project aarvee
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complete project on aarvee denims ltd.TRANSCRIPT
About Us
Aarvee Denims and Exports Ltd is a leading global player in the textile industry. Being backed by experienced promoters, the company is spreading its wings all over the globe at a very fast pace. Established in 1988 by Arora & VB Group, which has been involved in textile trade for over 50 years, are the forces behind this dynamic organization.
More than five decades of experience, well qualified human resources and state of the art production units have made “ADEL” today World’s one of the largest Vertically Integrated Denim Mill.
The Company has its integrated productions of :
Yarn ( Open End , Ring & PTY ) : Capacities of 43,000 metric tons/annum Denim Fabric : 78 million meters/annum Non-Denim Bottom Wear Fabric : 18 million meters/annum Apparels : 3.5 million pcs/annum
Company is also into Green energy generation with Installations of 20.5 MW Wind Power.
Locations & Sites
HEAD OFFICE & MILLS (UNIT – I)Aarvee Denims & Exports Limited.188/2, Ranipur Village,Opp. CNI Church, Narol,Ahmedabad – 382 405 Gujarat, India.Tel : +91-079-30417000, +91-079-40707000 (Central Boardline Number)Fax : +91-079-30417070 (Central Boardline Number)Mobile : +91-9825007331
Mail : [email protected], [email protected] :www.aarvee-denims.com
UNIT – IIAarvee Denims & Exports Limited.S.No. 215-217, Village Sari,Sarkhej Bavla Highway,Ta. Sanand, Dist. Ahmedabad, Gujarat, India.Tel : +91-079-30417000, +91-079-40707000 (Central Boardline Number)Fax : +91-079-30417070 (Central Boardline Number)
UNIT – IIIAarvee Denims & Exports Limited.191, Moje Shahwadi,
Narol – Sarkhej Highway,Ta. Sanand, Dist. Ahmedabad,Ahmedabad – 382 405 India.Tel : +91-079-30417000, +91-079-40707000 (Central Boardline Number)Fax : +91-079-30417070 (Central Boardline Number)
Research & Development
Research and Development is Aarvee’s FORTE, where we give birth to advanced Denim & Bottom wear Non-Denim Fabric. Aarvee has a strong product development team with experienced fabric designers and product technologists. The team has a
good forecasting of future trends. An extensive lab and quality control supports the R&D and together the set up is organized to give high quality, innovative products and customized Fabric to our buyers.
The Apparel Division is also equipped with world class Technology in every production process along with Dry & Wet Process Washing extensive research, which delivers fastest trends in fashion Industry.
Board of Directors
SHRI VINOD ARORA ( CMD )Mr. Vinod Arora is known by his rich experience in Denim since 1973 and the roaring success in Arora Group as the marketing pioneers of Denim, is heading the Board as Chairman and Managing Director.
SHRI ASHISH SHAH ( MD )Mr. Ashish V. Shah, commerce graduate, hails from the VB Group (since 55 years), the forerunners in textile industry. He is also member of Ahmedabad Education Society & Secretary of Textile Association at Narol,Ahmedabad.
SHRI KALPESH SHAH ( DIRECTOR )Mr. Kalpesh V. Shah, another dynamic entrepreneur also hails from the VB Group which is a well known name in textile trading since 55 years. He is also Secretary of Textile Maskati Mahajan , Ahmedabad.
PRODUCTION AND MANUFACTURES
Cotton Fiber
We manufacture 'DENIM' hence the basic raw material required is coarser cotton, that could spin cotton counts '5' to '20'. We procure cotton mostly of parameters as given below.
Length 25 mm to 27 mm, Micro value (Fineness) 3.2 to 3.5, Strength 25 to 26 GPT, Trash preferable below 5%, Moisture 8% (International Standard). Available from Gujarat, Maharastra, Madhya Pradesh, Andhra Pradesh, Rajasthan.
Length 22 mm to 24 mm, Micro value (Fineness) 4.0 to 4.5, Strength 24 to 25 GPT, Trash around 10 to 15 %, Moissture 8% (international Standard). Available from
Gujarat, Karnataka.
We also import Cotton from U.S.A., Brazil, Argentina, Pakistan, cls countries, provided price and quality are competitive, favourable and comparable to Indian cottons.
Our selection of cotton are strict as per our parameters and as per quality control Lab results.
Our total procurement of cotton annually is over USD 40 million, 160000 to 170000 Bales each CF 165 Kgs.
Garment Division
In year 2005, company started its Garment Division with Bottom Wear Plant situated at same premises of Ahmedabad where it’s prime activities of Spinning & Fabric manufacturing is carried.
Capacity of manufacturing 3.7 million Jeans/Casual Trousers p.a
Vertical setup of all in-house processes:
Sampling CAD Cutting Stitching Embroidery Printing Washing Finishing Packing
We also have our own design studio, delivering best forecast, developing the best patterns & styles as per customer’s requirements.
The Dry & Wet Processing in Washing is done by team of experts with strong Technical knowhow. We are also highly equipped with advanced & latest technology where our Collaborative Research and R & D team creates exciting combinations in Finishes, Coatings etc converting sensational new ideas into revolutionary new products.
Core production lines of over 1000 machines: Dedicated to produce Jeans & Casual Trousers.
Secondary production lines: Dedicated to produce Jackets, Casual Shirts & T-shirts.
All lines can cater to Mens , Womens & Kids requirements.
Shortest Lead Time : We work with fastest lead time in this industry due to in-house
production of Yarn & Fabric.
Most Competitive Prices: Due to setup of vertical in-house productions & huge capacities, our customers are beneficial of value added products at most competitive prices.
Our Major Markets : Aarvee has very large exposure to North, Central, South & Latin American countries, Europe & Asia.
Denim Fabric
We offer Denim Fabric with weight from 7 to 14.75 Oz., width upto 66/67", in different elective colors like Regular Indigo Blue, Dark Indigo Blue, Sulpher Bottom Indigo Top (SBIT), Indigo Bottom Sulpher Top (IBST), AZO free Sulphers, Pigments & Tints, in Open Ends, Rings, Cross Hatches, Multicounts, Flame , Flat Finish, Coated, Mercerized & Over dyed Denims. Available in various types of structures 1/1, 2/1, 3/1, Broken Twills, Herringbone's; Stretch Denim in low as well as high
stretchability.
Everyone at Aarvee Denims & Exports Limited,from management, that is in tune with international fashion, to the shop floor worker is highly responsive to your needs to work with a partner who understands and provides a supportive single source solution to all your Denim needs.
Collaborative research in creating & manufacturing new, exciting combinations and finishes in Denim allows you to morph your sensational new ideas into revolutionary new products. Our extensive, dedicated Research & Development facilities and innovative technical teams can help create your own distinctive signature Denim lines
Non-Denim Fabric
Aarvee being the Connoisseur in Denims also shares its expertise in developing trend worthy Cotton & Blended fabrics, produced and fine crafted to meet the ultimate fashion.
Cottons :In our cotton fabrics range, we offer 100% cotton twills, canavas, dobby designs, slubs, cross hatches, herringbones, corduroys in PFDs, sulphur, reactive & pigment dyes.
Blend Fabrics :We also offer Cotton/ Poly twills, Poly/ Cotton twills, Poly/ Viscose twills, Cotton/ Poly stretch.
Weight & Structures : The weight is available from 7 Oz to 13 oz in open ends, rings, cross hatches & multicounts. With various types of structures in 1/1, 2/1, 3/1, broken twills, herring bones, stretch fabrics in low and high stretchability.
Width : The width is upto 160 cms for non-stretch & upto 150 cms for stretch fabrics.
Colors : Available in various PFD, VAT, reactives, sulphurs (azo-free dyes) and pigment (azo-
free dyes). Premium dying facility through our distinctive CBR & CDR lines is also offered to our valued customers.
Garment
An exclusive assortment of Garments is added to our catalog, which updates the wardrobe of urban clients. With an ambition to venture into apparel market, we provide garments with mesmerizing designs, striking patterns and stunning color combinations. Meeting the expectations of style-conscious clients, the garments under our label are made using finest fabrics, having designs inspired by prevailing fashion trends. One can get an elegant ensemble with us in standardized fits and
contemporary styles.
Our catalog offers Jackets, Casual Shirts & T-shirts, Men's, Women's & Kids Clothing and many others.
We also have our own design studio, delivering best forecast,developing the best patterns & styles as per customer’s requirements.
The Dry & Wet Processing in Washing is done by team of experts with strong Technical knowhow. We are also highly equipped with advanced & latest technology where our Collaborative Research and R & D team creates exciting combinations in Finishes, Coatings etc converting sensational new ideas into revolutionary new products.
Core production lines of over 1000 machines: Dedicated to produce Jeans & Casual Trousers.
Secondary production lines : Dedicated to produce Jackets, Casual Shirts & T-shirts.
All lines can cater to Mens, Womens & Kids requirements.
Shortest Lead Time : We work with fastest lead time in this industry due to in-house production of Yarn & Fabric.
Most Competitive Prices: Due to setup of vertical in-house productions & huge capacities, our customers are beneficial of value added products at most competitive prices.
Our Major Markets : Aarvee has very large exposure to North, Central, South & Latin American countries, Europe & Asia.
Retail Brands
Aarvee Denims & Exports Ltd, manufactures Casual wear apparels for Mens, Womens & Juniors for it’s Retail Brands, “De Extase”, “Fashion Wrapper”& “Aden”. They are available at exclusive EBO of “De Extase” & also at MBO’s at national & international stores. All products are sold only on Cash & Carry operations.
Products available: T-shirt, Casual Shirts, Jackets, Jeans, Casual Trousers & Winter Wear products.
Our RetailDe Extase roots its philosophy from the word ‘Ecstasy’, it signifies extreme-ness & lust in all its manifestations and workmanship towards delivering Exciting designs to evoke your senses. Since its inception as a brand for the generation of spirited youth, promises to offering Premium products which Reflects their attitudes and dreams.
De Extase being the off shoot of Aarvee Denims & Exports Ltd., follows its predecessor by imbibing its quality and workmanship. It is in constant effort in delivering design superiority over the current market trends by an uncanny approach in portraying Ecstatic Fashion and Youthful Attitude through its design.
RETAIL PERSPECTIVE - DE EXTASEAarvee introduced its urban clothing line through its premium Brand “De Extase”. De Extase focuses on youth fashion. Every season De Extase launches more than 200 new styles. The brand today is retailed Through EBO & MBO stores across India & few overseas markets.
De Extase is poised to be the next leading brand in their Segment, in size, brand appeal and influence in the market. The Company has an in-house design team,
merchandisers, sampling unit and an independent in-house production facility which enables it to Launch new collections very frequently.
THE BRAND PERSONALITYIs a transparent, positive pro-active and motivated organization open to defining goals and allowing to be measured. De Extase merchandise is a reflection of today’s youth and his independent.
De Extase is at the forefront of fashion and is committed to providing trendy clothing for the youth suited for every season. The entire range has been designed to bring the De Extase element of fantasy. Unique value proposition for the customer is premium thinking. Quality and design available at value pricing is prime focus.
BRAND VISION“Being outside oneself” by the youth, De Extase strives constantly to provide excitement to the brand in terms of creative merchandise and Brand philosophy De Extase believes in trendy western wear for youth across all products categories using innovative Fabric, international styling and perfect fits.
The tag Line ‘Fulfill your Fantasy’ represents the brand positioning.
Aarvee Denims & Exports Ltd.
Main Activities: Textile Mills - Textile Product Mills - Apparel Manufacturing
Company InformationFull nameAarvee Denims & Exports Ltd.
Status: ListedLegal Form: Public Limited Company
Legal AddressUnit 1, 188/2 , Ranipur Village, Opp. C N I Church, Narol; Ahmedabad; Gujarat; 382405
Operational Status: OperationalISIN CODE : INE273D01019Financial Auditors: NC Shah & Associates (2011)
Tel: 079-30417000
Company DescriptionThe company was incorporated in 1988 as a private limited company and became a public limited corporate group . It manufactures denims in various varieties like dark denim, over dyed denim & Lurex denim, Ecru denim, indigo blue stretch denim and yarn a
Company AnalysisAccording to the Individual - Audited financial statement for the Year of 2012, total net operating revenues increased with 27.02%, from INR 499.12 tens of millions to
INR 634 tens of millions. Operating result increased from INR 79.3 tens of millions to INR 83.54 tens of millions which means 5.35% change. The results of the period decreased -58.64% reaching INR 13.83 tens of millions at the end of the period against INR 33.44 tens of millions last year. Return on equity (Net income/Total equity) went from 16.83% to 6.44%, the Return On Asset (Net income / Total Asset) went from 6.91% to 2.35% and the Net Profit Margin (Net Income/Net Sales) went from 6.70% to 2.18% when compared to the same period of last year. The Debt to Equity Ratio (Total Liabilities/Equity) was 178.43% compared to 143.69% of last year. Finally, the Current Ratio (Current Assets/Current Liabilities) went from 2.53 to 2.83 when compared to the previous year.
Key Executives
Vinod P Arora Chairman & Managing Director
Amol R Dalal Independent Director
Arvind D Sanghvi Independent Director
Ashok C Gandhi Independent Director
Sanjay S Majmudar Independent Director
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Aarvee Denims and Exports Ltd. is a leading global player in the textile industry. Being backed by experienced promoters, the company is spreading its wings all over the globe at a very fast pace. Arora Group, which is involved in the marketing of denim for over 35 years and VB Group which has been involved in textile trade for over 50 years are the forces behind this dynamic organization.
More than five decades of experience, well qualified human resources and state of the art production units have made AarVee India`s SECOND LARGEST denim manufacturer.
AarVee`s enterprising and flexible manufacturing process enables AarVee to quickly
adapt to the dynamism in the market trends and produce novel designs and weaves in the shortest turnaround time, offering to customers the unbeatable advantage of tapping into the markets as the demands peak. AarVee offers the widest possible variety of weaves and widths, thus saving their client`s precious time and efforts of sourcing material from multiple sources. AarVee`s range of products includes » Denim Garments- Jeans, Trousers, Jackets, Shirts etc. for men, women and kids.» Cotton Garments» Home Textiles» Power Plants
Aarvee’s denim fabric exports grow
Monday, 06 June 2011
While concentrating more on the overseas market rather than the domestic, Aarvee Denims and Exports Limited as a leading global player in the textile industry, has recently revealed a massive 100 per cent growth in denim fabric exports in fiscal year ended March 31, 2011. Of the Rs 4.94 billion revenue that Aarvee posted in the previous fiscal, nearly one billion rupees was generated from exports. Now the company has targeted Rs 1.5 billion in exports, in the current fiscal year. With flexible manufacturing process that helps it to quickly adapt to the dynamism in global market trends and produce novel designs, Ahmedabad-based Aarvee Denims has encouraged big-time apparel retailers such as Walmart and VF Corp of the overseas market lean towards the company.
“The export growth was mainly due to, increase in volume as well as realization. Exports more than doubled, because of Chinese factors and also due to our better quality and competitive price. In the Indian domestic market too, we have a good presence, because of our own marketing and distribution network and also because of better quality and competitive price,” says Utsav Pandwar, Finance Controller - Aarvee Denims & Exports. “We have expanded our denim fabric production capacity from 60 million meters to 72 million meters per annum in March 2011 and will be further expanding it to 84 million meters in August 2011,” he adds.
However they have recently closed down around 10 De Extase stores, mainly in Mumbai and New Delhi, as they were not profit making ventures and since turnover from the retail segment was only around one percent of total fabric revenue, it is not expected to affect their overall business. As India’s second largest denim manufacturer with more than five decades of experience, Aarvee Denims offers a wide range of products that includes denim fabrics, cotton fabrics, denim garments such as jeans, trousers, jackets, shirts etc. for men, women and kids, denim jeans, denim jackets, cotton garments, home textiles and power plants.
Aarvee Denims and exports Ltd, the second largest manufacturer and exporter of all kinds of denim fabrics and garments. Adding a new dimension to the world of glamour and fashion with spellbinding styles, immaculate finishing's, creative cuts
and lots more, all at extremely competitive prices. An OverviewAarvee Denims and Exports Ltd is a leading global player in the textile industry. Being backed by experienced promoters, the company is spreading its wings all over the globe at a very fast pace. Arora Group, which is involved in the marketing of denim for over 35 years and VB Group which has been involved in textile trade for over 50 years are the forces behind this dynamic organization. More than five decades of experience, well qualified human resources and state of the art production units have made us India's SECOND LARGEST denim manufacturer. Our enterprising and flexible manufacturing process enables us to quickly adapt to the dynamism in the market trends and produce novel designs and weaves in the shortest turnaround time. Due to this our customers get the unbeatable advantage of tapping into the markets as the demands peak. We offer the widest possible variety of weaves and widths, thus saving our client's precious time and efforts of sourcing material from multiple sources. Our range of products includes
Denim Garments-Jeans, Trousers, Jackets, Shirts etc. for men, women and kids. Cotton GarmentsHome TextilesPower PlantsOur BrandsOur range of products is available under the following brandsDE EXTASE - Exclusive Retail Outlet brand consisting of jeans, trousers, shirts, t-shirts for both men and womenFASHION WRAPPER - Exclusive Retail Outlet brand consisting of jeans, trousers, shirts, t-shirts for both men and womenADEN-Exclusive range of jeansAMTEX-Our denim fabric available in an unimaginable variety of shades and textures. Production InfrastructureWe have a streamlined production process and quality is our prime priority. Presently we have the capacity to produce 47 million meters of weaves, 18. 50 metric tonnes of spinning and 6 lakh pieces of readymade garments per annum. We have pooled in
the latest textile technologies to give our clients nothing but the BEST. We have the latest Spinning, Dyeing & Sizing, Weaving, Garmenting and Finishing machines, sourced from the world class manufacturers, which produce quality fabric expeditiously.
Basic Information
Company Name: AARVEE DENIMS & EXPORT LTD
Business Type: Manufacturer, Distributor/Wholesaler, Other
Product/Service(We Sell):
Denims,Denim Fabrics,Cotton Fabrics,Denim Garments,Cotton Garments,Ladies top,Women top,Men's denim,T- Shirts,Fashion top,Denim garments,Cotton Garments,women's capri,women's skirt,denim jeans,men's denim jeans,jeans,Mens'Denim Garments,Cotton Fabrics,Girls Top
Registered Address:188 / 2, Ranipur Village, Opposite CNI Church, Narol, Ahmedabad, Gujarat, India Zip: 382405
Brands: De Extase, Fashion Wrapper, Aarvee, Aden
Number of Employees: Above 1000 People
Company Website URL:http://www.aarvee-denims.com http://www.deextase.com
Ownership & CapitalYear Established: 1988
Registered Capital: Below US$100 Thousand
Ownership Type: Corporation/Limited Liability Company
Legal Representative/Business Owner:
Mr. Vinod Kumar Arora
Trade & Market
Main Markets:
North AmericaSouth AmericaEastern EuropeSoutheast AsiaAfricaOceaniaMid EastEastern AsiaWestern Europe
Total Annual Sales Volume:
US$50 Million - US$100 Million
Export Percentage: 31% - 40%
Total Annual Purchase Volume:
US$50 Million - US$100 Million
Factory InformationFactory Size: 30,000-50,000 square meters
Factory Location: Ahmedabad, Narol
QA/QC: In House
No. of Production Lines: 5
No. of R&D Staff: 5 - 10 People
No. of QC Staff: 5 - 10 People
Management Certification:
Others
Contract Manufacturing: Buyer Label Offered
Contact Person: Mr. Pankaj Arora
Company Name: AARVEE DENIMS & EXPORT LTD
Street Address: 188 / 2, Ranipur Village, Opposite CNI Church, Narol
City: Ahmedabad
Province/State: Gujarat
Country/Region: India
Zip: 382405
Telephone: 91-79-30417000
Mobile Phone: 91-9825006243
Fax: 91-79-30417070
Website:http://www.aarvee-denims.com http://www.deextase.com
Company History - Aarvee Denim and Exports Amtex India Private Limited was incorporated on 28th March 1988 and the commercial production of Denim fabric was started in 1989. The company was converted into a Public Limited company and the name was changed to Amtex India Limited vide special resolution passed u/s 21,31,44 (2)(b) at the Companies Act, 1956 on 2.4.1992 and the company obtained a fresh certificate of incorporation consequent to the change of name to Aarvee Denims & Exports Limited on 7.4.1994. The company set up facilities for dyeing 21.6 lac metres per annum of yarn and processing of 12.96 lac metres per annum of grey fabric at
Village Ranipur, Narol, District Ahmedabad. The cost of the project was Rs.86 lacs and was financed by term loans of Rs.40 lacs from State Bank of Hyderabad, equity share capital of Rs.24 lacs and unsecured loans of Rs.22 lacs from the promoters. The company commenced commercial production of denim in 1989. In 1991-92, the company set up facilities for weaving 7.02 lac metres per annum of fabric at a cost of Rs.26 lacs. In 1992-93 the company undertook an expansion project for increasing the yarn dyeing capacity from 21.6 lac metres to 81.6 lac metres per annum and the weaving capacity from
7.02 lac metres to 39 lac metres per annum. The cost of the expansion project was Rs.919 lacs and was financed by equity share capital of Rs.700 lacs (Promoters - Rs. 250 lacs, Public - Rs.450 lacs), internal accruals of Rs.79 lacs and deferred credit facilities of Rs.140 lacs from IDBI. During 1993-94, the company installed 4 additional Lakshmi Airjet looms (financed through internal cash accruals) to increase the weaving capacity. In order to further remove the bottleneck in the weaving capacity, the company has imported 34 second hand Tsudakoma and Suizer Airjet looms at a cost of Rs.300 lacs financed by an
equipment loan of Rs.300 lacs from SCICI, increasing the weaving capacity to 82.35 lac metres per annum. In order to increase the Dyeing and Weaving capacity from 21.60 lac metres and 7.02 lac metres respectively to 81.60 lac metres and 41.68 lac metres respectively, the company came out with a Public issue in November 1992. The project which involved installation of Air Jet Weaving Machines. Yarn Dyeing and Sizing Machines and Spindle Driven Warpers etc. The company's Indigo Denim Fabrics are sold under the brand name `Amtex Indigo Blue Denim'. 2007 -Aarvee Denims signs MoU with Government of Gujarat.
Raw Materials:
Cotton POY Yarn Dyes & Colours Grey Cloth Fabric Other Raw Materials
Textile sectors looks cautious for the Year 2008-09. Throughout last year, many textile and apparel factories were faced with shrinking demands from global consumers as the negative effects of the global financial crisis lingered on.
Despite the prediction that the downturn would continue this year, some manufacturers such as your company look to the positive side, anticipating fewer competitors, controlling over production costs and even new opportunities to emerge. Indian Textile manufacturers, who used to focus on the traditional markets of the US, Europe and Japan, are now looking for new destinations and new strategies that help them through the tough times.
The Indian textile industry's major players are also very confident about the vast
domestic market with very sound purchasing power. There is a growing focus on domestic retailing by launching exclusive retail outlets not just in the metros, but also in the second-and third tier cities.
Indian Market
India's denims and textile industry is facing multiple challenges such a high cost of raw cotton on account of sharp increase of overall 40% in the Minimum Support Price (MSP), domestic demand and production has also recorded a negative growth rate. The overall sales in domestic market slammed 10-15%. As a result, investment made by the industry in technology up gradation and expansion of manufacturing capacities in recent time are fast turning out to be non performing assets (NPA). Your company continues to focus on non-denim fabrics and readymade garments.
Export Market
India's textile exports declined by about 2 per cent in 2008-09 to USD 21.75 billion due to slump in demand from global economies like the USA, Canada and Europe which are reeling under the impact of financial meltdown. During 2007-08, the exports stood at USD 22.13 billion. The decline in exports of textile is due to less
demand from the USA, Canada and European markets which are reeling under recession. India's export of textiles and clothing into USA, European Union and Canada, which together accounts for over 60% market share. External demand in USA, Canada and Europe is witnessing a downturn, due to the economic crisis and unemployment. This affects their amount of disposable income, thereby forcing them to curtail their expenses, especially in garments
Review of Operations:
During the year under review, even in the global economic slowdown your company's turnover has increased as compared to last year. In spite of increase in turnover there was a sharp decrease in profitability as a result of reduction in average per meter price realisation due to various factors such as:
• Increase in input costs and uncertain raw material price mainly on account of minimum support price of cotton.
• High interest burden due to increase in interest rates and delay in reimbursement of technology up-gradation fund scheme (TUFS) dues.
• Reduction in duty drawback rates.
Since we don't know how long the current situation is going to persist, it is best to make one's own way out of it instead of waiting for Governments to give incentives which are unlikely. The management has taken various cost effective control methods and economies of production and purchases to remain profitable.
Company views and growth plans
Company has installed its own Plant which converting POY into PTY. Through this the company will reduce the incremental cost of Raw Material marginally. Continuing with diversification measures the Company plans to extend its Dying process floors.
Internal Control System and their adequacy
The Company has appropriate internal control systems for business processes, with regard to efficiency of operations, financial reporting, compliance with applicable laws and regulations etc. All operating parameters are monitored and controlled. Regular internal audits and checks ensure that responsibilities are executed effectively. The system is improved and modified continuously to meet with changes
in business conditions, statutory and accounting requirements. The Audit Committee of the Board of Directors actively reviews the adequacy and effectiveness of internal control systems and suggests improvement for strengthening them, from time to time.
RISK MANAGEMENT
The Company is exposed to risks from market fluctuations of foreign exchange, interest rates and commodity prices, risk of product concentration and other business risks.
Foreign Exchange Risk
Your Company's policy is to hedge its long-term foreign exchange risk as well as short-term exposures within the defined parameters.
Interest Rate Risk
Your Company is exposed to interest rate fluctuations on its Rupee denominated borrowings. It uses a judicious mix of fixed and floating rate debts within the stipulated parameters. The Company continuously monitors its interest rate exposures and whenever required, uses derivative instruments to minimise interest rate risk and
interest costs. In view of the continuous risk mitigating strategy adopted by the Company, it does not perceive interest rate risk as having any material impact on its profitability, at any point of time.
Commodity Price Risk
The Company is exposed to the risk of price fluctuation on raw materials as well as finished goods in all its products. The Company proactively manages these risks in inputs through purchase contract or forward booking for cotton - its main raw material and inventory management. The Company's reputation for quality and the existence of a strong marketing network mitigates the impact of price risks on finished goods.
Risk of Product Concentration
The company has risk of too much dependence on single product i.e. Denim. To de-risk the same, the company has already started the process reducing too much dependence on single product and going forward non-denim fabric, readymade garments and processed home textile fabric will be given the adequate push to increase their contribution towards their product mix. As a policy, the continuous differentiation in product mix with a focus on high value added product is to be
carried out to reduce cyclical nature and de-commodities the denim.
Other Business Risks
Apart from the risk on account of interest rate, foreign exchange and regulatory changes, the business of the company is exposed to certain operating business risks, which are managed by regular monitoring and corrective actions.
FINANCIAL PERFORMANCE AND REVIEW
Even global negative economic scenario, the Company has increased its sales but higher cost of production and low use of installed production capacity reduce the margin of profit. A detailed analysis as follows:
Highlights (Rs. In Crore)
Particulars2008-
092007-
08Increase/ Decrease
%Production (Lac Meters) 336.78 302.23 11.43Sales Volume (Lac Meters) - Cloth 333.40 290.51 14.76
Sales & Operating Income 325.12 242.96 33.82Decrease / (Increase) in stock -8.55 -13.13 -34.88Raw Materials 175.90 133.78 31.48Colours and chemicals 27.89 20.68 34.86Power and Fuel 39.34 31.01 26.86Salaries & wages 13.90 12.91 7.67Other overheads 33.35 27.93 19.41Total cost of sales 281.83 213.18 32.20Operating Profit 43.29 29.78 45.37Exceptional items currency Exchange Gain / (Loss)
(8.09) 4.89 -265.44
Other Income 0.52 9.45 -94.50Net Interest & Finance Cost 10.97 12.21 -10.16Cash Accrual 24.75 27.02 -8.40Depreciation 22.05 20.85 5.76Profit before tax 2.70 6.17 -56.24Provision for Tax & Deferred tax 0.37 0.83 -55.42
Profit after Tax 2.32 5.34 56.37Sales & Operating Income :
Despite of severe downturn faced in the year 2008-09, poor consumer sentiments and the credit squeeze, the company's revenue figures shows increase of 34% over the last year. The increase in sales due to increase in domestic as well as export sales and job work sales. The denim fabric sales constitutes 82% of total whereas other segments i.e. non denims, ready made garments etc. contributed 18%. Due to denim market becoming very competitive and having pressure as price realization, it has been decided to de-risk the denims and increase the shares of non-denim fabric for bottom weight and garments.
Raw Materials:
The 31% increase in raw material cost as compared to last year mainly due to increase in production volume and also increase in cotton price during the year and also to increase in Minimum Support Price (MSP) and increase in commodity price.
Direct Materials:
The direct materials at Rs. 27.89 crores as compared to Rs. 20.68 crores shows an
increase in use of dyes and chemicals by 35% mainly due to increase in production and sales volume during the year and also increase in prices of chemicals during first half of the last year. The Company is working on finding alternatives to these resources in order to reduce the cost.
Power and Fuel:
The increase in power and fuel cost to Rs. 39.34 crores (Energy cost excluding Wind Mill Generation comes to Rs. 22.03 crores as compared to 19.81 crores in previous year) is primarily attributed to the higher production volume, increase in job-work of third parties and also increase in per unit price of power by electricity companies.
Salaries and wages:
Looking at the potential of growth in the textile arena, special focus on hiring the right talent and retaining the existing has seen the cost on this account moving up by about 8% over the previous year, Lot of emphasis on "right people for the right job' has been given and is expected to bear fruits in managing the operations more efficiently.
Operating Margin :
The increase in sales volume, better per unit (meter) realization in export sales and increase in job work sales the operating profit increased by 45% as compared to previous year.
Net Interest and Finance cost:
The net interest and finance cost for the current financial year is Rs. 10.97 Crores as compared to Rs. 12.21 Crores during the previous financial year. The reduction is due to interest subsidy under TUF on long term debt and regular repayment of long term debts.
Cash Accruals:
The cash generated from operations this year is Rs. 24.75 crores which is 8% lower than last year's Rs. 27.02 crores.
Depreciation :
The amount of Rs. 22.05 crores this year as compared to Rs. 20.85 crores during the
previous financial year shows increase due to addition / up-gradation / improvement in existing machines.
Profit Before Tax (PBT):
Current year PBT of Rs. 2.70 crores is lower than last year figure of Rs. 6.17 crores by 56%. The drop is attributed to higher Raw material cost, depreciation, other direct material cost and employee cost.
Net Profit (PAT):
The Profit after Tax at Rs. 2.32 crores is lower by 56% compared to last year figure of Rs. 5.34 crores. The Company falls under Minimum Alternative Tax @11.33% (MAT) due to higher depreciation benefit available under the Income Tax Act for investment in the Windmills and in other machines.
Debt :
There was increase in the overall debt of the Company by Rs. 37.68 crores. There was increase of Rs. 12.31 crores in working capital facilities availed by the company and increase Rs. 17.39 crores in short term borrowing from Banks to meet working capital
requirement. Increase of 21.96 crores in FCCB is due to exchanger rate fluctuation. The Long term debt was reduced by Rs. 14.11 crores to 29.23 crores after regular repayment.
Working capital and liquidity :
The inventories are at a higher level at the year-end due to the slowing down in denim demands. The inventory turnover ratio has decreased from 4.43 times in last year to 4.23 times this year. The level of receivables increased from 53 days in the last year to 73 days this year. The delay in realization and overall difficult denim-market condition has increased the level of receivables.
Conclusion :
To conclude, the performance of the company during the year 2008-09 can be considered as noteworthy in spite of global economy slowdown during the year. Denim still will continue to be the largest revenue generator in the product mix. Denim performance is expected to improve due to incremental volume but the same will be impacted by high raw material (cotton) prices and exchange rate violation. Fabric as a product group is expected to perform better by achieving high level of
operations and process efficiencies. The growth will seen in the coming years as the company has focused strategy of making fabric business more profitable in domestic and export market by achieving higher level of operations and successfully establishing the garment manufacturing and Brand and retail business.
CAUTIONARY STATEMENT
Statement in this "Management Discussion and Analysis" describing the Company's objectives, projections, estimates, expectations or predictions may be "forward looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Company's operations include global and Indian demand supply conditions, raw material and finished goods prices, cyclical demand and pricing in the Company's principal markets, changes in Government regulations, tax regimes, economic developments within India and the countries within which the Company conducts businesses and other incidental factors. The Company assumes no responsibility to publicly amend, modify or revise any forward looking statements, on the basis of any subsequent development, information or events or otherwise.
