Ř Birla VXL
Limited – Director Ř JK Industries
Limited – Director Ř 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: |
Ř Arvind Clothing
Limited – Director Ř Arvind Fashions
Limited – Director Ř Arvind Brands
Limited – Director Ř Arvind Products
Limited – Director Ř Amtrex Hitachi
Appliances Limited – Chairman Ř Anagram
Wellington Asset Management Company Limited – Director Ř Anagram Housing
Finance Limited – Director Ř H. K. Finechem
Limited – Director Ř Amol Dicalit
Limited – Director Ř Gujarat
Infrastructure Limited – Director Ř 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 |
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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. 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 : |
Nominated by Export-Import Bank of |
KEY EXECUTIVES
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Name: |
Mr. R. V. Bhimani |
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Designation: |
Company Secretary |
MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN
As on
31.03.2007
|
Category Code |
Names of Shareholders |
No. of Shares |
Percentage of Holding |
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(A) |
Shareholding
of Promoter and Promoter Group |
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(1) |
Indian |
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(a) |
Individuals / Hindu Undivided Family |
276146 |
0.13 |
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(b) |
Bodies Corporate |
70705519 |
33.77 |
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Sub- Total (A) (1) |
70981665 |
33.90 |
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Total shareholding of Promoter and Promoter Group (A) |
70981665 |
33.90 |
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(B) |
Public Shareholding |
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(1) |
Institutions |
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(a) |
Mutual Funds / UTI |
9024720 |
4.31 |
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(b) |
Financial Institutions / Banks |
1875930 |
0.90 |
|
(c) |
Insurance Companies |
19490071 |
9.31 |
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(d) |
Foreign Institutional Investors |
38801071 |
18.53 |
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(e) |
Any other (specify) Foreign banks / IFCW |
1213 |
0.00 |
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Sub-Total (B) (1) |
69193005 |
33.05 |
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(2) |
Non-Institutions |
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(a) |
Bodies Corporate |
12555309 |
6.00 |
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(b) |
Individuals - |
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i. Individual shareholders holding nominal share capital up to Rs. 1 Lakh |
48617577 |
23.22 |
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ii. Individual shareholders holding nominal share capital in excess of Rs. 1 lakh |
5387211 |
2.57 |
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(c) |
Any other (specify) NRIs / OCBs |
1893082 |
0.90 |
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Sub-Total (B) (2) |
68453179 |
32.69 |
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Total Public Shareholding
(B) = (B) (1) + (B) (2) |
137646184 |
65.74 |
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(C) |
Shares held by
Custodians and against which Depository Receipts have been issued |
749692 |
0.36 |
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GRAND TOTAL (A) +
(B) + (C) |
209377541 |
100.00 |
BUSINESS DETAILS
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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, v
State
Bank of v
Bank
of v
UCO
Bank, Ahmedabad, v
State
Bank of v
Credit
v
Deutsche
Bank, Ahmedabad, v
HDFC
Bank, Ahmedabad, v
The
Bank of v
Standard
Chartered Grindlays Bank, Ahmedabad, v
Bank
of v
ICICI
Bank Limited, Ahmedabad, v
Calyon
Bank v
Standard
Chartered Bank v
Export-Import
bank of v
Axis
Bank v
ABN
Amro Bank NV |
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Banking Relations : |
Satisfactory |
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Auditors : |
Sorab S. Engineer
and Company Chartered
Accountants |
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Address : |
381, |
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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 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. v
Arvind
Worldwide (M) Inc., v
Arvind
Overseas (M) Limited, v
Big
Mill Lauffenmuhle v
Arvind
Spinning Limited |
CAPITAL STRUCTURE
Authorised Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
|
|
|
|
|
230000000 |
Equity Shares |
Rs. 10.00 each |
Rs. 2300.000 millions |
|
9000000 |
Preference Shares
|
Rs.100.00 each |
Rs. 900.000 millions |
|
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Total |
|
Rs. 3200.000 millions |
Issued, Subscribed & Paid-up Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
|
|
|
|
|
255580000 |
Equity Shares |
Rs. 10.00 each |
Rs. 2555.800millions |
FINANCIAL DATA
[all figures are
in Rupees Millions]
ABRIDGED BALANCE
SHEET
|
SOURCES
OF FUNDS |
31.03.2007 |
31.03.2006 |
31.03.2005 |
|
|
SHAREHOLDERS
FUNDS |
|
|
|
|
|
1] Share Capital |
2555.800 |
2654.800 |
2614.000 |
|
|
2] Reserves &
Surplus |
11314.500 |
12664.700 |
10197.500 |
|
NETWORTH
|
13870.300 |
15319.500 |
12811.500 |
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LOAN FUNDS |
|
|
|
|
|
1] Secured Loans |
17727.400 |
16883.800 |
14912.300 |
|
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2] Unsecured
Loans |
1615.700 |
1529.900 |
1911.900 |
|
TOTAL
BORROWING
|
19343.100 |
18413.700 |
16824.200 |
|
|
|
|
|
|
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TOTAL
|
33213.400 |
33733.200 |
29635.700 |
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|
|
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|
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APPLICATION OF FUNDS
|
|
|
|
|
|
|
|
|
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FIXED ASSETS [Net Block]
|
20448.900 |
13096.000 |
13816.900 |
|
Capital work-in-progress
|
714.500 |
795.900 |
1030.700 |
|
|
|
|
|
|
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INVESTMENT
|
480.500 |
3481.000 |
1530.200 |
|
|
|
|
|
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CURRENT ASSETS, LOANS & ADVANCES
|
|
|
|
|
|
|
Inventories
|
6450.100
|
4792.600
|
5111.500
|
|
|
Sundry Debtors
|
2048.500
|
3682.800
|
3191.100
|
|
|
Cash & Bank Balances
|
223.100
|
95.900
|
128.700
|
|
|
Loans & Advances
|
7509.300
|
12286.400
|
7585.000
|
Total Current Assets
|
16231.00
|
20857.700
|
16016.300
|
|
Less: CURRENT LIABILITIES & PROVISIONS
|
|
|
|
|
|
|
Current Liabilities
|
4218.100
|
4046.500
|
2434.700
|
|
|
Provisions
|
443.400
|
450.900
|
323.700
|
Total Current Liabilities
|
4661.500
|
4497.400
|
2758.400
|
|
Net
Current Assets
|
11569.500
|
16360.300
|
13257.900
|
|
|
|
|
|
|
|
TOTAL
|
33213.400 |
33733.200 |
29635.700 |
|
PROFIT & LOSS ACCOUNT
|
PARTICULARS |
31.03.2007 |
31.03.2006 |
31.03.2005 |
|
|
Sales Turnover |
18449.100 |
16233.900 |
16937.500 |
|
|
Other Income |
1163.700 |
261.300 |
146.700 |
|
|
Stock Adjustments |
979.500 |
(98.200) |
127.600 |
|
|
Total Income |
20592.300 |
16397.000 |
17211.800 |
|
|
|
|
|
|
|
|
Profit/(Loss) Before Tax |
1220.000 |
1363.800 |
1293.000 |
|
|
Provision for Taxation |
24.400 |
92.200 |
19.500 |
|
|
Profit/(Loss) After Tax |
1195.600 |
1271.600 |
1273.500 |
|
|
|
|
|
|
|
|
Expenditures : |
|
|
|
|
|
|
Raw Materials |
6532.100 |
5047.000 |
6198.700 |
|
|
Excise Duty |
0.000 |
0.000 |
0.000 |
|
|
Power and Fuel Cost |
0.000 |
1435.700 |
1788.500 |
|
|
Other Manufacturing Expenses |
5292.400 |
2801.900 |
2528.200 |
|
|
Employee Cost |
2014.700 |
1326.600 |
1205.400 |
|
|
Selling and Administration Expenses |
997.200 |
577.900 |
556.700 |
|
|
Miscellaneous Expenses |
1599.700 |
592.300 |
636.800 |
|
|
Interest and Financial Charges |
1502.600 |
1335.900 |
1176.800 |
|
|
Depreciation |
1433.600 |
1551.000 |
1490.700 |
|
Total
Expenditure |
19372.300 |
14668.300 |
15581.800 |
|
QUARTERLY /
SUMMARISED RESULTS
|
PARTICULARS |
|
|
30.06.2007 (1st Quarter) |
|
Sales Turnover |
|
|
5103.300 |
|
Other Income |
|
|
134.300 |
|
Total Income |
|
|
5237.600 |
|
Total Expenditure |
|
|
4382.000 |
|
Operating Profit |
|
|
855.600 |
|
Interest |
|
|
438.100 |
|
Gross Profit |
|
|
417.500 |
|
Depreciation |
|
|
354.500 |
|
Tax |
|
|
4.800 |
|
Reported PAT |
|
|
58.200 |
200706 Quarter 1
Notes Expenditure Includes (Increase)/Decrease in Stock in Trade
Rs (65.80) million Consumption of Raw Materials and Finished Goods Purchased Rs
1801.50 million Staff Cost Rs 569.10 million Power and Fuel Rs 456.20 million
Stores Consumption Rs 667.40 million Other Expenses Rs 953.60 million Foreign
Exchange (Gain)/Loss Rs (82.70)million Tax Includes Provision for Current Tax
Rs 6.60 million Fringe Benefit Tax Rs 4.80 million MAT Credit Entitlement Rs
(6.60)million EPS is Basic and Diluted Status of Investor Complaints for the
quarter ended June 30, 2007 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 July 28, 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, 2007, additional liability, if any will be adjusted
against the opening balance of Revenue Reserve at the year end. 4. The figures
for the quarter ended June 30, 2006 have been restated by the management after
considering the relevant effects of the Composite Scheme of Arrangement between
the Company, Arvind Brands Limited (subsidiary), Arvind Fashions Limited
(subsidiary) and their respective shareholders which was sanctioned by the High
Court of Gujarat on November 24, 2006 and was effective from April 01, 2006. 5.
Figures of the previous quarter / year have been regrouped wherever necessary.
KEY RATIOS
|
PARTICULARS |
|
31.03.2007 |
31.03.2006 |
31.03.2005 |
|
Debt Equity Ratio |
|
1.30 |
1.25 |
1.23 |
|
Long Term Debt Equity Ratio |
|
0.48 |
0.84 |
0.86 |
|
Current Ratio |
|
1.13 |
1.94 |
1.95 |
|
TURNOVER RATIOS |
|
|
|
|
|
Fixed Assets |
|
0.88 |
0.75 |
0.82 |
|
Inventory |
|
3.28 |
3.28 |
3.82 |
|
Debtors |
|
6.44 |
4.72 |
6.14 |
|
Interest Cover Ratio |
|
1.18 |
2.02 |
2.08 |
|
Operating Profit Margin |
(%) |
17.42 |
26.18 |
23.38 |
|
Profit Before Interest and Tax Margin |
(%) |
9.65 |
16.63 |
14.62 |
|
Cash Profit Margin |
(%) |
9.14 |
17.39 |
16.24 |
|
Adjusted Net Profit Margin |
(%) |
1.37 |
7.83 |
7.48 |
|
Return on Capital Employed |
(%) |
5.34 |
8.52 |
9.05 |
|
Return on Net Worth |
(%) |
1.81 |
9.17 |
10.59 |
STOCK PRICES
|
Face Value |
Rs. 10.00 |
|
High |
Rs. 52.85 |
|
Low |
Rs. 52.00 |
LOCAL AGENCY FURTHER INFORMATION
The company was
incorporated on 1st June, 1931 at Ahmedabad in
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,
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,
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
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' shirting 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 debts 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
players in the domestic ready to wear garment industry. The company has the
rights to market international brands such as Arrow, Lee, and Flying Machine
etc in
Subject's recent tie-ups include its technical and marketing alliance with F M
Hammerie Von-Ogensver Waltungs,
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
In 2004-05 the company has wound-up the business of Arvind Overseas (
The company has set up a
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 the company has been successfully
able to steer through financial year 2006-07, which was a very challenging
period. The company operated at lower utilization levels compared to previous
financial year and the impact is visible in the operating profits of the
company.
The operations of Arvind Brands Limited and its subsidiaries were merged with
the Company with effect from 1st April, 2006 and hence the figures of current year
are not strictly comparable with the previous financial year. Sales and
operating income at Rs.18449.100 millions were up by 16% compared to
Rs.15886.900 millions in the previous financial year, a growth of 16%. This was
mainly due to addition of turnover of Arvind Brands. Operating profit of the
company was Rs. 3050.800 millions compared to Rs.4148.300 millions in the
previous financial year, a drop of 26%. This was mainly due to addition of
Arvind Brands operations which have so far not been profitable as well as sharp
drop in denim volume and realizations. There was one time extraordinary profit
due to sale of business to VF Arvind Brands Private Limited amounting to
Rs.1001.200 millions and a write-off of CENVAT balance amounting to Rs.58.300
millions resulting in net profit of Rs.942.900 millions. The Key developments
of the year under review are summarized below:
* Merger of Arvind Brands Limited and its subsidiaries with the Company
with effect from 1st April, 2006;
* Wholesale branded apparel business of erstwhile Arvind Fashions Limited
has been sold to VF Arvind Brands Private Limited with effect from 31st August,
2006 for a total consideration of Rs.1816.500 millions, after making necessary
provisions for claims and other contingent liabilities, the company made one
time profit of Rs.1001
200 millions;
* With the denim manufacturing capacity in
* The cotton cost for the second consecutive year remained low and the
company has also benefited from the low cost inventory it had
accumulated.
The company has registered a Net Profit after Extra-ordinary Items of
Rs.1195.600 millions compared to Rs.1271.600 millions in the previous financial
year, a drop of 6%.
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 repaid the installments of Term Loans amounting
to Rs. 1420.000 millions falling due during the current year. The Company has
also made fresh borrowings of Rs. 2360.000 millions for funding capital
expenditure and other requirements. Long Term Debt including lease of the
Company stands to Rs. 12690.000 millions as on 31st March 2007.
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 the closure of business and disposal of the business undertaking,
the accounts of Arvind Overseas (
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.
Management
Discussion
OVERVIEW
2006-2007 has been a challenging year for the Company. It has made significant
progress towards its stated goal of becoming a truly integrated organization
that spans textile to retail. However, there have been temporary set backs
caused by a slowdown in the denim products group.
The Company has launched various initiatives and set in motion structural and
organizational changes that will help it address immediate issues as well as
speed it on its way to long-term goals. These cover product mix, customer
structure, marketing and design infrastructure, brand positioning and
production base.
OPERATING ENVIRONMENT
The Company operates across multiple products and businesses in diverse markets
and environments. These include the Indian retail market for its brands, the
Indian intermediary market for fabrics and the global market for the fabrics
and apparel business. While its performance in most of these markets is
satisfactory, the Indian intermediary market for the denim products group is
suffering from a supply glut.
Indian
Intermediary Market
The estimated demand in the domestic market is growing at an impressive rate of
over 25%1. However, supply far exceeds this demand, leading to tremendous
pressure on prices and volume. The denim production capacity in
The situation is compounded by the fact that the
The Company's shirting product group is also facing a challenge in the domestic
intermediary market. Fabric retail is under tremendous pressure as markets
rapidly shift towards ready-to-wear clothing. The proliferation of large-format
retail stores is further contributing to the slowdown in demand for fabric.
Export Market
WTO estimates for 2004 put world exports of textile and clothing at 566
billion, more than 6% of total world exports. The clothing sector takes thelion's
share with 322 billion .The export market for various product groups continues
to be stable and offers opportunities for the business to grow. The import of
cotton apparel into the
The primary objective for Indian apparel manufacturers is to replace the space
being vacated by
The total textile and apparel import into the European Union (EU) for 2006 has
grown by an estimated 3% by value over 2005, while volume has dropped by an
estimated 8%. This indicates an increase in prices. Imports from
2 Source: The office of Textiles and apparel,
3 Sources: European Trade Commission
For the time being, denim continues to be the mainstay of the Company, both in
terms of revenue and earning. The international denim market is estimated to be
about 6 billion square meters. While most of the production is based out of
Asia, the main consuming markets are the
In the near future, the revenue and earnings composition of the Company is set
to shift in favour of the retail and apparel businesses.
Business logic dictates that where apparel manufacturing is viable, the fabric
business will follow. With the apparel manufacturing base decisively shifting
to Asia, even remaining capacity in EU and
Indian Retail
Market
The Indian retail market is the most promising of all market spaces the Company
operates in. It is present through the branded apparel business as well as
through sale of fabric to apparel manufacturers. It also supplies, on a small
scale, ready-to-wear garments for store labels to large format retail stores.
Recent research has decisively indicated tremendous growth in the organized
retail sector in
The growth in organized retail in
4 Sources: Images Retail
5 Sources: A.T. Kearney
RESULT REVIEW
Revenue of the Company, for the year ended 31st March, 2007, was Rs.18450.000
millions. This represents an increase of 16% over the revenue of Rs.15890.000
millions for the previous financial year.6 The operating profit for the year
ended 31st March, 2007 stood at Rs. 3210.000 millions as against Rs.4270.000
millions in the previous financial year, representing a drop of 25%. There is
an extraordinary profit on account of sale of stake in VF Arvind Brands Private
Limited and after providing for few non-recurring expenses the net amount is
Rs. 940.000 millions. The profit after tax and extra ordinary items stood at
Rs.1200.000 millions compared to Rs.1270.000 millions in the previous financial
year, representing a drop of 6%.
Sales and Operating Income
Business revenue from the textile and apparel business is lower compared
to previous year primarily due to lower denim volumes and a sharp reduction in
realization. Revenues from all other product groups have remained stable or
moved upwards. Further, with the merger of the branded apparel business with
the Company, sales to Arvind Brands are now treated as internal sales and
knocked off.
The revenue of Arvind Brands for the year ended 31st March, 2007 was at
Rs.3470.000 millions. The previous financial year figures include sales from VF
licensed brands. If such sales were excluded from both the years, revenue
growth would be 18%.
The figures for the current financial year include revenue from the operations
of Arvind Brands Limited, which has been merged with the Company with effect
from 1st April, 2006. In that respect, the figures are not strictly
comparable.
Even with the inclusion of figures from Arvind Brands, the broad composition of
revenues shows that while fabric is the highest contributor, there is rapid
growth in the branded business.
The company is in
trade terms with the following:
v
Atul
Enterprises
v
Albaj
Engineering Corporation
v
B.
Trikamlal and 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
Fixed Assets
Land Freehold And Leasehold
Buildings
Machinery
Machinery Given On Lease
Motor Vehicles
Office Machinery
Dead Stock
As Per Web Details
Profile
The
Subject was 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.
Subject has 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.
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
Corporate Bureau
13 August 2004
Mumbai: Arvind
Mills is planning to shift its existing denim and garments manufacturing
facilities from
The company,
through its subsidiary companies, has eight million meters of denim
manufacturing facility and two million pieces of jeans plant at
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
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
The plan includes
capacity addition in jeans, khakis and an expansion of its knitted garments
factory at Ahmedabad. Arvind 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 planning to
set up new facilities - a 2.1 million pieces jeans factory, and a 1.5 million
pieces khakis factory in
"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,
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.40.49 |
|
|
1 |
Rs.82.38 |
|
Euro |
1 |
Rs.56.14 |
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 |
|