MIRA
INFORM REPORT
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Report Date : |
03.12.2008 |
IDENTIFICATION DETAILS
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Name : |
VARDHMAN TEXTILES
LIMITED |
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Formerly Name: |
MAHAVIR SPINNING
MILLS LIMITED |
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Registered Office : |
Post Box 105, Chandigarh Road, Ludhiana – 141 010, Punjab |
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Country : |
India |
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Financials (as on) : |
31.03.2008 |
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Date of Incorporation : |
08.10.1973 |
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Com. Reg. No.: |
16-3345 |
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CIN No.: [Company
Identification No.] |
L17111PB1973PLC003345 |
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TAN No.: [Tax
Deduction & Collection Account No.] |
JLDM03450G JLDM03167D |
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PAN No.: [Permanent
Account No.] |
AABCM4692E |
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Legal Form : |
A Public Limited Liability
Company. The company’s shares are listed on the Stock Exchanges |
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Line of Business : |
Manufacturer and
Seller of Cotton Yarn, Acrylic Yarn, Polyester Sewing Threads, Steel, Yarn of
Synthetic Staple Fibre, Woven Fabric of Cotton and Alloy Steel Ingots. |
RATING &
COMMENTS
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MIRA’s Rating : |
A |
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RATING |
STATUS
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PROPOSED
CREDIT LINE |
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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 |
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Maximum Credit Limit : |
USD 58600000 |
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Status : |
Good |
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Payment Behaviour : |
Regular |
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Litigation : |
Clear |
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Comments : |
Subject is a well
– established company having fine track. Trade relations are fair. Financial position
is good. Payments are correct and as per commitments. The company can
be considered good for any normal business dealings at usual trade terms and
conditions. |
LOCATIONS
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Registered Office : |
Post Box 105, Chandigarh Road, Ludhiana – 141 010, Punjab, INDIA |
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Tel. No.: |
91-161-2662543-47
/ 2670707 / 09/ 2228943-48 |
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Fax No.: |
91-161-2662542 /
2664541 / 2670503 / 2601040 / 2601048 / 2602710/ 2222616 |
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E-Mail : |
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Website : |
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Factories : |
Phagwara Road,
Hoshiarpur – 146 001, Punjab gassed mercerised yarn unit
Phagwara Road,
Hoshiarpur – 146 001, Punjab dyeing and finishing – perundurai unit
Plot No. E – 13 and H – 10, Sipcot Industrial Growth Centre, P. V. Palayam
(P. O.), Perundurai – 638 052 arihand spinning mills
Industrial Area, Malerkotla – 148 023, Sanazur, Punjab anant spinning mills
New Industrial Area, Mandideep – 462 046, Madhya Pradesh vardhman special steels
C-58, Focal Point, Ludhiana – 141 010, Punjab sewing thread – unit ii
Phase VIII, Focal Point, Ludhiana – 141 123, Punjab ARISHT
SPINNING MILLS, (DTA-I,
II and 100% EOU), BADDI AURO
SPINNING MILLS, BADDI, Teh. Nalagarh, District Solan – 173 205 AURO
DYEING , BADDI, Teh. Nalagarh, District Solan – 173 205 AURO
WEAVING MILLS, BADDI, Teh. Nalagarh, District Solan – 173 205 AURO
TEXTILES, BADDI, Teh. Nalagarh, District Solan – 173 205 MAHAVIR
SPINNING MILLS LIMITED, (Gassed
Mercerised Yarn Unit), Phagwara
Road, Hoshiarpur – 146 001 MAHAVIR
SPINNING MILLS LIMITED, Phagwara
Road, Hoshiarpur – 146 001 MAHAVIR
SPINNING MILLS LIMITED, (Dyeing
and Finishing-Perundurai Unit), Plot
No. E-13, and H- 10, SIPCOT, Industrial Growth Centre, P. V. Palayam
Perundurai – 638 052 MAHAVIR
SPINNING MILLS LIMITED, (Sewing
Thread, Unit-ll), Phase
– VIII, Focal Point, Ludhiana – 141 123. VARDHMAN
SPINNING AND GENERAL MILLS, (UNIT-I
and
II), LUDHIANA VARDHMAN
SPINNING AND GENERAL MILLS, (100%
EOU), BADDI VARDHMAN FABRICS Budhni,
District – Sahore (M.P.) VARDHMAN YARNS Satlapur,
District Raisen (M.P.) |
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Branches : |
v 30 and 33, Shri Krishna Centre, 1st Floor, Near Mithakhali Six Road, Navrang Pura, Ahmedabad-380 009 v No. 15, H. Siddiah Road, Bangalore-560 027 v S.C.O.1,2 and 3, Sector-17B, Chandigarh-160 017 v 36/2303, D and K, Ammankovil Road, Ernakulam (Cochin)-682 035 v 832, Phase-V, Udyog Vihar, Gurgaon-122 016 v 3-6-270/2, Himayat Nagar, Opposite Telugu Academy, Hyderabad-580 029 v Plot No.141, Pipila Road, A.B. Road, lndore-452 001 v B-34, Sangam Bhawan, Vijay Path, Titek Nagar, Jaipur-302 004 v 84/55, G.T. Road, Near Zarib Chowki, Next to Bankey Bihari Dham Banquet Hall, Kanpur-208 003 v P-22, 3rd Floor, Flat No. 6, C.I.T. Road, Scheme-IV, Kolkata-700 014 v
55, Canal East Road, Belighatta, Kolkata-700 085
Chandigarh Road, Ludhiana-141 010 v 314, Solaris-ll, Opp. LandT Gate No. 6, Saki Vihar Road, Andheri (East), Mumbai-400 072 v Solaris-ll, Universal Industrial Estate, Gala Number G-7 To G-14 and B-12 to B-14, Saki Vihar Road, Andheri (East), Mumbai-400 072 v C-40 and 42, Okhla Industrial Area, Phase-ll, NewDelhi-110020 v 212, Deen Dayal Upadhyaya Marg, Urdu Char, 1st Floor, New Delhi-110 002 v 5th Floor, Plot No. 19, Sagar Plaza Building, Laxmi Nagar, District Centre, New Delhi-110 092 , v 309-310, Surya Kiran Building, 19, Kasturba Gandhi Marg, New Delhi-110 001 v B-47, Sector-6, Noida-201 301 v Mezzanine Floor, Abhishek Plaza, Exhibition Road, Patna-800 001 v Realty Warehousing, Gat No. 2323/1, Wagholi, Pune-411 014 v Jyoti Sangam Lane, Upper Bazar, Ranchi-834 001 v
No-40-LRG Layout, Narayan Knitting Mills Compound,
Kongu Nagar Extension, Tirupur-638 607 v 377-B, Muthuswami Industrial Complex, Palladam Road, Tirupur v
504, Dalamal House, Nariman Point, Mumbai – 400 021. |
DIRECTORS
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Name : |
Mr. Shri Paul
Oswal |
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Designation : |
Chairman and Managing Director |
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Age: |
63years |
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Qualification: |
M. Com. |
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Experience: |
38 years |
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Date of
Appointment: |
01.11.2001 |
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Name : |
Mr. Darshan Lal Sharma |
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Designation : |
President and Executive Director |
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Name : |
Mr. Tilak Raj
Bajalia |
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Designation : |
Nominee Director of IDBI |
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Name : |
Mr. Vinod Kumar Saxena |
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Designation : |
Nominee Director of IDBI |
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Name : |
Mr. Ajay Kumar
Chakraborty |
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Designation : |
Nominee Director of ICICI |
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Name : |
Mr. Yesh Pal
Gupta |
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Designation : |
Nominee Director of UTI |
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Name : |
Mr. Dr. Jagdish
Chander Bakshi |
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Designation : |
Director |
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Name : |
Mr. Prafull
Anubhai |
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Designation : |
Director |
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Date of Birth/Age : |
20.01.1938 |
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Qualification : |
B.Com, B.S.C. (Eco.) – London |
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Date of Appointment : |
26.07.1980 |
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Expertise in specific functional area : |
Industrialist and Business Consultant having experience of more than
35 years |
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Directorships of other Companies as on 31.03.2008 : |
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Chairman/ Member of Committees of other Companies as on 31.03.2008 : |
Audit Committee:
Shareholders/
Investors Grievance Committee:
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Name : |
Mr. Dr. Triloki
Nath Kapoor |
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Designation : |
Director |
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Name : |
Mr. Sachit Jain |
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Designation : |
Executive Director |
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Date of Birth/Age : |
08.07.1966 |
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Qualification: |
B. Tech., MBA |
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Date of
Appointment: |
30.03.2005 |
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Expertise in specific functional area : |
Business Executive having rich experience of more than 18 years in Textile
Industry |
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Directorships of other Companies as on 31.03.2008 : |
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Chairman/ Member of Committees of other Companies as on 31.03.2008 : |
Audit Committee:
VMT Spinning Company Limited (Member) |
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Name : |
Mrs. Suchita Jain |
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Designation : |
Executive Director |
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Age: |
37 Years |
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Qualification: |
M. COM |
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Experience: |
12 Years |
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Date of
Appointment: |
30.03.2005 |
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Name : |
Mr. Subash
Khanchand Bijlani |
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Designation : |
Director |
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Name : |
Mr. Surendar Kumar
Bansal |
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Designation : |
Director |
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Name : |
Mr. Arun Kumar
Purwar |
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Designation : |
Director |
KEY EXECUTIVES
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Name : |
Mr. Vipin Gupta |
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Designation : |
Company Secretary |
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Name : |
Mr. Neeraj Jain |
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Designation : |
Chief Financial Officer |
BUSINESS DETAILS
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Line of Business : |
Manufacturer and
Seller of Cotton Yarn, Acrylic Yarn, Polyester Sewing Threads, Steel, Yarn of
Synthetic Staple Fibre, Woven Fabric of Cotton and Alloy Steel Ingots. |
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Products : |
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Exports to : |
20 countries
including Hong Kong, Japan, South Korea, Australia, New Zealand, Europe and
others. |
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Imports from : |
Germany |
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Terms : |
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Purchasing : |
L/C terms |
GENERAL INFORMATION
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No. of Employees : |
23350 |
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Bankers : |
v
Bank of Baroda, Ludhiana, Punjab v State Bank of Patiala v Punjab National Bank v Union Bank of India v State Bank of India v Bank of America v Bank of Baroda v Allahabad Bank v Deutsche Bank v BNP Paribas v Canara Bank v Corporation Bank v ICICI Bank Limited v Standard Chartered Bank v Banque Nationale De Paris |
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Facilities : |
Secured Loans :
Notes:
Unsecured Loans :
Note: Amount due for repayment out of Fixed Deposits and Short Term Loans and Advances within one year is Rs.260.574 millions. |
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Banking Relations : |
Satisfactory |
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Auditors : |
S C Vasudeva and
Company, Chartered
Accountants |
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Address : |
New Delhi |
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Branch Auditors : |
S. S. Kothari and
Company, New Delhi |
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Qualification: |
Chartered
Accountants |
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Associates : |
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Subsidiaries: |
Chandigarh Road, Ludhiana – 141 010, Punjab The company started its commercial production on 21st September, 1996.
Chandigarh Road, Ludhiana – 141 010, Punjab
Chandigarh Road, Ludhiana – 141 001, Punjab
Chandigarh Road, Ludhiana – 141 001, Punjab
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Other Companies: |
v Vardhman Spinning and General Mills Limited v Banarso Devi Oswal Public Charitable Trust v Adinath Investment and Trading Company v Srestha Holdings Limited v Flamingo Finance and Investment Company Limited v Marshall Investment and Trading Company (Private) Limited v Plaza Trading Company (Private) Limited v Anklesh Investments (Private) Limited v Vardhman Apparels Limited v Sri Aurobindo Socio Economic and Research v Management Institute v Devakar Investment and Trading Company (Private) Limited v Santon Finance and Investment Company Limited v Ramaniya Finance and Investment Company Limited v Pradeep Mercentile Company (Private) Limited v Vardhman Textile Processors (Private) Limited v Syracuse Investment
and Trading Company (Private) Limited |
CAPITAL STRUCTURE
Authorised
Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
90000000 |
Equity Shares |
Rs.10/- each |
Rs.900.000 Millions |
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10000000 |
Redeemable Cumulative
Preference Shares |
Rs.10/- each |
Rs.100.000 Millions |
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Total |
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Rs.1000.000 millions |
Issued,
Subscribed & Paid-up Capital :
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No. of Shares |
Type |
Value |
Amount |
|
57769527 |
Equity Shares |
Rs.10/- each |
Rs.577.696 Millions |
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Less: Calls in
arrears from others |
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Rs.0.500 million |
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Total |
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Rs.577.691 millions |
Notes:
a)
135916 Equity Shares of Rs.10/- each are allotted as fully paid up,
pursuant to a contact without payment being received in cash.
b)
35427580 Equity Shares of Rs.10/- each are allotted as fully paid up, by
way of bonus shares by capatalisation of Share Premium, Capital Redemption
Reserves and General Reserves.
FINANCIAL DATA
[all figures are in Rupees Millions]
ABRIDGED BALANCE SHEET
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SOURCES OF FUNDS |
31.03.2008 |
31.03.2007 |
31.03.2006 |
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SHAREHOLDERS FUNDS |
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1] Share Capital |
577.691 |
577.691 |
577.700 |
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2] Share Application Money |
0.000 |
0.000 |
0.000 |
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3] Reserves & Surplus |
11143.699 |
10342.595 |
9039.000 |
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4] (Accumulated Losses) |
0.000 |
0.000 |
0.000 |
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NETWORTH |
11721.390 |
10920.286 |
9616.700 |
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LOAN FUNDS |
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1] Secured Loans |
21237.470 |
14606.193 |
8310.800 |
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2] Unsecured Loans |
2674.873 |
2636.461 |
2711.500 |
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TOTAL BORROWING |
23912.343 |
17242.654 |
11022.300 |
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DEFERRED TAX LIABILITIES |
1399.656 |
950.993 |
0.000 |
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TOTAL |
37033.389 |
29113.933 |
11022.300 |
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APPLICATION OF FUNDS |
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FIXED ASSETS [Net Block] |
20222.204 |
11779.107 |
9410.800 |
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Capital work-in-progress |
3275.974 |
5407.184 |
964.800 |
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INVESTMENT |
792.851 |
687.476 |
683.800 |
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DEFERREX TAX ASSETS |
0.000 |
0.000 |
0.000 |
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CURRENT ASSETS, LOANS & ADVANCES |
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Inventories |
8703.633
|
6958.482 |
5690.000
|
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Sundry Debtors |
2746.983
|
2524.109 |
2220.400
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Cash & Bank Balances |
626.997
|
2167.336 |
2715.500
|
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Other Current Assets |
0.000
|
0.000 |
0.000
|
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Loans & Advances |
3285.232
|
2330.073 |
3879.600
|
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Total Current Assets |
15362.845
|
13980.000 |
14505.500 |
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Less
: CURRENT LIABILITIES & PROVISIONS |
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Current Liabilities |
2465.508
|
2798.513 |
2563.100
|
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Provisions |
154.977
|
(58.679) |
2362.800
|
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Total Current Liabilities |
2620.485
|
2739.834 |
4925.900 |
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Net Current Assets |
12742.360
|
11240.166 |
9579.600
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MISCELLANEOUS EXPENSES |
0.000 |
0.000 |
0.000 |
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TOTAL |
37033.389 |
29113.933 |
20639.000 |
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PROFIT & LOSS
ACCOUNT
|
PARTICULARS |
31.03.2008 |
31.03.2007 |
31.03.2006 |
|
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Sales Turnover |
22946.661 |
20967.773 |
20209.900 |
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Other Income |
328.748 |
248.808 |
0.000 |
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Total Income |
23275.409 |
21216.581 |
20209.900 |
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Profit/(Loss) Before Tax |
1689.760 |
2257.679 |
2504.400 |
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Provision for Taxation |
464.314 |
540.671 |
541.200 |
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Profit/(Loss) After Tax |
1225.446 |
1717.008 |
1963.200 |
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Earnings in Foreign Currency : |
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Export Earnings |
4505.105 |
4340.184 |
NA |
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Interest |
111.717 |
67.576 |
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Total Earnings |
4616.822 |
4407.760 |
NA |
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Imports : |
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Raw Materials |
1329.067 |
|
NA |
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Stores & Spares |
224.050 |
299.980 |
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Capital Goods |
3351.232 |
3391.893 |
|
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Total Imports |
4904.349 |
4675.511 |
NA |
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Expenditures : |
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|
|
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Raw Material Consumed |
11025.170 |
|
|
|
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Manufacturing Expenses |
5744.930 |
5188.182 |
NA |
|
|
Personnel Expenses |
1552.657 |
1270.645 |
|
|
|
Administrative Expenses |
513.059 |
560.251 |
|
|
|
Interest & Financial Charges |
638.890 |
376.950 |
|
|
|
Selling and Distribution Expenses |
990.242 |
1054.298 |
|
|
|
Increase/(Decrease) in Finished Goods |
(423.673) |
(279.511) |
|
|
|
Difference of Excise Duty on Stocks |
(1.255) |
11.393 |
|
|
|
Depreciation & Amortization |
1545.629 |
1194.453 |
|
|
|
Other Expenditure |
1545.629 |
1205.846 |
17705.500 |
|
Total Expenditure |
21585.649 |
18958.902 |
17705.500 |
|
QUARTERLY
|
PARTICULARS |
|
30.06.2008 (1ST Quarter) |
30.09.2008 (2ND
Quarter) |
|
Sales Turnover |
|
5661.600 |
6506.700 |
|
Other Income |
|
1080.000 |
239.900 |
|
Total Income |
|
6741.600 |
6746.600 |
|
Total Expenditure |
|
4803.700 |
5600.700 |
|
Operating Profit |
|
1937.900 |
1145.900 |
|
Interest |
|
284.600 |
314.500 |
|
Gross Profit |
|
1653.300 |
831.400 |
|
Depreciation |
|
504.000 |
524.600 |
|
Tax |
|
0.000 |
2.500 |
|
Reported PAT |
|
1096.800 |
194.300 |
KEY RATIOS
|
PARTICULARS |
|
31.03.2008 |
31.03.2007 |
31.03.2006 |
|
PAT / Total Income |
(%) |
5.26
|
8.09 |
9.71 |
|
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|
|
|
|
|
Net Profit Margin (PBT/Sales) |
(%) |
7.36
|
10.77 |
12.39 |
|
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|
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|
Return on Total Assets (PBT/Total Assets} |
(%) |
4.26
|
7.09 |
9.80 |
|
|
|
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|
|
|
Return on Investment (ROI) (PBT/Networth) |
|
0.14
|
0.21 |
0.26 |
|
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|
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|
Debt Equity Ratio (Total Liability/Networth) |
|
2.26
|
1.83 |
1.66 |
|
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|
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|
Current Ratio (Current Asset/Current Liability) |
|
5.86
|
5.10 |
2.94 |
LOCAL AGENCY FURTHER INFORMATION
HISTORY
Incorporated in Oct.'73, Mahavir Spinning Mills (MSML) was promoted by
Vardhaman Spinning and General Mills and is managed by Chairman Paul Oswal. The
first plant was commissioned in 1975 with 25,088 spindles in Hoshiarpur,
Punjab.
The company's subsidiaries are VMT Spinning Company Limited (VMT), Vardhman
Threads Limited(VTL) and Vardhman Yarns and Threads Limited
In 1977-78, the company set up a 25,000-spindle textile mill at Malerkotla in
Sanazur, Punjab. MSML is into the spinning of cotton, staple, acrylic and
acetate yarn and sewing thread. The company took over an ailing mini-steel
plant and renamed it Vardhaman Steels. It exports yarn to 20 countries
including Hong Kong, Japan, South Korea, Australia, New Zealand, Europe and
others.
In 1992-93, the company commissioned a 100% EOU at Mandideep. The EOU at
Mandideep and the spinning unit at Malerkotla were awarded the ISO 9002/BIS
14002 by Bureau of Indian Standards (BIS). Its gassed and mercerised dyed yarn
project at Hoshiarpur commenced commercial production in Mar.'95.
The company has entered into a joint venture agreement with Marubeni
Corporation and Toho Rayon, Japan, for setting up a 100% EOU at Baddi, Himachal
Pradesh. It floated a separate entity called Vardhman Acrylics Limited (VAL)
for executing the above project. Commercial production of this project
commenced on Sep.'96. During 1998-99, the third 100% EOU at Mandideep with an
installed capacity of 25000 spindles was flagged off for production.
Expansion of Sewing Thread capacity by addition of unit-II at Ludhiana with a
capacity of 5 TPD implemented in two phases, the first phase with a capacity of
2.5 TPD has commenced production. Further Unit-V with a capacity of 24192
spindels to produce fine counts meant for Gassed Mercerised Unit started
commercial production.
The Company is also undertaking expansion and technological upgradation of the
existing spinning unit at Malerkotla. To manufacture superior sewing thread
under their brands of PERMASPUN,D-CORE and PERMACORE the company has signed a
agreement with Amercian and Effird Inc., USA.
The Textile business of Vardhman Spinning and General Mills Limited (VSGM) was
vested into the company with effect from 1st April 2004 and the manufacturing
units belonging to VSGM is now part of the company. According to the scheme the
company has allotted 12,763,064 equity shares Rs.10/- each to the shareholders
of VSGM in the ratio of eight shares for every ten shares of VSGM held. As a
result of this allotment the paid-up equity capital of the company has
increased to Rs.385.130 millions.
In September 2005 the company has issued bonus equity shares to its equity
shareholders in the ratio 1:2.
During 2004-05 the company has increased its installed capacity of
Spindles and Rolled products by 158392 Nos and 14400 MT respectively. With this
expansion the total installed capacity of Spindles and Rolled Products has
increased to 468688 Nos and 80400 MT. Further the company has installed new
capacities of Looms and Rotors with a capacity of 264 Nos and 528 Nos
respectively.
MANAGEMENT
DISCUSSION AND ANALYSIS REPORT:
Textile Business:
The global Textile Industry witnessed increased restructuring,
relocation and mergers and acquisition activities in the last couple of years.
The global trade in textiles and clothing has increased from $479 bn in 2005 to
more than $530 bn in 2006. Out of the total increase of $51 bn in textiles and
clothing exports in 2006, 70% belongs to increase in clothing whereas 30%
belongs to textiles clearly showing higher growth in clothing trade than
textiles. Most of the textile exporting countries, except China and few other
countries, witnessed deceleration in the exports of textiles and clothing.
There has been a steady build up of capacities in all the textile producing
countries, which has resulted in an imbalance between demand and supply.
Consequentially, the volume and the margins are facing pressure.
The Indian Textile Industry witnessed growing investments during the last three
years. According to the data of the Textile Commissioner on Technology
Upgradation Fund (TUF), projects worth Rs.631770 millions have been sanctioned
during FY 2005-06 and FY 2006-07. The fresh investment will enable the Textile
Industry to expand capacities and achieve economies of scale. The textile
exports from the country have increased from $14.5 bn in 2004-05 to estimated
exports of over $19 bn in 2007-08. The Industry is striving hard to augment its
capabilities, diversify its product mix, manage growing cost pressures and strengthen
its global competitiveness. The Textile Summit 2007 organized by the Ministry
of Textiles has made several recommendations for addressing the various
constraints being faced by the industry, including pending fiscal policy
reforms, market development initiatives and HR challenges. They hope these
recommendations will be reflected in the new policies for the textile industry
and will strengthen the competitiveness of the industry.
The Company has been proactively moving towards more liberalized domestic and
international trade regime. The company chalked out fresh investments amounting
to about Rs.20000 millions by way of capacity expansion and modernization. The
company commissioned a new yarn unit-Vardhman Yarns at Satlapur (M.P.) in 2007
with initial capacity of 30,000 spindles. The capacity has since been expanded
to present level of 1,23,552 spindles. Vardhman Yarns is well on its way of
achieving the ultimate capacity of approx. 2,30,000 spindles. The unit is also
establishing its own captive power plant of 2-1 MW which is likely to be
operational during the current year.
The integrated textile unit of the Company Vardhman Fabrics' at Budni (M.P.)
has also started commercial production in 2007-2008. Vardhman Fabrics will have
60,000 spindles for yarn spinning, 2,830 rotors and 400 airjet looms, besides
having yarn dyeing capacity of 10 TPD and fabric processing capacity of 60
million meters per annum. Out of the above, 40,800 spindles, 2,160 rotors, 310
looms and fabric processing capacity of 40 million meters per annum have
already become operational during 2007-2008 and the remaining capacity is
likely to be operational during the current financial year. Further, the unit
also has its own captive power plant of 24 MW, which has become operational
during 2007-2008. However, the optimum level of utilization of the increased
capacities could also not be achieved in 2007-08 because of initial hiccups
which are expected to normalise over a period of time.
With these projects, Vardhman Group will emerge as a strong integrated textile
house, catering to the diverse requirements of the customers. The planned
increase in capacity will generate economies of scale and adoption of
technology will boost the productivity and quality to customers' delight.
Steel Business:
The global steel market has been on the rise since September last year.
The market moved up in steps till December, 2007 but has gone wild since the
advent of 2008 across all regions of the globe. The combined scarcity of coal,
coke and steel has had a telling impact on the world steel markets.
The Indian market that was too heating up along with the global market since
last 2-3 months, has been interrupted as the government has lifted custom duty
on steel imports and levied 10-15% duty on steel exports. This move shall help
in cooling down the domestic market to some extent, if there is no further
increase in the price in the global market.
However the high prices of steel and the increased interest rates in India is
likely to hit the automobile demand this year. Year 2007-08 saw only 1% growth
in alloys steel demand and this fiscal is going to be even tougher. Any early
respite in the steel prices seems to be unlikely and this does not augur well
for the steel demand worldwide and in the domestic markets.
Financial Analysis and Review of Operations:
The Directors are to report performance of the business as follows:
* PRODUCTION AND SALES REVIEW:
During the year, the company has registered
a turnover of Rs.23463.600 millions as compared to Rs.21592.400 millions,
showing an increase of 7.97% over the previous year turnover. The exports of
the Company increased from Rs.4340.200 millions to Rs.4505.100 millions,
showing an increase of 3.8% over the previous year owing to enhanced production
and better product/market penetration. The business wise performance is as
under:
i) Yarn:
The production of Yarn increased from 87,476 MT to 98,736 MT during
2007- 2008. The sales revenue of yarn increased from Rs.10287.300 millions to Rs.11153.200
millions during the year.
ii) Sewing Thread:
During the year, the production of Sewing Thread was 9,467 MT as against
8,783 MT in the previous year. The sales revenue of Sewing Thread Division
increased from Rs.2963.500 millions to Rs.3052.400 millions.
iii) Steel:
During the year, the production of steel ingots/ billets has been 87,976
MT compared to 88,378 MT of the previous year and that of Rolled products has
been 80,901 MT compared to, 81,537MT of the previous year. The sales revenue of
the division has been Rs.3684.000 millions (Previous year Rs.3470.200
millions).
Fabric:
During the year, the production of proessed fabric increased from 36.53 million
thereto 40.67 million meter, showing an increase of 11.33% over the previous
year. The sales revenue of the processed fabric also increased from Rs.3324.000
millions to Rs. 3678.000 millions showing increase of 10.65% over the previous
year.
* PROFITABILITY:
Company earned profit before depreciation, interest and tax of
Rs.3874.300 millions as against Rs.3829.100 millions in the previous year.
After providing-depreciation of Rs.1545.600 millions, (Previous year
Rs.1194.400 millions), interest of Rs.638.900 millions (Previous Rs.377.000
millions), provision for current tax Rs.1.900 millions (Previous year
Rs.501.700 millions), provision for deferred tax (net of adjustments),
Rs.448.900 millions previous year Rs.29.500 millions), income tax adjustments
earlier years Rs. NIL (Previous year Rs.(0.500) million) provision for Fringe
Benefit Tax of Rs.13.500 millions previous Year 10.000 millions) the net profit
worked out to Rs.1225.400 millions as compared to Rs.1717.000 millions in the
previous year.
*RESOURCES UTILISATION:
i) Fixed Assets:
The gross fixed assets (including work-in-progress) as at 31st March,
2008 were Rs.34240.900 millions as compared to Rs.26493.800 millions in the
previous year.
ii) Current Assets:
Debtors outstanding for more than six months were Rs.138.800 millions as
compared to Rs.105.800 millions in the previous year. The net current assets as
on 31st March, 2008 were Rs.12742.400 millions as against Rs.11240.200 millions
in the previous year. Inventory level was at Rs.8703.600 millions which was
more than the previous year level of Rs.6958.500 millions.
FINANCIAL CONDITIONS and LIQUIDITY:
The Company enjoys a rating of 'AA-' and 'P1+' from Credit Rating
Information Services of India Limited (CRISIL) for long term and short term
borrowings respectively. Management believes that the Company's liquidity and capital
resources should be sufficient to meet its expected working capital reeds and
other anticipated cash requirements.
Management perception of Risk and concern:
The major challenge to the industry in the last year was the almost 14%
appreciation in the Indian rupee against US dollar, which has serious
implication for the Indian Textile Industry. Being highly competitive industry
especially in international trade, increase in the external value of rupee has
virtually crippled the competitiveness of the industry. Though Government
announced some relief for the industry, however, more attention is required for
addressing the issues of competitiveness of the Textile Industry on long term
basis. Another important issue is availability, quality and the price of power.
The availability of good quality power at reasonable prices is critical for
sustainability of the industry. However, the cost of power has been
continuously increasing adding to the input cost pressure in the industry. They
hope that power situation will improve in the coming year.
Their major raw material-Cotton is an agriculture produce, which suffers from
climatic volatility in the major cotton producing countries. In addition,
growing demand as well as overall increase in prices of commodities in the
world have pushed up the prices of domestic cotton as well leading to pressure
on the Textile Industry. They are making all efforts to cope up with the
challenges through continuous cost reduction, process improvements and improved
customer services to mitigate the growing cost pressure.
Because of slow down in the US and increase in the prices of Raw
Material i.e. Cotton and Synthetic Fibre, they do believe that margins in
Textile Industry will remain under pressure in the current year. Moreover,
appreciation of Rupee which affected last two quarters of 2007-08 far more has
reduced competitiveness of Textile Industry. In view of the fact that India has
large Export Oriented Textile Industry any perceptible slow down in world
market may have an adverse impact on the prices in domestic market.
Notwithstanding these pressures, country and the Government will be
increasingly concerned about potential of employment, the Textile Industry does
offer and therefore, in the long run they think that the capacities created now
will be fruitful for the group in order to serve the customers better and to
have confidence of large buying houses. This may happen in 2-3 years.
Human Resources/Industrial Relations:
The Company continues to lay emphasis on building and sustaining an excellent
organizational climate based on human performance. Performance management is
the key word for the company. During the year the Company employed over 23,350
employees.
Pursuit of proactive policies for industrial relations has resulted in a
peaceful and harmonious situation on the shop floors of the various
plants.
SUBSIDIARIES:
The Company has following subsidiary companies the details of profitability of
which are given below:
VMT Spinning Company Limited (VMT):
Business of this subsidiary of the Company which is a Joint Venture with
Marubeni Corporation and Toho Rayon Company Limited of Japan remained steady.
The sales revenue of the Company increased to Rs.889.600 millions from
Rs.678.700 millions. The net profits of the Company decreased from Rs.113.900
millions to Rs.85.500 millions.
Out of the total present paid-up capital of Rs.207.000 millions, the
Company holds 73.33%. The Board of Directors of VMT has recommended a dividend
of 9% for the year 2007-2008.
Vardhman Threads Limited (VTL):
The thread undertaking of this 100% subsidiary of the Company has
demerged and vested in Vardhman Yarns and Threads Limited with effect from
1.04.2007 pursuant to the Scheme of Arrangement, Reorganisation and Demerger
among Subject, Vardhman Threads Limited and Vardhman Yarns and Threads Limited
sanctioned by the Hon'ble High Court for the States of Punjab and Haryana vide
its Order dated 24.01.2008 (effective from 1.04.08). Now the Company has been
left mainly with the business of investments in the shares, etc.
Vardhman Acrylics Limited:
Vardhman Acrylics Limited (VAL) in which the company had setup the
Acrylic Fibre Project in collaboration with Marubeni Corporation and Japan
Exlan Company Limited of Japan, had ceased to be a subsidiary of the company in
2003. This Company has again become the subsidiary of the company in February,
2008, pursuant to the purchase by the Company of the equity stake of the Joint
Venture partners namely Marubeni Corporation and Japan Exlan Company Limited.
As a result, VAL has ceased to be a Joint Venture Company. Presently the
Company holds 54.52% shares in this subsidiary. During the Financial Year
2007-08, VAL recorded a sales volume of Rs.2280.900 millions as against
Rs.2137.500 millions, an increase of 6.71% over the previous year. The net
profit for the year has been Rs.54.400 millions as against Rs.120.300 millions
in the previous year.
Vardhman Yarns and Threads Limited (VYTL):
Pursuant to the Scheme of Arrangement, Reorganisation and Demerger among
Subject (VTXL), Vardhman Threads Limited (VTL) and Vardhman Yarns and Threads
Limited (VYTL) sanctioned by the Hon'ble High Court for the States of Punjab
and Haryana vide its Order dated 24.01.2008 teffective from 1.04.08), the Threads
Undertaking of Vardhman Threads Limited has been demerged and vested in VYTL
with effect from 1.04.2007 and Threads Undertaking of VTXL has vested in VYTL
with effect from 1.04.2008.
BUSINESS RE-ORGANISATION AND STRATEGIC ALLIANCE:
The Board of Directors of the Company had approved the Scheme of
Arrangement, Re-organisation and Demerger among Subject, Vardhman Threads
Limited and Vardhman Yarns and Threads Limited and their respective
Shareholders and Creditors with the end intent of consolidating the Thread
Business of the Company and that of Vardhman Threads Limited, a 100% subsidiary
of the Company. The Petition under Section 391-394 of the Companies Act, 1956
had been filed in the High Court for the States of Punjab and Haryana at
Chandigarh for approval of the above said Scheme which was finally sanctioned
by the Hon'ble High Court vide its order dated 24.01.2008 after complying with
the procedure and process of law. The said scheme has become effective from
1.04.08.
In order to strengthen the thread business, the Company has entered into a
Joint Venture with -American and Efird INC. (AandE) which is the second largest
global player in Threads Manufacturing and Distribution with initial
partnership of 65:35 with an option with AandE to purchase another 14% of joint
Venture Company i.e. VYTL from the Company within first 5 years.
Unaudited Financial Results for the Quarter and Half year ended 30th
Sept, 2008 (Rs. In
Millions)
|
PARTICULARS |
Quarter ended
30.09.2008 (Unaudited) |
|
1. Income |
|
|
(a) Net
Sales/Income from Operations |
6506.700 |
|
(b) Other
Operating Income |
33.000 |
|
Total Income
(a+b) |
6539.700 |
|
2. Expenditure |
|
|
(a)
(Increase)/Decrease in Stock in trade and work in progress |
(373.000) |
|
(b) Consumption
of Raw Materials |
3421.300 |
|
(c) Purchase of
Traded Goods |
24.300 |
|
(d) Employees
Cost |
397.200 |
|
(e) Depreciation
|
524.600 |
|
(f) Other
Expenditure |
1925.600 |
|
(g) Total ( a to
f ) |
5920.000 |
|
3. Profit from Operations
before Other Income, Interest and Exceptional Items (1-2) |
619.700 |
|
4. Other Income |
66.900 |
|
5. Profit before
Interest and Exceptional Items (3+4) |
686.600 |
|
6. Interest |
314.500 |
|
7. Profit after Interest
but before Exceptional Items (5-6) |
372.100 |
|
8. Exceptional
Items |
(205.300) |
|
9. Profit /
(Loss) from ordinary activities before Tax (7+8) |
166.800 |
|
10. Provision
for Taxation |
|
|
-Current |
0.000 |
|
-Deferred |
110.000 |
|
-Fringe Benefit
Tax |
2.500 |
|
11. Net Profit
(Loss) from ordinary activities after Tax (9-10) |
54.300 |
|
12.
Extraordinary Items |
140.000 |
|
13. Net Profit
(Loss) for the period (11+12) |
194.300 |
|
14. Paid up Equity
Share Capital (Face value : Rs. 10/- per share ) |
577.700 |
|
15. Reserves
(Excluding Revaluation Reserve) |
|
|
16. EPS (in Rs.)
not annualised |
|
|
a) Before
Extraordinary Items |
|
|
- Basic |
9.400 |
|
- Diluted |
7.000 |
|
b) After
Extraordinary Items |
|
|
- Basic |
33.600 |
|
- Diluted |
24.600 |
|
17. Aggregate of
Public Shareholding |
|
|
Number of Shares |
21821575 |
|
Percentage of
Shareholding |
37.77% |
NOTES:
1. During the quarter ended 30th September 2008, 15648 spindles have
become operational at “Vardhman Yarns”, Satlapur, (M.P.) a unit of the Company
thus taking the total operational capacity of the said unit to 153792 spindles
as on 30th September 2008. Also Captive Power Plant of 24MW has become
operational at “Vardhman Yarns”, Satlapur (M.P.). Further, additional 30 looms
have become operational during the quarter at "Vardhman Fabrics",
Budhni (M.P.).
2. The results for the quarter ended 30th September, 2008 are not
comparable to the corresponding quarter of last year as the Thread Business
(including the Spinning Unit at Hoshiarpur) of the Company has got vested in
Vardhman Yarns and Threads Limited (VYTL) with effect from 1.04.2008 pursuant
to the Scheme of Arrangement, Re- Organisation and Demerger amongst the
Company, Vardhman Threads Limited (VTL) and Vardhman Yarns and Threads Limited
(VYTL) and their respective shareholders and creditors.
3. Capital work-in-progress, as per Capital Employed as given in Segment
Results, is expenditure incurred in respect of its expansion projects viz
Vardhman Yarns at Satlapur and Vardhman Fabrics at Budhni (other than the
capacities already operational in respect of these projects).
4. Exceptional Item comprises notional exchange loss on restatement of
foreign currency borrowings (FCCBs) to be matured in the year 2011.
5. The Extra-ordinary item during the quarter comprises of the amount
arising because of reduction in the estimated tax liability being netted from
the extra-ordinary income reported during the quarter ended 30th June, 2008.
6. The diluted Earnings Per Share (EPS) as mentioned in Point 16 above
has been calculated strictly in accordance with the Accounting Standard (AS)-20
on ‘Earnings per share’ by taking into account any event of contingency which
may require conversion of loan in equity. However, there has not been any
default on account whatsoever during the year, which may require conversion of
debt/loan into equity.
7. The Company did not have any investors’ complaint pending at the
beginning of the quarter. The Company received 39 complaints during the
quarter, all of which were disposed off and there were no complaints lying
unresolved at the end of the quarter on 30th September, 2008.
9. The Board of Directors has approved the above results in their meeting
held on 25th October, 2008 which have been reviewed by the Statutory Auditors
in terms of Clause 41 of the Listing Agreement.
It is in trade terms with :
v Bhagwan Chemicals, Faridabad, Haryana
v Himalya Phytochemicals, Khanna
v Joglekar Refractories, Mumbai
v Shriram Lime Products, Jodhpur
v Sahni Lines, Kharar
v S. R. Jindal Metals
Contingent
liabilities in respect of following items:
|
|
|
Rs. in Millions As on 31.03.2008 |
|
Claims not
acknowledged as debts |
|
33.458 |
|
Guarantees given
by the Company on behalf of others (The company has
received a legal notice in respect of one guarantee which it is repudiating and
legal steps are being taken up in this behalf) |
|
-- |
|
Guarantees given
by the company on behalf of associates to the extent loans availed by such associates |
|
-- |
|
Bank guarantees
and letters of Credit outstanding |
|
331.071 |
|
Bills discounted
with Banks |
|
987.372 |
FIXED ASSETS:
Freehold Land, Leasehold Land, Buildings, Plant and Machinery, Furniture
and Fixtures, Vehicles and Computer Software
AS PER WEBSITE:
OVERVIEW
Globalization
Vardhman ventured in to the global market in 1986 with an export value of one
core to reach an outstanding 4400 millions (92 million Dollors) in 2002.
Little wonder then,
that Vardhman, today, exports 40% of its yarn production to more than 25
countries and has a strong presence in markets like the EEC, USA, Canada,
China, Japan, Korea, Mexico, Brazil and Mauritius, Middle East. Vardhman has a
share of more than 6% in total Yarn exports from India.
Its trusted, tested and reliable workforce, coupled with the latest technology, quality consciousness, customer oriented services and strong logistics has given Vardhman an edge over its competitors and in the world’s most quality conscious and price sensitive markets. There by making Vardhman a truly international organisation in terms of sourcing from and catering to the world market.
DIRECTORS
Vardhman Holdings
Limited
Board of Directors -
Shri Paul Oswal – Chairman
Surinder Singh Bagai
Jagdish Rai Singal
Chaman Lal Jain
Ram Swarup Gupta
Bal Krishan Arora
Sat Pal Kanwar
Sachit Jain
Shakun Oswal
Suchita Jain
Vardhman Acrylics
Limited
Board of Directors –
Shri Paul Oswal – Chairman
Sachit Jain
Darshan Lal Sharma
Sudeshkumar Ganpatrai Gulati
Sanjit Paul Singh
Munish Chandra Gupta
(Dr.)Arvind Kumar Bakhshi
Bal Krishan Choudhary - Managing Director
ALLIANCES
Vardhman’s International Alliances
Fabric Dyeing and Finishing
Tokai Senko, Japan
Fiber and Yarn Dyeing
Nihon Sanmo Dyeing Co. Limited, Japan
Gassed Mercerized Yarns
Kiyung Bang South Korea
Cotton Yarn
Toho Rayon, Japan
Sewing Thread
American and Efird Inc., USA
Acrylic Fibre
Marubeni Corporation and Japan Exlan of
Japan
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.50.52 |
|
UK Pound |
1 |
Rs.75.08 |
|
Euro |
1 |
Rs.63.72 |
SCORE & RATING EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
7 |
|
PAID-UP CAPITAL |
1~10 |
7 |
|
OPERATING SCALE |
1~10 |
7 |
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
7 |
|
--PROFITABILIRY |
1~10 |
7 |
|
--LIQUIDITY |
1~10 |
7 |
|
--LEVERAGE |
1~10 |
7 |
|
--RESERVES |
1~10 |
7 |
|
--CREDIT LINES |
1~10 |
7 |
|
--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 |
NO |
|
--LISTED |
YES/NO |
YES |
|
--OTHER MERIT FACTORS |
YES/NO |
YES |
|
TOTAL |
|
63 |
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. |
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 |
|