MIRA
INFORM REPORT
|
Report Date : |
26.11.2011 |
IDENTIFICATION DETAILS
|
Name : |
VARDHMAN TEXTILES
LIMITED (w.e.f. 06.10.2006) |
|
|
|
|
Formerly Known
As : |
MAHAVIR SPINNING
MILLS LIMITED |
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|
|
Registered
Office : |
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Country : |
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Financials (as
on) : |
31.03.2011 |
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|
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Date of
Incorporation : |
08.10.1973 |
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|
|
|
Com. Reg. No.: |
16-003345 |
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Capital Investment
/ Paid-up Capital : |
Rs. 636.519 Millions |
|
|
|
|
CIN No.: [Company Identification
No.] |
L17111PB1973PLC003345 |
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|
|
|
TAN No.: [Tax Deduction &
Collection Account No.] |
JLDM03450G JLDM03167D |
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|
|
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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. |
|
|
|
|
No. of Employees
: |
23350 (Approximately) |
RATING & COMMENTS
|
MIRA’s Rating : |
A (62) |
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
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 |
|
Maximum Credit Limit : |
USD 76000000 |
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|
|
|
Status : |
Good |
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|
|
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Payment Behaviour : |
Regular |
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Litigation : |
Clear |
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Comments : |
Subject is a well established and reputed company having fine track. Financial
position of the company appears to be sound. Directors are reported as
experienced and respectable businessmen. Trade relations are reported as
fair. Business is active. Payments are reported to be regular and as per
commitments. The company can be considered good for normal business dealings at
usual trade terms and conditions. |
NOTES :
Any query related to this report can be made
on e-mail : infodept@mirainform.com
while quoting report number, name and date.
ECGC Country Risk Classification List – September 30, 2011
|
Country Name |
Previous Rating (30.06.2011) |
Current Rating (30.09.2011) |
|
India |
A1 |
A1 |
|
Risk Category |
ECGC
Classification |
|
Insignificant |
A1 |
|
Low |
A2 |
|
Moderate |
B1 |
|
High |
B2 |
|
Very High |
C1 |
|
Restricted |
C2 |
|
Off-credit |
D |
LOCATIONS
|
Registered/Corporate Office : |
|
|
Tel. No.: |
91-161-2662543-47
/ 2670707 / 09/ 2228943-48 |
|
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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Plants : |
·
arihand spinning mills
Industrial Area, Malerkotla – 148 023, Sanazur,
Punjab, India ·
anant spinning mills
New Industrial Area, Mandideep – 462 046,
Madhya Pradesh, India ·
ARISHT SPINNING MILLS, (DTA-I, II and 100% EOU), BADDI ·
AURO SPINNING MILLS, BADDI, Teh.
Nalagarh, District Solan–173205, Himachal Pradesh, India ·
AURO DYEING , BADDI, Teh. Nalagarh, District Solan – 173
205, Himachal Pradesh, India ·
AURO WEAVING MILLS, BADDI, Teh.
Nalagarh, District Solan–173205, Himachal Pradesh, India ·
AURO TEXTILES, BADDI, Teh. Nalagarh, District Solan – 173 205,
Himachal Pradesh, India ·
MAHAVIR SPINNING MILLS LIMITED, (Gassed Mercerised Yarn Unit) Phagwara Road, Hoshiarpur – 146 001, India ·
MAHAVIR SPINNING MILLS LIMITED, Phagwara Road, Hoshiarpur – 146 001, India ·
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, India ·
MAHAVIR SPINNING MILLS LIMITED (Sewing Thread, Unit-ll) Phase – VIII, Focal Point, Ludhiana – 141 123, Punjab, India ·
MAHAVIR SPINNING MILLS LIMITED (TEXTILE DIVISION) BADDI ·
VARDHMAN SPINNING AND GENERAL MILLS (UNIT-I and II), LUDHIANA ·
VARDHMAN SPINNING MILLS, BADDI ·
VARDHMAN FABRICS Budhni, District – Sahore ,Madhya Pradesh, India ·
VARDHMAN YARNS Satlapur, District Raisen Madhya Pradesh, India ·
VARDHMAN FABRICS
(Power Division) Bhdhani, District Sehore, Madhya Pradesh,
India ·
VARDHMAN YARNS
(Power Division) Satlapur, District Raisen, Madhya Pradesh,
India |
|
|
|
|
Branch Office : |
·
P-22, 3rd Floor, Flat No.6,
C.I.T. Road, Scheme IV, Kolkata- 700 014, West Bengal, India ·
Chandigarh Road,
Ludhiana- 141 010, Punjab, India ·
314, Solaris II, Opp. L
and T Gate No.6, Saki Vihar Road, Andheri (East), Mumbai- 400 072,
Maharashtra, India ·
504, Dalamal House,
Nariman Point, Mumbai- 400 021, Maharashtra, India ·
309-310, Surya Kiran
Building, 19, Kasturba Gandhi Marg, New Delhi- 110 001, India ·
212, Urdu Ghar, 1st
Floor, Deen Dayal Upadhyaya Marg, New Delhi-110 002, India ·
377-B, Muthuswami Industrial
Complex, Palladam Road, Tirupur- 638 604, India |
DIRECTORS
AS ON 31.03.2011
|
Name : |
Mr. Shri Paul
Oswal |
|
Designation : |
Chairman and Managing Director |
|
Qualification: |
M. Com. |
|
Date of
Appointment: |
01.11.2001 |
|
|
|
|
Name : |
Mr. Darshan Lal
Sharma |
|
Designation : |
President and Executive Director |
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|
|
|
Name : |
Mr. Ashok Kumar Kundra |
|
Designation : |
Director |
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|
|
|
Name : |
Mr. Prafull
Anubhai |
|
Designation : |
Director |
|
Date of Birth/Age : |
20.01.1938 |
|
Qualification : |
B.Com, B.S.C. (Eco.) – |
|
Date of Appointment : |
26.07.1980 |
|
Expertise in specific functional area : |
Industrialist and Business Consultant having experience of more than
35 years |
|
Directorships of other Companies as on 31.03.2008 : |
|
|
Chairman/ Member of Committees of other Companies as on 31.03.2008 : |
Audit Committee:
Shareholders/
Investors Grievance Committee:
|
|
|
|
|
Name : |
Mr. Sachit Jain |
|
Designation : |
Executive Director |
|
Date of Birth/Age : |
08.07.1966 |
|
Qualification: |
B. Tech., MBA |
|
Date of
Appointment: |
30.03.2005 |
|
Expertise in specific functional area : |
Business Executive having rich experience of more than 18 years in
Textile Industry |
|
Directorships of other Companies as on 31.03.2008 : |
|
|
Chairman/ Member of Committees of other Companies as on 31.03.2008 : |
Audit Committee:
VMT Spinning Company Limited (Member) |
|
|
|
|
Name : |
Mr. Subash
Khanchand Bijlani |
|
Designation : |
Director |
|
|
|
|
Name : |
Mr. S.
Padmanabhan |
|
Designation : |
Nominee of IDBI |
|
|
|
|
Name : |
Mr. Arun Kumar
Purwar |
|
Designation : |
Director |
|
|
|
|
Name : |
Mrs. Suchita Jain |
|
Designation : |
Executive Director |
|
|
|
|
Name : |
Mr. Neeraj Jain |
|
Designation : |
Executive Director |
KEY EXECUTIVES
|
Name : |
Mr. Vipin Gupta |
|
Designation : |
Company Secretary |
|
|
|
|
Name : |
Mr. Rajeev Thapar |
|
Designation : |
CGM (Finance, Accounts and Taxation) |
MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN
AS ON 30.09.2011
|
Category of Shareholders |
No. of Shares |
Percentage of
Holding |
|
(A)
Shareholding of Promoter and Promoter Group |
|
|
|
(1)
Indian |
|
|
|
Individuals / Hindu Undivided
Family |
1461658 |
2.30 |
|
Bodies Corporate |
37371862 |
58.71 |
|
Sub
Total |
38833520 |
61.01 |
|
(2)
Foreign |
|
|
|
Total
shareholding of Promoter and Promoter Group (A) |
38833520 |
61.01 |
|
(B)
Public Shareholding |
|
|
|
(1)
Institutions |
|
|
|
Mutual Funds / UTI |
11478439 |
18.03 |
|
Financial Institutions / Banks |
62242 |
0.10 |
|
Insurance Companies |
2146922 |
3.37 |
|
Foreign Institutional
Investors |
998308 |
1.57 |
|
Sub
Total |
14685911 |
23.07 |
|
(2)
Non-Institutions |
|
|
|
Bodies Corporate |
1223471 |
1.92 |
|
Individuals |
|
|
|
Individual shareholders holding nominal share capital up
to Rs. 0.100 million |
4236265 |
6.66 |
|
Individual shareholders
holding nominal share capital in excess of Rs. 0.100 million |
2493540 |
3.92 |
|
Any
Others (Specify) |
2179172 |
3.42 |
|
Trusts |
1611554 |
2.53 |
|
Non Resident Indians |
125908 |
0.20 |
|
Hindu Undivided Families |
441710 |
0.69 |
|
Sub
Total |
10132448 |
15.92 |
|
Total
Public shareholding (B) |
24818359 |
38.99 |
|
Total
(A)+(B) |
63651879 |
100.00 |
BUSINESS DETAILS
|
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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PRODUCTION STATUS (AS ON 31.03.2011)
|
Particulars |
Unit |
Installed
Capacity |
Actual
Production |
|
Spindles |
No |
747936 |
-- |
|
Looms |
No |
900 |
-- |
|
Rotors |
No |
3768 |
-- |
|
Steel Ingots/Billets |
MT |
-- |
64581 |
|
Rolled Products |
MT |
-- |
57060 |
|
Yarn |
MT |
-- |
130861 |
|
Fabric $ |
MN Mtrs |
-- |
114.08 |
|
Processed Fabric |
MN Mtrs |
-- |
74.44 |
Notes:
* including goods
processed by/for others on job basis and consumed for captive consumption
$ Including fabric transferred to Process House
GENERAL INFORMATION
|
No. of Employees : |
23350 (Approximately) |
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Bankers : |
v State Bank of Patiala v Punjab National Bank v State Bank of India v Allahabad Bank v Corporation Bank v ICICI Bank Limited v Standard Chartered Bank v Bank of India v State Bank of Hyderabad v State Bank of Mysore v Oriental Bank of Commerce |
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Facilities : |
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|
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Banking Relations
: |
-- |
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|
|
|
Auditors : |
|
|
Name : |
S C Vasudeva and
Company, Chartered
Accountants |
|
Address : |
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|
Subsidiaries : |
·
VMT Spinning Company Limited ·
Vardhman Acrylics Limited ·
VTL Investments Limited ·
Vardhman Yarns and Threads Limited ·
Vardhman Special Steels Limited ·
Vardhman Nisshinbo Garments Company Limited
(Formerly known as ·
Vardhman Texgarments Limited) |
|
|
|
|
Associates : |
·
Vardhman Textile Components Limited ·
Vardhman Spinning and General Mills Limited |
|
|
|
|
Enterprises over
which key Management Personnel and relative of such personnel is able to
exercise significant influence or control : |
·
Vardhman Holdings Limited ·
Vardhman Apparels Limited ·
Banarso Devi Oswal Public Charitable Trust ·
Sri Aurobindo Socio Economic and Management
Research Institute ·
Adinath Investment and Trading Company ·
Devakar Investment and Trading Company Private
Limited ·
Srestha Holdings Limited ·
Santon Finance and Investment Company Limited ·
Flamingo Finance and Investment Company Limited ·
Ramaniya Finance and Investment Company Limited ·
Marshall Investment and Trading Company (Private)
Limited ·
Pradeep Mercentile Company (Private) Limited ·
Plaza Trading Company (Private) Limited ·
Anklesh Investments (Private) Limited ·
Syracuse Investment and Trading Company (Private)
Limited ·
Mahavir Spinning Mills (Private) Limited
(Formerly known as Vardhman Textile Processors (Private) Limited) ·
Northern Trading Company |
CAPITAL STRUCTURE
AS ON 31.03.2011
Authorised Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
|
|
|
|
|
90000000 |
Equity Shares |
Rs.10/- each |
Rs. 900.000 Millions |
|
10000000 |
Redeemable Cumulative Preference Shares |
Rs. 10/- each |
Rs. 100.000 Millions |
|
|
Total |
|
Rs. 1000.000
Millions |
Issued, Subscribed & Paid-up Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
|
|
|
|
|
63651879 |
Equity Shares |
Rs.10/- each |
Rs. 636.519
Millions |
|
|
|
|
|
Notes:
Of the above:
(a)
1,35,916(previous year 1,35,916) Equity Shares of
Rs.10/- each are allotted as fully paid up, pursuant to a contract without
payment being received in cash.
(b)
3,54,27,580 (previous year 3,54,27,580) Equity
Shares of Rs.10/- each are allotted as fully paid up, by way of bonus shares by capitalisation of Share
Premium, Capital Redemption Reserve and General Reserve.
FINANCIAL DATA
[all figures are
in Rupees Millions]
ABRIDGED BALANCE
SHEET
|
SOURCES OF FUNDS |
31.03.2011 |
31.03.2010 |
31.03.2009 |
|
|
SHAREHOLDERS FUNDS |
|
|
|
|
|
1] Share Capital |
636.519 |
577.695 |
577.695 |
|
|
2] Share Application Money |
0.000 |
0.000 |
0.000 |
|
|
3] Reserves & Surplus |
18546.096 |
13980.801 |
12149.808 |
|
|
4] (Accumulated Losses) |
0.000 |
0.000 |
0.000 |
|
|
NETWORTH |
19182.615 |
14558.496 |
12727.503 |
|
|
LOAN FUNDS |
|
|
|
|
|
1] Secured Loans |
27654.597 |
22267.028 |
21238.725 |
|
|
2] Unsecured Loans |
665.478 |
3940.951 |
3694.504 |
|
|
TOTAL BORROWING |
28320.075 |
26207.979 |
24933.229 |
|
|
DEFERRED TAX LIABILITIES |
1968.053 |
1963.807 |
1798.697 |
|
|
|
|
|
|
|
|
TOTAL |
49470.743 |
42730.282 |
39459.429 |
|
|
|
|
|
|
|
|
APPLICATION OF FUNDS |
|
|
|
|
|
|
|
|
|
|
|
FIXED ASSETS [Net Block] |
21256.569 |
21823.871 |
21818.793 |
|
|
Capital work-in-progress |
1406.476 |
406.316 |
587.819 |
|
|
|
|
|
|
|
|
INVESTMENT |
3526.478 |
2804.849 |
3349.799 |
|
|
DEFERREX TAX ASSETS |
0.000 |
0.000 |
0.000 |
|
|
|
|
|
|
|
|
CURRENT ASSETS, LOANS & ADVANCES |
|
|
|
|
|
|
Inventories |
15983.946
|
11074.593 |
6201.005
|
|
|
Sundry Debtors |
4884.709
|
3973.369 |
2756.678
|
|
|
Cash & Bank Balances |
487.699
|
2220.701 |
3572.130
|
|
|
Other Current Assets |
0.000
|
0.000 |
0.000
|
|
|
Loans & Advances |
4523.767
|
3096.830 |
3587.416
|
|
Total
Current Assets |
25880.121
|
20365.493 |
16117.229 |
|
|
Less : CURRENT
LIABILITIES & PROVISIONS |
|
|
|
|
|
|
Sundry Creditors |
897.835
|
543.198 |
586.852 |
|
|
Other Current Liabilities |
1530.665
|
1939.695 |
1756.331
|
|
|
Provisions |
170.401
|
187.354 |
71.028
|
|
Total
Current Liabilities |
2598.901
|
2670.247 |
2414.211 |
|
|
Net Current Assets |
23281.220
|
17695.246 |
13703.018
|
|
|
|
|
|
|
|
|
MISCELLANEOUS EXPENSES |
0.000 |
0.000 |
0.000 |
|
|
|
|
|
|
|
|
TOTAL |
49470.743 |
42730.282 |
39459.429 |
|
PROFIT & LOSS
ACCOUNT
|
|
PARTICULARS |
31.03.2011 |
31.03.2010 |
31.03.2009 |
|
|
|
SALES |
|
|
|
|
|
|
|
Income |
36068.116 |
27429.536 |
24536.451 |
|
|
|
Other Income |
439.784 |
549.693 |
335.275 |
|
|
|
TOTAL (A) |
36507.900 |
27979.229 |
24871.726 |
|
|
|
|
|
|
|
|
Less |
EXPENSES |
|
|
|
|
|
|
|
Raw Material Consumed |
18704.821 |
13572.059 |
12450.234 |
|
|
|
Manufacturing Expenses |
6726.751 |
5999.720 |
5507.063 |
|
|
|
Personnel Expenses |
1936.319 |
1648.827 |
1531.470 |
|
|
|
Administrative Expenses |
717.451 |
506.114 |
980.127 |
|
|
|
Selling and Distribution Expenses |
1124.619 |
851.016 |
837.114 |
|
|
|
Increase/(Decrease) in Finished Goods |
(2151.775) |
(540.871) |
(117.298) |
|
|
|
Difference of Excise Duty on Stocks |
2.786 |
(3.963) |
(30.668) |
|
|
|
TOTAL (B) |
27060.972 |
22032.902 |
21158.042 |
|
|
|
|
|
|
|
|
Less |
PROFIT
BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION (A-B) (C) |
9446.928 |
5946.327 |
3713.684 |
|
|
|
|
|
|
|
|
|
Less |
FINANCIAL
EXPENSES (D) |
1098.122 |
867.330 |
1023.356 |
|
|
|
|
|
|
|
|
|
|
PROFIT
BEFORE TAX, DEPRECIATION AND AMORTISATION (C-D) (E) |
8348.806 |
5078.997 |
2690.328 |
|
|
|
|
|
|
|
|
|
Less/ Add |
DEPRECIATION/
AMORTISATION (F) |
2260.236 |
2208.757 |
2073.241 |
|
|
|
|
|
|
|
|
|
|
PROFIT BEFORE
TAX (E-F) (G) |
6088.570 |
2870.240 |
617.087 |
|
|
|
|
|
|
|
|
|
Less |
TAX (H) |
1391.521 |
732.610 |
(790.597) |
|
|
|
|
|
|
|
|
|
|
PROFIT AFTER TAX
(G-H) (I) |
4697.049 |
2137.630 |
1407.684 |
|
|
|
|
|
|
|
|
|
Add |
Corporate
Dividend Tax Written Back |
12.344 |
19.515 |
12.519 |
|
|
|
|
|
|
|
|
|
Less |
Adjustment of preceding
year’s tax effect in respect of premium paid on redemption of FCCB’s |
251.174 |
0.000 |
0.000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add |
PREVIOUS
YEARS’ BALANCE BROUGHT FORWARD |
1313.556 |
608.504 |
573.476 |
|
|
|
|
|
|
|
|
|
Less |
APPROPRIATIONS |
|
|
|
|
|
|
|
Transfer to General Reserve |
3000.000 |
1250.000 |
1250.000 |
|
|
|
Proposed Dividend on Equity Shares |
286.433 |
173.309 |
115.539 |
|
|
|
Corporate Dividend Tax Thereon |
46.467 |
28.784 |
19.636 |
|
|
BALANCE CARRIED
TO THE B/S |
2438.875 |
1313.556 |
608.504 |
|
|
|
|
|
|
|
|
|
|
EARNINGS IN
FOREIGN CURRENCY |
|
|
|
|
|
|
|
Export Earnings |
12182.627 |
7040.035 |
6270.355 |
|
|
|
Interest |
0.000 |
0.000 |
31.640 |
|
|
TOTAL EARNINGS |
12182.627 |
7040.035 |
631.995 |
|
|
|
|
|
|
|
|
|
|
IMPORTS |
|
|
|
|
|
|
|
Raw Materials |
1447.661 |
1348.981 |
1105.521 |
|
|
|
Stores & Spares |
418.539 |
346.618 |
302.608 |
|
|
|
Capital Goods |
1249.822 |
713.403 |
370.067 |
|
|
TOTAL IMPORTS |
3116.022 |
2409.002 |
1778.196 |
|
|
|
|
|
|
|
|
|
|
Earnings Per
Share (Rs.) |
78.06 |
37.00 |
24.37 |
|
QUARTERLY RESULTS
|
PARTICULARS |
30.06.2011 |
30.09.2011 |
|
|
1st
Quarter |
2nd
Quarter |
|
Net Sales |
9693.900 |
10356.300 |
|
Total Expenditure |
9324.500 |
8854.900 |
|
PBIDT (Excl OI) |
369.400 |
1501.400 |
|
Other Income |
73.600 |
40.300 |
|
Operating Profit |
443.000 |
1541.700 |
|
Interest |
503.000 |
447.200 |
|
Exceptional Items |
0.000 |
0.000 |
|
PBDT |
(60.000) |
1094.500 |
|
Depreciation |
570.800 |
571.900 |
|
Profit Before Tax |
(630.800) |
522.600 |
|
Tax |
(200.000) |
165.000 |
|
Provisions and contingencies |
0.000 |
0.000 |
|
Profit After Tax |
(430.800) |
357.600 |
|
Extraordinary Items |
0.000 |
0.000 |
|
Prior Period Expenses |
0.000 |
0.000 |
|
Other Adjustments |
0.000 |
0.000 |
|
Net Profit |
(430.800) |
357.600 |
KEY RATIOS
|
PARTICULARS |
|
31.03.2011 |
31.03.2010 |
31.03.2009 |
|
PAT / Total Income |
(%) |
12.87
|
7.79 |
5.74 |
|
|
|
|
|
|
|
Net Profit Margin (PBT/Sales) |
(%) |
16.88
|
10.46 |
2.51 |
|
|
|
|
|
|
|
Return on Total Assets (PBT/Total Assets} |
(%) |
12.92
|
6.80 |
1.63 |
|
|
|
|
|
|
|
Return on Investment (ROI) (PBT/Networth) |
|
0.32
|
0.20 |
0.05 |
|
|
|
|
|
|
|
Debt Equity Ratio (Total Liability/Networth) |
|
1.71
|
2.12 |
2.29 |
|
|
|
|
|
|
|
Current Ratio (Current Asset/Current Liability) |
|
9.96
|
7.63 |
6.68 |
LOCAL AGENCY FURTHER INFORMATION
MANAGEMENT
DISCUSSION AND ANALYSIS REPORT
BUSINESS REVIEW:
The global economy
kicked off a sputtering growth in FY 2010-11 with developed economies showing
faint signs of revival. The main engine of global growth, the United States,
moved into a recovery mode with employment coming off highs and retails sales
growing month on month, albeit slightly, and consumer confidence improving.
This growth was accompanied by a huge surge in world commodity prices, with the
Continuous Commodity Index (CCI) surging more than 42% during the year. This
rise was mainly attributed to the $600 billion of Quantitative Easing part Deux
(QE2) by the Federal Bank of America which released unprecedented amounts of
liquidity. This liquidity got channeled into commodities and prices soared.
This also gave
rise to supply side inflation and fast growing economies in Asia bore the
brunt. Their economies had barely recovered from the financial crises of FY
2008-09 and raising rates at this juncture would have meant putting a spanner
in the way of growth. Most Asian economies therefore held off raising interest rates
till the second half of the year and then a series of quick rate hikes
followed, more particularly in China and India, who have clearly indicated that
they don’t mind sacrificing growth at the altar of inflation control. As a
result, the earnings growth is expected to be hit in the current fiscal.
Further, the QE2 will come to an end in June 2011 and the Fed has no plans of a
QE3 as of now. In anticipation, the commodities have already come off their
lifetime highs.
COTTON AND YARN:
Cotton prices were
buoyed by strong global fundamentals, with US Department of Agriculture (USDA)
reports forecasting a 6% y/y reduction in end season stocks to 41.5 million
bales (of 480 lbs). This compares with 43.9 million bales (mb) in 2009-10 and
60.5mb in 2008-09.
Although global
cotton demand dipped by around 1.3% y/y in 2010-11, import demand from China
rose by 37% y/y over the same period. Both developments were mainly due to
supply constraints and global price rationing following a 8% decline in China’s
cotton output. China traditionally accounts for 30% of global cotton
production. Extremely tight global end-season stocks underpinned prices; the
stocks-to-use ratio at 35% will be the tightest since the 1993-94 season.
GLOBAL
STOCK-TO-USE RATIO LOWEST SINCE 1993-94:
In 2010-11, the
cotton crop in China and Pakistan was damaged by bad weather and the global
production fell. This led to an increase in cotton prices. The boom in prices
was also fuelled by speculative trading in commodities which increased prices
beyond fundamentals.
India had exported
8.5 millions bales of cotton in 2009-10. In September 2010, the Government of
India announced a cap of 5.5 millions bales of cotton for exports, around 18%
of the estimated production of 31.5 millions bales (of 375 lbs) in the current
cotton season (CS) 2010-11. This lead to lesser availability of cotton for
trade and with high import demand from China, international prices rose during
the month. Prices in India also increased. The Cotlook A index rose by 133%
from $1 per pound in September, 2010 to about $2.33 per pound in March, 2011
due to limited availability for exports on the back of restrictions by India
coupled with robust demand from China and traditional importing countries.
Indian Shankar 6 rose in tandem from Rs.37,000/ candy in Sept 2010 to
Rs.60,000/ candy in March 2011.
In line with
cotton prices, cotton yarn prices also continued to remain high. This increase
was in fact more than the increase in cotton prices due to pent up demand in
the system where the pipeline of yarn stocks was at very low levels and also
due to increased demand from a recovering global economy. Cotton yarn prices
touched a high of $6.50/kg. To look at this in perspective, the average of the
last 20 years was around $3/kg, with $4.5/kg being the previous all time high
in cotton yarn prices. These prices have since corrected and touched around
$4.50-$5.00 in the middle of May 2011. In order to curtail the rise in cotton
yarn prices, the Indian Government had imposed a limit of 720 mln kgs on cotton
yarn to be exported in FY 2010-11.
OUTLOOK FOR COTTON
PRICES:
These high prices
are not expected to sustain, in part on expectations of increased acreage,
particularly in US, China and Africa. China’s import demand is also expected to
slow down on a combination of high market prices, stronger output and
competition from synthetic fibers. China has also planned a cotton
purchase-and-reserve policy in 2011 with a view to stabilising prices in the
new season. Pakistan, where floods devastated cotton crops in the 2010-11
season, is another market which is likely to see a substantial increase in
cotton output from previous year.
Overall, the world
market is expected to remain structurally tight (although better than FY
2010-11), but this will not be fully apparent until later in the season when
the new crop stocks are drawn down. Global cotton production is expected to
increase by about 13% from 24.5 millions tonnes in cotton season 2010-11 (Oct
to Sept) to 27.5 millions tonnes in cotton season 2011-12. The closing stock of
2011-12 is expected to be around 10.5 million tons which is higher than last 2
years but still lower than normal closing stock levels in the past. The
stock-to-use ratio is expected to improve to about 42% but will still be lower
than the normal 48-52% in the past (excluding last 2 years).
In anticipation of
a bumper cotton crop this year, global cotton prices as of now have already
come off their previous highs. The Dec New York future is significantly lower
than the current New York future. Global yarn prices are decreasing in line
with the cotton prices. The anticipation in the market is that prices may come
off further and therefore the demand for yarn has reduced as buyers are waiting
for lower prices to buy.
Overall, this year
is likely to be turbulent and may have adverse impact on the operations of the
Industry at large. However because of prudent cotton buying practices and
conservative financial norms, Vardhman may not get as much affected as the rest
of the spinning industry.
TECHNOLOGY UPGRADATION FUND SCHEME (TUFS):
TUFS had been
suspended temporarily by the government in June 2010. The Scheme has now been
re-instated with a few changes; (i) Capital subsidy will now be available on
looms for weaving as well. (ii) a 5% interest reimbursement may be given to the
spinning units (against 4% earlier) if the unit is set up with matching
downstream capacity in weaving/processing. (iii) A cap of Rs.19820.000 millions
has been put on the total subsidy which will be given for the next one year.
This has been allocated between various sectors.
The sunset clause
of the scheme remains unchanged at March 31, 2012. All loans sanctioned till
that date will be eligible for subsidy for the life of the loan.
WOMEN EMPOWERMENT AT
VARDHMAN:
Vardhman Group has
a long tradition of nondiscriminatory gender neutral Human Resource (HR) policy
based on mutual trust, robust value system and transparent procedures. The top
management’s commitment to the cause has seen growing female participation at
all levels of work spanning from high profile corporate assignments to shop
floor operations.
The company has
seen entry of female in top management right up to executive director position.
This is followed by positions occupied by females of all age groups at
different corporate positions including several high profile departments.
Inspite of the
fact that textile is a hard core manufacturing industry the organization has
witnessed growing numbers of female working at shop floor. The use of
technology and rigorous training imparted at various training centers coupled
with stringent safety measures, which includes setting up of various female
hostels, has led to a situation where women consist of almost one-fourth of the
total workforce. This has led to social empowerment of females belonging to
semi skilled category especially from rural background. On the other hand, the
organization has benefited handsomely in terms of higher commitment and
increased discipline at shop floor leading to improved productivity and better
working environment.
FINANCIAL ANALYSIS
AND REVIEW OF OPERATIONS:
PRODUCTION AND
SALES REVIEW:
During the year,
the company has registered a turnover of Rs. 36369.600 millions as compared to
Rs. 27672.200 millions showing an increase of 31.43% over the previous year
turnover. The export of the Company increased from Rs. 7040.000 millions to
Rs.12182.600 millions, showing an increase of 73.05% over the previous year
mainly due to price rise and better product/market penetration. The business
wise performance is as under:-
YARN:
The production of
Yarn increased from 126,146 MT to 130,861 MT during 2010-2011.The sales revenue
of yarn increased from Rs. 14769.900 millions to Rs. 20410.600 millions during
the year.
STEEL:
The steel business
of the Company stand vested in Vardhman Special Steels Limited w.e.f 1.1.2011
pursuant to the scheme of Arrangement and Demerge as sanctioned by Hon’ble
Punjab and Haryana High Court. However for the nine months ending 31st,
December 2010, the production of steel ingots/billets has been 64,581 MT and
that of Rolled products has been 57,060 MT.
FABRIC:
During the year,
the production of processed fabric increased from 60.78 millions meter to 75.44
millions meter, showing an increase of 24.12% over the previous year. The sales
revenue of the processed fabric also increased from Rs. 5565.200 millions to
Rs. 8282.000 millions showing an increase of 48.81% over the previous year.
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 good. The sales revenue of the
Company has increased to Rs. 1283.400 millions from Rs. 1016.500 millions in
the last year and the net profits of the Company increased from Rs. 101.300
millions to Rs. 146.700 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 12% for the year 2010-2011.
VTL INVESTMENTS
LIMITED (VTL)
This 100% subsidiary
of the Company is engaged in the business of investments in the shares etc. The
earnings of the company mainly comes from the dividend/interest earned on its
investments and profits made on sale of investments. During the year the
company has earned a net profit of Rs.10.600 millions.
VARDHMAN ACRYLICS
LIMITED (VAL)
Vardhman Acrylics
Limited (VAL) is another subsidiary of the Company which is engaged in the
business of manufacturing of Acrylic Fiber. Presently the company holds 58.74%
shares in this subsidiary. During the Financial Year 2010-2011, VAL recorded a
sales volume of Rs. 4303.300 millions as against Rs. 2867.400 millions, an
increase of 50.08% over the previous year, however the net profit for the year
has decreased to Rs. 376.400 millions from Rs. 434.400 millions in the previous
year.
VARDHMAN YARNS AND
THREADS LIMITED (VYTL)
This subsidiary of
the Company, a Joint Venture with American and Effird Inc. (A and E), is
engaged in the business of Threads Manufacturing and Distribution. The Company
has a joint venture partnership of 51:49 with A and E, which is the second
largest global player in Threads Manufacturing and Distribution, in VYTL.
During the year, the gross sales of this Company were Rs. 4261.000 millions and
the Profit after tax was Rs. 493.100 millions. The Board of Directors of this
Company has recommended a dividend @ 23% for the year 2010-11.
VARDHMAN NISSHINBO
GARMENTS COMPANY LIMITED (VNGL)
This subsidiary of
the Company which is a Joint Venture partnership of 51:49 with Nisshinbo
Textiles Inc., Japan for manufacturing world class shirts started production in
the fag end of the year and it incurred a loss of Rs. 19.900 millions as its
operations are stabilizing.
VARDHMAN SPECIAL
STEELS LIMITED (VSSL)
During the year
Vardhman Special Steels Limited was got incorporated as the 100% subsidiary of
the Company. Pursuant to the Scheme of Arrangement and Demerger between
Vardhman Textiles Limited and Vardhman Special Steels Limited and their
respective shareholders and creditors, the Steel Business Undertaking of
Vardhman Textiles Limited stand vested in Vardhman Special Steels Limited
w.e.f. 01.01.2011 and the shareholders holding shares in Vardhman Textiles
Limited were to be allotted one share for every five shares held in Vardhman
Textiles Limited as on the relevant record date fixed for the purpose i.e.
30.03.2011. The said allottment of shares was made on 08.04.2011 and Vardhman
Special Steels Limited ceased to be a subsidiary of the Company w.e.f.
08.04.2011
UNAUDITED
FINANCIAL RESULTS FOR THE QUARTER AND HALF YEAR ENDED 30TH SEPTEMBER, 2011
(Rs. In Millions)
|
Particulars |
Quarter ended
30th September, 2011 (Unaudited) |
Half year ended
30th September, 2011 (Unaudited) |
|
Income |
|
|
|
a) Net Sales / Income from Operations |
10350.400 |
19952.600 |
|
b) Other Operating Income |
5.900 |
97.600 |
|
Total Operating Income |
10356.300 |
20050.200 |
|
Expenditure |
|
|
|
(a) (Increase)/decrease in Stock in Trade |
1002.200 |
638.400 |
|
(b) Consumption of Raw Materials |
5365.300 |
12214.400 |
|
(c)Purchased of Traded Goods |
107.700 |
165.100 |
|
(d) Employees Cost |
538.500 |
1059.100 |
|
(e) Depreciation |
571.900 |
1442.700 |
|
(f) Other Expenditure |
1841.200 |
4102.400 |
|
Total Expenditure |
9426.800 |
19322.100 |
|
Profit / (Loss) From Operations before other Income Interest and Exceptional Items |
929.500 |
728.100 |
|
Other Income |
18.200 |
85.100 |
|
Profit/(Loss) before Interest and Exceptional items |
947.700 |
813.200 |
|
Interest |
425.100 |
921.400 |
|
Profit / (Loss) after interest before Exceptional items |
522.600 |
(108.200) |
|
Exceptional Items |
-- |
-- |
|
Profit / (Loss) From Ordinary activities before Tax |
522.600 |
(108.200) |
|
Provision for Taxation |
|
|
|
- Current |
-- |
-- |
|
- Differed |
165.000 |
(35.000) |
|
- Fringe benifit Tax |
-- |
-- |
|
Net Profit/(Loss) From Ordinary activities after Tax |
357.600 |
(73.200) |
|
Extraordinary Items |
-- |
-- |
|
Net Profit/(Loss) for the period |
357.600 |
(73.200) |
|
Paid Up Equity Share Capital ( Face Value of the share Rs.10/- each ) |
636.500 |
636.500 |
|
Reserves (Excluding Revaluation Reserves) |
|
|
|
Public Share Holding |
|
|
|
Before
Extraordinary Items |
|
|
|
-Basic |
5.62 |
(1.15) |
|
-Diluted |
5.62 |
(1.15) |
|
After Extraordinary Items |
|
|
|
-Basic |
5.62 |
(1.15) |
|
-Diluted |
5.62 |
(1.15) |
|
Average of Public Share Holding |
|
|
|
- Number of Shares |
24818359 |
24818359 |
|
- Percentage of shareholding |
38.99% |
38.99% |
|
Promoters and
Promoter group shareholding |
|
|
|
a) Pledged / Encumbered |
|
|
|
- Number of Shares |
-- |
-- |
|
- Percentage of share (as a % of the total shareholding of promoter and promoter group) |
-- |
-- |
|
- Percentage of shares(as a % of the total share capital of the company) |
-- |
-- |
|
b) Non-encumbered |
|
|
|
- Number of Shares |
38833520 |
38833520 |
|
- Percentage of Share (as a % of the total shareholding of promoter and promoter group) |
100.00% |
100.00% |
|
- Percentage of Share (as a % of the total share capital of the company) |
61.01% |
61.01% |
Notes:
1. In view of the significant uncertainties associated with the derivative options
(taken for hedging of foreign currency exposure against exports/imports), the
ultimate outcome of which depends on future events which are not under the
direct control of the company, the resultant gain/loss if any, on such open
derivative options cannot be determined at this stage and has accordingly not
been accounted for in the books of account.
2. Other Income during the quarter comprises dividend received from a
subsidiary company.
- Interest expense
is net of interest income from deposits/bonds amounting to Rs 22.100
millions for the quarter ended 30th Sep 2011 and Rs. 28.800 millions for
the period ended 30th Sep 2011.
- The results
for the half year include the impact of Mark to Market losses on valuation
of inventories as provided in first quarter.
However, there has been no further mark to
market losses on Inventories during this quarter.
- Exceptional
Item in previous periods represents exchange gain / (loss) on restatement
of Foreign Currency Convertible Bonds (FCCBs) matured in Feb 2011.
- In terms of
the ‘Scheme of Arrangement and Demerger’ as approved by the Hon’ble Punjab
and Haryana High Court, the Steel Business undertaking together with all
its properties, assets, rights, benefits and interest therein of the
Company has vested in Vardhman Special Steels Limited (VSSL) w.e.f.
Jan,2011. Accordingly, results for the quarter and half year do not
include performance of the Steel Business undertaking.
- Basic
Earnings Per Share for the year ended 31.03.2011 has been calculated in
accordance with AS-20 after taking into account the weighted average
effect of equity shares issued through QIP during the year 2010-11.
There are no potential equity shares as at the
close of the quarter, which could require calculation of diluted earnings per
share.
The Diluted Earnings Per Share for the
previous periods as mentioned in Point 16 above had been calculated strictly in
accordance with the Accounting Standard (AS)-20 on ‘Earnings per share’ by
taking into account any event of contingency which could have required
conversion of loan in equity.
- The Company
did not have any investors’ complaint pending at the beginning of the
quarter. The Company received 69 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 Sep, 2011.
- Figures for
previous periods have been recast/regrouped, wherever necessary to make
them comparable.
- The Board of
Directors has approved the above results in their meeting held on
12.11.2011 which have been reviewed by the Statutory Auditors in terms of
Clause 41 of the Listing Agreement.
SEGMENTWISE REVENUE RESULTS AND CAPITAL EMPLOYED
(Rs. In Millions)
|
Particulars |
Quarter ended 30th
Sept., 2011 (Unaudited) |
Half year ended
30th Sept., 2011 (Unaudited) |
|
1. Segment Revenue |
|
|
|
Yarn |
8985.000 |
17421.800 |
|
Fabric |
2881.100 |
5966.100 |
|
Unallocated |
377.100 |
733.000 |
|
Total |
12243.200 |
24120.900 |
|
Less: Inter Segment Revenue |
1892.800 |
4168.300 |
|
Net Sales/Income from Operations |
10350.400 |
19952.600 |
|
|
|
|
|
2. Segment Results [Profit / (Loss) before tax and interest from
each segment] |
|
|
|
Yarn |
715.100 |
304.900 |
|
Fabric |
217.100 |
434.000 |
|
Unallocated |
39.200 |
88.500 |
|
Total |
971.400 |
827.400 |
|
|
|
|
|
Less: (i) Interest |
425.100 |
921.400 |
|
(ii) Net of Un-allocable expenditure/(Income) |
23.700 |
14.200 |
|
Profit after interest but before exceptional items & tax |
522.600 |
(108.200) |
|
|
|
|
|
3. Capital Employed |
|
|
|
Yarn |
25277.700 |
25277.700 |
|
Fabric |
9463.300 |
9463.300 |
|
Unallocated |
9797.200 |
9797.200 |
|
Total |
44718.200 |
44718.200 |
STATEMENT OF ASSETS AND LIABILITY
(Rs. In Millions)
|
Particular |
30.09.2011
Unaudited |
|
SHAREHOLDERS FUNDS |
|
|
1] Share Capital |
636.500 |
|
2] Reserves & Surplus |
18486.700 |
|
LOAN FUNDS |
23662.000 |
|
DEFERRED TAX LIABILITIES |
1933.000 |
|
|
|
|
TOTAL |
44718.200 |
|
|
|
|
FIXED ASSETS [Net Block] |
22614.100 |
|
INVESTMENT |
5807.700 |
|
|
|
|
CURRENT ASSETS, LOANS & ADVANCES |
|
|
Inventories |
7958.300 |
|
Sundry Debtors |
6909.500 |
|
Cash & Bank Balances |
227.800 |
|
Loans & Advances |
2680.900 |
|
Total Current
Assets |
17776.500 |
|
Less : CURRENT LIABILITIES & PROVISIONS |
|
|
Current Liabilities |
1785.400 |
|
Provisions |
(305.300) |
|
Total Current
Liabilities |
1480.100 |
|
Net Current
Assets |
16296.400 |
|
|
|
|
TOTAL |
44718.200 |
FIXED ASSETS:
·
·
·
Buildings
·
Plant and Machinery
·
Furniture and Fixtures
·
Vehicles
·
Computer Software
WEB SITE DETAILS
BUSINESS DESCRIPTION
Subject is an Indian-based
integrated textile producer. The Company’s business portfolio includes yarn,
greige and processed fabric, garments, sewing thread, acrylic fiber and alloy
steel. Its manufacturing facilities include over 8,00,000 spindles, 65 tons per
day yarn and fiber dyeing, 900 shuttleless looms, 90 million meters per annum
processed fabric, 33 tons per day sewing thread, 18000 metric tons per annum
acrylic fiber and 100,000 tons per annum special and alloy steel. The Company
owns and operates several subsidiary companies including VMT Spinning Company
Limited, VTL Investments Limited, Vardhman Acrylics Limited, Vardhman Yarns and
Threads Limited, Vardhman Nisshinbo Garments Company Limited and Vardhman
Special Steels Limited. For the fiscal year ended 31 March 2010, Vardhman
Textiles Limited's revenues increased 14% to RS33.99B. Net income totaled
RS2.61B, up from Rs 578.3M. Revenues reflect an increase in sales from Yarn
division, higher revenue from Fabric, an increase in other income and increased
sales of Sewing Thread. Net income also reflects a decrease in rental expenses,
lower insurance expenses and a decrease in interest expenses.
MANAGEMENT
S. PAUL OSWAL
Shri S. Paul Oswal
is Chairman of the Board, Managing Director of Vardhman Textiles Limited, since
June 1, 2010. He has business experience of more than 12 years in Textile
Industry. Directorships of Other Companies held are : Vardhman Spinning and
General Mills Limited, Vardhman Threads Limited , VMT Spinning Company Limited,
Adinath Investment and Trading Company, Devakar Investment and Trading Company
(Private) Limited, Anklesh Investments (Private) Limited, Srestha Holdings
Limited, Vardhman Textile Processors (Private) Limited, Santon Finance and
Investment Company Limited, Flamingo Finance and Investment Company Limited,
Ramaniya Finance and Investment Company Limited, Marshall Investment and
Trading Company (Private) Limited, Pradeep Mercantile Company (Private) Limited,
Plaza Trading Company (Private) Limited, The Ludhiana Industries Power Company
Limited, Syracuse Investment and Trading Company (Private) Limited, Vardhman
Yarns and Threads Limited
PRAFULL ANUBHAI
Shri. Prafull
Anubhai is Non-Executive Independent Director of Vardhman Textiles Limited,
since July 26, 1980. He is a industrialist and business consultant having
experience of more than 35 years. His Directorships of other companies are Gruh
Finance Limited, Soma Textiles and Industries Limited, The EMSAF -Mauritius,
The H.K. Finechem Limited, Torrent Cables Limited, Unichem laboratories
Limited, Management Structure and Systems Private Limited, BOTIL Oil Tools
India Private Limited, Birla Sun Life Trustee Company Private Limited and
Centre for science, technology and policy (CSTEP).
Education
·
BS Economics, University of London
SUBHASH KHANCHAND BIJLANI
Shri. Subhash
Khanchand Bijlani is Non-Executive Independent Director of Vardhman Textiles
Limited., since March 30, 2005. He has Industrial and Business experience of
more than 30 years. His other directorships are Magnus Engineers Private
Limited, Chandigarh Industrial and Tourism Development Corporation Limited ,
Punjab Information and Communication Technology Corporation Limited.
NEERAJ JAIN
Mr. Neeraj Jain is
Chief Executive Officer - Operations of Yam Business, Executive Director of
Vardhaman Textiles Limited., since Aril 1, 2010. He Holds B.Com and CA. He is a
business executive having experience of more than 18 years in Finance and Yarn
Business
SACHIT JAIN
Shri. Sachit Jain
is Executive Director of Vardhman Textiles Limited, since March 30, 2005. He is
a Business Executive having experience of more than 18 years in Textile
Industry. His Directorships of other companies are Vardhman Spinning and
General Mills Limited, Vardhman Acrylics Limited , VMT Spinning Company
Limited, Vardhman Apparels Limited, Auro Fabriks Limited, Adinath Investment
and Trading Company, Devakar Investment and Trading Company (Private) Limited,
Vardhman Textile Processors (Private) Limited, Plaza Trading Company (Private)
Limited, Pradeep Mercantile Company (Private) Limited, Anklesh Investments
(Private) Limited, Marshall Investment and Trading Company (Private) Limited,
Santon Finance and Investment Company Limited, Flamingo Finance and Investment
Company Limited, Ramaniya Finance and Investment Company Limited, Srestha
Holdings Limited, Syracuse Investment and Trading Company (Private) Limited,
Vardhman Yarns and Threads Limited and Punjab Tractors Limited.
SHRAVAN TALWAR
Shri. Shravan
Talwar is Additional Non-Executive Independent Director of Vardhaman Textiles
Limited., since January 29, 2010. He is a business executive having experience
of more than 10 years in the field of Strategic Planning, Marketing and
Restructuring of Business Operations. He holds BA (Computational and Applied
Math and Economics), MBA. He holds directorships with Destiny Healthcare
(Private) Limited and Destiny Health (Private) Limited.
NEWS
YARN
MILLS TAKE A HIT AS DEMAND SNAPS
16 June 2011
New
Delhi, June 16 -- It certainly looks as if textile mills took rising demand for
granted. Even as cotton prices more than doubled in the last year or so, prices
of yarn cruised in tandem as booming demand for fabric-both in the local and
world markets-enabled mills to pass on the price rise. Cotton spinning mills
such as Vardhman Textiles Limited, KPR Mill Limited, Alok Industries Limited
and Ambika Cotton Mills Limited ended fiscal 2011 (FY11) with record revenue
and profit growth.
But
with cotton prices on a roller-coaster ride since January, mills may well spin
a doleful story in the next few quarters. After a 40% jump between January and
March, cotton prices nosedived in April by a similar magnitude. Normally, this
would benefit spinning mills. Instead, crashing prices left mills holding
high-cost inventory, which they had piled up fearing a further surge in cotton
prices.
Compounding
this, domestic demand for cotton yarn, too, snapped last month. Demand in world
markets has also cooled off. Therefore, yarn prices are now down to two-thirds
of March levels and are expected to soften further. Most mills are stuck with
huge stocks of unsold yarn, forcing a production cut of at least 25%.
Lower
off take and lower prices will result in revenue contraction in the near term.
Also, marking down of high-cost inventory will drag down operating margins, and
translate into cash losses for some mills. The scenario is in sharp contrast
with FY11, when the industry was operating at 90% capacity utilization,
enjoying average operating margins of around 22%, and net profit of most large
mills nearly doubled.
The
volatility in stock prices of market leaders such as Vardhman Textiles,
AlokIndustries and KPR Mill, and those of mid-cap firms such as Precot Meridian
Limited in the last five months signalled difficult times. A research report by
Crisil Limited last year had cautioned about a deterioration in financial risk
profiles of spinning mills in the short term, especially for those that were
expanding capacity on borrowed funds. Rising interest rates will raise finance
costs and weigh on profitability.
The
industry is hoping that this will be a temporary blip. As yarn prices stabilize
at more reasonable levels and cotton output improves, demand may pull back gradually.
Yet, the first six months will see cotton mills post a relatively poorer
performance when compared with the year before, which in turn will hit stocks.
VARDHMAN'S
PROFITABILITY MAY HAVE PEAKED IN MARCH QUARTER
18 May 2011
New
Delhi, May 18 -- Vardhman Textiles Limited, one of the country's largest yarn
manufacturers, gained from soaring yarn prices through fiscal 2011 (FY11).
Even
during the March quarter when surging inflation hit the profitability of most
firms, Vardhman registered strong growth in profits. Increase in realizations
in yarn and fabric surpassed the surge in raw material (cotton) costs.
Volumes
grew, too, on the back of high consumption and demand. Net revenue for the
quarter jumped 20% year-on year.
Improved
operating leverage offset the rise in employee costs and other expenses, which
consequently fell as a percentage of sales.
This
translated into a huge 730 basis points (bps) jump in operating profit margin
from the year-ago period and 190 bps from the preceding quarter. In fact, the
operating margin is the highest since March 2009, when the textile cycle turned
positive after prolonged recession that had threatened closure of many smaller
firms.
Almost
all the improvement in margins accrued from Vardhman's yarn segment, which accounts
for a major portion of the business. Profit before interest and tax of the
segment doubled from the year-ago period.
As
a result, net profit for the quarter surged by around 84% to Rs.1395.000
millions. For the full year, net profit more than doubled on a 32% rise in
revenue. What has also gone down positively in the Street is Vardhman's
decision to hive off its steel business, which accounted for hardly one-tenth
of its revenue.
Rising
demand has also led to planned capital expenditure of around Rs.10000.000
Millions in the next two years that can be met through internal accruals.
Two-thirds
of this amount will be spent on increasing spindlage, while the rest will be
used to add looms and dyeing capacity.
The
key question is whether the uptrend in textile prices will continue. Since
April, both cotton and yarn prices have cooled off by about 30%.
Vardhman,
like most large mills, is holding high-cost inventory of cotton, which means
that if yarn realizations fall in the next two quarters due to weaker demand,
its operating margin would be adversely affected.
A
report by ICICI Securities Limited says: "We expect dual pressure on the
operating margin in FY12 due to correction in cotton and yarn prices and the
high procurement cost of cotton." Vardhman's shares, which had
outperformed the BSE-500 Index of the Bombay Stock Exchange until the December
quarter, have slowly started slipping since April on a weaker outlook for the
next two quarters. At the current price of '262 apiece, the stock trades at
around seven times FY12 earnings. While the valuation looks reasonable, being a
cyclical industry, any indication of a downturn could affect the stock sharply.
VARDHMAN TEXTILES
LIMITED UPDATES ON SCHEME OF ARRANGEMENT
Mar 16, 2011
Vardhman Textiles
Limited announced that pursuant to the approval to the Scheme by the
Shareholders, Secured Creditors and Unsecured Creditors, a Confirmatory
Petition was filed in the Hon'ble Punjab and Haryana High Court at Chandigarh
for its approval which was finally heard and an Order was passed by the Hon'ble
Punjab and Haryana High Court on January 12, 2011 approving the Scheme. The
Copy of the Order has been filed with the Registrar of Companies at Chandigarh
on March 15, 2011 and the Scheme has become effective. As per Clause 5.1 of the
Scheme, the shareholders of Vardhman Textiles Limited would be allotted 1 share
of Vardhman Special Steels Limited for every 5 shares held in Vardhman Textiles
Limited whose names are registered in the register of members of Vardhman
Textiles Limited as on the Record Date to be fixed for the purpose. In this
regard attention of the Exchange and the Shareholders of the Company is also
brought to Clause 5.4 of the Scheme which provides that all those shareholders
who hold shares of the Company in physical form shall also have the option to
receive the Equity Shares in dematerialized form provided, the details of their
account with the Depository Participant are intimated in writing to the Company
and / or its Registrar before the Record Date. Otherwise, they would be issued
Equity Shares, in physical form
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. 52.16 |
|
|
1 |
Rs. 80.64 |
|
Euro |
1 |
Rs. 69.42 |
SCORE & RATING EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
7 |
|
PAID-UP CAPITAL |
1~10 |
6 |
|
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 |
YES |
|
--LISTED |
YES/NO |
YES |
|
--OTHER MERIT FACTORS |
YES/NO |
YES |
|
TOTAL |
|
62 |
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 |
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 |
|
- |
NB |
New Business |
- |
This report is issued at your request without any
risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL)
or its officials.