wil annual report - 2008-09

Dare to Commit

WELSPUN City entrance, Anjar, Gujarat.

Vision Statement

Contents

05Corporate Information

06Chairman and Managing Director's Statement

10Directors' Report

20Corporate Governance Report

28Management Discussion and Analysis

44Financial Section

26Practicing Company Secretary’s Certificate

Forward looking statement

In this Annual Report we have disclosed forward-looking information to enable investors to comprehend our

prospects and take informed investment decisions. This report and other statements that set out anticipated

results based on the management's plans and assumptions. We have tried wherever possible to identify such

statements by using words as 'anticipate', 'estimate', 'expects', 'projects', 'intends', 'plans', 'believes', and words of

similar substance in connection with any discussion of future performance. We cannot guarantee that these

forward-looking statements will be realized, although we believe we have been prudent in assumptions. Should

known or unknown risks or uncertainties materialize, or should underlying assumptions prove inaccurate, actual

results could vary materially from those anticipated, estimated or projected. Readers should bear this in mind. We

undertake no obligation to publicity update any forward-looking statements, whether as a result of new information,

future events or otherwise.

4

WELSPUN INDIA LIMITEDAnnual Report 2008 -09

AWARD / RECOGNITION BESTOWED BY

5 Star Award Macy's Inc., USA2008

Supplier of the Year J.C. Penney, USA2008

Indian Exporters Excellence Awards

– Textile Sector

Dun & Bradstreet2008

Earth Care Awards

– (1st Runner Up - Greenhouse Gas Mitigation)

Times of India &

Jindal Steel Works.

2008

YEAR

5

CORPORATE INFORMATION

Board of Directors

Mr. B. K. Goenka

Chairman & Managing Director

Mr. Arun Todarwal

(Nominee – Dunearn Investments (Mauritius) Pte. Ltd.)

Mr. Dadi B. Engineer

(Director)

Mr. Ram Gopal Sharma

(Additional Director)

Mr. A. K. Dasgupta

(Director)

Mr. R. R. Mandawewala

(Joint Managing Director)

Mrs. Revathy Ashok

(Director)

Mr. M. L. Mittal

(Executive Director – Finance)

Company Secretary

Mr. D. K. Patil

Auditors

Price Waterhouse & Co.

Audit Committee

Mr. Dadi B. Engineer

Mr. A. K. Dasgupta

Mr. Arun T odarwal

Mr. Ram Gopal Sharma

Remuneration Committee Share Transfer and Investor Grievance Committee

Mr. A. K. Dasgupta Mr. A. K. Dasgupta

Mr. Dadi B. Engineer Mr. B. K. Goenka

Mr. Arun Todarwal Mr. R. R. Mandawewala

Mr. M. L. Mittal

Registered Office and Works Bankers:

Welspun City, Tal. Anjar, State Bank of Bikaner & Jaipur

Dist. Kutch, State Bank of India

Gujarat – 370 110, INDIA Punjab National Bank

Tel: (02836) 661111, Fax: (02836) 279010 Andhra Bank

Canara Bank

Works: Exim Bank Ltd.

Survey No. 76, Village Morai, Bank of India

Vapi, Dist. Valsad, State Bank of Patiala

Gujarat – 396 191, INDIA Bank of Baroda

Tel: (0260) 2437437, Fax: (0260) 2437088, Oriental Bank of Commerce

Email: [email protected] IDBI Bank

Corporate Office Stock Exchanges where the Company’s securities are

listed

Welspun House, 6th

Floor, Bombay Stock Exchange Ltd.

Kamala City, Phiroze Jeejeebhoy Towers, Dalal Street,

Senapati Bapat Marg, Lower Parel, Mumbai – 400 051

Mumbai - 400 013, INDIA

Tel: 022-66136000/ 2490 8000 The National Stock Exchange of India

Fax: 022-24908020 Exchange Plaza, Bandra Kurla Complex,

Website: http://www.welspuntowels.com Bandra (E), Mumbai – 400 051

My dear fellow stakeholders,

I always enjoy this forum as it gives me an opportunity to take a

step back, retrospect on the year that went by, introspect on

our achievements and short comings and evaluate prospects

for the year ahead.

This has been a very eventful year for the World economy -

from surge in commodity prices including cotton, energy cost

etc. in the first half, to a complete U-Turn reversal in the second

half, where Financial Institutes across the world were jolted

creating the lowest confidence index since the depression days

of 1920-30's. I strongly believe in the Chinese word for 'Crisis'

i.e. 'Weiji'. 'Wei' means 'danger' while 'ji' means 'Opportunity',

which is incidentally the central focus of Welspun.

We took multiple steps this year to create long-term

sustainable values for our stakeholders. To begin with, the

Board of Directors decided to demerge its non-core

investments and its marketing and distribution network into 2

separate entities Welspun Investments Ltd and Welspun

Global Brands Ltd respectively. This process has created a clear

focus on each element of our business. Both companies,

particularly Welspun Global Brands Ltd. is going to be our torch

bearer in the International arena encompassing all brands,

distribution, marketing, customer relationship and

international operations. I strongly believe that this Company

has the potential of becoming one of the most sort-out Global

Message from Chairman and Managing Director

6


brand companies and a force to reckon with in the home textiles segment.

The extension of a world-renowned brand license for fashion bedding, fashion bath in addition to earlier license of

towels and bed sheets is another example of how Welspun can enhance its brand personality by offering 360

degree product range within the home textile segment. Our initiative of setting up a factory in Mexico for the

decorative bedding segment has played a key role in creating such enviable market position in the entire North

American territory for the foresaid products.

Today, Welspun is truly a global brand Company with balanced portfolio and product offerings within Christy,

Sorema, Gracciozza, Amy Butler amongst other well sort-after brands. We also take pride in bringing consumer

research driven innovations within our product offerings. Supported by our state-of-art manufacturing facilities

and multi-location design studios, we offer comprehensive solutions to retailers all over the World to satisfy the

complete range of consumer requirements. 'Quick Dry Towels' and 'The Perfect Sheet' are ideal examples of how

innovation can enhance functionality in our product offerings.

In line with our strategy to offer more inter-related products within the home textile segment, our factory at Vapi,

Gujarat, India successfully commissioned its maiden bath rug manufacturing. This facility is perhaps one of the

best in the world utilizing latest technology in plant and machinery.

Friends, softening of commodity prices and energy costs, coupled with rupee depreciation against global

currencies, particularly the US Dollar, have enabled your company to remain competitive even in this macro

environment. Our focus have facilitated our production lines to be operating at optimal capacity levels thereby

retaining jobs in an environment where job losses have become synonymous within the textile industry. To widen

7

our Global footprints, we have expanded by opening new facilities at multiple locations, notably offices in San

Francisco to cater to our client base in the West-coast of U.S.

With our focus on cost optimization and our aim to be one of the largest producers of Home Textiles globally, we

can consolidate our status of being the preferred partner with almost all top retailers of the World. We also plan to

reach new markets particularly Mexico, Japan, Russia and China in our quest to be a truly Global Home Textile

Company. We have to live up to the true Chinese meaning of 'Crisis'.

The past one year 'Parivartan' (meaning 'change' in Hindi), a project undertaken with HAY Group, (World's leading

Human Resource consultant) have re-defined roles and responsibilities within our organization, thereby

increasing efficacy and efficiency within all our employees. I dedicate this space to the hard work of each and every

Welspunite who stood like rocks in testing times and now ready to transcend with the opportunities ahead.

Last but not the least, sustainability has remained a prime focus for Welspun thereby enabling improvements in

areas like energy efficiency, waste recycling, waste reduction and usage of eco-friendly material. Recognizing our

efforts, Macy's one of the most premium departmental chain in the U.S., bestowed their most prestigious 5 Star

Award to Welspun. We dedicate this Global recognition towards the trust bestowed by our stakeholders.

Finally I would like to put on record, my sincere appreciation to financial institutions, banks, equity partners,

Governmental authorities and each Welspunite for their unflinching support. I believe, we have all ingredients for

being one of the largest and best home textile companies and for that I solicit your continued support.

Yours sincerely

B. K. Goenka


8


TERRY TOWELS

Capacity

Facilities

– 45000 tons

– Anjar, Gujarat, India– Vapi, Gujarat, India

10


DIRECTORS' REPORT

To,

The Members,

WELSPUN INDIA LIMITED

Your directors have pleasure in presenting their 24th Annual Report on the Audited Financial Statement of the Company for the

financial year ended 31st March, 2009.

I. FINANCIAL HIGHLIGHTS

Despite severe recession in the Company's major market geographies, your Company's Turnover increased by 8.34% y-o-y.

Reduction in overall volume of Sales and adverse impact of foreign currency fluctuation arrested the growth in sales and

reduced Profit Before Tax. To counter the impact of recession on the business, your company undertook severe cost curbing

exercise which not only mitigated to a great extent the impact but also sharpened the competitive edge to exploit business

opportunities going forward. Improved quality fetched better unit value realization in both towel as well as bed linen.

II. AWARDS

Your Company has been in recognition by spectrum of relations in textile arena and the following accolades add to the list of

awards and honours received over the years:

'5 Star Award' by Macy's Inc., USA

Four 'Gold Awards' by Cotton Textile Promotion Council of India

III. QUALITY AND RESEARCH & DEVELOPMENT

Your Company continues to emphasize qualitative growth and believes that quality of its product has to be its strength in

this complex market environment. Your Company is committed to bringing about positive change in each and every process

and has a team fully focused on Research & Development. Particulars of activities relating thereto have been given in

Annexure I hereto.

IV. DIRECTORS

During the year, Mr. Gopi Ram Goenka, Chairman of the Company and 'Babuji' of the Welspun family passed away for

heavenly abode on December 28, 2008. Your directors pay homage to the departed soul and pray the almighty to give

courage to the bereaved family to withstand the colossal loss.

During the period under report, Mr. Ram Gopal Sharma has been appointed as an additional director of your Company

pursuant to section 260 of the Companies Act, 1956. Your Directors welcome him on the Board. Pursuant to section 257 of

the Companies Act, 1956, he is proposed to be appointed as a director, liable to retire by rotation, at the ensuing Annual

General Meeting.

�

�

ParticularsCurrent year

31.03.2009

% age to Total

Income

Previous year

31.03.2008

% age to

Total Income

Turnover 13,444.40 98.74 12,409.44 98.05

Other Income 171.6 1.26 246.66 1.95

Total Income 13,616.00 100.00 12,656.10 100.00

Profit before Interest, Depreciation and Tax (PBIDT) 2,138.79 15.71 1935.04 15.29

PROFIT BEFORE TAX (PBT) 257.37 1.89 414.52 3.28

Less: Provision for taxation -51.66 -0.38 151.86 1.20

PROFIT / (LOSS) AFTER TAX (PAT) 309.03 2.27 262.66 2.08

Add: Balance brought forward from the previous Year 1,692.62 - 1,430.29 -

Profit available for appropriation 2,001.65 - 1,692.95 -

Less : Transfer to Capital Redemption Reserve - 30.00 -

Add: Transfer from Debenture Redemption Reserve - 29.67 -

Balance carried to Next Year 2,001.65 1692.62 -

Earnings Per share (EPS) (Basic & Diluted) (Rs.) 4.23 3.59 -

(Rs. in million)

11

In the ensuing Annual General Meeting, Mr. Rajesh R. Mandawewala and Mr. A. K. Dasgupta will be retiring by rotation and

being eligible have offered themselves to be reappointed. Mr. Rajesh R. Mandawewala is a Joint Managing Director

whereas Mr. A. K. Dasgupta is an independent director. Further, details about these directors are given in the Notice of the

ensuing Annual General Meeting being sent to the shareholders along with Annual Report. The Board recommends their

reappointment.

V. ENERGY, TECHNOLOGY AND FOREIGN EXCHANGE

Information in accordance with the provisions of Section 217 (1) (e) of the Companies Act, 1956, read with Companies

(Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, regarding conservation of energy, technology

absorption and foreign exchange earnings and outgo is given in the Annexure I forming part of this report.

VI. SUBSIDIARY COMPANIES:

Ministry of Corporate Affairs, Government of India has exempted the Company from attaching the Annual Reports and

other particulars of its subsidiary companies along with the Annual Report of the company required u/s. 212 of the

Companies Act, 1956. Therefore, the said Reports of the subsidiary companies viz. (1) Welspun USA Inc., USA (2) Welspun

Holdings Private Limited, Cyprus (3) Welspun Home Textiles UK Limited, UK (4) CHT Holdings Limited, UK (5) Christy Home

Textiles Limited, UK (6) Welspun UK Limited (Formerly Christy UK Limited), UK (7) E R Kingsley (Textiles) Limited, UK (8)

Christy 2004 Limited, UK (9) Christy UK Limited (Formerly Flyspark Limited), UK (10) Christy Europe GmbH, (11) Welspun

AG, Switzerland (12) Welspun Mexico SA de CV, Mexico (13) SOREMA - Tapetes E Cortinas DE Banho, S.A., (14) Welspun

Global Brands Limited, India, (15) Welspun Investments Limited, India, (16) Besa Developers and Infrastructure Private

Limited, India, (17) Sorema Welspun Distribution and Logistics, Portugal, (18) Sorema Welspun España, Spain and (19)

Sorema Welspun Benelux, Holland are not attached herewith. However, a statement giving certain information as required

by the Ministry is placed along with the Consolidated Accounts.

The Company shall provide a copy of Annual Report and other documents of its subsidiary companies as required u/s. 212

of the Companies Act to the shareholders upon their request, free of cost.

VII. FIXED DEPOSIT

During the year under review, your Company has not accepted any fixed deposit within the meaning of Section 58-A of the

Companies Act, 1956 and the Rules made thereunder.

VIII. EMPLOYEE STOCK OPTION SCHEME:

The particulars required to be disclosed pursuant to Clause 12 of SEBI (Employee Stock Option Scheme and Employee Stock

Purchase Scheme) Guidelines, 1999 are as under:

During the year 2008 09, no new stock options were granted. Your Company had granted 20,58,000 stock options on 17th

May, 2006 (each option carrying entitlement for one equity share of the face value of Rs.10/- each) to a whole-time director

and employees including an employee of a subsidiary company at an exercise price of Rs. 110.80 per share i.e. the latest

closing market price of the company's equity share at the time of grant. The stock option can be exercised during a period of

3 years from the date of vesting. Till 31st March, 2009, 40% of the outstanding options i.e. 516,000 were vested. The dates

of vesting of remaining options are 17.05.09 (30%) and 17.05.10 (30%).

The Company has adopted intrinsic value method for the valuation and accounting of the aforesaid stock options as per

SEBI guidelines. Since the grants were made at an exercise price equal to the closing market price at the time of grant, no

amount was required to be accounted as employee compensation cost. The fair value of the options as per the “Black

Scholes” model comes to Rs. 63.39 per option. Had the company valued and accounted the aforesaid options as per the

“Black Scholes” model, the net profit for the year would have been lower by Rs.14.36 mn and the Basic and Diluted earning

per share (with face value of Rs. 10/- each) would have been Rs. 4.03 instead of Rs.4.23per share.

The “Black Scholes” model captures all the variables with their respective appropriateness which influences the fair value of

stock options. The significant assumptions to estimate the fair value of options as per “Black Scholes” model are :

1. Risk-free interest rate : 7.06%

2. Expected life of the option : 4.2 years

3. Expected volatility : 63.71%

4. Expected dividend yield : 0.00%

Mr. M. L. Mittal, Executive Director (Finance), being a senior management personnel has been granted 90,000 stock

options.

The other employees have been granted 12,00,000 options. The details of options granted to other employees are:

Total number of employees : 38

Max. number of options granted : 12,00,000

Avg. number of options granted : 31,579

The particulars with regard to the stock options as on 31st March, 2009 as required to be disclosed under the SEBI's guidelines

are as follows:

Cumulative position as on 31st March, 2009

As required by the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of

Employees) Rules, 1975 as amended, the names and other particulars of the employees are set out in the Annexure to the

Directors' Report. However, as per the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the Report and Accounts

is being sent to all the shareholders of the Company excluding the aforesaid information. Any shareholder interested in

obtaining such particulars may write to the Company Secretary at the Registered Office of the Company.

Cumulative disclosure

12


Nature of disclosure Particulars

a. Options granted 20,58,000

b. The pricing formula

The exercise price is Rs. 110.80 per equity share

i.e. the latest available closing market price of

share prior to the date of grant i.e. 17th

May,

2006.

c. Options vested 516,000

d. Options exercised NIL

e.The total number of shares arising as a result of exercise of

Options.

Total number of shares arising as a result of

exercise of options shall be 12,90,000 of Rs.

10/- each.

f. Options lapsed /surrendered 7,68,000

g. Variation of terms of Option ----

h. Money realized by exercise of Options NIL

i. Total number of Options in force 12,90,000

No. of Options

granted

No. of Options exercised

(a) Details of options granted to / exercised by the Whole -

time Directors

1. Mr. M.L. Mittal 90,000 NILj.

(b) Any other employee who received a grant in any one

year of option amounting to 5% or more of options

granted during that year.

NIL NIL

k.

Employees who were granted options, during any one

year, equal to or exceedi ng 1% of the issued capital of the

company at the time of grant

NIL

l.Diluted Earnings Per Share (EPS) of Option calculated in

accordance with Accounting Standard AS-20.Rs. 4.23

m.Weighted average exercise price of options

Weighted average fair valu e of options.

NIL

Rs.63.39

13

IX. DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirement under section 217(2AA) of the Companies Act, 1956, with respect to Directors' Responsibility

Statement, it is hereby confirmed:

(i) That in the preparation of the accounts for the financial year ended 31st March, 2009, the applicable accounting

standards have been followed alongwith proper explanation relating to material departures;

(ii) That the Directors have selected such accounting policies and applied them consistently and made judgements and

estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at

the end of the financial year and of the profit or loss of the Company for the year under review;

(iii) That the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in

accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for

preventing and detecting fraud and other irregularities;

(iv) That the Directors have prepared the accounts for the financial year ended 31st March, 2009 on a 'going concern' basis.

X. CORPORATE GOVERNANCE

Your Company believes that Corporate Governance is a voluntary code of self-discipline. Your Company continuously

endeavors to follow healthy Corporate Governance practices to nurture interest of all stakeholders in the Company.

A separate report on Corporate Governance is annexed hereto as a part of this report. A certificate from a practicing

company secretary regarding compliance of conditions of Corporate Governance as prescribed under Clause 49 of the

Listing Agreement is attached to this report. Management Discussion and Analysis Report is separately given in the Annual

Report.

XI. ACKNOWLEDGEMENT

Your directors express deep sense of appreciation for the assistance and co-operation received from the Financial

Institutions, Banks, Government Authorities, creditors and Shareholders and for the devoted services rendered, by the

Executives, Staff and Workers of the Company.

For and on behalf of the Board

Mumbai B.K. GOENKA R. R. MANDAWEWALA

July 30, 2009 Chairman & Managing Director Joint Managing Director

Form A (See Rule 2)

FORM FOR DISCLOSURE OF PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY

14


2008-09 2007-08

A. POWER AND FUEL CONSUMPTION

ELECTRICITY

PURCHASED

KWH Units (in '000s) 1,873.97 1,340.82

Total Amount (Rs in Lac) 110.36 68.00

(A)

Rate/Unit (Rs) 5.89 5.07

OWN GENERATION UNIT

Through Diesel Generator (Furnace Oil)

KWH Units (in '000s) 149,733 111,918.97

Unit per Ltr of Furnace Oil 4.25 4.24

Furnace Oil Consumption (Rs. in Lacs) 6,863.21 4,685.78

Cost / KWH Unit (Rs.) 4.58 4.19

(I)

Through Diesel Generator (Diesel Oil)

KWH Units (in '000s) 35.88 37.00

Unit per Ltr of Diesel Oil 3.90 3.81

Diesel Consumption (Rs. in Lacs) 3.19 3.90


(II)

Through Gas Turbine / Generator

KWH Units (in '000s) 75,727 80,116.47

Giga Calorie Consumption 195,824 199,286.93

KWH per Giga Calorie of Natural Gas 386.71 402.02

Gas Cost (Rs. in Lacs) 2,997.49 2,202.78

(B)

(III)


1

2 COAL - -

FURNACE OIL & HSD

(i) Furnace Oil

Quantity ( K.Ltrs) 36,282 27,339.41

Total Amount ( Rs. in Lac) 7,263.45 4,685.78

Cost/ Unit of Furnace Oil (Rs.) 20.02 17.14

(ii) Diesel Oil

Quantity (K.Ltrs) 9.20 9.70

Total Amount (Rs. in Lac 3.19 3.90

Cost / Unit of Diesel Oil (Rs.) 34.71 40.24

3

NATURAL GAS

Quantity (Giga Calorie) 195,824.00 199,286.93

Total Amount (Rs. in Lac) 2,997.49 2,202.78

Cost / Giga Calorie of Natural Gas (Rs.) 1,530.71 1,094.42

4

OTHERS/INTERNAL GENERATION - -5

B. CONSUMPTION PER UNIT OF PRODUCTION

PRODUCTS STANDARD CURRENT YEAR

PREVIOUS

YEAR

Cotton Yarn & Te rry Towels and Bed Sheet Mt 68,791 66,743

Electricity Kwh 3.67 2.90

Furnace Oil Ltr 0.58 0.41

Coal - - -

Others - - -

15

FORM B (See Rule 2)

FORM FOR DISCLOSURE OF PARTICULARS WITH RESPECT TO ABSORPTION.

RESEARCH AND DEVELOPMENT (R&D)

Technology absorption, adaptation and innovation

01 Specific areas in which R&D is carried

out by the Company

: 1) Use of wool fibers in place of PVA fibers for manufacture of Hygro yarns. This not

only has replaced the non bio degradable PVA, but also has brought down the cost

by as much as Rs 20/- per kg of Towel .

2) Spider Embroidery frame was introduced in place of normal embroidery frame. This

has resulted in 70% improvement in production in embroidery as a result of

reduced idle time.

3) Introduced twin needle length hemming machines for catering to institutional

towels, where unraveling of threads is prevented during industrial washes because

of double row stitching.

4) Bleach safe towel was introduced by incorporating cert ain chemicals during

processing, thus making the towel bleach resistant i.e. the color does not fade or

bleed even if bleach is used during domestic washing.

5) The liquor to material ratio has been reduced from 1:10 to 1:7 there by saving 30%

water consumption, which has reduced ETP load.

6) In rugs division new products in wool carpet, Dryn nylon rugs, Hygro rugs , Shaggy

rugs and artificial rugs are introduced.

02 Benefits derived as a result of the

above R&D.

1. Wool hygro towels have proved to be new kind of hygro towel which has been

accepted well in the market. Further it has resulted in addition to of a saving in cost

per kg of towel to an extant of Rs 20/-.

2. Bleach safe towels has been put into the market and is expected to be received

well.

3. In rugs division new products in wool carpet, Dry nylon rugs, Hygro rugs, Shaggy

rugs and artificial rugs are introduced; the samples have been appreciated in the

market place.

03 Future plan of action 1. Further innovation in bleach safe towel to eliminate any possible failure in the long

run.

2. Trial with natural dyes is to be made successful as the organ ic product with natural

dyes will attract more buyers .

3. Use of cationic dyes as a method of creating design on towels.

04 Expenditure on R&D

(a) Capital

(b) Recurring(PVA replacement)

(c) Total

(d) Total R&D expenditure as a

percentage of total turnovers.

Rs. 4.45 Lac

NIL

Rs. 4.45 Lac

-

01 Efforts, in brief, made towards

technology absorption, adaptation,

and innovation.

1. Three Numbers of MCS Machines of 1200 kg batch dyeing machines have been

installed, enhancing the dyeing capacity by 10 Tons per day toweling production.

2. In rugs plant Juki bar tracker, Pegasus covering and overlock, Jumbo rewinding,

Open packet dyeing, Tumble dryer, Cut pile tufting and loop tufting and auto bulk

dispensing and dosing system and Gerber comp cam machines have been installed.


above efforts, etc. Product

improvement, cost reduction,

product development, import

substitution, etc.

Over all toweling production increased 10 Tons per da y in towel dyeing and in rugs

plant. The new technology has adaptability for producing wool based carpets, Dry Nylon

rugs, Hygro rugs, Shaggy rugs and artificial rugs and yarn dyed rugs.

FORM B (See Rule 2)


16


03 In case of imported technology

(imported during the last 5 years

reckoned from the beginning of the

financial year), following

information may be furnished:

(a) Technology imported

(b) Year of import

(c) Has technology been fully

absorbed?

(d) If not fully absorbed, areas

where this has not taken place,

reasons therefore and future plans

of action.

1. MCS dyeing machines 3 nos.

2. Tumble dryers 5 machines in rugs

3. Open packet dyers 4 machines

4. Juki and Pegasus stitching 38 machines

5. Garber Cutting one machine

6. Lattex coating machine( Brukner)

2008-09

YES

Not applicable

Technology absorption, adaptation and innovation

Research and Development (R&D)(Anjar Plant)

01 Specific areas in which R&D is carried

out by the Company

: In continuation with innovation of new products-developed wide range of new

functional products for varieties of end uses have been developed, the se functional

products have attributed to meeting the specific end use requirements (towels,

sheetings, blankets):

1. Eucalyptus towel and sheets

2. Cotton touch sheet

3. Bleach Friendly towel and sheet

4. MXL specialised smart sheet

5. Quick Dry (Ecolite Towel)

6. Luxury collection for sheet and towel

7. Flannel print collection

• Sheets with specialty Finishes for enhancing performance like

1. Antibacterial

2. Moisture Management

3. Metallic Finish

4. Vitamin E / Aloe

5. MXL finish

• Special Collections: Developed special collections for high end buyers in TOB

segments:

• Special Designs

1. Printing

2. Jacquard

3. Dobby

4. Yarn dyed

5. Matellese Weaves

6. Embroidery with different stitches like single run, double run, triple run,

chawal embroidery , borer embroidery , zig –zag, satin serial, piping stitch,

cross-stitch etc.

7. Decorative stitch collections

FORM B (See Rule 2)


• Blankets

• Flannels collections both print and solid

• Flexi fit sheet with different color pallets

• Innovative approach of making TOB beds and Living room collections depicting

different themes- like Barren Beauty, Post pone Sun -rise, The Ethos, The Santa

Kukri for bedding, Fins and Oysters for Kid’s bedding ;

Maa , Knotting the Union, Better Connected ,

Nationalist Buoyancy for Living room items ,


above R&D.

Widened the range of products and create a brand image for better penetration in

market.

03 Future plan of action To create wider range of Sheets, towels and ‘Top of the Bed’ collections in future with

innovations.

04 Expenditure on R&D

(a) Capital

(b) Recurring

(c) Total

(d) Total R&D expenditure as a

percentage of total turnover.

NIL

Rs12.3 million

Rs12.3million

0.09%

Research and Development (R&D)(Anjar Plant)

17

.

01 Efforts, in brief, made towards

technology absorption, adaptation,

and innovation.

1. Designed processes to manufacture products made from special fibers, spinning,

weaving, and processing to packing.

2. Up-gradation in ERP system to accomplish growing need of fast material tracking,

data management, and ready access to useful information.

3. Ready access for information anywhere in the world with the plant for customer

enquiries and tracking.

4. Organic product processing established and we are certified manufacturers to

manufacture organic products. certified by International agencies (SKAL & IMO)

5. Adopted new technology of drying in towel (Alea Dryer). This technology helps pile

orientation thru air knife technology and drying in hot air resulting unique look of

the towel.

6. Incorporated new technology of auto-drawing (Staubli-from Germany) in sheeting

weaving. Earlier the system was fully manual and now with the help of automatic

system the process has become more reliable, fast and cost effective.

7. Incorporated auto-cutting system (Hauser-COMTAC-3000) in sheeting cut & sew

section enabling us to improve productivity, quality.

8. Incorporated auto-conveyer system (E-tone from Sweden) at cut & sew (sheeting)

to improve product quality and productivity.

9. Incorporated fully automatic cut & sew system (sheeting ) -Texpa-espritex which

also improve productivity & quality.

10. Incorporated New Sanforizing machine at sheeting (Monforts-Monfortex-finishing

shrinker) for effective finish on fabric.

11. Adopted new technology in dyeing – thermosol dyeing( Monforts Thermex

machine) which improve quality as well as production also.

12. Installed new finishing process of Anglada for improving quality & production in

towel.

13. Incorporated MXL finish fabrics through Matex 6000 Monforts machine where

sheets will be wrinkle free. As on date, this is a unique product & market

demanding value addition on sheeting fabric.

14. Incorporated Mitsubishi – singing machine in sheeting where double singing in one

operation

15. Incorporated single end sizing machine in case of sample which is minimized the

loss of production for sampling.

16. Incorporated in sample process Suzuki single end warping machine this is help

faster processing sample without hampering suffering loss of production.

Technology absorption, adaptation and innovation.

FORM B (See Rule 2)


(b) Year of import

(c) Has technology been fully

absorbed?

(d) If not fully absorbed, areas

where this has not taken place,

reasons therefore and future plans

of action.

Benninger, Printing from Stork, Stenter from Monforst and best quality Sanforiser

(from Monforts) and Calendering m/cs from Kusters . MXL finish m/c Matex 6000

from Monforts.

4. Imported new embroidery m/c Meca which is completely automatic & digital

base.

(From year 2004to2008)

Yes

Not applicable

Foreign exchange earnings and

outgo:

Activities relating to exports;

Initiatives taken to increase exports;

Development of new export markets

for products and services and export

plans;

Total foreign exchange used and

earned. Used : Rs. 2179.30 million

Earned : Rs. 9224.35 million


above efforts, etc. Product

improvement, cost reduction,

product development, import

substitution, etc.

Better feel and finish for the product to help better market penetration

The continuous effort has resulted in achieving improvement and consistency of

product quality.

03 In case of imported technology

(imported during the last 5 years

reckoned from the beginning of the

financial year), following information

may be furnished:

(a) Technology imported 1. Imported world’s best quality Testing lab equipments in spinning from Uster,

Switzerland/ USA. & Kissoki, Japan.

2. Preparatory (Warping/ Sizing) from Benninger, Looms from Psudokama, Japan and

Dornier.

3. Imported Singeing Osthoff, Germany & Mitsubishi, Japan. PTR, CDR from

Technology absorption, adaptation and innovation.

18


BASIC BEDDING

Capacity

Facilities

– 3 million units

– Mexico

20


CORPORATE GOVERNANCE REPORT - 2009

I. Philosophy on Corporate Governance:

II. Board of Directors.

III. AUDIT COMMITTEE

A. Terms of reference:

B. Composition:

Board of Directors of the Company acts as a trustee and assumes fiduciary responsibility of protecting the interests of the

shareholders and other stakeholders of the Company. Board supports the broad principles of Corporate Governance. In

order to attain the highest level of good Corporate Governance practice, Board lays strong emphasis on transparency,

accountability and integrity.

Composition and category of directors; attendance of each director at the board meetings and the last AGM; number of

other companies on the Board or Committees of which, a director is a Director; and number of board meetings, dates on

which held, are as under:

The terms of reference stipulated by the Board of Directors to the Audit Committee are as contained under clause 49 of the

Listing Agreement.

The Audit Committee was constituted by the Board of Directors in the year 1997. The Chairperson of the Committee is an

independent director. Five meetings of the Committee were held during the year under review (17th May, 2008, 29th May,

2008, 28th July, 2008, 31st October, 2008 and 31st January, 2009). The composition of the Committee and attendance of

PLC = Public Limited Company incorporated in India

PTC = Private Limited Company incorporated in India

Over-seas = Bodies Corporate incorporated outside India

Other = Others including companies Incorporated under Section 25 of the Companies Act

@ Finance & Administration Committee, Remuneration Committee & Project Management Committee memberships not included as the same are not

considered with reference to the limit of the committees on which a director can serve.

Abbreviations:

P = Promoter, E = Executive, NE = Non-Executive, I = Independent, L = Lenders, S = Shareholders, M = Member, C = Chairperson.

Five meetings of the board of directors were held during the financial year 2008-09. One each on 30th May, 2008, 28th July, 2008, 15th September, 2008,

31st October, 2008 and 31st January, 2009.

No. of other Director- ships

(As declared to the Company)Name of Director

CategoryBoard Meetings

Attended during

the Year 2008-09

Attendance at

the Last AGM

(attended)PLC PTC

Over-

seasOther

Member (M) /

Chairperson (C) in No. of

Board Committees

including other

Companies @

Mr. G. R .Goenka (Died on 28.12.2008)P 0 - - - - - -

Mr. B.K.Goenka - *Chairman & Managing

Director (Chairman w.e.f. 31.01.2009)P, E, C 4 - 13 7 4 - 3M

Mr. R.R.Mandawewala –

Joint Managing DirectorP, E, S 4 - 15 2 13 - 2M,1C

Mr. M.L.Mittal - Executive Director

(Finance)E 5 - 14 6 2 - 4M

Mr. D.B. Engineer NE, I 3 - 9 3 - - 4M, 2C

Mr. A.K Dasgupta NE, I 4 - 2 1 - - 1M

Mrs. Bala Deshpande NE, I 0 - 1 - 2M

Mrs. Revathy Ashok NE, I 2 - - 2 - - -

Mr. Arun Todarwal – Nominee – Dunearn

InvestmentsNE, S 5 - 4 1 - - 3M, 1C

Mr. Ram Gopal Sharma (appointed on

25.08.2008 and retired at AGM 27.09.2008

and again appointed w.e.f. 16.10.2008)

NE, I 3 YES 2 - - - 1M

21

the members is given hereunder:

The Company Secretary of the Company, Mr. D.K. Patil is the Secretary of the Committee. Executive Director (Finance),

Internal Auditors and Statutory Auditors attended each of the meetings as per the provisions of section 292A of the

Companies Act, 1956.

The Remuneration Committee was constituted by the Board of Directors in its meeting held on 22nd June, 2002. One

meeting of the Committee was held on 28-07-2008 during the year. The terms of reference, compositions are as under:

: To recommend appointment of Managerial Personnel and consider the remuneration payable to

them and review thereof from time to time.

The details of remuneration paid/ payable to the directors for the Financial Year 2008-09 are as under:

Chairman and Managing Director

Joint Managing Director

IV. REMUNERATION COMMITTEE:

a. Terms of reference

b. Composition:

c. Remuneration to Executive Directors

1) Mr. B.K Goenka -

2) Mr. R.R. Mandawewala

* @ 1 % on the profits determined under Section 349 of the Companies Act, 1956.

* @ 1 % on the profits determined under Section 349 of the Companies Act, 1956.

Name of Member Member/ Chairman CategoryNumber of Meetings

Attended

Mr. D. B. Engineer Chairman Non-Executive Independent 4

Mrs. Bala Deshpande Member Non-Executive Independent 0

Mr. Arun Todarwal Member Non-Executive Shareholder 5

Mr. A. K. Dasgupta Member Non-Executive Independent 5

Mr. R. G. Sharma (Since 16.10.2008) Member Non-Executive Independent 2

Name of Member Member/ Chairman

Mr. A. K. Dasgupta Chairman

Mrs. Bala Deshpande Member

Mr. Arun Todarwal Member

Salary & Allowances 2.85

Perquisites -

Commission * -

Service Contract Dated 04-11-2000 extended upto 10-10-2010

Tenure 11-10-2005 to 10-10-2010

Notice Period 1 Month

Severance Fees NIL

Stock Option NIL


Perquisites 0.26

Commission * -

Service Contract -

Tenure

Upto June 30, 2011 subject to reappointment upon

retirement by rotation and approval of the members in the

ensuing Annual General Meeting

Notice Period 1 month

Severance Fees NIL

Stock Option NIL

(Rs. in million)

(Rs. in million)

3) Mr. M.L.Mittal

D. Remuneration to Non Executive Directors:

V. SHARE TRANSFER AND INVESTOR GRIEVANCE COMMITTEE

- Executive Director (Finance)

The Non Executive Directors do not draw any remuneration from the Company. Non Executive directors are entitled to the

sitting fees for every meeting of the Board and Audit Committee attended.

Non Executive Directors are paid Rs. 5,000 for attending a Board Meeting, Rs. 3,000 for Audit Committee Meeting and Rs.

3,000 for Remuneration Committee Meeting.

The Share Transfer Committee was constituted by the Board of Directors at its meeting held on 30th December, 1996 and

was later on renamed and re-constituted as Share Transfer and Investor Grievance Committee. The Chairman of the

Committee Mr. A. K. Dasgupta is a Non Executive Independent Director. The Committee meets once in a fortnight.

Compliance Officer: Mr D.K. Patil - Vice President (Legal) & Company Secretary.

a. Constitution of the Share Transfer and Investor Grievance Committee and attendance in its meetings:

b. Number of Shareholders complaints received during the year:

During the Year under review, total 90 Investor complaints were received. Break-up of number of complaints received

under different category is given hereunder:

All the complaints received during the year under review were solved within the time limit to the satisfaction of the

investors/shareholders and no complaint is pending as at 31st March, 2009 for a period over 30 days.

22



Perquisites 0.19

Commission -

Service Contract -

Tenure

Upto June 30, 2011 subject to approval of the members in the

ensuing Annual General Meeting

Notice Period 1 month

Severance Fees NIL

Stock Options (Granted) 90,000

Sr.

No.

Director Fees paid for attending Board and Committee Meetings

1 Mr. D. B. Engineer 27,000

2 Mr. A. K. Dasgupta 38,000

3 Mrs. Bala Deshpande 0

4 Mrs. Revathy Ashok 10,000

5 Mr. Arun Todarwal 43,000

6 Mr. Ram Gopal Sharma 21,000

Name of Member Member/ Chairman Meetings attended

Mr. A. K. Dasgupta Chairman 23

Mr. B. K. Goenka Member 17

Mr. R.R.Mandawewala Member 16

Mr. M.L.Mittal Member 18

Sr. Nature of Grievance Nos.

1. Non receipt of Share certificates after transfer 20

2. Non receipt of warrant 5

3. Non receipt of end stickers 1

4. Non receipt of Annual Report 16

5. Non receipt of demat credit / remat certificate 35

6. Rejected demat request 2

7. Non receipt of exchange certificate 2

8. Others 9

Total 90

(Rs. in million)

23

VI. MANAGEMENT

VII. GENERAL BODY MEETINGS

VIII. DISCLOSURE

IX. MEANS OF COMMUNICATION

X. GENERAL SHAREHOLDER INFORMATION

a. Management Discussion and Analysis

Management Discussion and Analysis of various businesses of the Company will be separately given in the Annual Report.

b. Disclosures by Management to the Board

All details relating to financial and commercial transactions where directors may have a pecuniary interest are provided to

the Board, and the interested directors neither participated in the discussion, nor do they vote on such matters.

The details of Annual General Meetings held in the last three years are given hereunder:

a) Details of related party transactions

Refer Note No. 22 (ii) of Schedule 19 to the Accounts in the Annual Statement for list of related party transactions.

b) Details of information on appointment of new directors

A brief resume, nature of expertise in specific functional areas, names of companies in which the person already holds

directorship and membership of committees of the Board and his shareholdings in the Company forms part of the

Notice of General Meeting, annexed to this Annual Report.

c) Details of non-compliance

There was no non compliance by the Company, nor there was any penalty or stricture imposed on the Company by the

Stock Exchange or SEBI or any authority on any matter related to capital market during the last 3 years.

The Company published its un-audited quarterly results / audited annual financial results in one or more of the following

newspapers:

(i) Western Times (English and Gujarati Editions)

(ii) Business Standard (English Edition)

(iii) Economic Times (English Edition)

(iv) The Financial Express (English Edition)

Results are published immediately after the same are approved / taken on record by the Board of directors.

Address of Website on which quarterly results are posted: www.welspun.com

Management Discussion and Analysis form part of this Annual Report.

AGM will be held on Wednesday, 30th September, 2009 at 10.30 a.m. at the Registered Office of the Company at Welspun

City, Village Versamedi, Taluka Anjar, District Kutch, Gujarat 370 110.

Financial Year of the Company is 1st April to 31st March.

Date of Book Closure: 18th September, 2009 to 25th September, 2009 (Both days inclusive)

Dividend payment date: Not applicable.

Listing on Stock Exchanges: Bombay Stock Exchange (BSE) and National Stock Exchange (NSE).

The equity shares of the Company have been voluntarily delisted from Ahmedabad and Delhi Stock Exchanges and all the

Meeting Day & Date of Meeting Time Place

21st

Annual General

Meeting

Wednesday, 23rd

September,

2006

10.30

a.m.

Registered Office : Survey No.76, Village Morai,

Vapi, Dist. Valsad, Gujarat – 396191

22nd

Annual General

Meeting

Saturday, 29th

September,

2007

10.30

a.m.



23rd

Annual General

Meeting

Saturday, 28th

September,

2008

10.30

a.m.



formalities for delisting of equity shares from Calcutta Stock Exchange have been completed and formal intimation is

awaited.

Bombay Stock Exchange : 514162

National Stock Exchange : WELSPUNIND (SERIES BE)

Market Price Data: High & Low price of equity shares on Bombay Stock Exchange Limited is as under.

Market Price Data: High & Low price of equity shares on The National Stock Exchange is as under.

Performance in comparison to broad-based indices i.e. BSE Sensex and NSE S & P CNX is as under:

Registrar and Transfer Agent: The Company has appointed Registrar and Transfer agent to handle the share transfer work

and to solve the complaints of Shareholders. Name, Address and telephone number of Registrar and Transfer Agent is given

hereunder:

M/s. Link Intime India Private Limited

Unit: Welspun India Limited

C-13, Pannalal Silk Mills Compound, LBS Marg,

Bhandup (West), Mumbai - 400078

Contact person: Mr. Suresh Kadam

Stock Code:

24


Month High Amount (Rs.) Low Amount (Rs.)

Apr - 2008 58.00 43.65

May - 2008 64.70 48.60

Jun - 2008 50.95 35.00

Jul - 2008 41.45 33.00

Aug - 2008 43.00 36.20

Sep - 2008 49.90 34.00

Oct - 2008 37.50 17.10

Nov - 2008 28.50 16.20

Dec - 2008 27.20 17.50

Jan - 2009 24.20 15.25

Feb - 2009 17.35 12.95

Mar - 2009 25.00 11.35

Month BSE Index Closing price of

Shares (Rs.)

NSE Nifty Closing price of Shares

(Rs.)

Apr - 2008 17,287.31 52.80 5165.90 53.00

May - 2008 16,415.57 49.90 4870.10 50.10

Jun - 2008 13,461.60 35.70 4040.55 35.50

Jul - 2008 14,355.75 39.25 4332.95 39.15

Aug - 2008 14,564.53 38.60 4360.00 39.20

Sep - 2008 12,860.43 36.30 3921.20 36.55

Oct - 2008 9,788.06 22.90 2885.60 23.75

Nov - 2008 9,092.72 18.25 2755.10 18.00

Dec - 2008 9,647.31 20.45 2959.15 20.25

Jan - 2009 9,424.24 16.00 2874.80 16.05

Feb - 2009 8,891.61 14.30 2763.65 14.10

Mar - 2009 9,708.50 20.40 3020.95 20.40

Month High Amount (Rs.) Low Amount (Rs.)

Apr - 2008 57.90 43.70

May - 2008 64.75 48.60

Jun - 2008 50.70 35.00

Jul - 2008 40.00 33.00

Aug - 2008 43.00 36.00

Sep - 2008 44.95 34.00

Oct - 2008 39.00 17.50

Nov - 2008 27.50 15.00

Dec - 2008 27.00 17.50

Jan - 2009 24.95 15.20

Feb - 2009 17.90 13.00

Mar - 2009 24.60 13.20

Share Transfer System:

Distribution of Shareholding:

Address for correspondence:

Shares sent for transfer in physical form are registered by the Company's Registrars and Share Transfer Agents within 20

days from the receipt of the documents, if the same are found in order. Shares under objection are returned within two

weeks.

Dematerialisation of shares and liquidity: 98.84% have been dematerialized and has reasonable liquidity on Bombay Stock

Exchange.

Outstanding GDR's/ADR's/Convertible ( As at 31/3/2009) Nil.

Plant locations: Survey No.76, Village Morai, Vapi, Dist. Valsad, Gujarat - 396191 (India) and Village Varsamedi, Tal Anjar,

Distt. Kachchh, Gujarat 370110 (India)

Company Secretary

Welspun India Limited

B Wing, 9th Floor, Trade World,

Kamala Mills Compound,

Lower Parel,

Mumbai - 400 013

Tel: +91-22-4908000, +91-22-66136000

Fax: +91-22-4908020

E-mail : [email protected]

25

No. of Equity Shares held No. of

shareholders

Percentage of

Shareholders

Total No. of

shares held

Percentage of

Shares held

Upto-5000 36,203 99.44 60,56,879 8.29

5001-10000 83 0.23 6,25,190 0.86

10001-20000 51 0.14 7,48,608 1.02

20001-30000 20 0.06 4,79,286 0.66

30001-40000 12 0.03 4,18,844 0.57

40001-50000 3 0.01 1,37,760 0.19

50001-100000 12 0.03 8,85,604 1.21

100001- above 24 0.07 6,37,37,348 87.20

Total 36,408 100.00 7,30,89,519 100.00

BSE & Welspun India Limited

0.00

2,000.00

4,000.00

6,000.00

8,000.00

10,000.00

12,000.00

14,000.00

16,000.00

18,000.00

20,000.00

Ap

r0

8

Ma

y0

8

Jun

e0

8

July

08

Au

g0

8

Se

p0

8

Oct

08

No

v0

8

De

c 0

8

Jan

09

Feb

09

Ma

r0

9

Month

Se

nse

x

0.00

10.00

20.00

30.00

40.00

50.00

60.00

Sh

are

Pri

ce

Sensex

Welspun India Ltd

NSE & Welspun India Ltd

0

1000

2000

3000

4000

5000

6000

Ap

r0

8

Ma

y0

8

Jun

e0

8

July

08

Au

g0

8

Se

p0

8

Oct

08

No

v0

8

De

c 0

8

Jan

09

Feb

09

Ma

r0

9

Month

NIF

TY

0.00

10.00

20.00

30.00

40.00

50.00

60.00

Sh

are

Pri

ce

NS

Welspun India Ltd

E NIFTY

26


Practicing Company Secretary's Certificate

TO THE MEMBERS OF WELSPUN INDIA LIMITED

For S. S. Risbud & Co.

Company Secretaries

Sanjay S. Risbud

Proprietor

Mumbai

We have examined the compliance of conditions of Corporate Governance by Welspun India Limited for the year ended on 31st

March, 2009, as stipulated in Clause 49 of the Listing Agreement of the said Company with Stock Exchanges.

The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination was limited to

procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of the

Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company.

In our opinion and to the best of our information and according to the explanation given to us, we certify that the Company has

complied with the conditions of Corporate Governance as stipulated in the above mentioned Listing Agreement.

We state that in respect of investor grievance received during the year ended 31st March, 2009, the Registrars of the Company

have certified that as at 31st March, 2009, there were no investor grievance remaining unattended/pending for more than 30

days.

We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or

effectiveness with which the management has conducted the affairs of the Company.

July 30, 2009

DECORATIVE BEDDING

Capacity

Facilities– 1 million sets

– Mexico

28


MANAGEMENT DISCUSSION AND ANALYSIS

Rajesh R. Mandawewala

BUSINESS ORGANIZATION

Overview of the Indian economy

The World Textile overview

Readers are cautioned that this discussion and analysis contains forward-looking statements that involve risks and uncertainties. When used in this discussion,

the words “anticipate,” “believe,” “estimate,” “intend,” “will,” and “expected” and other similar expressions as they relate to the Company or its business are

intended to identify such forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements,

whether as a result of new information, future events, or otherwise. Actual results, performances or achievements, risks and opportunities could differ materially

from those expressed or implied in these forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements as

these are relevant at a particular point of time & adequate restrain should be applied in their use for any decision making or formation of an opinion. The

following discussion and analysis should be read in conjunction with the Company's financial statements included herein and the notes thereto.

Welspun’s wide range of products provides one-stop solution in Home

Textiles - from terry towels to bath rugs & robes and from bed linen to

decorative bedding. Our innovative product portfolio, one-of-its-kind

design studio and stringent practices on sustainability, is the hallmark

of servicing our consumers better and being one of the largest and the

most respected Home Textile Company in the World!


The Global economy saw a period of high growth from 2003- 2007 with the world economy growing at a CAGR of 4.5%. In 2007-

08 there were visible signs of a slowdown in the developed economies which exacerbated with the fall of several large financial

institutions in the US and Europe during 2008. The slowdown had a huge impact on the world economic growth in 2008 as all the

developed economies of USA, Europe and Japan entered into a recession. It is estimated by the International Monetary Fund

(IMF) that in 2009 the world economy will contract by 1.3% and show a modest recovery of 1.9% in 2010.

India's economy is on the fulcrum of an ever-increasing growth curve. With positive indicators such as a stable 8-9 percent

annual growth, rising foreign exchange reserves and rapidly expanding FDI inflows, India has emerged as the second fastest

growing major economy in the world after China.

The economy has been growing at an average growth rate of 8.8 percent in the last four fiscal years (2003-4 to 2006-7), with the

2006-7 growth rate of 9.6 percent being the highest in the last decade.

Inspite of the current global crisis, the Indian economy grew @ 6.7% during 2008-09. While the growth is expected to slow down

further in 2009-10 but most of the agencies believe that India will still grow at 5.5 to 6.5% during 2009-10. However, on the

Indian textile export front the country could only achieve a growth rate estimated to grow at 15

to 18 per cent.

The manufacturing sector in India has also been adversely affected by the global slowdown growing by a meager 2.4% in 2008-

09 against 8.2% in 2007-08. The Government has taken initiatives to stimulate the economy. The Indian industry is likely to see a

lot of capacity additions in 2009-10 in various Industry sectors.

The world cotton production for 2008-09 is estimated at 111.6 million bales, down 7.4% from 2007-08. The global cotton

consumption is also expected to reduce from 123.4 million bales in 2007-08 to 116.6 million bales in 2008-09. The lack of credit,

of at 11.8 per cent which was

(Source: IBEF Presentation on Textiles and Apparels, Dec 2008)

29

sharp drop in cotton prices and a drop in cotton consumption led to difficult conditions for the cotton industry across the world.

The global Textile & Clothing trade was estimated at US $ 598 billion in 2008 recording a growth of 2.5%, with the clothing trade

at US $ 363 billion and textile trade at US $ 235 billion.

The world trade in cotton textiles in 2008 was estimated at US $ 96.70 billion. The world trade in cotton made ups was estimated

at US$ 33.4 billion in 2008 considering a growth rate of 4.4%. USA which is the largest market for Cotton made ups in the world

registered a marginal decline of 1.48% in 2008. The UK market also showed a decline in imports of Cotton made ups by 6%.

Germany showed an increase of 4.88% (albeit much slower than the growth of 17.24% shown in 2007) and Japan showed an

increase in imports by 14.93% supported by the appreciation in the Japanese Yen (20%).

China which is the largest cotton producer in the world and exporter of Textile & Clothing has been facing a difficult period since

the beginning of the global economic crisis. The total T & C exports from China reached US $ 34.06 billion in Jan-Mar'09 a drop of

9% Y-o-Y. The key reasons for this are slackening demand, introduction of trade protection measures, currency appreciation and

increase in raw material cost.

China State Council recently announced further policies including tax breaks, export rebates, financial access and expanded

export credit insurance to support the exporters. The Chinese government has increased the tax rebate on textile exports five

times since August'08, the latest being an increase from 15% to 16% effective 1st April 2009.

The textile industry plays a crucial role in the Indian economy. It contributes about 14 per cent to the industrial production of the

country. As regards employment, it is the second largest after agriculture, employing nearly 35 million people & accounting for

20 per cent of the total workforce of the nation. Its contribution to forex earnings is around 14 per cent.

Textiles sector has been identified as one of the priority sectors having high growth potential and higher multiplier effects for

employment generation. Textile and clothing industry plays a dominant role in the country's economy. As of March 2009, it has a

total market size of USD 52 billion and accounts for 26 percent of the manufacturing sector, 20 percent of industrial production

and 18 percent of industrial employment. It contributes 16 percent to gross export earnings and 4 percent to national GDP.

Besides, another 50 million people are engaged in allied activities.

India has overtaken the US to become the world's 2nd largest cotton producing country, after China, as per a study by

International Service for the Acquisition of Agri-biotech Application. BT cotton was a major factor contributing to higher rate of

production, from 15.8 million bales in 2001-2 to 31 million bales in 2008-09. The yield per hectare has also improved drastically

from 278 kgs In 2000-01 to 526.15 kgs in 2008-09.

As of 2008, India accounts for:

41 percent of the global loomage. (including the organized & unorganized sector) (1.38 million out of 3.33 million

looms, out of this 1.3 million are non mill sector powerlooms)

16 percent of the global spindlage. (38.7 million out of 236 million spindles)

12 percent of the world's production of textile fibres and yarn.

20 percent share in the total world trade of cotton yarn. (US $ 2 billion out of $ 10 billion)

However, year 2008-09 was a tough year for the Indian textile Industry. In the first half of 2008-09 the commodity prices like

cotton, fuel and other inputs like power, dyes & chemicals were at multi year highs, the prices crashed after September 2008 and

reached lows in the second half of 2008-09. However, with an improvement in the business sentiment since April 2009, the

prices have again increased by 15-20%.

In addition to the global economic crisis some other steps taken by the government like 40% increase in the minimum support

price (MSP) of raw cotton, 5% export incentive for cotton exports, bulk discount offered by CCI, drastic reduction in export

incentive, heavy backlog in government dues, hardening of bank interest rates etc, have paralysed the performance of the

Indian textile industry. Even the best performing mills in the country have incurred huge losses for the last two years. Even in

(Source: Texprocil Newsletters,2009)

(Source: Texprocil)

(Source: * ITMF - International Textile Manufacturers Federation 2008 Shipment Statistics

# Texprocil)

The Indian Textile industry overview

�

�

�

�

*

*

#

#

competing manufacturing locations like China and Pakistan, there has been a closure of a lot of small manufacturing units.

The outlook for textile industry in India is optimistic. It is expected that Indian textile industry would achieve 7-8% growth rate in

the remaining period of the 11th Five year plan. The Indian textile & clothing industry is estimated to grow from USD 52 billion in

2008-09 to USD 115 billion by the year 2012, comprising domestic market of USD 60 billion and exports of USD 55 billion. Thus,

the projected growth rate is 34 percent per annum during these years, which is a pretty challenging target. It will require a well

defined multi prong strategy to achieve this kind of growth in the current challenging environment.

India produces a wide range of home furnishings, household linen, curtain tapestry and yardage made with different textures

and varying thickness.

The Indian domestic and export markets for textile and apparel grew at 6.5 percent and 12 percent CAGR respectively during the

tenth five year plan. However, due to the economic crisis, the Indian Textile & Clothing exports dropped by 2% to US $ 21.75

billion in 2008-09 in which Textile exports accounted for US $ 12.7 billion and Garment exports accounted for US $ 9.7 billion. In

the current scenario, it appears difficult to achieve the target of US $ 40 Billion in 2009-10 as planned in the 11th five year plan.

Ministry of Textiles has targeted a growth of 16% per annum for the Indian T&C industry to reach US $ 115 billion by the end of

Eleventh Five Year Plan. It also wants to secure a 7% share in global T&C trade by the end of the Eleventh Five Year Plan.

The domestic demand accounts for more than 60% of the Indian textile and apparel industry, reducing the dependence on the

international markets. However, the exports are heavily tilted towards the US and European market (70%).

India has several advantages in terms of abundant supply of cotton and human-made fibre, mature and well-established

production base, cheap and skilled labour and good design capabilities. Besides this, government incentives to exporters and

entry of foreign retailers into the Indian market would also act as a fillip to retail sourcing from India.

As per a recent survey conducted by the trade bodies on the Textile & Clothing Industry, the companies across the value chain

have been adversely affected by the global economic slowdown. The performance is however expected to improve in the

coming quarter with improvement in Demand, reduction in raw material prices and improvement in cost efficiencies by the

companies.

The global home textiles industry is estimated at US$ 70 billion (at the retail level) with US and EU together accounting for nearly

70% of the overall market.

During 2004-2007, the global growth, sales of new homes, increase in consumer spending led to an increase in the US and

European home textile markets. However, with the drop in sales of new homes and most of the developed economies entering a

recession the overall home textiles market stagnated in 2008.

The imports from China, India and Pakistan and other emerging manufacturing locations like Bangladesh and Vietnam have

been increasing since 2004 after the end of quotas. The manufacturing plants in USA and Europe have been shutting down and

adapting their business model to either relocating to low cost manufacturing locations (as done by Springs Global in moving to

Brazil and WestPoint Home getting products manufactured from Bahrain and Pakistan), sourcing from Asia or getting acquired

by companies from these manufacturing centres.

In the current scenario, USA imports of home textiles account for nearly 75% of the overall market. This figure is expected to go

up with the finishing facilities for Towels and basic bedding manufacturing plants also moving out of the USA.

Even in case of Europe, manufacturing companies from Portugal have been struggling with many small companies like Mundo

Textil, JMA, La Meirinho on the brink of closure. This provides a huge opportunity for companies like us with a global

manufacturing footprint to cater to these markets.

(Source: Texprocil Newsletter, 2009)

(Source: Home Textiles Today, ec.europa.eu)

(Source: OTEXA)

(Source: OTEXA)

Growth Plan for textiles and apparel industry

THE HOME TEXTILE INDUSTRY

30


31

CHALLENGES AND THREATS-GLOBAL CHALLENGE

ADVANTAGE INDIA

Building Sustainable Business Model

Availability of Cotton with a marginal cost advantage:

Strong presence in Yarn Market:

Cost Advantages in inputs:

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Increasing Competition: As mentioned above, there has been a shift from Developed economies to Developing

Asian Economies. Now with the emergence of new centres and slowdown in consumer spending, the competition is

increasing.

Weak Consumer Demand: The Retail sales in USA, UK and Japan have dropped since 2008 which has adversely affected the

order position.

Economic Slowdown: As mentioned earlier in the document, most of the developed economies are into recession. This has

severely affected tradeflows, consumer demand, job availability, business profitability etc. challenging the business

scenario.

Liquidity Crisis: With the collapse of large financial institutions in USA and Europe and the sub prime mortgage crisis,

defaults & foreclosures liquidity has been a concern. While most of the Central banks have reduced rates & infused liquidity

in the system, the availability of funds to businesses has been low.

As mentioned above India is now the second largest cotton

manufacturer in the world after China. With the improvement in area under cultivation and yield per hectare, the

availability of cotton is very good. With the low freight costs the overall cost advantage of 5- 7% is also available.

India contributes to nearly 20% of Yarn trade in the world and enjoys top exporter

status in 17 large markets. This provides easy availability of yarn with good quality.

In terms of the key inputs, most of the companies have access to captive power or public

power at competitive costs. Even in case of other key inputs like Dyes, Chemicals and packaging material which account

for 12-15% of overall product cost, most of the multinationals are present in India and there is also a development of

Weak Consumer Demand

Consumer confidence index

lowest in Decade

Retail Comp store sales

showing negative growth in US

Oct Dec’08 Retail comp store

sales growth negative in UK

Weak Consumer

Demand

Retailer

Bankruptcies

Liquidity

CrisisEconomic Slowdown

Increasing

Competition

Global

Challenges

Bankruptcies

Retailers- LNT, Boscov’s, Mervyn’s Liquidated,

Gottschalks filed for Chap 11

Suppliers- APE is an example

Increasing competition

High Inventory Levels

Obsolescence costs

Liquidity Crisis

Low Lending by Institutions

Purchase postponement

Defaults & Foreclosures

Economic Slowdown

All Major economies USA, UK, Japan and EU

in Recession.

Emerging economies have been affected

China GDP growth slowed to 6.1% for Jan-

Mar'09 (slowest in 20 years)

India has shown negative exports growth

since in Oct'08, for FY'09 Indian exports @

US $ 168.7 billion (only 3.4% Y-o-Y growth)

local vendors ensuring low delivery lead time and competitive pricing for inputs.

As per the Werner International Study, Most of the

Asian countries are competitive in terms of labour costs. India is also comparable with other manufacturing centres like

Bangladesh, Vietnam, Pakistan and China. However, India has the advantage of a pool of skilled manpower.

Most of the competing manufacturing centres lose out to India in terms of the

Political & Business Climate. While Bangladesh & Pakistan are battling Political Issues, China has also seen closure of a

lot of small units in the recent economic turmoil, the pegging of yuan against the dollar & dependence on exports has

also made china manufacturing uncompetitive in the recent past.

With the TUFS program, India saw a lot of Investment in the textile sector

in the last five- seven years. Considering that a lot of technology in India is better than other competitors.

The increasing shopping malls, residential complexes, sophisticated life style and surge in hotel

industry, bring a tremendous opportunity for Companies making home products.

• Welspun is today amongst the top 3 Home Textile manufacturers in the world. In all the product areas the

company has capacity amongst the top 5 manufacturers in the world. It has capacities at multiple locations

which is a derisking for the customers.

• With the expansion from Terry Towels & Bed Sheets to Rugs, Basic Bedding & Fashion Bedding as

also window treatments and blankets, today Welspun is an integrated Home Textile supplier across all customer

requirements.

• Welspun actively uses the organizations like NPD and Just Ask a Woman to get insights into consumer

requirements and identify the key product attributes to help in consumer communication. Infact, this consumer research is

also shared with the key retailers during strategic meetings which are the foundation for all product recommendations.

• To meet the differing expectations of the consumers in different markets and products

Welspun has design teams in India, New York (Bath), Charlotte (Bedding), Porto (Sorema Rugs), Hyde (UK Bed & Bath), San

Francisco, USA .

• Welspun believes that Product Development & Innovation is a key area to create a

sustainable competitive advantage. Using the inputs from the consumer research and through tracking the new

developments, the Company has added new products like nanospun towels, eco-lite towels (quick dry), cotton bamboo

towel, eucalyptus towel and texture towels in its product basket.

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Availability of Skilled Manpower and comparatively lower cost:

Stable Political & Business Scenario:

Investment in Technology & Infrastructure:

Increasing demand:

ADVANTAGE WELSPUN - STRENGTHS AND OPPORTUNITIES

Global Scale:

The total capacity of Welspun is as under:

One stop shop for Home:

Consumer Research:

Multi Location Design Team:

Product Development and Innovation:

32


India Portugal Mexico Total

1 mn sets

Basic Bedding

Bath Rugs

Bed Linen 10 mn sets 10 mn sets

Towel 38,200 tonnes 38,200 tonnes

10 mn pieces

1,07,496 spindles

DecorativeBeddings

1 mn sets

Yarn Spindles (nos) 1,07,496 spindles

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1 mn pieces 11 mn pieces

3 mn units 3 mn units

33

On the Bed Linen front, a lot of product development has taken place in the second half of 2008-09 and Welspun has

added products like Ever Smooth Wrinkle Free, Quick Dry Sheets, Flexifit sheets and the Perfect Sheet incorporating all

the qualities mentioned.

• Welspun has a Marketing team in USA at Charlotte and in India which works on developing the

Packaging for different products. In order to ensure that the key functional product attributes are communicated to the

consumer at the retail floor, the Point Of Sale communication is also developed.

• Welspun has a portfolio of Own Brands and Licensed Brands. While own brands like Hygrocotton,

Luxus, Smart and Eversmooth Christy, Graccioza by Sorema are finding increasing customer recognition and acceptance,

Licensed Brands like Amy Butler, Waverly and Umbra provide access to retailers.

• Welspun is amongst the few manufacturers which provide Collaborative Forecasting, Planning and

Replenishment to its customers over more than 30 programs from POS to production at plant level.

• Welspun has presence at multiple locations across the world and uses this presence to

build the market intelligence for different markets. In addition to this secondary research using published Industry sources

helps to build the market intelligence.

• State-of-the art technology, machinery know-how from the best international suppliers and vertically

integrated plants, gives the Company a very strong footprint in this particular industry. Welspun is flexible, change

oriented and innovative.

• A strong client base and a great track record in terms of client servicing and on time delivery is a key strength.

• The exponential growth anticipated in the textile industry gives a great futuristic hope

for companies like us which have implemented process and technology of global standards and are ready to meet future

demands.

• Cotton is sourced locally, helping in lean manufacturing. In a nutshell, the Company has really

established synergies between raw material sourcing, manufacturing facilities and markets.

In a time when the main competitors like Springs Global & WestPoint Home have been losing revenues and money, Welspun has

been able to sustain its revenues in the global slowdown. In fact Welspun is the only supplier in the Top 15 Suppliers as per Home

Textiles Today, which has shown consistent growth over the last three years.(Home Textiles Today, co. websites)

Welspun has followed its defined strategy, improved product mix and optimised the utilisation of assets. It has been successful

in the optimisation of raw material cost and major input cost. During the year under review, the customers have appreciated the

new products developed by the company and it is expected that in 2009-10, Welspun will get significant jump in revenues &

volumes through the bed linen products.

In 2008-09 Welspun started its state of the art Rugs Plant at Vapi and has already placed product with large customers like Bed

Bath & Beyond and Macy's. The business for Mexico Bedding factory also improved since November'08 and with the License of

an eminent brand the business is expected to improve in 2009-10.

Welspun has over the last year been able to cement its position as a fully integrated complete home textile supplier. It has been

able to retain its market share of the Terry Towels product category and increase its share in the bed linen category.

Through Sorema of Portugal, Welspun has been able to set up a sales network in Europe in the key markets of Germany, Spain,

Benelux, Scandinavia in addition to UK and Portugal. Christy UK, inspite of a difficult market has been able to sustain its market

share in Terry Towels in the UK market. In the Bed Linen category in UK the consumer response has been good and the business is

expected to grow In the coming years.

Packaging and Point Of Sale:

Advantage of Brands:

,

Extended SCM:

Global Market intelligence:

Technology:

Reliability:

Projected growth of textile industry:

Access to raw materials:

Welspun's efforts to sharpen competitive edge

Welspun is further expanding/modernising its manufacturing capacities with an objective to attain increase in volume with

lower overhead, better quality and replacement of old technology with world class technology.

Welspun targets cost optimization with an aim to become the lowest cost producer of home textiles globally and further aims to

become the preferred partner in home textiles for global initiative with its business model.

In 2009-10 Welspun plans to:

Sustain its market share in Towels in USA and UK

Improve its market share in Bed Linen in all Markets

Utilise the Sales Network set up in Europe to increase sales across all product categories

Stabilise the sales of Faupel products in UK

Acquire/ License Brands

Increase revenues in Fashion Bedding, Basic Bedding and Bath Rugs

Develop new Markets like Mexico, Japan, Russia and China

Create a Sourcing & Quality infrastructure

Create sustainable products

Continuous focus on cost reduction at plants and subsidiaries

Product Development & Innovation

Developing a Competitive Advantage

• Offering a Business Proposition

Be a strategic partner to Customers

• Sharing of Common Objective with Customer

Maximize inventory turns

Optimize ROI for Customer & Welspun

• Integration

Supply Chain Integration with Client data base

• Quick response through USA distribution

• Efficient supply chain for filled products through Mexico

Building global scale

• Towel capacity among top three in the world

• Sheet capacity will be among top two in India and top five in the world

• Dec bedding and rugs also global scaleamong top 5 capacities in the world

• Manufacturing base in Mexico, Portugal and India

• Distribution facilities in India, Charlotte, Mexico, Portugal, UK

Welspun “Social” Initiatives

• Health & Environment

Initiation towards Carbon Credit - VAPI changing over to gas-based turbines in place of Furnace Oil generation

Social forestry by planting eucalyptus saplings outside the company premises.

Zero Discharge Effluent treatment plant with Sludge disposal, RO Plant & Salt Recovery

• Employee Benefits

Schooling, Transportation

Good Working Environment

• Awards & Certifications

EARTH CARE AWARD for major reduction of carbon emissions. Earth Care awards was founded by India's largest

media house, the Times of India and Jindal Steel Works in an effort to recognize local and relevant action in tackling

challenges posed by climate change.

Walmart Sustainability Award

• Training

5S, Lean Six Sigma, Process Training

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35

OUTLOOK

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

Welspun is already a strategic vendor to the major retailers in the USA. It has been able to sustain its growth even in the current

economic scenario where the retail sales in its key market of US dropped since Sept'08. As a result of reduced consumer

spending the retailers also corrected the inventory in the entire supply chain leading to low orders.

In 2008-09 Welspun has signed a License for a leading brand for North America covering the categories of Fashion Bedding,

Fashion Bath, Blankets/ Throws and Area Rugs in addition to the earlier license of Bath, Solid Sheets and rugs. The new license

will help Welspun in becoming a key player in the Fashion Bedding segment through the manufacturing facility at Mexico.

Welspun today differentiates itself from the other manufacturers by focusing on Consumer Research driven innovations, use of

new technologies, a global manufacturing & sales footprint and ability to offer a comprehensive end-to- end solution to the

customers. A recent example of a consumer research driven innovation has been the Quick Dry Towel and the Perfect Sheet.

At Welspun, the internal control system encompasses the policies, processes, tasks, behaviours and other aspects of the

Company that taken together facilitates effective and efficient operation, quality of internal and external reporting, compliance

with applicable laws and regulations. Welspun's objectives, its internal organisation and the environment in which it operates

are continually evolving and, as a result, the risks it faces are continually changing. In order to make its internal control effective

and sound, Welspun thoroughly and regularly evaluates the nature and extent of the risks to which the Company is exposed. The

operation and monitoring of the system of internal control has been taken by individuals who collectively possess the necessary

skills, technical knowledge, objectivity and understanding of the Company and the industries and markets in which it operates.

Welspun also outsources management auditors to periodically check the adequacy of its systems and processes so as to make it

more responsive in this volatile environment. The qualified, experienced and independent Audit Committee of the Board of

Directors actively reviews the adequacy and effectiveness of internal controls systems and suggests improvements for

strengthening them. Welspun has a strong Management Information System which is an integral part of the control mechanism.

Welspun has successfully implemented an enterprise wide solution (ERP) in its textile plants, is in advanced stage of

implementation at WUSA, WAG and Welspun Mexico and is in the process of covering all its businesses, planning and accounting

processes.

The system is improved and modified continuously to meet the changes in business conditions, statutory and accounting

requirements.

DISCUSSION ON FINANCIAL PERFORMANCE

KEY FINANCIAL DATA ( Standalone)

1. REVENUE

a. Net Sales

The Company achieved net sales of Rs 13,444.40 mn in FY 2009 registering an increase of 8.34% over the previous

financial year on account of better unit price realization despite slowdown in major global markets and lower foreign

exchange realization.

b. Other income

The income from other sources dropped from Rs. 246.66 mn in FY 2008 to Rs. 171.60 mn in FY 2009.

The Company was proactive in adoption of Accounting Standard 30 'Financial Instruments: Recognition and

Measurement. Changes in the fair value of the hedging instruments that do not qualify for hedge accounting are

recognised in profit and loss account to the extent of Rs 231.80 mn.

Profit on cancellation of forward contracts dropped from Rs.114.92 mn to Rs.21.13 mn in FY 2009.

This has offset the non operating income from the sale of Welspun Gujarat Stahl Rohren Limited shares amounting

to Rs 221.35 mn.

The bearish capital market had its effect on the dividend income from the mutual fund transactions which stands

at Rs 5.86 mn in FY 2009 vis-à-vis Rs 18.70 mn in FY 2008.

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(In Rs million except per share data)

Net Sales(net of excise) 13,444.40 100.00 12,409.44 100.00 1,034.96 8.34

Other Income 171.60 1.28 246.66 1.99 (75.06) - 30.43

Cost of Material 5,784.37 43.02 5,034.54 40.57 749.00 14.89

Manufacturing Expenses 3,670.56 27.30 3,304.23 26.63 366.33 11.09

Employee Cost 1,035.18 7.70 963.37 7.76 71.81 7.45

Selling Administration and

Other Expenses 987.10 7.34 1,418.92 11.43 (431.82) - 30.43

Reported EBIDTA 2,138.79 15.91 1,935.04 15.59 204.57 10.53

Financial Expenses 921.11 6.85 676.85 5.45 244.26 36.09

Depreciation 952.98 7.09 847.19 6.83 105.79 12.49

Taxes (51.66) - 0.38 151.86 1.22 (203.66) - 133.99

Net Income from Ordinary

Activities 316.73 2.36 259.14 2.12 58.18 20.59

Extraordinary Item (net of tax

expense) 7.33 0.05

-

3.81 -

Exceptional Items

3.52

PAT (Profit After Tax) 309.03 2.30 262.66 2.12 46.36 17.65

EPS (Basic and Diluted before

Extraordinary Item) 4.33 - 3.59 - 0.74 - 20.61

EPS (Basic and Diluted after

Extraordinary Item) 4.23 - 3.59 - 0.64 17.83

Particulars FY 08-09 % FY 07-08 % YOY change YOY % change

CAPACITY UTILIZATION

FY 08- 09 F Y 07-08

Product Unit Installed

Capacity

Actual

Production

Capacity

Utilisation

Installed

Capacity

Actual

Production

Capacity

Utilisation

Terry Towel MTPA 38,201 30,088 78.76% 37,074 29,822 80.44%

Bed Linen

Products

Mtrs 42.84mn 23.51mn 54.88% 35.7mn 28.38mn 79.50%

- -

-- - -

36


2.

a. Cost of Materials

The Cost of Material stands at Rs. 5,784.37 mn and as a % age of Net sales, it is 43.02% in FY 2009 vis-à-vis 40.57% in

FY 2008. This was mainly due to increase in the minimum support prices (MSP) for cotton .

b. Manufacturing Expenses

Manufacturing Expenses on year to year basis has increased by 11.09% and amounted to Rs.3670.56 mn for FY

2009 mainly due to increase in power fuel and water charges. The power fuel and water charges amounted to Rs

1408.47 mn in FY 2009 vis-à-vis Rs 1018.25 mn in FY 2008.

c. Selling, Administration and Other Expenses

The selling administration and other expenses saw a considerable drop on year to year basis. In Q4 of FY

2009 the Company has routed its export sales through its then Indian subsidiary Welspun Global Brands Ltd .

Hence all the related selling and marketing expenses are booked in the subsidiary company .The claims , discounts

and rebates have also reduced due to better quality production and negotiation of claims.

d. Finance Expenses (Net)

The Company has relied heavily on borrowings from the financials institutions for the Phase II expansion at Anjar.

During the FY 2009, the Company's borrowings has increased by Rs 1,172.66 mn. Further due to increase in the

banks lending rate and resetting of interest on old borrowings the total financial expenses are higher.

e. Depreciation

The installed capacity of the Company 's terry towel production units increased from 37,074 mtpa in FY 2008 to

38201 mtpa in FY 2009 . Similarly, the installed capacity of the Company's Bed-Linen products increased from 35.7

mn mtrs in FY 2008 to 42.84 mn mtrs in FY 2009. This increase in installed capacity has resulted in higher

depreciation cost for the FY 2009.

The EBIDTA has remained constant for the two financials at 16% as a percentage of sales due to meager increase on both

sale prices and volume .

The Profit after tax from ordinary activities remained constant at approximate 2%as a percentage of sales but registered an

increase of 17.65% on year to year basis . The major contributing factor was recognition of Deferred Tax Asset of Rs. 75.23

mn on unabsorbed depreciation pertaining to Assessment Year 1998-99 and 2001-2002 due to Appellate Tribunal ruling in

Company's favor.

The Earning Per Share (Basic) (before extra-ordinary item) in FY 2009 stands at Rs. 4.33 per share as compared to Rs.3.59

per share in the FY 2008, due to better profit after tax position.

EXPENDITURE

3. EBIDTA

4. PROFIT AFTER TAX

5. EARNING PER SHARE (Basic)

by the government

, of 30.43%

,

Particulars

Share capital

Reserves and Surplus

Total Shareholders Equity

Less: Miscellaneous Expenditure to the

extent not written off or adjusted

Net Worth

Net Sales

Net Sales/ Net Worth

Net Profit/Loss after Tax

Return on Net Worth

Current Assets

Current Liabilities and Provisions

Current Ratio

Inventory Turnover Ratio

Inventory (Days)

Debtors Turnover Ratio (Sales / Debtors)

Days Sales Outstanding

FY 08-09 FY 07-08

780.90 780.90

4,821.37 4,807.29

5,602.27 5,588.19

- -

5,602.27 5,588.19

13,444.40 12,409.44

2.40 2.22

309.03 262.66

5.52% 4.70%

8,223.33 7,546.69

1,866.68 1,468.09

4.41 5.14

5.37 4.71

68.16 77.69

11.81 15.11

31.00 24.23

6. KEY FINANCIAL RATIOS

37

(In Rs million except ratios)

CONSOLIDATED ACCOUNTS:

HUMAN RESOURCE MANAGEMENT AND INDUSTRIAL RELATIONS

During FY 09, Net Sales at Rs. 16991.20 mn was marginally higher by 3.20%. Though the standalone sales have gone up by 8.34%

the consolidated sales is not up by the same % as sales to Subsidiaries made in March ‘09 were in transit or in subsidiary’s

inventory.

However, Earning Before Interest, Depreciation and Tax (also before Exceptional Items) (EBIDTA) from Ordinary Activities at Rs.

1658.41mn was lower by 18% as compared to EBIDTA of Rs. 2031.01 mn in FY 08. Profit / ( Loss) Before Tax (PBT) from Ordinary

Activities at (Rs. 643.27 mn) was lower by 289% of PBT of Rs. 341.04 mn for FY07-08. Net Loss after adjusting for share of

Associates and Minority Interest was Rs. 765.57 mn as against Net Loss of Rs.1.55 mn for FY 08.This variation in EBDITA, PBT and

PAT is mainly on account of sluggish market conditions prevailing across the globe and underutilization of the capacity at some of

the subsidiaries.

The Company has undertaken “Project Parivartan” with eminent consultants, The HAY Group, India for

Change Path Exercise with focus for business stability and robust organization to achieve the Company's vision. This project has

added significant value to business in terms of global realignment and streamlined operations. The Industrial Relations across

the units remained cordial during the year.

Cautionary Statement:

Statements in the Management Discussion and Analysis describing Welspun's objectives, projections and estimates are forward looking statements and

progressive, within the meaning of applicable security laws and regulations. Actual results may vary from those expressed or implied, depending upon

economic condition, Government policies and other incidental factors

“Group for Inter-Se Transfer of Shares:

As required under Clause 3(1)(e) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, persons

constituting “Group” (within the meaning as defined in the Monopolies and Restrictive Trade Practices Act, 1969) for the purpose of availing exemption from

applicability of the provisions of Regulations 10 to 12 of the aforesaid SEBI Regulations are 1) B.K.Goenka, 2) Dipali Goenka, 3) Radhika Goenka, 4) Vanshika

Goenka, 4) R.R.Mandawewala, 5) Pratima Mandawewala, 6) Abhishek Mandawewala, 7) Yash Mandawewala, 8) B.K.Goenka Trustee, B.K.Goenka Family Trust,

9) Welspun Wintex Ltd, 10) Welspun Mercantile Ltd., 11) Welspun Trading Ltd, 12) Krishiraj Trading Ltd., 13) Welspun India Ltd., 14) Methodical Inv & Fin Pvt.Ltd,

15) Welspun Syntex Ltd, 16) Welspun Zuchhi Textile Ltd, 17) Welspun Power & Steel Ltd.

38


SHEETS

Capacity

Facilities

– 10 million sets

– Vapi, Gujarat, India– Anjar, Gujarat, India

40


CORPORATE SOCIAL RESPONSIBILITY (CSR)

Welspun is committed to conduct business in a socially responsible and ethical manner. Sustaining mutually accountable and

responsible synergies, we serve with passion to our Customers, Shareholders, Employees & Society at large. Our commitments

towards Corporate Social Responsibility (CSR) have been carefully selected in align with our six guiding path (6E's). These are

Enrichment of mind, Enrichment of body, Education, Empathy, Empowerment of Women and Environment sustenance.

A dedicated CSR team consisting of a cross-section of different functions from across the company reviewed and prioritized the

issues to be addressed now and in the future.

Through stakeholder engagement we have been able to review our issues and objectives and ensure we have in place a process

to enable thorough, open and transparent dialogue with all our key stakeholders

Sustaining mutually accountable and responsible synergies, Welspun has adopted Corporate Social Responsibility policy in the

year 2008. The policy outlines processes, systems and minimum standards for managing CSR related activities throughout

Welspun. Some of the main features of the policy are given below…

Build a civic character, not just a business character.

Follow practices laid down by various UN and International bodies in our business to meet society's expectations.

Follow Ethical business conduct and practice the principles of accountability, honesty and integrity in all business

aspects. Besides this, we strictly comply with all the laws that regulate and apply to the company, its systems and the

conduct of its business.

Ensure consistency in performance of various activities/ projects.

Work with government and agencies to support and respect Human Rights. We promote universal respect for

observance of human rights and fundamental freedom - particularly those of our employees, the communities within

which we operate and parties with whom we do business, without distinction as to ethnicity, origin, religion, gender,

language or disability

At Welspun we believe that Local Stakeholder Engagement is extremely important and we adhere to a collaborative,

consultative approach in our communities by supporting innovative programs in health, education, environment, as

well as cultural and civic projects. We take utmost care to integrate community investment considerations into

decision-making and business practices and assist in local capacity building to develop mutually beneficial

relationships with communities.

Provide maximum employment and economic opportunities and strengthen Human Relations. We ensure to provide

maximum employment and economic opportunities in the communities where we operate and we make sure that

employees are treated fairly and with dignity and consideration for their goals and aspirations and that diversity in the

workplace is embraced. Fair labour policies, while respecting the national and local laws of the countries and

communities where we operate are practiced. We are additionally committed to provide equal opportunity in all

aspects of employment and will not engage in or tolerate unlawful workplace conduct, including discrimination,

intimidation, or harassment.

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- - - 6E's- - -

Enrichment of mind

Enrichment of body

Education

Empathy

Empowerment of Women

Mental Wellness is an important dimension of health and wellness. It signifies a state of flourishing of the overall being. At

Welspun, we believe that nurturing of the mind helps to reach high levels of emotional, psychological, physical and social well-

being. In this endeavour, we conduct work/life balance & stress management workshops.

We recognize knowledge as information in action. It is a dynamic blend of experience, values, information and insights, against

which new experiences and information can be evaluated and consolidated. Welspun has started the drive in upgrading libraries

across its facilities. This endeavour also focuses upon accessing materials by electronic means. User friendly library software is

being developed and designed to meet the needs of the readers. Relaxation and yoga AV (Audio-video) collections to de-stress

and re-energize are available at library resources.

Living a healthier life improves the quality of life. Feeling physically better and having control over life can greatly increase

mental health as well. We believe achieving health and remaining healthy is an active process.

Welspun has organized a number of health and eye camps in the last year in association with the local NGOs like Abhishyam

foundation, Princey eye care, Local Gram Panchayat & local hospitals. It has served over 1500 people. Around 10 people availed

of eye surgical facilities and over 1,000 people received aids and appliances. In all, over one thousand populations have been

benefited by the CSR activities of Welspun.

In our seamless effort to improve the lives of children through education, “Welspun Vidya Mandir”, a school up to Standard 10

and 'Welspun Anganvadi', a pre-primary school has been set up for not only the children of Welspun employees but children of

the other local families could also attend. Further, we also support various education initiatives at all levels. This involves

granting aid to schools, acknowledging and rewarding meritorious students and an initiative called Welspun scholars. Welspun

scholars are a group of approximately 14 students, who yearly, seek full study-assistance from Welspun. We support these

students, the future of tomorrow, with all humility and passion.

Welspun consider empathy as a salient component in our activities. Effective understanding, communication and relationships

are essential to develop solutions and avoiding or diffusing conflict. By helping others, we help ourselves to grow. In this regard

from the CSR front we have worked with several NGOs and helped to promote the social cause like, Right to Information Act,

Differently-able, Legal Rights for Women, orphanage children etc.

Welspun enables women to realize their full potential. We work for equal access to women on health care, quality education,

career and vocational guidance, employment, equal remuneration, occupational health and safety, etc. Welspun builds and

strengthens partnerships with civil society, particularly women's organizations and work towards changing societal attitudes

and community practices by active participation and involvement of women.

Girl child is a cause very close to our hearts at Welspun. We are determined to priorities the cause of the Girl child. A little

amount of care, a handful of warmth and a heart full of love for a girl child can make a big difference. In this endeavour, Naya

Savera, campaign was launched in Mumbai. Around 35 employees took the pledge and adopted more than fifty girl child. These

overwhelming responses bolster our spirit to lead the initiatives in a long run.

Environment Sustenance.

We consider environmental conservation is closely intertwined with human welfare. Companies care concern for the

environment manifests itself at all its facilities, establishment and project sites. Ensures compliance with applicable Health

Safety and Environment (HSE) legislation Welspun environment conservation initiatives includes, eco-friendly production

processes, reuse and recycling, effluent treatment, use of clean energy, a green cover in its factories, large scale tree plantation,

campaigns on energy conservation, rain water harvesting and many more.

CSR activities of Welspun have touched the lives of many, including the beneficiaries, the employees, families of employees, the

management, families of management staff, etc. due to this strength of people, it gave rise to a snowball effect, year after year

our CSR initiative has started doing better and even today its work has been recognized and appreciated as amongst top 38

Companies contributing in the field of CSR (Source: Social Corporate Governance Award, 2008). We are making every effort in

social commitment and contribute one per cent of its profit after tax on several CSR initiatives. Thus we sustain our efforts and

not sporadic attempts at community development. It goes beyond charity to capacity building. This is reflected from the change

in the lives of people whom we have touched through our various programs and activities. Our commitment is the beacon

towards many new innovation and initiatives in CSR. In coming years, Welspun is determined to face newer challenges and

newer avenues with a meaningful approach and interventions towards social welfare activities.

42


BATH ROBES

Capacity

Facilities

– 1 million pieces

– Vapi, Gujarat, India

44


Financials Section

Standalone Accounts

45Audit Report

48Balance Sheet

50Schedules

49Profit & Loss Account

78Cashflow Statement

79Balance Sheet Abstract

80Section 212 disclosure

Consolidated Accounts

81Audit Report

82Balance Sheet

84Schedules

83Profit & Loss Account

109Cashflow Statement

AUDITORS' REPORT

TO THE MEMBERS OF WELSPUN INDIA LIMITED

Neeraj Gupta


1. We have audited the attached Balance Sheet of Welspun India Limited (the “Company”) as at March 31, 2009 and the

related Profit and Loss Account and Cash Flow Statement for the year ended on that date annexed thereto, which we have

signed under reference to this report. These financial statements are the responsibility of the Management of the

Company. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those standards require

that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of

material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in

the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by

Management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a

reasonable basis for our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003, as amended by the Companies (Auditor's Report)

(Amendment) Order, 2004 (together the “Order”) issued by the Central Government of India in terms of sub-section (4A) of

Section 227 of The Companies Act, 1956 of India (the “Act”) and on the basis of such checks of the books and records of the

Company as we considered appropriate and according to the information and explanations given to us, we give in the

Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to in paragraph 3 above, we report that:

(a) We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary

for the purposes of our audit;

(b) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our

examination of those books;

(c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with

the books of account;

(d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply

with the accounting standards referred to in sub-section (3C) of Section 211 of the Act;

(e) On the basis of written representations received from the Directors, as on March 31, 2009, and taken on record by the

Board of Directors, none of the Directors is disqualified as on March 31, 2009 from being appointed as a director in

terms of clause (g) of sub-section (1) of Section 274 of the Act;

(f) In our opinion, and to the best of our information and according to the explanations given to us, the said financial

statements, together with the Notes thereon and attached thereto, give in the prescribed manner, the information

required by the Act, and also give, a true and fair view in conformity with the accounting principles generally accepted

in India:

(i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2009;

(ii) in the case of the Profit and Loss Account, of the profit for the year ended on that date; and

(iii) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

Partner

Membership No. F055158

For and on behalf of

Chartered Accountants

Mumbai, June 30, 2009

45

(b) According to the information and explanations given to us and records of the Company examined by us, there are

no dues of income tax, service tax, customs duty, wealth tax and cess which have not been deposited on account

Annexure to Auditors' Report referred to in paragraph 3 of the Auditors' Report of even date to the members of Welspun

India Limited on the financial statements for the year ended March 31, 2009

46


(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation

of fixed assets.

(b) The fixed assets of the Company have been physically verified by the Management during the year. No material

discrepancies between the book records and the physical inventory have been noticed. In our opinion, the

frequency of verification is reasonable.

(c) In our opinion, and according to the information and explanations given to us, a substantial part of fixe d assets

has not been disposed-of by the Company during the year.

(ii) (a) The inventory has been physically verified by the Management during the year. In our opinion, the frequency of

verification is reasonable.

(b) In our opinion, the procedures for the physical verification of inventory followed by the Management are

reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) On the basis of our examination of the inventory records, in our opinion, the Company has maintained proper

records of inventory. The discrepancies noticed on physical verification of inventory as compared to book records

were not material.

(iii) (a) The Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the

register maintained under Section 301 of the Act.

(b) The Company has not taken any loans, secured or unsecured, from companies, firms or other parties covered in

the register maintained under Section 301 of the Act.

(iv) In our opinion, there is an adequate internal control system commensurate with the size of the Company and the nature

of its business for the purchase of inventory, fixed assets and sale of goods. The Company’s operations do not involve

sale of services. Further, on the basis of our examination of the books and records of the Company, and according to

the information and explanations given to us, we have neither come across nor have been informed of any instances of

major weaknesses in the aforesaid internal control system.

(v) (a) In our opinion and according to the information and explanations given to us, the particulars of contracts or

arrangements referred to in Section 301 of the Act have been entered in the register required to be maintained

under that Section.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance

of contracts or arrangements entered in the register maintained under Section 301 of the Act and exceeding the

value of Rupees Five Lakhs in respect of any party during the year, have been made at prices which are

reasonable having regard to the prevailing market prices at the relevant time.

(vi) The Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA of the Act

and the rules framed there under.

(vii) In our opinion, the Company has an internal audit system commensurate with its size and the nature of its business.

(viii) We have broadly reviewed the book s of account maintained by the Company, in respect of products where, pursuant to

the rules made by the Central Government of India, the maintenance of cost records has been prescribed under clause

(d) of sub section (1) of Section 209 of the Act, and are of opinion that, prima facie, the prescribed accounts and records

have been made and maintained. We have not, however, made a detailed examination of the records with a view to

determine whether they are accurate or complete.

(ix) (a) According to the information and explanations given to us and the records of the Company examined by us, in our

opinion, the Company has been generally regular in depositing the undisputed statutory dues in respect of

provident fund, investor education and protection fund, employees’ state insurance, income tax, sales tax, wealth

tax, service tax, customs duty, excise duty, cess and other material statutory dues , as applicable, with the

appropriate authorities.

of any dispute. The particulars of dues of sales tax and excise duty as at March 31, 2009 which have not been

deposited on account of a dispute, are as follows:

* Net of amounts paid under protest

(x) The Company has no accumulated losses as at March 31, 2009 and it has not incurred any cash losses in the financial

year ended on that date or in the immediately preceding financial year.

(xi) According to the records of the Company examined by us and the information and explanations given to us, the

Company has not defaulted in repayment of dues to any financial institution or bank or debenture holders during the

year.

(xii) The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures

and other securities.

(xiii) The provisions of any special statute applicable to chit fund/ nidhi/ mutual benefit fund/ societies are not applicable to

the Company.

(xiv) In our opinion, the Company is not a dealer or trader in shares, securities, debentures and other investments.

(xv) In our opinion and according to the information and explanations given to us, the terms and conditions of the

guarantees given by the Company to banks that have given loans to certain subsidiary companies of the Company, are

not prejudicial to the interest of the Company.

(xvi) In our opinion, and according to the information and explanations given to us, on an overall basis, the term loans have

been applied for the purpose for which they were obtained.

(xvii) On the basis of an overall examination of the Balance Sheet of the Company, in our opinion and according to the

information and explanations given to us, there are no funds raised on a short -term basis which have been used for

long-term investment.

(xviii) The Company has not made any preferential allotment of shares to parties and companies covered in the

register maintained under Section 301 of the Act during the year.

(xix) The Company issued and redeemed during the year; short-term unsecured debentures aggregating Rs. 500 million.

Hence, the question of our commenting on the creation of security or charge in respect of such debentures does not

arise.

(xx) The Company has not raised any money by public issues during the year.

(xxi) During the course of our examination of the books and records of the Company, carried out in accordance with the

generally accepted auditing practices in India, and according to the information and explanations given to us, we have

neither come across any instance of fraud on or by the Company, noticed or reported during the year, nor have we been

informed of such case by the Management.

47

Name of the

Statute

Nature of dues Amounts

(Rs. in million)*

Period to which

the amount relates

Forum where the dispute is pending

Gujarat Sales Tax

Act, 1969

Sales Tax including

penalty and interest

7.74 2003-04 and

2004-05

Joint Commissioner of Sales Tax

(Appeals - 2), Vadodra

Central Excise

Act, 1944

Excise Duty

including penalty

and interest

1.13 March 2004 to

July 2006

Commissioner of Central Excise

Custom (Appeals), Daman

Central Excise

Act, 1944

Excise Duty

including penalty

and interest

18.75 September

1999 to April

2000

Custom, Excise and Service Tax

Appellate Tribunal, Ahmedabad

Central Excise

Act, 1944

Excise Duty 69.28 September

2005 to July

2006

Revision Application with the Joint

Secretary, Ministry of Finance,

Department of Revenue

Central Excise

Act, 1944

Service Tax 0.15 April 2004 to

May 2005

The Company is in the process of

filing appeal with Commissioner of

Central Excise and Custom (Appeals)

Neeraj Gupta


Partner





Annexure to Auditors' Report referred to in paragraph 3 of the Auditors' Report of even date to the members of Welspun

India Limited on the financial statements for the year ended March 31, 2009

48

BALANCE SHEET AS AT MARCH 31, 2009(Rs. In million)

As atMarch 31, 2009

780.904,821.375,602.27

16,089.09500.03

16,589.12

1,039.83

23,231.22

19,121.194,231.42

14,889.77884.04

15,773.81

54.05

1,046.71

2,105.631,523.91

888.133,705.668,223.33

1,821.6445.04

1,866.68

6,356.65

23,231.22

SCHEDULESAs at

March 31, 2008

SOURCES OF FUNDS

SHAREHOLDERS' FUNDSCapital 1 780.90Reserves and Surplus 2 4,807.29

5,588.19

LOAN FUNDSSecured Loans 3 15,235.71Unsecured Loans 4 182.72

15,418.43

DEFERRED TAX LIABILITY (NET) 5 1,104.00

22,110.62APPLICATION OF FUNDS

FIXED ASSETSGross Block 6A 17,033.88Less: Depreciation 3,327.58Net Block 13,706.30Capital Work-in-progress 1,358.19

15,064.49

Incidental Expenditure Pending Capitalisation/ Allocation 6B 62.78

INVESTMENTS 7 904.75

CURRENT ASSETS, LOANS AND ADVANCESInventories 8 2,901.92Sundry Debtors 9 753.41Cash and Bank Balances 10 920.51Loans and Advances and Other Current Assets 11 2,970.85

7,546.69LESS: CURRENT LIABILITIES AND PROVISIONS 12Liabilities 1,432.07Provisions 36.02

1,468.09

NET CURRENT ASSETS 6,078.60

22,110.62

NOTES TO ACCOUNTS 190

The Schedules referred to herein form an integral part of the Balance Sheet.

This is the Balance Sheet referred toin our report of the even date.

For and on behalf of the Board of Directors

Neeraj Gupta B. K. Goenka R. R. MandawewalaPartner Chairman & Managing DirectorMembership No. F055158For and on behalf ofPrice Waterhouse & Co.Chartered Accountants M. L. Mittal

Executive Director (Finance) Company Secretary

Mumbai, June 30, 2009 Mumbai, June 30, 2009


D. K. Patil


Year endedSCHEDULES March 31, 2008

IncomeSales 13 12,440.50Less : Excise Duty 31.06

12,409.44Other Income 14 246.66

12,656.101,015,471,136.03

ExpenditureMaterials and Manufacturing Expenses 15 8,338.77Employees' Remuneration and Benefits 16 963.37Selling, Administration and Other Expenses 17 1,418.92Finance Expenses (Net) 18 676.85Depreciation 847.19

12,245.10

Profit Before Exceptional Item And Taxation 411.00Exceptional Item 3.52Profit Before Taxation From Ordinary Activities 414.52

Profit/ (Loss) Before Taxation From Ordinary Activities

And From Continuing Operations

305.00

Provision For Taxation- Current Tax 44.50- Less : Minimum Alternative Tax Credit Availed (44.50)

-- Deferred Tax (Refer Note 26 on Schedule 19) 142.69- Fringe Benefit Tax 6.40

Profit After Taxation From Ordinary Activities And From Continuing Operations 155.91

Extraordinary Item (net of deferred tax credit of Rs. 3.77 million)

(Refer Note 27 on Schedule 19)

-

Profit/ (Loss) After Taxation From Continuing Operations (A) 155.91

Profit Before Taxation From Ordinary Activities And From Discontinuing Operations 109.52

- Fringe Benefit Tax 2.77Profit After Taxation From Ordinary Activities And From

Discontinuing Operations

(B) 106.75

Profit After Taxation (A) + (B) 262.66Profit and Loss Account Balance Brought Forward 1,430.29Profit Available For Appropriation 1,692.95

AppropriationsTransfer to Capital Redemption Reserve 30.00

Transfer from Debenture Redemption Reserve (29.67)Profit and Loss Account Balance Carried to Balance Sheet 1,692.62

1,692.95

Earnings Per Share (Rs.) - (Refer Note 24 on Schedule 19)- Basic and Diluted before Extraordinary Item 3.59- Basic and Diluted after Extraordinary Item 3.59

NOTES TO ACCOUNTS 19

The Schedules referred to herein form an integral part of the Profit and Loss Account.

This is the Profit and Loss Account referred toin our report of the even date.






D. K. Patil

Year endedMarch 31, 2009

13,453.559.15

13,444.40171.60

13,616.00

9,454.931,035.18

987.10921.11952.98

13,351.30

264.70-

264.70

(50.47)

27.10(27.10)

-(60.40)

5.993.94

7.33

(3.39)

315.17

2.75312.42

309.031,692.622,001.65

-

-2,001.652,001.65

4.334.23

49

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2009(Rs. In million)

As at

March 31, 2008

815.00

110.00

235.00

1,160.00

730.90

50.00

2,710.37

-

2,710.37

72.26

2,638.11

398.38

30.00

428.38

29.67

29.67

-

48.18

-

1,692.62

4,807.29

12,305.02

39.90

2,890.79

15,235.71

0.40

182.32

182.72

1,645.67

8.08

19.02

11.75

4.53

498.29

-

541.67

1,104.00

As at

March 31, 2009SCHEDULE 1 : CAPITAL

Authorised

81,500,000 Equity Shares of Rs. 10 each 815.00

1,100,000 Redeemable Cumulative Preference Shares of Rs. 100 each 110.00

23,500,000 Redeemable Cumulative Preference Shares of Rs. 10 each 235.00

1,160.00Issued, Subscribed and Paid Up

73,089,519 Equity Shares of Rs. 10 each fully paid up 730.90

500,000 0% Redeemable Cumulative Preference Shares of Rs. 100 50.00

each fully paid up (Refer Note 9 on Schedule 19)

SCHEDULE 2 : RESERVES AND SURPLUS

Securities Premium Account

As per last Balance Sheet 2,638.11

Add : Additions during the year -

2,638.11

Less : Premium on Redemption of Preference Shares -

2,638.11

Capital Redemption Reserve

As per last Balance Sheet 428.38

Add : Transferred from Profit and Loss Account -

428.38

Debenture Redemption Reserve

As per last Balance Sheet -

Less : Transferred to Profit and Loss Account -

-

Capital Reserve - Forfeiture of Equity Warrants 48.18

Hedging Reserve Account (294.95)

Profit and Loss Account 2,001.65

#REF! 4,821.37

SCHEDULE 3 : SECURED LOANS

Term Loans (Refer Notes 10(a) and (b) on Schedule 19)

From Banks

- In Rupee 13,049.92

- In Foreign Currency -

Working Capital Loans from Banks (Refer Notes 10(c) and (d) on Schedule 19) 3,039.17

16,089.09

SCHEDULE 4 : UNSECURED LOANS

0.03

Short Term Loans from Banks 500.00

500.03

SCHEDULE 5 : DEFERRED TAX LIABILITY (NET)

(Refer Note 1(viii)(b) on Schedule 19)

Deferred Tax Liability arising on account of Timing differences in :

- Depreciation 1,932.16

Deferred Tax Asset arising on account of Timing differences in:

- Provision for Doubtful Debts/ Advances 8.50

- Provision for Unpaid Statutory Dues under Section 43B of the Income Tax Act, 1961 2.59

- Provision for Employee Benefits 14.66

- Provision for Diminution in Value of Investments -

- Unabsorbed Depreciation as per the Income Tax Act, 1961 865.58

- Provision for Others 1.00

892.33

1,039.83

Interest Free Sales Tax Loan (Repayable in six annual installments for each

disbursement till October 7, 2010) (Repayable within one year Rs. 0.01 million;

March 31, 2008 : Rs. 0.37 million)

780.90780.90

50

SCHEDULES ANNEXED TO AND FORMING PART OF THE BALANCE SHEET AS AT MARCH 31, 2009(Rs. In million)


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31

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9

(Refer Notes 1(iii) and 20 on Schedule 19)

As atAs at

March 31, 2009 March 31, 2008

Opening Balance (A) 62.78 41.24

Add :

Raw Material Consumption during Trial Run 81.15 -

Stores and Spares Consumed 4.77 -

Dyes and Chemicals Consumed 15.05 -

Packing Material Consumed 8.47 -

Job Work Expenses 8.45 -

Power and Fuel 4.48 3.03

Freight, Forwarding and Coolie Charges 3.84 0.20

Repairs and Maintenance

- Others 0.10 0.25

Salaries, Wages, Bonus and Allowances 59.07 26.63

Contribution to Provident and Other Funds 4.01 0.65

Staff and Labour Welfare 1.01 0.34

Rent - 1.91

Rates and Taxes 0.43 1.49

Printing and Stationery 0.19 0.02

Travelling and Conveyance 5.83 9.17

Legal and Professional Charges 4.79 5.84

Insurance 1.55 3.18

Communication 0.11 0.66

Loss on Redemption/ Sale of Units of Mutual Funds (Net) 0.03 -

Postage and Courier 0.65 0.09

Vehicle Expenses 0.14 -

Advertising and Sales Promotion 9.52 -

Interest on Fixed Loans 97.52 138.13

Interest on Working Capital Loans 0.02 0.14

Discounting and Bank Charges 1.00 0.66

Loan Processing Charges - 2.40

Miscellaneous 8.02 4.86

(B) 320.20 199.65

Less :

Sales during Trial Run 118.83 -

Sale of Scrap 0.58 -

Export Benefits 8.90 -

Interest on Deposit Accounts - Gross 13.48 33.99

(Tax Deducted at Source Rs. 3.06 million; Previous Year : Rs. 7.24 million)

Interest on Bonds - Gross - 6.42

(Tax Deducted at Source : Rs. Nil; Previous Year : Rs. 1.21 million)

Profit on Redemption/ Sales of Units of Mutual Funds - 2.29

Dividend 2.91 30.09

Increase in Stocks During Trial Run 46.44 -

(C) 191.14 72.79

(A) + (B) - (C) 191.84 168.10

Less : Transferred to :

Plant and Machinery 110.36 87.11

Buildings 27.43 18.21

Incidental Expenditure Pending Capitalisation/ Allocation 54.05 62.78

SCHEDULE 6B : INCIDENTAL EXPENDITURE PENDING CAPITALISATION/ ALLOCATION

52



As atMarch 31, 2009

As atMarch 31, 2008

53


SCHEDULE 7 : INVESTMENTS(Refer Note 1(vi) on Schedule 19)

Long Term

Non - Trade

Investment in Government Securities

National Saving Certificates

(Lodged with District Magistrate, Valsad)

Trade (At Cost)

(Unquoted)

In Wholly Owned Subsidiaries

1,500,000 Equity Shares of US $ 0.10 each, fully paid up of Welspun USA Inc.

(During the year, additional contribution of Rs. 275.78 million has been made)

5,000 Equity Shares of GBP 1 each, fully paid up of Welspun Holdings Private Limited,

Cyprus (Of the above, 1,000 shares have been pledged with bank for securingthe loan given to Welspun Home Textiles UK Limited, U.K.; the wholly ownedsubsidiary of Welspun Holdings Private Limited, Cyprus)

Nil (March 31, 2008 : 600) Equity Shares of CHF 1,000 each, CHF 200 paid up of

Welspun AG, Switzerland (Refer Note 6 on Schedule 19)

10,000 Equity Shares of Rs. 10 each fully paid up of BESA Developers andInfrastructure Private Limited

500,000 (March 31, 2008 : Nil) Equity Shares of Rs. 10 each fully paid up ofWelspun Global Brands Limited

50,000 (March 31, 2008 : Nil) Equity Shares of Rs. 10 each fully paid up ofWelspun Investments Limited

In Others

2,750,000 Equity Shares of Rs. 10 each fully paid up of Welspun Zucchi Textiles Limited

9,800,000 Equity Shares of Rs. 10 each fully paid up of Welspun Retail Limited

100 Equity Shares of Rs. 10 each fully paid up of Welspun Power and Steel Limited

3,320,000 Equity Shares of Rs. 10 each fully paid up of MEP Cotton Limited

Share Application Money Pending Allotment

* - Less than Rs. 10,000

(Quoted)283,500 Equity Shares of Rs. 10 each fully paid up of Welspun Syntex Limited

Less : Provision for Diminution

4,033,000 (March 31, 2008 : 7,133,000) Equity Shares of Rs. 5 each fully paid up ofWelspun Gujarat Stahl Rohren Limited

Current (At Lower of Cost and Fair Value)

Non Trade - (Unquoted, Unlisted)Investment In Mutual Funds Units of Rs. 10 each

Nil (March 31, 2008 : 600,357) DWS Installment Cash Plus Fund - Daily Dividend Plan

Nil (March 31, 2008 : 241,114) LICMF Liquid Fund - Dividend Plan

Nil (March 31, 2008 : 4,437,300) LICMF Floating Rate Fund - Short Term Plan -Dividend Option

Nil (March 31, 2008 : 23,668) Principal Floating Rate Fund - Daily DividendReinvestment Plan

Nil (March 31, 2008 : 13,490) Reliance Liquid Fund - Treasury Plan Retail Option

Investment In BondsNil (March 31, 2008 : 217) Zero Coupon Redeemable Deep Discount (2007

Series-II) Punjab Infrastructure Development Bonds

Aggregate of Unquoted Investments - At Book Value

Aggregate of Quoted Investments - At Book Value

- At Market Value

0.01

282.67

337.06

-

0.10

10.00

0.50

34.56

244.63

*

99.50

0.05

18.94

13.34

5.6032.03

-

-

-

-

-

-

1,046.71

1,009.08

37.63

301.32

0.01

6.89

337.06

4.05

0.10

-

-

34.56

244.63

*

99.50

0.05

18.94

13.34

5.6056.65

6.18

2.65

45.05

0.24

0.14

61.39

904.75

842.50

62.25

2,740.78

54



As at

March 31, 2008

SCHEDULE 8 : INVENTORIES

(Refer Note 1(vii) on Schedule 19)

Raw Materials 758.44

Work-in-Process 1,256.47

Finished Goods 622.47

Stores, Spares, Dyes and Chemicals 261.16

Traded Goods 3.38

2,901.92

SCHEDULE 9 : SUNDRY DEBTORS

(Refer Note 11(a) on Schedule 19)

Unsecured

Debts Outstanding for a period exceeding six months :

- Considered Good 45.00

- Considered Doubtful 10.93

55.93

Other Debts :



713.83

Less : Provision for Doubtful Debts 16.35

753.41

SCHEDULE 10 : CASH AND BANK BALANCES

Cash on Hand 1.84

Cheques on Hand 6.21

Balances with Scheduled Banks

- In Current Accounts 168.83

- In Fixed Deposit Accounts 743.37

- In Exchange Earners Foreign Currency Accounts (USD 8,140.56; Previous Year :

USD 5,976.91)

0.26

920.51

SCHEDULE 11 : LOANS, ADVANCES AND OTHER CURRENT ASSETS

(Refer Notes 11(b) and 25 on Schedule 19)

LOANS AND ADVANCES

UnsecuredLoans to Subsidiary Companies

- Welspun USA Inc. 65.44

- Welspun Holdings Private Limited, Cyprus 393.92

- Welspun AG, Switzerland 155.97

- BESA Developers and Infrastructure Private Limited 31.50

646.83

Loan to Others -

Advance to Subsidiary Companies

6.44

- Welspun AG, Switzerland -

-

Advances Recoverable in Cash or in Kind or for Value to be Received



243.54

Less : Provision for Doubtful Advances 7.42

236.12

Balances with Customs, Excise, Sales Tax and other Government Authorities 828.21

Advance Tax and Tax Deducted at Source (Net of Provision of Rs. 257 million; 34.39

March 31, 2008 : Rs. 229.90 million)

Minimum Alternative Tax Credit Entitlement 182.40

Deposits 348.00

2,282.39

- Welspun Holdings Private Limited, Cyprus

- Welspun Global Brands Limited

(includes deposits aggregating Rs. 536.31 million; March 31, 2008: Rs. 446.61 million pledged

with banks against term loans, overdraft, letters of credit and bank guarantee facilities)

As at

March 31, 2009

504.21

1,077.64

332.41

191.37

-

2,105.63

4.02

16.38

20.40

1,519.89

-

1,519.89

16.38

1,523.91

1.16

15.38

253.83

617.35

0.41

888.13

320.80

348.60

150.34

31.50

851.24

42.68

0.60

1.33

4.75

296.07

8.63

304.70

8.63

296.07

507.78

44.46

209.50

306.54

2,264.95

As atMarch 31, 2009

As atMarch 31, 2008

55


As atMarch 31, 2008

621.11

-

38.49

7.79

21.07

688.46

2,970.85

0.75

1,195.78

-

53.94

-

39.11

17.2788.9336.29

1,432.07

1.45

-

34.57

36.021,468.09

OTHER CURRENT ASSETSTechnology Upgradation Fund Credit Receivable

Receivable from Welspun Holdings Private Limited, Cyprus (Refer Note 6 on Schedule 19)

Interest Accrued on Loans given to Subsidiaries

Interest Receivable under Subvention Scheme

Interest Accrued on Deposits

SCHEDULE 12 : CURRENT LIABILITIES AND PROVISIONS

CURRENT LIABILITIESSundry Creditors

- Total Outstanding Dues of Micro Enterprises and Small Enterprises (Refer Note 14 on Schedule 19)

- Total Outstanding Dues of Creditors other than Micro Enterprises and Small Enterprises

Mark-to-Market Loss on Options/ Forward Contracts

Amounts due to Subsidiary Companies

- Welspun USA Inc.

- Welspun Mexico S.A. de C.V

- Christy UK Limited

Advance Received from CustomersTemporary Overdraft with Scheduled BanksInterest Accrued but not Due

PROVISIONS

Fringe Benefit Tax (Net of Advance Tax Rs. 36.11 million; March 31, 2008 : Rs. 27.82 million)

Gratuity (Refer Note 1(ix)(b) and 18 on Schedule 19)

Leave Entitlement (Refer Note 1(ix)(c) on Schedule 19)

As atMarch 31, 2009

525.33

739.12

112.86

8.60

54.80

1,440.71

3,705.66

0.79

1,080.50

596.77

48.92

0.04

0.12

5.279.29

79.941,821.64

1.90

1.61

41.53

45.041,866.68

Year ended

March 31, 2008

778.45

5,488.08

6,266.53

758.44

5,508.09

84.80

267.35

1,053.24

1,320.59

-

-

-

-

622.47

1,256.47

1,878.94

(558.35)

212.18

1,062.34

237.34

116.88

-

1,018.25

621.19

33.51

2.54

3,304.23

8,338.77

Year ended

March 31, 2009

5,148.88

311.78

323.71

3,670.56

9,454.93

SCHEDULES ANNEXED TO AND FORMING PART OF THE PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2009(Rs. In million)


56

SCHEDULE 13 : SALES

Sales - Export

Sales - Local

Export Benefits

SCHEDULE 14 : OTHER INCOME

Rent (Tax Deducted at Source Rs. 1.90 million, Previous Year : Rs. 2.67 million)

Dividend - Trade Investments

Dividend - Others

Insurance Claim

Profit on Redemption/ Sale of Units in Mutual Funds

Profit on Sale of Bonds

Profit on Sale of Shares

Liabilities Written Back as no Longer Required

Provision for Doubtful Advances Written Back

Provision for Doubtful Debts Written Back

Profit on Cancellation of Forward Contracts

Exchange Gain/ (Loss) - Net

Job Work and Processing Charges

Excise and Sales Tax Benefit

Miscellaneous

10,782.13

997.46

11,779.59

660.91

12,440.50

11.18

7.13

18.70

17.05

1.23

4.97

-

0.53

4.89

0.94

114.92

(2.18)

22.23

36.55

8.52

246.66

8,402.05

4,151.48

12,553.53

900.02

13,453.55

7.85

10.70

5.86

0.43

3.60

2.00

221.35

1.43

-

-

21.13

(231.80)

25.95

92.30

10.80

171.60

Raw Materials Consumed

Opening Stock

Add: Purchases

Less: Closing Stock

Cost of Traded Goods Sold

Decrease/ (Increase) in Stocks

Opening Stock

Finished Goods

Work-in-Process

Add: Stock Transferred from Trial Run Production

Finished Goods

Work-in-Process

Less: Loss of Finished Goods and Work-in-Process inventory due to floods

Closing Stock

Finished Goods

Work-in-Process

Manufacturing Expenses

Stores and Spares Consumed

Dyes and Chemicals Consumed

Contract Labour Charges

Job Work Expenses

Excise Duty On Closing Stocks

Power, Fuel and Water Charges

Packing Charges

Repairs and Maintenance:

Plant and Machinery

Factory Building

758.44

4,894.65

5,653.09

504.21

622.47

1,256.47

1,878.94

16.03

30.41

46.44

191.62

332.41

1,077.64

1,410.05

219.89

1,077.59

212.38

89.71

2.68

1,408.47

633.06

20.42

6.36

SCHEDULE 15 : MATERIALS AND MANUFACTURING EXPENSES

Year endedMarch 31, 2008SCHEDULE 16 : EMPLOYEES' REMUNERATION AND BENEFITS

Salaries, Wages, Allowances and Other Benefits (Refer Note 18 on Schedule 19) 842.41Contribution to Provident and Other Funds (Refer Note 18 on Schedule 19) 62.32Managerial Remuneration (Refer Note 13 on Schedule 19) 17.43Staff and Labour Welfare 41.21

963.37

SCHEDULE 17 : SELLING, ADMINISTRATION AND OTHER EXPENSES

Claims, Discounts and Rebates 213.38Brokerage and Commission 55.08Freight, Forwarding and Coolie Charges 464.17Repairs and Maintenance - Others 10.59Directors' Sitting Fees 0.18Rent 59.81Rates and Taxes 6.93Printing and Stationery 10.41Travelling and Conveyance 91.09Legal and Professional Charges 40.73Insurance 56.17Communication 12.60Postage and Courier 22.96Loss on Sale/ Discarding of Fixed Assets (Net) 6.91Provision for Doubtful Debts 13.41Provision for Doubtful Advances 5.28Debts/ Advances Written off 5.57Design, Development and Testing Expenses 11.58Excise Benefits Receivable Written Off 43.23Royalty 2.10Advertising and Sales Promotion 223.26Donations 5.36Auditors' Remuneration- As Auditors 3.90- In other capacity - As Tax Auditors 0.60- Certification and Other Matters 0.22- Out of Pocket Expenses 0.09Miscellaneous 53.31

1,418.92

SCHEDULE 18 : FINANCE EXPENSES (NET)

Interest on Fixed Loans 409.42(net of interest subsidy of Rs. 534.47 million, Previous Year : Rs. 412.33 million)Interest on Debentures 11.26Interest on Working Capital Loans 270.09(net of interest subvention of Rs. 24.37 million, Previous Year : Rs. 38.64 million)Interest to Others 4.92Discounting and Bank Charges 64.31

760.00Less:Interest on Fixed Deposits -Gross 24.54(Tax Deducted at Source Rs. 1.83 million, Previous Year : Rs. 4.59 million)Interest on Loans given to Subsidiaries and Affiliates 34.28(Tax Deducted at Source Rs. 0.88 million, Previous Year : Rs. 0.99 million)Interest on Bonds (Tax Deducted at Source Rs. Nil, Previous Year : Rs. 0.44 million) 2.69Interest on Others - Gross 0.10(Tax Deducted at Source Rs. 0.01 million, Previous Year : Rs. 0.02 million)Cash Discount received 21.54

83.15

676.85


919.3474.758.17

32.921,035.18

91.8324.65

197.6913.650.14

88.974.148.37

88.42

64.6536.9520.5321.7215.080.031.214.25

12.98--

231.921.76

3.120.480.940.10

53.52987.10

634.28

6.53355.21

8.2055.47

1,059.69

43.63

79.78

-0.46

14.71138.58

921.11

57

(Rs. In million)

SCHEDULES ANNEXED TO AND FORMING PART OF THE PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2009

SCHEDULES ANNEXED TO AND FORMING PART OF THE BALANCE SHEET AS AT MARCH 31, 2009 AND

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2009

SCHEDULE 19: NOTES TO ACCOUNTS

(i) Accounting Convention

The Financial Statements are prepared to comply in all material aspects with all the applicable accounting principles in

India, the applicable accounting standards notified under sub-section (3C) of Section 211 of the Companies Act, 1956

(the “Act”) and the other relevant provisions of the Act.

(ii) Fixed Assets

Fixed Assets are stated at cost (net of cenvat credit, wherever applicable) less accumulated depreciation and

impairment loss, if any. The cost includes cost of acquisition, construction, erection, installation etc., preoperative

expenses (including trial run) and borrowing costs incurred during pre-operational period. Cost of software includes

license fees and implementation/ integration expenses.

(iii) Incidental Expenditure Pending Capitalisation/ Allocation

Incidental expenditure pending capitalisation/ allocation represents expenses incurred during setting-up of

manufacturing facility including preoperative expenses for trial runs and borrowing cost incurred prior to the date of

commencement of commercial production. These expenses are net of sales during trial run and other income accrued

prior to the commencement of commercial production.

(iv) Borrowing Costs

Borrowing costs directly attributable to the acquisition/ construction of fixed assets are apportioned to the cost of the

fixed assets up to the date on which the asset is put to use/ commissioned.

(v) Depreciation

(a) Depreciation on fixed assets, other than leasehold improvements, is provided on straight-line method at the rates

and in the manner prescribed under Schedule XIV to the Act. Depreciation on additions/ deletions to fixed assets

is calculated pro-rata from/ up to the date of such additions/ deletions.

(b) Leasehold improvements are amortised on straight-line basis over the primary period of lease.

(c) Computer software is amortised on the straight-line method over a period of five years.

(d) Assets individually costing Rs. 5,000 or less are fully depreciated in the year of purchase.

(vi) Investments

Long term investments are stated at cost less provision, if any, for diminution in value other than temporary. Current

investments are carried at the lower of cost and fair value.

(vii) Inventories

(a) Inventories are valued at lower of cost and net realisable value.

(b) Cost of raw materials and stores and spares is determined on weighted average basis. Cost of traded goods is

determined on first-in-first-out basis. Cost of work-in-process and finished goods comprises of raw material,

direct labor, other direct costs and related overheads but exclude interest expense. Net realisable value is the

estimate of the selling price in the ordinary course of the business, less the estimated costs of completion and

estimated selling expenses.

(viii)Accounting for Taxes on Income/Minimum Alternate Tax Credit

(a)

The current tax is determined as the amount of tax payable in respect of taxable income for the year as per the

Income Tax Act, 1961, of India.

(b)

Deferred tax resulting from timing differences between book and tax profits is accounted for under the

liability method, at the current/ substantially enacted rate of tax to the extent that the timing differences are

expected to crystallise.

Deferred tax assets arising in situations where there are brought forward losses and unabsorbed depreciation

as per the Income Tax Act, 1961, of India, are recognised only when there is a virtual certainty supported by

convincing evidence that such assets will be realised.

1. Significant Accounting Policies

Current Taxation

Deferred Taxation

�

�

58


(c)

Minimum Alternate Tax (MAT) paid in accordance with tax laws, which give rise to future economic benefits in the

form of adjustment of future tax liability, is recognized as an asset only when, based on convincing evidence, it is

probable that the future economic benefits associated with it will flow to the Company and the assets can be

measured reliably.

(ix) Employee Benefits

(a)

The Company contributes on a defined contribution basis to Employee's Provident Fund, Employee's State

Insurance Fund and Employee's Pension Scheme towards post employment benefits, all of which are

administered by the respective Government authorities, and has no further obligation beyond making its

contribution, which is expensed in the year to which it pertains.

(b)

The Company has a Defined Benefit Plan namely Gratuity for all its employees. The liability for the defined benefit

plan of Gratuity is determined on the basis of an actuarial valuation, calculated using projected unit credit method,

by an independent actuary at the year end.

Gratuity Fund is recognized by the income tax authorities and is administered through trustees. The Employee's

Gratuity Trust takes group gratuity policies with insurance companies.

Actuarial gains and losses which comprise experience adjustments and the effect of changes in actuarial

assumptions are recognised in the Profit and Loss Account.

(c)

The employees of the Company are entitled to leave as per the leave policy of the Company. The liability in respect

of unutilised leave balances is provided based on an actuarial valuation carried out by an independent actuary as

at the year end and charged to the Profit and Loss Account.

(x) Foreign Currency Transactions, Derivative Instruments and Hedge Accounting

(a) Foreign currency transactions are recorded at the exchange rates prevailing on the date of such transactions.

Monetary assets and liabilities as at the Balance Sheet date are translated at the rates of exchange prevailing at the

date of the Balance Sheet. Gains and losses arising on account of differences in foreign exchange rates on

settlement/ translation of monetary assets and liabilities are recognised in the Profit and Loss Account. Non-

monetary foreign currency items are carried at cost.

(b) In respect of forward contracts, other than forward contracts in respect of firm commitments and highly probable

forecast transactions, the premium or discount arising at the inception of forward exchange contract, is amortised

as expense or income over the life of the contract. Exchange differences on such contracts are recognised in the

Profit and Loss Account in the reporting period in which the exchange rates change. Any profit or loss arising on

cancellation or renewal of such a forward exchange contract is recognised as income or as expense for the period.

(c) In respect of forward contracts and currency options taken to hedge the risks associated with foreign currency

fluctuations relating to firm commitments and highly probable forecast transactions, with effect from April 1,

2008, the Company has early adopted the principles of AS 30 'Financial Instruments: Recognition and

Measurement”. Accordingly, foreign currency fluctuations relating to firm commitments and highly probable

forecast transactions are fair valued at each reporting date.

Changes in the fair value of these hedging instruments that are designated and considered as effective hedges of

highly probable forecasted transactions are recognised directly in shareholders' funds under 'Hedging Reserve

Account' to be recognised in the Profit and Loss Account when the underlying transaction occurs. Changes in the

fair value of the hedging instruments that do not qualify for hedge accounting are recognised in the Profit and Loss

Account as they arise.

(xi) Revenue Recognition

(a) Sales revenue is recognised on transfer of significant risks and rewards of ownership of the goods to the buyer.

Domestic sales are recognised on dispatch to customers. Export sales are recognised on the date of cargo receipts,

bill of lading or other relevant documents, in accordance with the terms and conditions for sales. Realised

exchange differences on export debtors are included in sales.

Minimum Alternate Tax Credit

Defined Contribution Plans

Defined Benefit Plans

Employee Leave Entitlement



59

Alleged improper re-credit of duty paid through PLA under Notification no. 39/2001 –CE

dated July 31, 2001 in respect of goods sold from the factory during the period from

February 2006 to September 2007. The Assistant Commissioner of Central Excise has

passed the order against the Company. The Company has preferred an appeal with the

Commissioner of Central Excise (Appeals) – Rajkot.

318.58 -

(b) Export benefits arising from Duty Entitlement Pass Book (DEPB) and Duty Drawback scheme are recognised on

shipment.

(c) Dividends are accounted for when the right to receive dividend is established.

(xii) Government Grants

Government grants are accounted for when it is reasonably certain that ultimate collection will be made. Capital grants

relating to specific assets are reduced from the gross value of the Fixed Assets. Revenue grants, in the nature of interest

subsidy under the Technology Upgradation Fund Scheme (TUFS) are adjusted against 'Interest on Fixed Loans'.

Revenue grants in the nature of interest subvention on 'Rupee Export Credit Loans' are adjusted against 'Interest on

Working Capital Loans'.

(xiii)Impairment of Assets

The Company assesses at each balance sheet date whether there is any indication that an asset may be impaired. If any

such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the

asset or recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the

carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is

recognised in the Profit and Loss Account. If at the Balance Sheet date there is an indication that if a previously

assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the

recoverable amount.

(xiv)Provisions and Contingent Liabilities

The Company recognises a provision when there is a present obligation as a result of a past event that probably

requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a

contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not,

require an outflow of resources. Where there is a possible obligation or a present obligation but the likelihood of

outflow of resources is remote, no provision or disclosure as specified in Accounting Standard 29 “ Provisions,

Contingent Liabilities and Contingent Assets”, issued by the Institute of Chartered Accountants of India is made.

(xv) Employees Stock Option Schemes

Stock options granted to employees under Employee Stock Option Schemes are accounted as per the accounting

treatment prescribed in the Guidance Note on Accounting for Employee Share-based Payments issued by the Institute

of Chartered Accountants of India.

(xvi)Accounting Estimates

The preparation of financial statements requires estimates and assumptions to be made that affect the reported

amounts of assets and liabilities on the date of financial statements and the reported amounts of revenue and

expenses during the reporting period. Difference between the actual results and the estimates are recognized in the

period in which the results are known/ materialised.

2. Contingent Liabilities not provided for :

60

Description

As at

March 31, 2009

Rs. million

As at

March 31, 2008

Rs. million

Excise, Customs and Service Tax

Alleged excess clearance of cotton yarn in Domestic Tariff Area over and above the limit

specified in para 9.9 (b) of the Exim Policy 1997-2002. The Company has deposited

Rs. 0.70 million under protest and filed an appeal with the Customs, Excise and Service Tax

Appellate Tribunal (CESTAT), Ahmedabad against the order passed by Commissioner

(Appeals) of Central Excise and Customs.

19.45 18.50

Alleged manufacture and clearance of texturised yarn without payment of excise duty

and without entering into statutory records. Further, there was an alleged shortage of

Polyester Texturised yarn in physical stock as compared to the stock as per statutory

records. The case has been settled in the Company’s favour during the current year.

- 12.76

318.58




Description

As at

March 31, 2009

Rs. million

As at

March 31, 2008

Rs. million

Alleged improper grant of refund for duty paid through PLA by Assistant Commissioner

under Rule 18 of Central Excise Rules during the period from September 2005 to July

2006. The Commissioner (Appeals) of Customs and Central Excise has passed the order

against the Company. The Company has filed Revision Application with the Joint

Secretary, Ministry of Finance, Department of Revenue.

69.28 -

Alleged improper cenvat credit availed and non payment of excise duty under

Notification No. 214/86 – CE dated 25-03-1986, on furnace oil used for manufacturing

of goods on job work during the period April 2002 to March 2008. The Company has

filed its reply against the show cause notices issued by Joint Commissioner and

Commissioner of Customs and Central Excise, Daman. During the year, based on the

review and comments made by the Committee of Chief Commissioners, the

Commissioner has made an application to CESTAT to withdraw his order passed in April

2008 in respect of non payment of excise duty.

3.33 72.60

Alleged non-payment of cess on cotton consumed during the period April 2002 to

February 2007 under 'The Produce Cess Act, 1966'. The Company has filed appeals with

Commissioner of Custom and Central Excise, Daman against the orders passed by the

Assistant Commissioner of Custom and Central Excise, Vapi. The case has been settled

in the Company’s favour during the current year.

- 1.56

Alleged improper abatement of service tax on payments made to Goods Transport

Agency under Notification No. 32/04-ST dated 3 -12-2004. The Company has filed its

reply against the show cause notice issued by the Commissioner of Central Excise and

Customs, Daman.

45.51 29.27

Alleged service tax credit based on improper documents.The Company has received an

order from Commissioner, Centr al Excise & Customs, Daman demanding the amount of

duty, interest and penalty. The Company filed an appeal against the order with

Commissioner of Central Excise & Customs (Appeals), Daman

0.15 0.15

Alleged procurement of furnace oil without payment of duty by wrongly availing the

exemptions contained in the Notification No. 1/95-CE 04-01-1995. The excise

department had preferred an appeal with the Supreme Court against CESTAT,

Ahmedabad order. The Supreme Court has upheld the matter in the Company’s favour

in January 2009.

- 14.81

Alleged procurement of furnace oil without payment of duty by wrongly availing the

exemptions contained in the Notification No. 53/97-CUS 03-06-1997. The excise

department had preferred a civil appeal with the Supreme Court against CESTAT,

Ahmedabad’s order passed in favour of the Company. The Supreme Court has upheld

the matter in the Company’s favour in January 2009.

- 11.47

Alleged improper cenvat credit availed on “racks” classified as capital goods, which are

used for storage of finished goods.

The Company received an order from Additional Commissioner, Central Excise &

Customs, Daman dated 11.02.2009 demanding the amount of duty, interest and

penalty. The Company has paid Rs. 0.07 million under protest and filed an appeal

against the order with Commissioner of Central Excise & Customs (Appeals), Daman in

March 2009.

1.82 -

Alleged improper availment of cenvat credit on service tax paid on insurance premia

paid for availing insurance services that are not used in or in relation to manufacture of

final products.

The Company has received a show-cause notice from Assistant Commissioner of Central

Excise and Customs, Vapi against which it has filed a reply.

0.03 -

Stamp Duty :

Disputed stamp duty liability on De-merger Scheme. The Company has paid Rs. 1.74

million under protest.

4.46 4.46

Sales Tax :

The Deputy Commissioner of Sales Tax has issued an assessment order for the financial

year 2003-04 and raised the demand on purchase of Furnace oil during the year 2003-

04 in respect of purchases made by the Company at a concessional rate of tax. The

Company has deposited Rs. 0.09 million under protest and has filed an appeal with the

Joint Commissioner of Sales Tax, Vadodra.

1.07 0.97

The Deputy Commissioner of Sales Tax has issued an assessment order for the financial

year 2004-05 and raised the demand on purchase of Furnace oil during the year 2004-

05 in respect of purchases made by the Company at a concessional rate of tax. The

Company has filed an appeal with the Joint Commissioner of Sales Tax, Vadodra.

6.75 -

61



62

FEMA :

The Appellate Tribunal for Foreign Exchange, New Delhi has issued an order for

contravention of the provision of Section 18(2) of the Foreign Exchange Regulation Act,

1973 read with Section 49(3) and (4) of Foreign Exchange Management Act, 1999 in

respect of non-realisation of export proceeds. The Company has filed an appeal with

the Delhi High Court.

0.90 0.90

Others:

Uncalled liability of 800 CHF per share, in respect of partly paid 600 equity shares of

Welspun AG, a subsidiary company

- 19.37

Accumulated dividend on cumulative redeemable preference shares 17.41 17.41

Claims against the Company not acknowledged as debts 2.65 2.17

Bills discounted in respect of export debtors 684.55 1,999.32

Description

As at

March 31, 2009

Rs. million

As at

March 31, 2008

Rs. million

3 (a) Guarantees given by banks on behalf of the Company 79.14

(b) Corporate Guarantees / Undertakings given by the Company :

-

undertaking provided in an earlier year in favour of Bank of

India, Manchester Branch, for securing loan of GBP 10 million

granted to Welspun Home Textiles UK Limited for acquisition of

CHT Holdings Limited. Amount as at March 31, 2008 represents

the aforesaid indemnity and undertaking provided to Bank of

India, Manchester Branch for the term loan of GBP 7.5 million

given by the bank to Welspun Home Textile UK Limited

597.74

- Guarantees aggregating USD 7.92 million (March 31, 2008 : USD 1.8

million) on behalf of Welspun USA Inc. (WUSA) (Subsidiary

Company) to Nautica Apparel Inc. in respect of all paymen t

obligations of WUSA under license agreements entered between

WUSA and Nautica Apparel Inc.

72.23

- Guarantee on behalf of Welspun Mexico SA de CV (WELMEX)

(Subsidiary Company) to HSBC México, S.A.., Institución de Banca

Múltiple, Grupo Financiero (HSBC Mexico) to secure repayment of

advances, credit and such other facilities extended / to be extended

by HSBC Mexico to WELMEX

300.00

- Guarantee of USD 19 million on behalf of WUSA to Verde Chihuahua

Industrial S de RL de CV (Verde), in respect of all payments by WUSA

as a tenant under lease agreement between WUSA and Verde.

762.38

- Guarantee of USD 1.12 million on behalf of WELMEX to Nautica

Apparel Inc. in respect of all payment obligations of W ELMEX under

the License Agreement entered between WELMEX and Nautica

Apparel Inc.

-

- Guarantee on behalf of Welspun Global Brands Limited (WGBL)

(Subsidiary Company) in favour of Bank of India to secure

repayment of loans extended / to be extended by Bank of India to

WGBL.

-

(c) In accordance with the EPCG Scheme, imports of capital goods are

allowed to be made duty free and under Advance License Scheme,

imports of raw material are allowed to be made duty free, subject to

the condition that the Company will fulfill, in future, a specified

amount of export obligation within a specified time. Based on the

current operating plan, the Company would fulfill its export

obligation within the specified time period. Amount of duty saved

on imports of above goods against which export obligation is yet to

be fulfilled.

274.13

(d) Estimated amount of contracts (net of advances) remaining to be

executed on capital account and not provided for.

781.12

As at

March 31, 2009

Rs. million

As at

March 31, 2008

Rs. million30.67

724.89

401.75

300.00

963.68

56.81

210.00

55.41

36.22

Guarantee issued in the current year in lieu of the indemnity and




Description

63

Marketing Division Investment & Treasury

Division

Total

Particulars

As at March

31,2009

As at March

31, 2008

As at March

31, 2009

As at March

31, 2008

As at March

31, 2009

As at March

31, 2008

Total Assets to be disposed of 880.51 592.63 233.34 56.55 1113.85 649.18

Total Liabilities to be settled 653.75 - - - 653.75 -

Rs. million



4. On December 20, 2007, the Company acquired 76% of the equity shareholding in SOREMA-Tapetes E Cortinas DE Banho,

S.V., Portugal (“SOREMA”) through Welspun Holdings Private Limited (WHPL), its wholly owned subsidiary, for

consideration of Euro 6,329,431.21 as specified in the Share Purchase Agreement. Further, the Company, through WHPL,

has entered into a Put and Call Option Agreement to buy remaining 24% equity shareholding in SOREMA, 8% each; on or

after January 1, 2011, January 1, 2012 and January 1, 2013 respectively, at a consideration to be determined based on the

respective average EBITDA of SOREMA for last two financial years prior to these dates.

5. On July 3, 2006, the Company had acquired 85% of the equity shareholding in CHT Holdings Limited - holding company of

Christy Group (“Christy”) through conduits of wholly owned subsidiaries (“WOS”) and through these WOS had also entered

into a put and call option agreement to buy the remaining 15% equity shareholding in Christy. On April 2, 2008, the

Company, through the conduits, acquired the remaining 15% of the equity shareholding in CHT Holdings Limited at a

consideration of GBP 2.356 million.

6. During the year, certain loans aggregating Rs. 726.95 million (equivalent to CHF 16.88 million) given to Welspun AG (WAG), a

wholly owned subsidiary, were converted into investments in the equity share capital of WAG. Subsequently, on March 16,

2009 vide an Assignment dated March 16, 2009, the Company transferred the entire investment aggregating CHF 17 million

at cost in equity shares of WAG to Welspun Holdings Private Limited, a wholly owned subsidiary of the Company.

7. (a) (i) Pursuant to 'the Composite Scheme of Arrangement in the nature of demerger and transfer of Marketing Division

of Welspun India Limited to Welspun Global Brands Limited and Investment & Treasury Division to Welspun

Investments Limited and Restructure of Capital of these companies' (the “Scheme”) as approved by the Board of

Directors of the Company on September 15, 2008 and the shareholders in the Court convened meeting held on

January 13, 2009 and filed with the Registrar of Companies on June 12, 2009, the Marketing Division of the

Company and the Investment & Treasury Division of the Company were transferred to Welspun Global Brands

Limited (WGBL) and Welspun Investments Limited (WINL), respectively, with effect from April 1, 2009 (the

“Appointed date”).

(ii) As per the Scheme, assets and liabilities of the Marketing Division of the Company will be transferred to WGBL with

effect from the Appointed date. Upon the transfer, WGBL will issue 1 equity share of Rs. 10 each credited as fully

paid up to the shareholders of Welspun India Limited for every 10 equity shares held by them in Welspun India

Limited. On September 17, 2008, the Company acquired 500,000 equity shares of Rs. 10 each representing the

entire share capital of WGBL at a premium of Rs. 10 per share. WGBL was acquired for the purpose of transfer of

“Marketing Division” of the Company to a wholly owned subsidiary pursuant to the Scheme.

(iii) Further, as per the Scheme, the assets and liabilities of the Investment & Treasury Division of the Company will be

transferred to WINL with effect from the Appointed date. Upon the transfer, WINL will issue 1 equity share of Rs. 10

each credited as fully paid up to the shareholders of Welspun India Limited for every 20 equity shares held by them

in Welspun India Limited. On October 7, 2008, the Company formed WINL by investing Rs. 500,000 in the equity

share capital of WINL. WINL was formed for the purpose of transfer of “Investment & Treasury Division” of the

Company to a wholly owned subsidiary pursuant to the Scheme.

(b) Information relating to the discontinuing operations :

(i) Date of the initial disclosure event : September 15, 2008

(ii) Period in which the discontinuance is expected to be completed : Financial year 2009-2010

(iii) Carrying amounts as at March 31, 2009 and March 31, 2008 of the total assets to be disposed of and the total

liabilities to be settled:

Marketing Division Investment & Treasury Division TotalParticulars For the year

ended March

31, 2009

For the year

ended March

31, 2009

For the year

ended March

31, 2009

Revenue 774.20 1,182.33 232.05 7.13 1,006.25 1,189.46

Operating Expenses 691.08 1,079.94 - - 691.08 1,079.94

Pre - Tax Profit s 83.12 102.39 232.05 7.13 315.17 109.52

Fringe Benefit Tax 2.75 2.77 - - 2.75 2.77

64

Marketing Division Investment & Treasury DivisionParticulars

For the year ended

March 31, 2009

For the year ended

March 31, 2008

For the year ended

March 31, 2009

For the year ended

March 31, 2008

Cash flows from Operating activities 86.01 108.04 - -

Cash flows from Investing activities - - 256.67 7.13

Cash flows from Financing activities 50.00 - - -

Summary of Stock Options No. of Stock Options Weighted Average Exercise Price (Rs.)

Options outstanding on April 1, 2008 1,494,000 110.80

Options granted during the year -

Options forfeited/lapsed during the year 204,000 110.80

Options exercised during the year -

Options outstanding on March 31, 2009 1,290,000 110.80

Options vested but not exercised on March 31, 2009 516,000 110.80

No. of Stock Options Weighted Average remaining life in years Weighted Average Exercise Price (Rs.)

258,000 1.13 110.80

258,000 2.13 110.80

387,000 3.13 110.80

387,000 4.13 110.80


Rs. million

Rs. million



For the year

ended March

31, 2008

For the year

ended March

31, 2008

For the year

ended March

31, 2008

iv) Amount of revenue, expenses, pre - tax profit and tax in respect of the ordinary activities attributable to the

discontinuing operations

(v) Amounts of net cash flows attributable to discontinuing Operations

8. On May 17, 2006, the Company issued Employee Stock Options under the Employee Stock Options Scheme (the “Scheme”)

to employees of the Company and its subsidiaries with a right to subscribe to equity shares at a price of Rs. 110.80 per equity

share (closing market price as on May 16, 2006). The salient features of the Scheme are as under:

(i) Vesting : Options to vest over a period of four years from the date of their grants as under :

- 20% of the Options granted to vest at each of the 1st and 2nd Anniversaries of the date of grant.

- 30% of the Options granted to vest at each of the 3rd and 4th Anniversaries of the date of grant.

(ii) Exercise: Options vested with an employee will be exercisable within 3 years from the date of their vesting by

subscribing to the number of equity shares in the ratio of one equity share for every option, at the latest available

closing market price of the equity shares, prior to the date of grant. In the event of cessation of employment due

to death, resignation or otherwise the Options may lapse or be exercisable in the manner specifically provided for

in the Scheme.

Information in respect of options outstanding as at March 31, 2009

65

The compensation costs of stock options granted to employees are accounted by the Company using the intrinsic value

method. Since, on the date of grant of option, quoted market price of the underlying equity shares of the Company was

equal to the exercise price of an option, no expense or liability arising from the Scheme has been recognised.

The fair value of the options as per the 'Black Scholes' model is Rs. 63.39. Had the Company adopted fair value method

in respect of options granted, the employee compensation cost would have been higher by Rs. 14.36 million, Profit

After Tax lower by Rs. 14.36 million and the basic and diluted earning per share would have been lower by Re. 0.20.

9. 500,000 0% Redeemable Preference Shares of Rs. 100 each fully paid up are redeemable at par in the year 2009-2010 or

after repayment of all outstanding term liabilities and preference shares held by banks and financial institutions as on April

1, 2000 and interest and dividend thereon; whichever is later.

10. (a) Term loans from banks including interest thereon are secured by way of first charge on entire movable and immovable

properties of the Company, both present and future, ranking pari passu, subject to prior charge on specific assets as per

10(b) below and on current assets as per 10(c) and (d) below against borrowing from banks for working capital finance.

(b) In addition to 10(a) above, term loans from Banks aggregating Rs. Nil (March 31, 2008: Rs. 47.20 million) and Rs.

4,215.75 million (March 31, 2008: Rs. 4,509.10 million) and interest thereon, are secured by exclusive charge pari

passu, inter se, on specific fixed assets of the Company and by lien on fixed deposits of the Company, respectively.

(c) The working capital loan towards overdraft facility aggregating Rs. 266.50 million (March 31, 2008: Rs. Nil) is secured by

subservient charge on company's entire current asset and Technology Upgradation Fund subsidy receivable from

Government of India for textile industries towards term loan borrowing by the Company and against collateral of post

dated cheques.

(d) The working capital loans (other than referred in 10(c) above), which includes cash credit, packing credit, and demand

loans from banks, are secured by hypothecation of raw materials, finished and semi finished goods, stores and spares

and book debts of the Company and second charge on entire fixed assets of the Company.

11.(a) Sundry debtors include Rs. 1,121.08 million (March 31, 2008: Rs. 179.73 million) due from subsidiaries as below :

(b) Deposits of Rs. Nil (March 31, 2008: Rs. 9.20 million) given against use of office premises to a company in which some of

the Directors are interested as members.

12. Interest in Joint Venture

(a) The Company has accounted the investments in Joint Ventures in Welspun Zucchi Textiles Limited (WZTL) and MEP

Cotton Private Limited (MCPL) in accordance with Accounting Standard 13, Accounting for Investments.

(b) The Company's share of contingent liability of WZTL and MCPL is Rs. 7.43 million (March 31, 2008: Rs. 3.67 million)

and Rs. 15.61 million (March 31, 2008: Rs. 70.34 million), respectively.

(c) The Company's share of the aggregate amounts of assets and liabilities as at March 31, 2009 and income and

*Less than Rs. 10,000/-

As at March 31, 2009 As at March 31, 2008

Welspun USA Inc. * 150.91

Christy UK Limited 37.53 9.13

Christy USA LLC - 8.88

Welspun Mexico S.A. de C.V 6.95 2.04

Welspun AG 172.10 8.77

Welspun Global Brands Limited 872.16 -

SOREMA – Tapetes E Cortinas De Banho, S.A. 32.34 -

Total 1,121.08 179.73

Rs. million



expenditure of WZTL and MCPL for the year ended March 31, 2009 are as under:

13. Managerial Remuneration and Sitting Fees paid/ payable to directors:

Note: Provisions for leave entitlement and post retirement benefits which are based on actuarial valuations done on an overall company basis are excluded above.

Remuneration paid to the Managing Director and a Whole Time Director is in excess of the maximum amount payable as prescribed

under Schedule XIII to the Act by Rs. 0.45 million and Rs. 0.76 million, respectively. Such excess awaits approval of the shareholders of the

Company, by a special resolution in a general meeting of the Company. Due to inadequacy of profits as computed under Section 198 of

the Act, no commission is being paid for the year ended March 31, 2009.

Computation of Net Profit for the year ended March 31, 2008 in accordance with Section 198 of the Companies Act, 1956:

66

WZTL MCPL

Particulars March 31, 2009 March 31, 2008 March 31, 2009 March 31, 2008

Assets 101.63 89.20 422.22 649.84

Liabilities (excluding Share capital and Reserves

and Surplus)

40.73 34.72 355.46 539.34

Income 171.93 140.88 523.89 431.51

Expenditure (including provision for taxes) 166.33 140.55 585.33 431.01

Year ended March 31, 2008

Net Profit 414.52

Add:

Managerial Remuneration and Sitting Fees 17.61

Depreciation as per the Profit and Loss Account 847.19

Provision for doubtful debts/ advances 18.69

Loss on sale/ discarding of fixed assets 6.91

Provision for diminution in value of Investments -

1,304.92

Less:

Provision for doubtful debts/ advances written back 5.83

Profit on redemption/ sale of units in Mutual Funds 1.23

Profit on sale of bonds 4.97

Gain on Premature Redemption of Debentures 3.52

Depreciation as per Section 350 of the Act 847.19

Net profit as per Section 198 of the Act 442.18

Maximum remuneration payable under the Companies Act, 1956 @ 10% of the above 44.22

Restricted to 17.43


Rs. million

Year ended March 31, 2009 Year ended March 31, 2008

Managing / Whole time directors

(i) Salary and Allowances 7.72 8.13

(ii) Perquisites 0.45 0.46

(iii) Commission to Managing Director and a

Wholetime Director- 8.84

Total 8.17 17.43

Directors other than Managing / Whole time directors

Sitting fees 0.14 0.18

Total 8.31 17.61

Rs. Million

Rs. million



* less than Rs. 1,000

The above information and that given in Schedule 12- “Current Liabilities and Provisions” regarding micro and small enterprises

has been determined to the extent such parties have been identified on the basis of information available with the Company.

15. Details of Purchase and Sale of Investments during the year ended March 31, 2009

INVESTMENTS Number of Shares/

Units Purchased

during the Year ended

March 31, 2009

Number of Shares/

Units Sold during

the Year ended

March 31, 2009

Welspun Global Brands Limited 500,000 -

Welspun Investment Limited 50,000 -

Welspun Gujarat Stahl Rohren Limited - 3,100,000

Welspun AG, Switzerland 16,400 17,000

Birla Sun Life Cash Plus - Institutional - Daily Dividend Reinvestment 5,884,327 5,884,327

Canara Robeco Liquid Fund - Institutional - Daily Dividend Reinvestment Option 4,157,544 4,157,544

DBS Chola Liquid Inst Daily Dividend Reinvestment Plan 858,418 858,418

DWS Installment Cash Plus Fund - Daily Dividend Plan 3,472 603,829

Fortis Money Plus Institutional Plan - Daily Dividend Plan 12,602,046 12,602,046

Fortis Overnight Fund - Institutional Plan - Daily Dividend Plan 13,004,890 13,004,890

HSBC Cash Fund - Institutional Plus - Daily Dividend Reinvestment Option 2,880,593 2,880,593

ING Liquid Fund Super Institutional - Daily Dividend Reinvestment Option 31,064,650 31,064,650

JM High Liquidity Fund - Super Institutional - Daily Dividend Reinvestment Option 237,427 237,427

JP Morgan India Liquid Fund - Super Institutional Daily Dividend- Reinvestment Option 2,243,358 2,243,358

LICMF Floating Rate Fund - Short Term Plan - Dividend Plan 268,751,322 273,188,622

LICMF Income Plus Fund - Daily Dividend Plan 295,252,773 295,252,773

LICMF Liquid Fund - Daily Dividend Reinvestment Plan 29,924,159 29,924,159

LICMF Liquid Plan - Dividend Plan 47,801,796 48,042,910

LICMF Saving Plus Plan - Daily Dividend Reinvestment 10,694,446 10,694,446

Lotus India Liquid Fund - Institutional Daily Dividend 5,004,537 5,004,537

Principal Floating Rate Fund SMP Institutional Option - Daily Dividend Reinvestment 779 24,447

Reliance Liquid Fund - Treasury Plan Retail Option 128 13,618

SBI Magnum Insta Cash Fund - Daily Dividend Option 1,574,351 1,574,351

SBI Premier Liquid Fund - Institutional Plan - Daily Dividend 1,045,584 1,045,584

Tata Liquid Super High Investment Fund - Daily Dividend 184,162 184,162

UTI Money Market Fund - Daily Dividend Option - Reinvestment 5,764,291 5,764,291

UTI Treasury Advantage Fund - Institutional Plan - Daily Dividend Option - Reinvestment 100,116 100,116

Rs. million

Particulars

Year ended March

31, 2009

Year ended March

31, 2008

i) the principal amount and the interest duet thereon (to be shown separately) remaining

unpaid to any supplier as at the end of each accounting year;

- Principal

- Interest due thereon

0.78

0.01

0.75

*

ii) the amount of interest paid by the buyer in terms of section 16 of the Micro, Small and

Medium Enterprises Development Act, 2006, along with the amount of the payment made

to the supplier beyond the appointed day during each accounting year;

- Principal

- Interest

1.75

*

0.10

0.27

iii) the amount of interest due and payable for th e period of delay in making payment (which

have been paid but beyond the appointed day during the year) but without adding the

interest specified under the Micro, Small and Medium Enterprises Development Act, 2006;

- -

iv) the amount of interest accrued and remaining unpaid at the end of each accounting year;

-Total interest Accrued

- Interest remaining unpaid0.01

0.01

*

*

v) the amount of further interest remaining due and payable even in the succeeding years,

until such date when the interest dues as above are actually paid to the small enterprise,

for the purpose of disallowance as a deductible expenditure under section 23 of the Micro,

Small and Medium Enterprises Development Act, 2006.

0.01 *



67

14. Disclosure for Micro and Small Enterprises:

16. a) Additional information pursuant to Part II of Schedule VI to the Companies Act, 1956.

16. b) Detailed information in respect of opening and closing stocks, production, purchases and sales in respect of each class

of goods produced and traded :

68


a) Licensed Capacity Not Applicable

As per the Industrial Policy declared in July 1991, as amended in April 1993,

no licences are required for the products manufactured by the Company.

Installed Capacity as at March 31, 2009 (As certified by Management)

Cotton Terry Towels 38,201 (March 31, 2008 : 37,074) M.T.

Cotton Yarn 28,326 (March 31, 2008 : 28,295) M.T.

Bed Sheets 42,840 (March 31, 2008 : 35,700) 000' Mtrs

Rugs 10,151 (March 31, 2008 : Nil) M.T.

Notes:

1. Previous Year figures are given in brackets.

2. Cotton Yarn production includes captive consumption of 26,455.80 MT (Previous Year : 21,948 MT).

3. Grey Fabric - Bed Linen Products production includes captive consumption of 2,223.99 MT (Previous Year : Nil).

4. Sales Rugs includes 309.54 MT (Previous Year : Nil) of Rs. 118.83 million (Previous Year : Rs. Nil) sold during Trial Run (Refer Schedule 6B).

5. Sales Others includes Rs. 0.58 million (Previous Year : Rs. Nil) sold during Trial Run (Refer Schedule 6B).

Class of Goods Unit Production

Quantity (Rs. million) Quantity Quantity (Rs. million) Quantity (Rs. million) Quantity (Rs. million)

Manufactured

Terry Towels MT 1,618.05 281.60 30,088.17 - - 31,018.92 7,975.30 687.30 141.22

(894.09) (159.87) (29,822.17) - - (29,098.21) (7,162.75) (1,618.05) (281.60)

Cotton Yarn (Refer Note 2) MT 359.49 39.04 26,980.70 - - 884.40 67.82 - -

(312.67) (30.65) (24,465.28) - - (2,471.04) (188.00) (359.49) (39.04)

Bed Linen Products 000 Mtrs 2,303.85 295.18 23,513.32 - - 24,264.27 3,557.05 1,552.90 141.59

(646.85) (66.34) (28,381.51) - - (26,724.51) (3,836.11) (2,303.85) (295.18)

Decorative Bedding 000 Mtrs - - 2,195.79 - - 1,963.97 255.40 231.82 15.58

- - - - - - - - -

Grey Fabric - Bed Linen Products

(Refer Note 3)

000 Mtrs - - 4,349.44 - - 2,125.45 128.51 - -

- - (3,072.74) - - (3,072.74) (262.04) - -

Rugs (Refer Note 4) MT - - 450.15 309.54 118.83 140.61 30.40

- - - - - - -

Others (Refer Note 5) 6.65 - 262.70 3.62

(10.49) - (248.20) (6.65)

Traded

Cotton - - - 286.00 60.68 286.00 57.78 - -

MT - - - (11.10) (0.79) (11.10) (0.50) - -

Cotton Yarn MT 54.61 3.38 - 54.62 0.91 109.23 7.38 - -

- - - (545.50) (36.50) (490.89) (32.72) (54.61) (3.38)

Bed Linen Products 000 PCS - - - 520.40 209.58 520.40 211.38 - -

- - - (496.51) (41.72) (496.51) (38.36) - -

Others - 37.23 30.79 -

- (9.17) (10.91) -

Total 625.85 308.40 12,672.94 332.41

(267.35) (88.18) (11,779.59) (625.85)

Stocks at Commencement Purchases Sales Stocks at Close



UNIT Qty. (Rs. million) Qty. (Rs. million)

c) Raw Material Consumed:

Cotton Yarn* MT 20,766.65 2,714.80 19,057.00 2,711.44

Cotton MT 24,317.80 1,604.55 29,358.00 1,836.47

Fabric Consumed** MT 1,171.65 207.38 846.00 166.26

Bed Linen Fabrics 000 Mtrs. 6,537.28 703.30 6,573.00 793.92

Total 5,230.03 5,508.09

d) Value of Imported and Indigenous Raw Materials and Stores, Spare Parts Consumed and Percentage

1. Raw Material % (Rs. million) % (Rs. million)

Imported @ 10.64% 556.35 6.89% 379.47

Indigenous @ 89.36% 4,673.68 93.11% 5,128.62

Total 100.00% 5,230.03 100.00% 5,508.09

2. Stores and Spares and Dyes and Chemicals

Imported # 12.42% 163.55 8.87 113.09

Indigenous # 87.58% 1,153.75 91.13 1,161.43

Total 100% 1,317.30 100.00 1,274.52

Year ended Year ended

March 31, 2009 March 31, 2008

(Rs. million) (Rs. million)

e) Value of Imports on CIF Basis:

Raw Materials 544.83 522.64

Stores & Spares and Dyes & Chemicals 203.87 121.97

Capital Goods 1,003.11 1,653.94

Packing Material 12.85 9.67

Total 1,764.66 2,308.22

f) FOB Value Of Exports 9,224.35 10,131.14

g) Expenditure in Foreign Currency

Travelling 3.79 7.57

Commission 21.52 53.32

Professional Charges 23.19 5.48

Claims, Discount and Rebate 78.91 102.27

Freight 52.48 103.37

Advertisement and Sales Promotion 210.84 165.84

Interest - 8.17

Others 23.91 9.83

Total 414.64 455.85

@ Includes imported raw material Rs. 42.37 million (Previous Year : Rs. Nil) and indigenous raw material Rs. 38.78 million

(Previous Year : Rs. Nil) consumed during Trial Run (Refer Schedule 6B)

# Includes imported stores & spares and dyes & chemicals Rs. 2.22 million (Previous Year : Rs. Nil) and indigenous stores & spares

and dyes & chemicals Rs. 17.60 million (Previous Year : Rs. Nil) consumed during Trial Run (Refer Schedule 6B)


March 31, 2009 March 31, 2008

*Includes 381.06 MT (Previous Year : Nil) of Rs. 63.94 million (Previous Year : Rs. Nil) consumed during Trial Run (Refer Schedule 6B)

** Includes 139.89 MT (Previous Year : Nil) of Rs. 17.21 million (Previous Year : Rs. Nil) consumed during Trial Run (Refer Schedule 6B)


March 31, 2009 March 31, 2008

69



17. Disclosure of Derivative Instruments

A. Derivative instruments outstanding at the year end :

i) Forward Exchange and Option Contracts to hedge the foreign currency exposure for payments to be received against

exports and other receivables:

ii) Forward Exchange and Option Contracts to hedge the foreign currency exposure for payments to be made against

imports and other payables:

B. As of the Balance Sheet date, the foreign currency exposure not hedged by a derivative instrument or otherwise is

amounting to Rs. 1,774.03 million (March 31, 2008 : Rs. 1,372.98 million).

C. Pursuant to the adoption of AS-30 with effect from April 1, 2008 as given in Note 1(x)(c) above, the Company has

debited and carried forward loss aggregating Rs. 294.95 million arising on fair valuation of hedging instruments that

are considered effective, in the ‘Hedging Reserve Account’ instead of the earlier policy of recognising such losses in the

Profit and Loss Account.

The following table summarizes activity in the Hedging Reserve related to all derivatives classified as cash flow hedges

during the year ended March 31, 2009

The entire balance of Hedging Reserve Account as at March 31, 2009 of Rs. 294.95 million pertaining to 'Marketing

Division' of the Company will be transferred to Welspun Global Brands Limited with effect from April 1, 2009, pursuant

to demerger and transfer of 'Marketing Division' as referred in Note 7 above, to Welspun Global Brands Limited

70


Currency

March 31, 2009 March 31, 2008

USD 161.38 114.28

(Equivalent Rs.) (7,769.93) (4,640.87)

EURO 0.69 2.00

(Equivalent Rs.) (46.44) (116.33)

Forward Exchange Contracts and Option Contracts

Particulars Year ended March 31, 2009

Balance as at the beginning of the year

Unrealised gain/ (losses) on cash flow hedging derivatives during the

year

Net gains/ (losses) reclassified into net income on occurrence of

hedged transactions

Balance as at Year end

-

(903.54)

(608.59)

(294.95)

Currency

March 31, 2009 March 31, 2008

USD 1.44 12.38(Equivalent Rs.) (73.95) (496.33)EURO 0.76 10.91(Equivalent Rs.) (49.62) (647.26)JPY - 59.40(Equivalent Rs.) - (23.83)


(Rs. million)

(Rs. million)

(Rs. million)



18. The Company has classified the various benefits provided to employees as under :-

I Defined Contribution Plans

a. Employers' Contribution to Provident Fund

b. Employers' Contribution to Employee’s State Insurance

c. Employers' Contribution to Employee’s Pension Scheme, 1995Rs. million

During the year, the Company has recognised the following amounts in the Profit and Loss Account: 2008-09 2007-08

- Employers' Contribution to Provident Fund * 32.03 25.56

- Employers' Contribution to Employee’s State Insurance * 6.69 7.32

- Employers' Contribution to Employee’s Pension Scheme * 36.03 29.44

* Included in Contribution to Provident and Other Funds (Refer Schedule 16)

II Defined Benefit Plan

Contribution to Gratuity Fund(% p.a.)

a. Major Assumptions 2008-09 2007-08

Discount Rate : - Staff 7.50 8.50

- Worker 7.25 8.50

Expected Rate of Return on Plan Assets 8.00 8.00

Salary Escalation Rate @ 5.00 6.00

@ The estimates for future salary increases considered takes into account the inflation, seniority,

promotion and other relevant factors. Rs. million

b. Change in the Present Value of Obligation 2008-09 2007-08

Opening Present Value of Obligation 47.23 36.83

Current Service Cost 11.72 11.19

Interest Cost 4.02 3.13

Benefit paid (12.01) (6.10)

Actuarial Loss on Obligations 1.20 2.18

Closing Present Value of Obligation 52.16 47.23

Rs. million

c. Change in Fair Value of Plan Assets 2008-09 2007-08

Opening Fair Value of Plan Assets 53.24 34.02

Expected Return on Plan Assets 4.26 2.72

Actuarial (loss)/gain on Plan Assets (7.53) 5.10

Contributions 9.48 17.50

Benefits paid (8.90) (6.10)

Closing Fair Value of Plan Assets 50.55 53.24

Rs. million

d. Reconciliation of Present Value of Defined Benefit Obligation and the Fair Value of Assets As At

March 31, 2009

As At

March 31, 2008

Present Value of Funded Obligation 52.16 47.23

Fair Value of Plan Assets 50.55 53.24

Funded Status (1.61) 6.01

Present Value of Unfunded Obligation 1.61 -

Assets recognised in the balance Sheet and included under Loans, Advances and Other Current Assets

(Refer Schedule 11)

- 6.01

Unfunded Net Liability Recognised in the Balance Sheet disclosed under Current Liabilities and

Provisions (Refer Schedule 12)

1.61 -

e. Amount recognised in the Balance Sheet

Present Value of Obligation 52.16 47.23

Fair Value of Plan Assets 50.55 53.24

Liability/ (Assets) recognised in the balance Sheet and included under Current Liabilities and Provisions 1.61 (6.01)

(Refer Schedule 12) respectively and under Loans, Advance & Other Current Assets (Refer Schedule 11)

Rs. million

f. Expenses Recognised in the Profit and Loss Account 2008-09 2007-08

Current Service Cost 11.72 11.19

Interest Cost 4.02 3.13

Expected Return on Plan Assets (4.26) (2.72)

Net Actuarial Loss/(gain) Recognised in the period 8.73 (2.92)

Total expenses Recognised in the Profit and Loss Account ** 20.21 8.68

Actual (Loss)/Return on Plan Assets (3.27) 7.82

** Included in Salary, Wages, Allowances and Other Benefits (Refer Schedule 16)

71



19. In accordance with the Company's policy given in Note 1(x) above, net exchange loss of Rs. 1,060.59 million (Previous Year:

net exchange gain of Rs. 379.21 million) has been accounted in Profit and Loss Account.

20. Borrowing Costs aggregating Rs. 99.99 million; Previous Year: Rs. 145.69 million (net of interest subsidy of Rs. 90.66 million;

Previous Year: Rs. 156.16 million) attributable to the acquisition or construction of qualifying assets are capitalised during

the year as part of the cost of such assets.

(I) Information about Primary Business Segment

The Company is exclusively engaged in the business of Home Textiles which, in the context of Accounting Standard 17

on Segment Reporting, issued by the Institute of Chartered Accountants of India, is considered to constitute a single

primary segment. Thus, the segment revenue, segment results, total carrying amount of segment assets, total

carrying amount of segment liabilities, total cost incurred to acquire segment assets, total amount of charge for

depreciation during the year are all as reflected in the financial statements for the year ended March 31, 2009 and as on

that date.

(ii) Information about Secondary Geographical Segments:

(iii) Notes:

(a) The Segment revenue in the geographical segments considered for disclosure are as follows:

- Revenue within India includes sales to customers located within India and earnings in India.

- Revenue outside India includes sales to customers located outside India, earnings outside India and export

benefits on sales made to customers located outside India.

(b) Segment revenue, results, assets and liabilities include the respective amounts identified to each of the segments

and amounts allocated on a reasonable basis.

21. Segment Information for the year ended March 31, 2009.


India Outside India Total

March 31,

2009

March 31,

2008

March 31,

2009

March 31,

2008

March 31,

2009

March 31,

2008

External Revenue 4,142.33 966.40 9,302.07 11,443.04 13,444.40 12,409.44

Carrying Amount of Segment Assets 23,037.88 21,581.67 2060.02 1,997.04 25,097.90 23,578.71

Capital Expenditure

(excluding the Incidental Expenditure

Pending Capitalisation/ Allocation)

1,705.87 3,167.48 - - 1,705.87 3,167.48

Rs. million



72

22. Related Party Disclosures

(i) Relationship

73

Control

(a) Subsidiary Companies Welspun USA Inc., USA (WUSA)

Welspun Holdings Private Limited, Cyprus (WHPL)

Welspun AG (WAG) (Held directly till March 15, 2009 and through WHPL w.e.f. March 16, 2009)

Besa Developers and Infrastructure Private Limited (BESA)

Welspun Global Brands Limited (WGBL) ( w.e.f. September 17, 2008)

Welspun Investments Limited (WINL) (w.e.f. October 7, 2008)

Welspun Mexico S.A. de C.V (WMEX) (Held through WAG)

Welspun Home Textiles UK Limited (WHTUKL)

(Held through WHPL)

CHT Holdings Limited (CHTHL) (Held through WHTUKL)

Christy Home Textiles Limited (CHTL)

(Held through CHTHL)

Christy UK Limited (CUKL) (Held through CHTL)

Christy 2004 Limited (Held through CUKL)

Flyspark Limited (Held through CHTL)

Christy USA, LLC (CUSA) (merged with WUSA w.e.f. April 1, 2008)

Christy Europe GmbH (Held through CHTL)

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

SOREMA – Tapetes E Cortinas D e Banho, S.A., Portugal (SOREMA) (Held through WHPL)

SOREMA Welspun Distribution and Logistics, S. A., Portugal (Held through SOREMA w.e.f. September 3, 2008)

SOREMA Welspun Espana S. L. U., Spain (Held through SOREMA w.e.f. July 24, 2008)

SOREMA Welspun Benelux B. V. , Holland (Held through SOREMA w.e.f. February 6, 2009)

(b) Joint Venture Companies Welspun Zucchi Textiles Limited (WZTL)

MEP Cotton Limited (MCL)

(c) Associate Company Welspun Retail Limited (WRL)

Welspun Gujarat Stahl Rohren Limited (WGSRL)

Welspun Power and Steel Limited (WPSL)

Welspun Syntex Limited (WSL)

Welspun Trading Limited (WTL)

Welspun Wintex Limited (WWL)

Welspun Mercantile Limited (WML)

Krishiraj Trading Limited (KTL)

Welspun Logistics Limited (WLL)

Welspun Realty Private Limited (WRPL)

Mertz Securities Limited (MSL)

Welspun Polybuttons Limited (WPBL)

Vipuna Trading Limited (VTL)

Goodvalue Polyplast Limited (GVPL)

Welspun Foundation for Health and Knowledge (WFHK)

(d) 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

Refined Salts Private Limited (RSPL)

B.K.Goenka (BKG)

R. R. Mandawewala (RRM)

(e) Key Management

Personnel

M. L. Mittal (MLM)

(f) Relatives of Key

Management Personnel

Deepali Goenka (DBG)




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23.

24.

25.

Leases

A. Where the Company is a lessor:

Operating Lease

The Company has given certain buildings and plant and machinery on operating lease, details of which are as under:

B. Where the Company is a lessee:

Operating Lease

The Company has taken various residential, office premises, godowns, equipment and vehicles under operating lease

agreements that are renewable on a periodic basis at the option of both the lessor and the lessee. The initial tenure of lease

is generally for eleven months to sixty months.

The aggregate rental expenses of all the operating leases for the year are Rs. 88.97 million (Previous Year: Rs. 59.81 million).

Earnings per Share

As required by the Clause 32 of the listing agreement, the following disclosure is made:

* includes depreciation of Rs. 3.40 million on Plant and Machinery which was given on lease upto July 2007.

Particulars March 31, 2009 March 31, 2008

Buildings

Gross Block 10.25 10.25

Accumulated Depreciation 1.82 1.65

Depreciation recognised in the Profit and Loss Account for the year 0.17 0.17

Plant and Machinery



Depreciation recognised in the Profit and Loss Account for the year 3.73 6.33*


Profit after Tax and before Extraordinary Item (A) 316.36 262.66

Less : Extraordinary Item 7.33 -

Profit after Tax and after Extraordinary Item (B) 309.03 262.66

Number of Equity Shares

- Weighted Number of equity shares outstanding during the year ( C) 73,089,519 73,089,519

Basic and Diluted earnings per share before Extra Ordinary Item (A/C) (Rs.) 4.33 3.59

Basic and Diluted earnings per share after Extra Ordinary Item (B/C) (Rs.) 4.23 3.59

Nominal value of an equity share (Rs.) 10 10

Particulars

Balance as on

March 31, 2009

Maximum amount

outstanding during

the year ended

March 31, 2009

Balance as on

March 31, 2008

Maximum amount

outstanding

during the year

ended March 31,

2008

i. Loans and advances in the nature of loans to

subsidiary (excluding interest accrued),

- Welspun USA Inc.


- Welspun AG

- Besa Developers and Infrastructure Private

Limited

320.80

348.60

150.34

31.50

590.30

442.93

692.85

31.50

65.44

393.92

155.97

31.50

131.21

605.16

155.97

31.50

Rs. Million

Rs. Million

Rs. Million




76

26.

27.

28

29

The Income Tax Department had disallowed certain expenditure claimed by the Company in its income tax returns for the

Assessment Years 1998-1999 and 2001-2002. During the year, the Income Tax Appellate Tribunal decided the matter in the

Company's favour, consequent to which, the Company has recognised deferred tax asset aggregating Rs. 75.23 million on

unabsorbed depreciation pertaining to the aforesaid assessment years.

Due to floods at the Company's manufacturing unit at Anjar in the year 2008, certain inventory, machinery and buildings

were damaged. Loss arising on account of these floods (net of insurance claim received) aggregating Rs. 11.10 million has

been included under 'Extraordinary item' in the Profit and Loss Account. The extraordinary item disclosed is net of tax

impact of Rs. 3.77 million.

. Refer Annexure for additional information to Part IV of Schedule VI to the Act.

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

ii. Loans and advances in the nature of loans to

associates

- Welspun Retail Limited 42.68 42.68 - -

iii. Loans and advances in the nature of loans where there

is no repayment schedule, or interest below rate

specified as per Section 372A of the Companies Act,

1956.

- Welspun USA Inc.


- Welspun AG

- Besa Developers and Infrastructure Private

Limited

-

-

-

-

-

-

-

-

65.44

393.92

155.97

31.50

131.21

605.16

155.97

31.50

iv. Loans and advances in the nature of loans to firms/

companies in which directors are interested

- - - -

v. Investments by the Loanee in the shares of the

Company as on March 31, 2009

- - - -

Particulars

Balance as on

March 31, 2009

Maximum amount

outstanding during

the year ended

March 31, 2009

Balance as on

March 31, 2008

Maximum amount

outstanding

during the year

ended March 31,

2008

Signatures to Schedules 1 to 19 forming part of the Accounts






D. K. Patil

77



For the Year Ended For the Year Ended

March 31, 2009 March 31, 2008

Rs. million Rs. million Rs. million

78


CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2009

A. CASH FLOW FROM OPERATING ACTIVITIES

Net Profit Before Tax 264.70 414.52

Adjustments for :

Depreciation 952.98 847.19

Unrealised Foreign Exchange Differences (49.93) (20.84)

Loss on Sale of Fixed Assets 15.08 6.91

Gain on Premature Redemption of Debentures - (3.52)

Profit on Redemption/ Sale of Units of Mutual Funds (3.60) (1.23)

Profit on Sale of Bonds (2.00) (4.97)

Profit on sale of Shares (221.35) -

Dividend (16.56) (25.83)

Liabilities Written Back as no Longer Required (1.43) (0.53)

Provision for Doubtful Debts/ Advances Written Back - (5.83)

Provision for Doubtful debts/ Advances 1.24 18.69

Debts/ Advances Written off 4.25 5.57

Excise Benefits Receivable Written Off - 43.23

Extraordinary Item (11.10) -

Provision for diminution in value of Investments - -

Interest Income and Cash Discount Received (138.58) (83.15)

Interest and Other Expenses 1,059.69 760.00

1,588.69 1,535.69

Operating Profit Before Working Capital Changes 1,853.39 1,950.21

Adjustments for changes in working capital :

Trade and Other Receivables (1,395.52) (653.30)

Inventories 796.29 (535.48)

Current Liabilities and Provisions 68.63 526.88

(530.60) (661.90)

Cash Flow Generated from Operations 1,322.79 1,288.31

Income Tax and Fringe Benefit Tax paid (45.46) (88.41)

Net Cash Flow from Operating Activities 1,277.33 1,199.90

B. CASH FLOW USED IN INVESTING ACTIVITIES

Purchase of Fixed Assets (Including Capital Work-in-progress) (1,739.59) (3,160.72)

Sale of Fixed Assets 17.46 4.69

Capital Subsidy 39.27 14.79

Purchase of Investment in Subsidiaries (net of sales) (282.23) (4.15)

Sale of Other Investments (net of purchases) 367.22 771.03

Dividend Received 16.56 25.83

Interest Received 14.96 9.35

Net Cash Flow used in Investing Activities (1,566.35) (2,339.18)

C. CASH FLOW FROM FINANCING ACTIVITIES

Redemption of Preference Shares - (102.26)

Redemption of Debentures - (168.08)

Proceeds from Borrowings - Long Term 1,770.73 2,012.08

Repayment of Borrowings - Long Term (1,074.23) (788.12)

Proceeds/ Repayments of Other Borrowings 465.69 432.82

Interest and Other Finance Expenses Paid (905.55) (966.53)

Net Cash Flow from Financing Activities 256.64 419.91

( A + B + C ) (32.38) (719.37)

Cash and Cash Equivalents at the beginning of the year 920.51 1,639.88

Cash and Cash Equivalents at the end of the year 888.13 920.51

Net Decrease in Cash and Cash Equivalents (32.38) (719.37)

(0.00)NOTES : 0.001. The Cash Flow Statement has been prepared under the "Indirect method" as set out in Accounting Standard - 3 on

Cash Flow Statements issued by the Institute of Chartered Accountants of India.

2. Previous year's comparatives have been reclassified to conform with the current year's presentation, wherever applicable.

This is the Cash Flow Statement referred to in out report of even date.

Neeraj Gupta

Partner







B. K. Goenka R. R. Mandawewala

Chairman and Managing Director

M. L. Mittal D. K. Patil

Director (Finance) Company Secretary



79

Additional Information pursuant to Part IV of Schedule VI to the Act.Balance Sheet Abstract and Company's General Business Profile

ANNEXURE

I Registration Details

Registration No. U 9 9 9 9 9 M H 1 9 8 5 P T C 0 3 5 0 9 2 State Code 0 4

Balance Sheet Date 3 1 0 3 2 0 0 9

II Capital Raised During the Year (Amount in Rs. Thousands)

Rights Issue

N I L N I L

Private Placement

N I L N I L

III Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousands)

Total Liabilities Total Assets

2 5 0 9 7 7 0 3 2 5 0 9 7 7 0 3

Sources of Funds Paid-up Capital Equity Warrants

7 8 0 9 0 0 N I L

Reserves and Surplus Secured Loans

4 8 2 1 3 7 2 1 6 0 8 9 0 9 0

Unsecured Loans Deferred Tax Liability (Net)

5 0 0 0 3 0 1 0 3 9 8 3 0

Application of Funds Net Fixed Assets Incidental Expenditure Pending Capitalisation/ Allocation

1 5 7 7 3 8 1 0 5 4 0 5 2

Investments Net Current Assets

1 0 4 6 7 1 0 6 3 5 6 6 5 0

Accumulated Losses Miscellaneous Expenditure

N I L N I L

IV Performance of Company (Amount in Rs. Thousands)

Turnover (including Other Income) Total Expenditure

1 3 6 1 6 0 0 0 1 3 3 6 2 3 0 3

+ - Profit/Loss Before Tax + - Profit/Loss after Tax

2 5 3 6 9 7 3 0 9 0 2 8

(Please tick appropriate box + for Positive, - for Negative) (Please tick appropriate box + for Positive, - for Negative)

Earnings Per Share after extraordinary

+ - items (Basic and Diluted) (In Rs.) Dividend Rate %

4 . 2 3 - - -

Public Issue

Bonus Issue

Date Month Year

V Generic Names of Three Principal Products / Services of Company (as per monetary terms)

Item Code No. (ITC Code) Product Description

6 3 0 4 9 2 5 0 C O T T O N T E R R Y T O W E L

6 3 0 4 1 9 1 0 C O T T O N B E D S H E E T

5 2 0 5 1 1 0 0 C O T T O N Y A R N

On behalf of the Board of Directors


Chairman & Managing Director Joint Managing Director

M. L. Mittal D. K. Patil



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80


AUDITORS' REPORT TO THE BOARD OF DIRECTORS OF WELSPUN INDIA LIMITED

Neeraj Gupta


1. We have audited the attached consolidated Balance Sheet of Welspun India Limited (the “Company”) and its subsidiaries,

its jointly controlled entities and associate company; hereinafter referred to as the “Group” (refer Note 1B(ii) on Schedule

19 to the attached consolidated financial statements) as at March 31, 2009, the related consolidated Profit and Loss

Account and the consolidated Cash Flow Statement for the year ended on that date annexed thereto, which we have signed

under reference to this report. These consolidated financial statements are the responsibility of the Company's

Management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those standards require

that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of

material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in

the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by

Management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a

reasonable basis for our opinion.

3. We did not audit the financial statements of (i) the jointly controlled entities and seven subsidiaries, whose financial

statements include the Company's share of total assets aggregating Rs. 1,510.26 million as at the balance sheet date, total

revenues aggregating Rs. 3,591.39 million and net cash outflows aggregating Rs. 5.52 million for the year then ended; and

(ii) the associate company, whose financial statements include the Company's share of net loss aggregating Rs. 204.31

million for the year then ended; all of which are considered in the attached consolidated financial statements. The financial

statements of five of the aforesaid seven subsidiaries, the jointly controlled entities and the associate company have been

audited by other auditors, whose reports have been furnished to us, and our opinion, in so far as it relates to the amounts

included in respect of the said subsidiaries, the jointly controlled entities and the associate company, is based solely on the

reports of the other auditors. The financial statements of the other two aforesaid subsidiaries, which include the

Company's share of total assets aggregating Rs. 31.75 million as at the balance sheet date, total revenues aggregating Rs. Nil

and net cash inflows aggregating Rs. 0.41 million for the year then ended, have been certified by its directors, and our

opinion, in so far as it relates to amounts included in respect of the subsidiary, is based solely on those management

certified financial statements.

4. We report that the consolidated financial statements have been prepared by the Company's Management in accordance

with the requirements of Accounting Standard 21 - Consolidated Financial Statements, Accounting Standard 23

Accounting for Investments in Associates in Consolidated Financial Statements and Accounting Standard 27 - Financial

Reporting of Interest in Joint Ventures, issued by the Institute of Chartered Accountants of India.

5. On the basis of the information and explanations given to us and on consideration of the separate audit reports on

individual audited financial statements of the Company, its aforesaid subsidiaries, jointly controlled entities and the

associate company, and management certified financial statements in case of two subsidiaries, in our opinion, the attached

consolidated financial statements give a true and fair view in conformity with the accounting principles generally accepted

in India:

(a) in the case of the consolidated Balance Sheet, of the state of affairs of the Group as at March 31, 2009;

(b) in the case of the consolidated Profit and Loss Account, of the consolidated results of operations of the Group for the

year ended on that date; and

(c) in the case of the consolidated Cash Flow Statement, of the consolidated cash flows of the Group for the year ended on

that date.

Partner



Mumbai, June 30, 2009 Chartered Accountants

81

82


CONSOLIDATED BALANCE SHEET AS AT MARCH 31, 2009

19 (0.00) (0.00)(0.00)

The Schedules referred to herein form an integral part of the Consolidated Balance Sheet.




M. L. Mittal




D. K. Patil

SOURCES OF FUNDS

SHAREHOLDERS' FUNDSCapitalReserves and Surplus

Minority Interest

LOAN FUNDSSecured LoansUnsecured Loans

DEFERRED TAX LIABILITY (NET)

APPLICATION OF FUNDS

FIXED ASSETSGross BlockLess : DepreciationNet BlockCapital Work-in-progress

Incidental Expenditure Pending Capitalisation/ Allocation

INVESTMENTS

CURRENT ASSETS, LOANS AND ADVANCESInventoriesSundry DebtorsCash and Bank BalancesLoans, Advances and Other Current Assets

LESS : CURRENT LIABILITIES AND PROVISIONSLiabilitiesProvisions

NET CURRENT ASSETS

NOTES TO ACCOUNTS

This is the Consolidated Balance Sheet referred to in our report of the even date.

Neeraj Gupta

PartnerMembership No. F055158For and on behalf ofPrice Waterhouse & Co.



As at As atMarch 31, 2009 March 31, 2008

SCHEDULES Rs. million Rs. million

1 780.90 780.902 3,659.35 4,500.20

4,440.25 5,281.10

20.30 194.01

3 18,186.71 17,048.054 529.62 303.79

18,716.33 17,351.84

5 1,046.70 1,085.51

24,223.58 23,912.46

6A 21,813.34 19,556.135,146.42 4,327.48

16,666.92 15,228.65997.27 1,599.33

17,664.19 16,827.98

6B 55.28 65.94

7 314.16 273.89

8 4,215.28 3,846.659 1,434.95 1,384.0710 1,197.87 1,298.6411 2,557.85 2,404.64

9,405.95 8,934.0012

3,141.65 2,148.9874.35 40.37

3,216.00 2,189.35

6,189.95 6,744.65

24,223.58 23,912.46

CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2009

INCOMESalesLess : Excise Duty

Other Income

EXPENDITUREMaterials and Manufacturing ExpensesEmployees' Remuneration and BenefitsSelling, Administration and Other ExpensesFinance Expenses (Net)Depreciation

PROFIT/ (LOSS) BEFORE EXCEPTIONAL ITEMS AND TAXATIONExceptional Items (Refer Note 20 on Schedule 19)PROFIT/ (LOSS) BEFORE TAXATION FROM ORDINARY ACTIVITIES

PROFIT/ (LOSS) BEFORE TAXATION FROM ORDINARY ACTIVITIES AND FROM CONTINUING OPERATIONSProvision For Taxation- Current Tax- Less : Minimum Alternative Tax Credit Availed

- Deferred Tax- Fringe Benefit TaxPROFIT/ (LOSS) AFTER TAXATION FROM ORDINARY ACTIVITIES AND FROM CONTINUING OPERATIONSExtraordinary Item (net of deferred tax credit of Rs. 3.77 million) (Refer Note 25 on Schedule 19)PROFIT/ (LOSS) AFTER TAXATION FROM CONTINUING OPERATIONS

PROFIT/ (LOSS) BEFORE TAXATION FROM ORDINARY ACTIVITIES AND FROMDISCONTINUING OPERATIONS AND BEFORE SHARE OF LOSS OF ASSOCIATE ANDMINORITY INTERESTProvision For Taxation- Current Tax- Deferred Tax- Fringe Benefit TaxPROFIT/ (LOSS) AFTER TAXATION FROM ORDINARY ACTIVITIES AND FROMDISCONTINUING OPERATIONS AND BEFORE SHARE OF LOSS OF ASSOCIATE ANDMINORITY INTERESTShare of Associate's Net LossPROFIT/ (LOSS) AFTER TAXATION FROM ORDINARY ACTIVITIES AND FROMDISCONTINUING OPERATIONS AND BEFORE SHARE OF LOSS OF MINORITY INTEREST

Minority's Share of Profit/ (Loss) in Certain Subsidiary CompaniesPROFIT/ (LOSS) AFTER TAXATION FROM ORDINARY ACTIVITIES AND FROMDISCONTINUING OPERATIONS

NET PROFIT/ (LOSS)

Profit and Loss Account Balance Brought Forward

PROFIT AVAILABLE FOR APPROPRIATION

APPROPRIATIONSTransfer to Capital Redemption ReserveTransfer from Debenture Redemption ReserveProfit and Loss Account Balance Carried to Balance Sheet

Loss Per Share (Rs.) - (Refer Note 26 on Schedule 19)- Basic and Diluted before Extraordinary Item- Basic and Diluted after Extraordinary Item

NOTES TO ACCOUNTS

The Schedules referred to herein form an integral part of the Consolidated Profit and Loss Account.

This is the Consolidated Profit and Loss Account referred to in our report of the even date.

Neeraj GuptaPartnerMembership No. F055158For and on behalf ofPrice Waterhouse & Co.Chartered Accountants


Rs. million

17,000.359.15

16,991.20254.34

17,245.54

11,339.942,034.262,212.951,176.561,086.57

17,850.28

(604.74)(38.52)

(643.26)

(98.36)

31.95(27.10)

4.85(62.99)

2.97(43.19)

7.33(50.52)

(544.90)

(53.31)27.84

6.21(525.64)

(204.31)(729.95)

(14.90)(715.05)

(765.57)

1,374.83

609.26

--

609.26609.26

10.3710.47


Rs. million

16,495.1931.26

16,463.93377.61

16,841.54

10,783.141,698.582,328.81

781.94951.74

16,544.21

297.3343.71

341.04

146.88

45.39(44.50)

0.89142.86

2.890.24-

0.24

194.16

53.31(14.41)

6.51148.75

(146.45)2.30

4.09(1.79)

(1.55)

1,376.71

1,375.16

30.00(29.67)

1,374.831,375.16

0.020.02

SCHEDULES

13

14

15161718

(A)

(B)

(A) + (B)

19


B. K. Goenka R. R. MandawewalaChairman & Managing Director

M. L. MittalExecutive Director (Finance) Company Secretary


D. K. Patil


83

84


SCHEDULES ANNEXED TO AND FORMING PART OF THE CONSOLIDATED BALANCE SHEET AS AT MARCH 31, 2009

SCHEDULE 1 : CAPITAL

Authorised81,500,000 Equity Shares of Rs. 10 each1,100,000 Redeemable Cumulative Preference Shares of Rs. 100 each

23,500,000 Redeemable Cumulative Preference Shares of Rs. 10 each

Issued, Subscribed and Paid Up73,089,519 Equity Shares of Rs. 10 each fully paid up

500,000 0% Redeemable Cumulative Preference Shares of Rs. 100each fully paid up (Refer Note 12 on Schedule 19)

Less : Adjustment for 50 Equity Shares representing 50% of 100 equity shares of Welspun India Limitedheld by Welspun Zucchi Textiles Limited, a jointly controlled entity.

* Less than Rs. 1,000

SCHEDULE 2 : RESERVES AND SURPLUS

Securities Premium AccountAs per last Balance SheetLess : Premium on Redemption of Preference Shares

Capital Redemption ReserveAs per last Balance SheetAdd : Transferred from Profit and Loss Account

Debenture Redemption ReserveAs per last Balance SheetLess : Transferred to Profit and Loss Account

Capital Reserve - Forfeiture of Equity Warrants

Capital Reserve- Arising on Dilution in Shareholding of Associate Company (Refer Note 7 on Schedule 19)- Arising on Dilution of Interest in Joint Venture- Arising on Acquisition of Interest in Joint Venture

Hedging Reserve

Foreign Exchange Translation Reserve

Profit and Loss Account[includes Share in Joint Ventures - Loss of Rs. 27.46 million (March 31, 2008 : Profit of Rs. 20.81 million)]

SCHEDULE 3 : SECURED LOANS

Term Loans (Refer Notes 11(a) & 11(b) on Schedule 19)- From Banks

- In Rupee- In Foreign Currency

Working Capital Loans from Banks (Refer Notes 11(c) & 11(d) on Schedule 19)

Hire Purchase Finance Loans from Banks

Share in Joint Venture

SCHEDULE 4 : UNSECURED LOANS

Interest Free Sales Tax Loan (Repayable in six annual installments for each disbursement tillOctober 7, 2010) (Repayable within one year Rs. 0.01 million; March 31, 2008 : Rs. 0.37 million)Short Term Loans from Banks


815.00110.00235.00

1,160.00

730.9050.00

780.90

*

780.90

2,710.3772.26

2,638.11

398.3830.00

428.38

29.6729.67

-48.18

--

0.080.08

-

10.62

1,374.834,500.20

12,305.021,069.76

3,153.79

5.0016,533.57

514.48

17,048.05

0.40

288.43

14.96

303.79

As atMarch 31, 2008

Rs. million

As atMarch 31, 2009

Rs. million

815.00110.00235.00

1,160.00

730.9050.00

780.90

*

780.90

2,638.11-

2,638.11

428.38-

428.38

---

48.18

380.3928.070.08

408.54

(332.63)

(140.49)

609.263,659.35

13,049.921,256.44

3,603.72

-17,910.08

276.63

18,186.71

0.03

500.00

29.59

529.62

SCHEDULE 6A : FIXED ASSETS

(Refer Notes 1(C)(i), (ii), (iii), (iv), (xi), 14 and 19 on Schedule 19) Rs. million

PARTICULARS As at

March 31, 2008

As at

March 31, 2009

Accumulated upto

March 31, 2008

Accumulated upto

March 31, 2009

As at

March 31, 2009

As at

March 31, 2008

Freehold Land 72.65 99.25 - - 99.25 72.65

Buildings 2,545.47 2,985.58 261.62 331.99 2,653.59 2,283.85

Leasehold Improvements 16.23 88.44 12.86 4.23 84.21 3.37

Plant and Machinery (Refer Note 1 below) 14,956.14 16,426.74 3,549.73 4,167.34 12,259.40 11,406.41

Vehicles (Refer Note 2 below) 64.54 69.30 30.36 35.99 33.31 34.18

Furniture and Fixtures 292.29 390.14 142.07 198.11 192.03 150.22

Office Equipment 74.28 131.00 37.53 38.49 92.51 36.75

Computer Hardware 218.25 259.95 137.84 157.47 102.48 80.41

Computer Software 50.69 95.71 27.53 37.73 57.98 23.16

Goodwill on Consolidation of Subsidiaries and

Jointly controlled Entities933.13 961.17 49.39 75.49

885.68 883.74

Goodwill on Amalgamation 1.56 1.56 1.56 1.56 - -

Development Expenditure 52.22 70.15 51.57 66.81 3.34 0.65

TOTAL 19,277.45 21,578.99 4,302.06 5,115.21 16,463.78 14,975.39

Share in Joint Venture 278.68 234.35 25.42 31.21 203.14 253.26

TOTAL 19,556.13 21,813.34 4,327.48 5,146.42 16,666.92 15,228.65

Previous Year 15,330.87 19,556.13 3,113.94 4,327.48

Capital Work-in-progress [including Capital Advances Rs. 86.18 million (March 31, 2008 : Rs. 215.32 million)] 958.70 1,543.76

Share in Joint Venture [including Capital Advances Rs. 15.54 million (March 31, 2008 : Rs. 5.98 million)] 38.57 55.57

997.27 1,599.33

17,664.19 16,827.98

GROSS BLOCK DEPRECIATION NET BLOCK

Notes:

1) Net book value of Plant and Machinery of Rs. 8.77 million (March 31, 2008 : Rs. 21.60 million) is acquired under finance lease.

2) Net book value of Vehicles of Rs. 5.97 million (March 31, 2008 : Rs. Nil) is acquired under finance lease.

3) Capital Work-in-progress includes adjustment for capital subsidy of Rs. 28.24 million (Previous year : Rs. Nil) granted under the Technology

Upgradation Fund (TUF) Scheme.


As atMarch 31, 2008

Rs. million

As atMarch 31, 2009

Rs. million

SCHEDULE 5 : DEFERRED TAX LIABILITY (NET)(Refer Note 1C(vii)(b) on Schedule 19)

Deferred Tax Liability arising on account of Timing differences in :- Depreciation

Deferred Tax Asset arising on account of Timing differences in:- Provision for Doubtful Debts/ Advances- Provision for Unpaid Statutory Dues- Provision for Employee Benefits- Provision for Diminution in Value of Investments- Deferred Rent- Unabsorbed Depreciation and Net Operating Losses- Provision for Others


1,926.69

20.085.78

14.66-

0.23836.53

1.00878.28

(1.71)

1,046.70

1,626.66

8.1519.0211.754.530.28

498.30-

542.03

0.88

1,085.51

85

As atMarch 31, 2008

Rs. million

As atMarch 31, 2009

Rs. million(Refer Notes 1C(ii) on Schedule 19)

Opening Balance (A)

Add :

Raw Material Consumption during Trial Run

Stores and Spares Consumed

Dyes and Chemicals Consumed

Packing Material Consumed

Job Work Expenses

Power and Fuel

Freight, Forwarding and Coolie Charges

Repairs and Maintenance

- Others

Salaries, Wages, Bonus and Allowances

Contribution to Provident and Other Funds

Staff and Labour Welfare

Rent

Rates and Taxes

Printing and Stationery

Travelling and Conveyance

Legal and Professional Charges

Insurance

Communication

Loss on Redemption/ Sale of Units of Mutual Funds (Net)

Postage and Courier

Vehicle Expenses

Advertising and Sales Promotion

Interest on Fixed Loans

Interest on Working Capital Loans

Discounting and Bank Charges

Loan Processing Charges

Miscellaneous

Less :

Sales during Trial Run

Sale of Scrap

Export Benefits

Interest on Deposit Accounts - Gross

(Tax Deducted at Source Rs. 3.06 million; Previous Year : Rs. 7.24 million)

Interest on Bonds - Gross

(Tax Deducted at Source : Rs. Nil; Previous Year : Rs. 1.21 million)

Profit on Redemption/ Sales of Units of Mutual Funds

Dividend

Increase in Stocks During Trial Run

Less : Transferred to :

Plant and Machinery

Buildings

Incidental Expenditure Pending Capitalisation/ Allocation


Total Incidental Expenditure Pending Capitalisation/ Allocation

SCHEDULE 6B : INCIDENTAL EXPENDITURE PENDING CAPITALISATION/ ALLOCATION

65.94 41.24

81.15 -

4.77 -

15.05 -

8.47 -

8.45 -

4.48 3.03

3.84 0.20

0.10 0.25

59.07 26.63

4.01 0.65

1.01 0.34

- 1.91

0.43 1.49

0.19 0.02

5.83 9.17

4.79 5.84

1.55 3.18

0.11 0.66

0.03 -

0.65 0.09

0.14 -

9.52 -

97.52 138.13

0.02 0.14

1.00 0.66

- 2.40

8.02 4.86

(B) 320.20 199.65

118.83 -

0.58 -

8.90 -

13.48 33.99

- 6.42

- 2.29

2.91 30.09

46.44 -

(C) 191.14 72.79

(A) + (B) - (C) 195.00 168.10

113.52 87.11

27.43 18.21

54.05 62.78

1.23 3.16

55.28 65.94

86




As atMarch 31, 2008

Rs. million

As atMarch 31, 2009

Rs. millionSCHEDULE 7 : INVESTMENTS(Refer Note 1(C)(v) on Schedule 19)

Non - TradeInvestment in Government SecuritiesNational Saving Certificates(Lodged with District Magistrate, Valsad)

Trade - Long Term (At Cost)(Unquoted)In Others

9,800,000 Equity Shares of Rs. 10 each fully paid up of Welspun Retail LimitedCost of acquisition (including goodwill of Rs. 0.02 million)Add : Increase in carrying value arising on dilution in shareholding(Refer Note 7 on Schedule 19)Less : Company's Share of Loss as at the year end

100 Equity Shares of Rs. 10 each fully paid up of Welspun Power and Steel Limited* - Less than Rs. 10,000

(Quoted)283,500 Equity Shares of Rs. 10 each fully paid up of Welspun Syntex Limited

Less : Provision for Permanent Diminution

4,033,000 (March 31, 2008 : 7,133,000) Equity Shares of Rs. 5 each fully paid up of WelspunGujarat Stahl Rohren Limited

Current (At Lower of Cost and Fair Value)Non Trade - (Unquoted, Unlisted)

Investment In Mutual Funds Units of Rs. 10 eachNil (March 31, 2008 : 600,357) DWS Installment Cash Plus Fund - Daily Dividend PlanNil (March 31, 2008 : 241,114) LICMF Liquid Fund - Dividend PlanNil (March 31, 2008 : 4,437,300) LICMF Floating Rate Fund - Short Term Plan - Dividend OptionNil (March 31, 2008 : 23,668) Principal Floating Rate Fund - Daily Dividend Reinvestment PlanNil (March 31, 2008 : 13,490) Reliance Liquid Fund - Treasury Plan Retail Option

Investment In BondsNil (March 31, 2008 : 217) Zero Coupon Redeemable Deep Discount (2008 Series-II) Punjab

Infrastructure Development Bonds


Aggregate of Unquoted Investments - At Book ValueAggregate of Quoted Investments - At Book ValueAggregate of Quoted Investments- At Market Value

0.01

244.63-

244.63148.7795.86

*

18.9413.345.60

56.65

6.182.65

45.050.240.14

54.26

61.39

273.77

0.12

273.89

211.6462.25

2,740.78

0.01

244.63380.39625.02353.08271.94

*

18.9413.345.60

32.03

------

-

309.58

4.58

314.16

276.5337.63

301.32

SCHEDULE 8 : INVENTORIES(Refer Note 1(C)(vi) on Schedule 19)

Raw MaterialsWork-in-ProcessFinished Goods and Traded Goods (Refer Note 23 on Schedule 19)Stores, Spares, Dyes and Chemicals


848.411,260.061,313.49

264.333,686.29

160.36

3,846.65

794.401,099.801,944.19

209.524,047.91

167.37

4,215.28

87

88


SCHEDULES ANNEXED TO AND FORMING PART OF THE CONSOLIDATED BALANCE SHEET AS AT MARCH 31, 2009As at

March 31, 2008Rs. million

As atMarch 31, 2009

Rs. millionSCHEDULE 9 : SUNDRY DEBTORS

UnsecuredDebts Outstanding for a period exceeding six months :- Considered Good- Considered DoubtfulOther Debts :- Considered Good- Considered Doubtful

Less : Provision for Doubtful Debts

Less : Provision for debtors not covered under Group Credit Insurance Arrangements


SCHEDULE 10 : CASH AND BANK BALANCES

Cash on HandCheques on HandBank Balances- with Scheduled Banks- In Current Accounts- In Fixed Deposit Accounts

against term loans, overdraft, letters of credit and bank guarantee facilities.]banks- with Others- In Current Accounts in Foreign Currency


[includes deposits aggregating Rs. 536.31 million (March 31, 2008 : Rs. 446.61 million) pledged with

- Joint Deposit Account (Escrow)Less : Held in Trust

35.3910.9346.32

1,178.2210.81

1,189.0321.74

1,213.619.56

1,204.05

180.02

1,384.07

4.267.33

262.31744.01

248.84228.97228.97

-

1,266.75

31.89

1,298.64

4.0216.3820.40

1,380.569.54

1,390.1025.92

1,384.58-

1,384.58

50.37

1,434.95

2.6615.38

269.69617.45

287.15242.16242.16

-

1,192.33

5.54

1,197.87

SCHEDULE 11 : LOANS, ADVANCES AND OTHER CURRENT ASSETS

LOANS AND ADVANCESUnsecured- Considered Good- Considered Doubtful

Less : Provision for Doubtful Advances

Balances with Customs, Excise, Sales Tax and other Government Authorities

Minimum Alternative Tax Credit EntitlementDeposits

OTHER CURRENT ASSETSTechnology Upgradation Fund Credit ReceivableInterest Receivable under Subvention SchemeInterest Accrued on Deposits


Advance Tax and Tax Deducted at Source (Net of Provision for Tax)

313.247.42

320.667.42

313.24828.2122.63

182.40353.53

1,700.01

621.117.79

21.07649.97

54.66

2,404.64

651.398.63

660.028.63

651.39700.5537.56

209.50315.90

1,914.90

525.3311.1655.12

591.61

51.34

2,557.85

SCHEDULE 12 : CURRENT LIABILITIES AND PROVISIONS

CURRENT LIABILITIESAcceptancesSundry CreditorsAdvance received from CustomersTemporary Overdraft with Scheduled BanksMark-to-Market Loss on Options/ Forward ContractsInterest Accrued but not Due


PROVISIONSFringe Benefit Tax (Net of Advance Tax)Gratuity (Refer Note 1(C)(viii)(b) on Schedule 19)Leave Encashment (Refer Note 1(C)(viii)(c) on Schedule 19)Provision for Closure Costs (Refer Note 20 on Schedule 19)


59.061,905.48

17.4288.93

-36.71

2,107.6041.38

2,148.98

1.45-

34.571.99

38.012.36

40.372,189.35

200.652,113.82

71.189.29

596.7779.94

3,071.6570.00

3,141.65

1.901.61

41.529.35

54.3819.9774.35

3,216.00

SCHEDULES FORMING PART OF THE CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2009

SCHEDULE 13 : SALESSalesExport Benefits


SCHEDULE 14 : OTHER INCOME

Rent (Tax Deducted at Source Rs. 1.90 million, Previous Year : Rs. 2.67 million)

DividendInsurance ClaimProfit on Redemption/ Sale of Units in Mutual FundsProfit on Sale of SharesProfit on Sale of BondsProfit on Sale of Fixed AssetsLiabilities Written Back as no Longer RequiredProvision for Doubtful Advances Written BackProvision for Doubtful Debts Written BackProfit on Cancellation of Forward ContractsExchange Loss (Net)Job Charges ReceivedExcise and Sales Tax BenefitsRoyalty IncomeMiscellaneous


SCHEDULE 15 : MATERIALS AND MANUFACTURING EXPENSES

Materials Consumed (Refer Note 23 on Schedule 19)Opening Stock of Raw Material, Work-in-Process, Finished Goods and Traded GoodsAdd : Adjustment on acquisition of Subsidiaries

Add : Purchases of Raw Material and Traded Goods

Less : Closing Stock of Raw Material, Work-in-Process, Finished Goods and Traded Goods

Manufacturing ExpensesStores and Spares ConsumedDyes and Chemicals ConsumedContract Labour ChargesJob Work ExpensesPower and FuelPacking ChargesRepairs and Maintenance:- Plant and Machinery- Factory Building


15,267.96660.91

15,928.87

566.32

16,495.19

11.18

25.8317.051.24-

4.9779.250.534.890.96

114.92(2.17)22.2336.559.76

44.15371.34

6.27

377.61

2,939.46118.28

3,057.747,233.59

10,291.333,421.966,869.37

241.731,065.57

237.34127.29

1,043.71631.86

35.674.08

3,387.25526.52

10,783.14

15,261.951,045.13

16,307.08

693.27

17,000.35

7.85

16.560.433.60

221.352.00-

1.43--

21.13(169.52)

25.9592.307.84

20.87251.79

2.55

254.34

3,421.96-

3,421.967,325.87

10,747.833,838.386,909.45

249.491,077.59

212.38114.37

1,493.90635.11

25.538.32

3,816.69613.80

11,339.94


Rs. million


Rs. million

89

90


SCHEDULE 16 : EMPLOYEES' REMUNERATION AND BENEFITS

Salaries, Wages, Allowances and Other Benefits (Refer Note 15 on Schedule 19)Contribution to Provident and Other FundsManagerial RemunerationStaff and Labour Welfare


SCHEDULE 17 : SELLING, ADMINISTRATION AND OTHER EXPENSES

Claims, Discounts and RebatesBrokerage and CommissionFreight, Forwarding and Coolie ChargesRepairs and Maintenance - OthersDirectors' Sitting FeesRentRates and TaxesPrinting and StationeryTravelling and ConveyanceLegal and Professional ChargesInsuranceCommunicationPostage and CourierLoss on Sale/ Discarding of Fixed Assets (Net)Provision for Doubtful DebtsProvision for Doubtful AdvancesDebts/ Advances Written offDesign Development and Testing ExpensesExcise Benefits Receivable Written OffRoyaltyAdvertising and Sales PromotionDonationsAuditors' Remuneration- As Auditors- In other capacity - As Tax Auditors- Certification and Other Matters- Out of Pocket ExpensesMiscellaneous


SCHEDULE 18 : FINANCE EXPENSES (NET)

Interest on Fixed Loans(net of interest subsidy of Rs. 534.47 million, Previous Year : Rs. 412.33 million)Interest on DebenturesInterest on Working Capital Loans(net of interest subvention of Rs. 26.93 million, Previous Year : Rs. 38.64 million)Interest to OthersDiscounting and Bank ChargesLease Rentals

Less :Interest on Fixed Deposits - Gross(Tax Deducted at Source Rs. 1.83 million, Previous Year : Rs. 4.59 million)Interest on Bonds - Gross(Tax Deducted at Source Rs. Nil, Previous Year : Rs. 0.44 million)Interest on Others - Gross(Tax Deducted at Source Rs. 0.01 million, Previous Year : Rs. 0.02 million)Cash Discount received



Rs. million

1,538.7574.8617.4352.22

1,683.26

15.32

1,698.58

401.05255.22568.6129.180.25

166.8720.2913.11

136.4883.1883.1126.5628.33

-20.285.28

15.6220.5943.23

116.02187.54

6.90

11.254.240.220.09

78.012,321.51

7.30

2,328.81

451.91

11.26282.91

3.8873.061.21

824.23

31.74

2.69

0.75

21.54767.51

14.43

781.94


Rs. million

1,791.60122.04

38.0762.24

2,013.95

20.31

2,034.26

235.20258.69374.17

58.440.25

287.0040.6111.71

169.71112.74

69.5045.6221.7215.1210.13

5.404.70

71.13-

119.53128.45

2.46

10.772.940.970.46

108.272,165.69

47.26

2,212.95

660.00

6.53415.32

40.2174.03

0.081,196.17

45.73

-

5.92

14.711,129.81

46.75

1,176.56

SCHEDULES FORMING PART OF THE CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2009

SCHEDULE 19 : NOTES TO ACCOUNTS

1) Significant Accounting Policies

A. Basis of Accounting

The consolidated financial statements are prepared under historical cost convention in accordance with generally accepted

accounting principles applicable in India and the Accounting Standards issued by the Institute of Chartered Accountants of

India.

B. Principles of Consolidation

(i) The consolidated financial statements relate to Welspun India Limited (the “Company”), its Subsidiary Companies,

Joint Venture Companies and Associate Company. The consolidated financial statements have been prepared on

the following basis:

(a) The financial statements of the Company and its Subsidiary Companies have been combined on a line-by-line

basis by adding together the book values of like items of assets, liabilities, income and expenses, after fully

eliminating intra-group balances, intra-group transactions and resulting unrealised profits or losses on intra-

group transactions.

(b) The difference between the cost of investment in the subsidiaries over the Company's portion of equity of the

subsidiary is recognised in the financial statements as Goodwill or Capital Reserve.

(c) Minority Interest in the net assets of consolidated subsidiaries consist of :

- the amount of equity attributable to minorities at the date on which investment in a subsidiary is made

and

- the minorities' share of movements in equity since the date the parent subsidiary relationship comes into

existence.

(d) In the consolidated financial statements, the Company has reported its interest in the Joint Venture

Companies, using proportionate consolidation method whereby the Company's share of each of the assets,

liabilities, income and expenses of the jointly controlled entities is reported as separate line items, after

eliminating proportionate unrealised profits or losses attributable to the interest of the Company.

(e) Investments in Associates have been accounted for under AS-23 using equity method whereby the

investment is initially recorded at cost, identifying any goodwill/ capital reserve arising at the time of

acquisition. The carrying amount of the investment is adjusted thereafter for the post acquisition change in

the investor's share of net assets of the investee.

On occasion, an associate company accounted for by the equity method may issue its shares to third parties as

either a public offering or private placement at per share amounts in excess of or less than Parent Company's

average per share carrying value. With respect to such transactions, the resulting gains/ losses arising from

the dilution of interest are recorded as Capital Reserve/ Goodwill.

The consolidated statement of profit and loss reflects the investor's share of the results of operations of the

investee.

(f) The consolidated financial statements have been prepared using uniform accounting policies for like

transactions and other events in similar circumstances and are prepared to the extent possible, in the same

manner as the Company's separate financial statements.

SCHEDULES ANNEXED TO AND FORMING PART OF THE CONSOLIDATED BALANCE SHEET AS AT MARCH 31, 2009 AND


91

(ii) The Subsidiary Companies, Joint Venture Companies and Associate Company considered in the consolidated

financial statements are:

C. Significant Accounting Policies

(i) Fixed Assets

Fixed Assets are stated at cost (net of cenvat credit, wherever applicable) less depreciation. The cost includes cost

of acquisition, construction, erection, installation etc., preoperative expenses (including trial run) and borrowing

costs incurred during pre-operational period.

Cost of software includes license fees and implementation/ integration expenses.

(ii) Incidental Expenditure Pending Capitalisation/ Allocation

Incidental expenditure pending capitalisation/ allocation represents expenses incurred during setting-up of

manufacturing facility including preoperative expenses for trial runs and borrowing cost incurred prior to the date

of commencement of commercial production. These expenses are net of sales during trial run and other income

accrued prior to the commencement of commercial production.

(iii) Borrowing Costs

Borrowing costs directly attributable to the acquisition/ construction of fixed assets are apportioned to the cost of

the fixed assets up to the date on which the asset is put to use/ commissioned.

92


Name of the Company Relationship Country of

Incorporation

% Voting power held

as at March 31, 2009

Welspun USA Inc. (WUSA) Subsidiary U.S.A. 100.00

Welspun Holdings Private Limited, Cyprus (WHPL) Subsidiary Cyprus 100.00

Welspun AG (WAG) (Held directly till March 15, 2009 and through

WHPL w.e.f. March 16, 2009)

Subsidiary Switzerland 100.00

Welspun Mexico S.A. de C.V (WMEX)

(Held through WAG)

Subsidiary Mexico 100.00

Welspun Home Textiles UK Limited (WHTUKL)

(Held through WHPL)

Subsidiary U.K. 100.00

CHT Holdings Limited (CHTHL)

(Held through WHTUKL)


Christy Home Textiles Limited (CHTL)

(Held through CHTHL)


Christy UK Limited (CUKL)

(Held through CHTL)


Christy 2004 Limited

(Held through CUKL)


Flyspark Limited

(Held through CHTL)


Christy Europe GmbH

(Held through CHTL)

Subsidiary Germany 100.00

ER Kingsley (Textiles) Limited

(Held through CHTL)


SOREMA – Tapetes E Cortinas De Banho, S.A. (SOREMA) (Held

through WHPL)

Subsidiary Portugal 76.00

SOREMA Welspun Distribution & Logistics, S. A., Portugal (Held

through SOREMA w.e.f. September 3, 2008)

Subsidiary Portugal 76.00

SOREMA Welspun Espana S. L. U., Spain (Held through SOREMA

w.e.f. July 24, 2008)

Subsidiary Spain 76.00

SOREMA Welspun Benelux B. V., Holland (Held through SOREMA

w.e.f. February 6, 2009)

Subsidiary Holland 76.00

Besa Developers and Infrastructure Private Limited (BESA) Subsidiary India 100.00

Welspun Global Brands Limited (WGBL) (w.e.f. September 17,

2008)

Subsidiary India 100.00

Welspun Investments Limited (WINL) (w.e.f. October 7, 2008 ) Subsidiary India 100.00

Welspun Zucchi Textiles Limited (WZTL) Joint Venture India 50.00

MEP Cotton Limited (MCL) Joint Venture India 26.94

Welspun Retail Limited Associate India 41.65



(iv) Depreciation and Amortisation

(a) Depreciation on Fixed Assets is provided on the straight-line method so as to write off the cost of fixed assets

over estimated useful lives of the assets. Depreciation on additions/ deletions to fixed assets is calculated

pro-rata from/ up to the date of such additions/ deletions except in case of a subsidiary company, where the

depreciation is calculated at 50% of the rate arrived based on the useful lives of such assets in the year of

additions/ deletions.

(b) Computer software is amortised on the straight-line method over a period of three to five years.

(c) Leasehold Land is amortised over the period of lease in case of a jointly controlled entities.

(d) Amortisation of leasehold improvements is computed on the straight line method over the term of the

related lease including extensions which are reasonably expected to occur, which is not in excess of the

estimated useful lives of such improvements.

(e) Goodwill arising on consolidation of a certain subsidiary sub-group is amortised on a straight line basis over its

estimated useful economic life of 20 years. Further, goodwill on consolidation is tested for impairment on an

annual basis.

(f) Development Expenditure is amortised on a straight line basis over a period of 3 years.

(v) Investments

(a) Long term investments are stated at cost less provision, if any, for permanent diminution in value. Current

investments are carried at the lower of cost and fair value.

(b) Investment in Associate is accounted for using the equity method (Refer note 1(B)(i)(e) above).

(vi) Inventories

(a) Inventories are valued at lower of cost and net realisable value.

(b) Cost of raw materials and stores and spares is determined on weighted average basis except in case of jointly

controlled entities, where the same is determined on first-in-first-out basis. Cost of traded goods is

determined on weighted average basis. Cost of work-in-process and finished goods comprises of raw

material, direct labour, other direct costs and related overheads but exclude interest expense. Net realisable

value is the estimate of the selling price in the ordinary course of the business, less the estimated costs of

completion and estimated selling expenses.

(vii) Accounting for Taxes on Income/ Minimum Alternate Tax Credit

Income tax expense comprises current tax and deferred tax charge or credit.

(a) Current Taxation

Current tax is determined as the amount of tax payable in respect of taxable income for the year.

(b) Deferred Taxation

Deferred tax resulting from timing differences between book and tax profits is accounted for under the

liability method, at the current/ substantially enacted rate of tax to the extent that the timing differences

are expected to crystallise.

Deferred tax assets arising in situations where there are brought forward losses and unabsorbed

depreciation, are recognised only when there is a virtual certainty supported by convincing evidence that

such assets will be realised.

(c) Minimum Alternate Tax Credit

Minimum Alternate Tax (MAT) paid in accordance with tax laws, which give rise to future economic benefits in

the form of adjustment of future tax liability, is recognized as an asset only when, based on convincing

evidence, it is probable that the future economic benefits associated with it will flow to the Company and the

assets can be measured reliably.

�

�



93

(viii)Employee Benefits

(a) Defined Contribution Plans

Contributions made on a defined contribution basis towards post employment benefits to Employee's

Provident Fund, Employee's State Insurance Fund, Employee's Pension Scheme and various other social

security funds generally administered by the respective Government authorities in respect of which there is

no further obligation beyond making the contribution are expensed in the year to which it pertains.

(b) Defined Benefit Plans

The liability for the defined benefit plan of Gratuity of the Company, jointly controlled entities and associate is

determined on the basis of an actuarial valuation by an independent actuary at the year end, which is

calculated using projected unit credit method as per Accounting Standard 15 (revised 2005) Employee

Benefits ('AS 15').

(c) Employee Leave Entitlement

The employees of the Company, jointly controlled entities and associate are entitled to leave as per the

applicable leave policies of their employers. The liability in respect of unutilised leave balances is provided

based on an actuarial valuation carried out by an independent actuary as at the year end and charged to the

Profit and Loss Account as per Accounting Standard 15 (revised 2005) Employee Benefits ('AS 15').

(ix) Foreign Currency Transactions, Derivative Instruments and Hedge Accounting

(a) In respect of the Company, it's subsidiaries incorporated in India, it's integral foreign operations, jointly

controlled entities and associate, foreign currency transactions are recorded at the exchange rates prevailing

on the date of such transactions. Monetary assets and liabilities as at the Balance Sheet date are translated at

the rates of exchange prevailing at the date of the Balance Sheet. Gains and losses arising on account of

differences in foreign exchange rates on settlement/ translation of monetary assets and liabilities are

recognised in the Profit and Loss Account. Non-monetary foreign currency items are carried at cost.

(b) In respect of forward contracts, other than forward contracts in respect of firm commitments and highly

probable forecast transactions, the premium or discount arising at the inception of forward exchange

contract, is amortised as expense or income over the life of the contract. Exchange differences on such

contracts are recognised in the Profit and Loss Account in the reporting period in which the exchange rates

change. Any profit or loss arising on cancellation or renewal of such a forward exchange contract is

recognised as income or as expense for the period.

(c) In respect of forward contracts and currency options taken to hedge the risks associated with foreign currency

fluctuations relating to firm commitments and highly probable forecast transactions, with effect from April 1,

2008, the Company has early adopted the principles of AS 30 'Financial Instruments: Recognition and

Measurement”. Accordingly, foreign currency fluctuations relating to firm commitments and highly probable

forecast transactions are fair valued at each reporting date.

Changes in the fair value of these hedging instruments that are designated and considered as effective hedges

of highly probable forecasted transactions are recognised directly in shareholders' funds under 'Hedging

Reserve Account' to be recognised in the Profit and Loss Account when the underlying transaction occurs.

Changes in the fair value of the hedging instruments that do not qualify for hedge accounting are recognised

in the Profit and Loss Account as they arise.

(d) In respect of non-integral operations, assets and liabilities are translated using the exchange rates in effect at

the balance sheet date, for revenue, costs and expenses using the average exchange rates prevailing during

the reporting periods and for share capital, using the exchange rate at the date of transaction. The resultant

translation exchange gain/ loss has been disclosed as Foreign Currency Translation Reserve under Reserves

and Surplus.

(x) Revenue Recognition

i. Sales revenue is recognised on transfer of significant risks and rewards of ownership of the goods to the buyer.

94




Domestic sales are recognised on dispatch to customers. Export sales are recognised on the date of cargo receipts,

bill of lading or other relevant documents, in accordance with the terms and conditions for sales. Realised

exchange differences on export debtors are included in sales.

ii. Export benefits arising from Duty Entitlement Pass Book (DEPB) and Duty Drawback scheme are recognised on

shipment.

iii. Dividends are accounted for when the right to receive dividend is established.

(xi) Government Grants

Government grants are accounted for when it is reasonably certain that ultimate collection will be made. Capital

grants relating to specific assets are reduced from the gross value of the Fixed Assets. Revenue grants, in the

nature of interest subsidy under the Technology Upgradation Fund Scheme (TUFS) are adjusted against 'Interest

on Fixed Loans'. Revenue grants in the nature of interest subvention on 'Rupee Export Credit Loans' are adjusted

against 'Interest on Working Capital Loans'.

(xii) Impairment of Assets

At each balance sheet date an assessment is made as to whether there is any indication that an asset may be

impaired. If any such indication exists, the recoverable amount of the asset is estimated. If such recoverable

amount of the asset or recoverable amount of the cash generating unit to which the asset belongs is less than its

carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an

impairment loss and is recognised in the Profit and Loss Account. If at the Balance Sheet date there is an indication

that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset

is reflected at the recoverable amount.

(xiii)Provisions and Contingent Liabilities

A provision is recognised when there is a present obligation as a result of a past event that probably requires an

outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a

contingent liability is made when there is a possible obligation or a present obligation that may, but probably will

not, require an outflow of resources. Where there is a possible obligation or a present obligation but the

likelihood of outflow of resources is remote, no provision or disclosure as specified in Accounting Standard 29 “

Provisions, Contingent Liabilities and Contingent Assets”, issued by the Institute of Chartered Accountants of India

is made.

(xiv)Employees Stock Option Schemes

Stock options granted to employees under Employee Stock Option Schemes are accounted as per the accounting

treatment prescribed in the Guidance Note on Accounting for Employee Share-based Payments issued by the

Institute of Chartered Accountants of India.

(xv) Accounting Estimates

The preparation of financial statements requires estimates and assumptions to be made that affect the reported

amounts of assets and liabilities on the date of financial statements and the reported amounts of revenue and

expenses during the reporting period. Difference between the actual results and the estimates are recognised in

the period in which the results are known/ materialised.



95

2) Contingent Liabilities not provided for:

96


Description

As at

March 31, 2009

Rs. million

As at

March 31, 2008

Rs. million

Excise, Customs and Service Tax

Alleged excess clearance of cotton yarn in Domestic Tariff Area over and above the

limit specified in para 9.9 (b) of the Exim Policy 1997-2002. The Company has

deposited Rs. 0.70 million under protest and filed an appeal with the Customs,

Excise and Service Tax Appellate Tribunal (CESTAT), Ahmedabad against the order

passed by Commissioner (Appeals) of Central Excise and Customs.

19.45 18.50

Alleged manufacture and clearance of texturised yarn without payment of excise

duty and without entering into statutory records. Further, there was an alleged

shortage of Polyester Texturised yarn in physical stock as compared to the stock as

per statutory records. The case has been settled in the Company’s favour during

the current year.

- 12.76

Alleged improper re-credit of duty paid through PLA under Notification no. 39/2001

–CE dated July 31, 2001 in respect of goods sold from the factory during the period

from February 2006 to September 2007. The Assistant Commissioner of Central

Excise has passed the order against the Company. The Company has preferred an

appeal with the Commissioner of Central Excise (Appeals) – Rajkot.

318.58 -

Alleged improper grant of refund for duty paid through PLA by Assistant

Commissioner under Rule 18 of Central Excise Rules during the period from

September 2005 to July 2006. The Commissioner (Appeals) of Customs and Central

Excise has passed the order against the Company. The Company has filed Revision

Application with the Joint Secretary, Ministry of Finance, Department of Revenue.

69.28 -

Alleged improper cenvat credit availed and non payment of excise duty under

Notification No.214/86 – CE dated 25-03-1986, on furnace oil used for

manufacturing of goods on job work during the period April 2002 to March 2008.

The Company has filed its reply against the show cause notices issued by Joint

Commissioner and Commissioner of Customs and Central Excise, Daman. During

the year, based on the review and com ments made by the Committee of Chief

Commissioners, the Commissioner has made an application to CESTAT to withdraw

his order passed in April 2008 in respect of non payment of excise duty.

3.33 72.60

Alleged non-payment of cess on cotton consumed during the period April 2002 to

February 2007 under 'The Produce Cess Act, 1966'. The Company has filed appeals

with Commissioner of Custom and Central Excise, Daman against the orders passed

by the Assistant Commissioner of Custom and Central Excise, Vapi. The case has

been settled in the Company’s favour during the current year.

- 1.56

Alleged improper abatement of service tax on payments made to Goods Transport

Agency under Notification No. 32/04-ST dated 3-12-2004. The Company has filed its

reply against the show cause notice issued by the Commissioner of Central Excise

and Customs, Daman.

45.51 29.27

Alleged service tax credit based on improper documents. The Company has

received an order from Commissioner, Central Excise & Customs, Daman

demanding the amount of duty, interest and penalty. The Company filed an appeal

against the order with Commissioner of Central Excise & Customs (Appeals),

Daman.

0.15 0.15

Alleged procurement of furnace oil without payment of duty by wrongly availing

the exemptions contained in the Notification No. 1/95-CE 04-01-1995. The excise

department had preferred an appeal with the Supreme Court against CESTAT,

Ahmedabad order passed in favour of the Company. The Supreme Court has

upheld the matter in the Company’s favour in January 2009.

- 14.81

Alleged procurement of furnace oil without payment of duty by wrongly availing

the exemptions contained in the Notification No. 53/97-CUS 03-06-1997. The

excise department had preferred a civil appeal with the Supreme Court against

CESTAT, Ahmedabad’s order passed in favour of the Company. The Supreme Court

has upheld the matter in the Company’s favour in January 2009.

- 11.47



Description

As at

March 31, 2009

Rs. million

As at

March 31, 2008

Rs. million

Alleged improper cenvat credit availed on “racks” classified as capital goods, which

are used for storage of finished goods.

The Company received an order from Additional Commissioner, Central Excise &

Customs, Daman dated 11.02.2009 demanding the amount of duty, interest and

penalty. The Company has paid Rs. 0.07 million under protest and filed an appeal

against the order with Commissioner of Central Excise & Customs (Appeals), Daman

on 27.03.2009.

1.82 -

Alleged improper availment of cenvat credit on service tax paid on insurance

peimia paid for availing insurance services that are not used in or in relation to

manufacture of final products.

The Company has received a show-cause notice from Assistant Commissioner of

Central Excise and Customs, Vapi against which it has filed a reply.

0.03 -

Stamp Duty :

Disputed stamp duty liability on De-merger Scheme. The Company has paid Rs.

1.74 million under protest.

4.46 4.46

Company’s share of stamp duty demand raised by Gujarat Government from WZTL

(a jointly controlled entity) for which WZTL has filed an Appeal with the High Court

of Gujarat.

0.18 -

Sales Tax :

The Deputy Commissioner of Sales Tax has issued an assessment order for the

financial year 2003-04 and raised the demand on purchase of Furnace oil during

the year 2003-04 in respect of purchases made by the Company at a concessional

rate of tax. The Company has deposited Rs. 0.09 million under protest and has filed

an appeal with the Joint Commissioner of Sales Tax, Vadodra.

1.07 0.97

The Deputy Commissioner of Sales Tax has issued an assessment order for the

financial year 2004-05 and raised the demand on purchase of Furnace oil during

the year 2004-05 in respect of purchases made by the Company at a concessional

rate of tax. The Company has filed an appeal with the Joint Commissioner of Sales

Tax, Vadodra.

6.75 -

FEMA :

The Appellate Tribunal for Foreign Exchange, New Delhi has issued an order for

contravention of the provision of Section 18(2) of the Foreign Exchange Regulation

Act, 1973 read with Section 49(3) and (4) of Foreign Exchange Management Act,

1999 in respect of non-realisation of export proceeds. The Company has filed an

appeal with the Delhi High Court.

0.90 0.90

Description

As at

March 31, 2009

Rs. million

As at

March 31, 2008

Rs. million

INCOME TAX

Company’s share of income tax demand raised by Income tax Authorities on

WZTL (a jointly controlled entity) for which an appeal has been filed by WZTL

before the first appellate authority.

7.23 -

Others:

Accumulated dividend on cumulative redeemable preference shares . 17.41 17.41

Claims against the Company not acknowledged as debts. 2.72 2.17

Bills discounted in respect of export debtors [including the Company’s share of

Rs. Nil (March 31, 2008 : 74.01 million) in jointly controlled entities].

1,021.30 1,856.12



97

4) -

5) -

6)

7)

8) -

9)

On December 20, 2007, the Company acquired 76% of the equity shareholding in SOREMA Tapetes E Cortinas DE Banho,

S.A., Portugal (“SOREMA”) through Welspun Holdings Private Limited (WHPL), its wholly owned subsidiary, for

consideration of Euro 6,329,431.21 as specified in the Share Purchase Agreement. Further, the Company, through WHPL,

has entered into a Put and Call Option Agreement to buy remaining 24% equity shareholding in SOREMA, 8% each; on or

after January 1, 2011, January 1, 2012 and January 1, 2013 respectively, at a consideration to be determined based on the

respective average EBITDA of SOREMA for last two financial years prior to these dates.

On July 3, 2006, the Company had acquired 85% of the equity shareholding in CHT Holdings Limited holding company of

Christy Group (“Christy”) through conduits of wholly owned subsidiaries (“WOS”) and through these WOS had also entered

into a put and call option agreement to buy the remaining 15% equity shareholding in Christy. On April 2, 2008, the

Company, through the conduits, acquired the remaining 15% of the equity shareholding in CHT Holdings Limited at a

consideration of GBP 2.356 million.

During the year, certain loans aggregating Rs. 726.95 million (equivalent to CHF 16.88 million) given to Welspun AG (WAG), a

wholly owned subsidiary, were converted into investments in the equity share capital of WAG. Subsequently, on March 16,

2009, the Company transferred the entire investment in equity shares of WAG aggregating CHF 17 million to Welspun

Holdings Private Limited, a wholly owned subsidiary of the Company.

An Associate of the Parent Company, Welspun Retail Limited (“WRL”) made a private placement of its equity on November

3, 2008. Subsequent to the private placement, the Parent Company's shareholding in WRL has diluted from 49% to 41.65%.

The private placement was made at a price which was in excess of the Company's average per share carrying value as on the

date of private placement. The resultant gain of Rs. 380.39 million has been recorded as Capital Reserve.

During the year, SOREMA Tapetes E Cortinas De Banho, S.A. (SOREMA), a Subsidiary of the Parent Company, formed the

following fully owned subsidiaries as follows ;-

(a) SOREMA Welspun Distribution & Logistics

(b) SOREMA Welspun Espana

(c) SOREMA Welspun Benelux

to expand its activity in Spain, Holland, Belgium, Luxembourg and other European Union countries.

The Consolidated Financial Statements include net liability aggregating Rs. 0.62 million and net loss aggregating Rs. 6.39

million pertaining to the above fully owned subsidiaries of SOREMA.

(a) (i) Pursuant to 'the Composite Scheme of Arrangement in the nature of demerger and transfer of Marketing Division

of Welspun India Limited to Welspun Global Brands Limited and Investment & Treasury Division to Welspun

Investments Limited and Restructure of Capital of these companies' (the “Scheme”) as approved by the Board of

Directors of the Company on September 15, 2008 and the shareholders in the Court convened meeting held on

98


Description

As at

March 31,2009

Rs. million

As at

March 31, 2008

Rs. million

(a) Guarantees given by banks on behalf of the Company and its subsidiaries

[including the Company’s share of Rs. 0.24 million (March 31, 2008 : Rs. 0.24

million) in Jointly Controlled entities and Rs. 9.28 million (March 31, 2008 :

Rs. 0.33 million) in associates]

296.43 285.81

(b) In accordance with the EPCG Scheme, imports of capital goods are allowed to

be made duty free and under Advance License Scheme, imports of raw

material are allowed to be made duty free, subject to the condition that the

Company will fulfill, in future, a specified amount of export obligation within

a specified time. Based on the current operating plan, the Company would

fulfill its export obligation within the specified time period. Amount of duty

saved on imports of above goods against which export obligation is yet to be

fulfilled [including companies share of Rs. 15.54 million (March 31, 2008: Rs.

28.84 million) in jointly controlled entities].

70.95 302.97

(c) Estimated amount of contracts (net of advances) remaining to be executed

on capital account and not provided for [including the Company’s share of

Rs. 0.67 million (March 31, 2008 : Rs. 33.78 million) in jointly controlled

entities].

36.89 876.61

3)



9)

January 13, 2009 and filed with the Registrar of Companies on June 12, 2009, the Marketing Division of the Company

and the Investment & Treasury Division of the Company were transferred to Welspun Global Brands Limited (WGBL)

and Welspun Investments Limited (WINL), respectively, with effect from April 1, 2009 (the “Appointed date”).

(ii) As per the Scheme, assets and liabilities of the Marketing Division of the Company will be transferred to WGBL

with effect from the Appointed date. Upon the transfer, WGBL will issue 1 equity share of Rs. 10 each credited as fully

paid up to the shareholders of Welspun India Limited for every 10 equity shares held by them in Welspun India Limited.

On September 17, 2008, the Company acquired 500,000 equity shares of Rs. 10 each representing the entire share

capital of WGBL at a premium of Rs. 10 per share. WGBL was acquired for the purpose of transfer of “Marketing

Division” of the Company to a wholly owned subsidiary pursuant to the Scheme.

(Iii) Further, as per the Scheme, the assets and liabilities of the Investment & Treasury Division of the Company will be

transferred to WINL with effect from the Appointed date. Upon the transfer, WINL will issue 1 equity share of Rs. 10

each credited as fully paid up to the shareholders of Welspun India Limited for every 20 equity shares held by them in

Welspun India Limited. On October 7, 2008, the Company formed WINL by investing Rs. 500,000 in the equity share

capital of WINL. WINL was formed for the purpose of transfer of “Investment & Treasury Division” of the Company to a

wholly owned subsidiary pursuant to the Scheme.

(b) Information relating to a discontinuing operation:

(i) Date of the initial disclosure event : September 15, 2008

(ii) Period in which the discontinuance is expected to be completed : Financial year 2009-2010

(iii) Carrying amounts, as at March 31, 2009 and as at March 31, 2008, of the total assets to be disposed of and the total

liabilities to be settled:

(iv) Amount of revenue, expenses, pre - tax profit and tax in respect of the ordinary activities attributable to the

discontinuing operations:


Division

TotalParticulars

As at March 31,

2009

As at March

31, 2008

As at

March 31,

2009

As at

March 31,

2008

As at

March 31,

2009

As at March

31, 2008

Total Assets to be disposed of 2,620.84 3,037.01 233.34 56.55 2,854.18 3,093.56

Total Liabilities to be settled 3,783.99 2,636.18 - - 3,783.99 2,636.18

(Rs. Million)


Division

TotalParticulars

Revenue 6,895.84 5,360.84 232.05 7.13 7,127.89 5,367.97

Operating Expenses 7,672.79 5,173.81 - - 7,672.79 5,173.81

Pre-Tax Profits / (Loss) before

share of Loss of Associate and

Minority Interest

(776.95) 187.03 232.05 7.13 (544.90) 194.16

Fringe Benefit Tax 2.75 2.77 - - 2.75 2.77

(Rs. Million)



For theyear endedMarch 31,

2009


2008


2009


2008


2009


2008

99

(v) Amounts of Net cash flows attributable to discontinuing Operations.

On May 17, 2006, the Company has issued Employee Stock Options under the Employee Stock Options Scheme (the

“Scheme”) to employees of the Company and its subsidiaries with a right to subscribe to equity shares at a price of Rs.

110.80 per equity share (closing market price as on May 16, 2006). The salient features of the Scheme are as under:

(i) Vesting: Options to vest over a period of four years from the date of their grants as under :

- 20% of the Options granted to vest at each of the 1st and 2nd Anniversaries of the date of grant.

- 30% of the Options granted to vest at each of the 3rd and 4th Anniversaries of the date of grant.

(ii) Exercise: Options vested with an employee will be exercisable within 3 years from the date of their vesting by

subscribing to the number of equity shares in the ratio of one equity share for every option, at the latest available

closing market price of the equity shares, prior to the date of grant. In the event of cessation of employment due to

death, resignation or otherwise the Options may lapse or be exercisable in the manner specifically provided for in the

Scheme.

Information in respect of options outstanding as at March 31, 2009

The compensation costs of stock options granted to employees are accounted by the Company using the intrinsic value

method. Since, on the date of grant of option, quoted market price of the underlying equity shares of the Company was

equal to the exercise price of an option, hence, no expense or liability arising from the Scheme has been recognised.

The fair value of the options as per the 'Black Scholes' model is Rs. 63.39. Had the Company adopted fair value method in

respect of options granted, the employee compensation cost would have been higher by Rs. 14.36 million, Profit after Tax

lower by Rs. 14.36 million and the basic and diluted earning per share would have been lower by Re. 0.20.

(a) Term loans from banks and financial institutions including interest thereon are secured by way of first charge on entire

movable and immovable properties of the Company, both present and future, ranking pari passu, subject to prior

charge on specific assets as per 11(b) below and on current assets as per 11(c) and (d) below against borrowing from

banks for working capital finance. Certain term loans of a subsidiary are also collaterally secured by shares owned by

group companies. Further, certain term loans of a subsidiary are secured by way of charge on it's plant and equipments.

10)

11)

Marketing Division Investment and Treasury DivisionParticulars

For the year ended

March 31, 2009

For the year ended

March 31, 2008

For the year ended

March 31, 2009

For the year ended

March 31, 2008

Cash flows from Operating

activities

64.90 (22.09) - -

Cash flows from Investing

activities

(537.18) (976.03) 256.67 7.13

Cash flows from Financing

activities

(8.64) 971.13 - -

100


(Rs. Million)

Summary of Stock Options No. of Stock Options Weighted Average Exercise Price (Rs.)

Options outstanding on April 1, 2008 1,494,000 110.80

Options granted during the year -

Options forfeited/lapsed during the year 204,000 110.80

Options exercised during the year -

Options outstanding on March 31, 2009 1,290,000 110.80

Options vested but not exercised on March 31, 2009 516,000 110.80

No. of Stock Options Weighted Average remaining life in

years

Weighted Average Exercise Price (Rs.)

258,000 1.13 110.80

258,000 2.13 110.80

387,000 3.13 110.80

387,000 4.13 110.80



(b) In addition to 11(a) above, term loans from Banks aggregating Rs. Nil (March 31, 2008 : Rs. 47.20 million) and Rs.

4,215.75 million (March 31, 2008 : Rs. 4,509.10 million) and interest thereon, are secured by exclusive charge pari

passu, inter se, on specific fixed assets of the Company and by lien on fixed deposits of the Company, respectively.

(c) The working capital loan towards overdraft facility aggregating Rs. 266.50 million (March 31, 2008 : Rs. Nil) is secured

by subservient charge on Company's entire current asset and Technology Upgradation Fund subsidy receivable from

Government of India for textile industries towards term loan borrowing by the company and against collateral of post

dated cheques.

(d) The working capital loans (other than referred in 11(c) above), (which includes cash credit, packing credit, and demand

loans from banks) are secured by hypothecation of raw materials, finished and semi finished goods, stores and spares

and book debts of the Company and second charge on entire fixed assets of the Company. The working capital loans of

the subsidiaries are secured by hypothecation of inventory, book debts and fixed assets of the respective subsidiaries.

500,000 0% Redeemable Preference Shares of Rs. 100 each fully paid up are redeemable at par in the year 2009-2010

or after repayment of all outstanding term liabilities and preference shares held by banks and financial institutions as

on April 1, 2000 and interest and dividend thereon; whichever is later.

In accordance with the Company's policy given in Note 1(C)(ix) above, net exchange loss of Rs. 1,092.20 million (Previous

Year: net exchange gain of Rs. 383.42 million) which includes the Company's share of net exchange loss of Rs. 3.97 (Previous

Year: net exchange gain of Rs. 5.82 million) in jointly controlled entities, has been accounted in Profit and Loss Account.

Borrowing Costs aggregating Rs. 101.79 million; Previous Year: Rs. 152.35 million (net of interest subsidy of Rs. 90.66

million; Previous Year: Rs. 156.16 million) attributable to the acquisition or construction of qualifying assets are capitalised

during the year as part of the cost of such assets which includes the Company's share of Rs. 1.80 million (Previous Year: Rs.

5.82 million) in jointly controlled entities.

12)

13)

14)

15) The Company has classified the various benefits provided to employees as under :-

I Defined Contribution Plans

a. Employers' Contribution to Provident Fund

b. Employers' Contribution to Employee’s State Insurance

c. Employers' Contribution to Employee’s Pension Scheme, 1995

d. Employers' Contribution to 401(k) Retirement Plan

e. Other Social Security Funds

During the year, the Company has recognised the following amounts in the Profit and Loss Account:

- Employers' Contribution to Provident Fund*

- Employers' Contribution to Employee’s State Insurance*

- Employers' Contribution to Employee’s Pension Scheme*

- Other Social Security Funds

The Company's share of expenses recognised in the Profit and Loss Account in jointly controlled entities.

* Included in Contribution to Provident and Other Funds (Refer Schedule 16)

II Defined Benefit Plan

Contribution to Gratuity Fund

a. Major Assumptions

Discount Rate - Staff

Discount Rate - Worker

Expected Rate of Return on Plan Assets

Salary Escalation Rate@ The estimates for future salary increases considered takes into account the inflation, seniority,

promotion and other relevant factors.

Rs. million

2008-09 2007-08

32.03 25.56

6.69 7.32

36.03 29.45

47.29 12.54

1.28 0.95

(% p.a.)

2008-09 2007-08

7.50 8.50

7.25 8.50

8.00 8.00

5.00 6.00@



101

16) Segment Information for the year ended March 31, 2009

(i) Information about Primary Business Segment

The companies forming part of consolidated financial statements are exclusively engaged in the business of Home

Textiles. This, in the context of Accounting Standard 17 on Segment Reporting, issued by the Institute of Chartered

Accountants of India, is considered to constitute a single primary segment. Thus, the segment revenue, segment

results, total carrying amount of segment assets, total carrying amount of segment liabilities, total cost incurred to

acquire segment assets, total amount of charge for depreciation during the year are all as reflected in the financial

statements for the year ended March 31, 2009 and as on that date.

b. Change in the Present Value of Obligation

Opening Present Value of Obligation

Current Service Cost

Interest Cost

Past Service Cost

Benefit paid

Actuarial Losses on Obligations

Closing Present Value of Obligation

c. Change in Fair Value of Plan Assets

Opening Fair Value of Plan Assets

Expected Return on Plan Assets

Actuarial (loss)/ gain on Plan Assets

Contributions

Benefits paid

Closing Fair Value of Plan Assets

Rs. million

2008-09 2007-08

47.23 36.83

11.72 11.19

4.02 3.13

(12.01) (6.10)

1.20 2.18

52.16 47.23

Rs. million

2008-09 2007-08

53.24 34.02

4.26 2.72

(7.53) 5.10

9.48 17.50

(8.90) (6.10)

50.55 53.24

d. Reconciliation of Present Value of Defined Benefit Obligation and the Fair Value of Assets

Present Value of Funded Obligation

Fair Value of Plan Assets

Funded Status

Present Value of Unfunded ObligationAssets recognised in the balance Sheet and included under Loans, Advances and OtherCurrent AssetsUnfunded Net Liability Recognised in the Balance Sheet disclosed under Current Liabilities

and Provisions (Refer Schedule 12)

e. Amount recognised in the Balance Sheet

Present Value of Obligation

Fair Value of Plan AssetsLiability/ (Assets) recognised in the Balance Sheet

f. Expenses Recognised in the Profit and Loss Account

Current Service Cost

Interest Cost

Expected Return on Plan Assets

Net Actuarial Loss/ (gain) Recognised in the period

Total expenses Recognised in the Profit and Loss Account**

Actual (Loss)/ Return on Plan Assets

** Included in Salary, Wages, Allowances and Other Benefits (Refer Schedule 16)

The Company's share of expenses recognised in the Profit and Loss Account in jointly control entities.

The Company's share of (Assets)/ Liability recognised in the balance Sheet in jointly control entities.

Rs. millionAs at March 31,

2009As at March 31,

2008

52.16 47.23

50.55 53.24

(1.61) 6.01

1.61 -

- 6.011.61 -

52.16 47.23

50.55 53.241.61 (6.01)

Rs. million

2008-09 2007-08

11.72 11.19

4.02 3.13

(4.26) (2.72)

8.73 (2.92)

20.21 8.68**

(3.27) 7.82

0.51 0.34

0.27 0.66

102




(ii) Information about Secondary Geographical Segments:

A subsidiary of the Company has four separate trademark licensing agreements, under which it could utilize

certain names on towels.

The future minimum annual royalties, image fund fees and merchandise coordinator fees obligations as at March 31, 2009

were as follows:

Related Party Disclosures

(i) Relationship

(iii) Notes:

(a) The Segment revenue in the geographical segments considered for disclosure are as follows:

- Revenue within India includes sales to customers located within India and earnings in India.

- Revenue outside India includes sales to customers located outside India, earnings outside India and export benefits on

sales made to customers located outside India.

(b) Segment revenue, results, assets and liabilities include the respective amounts identified to each of the segments and

amounts allocated on a reasonable basis.

17)

18)

India Outside India Total

March

31, 2009

March

31, 2008

March

31, 2009

March

31, 2008

March

31, 2009

March

31, 2008

External Revenue 1,163.36 1,075.35 15,827.84 15,388.58 16,991.20 16,463.93

Carrying Amount of Segment Assets 21,408.07 22,141.93 6,031.51 3,959.88 27,439.58 26,101.81

Capital Expenditure

(excluding the Incidental Expenditure

Pending Capitalisation/ Allocation) 1,754.06 3,310.86 441.24 465.63 2,195.30 3,776.49

(Rs. Million)

Year ended March 31 Royalty Image Fund and Merchandise Coordinator Fees Total

2010 114.94 31.36 146.30

2011 66.17 42.57 108.74

2012 41.12 38.48 79.60

222.23 112.41 334.64

Control

(a) Joint Venture Companies Welspun Zucchi Textiles Limited (WZTL)

(Extent of holding – 50%)

MEP Cotton Limited (MC L)

(Extent of holding – 26.94%)

(b) Associate Company Welspun Retail Limited (WRL)

(Extent of holding – 41.65%)

Welspun Gujarat Stahl Rohren Limited (WGSRL)

Welspun Power and Steel Limited (WPSL)

Welspun Syntex Limited (WSL)

Welspun Trading Limited (WTL)

Welspun Wintex Limited (WWL)

Welspun Mercantile Limited (WML)

Krishiraj Trading Limited (KTL)

Welspun Logistics Limited (WLL)

Welspun Realty Private Limited (WRPL)

Mertz Securities Limited (MSL)

Welspun Polybuttons Limited (WPBL)

Refined Salts Private Limited (RSPL)

Vipuna Trading Limited (VTL)

Goodvalue Polyplast Limited (GVPL)

(c) 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

Welspun Foundation for Health and Knowledge (WFHK)

B. K. Goenka (BKG)

R. R. Mandawewala (RRM)

(d) Key Management

Personnel

M. L. Mittal (MLM)

(e) Relatives of Key Management

Personnel

Deepali Goenka (DBG)



103

(Rs. million)

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19) Leases

A. Where the Company is a lessor :

Operating Lease

Certain buildings and plant and machinery have been given on operating lease, details of which are as under:

* Includes depreciation of Rs. 3.40 million on plant and machinery which was given on lease upto July 2007.

B. Where the Company is a lessee :

(i) Finance Lease

Future obligation towards lease rentals under the lease agreements as on March 31, 2009 is Rs. 41.87 million

(March 31, 2008 : Rs. 25.71 million)

Previous Year figures are given in brackets.

MLP : Minimum Lease Payments

PV : Present Value

(i) Operating Lease

The Company, some of its subsidiaries and one of it's jointly controlled entities have taken various residential,

office premises, godowns and vehicles under operating lease agreements that are renewable on a periodic basis at

the option of both the lessor and the lessee. The initial tenure of lease is generally for eleven months to sixty

months.

The minimum rental payments under the operating leases under non-cancellable lease term as at March 31, 2009

are as under:

Previous Year figures are given in brackets

* Including the Company's share of Rs. 0.04 million (March 31, 2008 : Rs. 0.11 million) in jointly controlled

entities

**Including the Company's share of Rs. Nil (March 31, 2008 : Rs. 0.01 million) in jointly controlled entities

The aggregate rental expenses of all the operating leases for the year are Rs. 287.29 million (Previous Year: Rs.

167.43 million) which includes the Company's share of Rs. 0.29 million (Previous Year Rs. 0.56 million) in jointly

controlled entities.


Buildings



Depreciation recognised in the Profit and Loss Account for the year 0.17 0.17

Plant and Machinery



Depreciation recognised in the Profit and Loss Account for the year 3.73 6.33*

Description Not later than 1 year Later than 1 year and not later

than 5 years

Later than 5

years

Total

MLP PV MLP PV MLP PV MLP PV

Plant and Machinery 19.29

(13.76)

17.86

(12.74)

22.58

(11.95)

19.37

(10.25)

-

-

-

-

41.87

(25.71)

37.23

(22.99)

Not later than 1 year Later than 1 year and not later than 5 years Later than 5 years

167.38*

(86.98)

767.61**

(489.34)

100.49

(229.13)



Rs. million

Rs. million

Rs. million

105

20)

21)

Provisions for Closure Costs

Exceptional items for the year represent costs incurred by one of the Subsidiaries to exit an arrangement with a retailer. The

cost includes severance cost and write off of shop fixtures and fittings.

Disclosure of Interest in Joint Ventures

106


Rs. million

Opening Balance 1.99

Add: Additional provision made 38.52

Less: Amounts Utilised 31.16

Closing Balance 9.35

As at

March 31, 2009

As at

March 31, 2008

I ASSETS

1. Fixed Assets 241.71 308.83

2. Incidental Expenditure Pending

Capitalisation/ Allocation

1.23 3.16

3. Investments 4.58 0.12

4. Deferred Tax Asset – Net 1.71 -

5. Current Assets, Loans and Advances

a) Inventories 167.37 160.36

b) Sundry Debtors 50.37 180.02

c) Cash and Bank Balances 5.54 31.89

d) Loans, Advances and Other Current

Assets

51.34 54.66

II LIABILITIES

1. Shareholders’ Funds – Reserves and Surplus

(excluding Share Premium)

(27.46) 20.81

2. Secured Loans 276.63 514.48

3. Unsecured Loans 29.59 14.96

4. Deferred Tax Liability – Net - 0.88

5. Current Liabilities and Provisions

a) Liabilities 70.00 41.38

b) Provisions 19.97 2.36

For the year ended

March 31, 2009

For the year ended

March 31, 2008

III INCOME

1. Sales (net of excise duty) 693.27 566.12

2. Other Income 2.55 6.27

695.82 572.39

IV EXPENDITURE

1. Materials and Manufacturing Expenses 613.80 526.52

2. Employees’ Remuneration and Benefit 20.31 15.32

3. Selling, Administration and Other

Expenses

47.26 7.30

4. Finance Expenses (Net) 46.75 14.43

5. Depreciation 15.58 6.69

743.70 570.26

(Loss)/ Profit before taxation (47.88) 2.13

Provision for taxation

(including deferred taxation)

7.96 1.30

(Loss)/ Profit after taxation (55.84) 0.83

Rs. million

Rs. million



23)

24)

Certain Subsidiary Companies' accounting systems do not track purchases/ consumption of raw materials and purchases of

traded goods separately. Hence, for the purposes of presentation in Schedule 15, opening stock of raw materials, work in

process, finished goods and traded goods are grouped together, purchase of raw materials and traded goods are grouped

together and closing stock of raw materials, work in process, finished goods and traded goods are grouped together.

Similarly, inventories of finished goods and traded goods are grouped together under Schedule 8.

The Income Tax Department had disallowed certain expenditure claimed by the Company in its income tax returns for the

Assessment Years 1998-1999 and 2001-2002. During the year, the Income Tax Appellate Tribunal decided the matter in the

22) Disclosure of Derivative Instruments

A Derivative instruments outstanding at the year end :

i) Forward Exchange and Option Contracts to hedge the foreign currency exposure for payments to be

received against exports and other receivables: (Rs. million)

Currency

March 31, 2009 March 31, 2008

USD 186.91 114.28

(Equivalent Rs.) (9,052.89) (4,640.87)

EURO 0.69 2.00

(Equivalent Rs.) (46.44) (116.33)

ii) Forward Exchange and Option Contracts to hedge the foreign currency exposure for payments to be

made against imports and other payables:

(Rs. million)

Currency

March 31, 2009 March 31, 2008

USD 1.44 12.38

(Equivalent Rs.) (73.95) (496.33)

EURO 0.76 10.91

(Equivalent Rs.) (49.62) (647.26)

JPY - 59.40

(Equivalent Rs.) - (23.83)

B Pursuant to the adoption of AS-30 with effect from April 1, 2008 as given in Note 1(x)(c) above, forward

loss aggregating Rs. 294.95 million arising on fair valuation of hedging instruments that are considered

effective are debited and carried forward, in ‘Hedging Reserve Account’ instead of the earlier policy of

recognising such losses in the Profit and Loss Account.

C The following table summarizes activity in the Hedging Reserve related to all derivatives classified as

cash flow hedges during the year ended March 31, 2009

(Rs. million)

Particulars Year ended March 31, 2009 Year ended March 31, 2008

Balance as at the beginning of the year - -

Unrealised gain/ (losses) on cash flow

hedging derivatives during the year (941.22) -

Net gains/ (losses) reclassified into net

income on completion of hedged

transactions (608.59) -

Balance as at Year end (332.63) -





107

Company's favour, consequent to which, the Company has recognised deferred tax asset aggregating Rs. 75.23 million on

unabsorbed depreciation pertaining to the aforesaid assessment years.

Due to floods at the Company's manufacturing unit at Anjar in the year 2008, certain inventory, machinery and buildings

were damaged. Loss arising on account of these floods (net of insurance claim received) aggregating Rs. 11.10 million has

been included under 'Extraordinary item' in the Profit and Loss Account. The extraordinary item disclosed is net of tax

impact of Rs. 3.77 million.

Loss per Share

The current year's figures include the effect of consolidating Welspun Global Brands Limited, Welspun Investments Limited,

SOREMA Welspun Distribution & Logistics, S. A., Portugal, SOREMA Welspun Espana S. L. U., Spain, SOREMA Welspun

Benelux B. V., Holland and acquisition of additional 15% in CHT Holdings Limited and it's subsidiaries. These investments

were made by the Company during the year ended March 31, 2009. Hence, the current year's figures are not comparable

with the previous year's figures. Previous year's figures have been reclassified to conform with the current year's

presentation, wherever applicable.

25)

26)

27)


Loss after Tax and before Extraordinary Item (A) 758.24 1.55

Less : Extraordinary Item 7.33 -

Losses after Tax and after Extraordinary Item (B) 765.57 1.55

Number of Equity Shares

- Weighted Number of equity shares outstanding during the year ( C) 73,089,519 73,089,519

Basic and Diluted loss per share before Extra Ordinary Item (A/C) (Rs.) 10.37 0.02

Basic and Diluted loss per share after Extra Ordinary Item (B/C) (Rs.) 10.47 0.02

Nominal value of an equity share (Rs.) 10 10

108





M. L. Mittal




D. K. Patil

Signatures to Schedules 1 to 19 forming part of the Accounts

Neeraj Gupta

PartnerMembership No. F055158For and on behalf ofPrice Waterhouse & Co.





Rs. million

109

CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2009For the Year Ended For the Year Ended

March 31, 2009 March 31, 2008

Rs. million Rs. millionRs. million

A. CASH FLOW FROM OPERATING ACTIVITIES

Net Profit Before Tax (643.26) 341.04

Adjustments for :

Depreciation 1,086.57 951.74

Exceptional Items (Refer Note 20 on Schedule 19) (38.52) (43.71)

Unrealised Foreign Exchange Differences 12.14 (27.73)

Loss/ (Profit) on Sale of Fixed Assets 15.12 (79.25)

Profit on Redemption/ Sale of Units of Mutual Funds (3.60) (1.24)

Profit on Sale of Bonds (2.00) (4.97)

Profit on sale of Shares (221.35) -

Dividend (16.56) (25.83)

Liabilities Written Back as no Longer Required (1.43) (0.53)

Provision for Doubtful Debts/ Advances Written Back - (5.85)

Provision for Doubtful Debts/ Advances 15.53 25.56

Debts/ Advances Written off 4.70 15.62

Excise Benefits Receivable Written Off - 43.23

Extraordinary Item (11.10) -

Interest Income and Cash Discount Received (66.36) (56.72)

Finance Expenses 1,242.92 838.66

2,016.06 1,628.98

Operating Profit Before Working Capital Changes 1,372.80 1,970.02

Adjustments for changes in working capital :

Trade and Other Receivables (199.46) (597.70)

Inventories (368.63) (495.56)

Current Liabilities and Provisions 715.04 465.36

146.95 (627.90)

Cash Flow Generated from Operations 1,519.75 1,342.12

Income Tax and Fringe Benefit Tax paid (51.08) (101.31)

Net Cash Flow from Operating Activities 1,468.67 1,240.81

B. CASH FLOW FROM INVESTING ACTIVITIES

Purchase of Fixed Assets (Including Capital Work-in-progress) (2,100.24) (3,776.35)

Sale of Fixed Assets 10.40 160.20

Capital Subsidy 39.27 14.79

Sale of Investments 175.05 222.14

Dividend Received 16.56 25.83

Interest Received 17.60 19.69

Net Cash Flow used in Investing Activities (1,841.36) (3,333.70)

C. CASH FLOW FROM FINANCING ACTIVITIES

Redemption of Preference Shares - (102.26)

Redemption of Debentures - (168.08)

Proceeds from Long Term Borrowings (Net of Repayments) 898.80 1,499.16

Proceeds from Other Borrowings (Net of Repayments) 465.69 1,277.42

Finance Expenses Paid (1,092.57) (1,045.41)

Net Cash Flow from Financing Activities 271.92 1,460.83

( A + B + C ) (100.77) (632.06)

Cash and Cash Equivalents at the beginning of the year 1,298.64 1,886.15

Cash and Cash Equivalents taken over from erstwhile SOREMA – Tapetes E

Cortinas De Banho, S.A.,a subsidiary Company- 44.55

Cash and Cash Equivalents at the end of the year 1,197.87 1,298.64

Net Decrease in Cash and Cash Equivalents (100.77) (632.06)

NOTES :

1. The Cash Flow Statement has been prepared under the "Indirect method" as set out in Accounting Standard - 3 on

Cash Flow Statements issued by the Institute of Chartered Accountants of India.

2. Previous year's comparatives have been reclassified to conform with the current year's presentation, wherever applicable.

This is the Consolidated Cash Flow referred to in our report of the even date.




M. L. Mittal



D. K. Patil


Neeraj Gupta

Partner






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wil annual report - 2008-09

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