MIRA INFORM REPORT

 

 

Report Date :

20.03.2013

 

IDENTIFICATION DETAILS

 

Name :

WELSPUN INDIA LIMITED

 

WELSPUN GLOBAL BRANDS LIMITED AMALGAMATED WITH WELSPUN INDIA LIMITED (w.e.f. 08.02.2013)

 

 

Registered Office :

Welspun City, Village Versamedi, Taluka Anjar – 370110, Gujarat

 

 

Country :

India

 

 

Financials (as on) :

31.03.2012

 

 

Date of Incorporation :

17.01.1985

 

 

Com. Reg. No.:

04-033271

 

 

Capital Investment / Paid-up Capital :

Rs. 890.120 Millions

 

 

CIN No.:

[Company Identification No.]

L17110GJ1985PLC033271

 

 

TAN No.:

[Tax Deduction & Collection Account No.]

RKTW00055G

 

 

PAN No.:

[Permanent Account No.]

AAACW1259N

 

 

Legal Form :

A Public Limited Liability Company. The Company’s Shares are Listed on the Stock Exchanges.

 

 

Line of Business :

Manufacturer of wide range of home textile products, mainly terry towels, bed linen products and rugs.

 

 

No. of Employees :

10878 (Approximately)

 

 

RATING & COMMENTS

 

MIRA’s Rating :

Ba (52)

 

RATING

STATUS

 

PROPOSED CREDIT LINE

41-55

Ba

Overall operation is considered normal. Capable to meet normal commitments.

Satisfactory

 

Maximum Credit Limit :

USD 37200000

 

 

Status :

Good

 

 

Payment Behaviour :

Regular

 

 

Litigation :

Clear

 

 

Comments :

Subject is a part of Welspun Group. It is a well established and reputed company having good track record. Company has performed well during the current year. Financially company seems to be strong.

 

Fundamental of the company appears to be healthy. Subject gets good supports from its group companies.

 

The rating also take into consideration the experienced management and leading position in home textile segment with well-diversified portfolio.

 

Trade relations are reported to be fair. Business is active. Payments are regular and as per commitments.

 

The company can be considered for normal business dealings at usual trade terms and condition.

 

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 – June 30, 2012

 

Country Name

Previous Rating

(31.03.2012)

Current Rating

(30.06.2012)

India

A1

A1

 

Risk Category

ECGC Classification

Insignificant

 

A1

Low

 

A2

Moderate

 

B1

High

 

B2

Very High

 

C1

Restricted

 

C2

Off-credit

 

D

 

 

INDIAN ECONOMIC OVERVIEW

 

India is developing into an open-market economy, yet traces of its past autarkic policies remain. Economic liberalization, including industrial deregulation, privatization of state-owned enterprises, and reduced controls on foreign trade and investment, began in the early 1990s and has served to accelerate the country's growth, which has averaged more than 7% per year since 1997. India's diverse economy encompasses traditional village farming, modern agriculture, handicrafts, a wide range of modern industries, and a multitude of services. Slightly more than half of the work force is in agriculture, but services are the major source of economic growth, accounting for more than half of India's output, with only one-third of its labor force. India has capitalized on its large educated English-speaking population to become a major exporter of information technology services and software workers. In 2010, the Indian economy rebounded robustly from the global financial crisis - in large part because of strong domestic demand - and growth exceeded 8% year-on-year in real terms. However, India's economic growth in 2011 slowed because of persistently high inflation and interest rates and little progress on economic reforms. High international crude prices have exacerbated the government's fuel subsidy expenditures contributing to a higher fiscal deficit, and a worsening current account deficit. Little economic reform took place in 2011 largely due to corruption scandals that have slowed legislative work. India's medium-term growth outlook is positive due to a young population and corresponding low dependency ratio, healthy savings and investment rates, and increasing integration into the global economy. India has many long-term challenges that it has not yet fully addressed, including widespread poverty, inadequate physical and social infrastructure, limited non-agricultural employment opportunities, scarce access to quality basic and higher education, and accommodating rural-to-urban migration.

Source : CIA

 

 

EXTERNAL AGENCY RATING

 

Rating Agency Name

CARE

Rating

Long term Bank facilities : (CARE) A

Rating Explanation

Having adequate degree of safety regarding timely servicing of financial obligations, it carry low credit risk. 

Date

December 2011

 

 

RBI DEFAULTERS’ LIST STATUS

 

Subject’s name is not enlisted as a defaulter in the publicly available RBI Defaulters’ list.

 

 

EPF (Employee Provident Fund) DEFAULTERS’ LIST STATUS

 

Subject’s name is not enlisted as a defaulter in the publicly available EPF (Employee Provident Fund) Defaulters’ list as of 31-03-2012.

 

 

LOCATIONS

 

Registered Office/ Plant I  :

Welspun City, Village Versamedi, Taluka Anjar – 370110, Gujarat, India

Tel. No.:

91-2836-573428/ 9 / 279000 / 09/ 661111 / 279051

Fax No.:

91-2836-247070/ 279010 / 279050

E-Mail :

companysecretary_wil@welspun.com

ashish_shah@welspun.com

Website :

www.welspun.com

Location :

Owned

 

 

Corporate Office :

Welspun House, 6th Floor, Kamala Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai – 400013, Maharashtra, India

Tel. No.:

91-22-66136000/ 24908000

Fax No.:

91-22-24908020/ 24908021

E-Mail :

subrata_pal@welspun.com

 

 

Plant II :

Survey No. 76 Village and P.O. Morai, Vapi District Valsad, Gujarat – 396194, India

Tel. No.:

91-260-2437437

Fax No.:

91-260-2437088

Email :

wttvapi@welspun.com

 

 

DIRECTORS

 

AS ON 31.03.2012

 

Name :

Mr. B. K. Goenka

Designation :

Chairman

 

 

Name :

Mr. R. R. Mandawewala

Designation :

Managing Director

 

 

Name :

Mr. Dadi B. Engineer

Designation :

Director

 

 

Name :

Mr. Ram Gopal Sharma

Designation :

Director

 

 

Name :

Mr. A. K. Dasgupta

Designation :

Director

 

 

Name :

Mr. Ajay Sharma

Designation :

Nominee – IDBI Bank

 

 

KEY EXECUTIVES

 

Name :

Mr. Shashikant Thorat

Designation :

Company Secretary

 

 

Audit Committee :

·         Mr. Ram Gopal Sharma

·         Mr. Dadi B. Engineer

·         Mr. A. K. Dasgupta

 

 

Remuneration Committee:

·         Mr. A. K. Dasgupta

·         Mr. Dadi B. Engineer

·         Mr. Ram Gopal Sharma

 

 

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

 

AS ON 31.12.2012

 

Category of Shareholders

No. of Shares

Percentage of Holdings

(A) Shareholding of Promoter and Promoter Group

 

 

http://www.bseindia.com/include/images/clear.gif(1) Indian

 

 

http://www.bseindia.com/include/images/clear.gifIndividuals / Hindu Undivided Family

254453

0.28

http://www.bseindia.com/include/images/clear.gifBodies Corporate

60187456

67.32

http://www.bseindia.com/include/images/clear.gifSub Total

60441909

67.61

http://www.bseindia.com/include/images/clear.gif(2) Foreign

 

 

Total shareholding of Promoter and Promoter Group (A)

60441909

67.61

(B) Public Shareholding

 

 

http://www.bseindia.com/include/images/clear.gif(1) Institutions

 

 

http://www.bseindia.com/include/images/clear.gifMutual Funds / UTI

2520956

2.82

http://www.bseindia.com/include/images/clear.gifFinancial Institutions / Banks

14008213

15.67

http://www.bseindia.com/include/images/clear.gifInsurance Companies

49831

0.06

http://www.bseindia.com/include/images/clear.gifSub Total

16579000

18.54

http://www.bseindia.com/include/images/clear.gif(2) Non-Institutions

 

 

http://www.bseindia.com/include/images/clear.gifBodies Corporate

2035166

2.28

http://www.bseindia.com/include/images/clear.gifIndividuals

 

 

http://www.bseindia.com/include/images/clear.gifIndividual shareholders holding nominal share capital up to Rs. 0.100 Million

6140815

6.87

http://www.bseindia.com/include/images/clear.gifIndividual shareholders holding nominal share capital in excess of Rs. 0.100 Million

3528529

3.95

http://www.bseindia.com/include/images/clear.gifAny Others (Specify)

677350

0.76

http://www.bseindia.com/include/images/clear.gifClearing Members

162879

0.18

http://www.bseindia.com/include/images/clear.gifNon Resident Indians

329615

0.37

http://www.bseindia.com/include/images/clear.gifAny Other

129581

0.14

http://www.bseindia.com/include/images/clear.gifTrusts

300

0.00

http://www.bseindia.com/include/images/clear.gifHindu Undivided Families

54975

0.06

http://www.bseindia.com/include/images/clear.gifSub Total

12381860

13.85

Total Public shareholding (B)

28960860

32.39

Total (A)+(B)

89402769

100.00

(C) Shares held by Custodians and against which Depository Receipts have been issued

0

0.00

http://www.bseindia.com/include/images/clear.gif(1) Promoter and Promoter Group

0

0.00

http://www.bseindia.com/include/images/clear.gif(2) Public

0

0.00

http://www.bseindia.com/include/images/clear.gifSub Total

0

0.00

Total (A)+(B)+(C)

89402769

0.00

 

 

BUSINESS DETAILS

 

Line of Business :

Manufacturer of wide range of home textile products, mainly terry towels, bed linen products and rugs.

 

 

Products :

ITC Code

Product Descriptions

63049250

Cotton Terry Towel

63041910

Cotton bed Sheet

52051100

Cotton Yarn

 

 

PRODUCTION STATUS (AS ON 31.03.2012)

 

Particulars

Unit

Actual Production

Towels

M.T.

41477.85

Bed Sheets

Million Mtrs

37.33

Cotton Yarn

M.T.

33507.06

Rugs

M.T.

4808.99

 

 

GENERAL INFORMATION

 

No. of Employees :

10878 (Approximately)

 

 

Bankers :

Ø  State Bank of Bikaner and Jaipur

Ø  State Bank of India

Ø  Punjab National Bank

Ø  Andhra Bank

Ø  Canara Bank

Ø  Exim Bank Limited

Ø  Bank of India

Ø  State Bank of Patiala

Ø  Bank of Baroda

Ø  Oriental Bank of Commerce

Ø  IDBI Bank Limited

Ø  State Bank of Hyderabad

Ø  State Bank of Travancore

Ø  Indian Overseas Bank

Ø  Corporation Bank

Ø  United Bank of India

Ø  ICICI Bank Limited

Ø  Central Bank of India

 

 

Facilities :

 

Secured Loans

31.03.2012

31.03.2011

 

Term Loans:

(Rs. In Millions)

Rupee Term Loans from Banks

9566.480

9996.900

Working Capital Loans from Banks

4520.740

3886.480

Total

14087.220

13883.380

 

Note :

 

The working capital loans, which includes cash credit and packing credit from banks, are secured by hypothecation of raw materials, stock-in-process, finished, semi finished goods, stores, spares and book debts and other current assets of the Company and second charge on entire fixed assets of the Company and by a Corporate Guarantee issued by Welspun Retail Limited.

 

 

 

Banking Relations :

--

 

 

Auditors :

 

Name :

Price Waterhouse

Chartered Accountants

 

 

Associate Company :

Welspun Captive Power Generation Limited (WCPGL)

 

 

Joint Venture Company :

Welspun Zucchi Textiles Limited (WZTL)

 

 

Subsidiaries :

Ø  Welspun AG (WAG)

Ø  Besa Developers and Infrastructure Private Limited (BESA)

Ø  Welspun Mexico S.A. de C.V (WMEX)

Ø  Welspun Sorema Europe, S.A. (SOREMA) (Up to February 29, 2012)

Ø  Welspun Retail Limited (WRL)

Ø  CHT Holdings Limited (CHTHL) (Held through WHTUKL)

Ø  Welspun USA Inc., USA (WUSA)

Ø  Welspun Decorative Hospitality LLC (WDHL)

Ø  Welspun Holdings Private Limited, Cyprus (WHPL)

Ø  Kojo Canada Inc. (Held through WDHL)

Ø  Welspun Mauritius Enterprises Limited (WMEL)

Ø  Novelty Home Textiles SA de CV (Held through WMEL)

Ø  Welspun Home Textiles UK Limited (WHTUKL) (Held through WHPL)

Ø  Christy Home Textiles Limited (CHTL) (Held through CHTHL)

Ø  Welspun UK Limited (WUKL) (Held through CHTL)

Ø  Christy 2004 Limited (Held through WUKL)

Ø  Christy Europe GmbH (CEG) (Held through CHTL)

Ø  Christy UK Limited (CUKL) (Held through CHTL)

Ø  ER Kingsley (Textiles) Limited (ERK) (Held through CHTL)

Ø  SOREMA Welspun Distribution and Logistics, S. A, Portugal (Held through SOREMA)

Ø  SOREMA Welspun Espana S. L. U. (Held through SOREMA)

Ø  SOREMA Welspun Benelux B. V. Holland (Held through SOREMA)

Ø  SOREMA Welspun Deutschland GmbH, Germany (Held through SOREMA)

 

 

Enterprises over which Key Management Personnel or relatives of such personnel exercise significant influence or control and with whom transactions have taken place during the year :

Ø  Welspun Global Brands Limited (WGBL)

Ø  Welspun Investments and Commercials Limited (WICL)

Ø  Welspun Corp Limited (WCL) (Formerly known as Gujarat Stahl Rohren Limited (WGSRL)

Ø  Welspun Power and Steel Limited (WPSL)

Ø  Welspun Wintex Limited (WWL)

Ø  Welspun Mercantile Limited (WML)

Ø  Krishiraj Trading Limited (KTL)

Ø  Welspun Logistics Limited (WLL)

Ø  Welspun Syntex Limited (WSL)

Ø  Welspun Realty Private Limited (WRPL)

Ø  Vipuna Trading Limited (VTL)

Ø  MertzSecurities Limited (MSL)

Ø  Welspun Polybuttons Limited (WPBL)

Ø  Wel-treat Enviro Management Organisation Limited (WEMO)

Ø  Remi Metals Gujarat Limited (RMGL)

Ø  Welspun Maxsteel Limited (WMSL)

Ø  Welspun Projects Limited (WPL)

Ø  Methodical Investment and Trading Company Private Limited (MITCPL)

Ø  Welspun FinTrade Limited (WFTL)

Ø  Welspun Finance Limited (WFL)

Ø  Welspun Urja Gujarat Private Limited (WUGPL)

Ø  Welspun Foundation for Health and Knowledge (WFHK)

 

 

CAPITAL STRUCTURE

 

AS ON 31.03.2012

 

Authorised Capital :

No. of Shares

Type

Value

Amount

 

 

 

 

155,500,000

Equity Shares

Rs. 10/- each

Rs. 1555.000 Millions

 

 

 

 

 

Issued, Subscribed & Paid-up Capital :

No. of Shares

Type

Value

Amount

 

 

 

 

89,012,269

Equity Shares

Rs. 10/- each

Rs. 890.120 Millions

 

 

 

 

 

 

(a) Reconciliation of number of shares

 

Equity Shares :

31.03.2012

 

Number of Shares

Amount (Rs. millions)

Balance as at the beginning of the year

88,976,269

889.760

Add : Shares issued to Qualified Institutional Buyers (QIB)

--

--

Add : Shares issued to Employees under Employee Stock Option Scheme

36,000

0.360

Balance as at the end of the year

89,012,269

890.120

 

 

Preference Shares :

31.03.2012

 

Number of Shares

Amount (Rs. millions)

Balance as at the beginning of the year

500,000

50.000

Less: Shares redeemed during the year

(500,000)

(50.000)

Balance as at the end of the year

--

--

 

 

(b) Details of shares held by shareholders holding more than 5% of the aggregate shares in the Company

 

Equity Shares :

31.03.2012

 

Number of Shares

% of holdings

Welspun Fintrade Limited

17,409,268

19.56

Welspun Mercantile Limited

9,519,294

10.69

Dunearn Investment Mauritius Pte Limited

9,079,463

10.20

Welspun Wintex Limited

7,179,577

8.07

Krishiraj Trading Limited

6,590,765

7.40

IFCI Limited

6,034,069

6.78

 

# Less than 5%

 

(c)   Rights, preferences and restrictions attached to shares Equity Shares:

The company has one class of equity shares having a par value of Rs.10 per share. Each shareholder is eligible for one vote per share held. The dividend, in case proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

Preference Shares:

0% Redeemable Preference Shares of Rs.100 each fully paid up issued pursuant to High Court order were redeemable at par on or after repayment of all outstanding term liabilities and preference shares held by banks and financial institutions as on April 1, 2000 alongwith interest and dividend thereon.

FINANCIAL DATA

[all figures are in Rupees Millions]

 

ABRIDGED BALANCE SHEET

 

SOURCES OF FUNDS

 

31.03.2012

31.03.2011

31.03.2010

SHAREHOLDERS FUNDS

 

 

 

1] Share Capital

890.120

939.760

780.900

2] Share Application Money

0.000

0.000

0.000

3] Reserves & Surplus

8317.260

5682.690

5397.960

4] (Accumulated Losses)

0.000

0.000

0.000

5] Share Suspense Account

104.750

0.000

0.000

NETWORTH

9312.130

6622.450

6178.860

LOAN FUNDS

 

 

 

1] Secured Loans

14087.220

13883.380

16163.590

2] Unsecured Loans

396.770

825.700

417.380

TOTAL BORROWING

14483.990

14709.080

16580.970

DEFERRED TAX LIABILITIES

2161.990

1878.730

1562.090

 

 

 

 

TOTAL

25958.110

23210.260

24321.920

 

 

 

 

APPLICATION OF FUNDS

 

 

 

 

 

 

 

FIXED ASSETS [Net Block]

15565.820

15288.450

15068.530

Capital work-in-progress

1198.420

550.170

239.820

 

 

 

 

INVESTMENT

2049.360

1065.880

929.440

DEFERRED TAX ASSETS

0.000

0.000

0.000

 

 

 

 

CURRENT ASSETS, LOANS & ADVANCES

 

 

 

 

Inventories
4547.340

4527.320
3544.270

 

Sundry Debtors
2059.790

1330.430
1733.530

 

Cash & Bank Balances
919.190

372.830
830.120

 

Other Current Assets
1519.400

2420.360
623.780

 

Loans & Advances
4243.940

2776.840
3411.260

Total Current Assets
13289.660

11427.780

10142.960

Less : CURRENT LIABILITIES & PROVISIONS
 

 

 

 

Sundry Creditors
2637.150

1998.620

1773.050

 

Other Current Liabilities
3391.960

3011.050
139.180

 

Provisions
116.040

112.350
146.600

Total Current Liabilities
6145.150

5122.020
2058.830

Net Current Assets
7144.510

6305.760
8084.130

 

 

 

 

MISCELLANEOUS EXPENSES

0.000

0.000

0.000

 

 

 

 

TOTAL

25958.110

23210.260

24321.920

 

PROFIT & LOSS ACCOUNT

 

 

PARTICULARS

31.03.2012

31.03.2011

31.03.2010

 

SALES

 

 

 

 

 

Revenue from operations

25904.890

20491.860

18235.410

 

 

Other Income

380.940

401.540

577.300

 

 

TOTAL                                    

26285.830

20893.400

18812.710

 

 

 

 

 

Less

EXPENSES

 

 

 

 

Cost of material consumed

13541.490

11911.010

 

 

 

Purchase of stock in trade

153.460

31.930

 

 

 

Changes in inventory of finished goods, work in progress and stock in trade

240.180

(851.770)

 

 

 

Employees Benefit Expenses

1541.650

1478.580

 

 

 

Other Expenses

5931.790

5090.160

 

 

 

TOTAL                                    

21408.570

17659.910

15174.850

 

 

 

 

 

Less

PROFIT/ (LOSS) BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION

4877.260

3233.490

3637.860

 

 

 

 

 

Less

FINANCIAL EXPENSES                                   

1438.510

1069.690

870.050

 

 

 

 

 

 

PROFIT/ (LOSS) BEFORE TAX, DEPRECIATION AND AMORTISATION

3438.750

2163.800

2767.810

 

 

 

 

 

Less/ Add

DEPRECIATION/ AMORTISATION                    

1187.430

1135.130

1063.250

 

 

 

 

 

 

PROVISION FOR DIMINUTION IN VALUE OF INVESTMENTS [Exceptional Items]

81.790

0.000

0.000

 

 

 

 

 

 

PROVISION FOR DIMINUTION IN VALUE OF INVESTMENTS [Extraordinary Items]

0.000

739.120

0.000

 

 

 

 

 

 

PROVISION FOR DOUBTFUL LOANS AND ADVANCES [Extraordinary Items]

284.350

937.910

0.000

 

 

 

 

 

 

PROFIT/ (LOSS) BEFORE TAX

1885.180

(648.360)

1704.560

 

 

 

 

 

Less

TAX                                                                 

714.080

349.480

554.500

 

 

 

 

 

 

PROFIT/ (LOSS) AFTER TAX

1171.100

(997.840)

1150.060

 

 

 

 

 

Add

PREVIOUS YEARS’ BALANCE BROUGHT FORWARD

2030.140

3046.180

2001.650

 

 

 

 

 

Less

APPROPRIATIONS

 

 

 

 

 

Equity Shareholders

0.000

0.000

73.090

 

 

Preference Shareholders

50.000

0.000

17.410

 

 

Final Dividend for Previous Year

0.000

15.600

0.000

 

 

Tax on Final Dividend

0.000

2.600

15.030

 

BALANCE CARRIED TO THE B/S

3151.240

2030.140

3046.180

 

 

 

 

 

 

EARNINGS IN FOREIGN CURRENCY

 

 

 

 

Revenue from Exports on FOB basis

0.000

8.690

 

 

 

Interest Income

0.000

6.630

 

 

TOTAL EARNINGS

0.000

15.320

1044.380

 

 

 

 

 

 

IMPORTS

 

 

 

 

 

Raw Materials

735.550

802.450

1801.810

 

 

Stores and Spares and Dyes and Chemicals

245.630

175.480

143.790

 

 

Capital Goods

1248.670

1248.160

149.020

 

 

Packing Material

28.000

13.150

114.260

 

 

Others

90.980

8.690

0.000

 

TOTAL IMPORTS

2348.830

2247.930

2208.880

 

 

 

 

 

 

Earnings/ (Loss) Per Share (Rs.)

 

 

 

 

Basic and diluted after Extraordinary Items

11.77

(11.33)

N.A.

 

 

QUARTERLY RESULTS

 

PARTICULARS

 

30.06.2012

30.09.2012

31.12.2012

Type

1st Quarter

2nd Quarter

3rd Quarter

 Sales Turnover

7459.340

7989.750

7654.400

 Total Expenditure

6200.760

6830.530

6485.300

 PBIDT (Excl OI)

1258.580

1159.220

1169.100

 Other Income

169.060

115.280

64.400

 Operating Profit

1427.640

1274.500

1233.600

 Interest

363.050

333.420

332.700

 Exceptional Items

0.000

0.000

0.000

 PBDT

1064.590

941.080

900.900

 Depreciation

318.710

324.720

338.500

 Profit Before Tax

745.880

616.360

562.400

 Tax

246.850

220.380

182.800

Provisions and Contingencies

0.000

0.000

0.000

 Reported PAT

499.030

395.980

379.600

Extraordinary Items      

-113.720

66.220

-51.300

Prior Period Expenses

0.000

0.000

0.000

Other Adjustments

0.000

0.000

0.000

Net Profit

385.310

462.190

328.300

 

 

KEY RATIOS

 

PARTICULARS

 

 

31.03.2012

31.03.2011

31.03.2010

PAT / Total Income

(%)
4.46
(4.78)
6.11

 

 
 
 
 

Net Profit Margin

(PBT/Sales)

(%)
7.28
(3.16)
9.35

 

 
 
 
 

Return on Total Assets

(PBT/Total Assets}

(%)
6.53
(2.43)
6.76

 

 
 
 
 

Return on Investment (ROI)

(PBT/Networth)

 
0.20
(0.10)
0.28

 

 
 
 
 

Debt Equity Ratio

(Total Liability/Networth)

 
2.22
2.99
3.02

 

 
 
 
 

Current Ratio

(Current Asset/Current Liability)

 
2.16
2.23
4.93

 

 

LOCAL AGENCY FURTHER INFORMATION

 

 

Sr. No.

Check List by Info Agents

Available in Report (Yes / No)

1]

Year of Establishment

Yes

2]

Locality of the firm

Yes

3]

Constitutions of the firm

Yes

4]

Premises details

No

5]

Type of Business

Yes

6]

Line of Business

Yes

7]

Promoter's background

Yes

8]

No. of employees

Yes

9]

Name of person contacted

No

10]

Designation of contact person

No

11]

Turnover of firm for last three years

Yes

12]

Profitability for last three years

Yes

13]

Reasons for variation <> 20%

--

14]

Estimation for coming financial year

No

15]

Capital in the business

Yes

16]

Details of sister concerns

Yes

17]

Major suppliers

No

18]

Major customers

No

19]

Payments terms

No

20]

Export / Import details (if applicable)

No

21]

Market information

--

22]

Litigations that the firm / promoter involved in

--

23]

Banking Details

Yes

24]

Banking facility details

Yes

25]

Conduct of the banking account

--

26]

Buyer visit details

--

27]

Financials, if provided

Yes

28]

Incorporation details, if applicable

Yes

29]

Last accounts filed at ROC

Yes

30]

Major Shareholders, if available

Yes

31]

Date of Birth of Proprietor/Partner/Director, if available

No

32]

PAN of Proprietor/Partner/Director, if available

No

33]

Voter ID No of Proprietor/Partner/Director, if available

No

34]

External Agency Rating, if available

Yes

 

 

UNSECURED LOANS

 

Unsecured Loans

31.03.2012

31.03.2011

 

 

(Rs. In Millions)

Inter-Corporate Loan from Welspun Investments and Commercials Limited

0.000

80.000

Working Capital Loans from Banks

396.770

745.700

Total

396.770

825.700

 

 

FINANCIAL HIGHLIGHTS

 

During the year, the Company registered a growth of 26.43% in Revenue from Operations' 48.31% in PBIDT and 110.91% in PBT (before exceptional items).

 

With steady improvement in western economies and correction in the raw material prices' the Company's business witnessed remarkable growth. The Board anticipates this trend to continue during the next financial year.

 

Mexican operations of the Company' undertaken for decorative bedding through an indirect subsidiary formed under its Swiss subsidiary' have been wound up due to non-conducive atmosphere for the company's business. In view of the aforesaid closure' the company's subsidiaries of Mexico and Switzerland have been decided to be wound up.

 

 

SCHEME OF ARRANGEMENT

 

On November 26'2012' the Honourable High Court of Gujarat at Ahmedabad has passed an order ("Order") approving the Composite Scheme of Arrangement between the Company' Welspun Global Brands Limited and Welspun Retail Limited. The Order has become effective from December 7'2012. Pursuant to the Order:

 

i) Welspun Global Brands Limited ("WGBL") has been amalgamated as a going concern with the Company;

 

ii) Post the aforesaid transfer' the Marketing Business Undertaking of the Company along with investments in subsidiary Companies viz. Welspun USA Inc' Welspun Holdings Private Limited and Welspun Mauritius Enterprises Limited (i.e. WGBL Undertaking) has been transferred to Welspun Retail Limited; and

 

iii) The name of Welspun Retail Limited sanctioned to be changed to Welspun Global Brands Limited (formal change of name certificate from Registrar of Companies is being obtained).

 

 

MANAGEMENT DISCUSSION AND ANALYSIS

 

WELSPUN INDIA BUSINESS OVERVIEW

 

Subject is a part of the US$ 3.5 billion Welspun Group is the second largest home textile player in the world and the largest home textile company in Asia. With manufacturing facilities in India and a distribution network in 32 countries, it is the largest exporter of home textile products from India. Supplier to 14 of the Top 30 global retailers, the company has marquee clients like Wal-Mart, J C Penny, Target and Macy's to name a few.

 

The financial year 2011-12 (FY12) has been a transitional year for Welspun's textile business. The most significant step was the consolidation of textile business under a single umbrella, which has re-created a unified stronger entity where 'Welspun Global Brands Limited' the group's textile marketing arm has merged with Welspun India Limited and simultaneously transferred the same to its subsidiary, Welspun Retail Limited to transform into a textile powerhouse. This simplified structure provides WIL and its stakeholder's better control on all manufacturing and branding activities and presents an opportunity for the company to increase its market share globally. The company now has an increased presence in newer markets like Canada, South Africa, Kenya, Australia, Japan, China, Korea and Russia. This entry into newer markets has helped it in diversifying the geographical risks so that the Company is not adversely affected by any one market where it operates. The company also exited all the non-performing international manufacturing and marketing entities, thereby ensuring stronger and sustainable business growth and financial performance. The exit cost and losses are appearing as one-time losses in the financial numbers of FY12.

 

Additionally, WIL has also taken steps to pare down the retail network in India by reducing Wel home chain of stores. Going forward, preference will be given to shop-in-shop concept rather than setting up own retail outlets.

 

Further, seeing the tremendous potential in the Advanced Textiles market, the company forayed into this segment starting with the Non- Woven category. WIL has put up a new plant which has started production in October 2012. In a short span of time, it is already certified with J&J, Covadian, Rocklin and Reckitt Benckiser. Some of the specialized products that the company is currently manufacturing in Advanced Textiles are top end baby care wipes, hygiene wipes, filtration cloth and automotive nonwovens. WIL is well placed with high end global scale capacity, skilled workforce, product knowledge expertise and coordinated marketing approach to capitalise on the technical textile growth. WIL is thus well placed to strengthen its position as a global player. The company is confident that all the above steps will reflect positively in the financial performance for FY13.

 

 

GLOBAL ECONOMIC OVERVIEW

 

The global economic environment was challenging in FY12. The recovery in the developed economies that seemed to be shaping well at the start of 2011 lost steam towards the fag-end of the year. The momentum loss was on account of the protracted debt crisis in the euro area and as fiscal fragilities dampened business and consumer confidence. However, contrary to fears that came to the fore time and again during FY12, global growth did not stall.

 

Global manufacturing slowed sharply during FY12 and Euro area periphery saw a significant decline in activity driven by financial difficulties evident in a sharp increase in sovereign rate spreads. Activity disappointed in other economies too, notably the United States and United Kingdom. Spillovers from advanced economies and homegrown difficulties affected emerging markets and developing economies, resulting in a slowdown in growth in these economies. These spillovers lowered commodity prices and weighed on activity in many commodity exporters. The result of these developments was that growth was weaker than projected, in significant part because of the continuing intensity of the Euro area crisis. Other causes of disappointing growth included weak financial institutions and inadequate policies in key advanced economies. Furthermore, a significant part of the lower growth in emerging market and developing economies related to domestic factors, notably constraints on the sustainability of the high pace of growth in these economies and building financial imbalances.

 

Even in the first half of FY13, growth prospects, both in developed economies and emerging economies have continued to remain weak. In this period, the International Monetary Fund (IMF) has revised its global growth projections for both these groups downwards. Weaker growth prospects largely reflect the impact of sovereign debt overhang and banking fragilities in the euro area coupled with fiscal multipliers impacting growth with on-going fiscal consolidation. Euro area risks have affected business confidence and caused world trade to decelerate. Consequently, several emerging economies face weaker external demand on top of an already slowing domestic demand. Further downside risks to global growth stem from a possible "fiscal cliff" leading to sudden and sharp fiscal consolidation in the US.

 

Thus far in 2012, the US economy has grown at a relatively slow rate around 2.1%. In 2013, the US economy is expected to grow at a similar rate.

 

In Europe, the euro area crisis has deepened in spite of policy action aimed at resolving it and new interventions have been necessary to prevent matters from deteriorating rapidly. Banks, insurers, and firms have swept spare liquidity from the periphery to the core of the euro area, causing sovereign spreads in weaker European economies to hit record highs. The UK economy, while not part of the Euro zone, has nevertheless been in the doldrums since the financial crisis of 2008. While technically out of recession, unemployment has grown and consumer confidence remains depressed. Negative growth in property prices has made consumers cautious of debt despite very low interest rates. As a result savings rates have increased while wage growth has lagged behind inflation.

 

There is considerable uncertainty around the outlook of the global economy-whether it is just hitting another bout of turbulence on the path of a slow and bumpy recovery or whether the current slowdown has a more lasting component. The answer depends on what policy actions various government policymakers come up with to deal with the major short-term economic challenges in their respective countries and the impact of these policies. The Euro crisis while still severe, has shown signs of stabilizing. While there are no signs of growth returning outside of Germany, there is hope that the bottom of the curve has been reached in the Eurozone.

 

 

INDIA ECONOMIC OVERVIEW

 

India was also adversely affected by the global economic environment in FY12. Though India outperformed most of its peers in terms of growth, its potential and actual growth slowed. Growth decelerated in FY12 to 6.5% after two years of relatively good performance (8.4% in FY10 and FY11) and dropped to below the economy's potential. The drop in growth was a result of combination of domestic and global factors. Global macroeconomic and financial uncertainty, weak external demand, elevated level of prices, widening twin deficits and falling investment combined to adversely impact growth. The investment climate worsened due to structural impediments, policy uncertainty, inflation persistence and rising interest rates.

 

Economic indicators suggest that the slowdown has continued in the first half of FY13 with slack industrial activity and sub-par services sector performance. Inflation has stayed sticky at around 7.5 per cent in FY13 so far. Non-food manufacturing inflation has not softened in spite of the negative output gap that has emerged as a result of slowing growth. Fiscal imbalances, past exchange rate depreciation and feeble supply response have impacted inflation.

 

However, hopes of a growth revival have increased in recent months. Since the second week of September 2012, the government has announced a number of policy measures towards fiscal consolidation by reducing fuel subsidies and clearing stake sales in public enterprises. It has also taken several other reform measures including those related to FDI, infrastructure investment and overseas borrowings. While these measures have helped improve sentiments, their impact on growth will be felt with a lag, particularly after the substantive implementation of the initiatives relating to FDI and infrastructure. The improved prospects for Rabi crop, following the reduction in monsoon deficit with late rains are also expected to contribute to improving growth and inflation outlook, even though the recovery may take some time to set in. Though inflation is likely to remain sticky in near months, some relief may follow as demand-side inflationary pressures ebb after a period of high wage and cost push inflation. Expectations of a decline in inflation have also raised hopes of a reduction in interest rates, which could further improve growth.

 

 

GLOBAL TEXTILE INDUSTRY AND TRADE

 

The textile and apparel trade was estimated to be ~US$ 650 billion in 2011. This is approximately 4% of the total global trade of all commodities estimated at~ US$ 15 trillion.

 

The current global textile and apparel industry evolved in two parts as distinct supplier and consumption hubs. This has resulted in high level of trade between the two hubs. During the last 10 years, textile production has gradually shifted from developed countries like the US and UK towards low cost emerging market countries in Asia that have favorable conditions conducive to textile and apparel production. Mature economies have now emerged as major consuming hubs while developing economies are still in the primary stages of consumption.

 

In the period 1995 to 2010, textile and apparel trade grew at a modest CAGR of 5% per annum. During 1995 to 2000, trade growth remained muted at 3% CAGR. However, it accelerated to 7% during 2000 to 2005 and then fell in the subsequent five years to 4% CAGR. Global demand is expected to continue growing at mid- single digit growth rates in the period till year 2020. This growth is expected to be driven more by emerging market economies in the next few years as demand growth from developed nations is expected to slow down.

 

In the last few years, several new countries like Bangladesh and Vietnam have emerged as strong textile and apparel suppliers and have shown spectacular growth in exports. As Figure 6 shows, the growth rate in export of textiles and apparels developed countries like the US, UK, Italy, France has been much lower than the growth rate in emerging market countries like Bangladesh, Vietnam, India and China.

 

Over the last couple of years, labor costs across the globe have risen in the textile industry. This along with raw material price fluctuations has led to some uncertainty in the industry. In response to this, unit value prices have already started seeing an upward trend, and global competitors have been forced to look for strategic advantages.

 

 

GLOBAL HOME TEXTILES MARKET

 

In 2011, the global home textiles market was estimated at around US$70 billion of which cotton made-ups account for 50% (~US$35 billion). Both these markets have been growing at a CAGR of 6% over the last 5 years.

 

The home textiles market is evolving very fast. The market is moving from the developed countries to fast-growing developing economies. Growth in population and disposal incomes is the primary driver of consumption in home textiles. Hence, there has been an increase in demand from countries like China, India, Brazil and Russia.

 

India's share in the global home textiles trade is around 7% and $3 billion specifically in cotton made-ups. Around 2/3rd of India's exports are into the US and EU, according to the Confederation of Indian Textile Industry

 

Home Textiles Market in the US

 

In 2011, the home textiles market in the US was approximately US$23.1 billion, down by 2% from 2010. Bedding accounts for 51.4% of the total market while bath accounts for 25.3%. The remaining 23.3% market is split between window and kitchen and dining.

 

The major global sourcing destinations for home textiles are India, China and Pakistan. Last year, there has been a revival of Turkey and other European countries as important sourcing destinations in addition to the growing strength of other low cost countries like Bangladesh, Vietnam, Philippines and Indonesia.

 

Sheets Market Share by Country in USA

 

India's share in sheets in US has gone up primarily because of its ability to manufacture superior quality sheets at comparatively lower costs than China and Pakistan. However, with the emergence of blended fabric for sheets and its growing popularity, there are certain challenges and threats to the sheets business from India.

 

 

Top of Bed Market Share by Country in USA

 

In top of bed (basic and decorative bedding), China is a dominant player followed by Pakistan. India's share in TOB is lower because of the popularity of polyester fabric used in manufacturing TOB.


As is apparent from the above graph, India, China and Pakistan have over 80% of the home textile market share in the US. India has been slowly gaining share given political instability in Pakistan and rising labor costs in China.

 

 

BUSINESS ENVIRONMENT IN MAJOR MARKETS

 

Business Environment-USA

 

Trends for consumer spending look positive. Since, home textiles fall under discretionary spending there are hopes of seeing higher purchases in this category as consumers release the pent-up demand for these products.

The US economy is also seeing a marked change in the demographic patterns. By 2015, one-third of the population will consist of baby boomers with focus shifting to health and healthcare. In addition to this, by 2015, nearly 50% of its population below 25 years will be of Hispanic origins. These are important trends to watch in the home textiles business as they may affect the tastes and preferences of the consumers and hence, the retailers with whom home textile manufacturers works with.

 

Business Environment – UK

 

Increase in commodity prices and depressed consumer demand have applied a squeeze on margins right through the supply chain. With sales lower, retailers have looked for higher margins to protect profit. Producers have not passed on the full impact of commodity and labor cost increases.

 

Importers and middle men have been cut out as retailers go direct to suppliers to increase margins. Better supply chain technology has enabled retailers to do this with the full service importers losing turnover or moving to a sales agent role to survive.

 

Retailers who are not big enough to buy direct are finding it difficult to compete on price. They still depend upon importers and have reduced quality in an attempt to preserve margin. Fabric thread counts have been under downward pressure in the small independent sector while supermarkets and large category stores maintain quality through their larger buying power. This has undermined the value equation for many retailers with the supermarkets gaining market share.

 

The branded market in the UK remains steady where strong differentiation on product and design resonates with the consumer. Discounted activity on a high-low price strategy has lost leverage with the consumer. The over use of the discount model has led to a savvy consumer who, with the help of the internet, is now much better at determining value for money. Discounting still works but it increasingly needs to be genuine.

 

Business Environment-Europe

 

The Euro zone remains depressed with contraction of sales volumes especially in the PUGS (Portugal, Italy, Ireland, Greece and Spain). Germany is an exception with strong employment and robust economic performance. Unlike the US where retailers have significant scale, the European market is more regional with a higher number of relatively smaller retailers. Lower sales volumes and higher commodity prices have put relentless pressure on margins and quality. As a result, European buyers are very price driven and less quality conscious in terms of light and thread count. They tend to buy from medium sized low cost producers. Many buy through agents and have not moved to direct sourcing on the scale that UK retailers have. It is expected that there will be further opportunity to develop direct sourcing relationships with producers in Asia.

 

 

INDIAN TEXTILE INDUSTRY

 

India is the second largest producer of cotton, textiles and garments, and the only major textile exporting country with a cotton surplus. Indian textile industry contributes ~ 12% of India's exports and 4% towards GDP with presence across the value chain. Employment in the Indian textile and apparel sector stands at 45 million and with an additional employment of 60 million in allied sectors; total employment stands at 105 million.

 

India is among the very few countries which have a presence across the entire supply chain, from natural and synthetic fibers right up to finished goods manufacturing. It has presence in organized mill sector as well as decentralized sectors like handloom, power loom, silk, etc.

 

The total Indian textiles and apparel market is estimated at ~US$ 58 billion (apparel retail contributes ~ US$ 40 billion, technical textiles contributes"" US$ 14 billion and home textiles contributes ~ US$4 billion). The current domestic textile and apparel market is expected to grow at 9% annually to reach US$ 141 billion by 2021. Indian textile and apparel market size (domestic + exports) is projected to reach US$223 billion by 2021

 

 

INDIA'S SHARE IN GLOBAL TEXTILE EXPORTS

 

Textile exports play an important role in overall exports from India. The Indian textiles and clothing industry is one of the largest contributors to the country's exports. India's share in the world textile and clothing market is small, but rising steadily. India's share in the global textile and apparel markets is around 4% and 3% respectively. The export basket of the Indian textiles industry consists of a wide range of items: readymade garments, cotton textiles, handloom textiles, man-made fibre textiles, wool and woolen goods, silk, jute and handicrafts, including carpets. In the global exports of textiles, India ranked as the third largest exporter, trailing EU-27 and China. India's share in global textile exports has seen a steady increase from 2.21% to 4.02% between 1990 and 2010

 

 

INDIA EXPORT-IMPORT SCENARIO

 

Indian textile and clothing exports have come a long way in the last decade or so, doubling the exports value in this duration. Indian textile & apparel as an export category has outperformed several large textile producers of past including Germany, Italy, USA, Turkey, etc.

 

The reasons for high growth of textile and apparel exports from India are the country's strong raw material base, design and skill heritage, manufacturing capacities that are flexible for small orders, manpower cost competitiveness and government's incentive schemes for export promotion.

 

The USA and the EU account for about two-third of India's textiles exports. Although India exports textiles to more than 100 countries, they are heavily skewed in terms of export destinations. The top 10 destinations for India's readymade garments exports account for nearly 80% of India's RMG exports. Even among the leading 10 export markets, the US accounts for the largest chunk. The exports have grown from US$ 19 billion in FY07 to US$ 34 billion in FY12 at a CAGR of 12% as shown in the figure 13 below. India's textile exports declined in FY09 mainly due to fall in demand owing to the global slowdown. However, during FY10, exports recovered and recorded an increase of 5%. With a relatively recovering economy, exports of textiles rose sharply by 23% in FY11. Subsequently, during FY12, textile exports recorded healthy growth of 26% over exports in FY11.

 

India also imports textile and apparel goods to the tune of US$ 4 billion, which comprises mainly of products like high end woolen / worsted fabrics, coated and performance fabrics, other technical textile and specialty products, fine cotton yarn dyed fabrics, premium and super premium garment categories, etc. The main reason of imports is unavailability of these products. In recent years even some inexpensive commodity articles like raw silk, other fibers, basic fabrics and garments have also made in-roads from suppliers like China.

 

 

CHALLENGES FACED BY THE INDIAN TEXTILE INDUSTRY

 

The Indian textile industry has not performed to its full potential in spite of its importance in the Indian economy. It faces several challenges in aspects of production, marketing, and support infrastructure. The technology used in manufacturing of textile and apparel in India considerably lags behind that of developed nations. The industry also suffers due to general infrastructure related issues.

 

The key challenges faced by the industry are:

 

Manufacturing:

 

Ø  Low value addition

Ø  Low Productivity

Ø  Low pace of modernization

Ø  Economies of scale not adequate

Ø  High fragmentation

 

Marketing:

 

Ø  Limited markets

Ø  Sluggish demand in traditional markets

Ø  Higher growth of competitors

Ø  Weak brand positioning of India

 

Support Infrastructure:

 

Ø  Not up to date infrastructure

Ø  High transaction costs

Ø  Unreliability in transit times

 

 

INDIAN TEXTILE INDUSTRY OUTLOOK-WELL POISED FOR STRONG GROWTH

 

As manufacturing becomes more and more expensive in the developed economies, manufacturers have shifted based to lower-cost countries like India, Bangladesh, Vietnam, Pakistan etc. The primary benefit to these manufacturers has come in terms of significantly lower cost of labor ensuring cheaper products which in turn could fuel demand, as well as favourable overall conditions for textile manufacturing. Among the major exporting countries, India is well poised to increase its market share.

 

India - "Net Exporter" of cotton

 

Of all the major textile supplying countries, India is a major "Net Exporter" of cotton as the indicated in table 2. Other major suppliers like China, Pakistan and Turkey have higher cotton imports than exports, and while Brazil does have higher exports than imports, the exports are not as high as those of India. This puts India at an advantage against other major exporters in terms of raw material availability and costs.

 

 

De-Risking from China and Pakistan

 

With China's rising per capita income and transition to a developed country, domestic consumption has increased. This is expected to impact China's ability to export. Further, China's concentration on high end industries is increasing and focus on textiles has reduced compared to previous decades. China is also facing problems related to power generation due to environmental concerns. Textile, being a high energy consuming industry, has been impacted by this issue. China's low labor cost advantage has also suffered as labor costs have been rising between 10-20% every year in the last few years. A fast ageing population and one child policy would cause wage inflation to rise at an even brisker pace which is averaging about 18% p.a. Currency appreciation has also made Chinese exports less competitive. Customers are also concerned about the geopolitical situation in Pakistan. These factors have forced importers from China and Pakistan to look at alternative locations such as India.

 

Proposed FTA with EU

 

The proposed India-EU FTA, to be known as the Bilateral Trade and Investment Agreement (BTIA), is in the final stages of discussion and an agreement is expected soon. The agreement is expected to boost bilateral trade and stimulate the flow of capital, technology and personnel between the two regions. It proposes removal of duties on about 90% of bilaterally traded goods during the next ten-year period. If the FTA is signed, then the import duty of 9.6% per garment and 5% on other textile items is expected to end. This will make Indian exports more competitive against other key exporters like China and Bangladesh and further open up the European market for Indian exporters.

 

 

WELSPUN OPERATIONS OVERVIEW

 

WIL, along with its subsidiaries manufactures and markets bed and bath linen products-bed sheets, pillow cases, comforters, quilts, mattress pads, pillows, to bath rugs, towels and bath robes. Majority of these products are presented and sold in the key markets like USA, Canada, UK, Europe and Japan through Welspun USA Inc. and Welspun UK Limited., sales arms of WIL based in the US and UK respectively.

 

Over 90% of WIL's production is exported to various countries globally. WIL has subsidiaries based out of New York in USA and Manchester in UK to look after its North American and European businesses respectively.

 

Over the years, WIL has moved from being a US centric player to becoming a global player in the home textiles category. WIL has an increased presence in newer markets like Canada, South Africa, Australia, Japan and Russia. This entry into newer markets has helped WIL in diversifying the geographical risks so that the Company is not adversely affected by any one market where it operates. Currently, nearly 70% of WIL revenues come from the US markets. This is significantly lower now compared to the nearly 90% of business coming from the US nearly a decade ago.

 

In addition to sales through its subsidiaries, WIL continues to look at brand licensing opportunities while maintaining its owned brand portfolio. Currently, WIL's owned brand portfolio includes Christy, Welhome, Spaces Home and Beyond and Pure Opulence-to name a few. The Company's licensed brand portfolio includes Simmons and Beautyrest brands in the US primarily for the sheets category and Agent Provocateur and English Heritage in the UK.

 

In addition to this, WIL also has presence in retail through owned brands like Christy in the UK and Spaces Home and Beyond in India. WIL operates through a mode of concessionaire stores in both locations. In addition to the concessionaires, Christy also has its own outlet stores. The retail channel helps WIL understand its customers better and enables WIL to deliver to the consumer's specific needs. This feedback coupled with market research is shared with the product development team to provide innovative products and solutions for the customers. WIL aims to reach out to consumers through numerous channels. Hence, WIL also has a small presence in catalog and online sales through Christy in the UK.

 

Asa service oriented organization, WIL also provides Supply Chain Management (SCM) and distribution services to the key customers in the US through the warehouses in Ohio and also in UK to a limited extent through their warehousing operations there.

 

Three years ago, WIL also entered the hospitality segment as it provided with ample newer opportunities. WIL has seen some traction lately and sees this business growing exponentially over the next three to four years. WIL remains focused on the core hospitality products like rugs and sheets, while not so much on the decorative hospitality products.

 

 

FUTURE OUTLOOK

 

Welspun's DNA has always been strong and aggressive growth. In these challenging times, the company's strategy has been stringent cost controls, aggressive foray into new markets, and consolidation and streamlining of operations to maximize the ROI.

 

In FY13, the company's aim is to improve its profits through continued cost control. WIL also aims to improve its revenues to become the leader in home textile manufacturing in the world in the next couple of years. This growth will come not only from innovations in its existing product categories but through improved sales in new categories like top of bed products and technical textiles. WIL is developing products focused on non-US markets, so that the company can further reduce its dependence on the US markets.

 

WIL is also looking at further streamlining its operations and reviewing the internal systems and processes to improve efficiency and provide better customer service. The company is leveraging IT to streamline its supply chain. In this year, WIL is also foraying into advanced textiles and is looking at launching its patent pending products in the global market.

 

The proposed India-EU FTA is expected to boost India's as well as WIL's textile exports to the EU. With the removal of import duties on textiles, Indian exporters including WIL will become more competitive against China and Bangladesh. In view of the expected increase in demand on account of the likely New Free Trade Agreement of Eurozone, Subject is proposing Capital Expenditure of Rs. 18 Billion towards integration projects, modernisation and expansion in India. The Company has also decided to invest a part in advanced textile as it is entering segments like Hometech, Mobiltech, Clothtech, Indutech, Meditech and Personal Care.

 

Welspun believes that the various steps taken by it to restructure the business will start yielding results in FY13.

 

Welspun expects to continue delivering value to its customers and other stakeholders by:

 

Ø  Focusing on innovation that delivers higher quality products at lower costs

Ø  Adopting a solutions based approach to customer needs and gearing up to become a consumer-centric organization

Ø  Ongoing commitment towards maintaining market share in existing markets and growing in newer markets

Ø  Looking at alternative channels to boost growth by leveraging hospitality, e-commerce, retail, etc. across various geographies that WIL is present in

Ø  Continuing to focus on developing robust internal systems and processes to reduce response time further

Ø  Leveraging favourable government policies for textiles and proposed Europe FTA

 

The Company is well placed to benefit from the steadying growth in US, which is one of the largest markets for Welspun. The capacity closure in developed nations has certainly improved overall supply capability of major textile-exporting countries, including India. Welspun is well placed to leverage its India location, which is cotton surplus. The Company is well poised to sweat its assets, with operations at high utilization rates of about 90% in towels and sheets.

 

 

CONTINGENT LIABILITIES

(Rs. in millions)

Description

31.03.2012

31.03.2011

Excise, Customs and Service Tax Matters

677.480

492.280

Stamp Duty Matter

4.460

4.460

Sales Tax

36.440

10.610

Corporate Guarantees

8891.900

8738.520

Bank Guarantees

166.890

220.160

Claims against Company not acknowledged as debts

5.510

7.850

Note:

 

The Company has issued corporate guarantee aggregating Rs. 8,891.900 million (March 31, 2011: Rs. 8,738.520 million) on behalf of Welspun Retail Limited (WRL), Welspun USA Inc. ('WUSA'), Welspun Home Textiles UK limited ('WHTL'), Welspun Captive Power Generation Limited (WCPGL) and CHT Holdings Limited ('CHTHL').

 

 

FIXED ASSETS

 

Ø  Freehold Land

Ø  Buildings

Ø  Leasehold Improvements

Ø  Plant and Machinery

Ø  Vehicles

Ø  Furniture and Fixtures

Ø  Office Equipments

Ø  Computers

Ø  Computer Software

Ø  Goodwill

 

 

UNAUDITED STANDALONE FINANCIAL RESULTS FOR THE QUARTER AND NINE MONTHS ENDED 31.12.2012

 

                                                                                                                                          Rs in Millions

 

Particular

Quarter Ended

Nine months ended

 

 

31.12.2012

30.09.2012

31.12.2012

 

 

{Unaudited)

{Unaudited)

(Unaudited )

1

a. Net Safes/ Income from Operations

7177.768

7513.688

21720.635

 

(Net of excise duty)

 

 

 

 

b. Other Operating Income

476.634

476.061

1382.852

 

Total Income from Operations (net|

7654.402

7989.749

23103.487

2

Expanses

 

 

 

 

a. Cost of Materials Consumed

4245.292

4671.141

12952.997

 

b. Purchases of Stock-in-trade

34.140

22.178

90.671

 

c. Changes in Inventories of Finished Goods and Work-in-Progress

47.079

(220.331)

(233.870)

 

d. Employee Benefits Expense

400.685

473.918

1397.798

 

e. Depreciation and Amortisation Expense

330.483

324.717

981.905

 

f. Power. Fuel and Water Charges

601.237

726.878

2027.436

 

g. Other Expenses

1076.835

1150.731

3281.516

 

Total Expenses

6823.751

7155.232

20498.453

3

Profit from Operations before Other Income. Finance Costs and Exceptional Items (1-2)

830.651

834.517

2605.034

4

Other Income

64.442

115.262

348.764

5

Profit from Ordinary Activities before Finance Costs and Exceptional Items (3+4)

895.093

949.779

2953.798

6

Finance Costs

332.674

333.422

1029.148

7

Profit from Ordinary Activities after Finance Costs but before Exceptional Hems (5-6)

562.419

616.357

1924.650

a

Exceptional Items Gain/ (Loss)

-

-

-

9

Profit from Ordinary Activities before Tax (7+8)

562.419

616.357

1924.650

10

Tax Expense

 

 

 

 

Provision for Taxation - Current Tax (Net)

181.140

247.469

697.200

 

Less : Minimum Alternative Tax Credit Availed

-

-

-

 

Short Provision for Tax In Earlier Years

-

-

 

 

Provision for Taxation - Deferred Tax (Net)

1.681

(27.089)

(47.154)

 

Total

182.821

220.380

650.046

11

Net Profit from Ordinary Activities after tax (9-10)

379.598

395.977

1274.604

12

Extraordinary Items Gain/ (Loss)- Refer Note 3 below

(51.342)

66.217

(96.846)

13

Net Profit/ (Loss) for the period (11+12)

328.256

462.194

1175.758

14

Paid-up Equity Share Capital (Shares of Rs. 10 each)

894.028

891.718

894.028

15

Reserves Excluding Revaluation Reserves as par Balance Sheet of Previous Accounting Year

 

 

 

16

Earnings/(Loss) Per Share in Rs.

 

 

 

 

a) Basic before Extraordinary Items

3.81*

4.45*

12.80*

 

b) Diluted before Extraordinary Items

3.80*

4.43*

12.76*

 

c) Basic after Extraordinary Items

3.30*

5.18"

11.80*

 

d) Diluted after Extraordinary items

3,29*

5.16*

11.77*

 

* Not Annualised

 

 

 

Quarter Ended

Nine months ended

Part A

 

31.12.2012

30.09.2012

31.12.2012

 

 

{Unaudited)

{Unaudited)

(Unaudited )

 

Particulars or Shareholding

 

 

 

1

Public Shareholding

 

 

 

 

a) Number of Shares

28960360

28729860

26960860

 

b) Percentage of Shareholding

32%

32%

32%

2

Promoters and Promoter Group Shareholding a. Pledged/Encumbered

 

 

 

 

-Number of Shares

NIL

NIL

NIL

 

- Percentage of Shares (as a % of the total shareholding of Promoters and Promoter Group

NIL

NIL

NIL

 

- Percentage of Shares (as a % of the total Share capital of the Company)

NIL

NIL

NIL

 

b. Non-Encumbered

 

 

 

 

- Number of Shares

60441909

60441909

60441909

 

- Percentage of Shares (as e % of the total shareholding of Promoters and Promoter Group

100%

100%

100%

 

- Percentage of Shares (as a % of the total Share capital of the Company)

68%

68%

68%

 

 

 

Opening Balance

Additions

Disposals

Closing Balance

Number of Complaints

-

25

25

0

 

 

  1. The above financial results were reviewed by the Audit Committee and were thereafter approved by the Board or Directors at its meeting held on February 6, 2013.

 

  1. The High Court of Gujarat at Ahmedabad by its order doled November 26, 2012 approved the composite scheme of arrangement (the "Scheme") between the Company, Welspun Global Brands Limited ("WGBL') and Welspun Retail Limited ('WRL"). In accordance with the Scheme, WGBL was merged into the Company, the marketing business undertaking of the Company was hived off to WRL and certain overseas investments of the Company were transfered to WRL Consequently, WGBL was dissolved without winding up. Appointed Date for the Scheme was April 1, 2011. The order was fled with the Registrar of Companies on December", 2012 (effective date of the scheme).

 

Accordingly, the unaudited financial results of the Company for the quarter ended September 30, 2012 and quarter and nine months ended December 31, 2011 do not include the effect of the aforementioned scheme. However audited results of the company for the year ended March 31, 2012 and unaudited results of the Company for the quarter and nine months ended December 31, 2012 include the effect of the scheme. Hence, figures for for the quarter ended December 31, 2012 are not comparable with those far the quarter ended September 30, 2012 and December 31, 2011. Similarly, figures for the nine month ended December 31, 2012 are not comparable with those for the nine month ended December 31, 2011. In order to facilitate comparability, given below are certain hey figures of the Company after giving effect of the scheme for each of the periods presented :

 

                                                                                                                                    Rs in Millions

 

Quarter Ended

Nine months ended

Particulars

31.12.2012 {Unaudited}

30.09.2012 (Unaudited)

31.12.2012 (Unaudited)

Total Income from Operations

7654.402

7989.749

23103.487

Profit from Ordinary Activities before Tax

601.001

595.216

1924.650

Net Profit from Ordinary Activities after tax

405.662

381.695

1274.604

Net Profit for the pored earnings/{Loss) Per Share in Rs.

354.321

447.912

1175.758

a) Basic after Extraordinary items "'

3.56

4.50

11.80

b) Diluted otter Extraordinary Items '"

3.55

4.49

11.77

 

3 Extraordinary items for the quarter ended December 31, 2012 pertains to increase in provision (or doubtful loons given to Welspun AG, a wholly owned subsidiary, arising out of the restatement at the quarter end of the foreign currency balance which wa3 fully provided as at March 31, 2012. The corresponding Gain on restatement is netted off in Other Income (line 4) above

 

 4 Prior period comparatives have been reclassified to conform with the current period's presentation, wherever applicable.

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 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. 54.26

UK Pound

1

Rs. 81.94

Euro

1

Rs. 70.21

 

 

INFORMATION DETAILS

 

Report Prepared by :

UDS

 

 

SCORE & RATING EXPLANATIONS

 

SCORE FACTORS

 

RANGE

POINTS

HISTORY

1~10

6

PAID-UP CAPITAL

1~10

6

OPERATING SCALE

1~10

6

FINANCIAL CONDITION

 

 

--BUSINESS SCALE

1~10

6

--PROFITABILIRY

1~10

6

--LIQUIDITY

1~10

5

--LEVERAGE

1~10

5

--RESERVES

1~10

6

--CREDIT LINES

1~10

6

--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

NO

--AFFILIATION

YES/NO

YES

--LISTED

YES/NO

YES

--OTHER MERIT FACTORS

YES/NO

YES

--RBI

YES/NO

NO

--EPF

YES/NO

NO

TOTAL

 

52

 

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

-

 

 

 

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions

This report is issued at your request without any risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL) or its officials.