sada final PROJECT REPORT.doc

8/10/2019 sada final PROJECT REPORT.doc

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1. Executive Summary:

Gaining Economic Significance The Textile Industry is at the cusp of regaining its

earlier significance in the Indian Economy. Currently, the sector accounts for around 14%

of the total industrial production and around 4% of the country's oerall !"#. The sector

contri$utes alua$le foreign exchange for the country as it accounts for nearly &% of the

country's total exports.

Domestic Industry - Restructuring a growth strategy: The Textile Industry underent

a lean phase during the late nineties. This as primarily on account of excess capacity,

higher interest costs on account of de$t $urden, !oernment policies faoring small-scale

industries, la$our las and slodon in the glo$al economy among others. "eclining

interest rates, groing domestic economy, faora$le !oernment policies, reial in

glo$al economy and groing potential post-(uota regime augured ell for the reial in

the textile industry. The changing dynamics of the Indian Economy ith the emergence of

the upper middle class segment, higher disposa$le income and increasing consumerism is

proiding some demand side relief for the Textile Industry. )urther, ith mushrooming of

organi*ed retailing, demand for apparels and textiles ould get a fillip.

China India - !"vious "eneficiaries under the new regime:"ismantling of (uotas from

+anuary 1, && ould gie more discretionary poers to the glo$al $uyers in selecting their

material sourcing aenues. uyers in E and / ould $e free to $uy from the cheapest

possi$le source. #ost (uota dismantling, glo$al textile trade is expected to gather momentum.

This is expected to increase from /02& $n 3&&4 to /02& $n $y &1&. Cost-

competitie countries li5e China and India could there$y increase their mar5et share at the

cost of other deeloped and deeloping nations. China is li5ely to $ecome the 6supplier of

choice6. 7t the same time other lo cost countries li5e India,.

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India to gra" share in #ome $exti%es& fo%%owed "y '((are%s:India is li5ely to ma5e the

most of its strength in cotton and lo cost s5illed la$our in increasing its pie of glo$al

textile trade. India's current exports at /01 $n, accounts for only 4% of the total orld

exports, hich is expected to gro to /04& $n capturing a mar5et share of close to 8-

9% $y &1&. India is ell poised to strengthen its foothold in the glo$al home textiles

segment post dismantling of (uotas, hich ould $e folloed $y higher share in apparels

segment.

)ac*%ash from Deve%o(ed Countries against China to "enefit India: Increasing

dominance of China in glo$al textile trade post (uota dismantling is expected to attract

$ac5lash from deeloped mar5ets li5e / : E in order to protect domestic industries.

Thus, protectionist measures against China, is li5ely to act as a $oon for India. India

ould $e second $est choice for the glo$al $uyers gien its esta$lished position in the

glo$al textile trade.


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+. Com(any ,rofi%e:

IS I/0ES$S'R$ $D:

The ;/C group has ac(uired 8.1 per cent sta5e in the listed retail $ro5ing firm I


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,romoters history IS Investsmart td

,romoted "y Infrastructure easing and inancia% Services td

Shareho%ders of IS inc%ude S)I& !RI2-3a(an& IC-4ashington& Credit

Commercia% de rance& Indivest ,te td5an 'ffi%iate of Govt. of Singa(ore6

)usiness o(erations of the (romoter

Infrastructure and Deve%o(ment Services: Sectors such as Surface

$rans(ort and $rans(ortation Systems& 4ater Su((%y& #ydro ,ower&

S(ecia% Economic 7one& ,ort and Environment Socia% anagement

Grou(.

Investment )an*ing : Strategy& 'sset inancing& Cor(orate 'dvisory&

Ca(ita% ar*ets& ,ro8ect inancing

ade contri"utions to the fo%%owing trusts: IS Infrastructure E9uity

und& IS Investment $rust I& II& I0

$he Indian Innovation 'ward-+;;


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$o( anagement:

$he to( management of this com(any com(rises of four directors in e9ua% hierarchica%

designation. $he ta"%e shows their res(onsi"i%ity in the organi=ation.

$a"%e /o:1

@ame :Jualification

7ge #osition )unctional 7reas

r. Sandee(

,resswa%a

>? Chief !(erating

!fficer

1.Served as C!! since !cto"er

1???

+. #as over 1@ years of ex(erience

in Ca(ita% ar*ets

>. #o%ds a )ache%ors Degree inCommerce from )om"ay

Aniversity and is a Chartered

'ccountant

r. Sachin

3oshi

@; Chief inancia%

!fficer

1. Served as C! since !cto"er

1???

+. #as over 1B years of inancia%

anagement ex(erience

>. #o%ds a )ache%ors degree in

Commerce and is a )5Gen6&

Chartered 'ccountant and Cost

and 4or*s 'ccountantsr. Girish

/ad*arni

> Chief !(erating

!fficer

1. #as over 1< years of industry

ex(erience in financia% services

+. #o%ds a ,GD from II-'&

)ache%ors in Commerce from

um"ai Aniversity and is a Cost

and 4or*s 'ccountant

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IG +. ,roduct ,ortfo%io

IG >. )usiness ode% Aniversa% )ro*er

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IG @.!ur Retai% !fferings

IG


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IG B.)usiness Strategy

Growth ,%an

Com(%ete "usiness restructuring

Increase argin ,ortfo%io "oo* to Rs. .< "n

'cce%erate "ranch ex(ansion through setu( of mini "ranches

Reach an 'A of Rs. +; "n in assets

Strong focus on "ui%ding new "usinesses : commodities& on%ine trading

aunch internationa% o(erations in Singa(ore. Com(%ete Du"ai a((rova%s

Conso%idate in the niche (osition in mid mar*et cor(orate segment and graduate

to %arge si=ed dea%s

>


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Dee(en the focus on research and cor(orate re%ationshi(s to grow institutiona%

"usiness

/etwor* Ex(ansion

'cce%erated ex(ansion through mini "ranches and se%ect franchisees (%anned

Ra(id "ranch ex(ansion on a sma%%er format 5mini "ranches6 (%anned in

um"ai& De%hi and $ier II cities

Existing franchisee re%ationshi(s to "e deve%o(ed& growth from new franchisees

to "e se%ective

$a"%e /o: +

1&


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>. I/$R!DAC$I!/

.1 ,ur(ose: -

=esearch is the $ase of eery ne inention. 7s far as e(uity research is concern e

hae to create solid $ase of financial data.

. !"8ective of the study: -

To analy*e the ?acroeconomic factors.

To carry out fundamental analysis of the textile sector.

To analy*e 1& maor players in the sector.

. Research ethodo%ogy: -

?r. =oopesh Aumar, after explaining the o$ectie of the proect, explained me the

procedure in hich the proect should $e carried out and hich data should $e ta5en into

account for research purpose. The approach carried out as Top-to-ottom approach.

#arameters on hich the research and analysis is to $e done ere otted don. "ifferent

sources of data re(uired for analysis are gien in $rief in the coming paragraphs.

.4 Data Sources: -

Secondary data: - #u$lish : readily aaila$le data comes under the head of

secondary data. )inancial statements, accounting files : other related document are

the example of this. ?ost of the e(uity research firm use secondary data for their

or5.

1. De$sites li5e .r$i.org.in, .i$ef.org, @espapers ere the sources

used for economic oerie.

. )undamental analysis of the textile sector as carried out from arious

sources such asK

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http://www.ibef.org/http://www.ibef.org/


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o 7nnual =eport of Textile sector for last three years.

o De$site of textile ministry i.e .texmin.nic.in

o Bther e$sites li5e .i$ef.org,.myiris.com.

. 7nalysis of 1& maor players as done ith the information collected fromK

o 7nnual reports of the company and companyGs e$site

o oo5 of )inancial ?anagement $y I.?.#andey for analysis

purpose.

o Bther e$sites li5e - .icicidirect.com, .myiris.com ,

.cline.capitaline.com,

o usiness /tandard @espaper

1
http://www.texmin.nic.in/http://www.ibef.org/http://www.ibef.org/http://www.myiris.com/http://www.icicidirect.com/http://www.myiris.com/http://www.cline.capitaline.com/http://www.texmin.nic.in/http://www.ibef.org/http://www.myiris.com/http://www.icicidirect.com/http://www.myiris.com/http://www.cline.capitaline.com/


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@. iterature survey:

@.1. $exti%e Sector !verview:

It contri$utes & percent of industrial production, > per cent of excise collections, nearly

& percent to the countryGs total export earnings and 4 per cent to the !"#.

The sector employs nearly 19 per cent of employment in industrial sector and million

people of the country, hich is the second highest employer in the country.

The total )"I inflo in the country is / 0 4&.&, hich contri$utes to 1.1% of the

total )"I inflos of the country.

The industry contri$utes a$out per cent share in the orld trade of cotton yarn. Indian

textile industry contri$utes a$out per cent to the orld spindle age and a$out 2 per cent

to the orld rotor capacity installed

In fact, in the last six years, an estimated /0 2.8 $illion has $een inested in the textiles

sector, aided $y the Technology p gradation )und 3T) scheme

The sector accounts for around 14% of the total industrial production and around 4% of

the country's oerall !"#. The sector contri$utes alua$le foreign exchange for the

country as it accounts for nearly 1% of the country's total exports.

The Indian textile industry is estimated to $e around /0 $illion and is li5ely to reach

/0 11 $illion $y &1. The domestic mar5et is li5ely to increase from /0 4.2 $illion to

/0 2& $illion $y &1. It is expected that India's share of exports to the orld ould also

increase from the current 4 per cent to around 8 per cent during this period.

India's textile exports hae shot up from /0 1>.14 $illion in &&2-&8 to /0 .1 $illion in

&&8-&9, registering a groth of oer 1 per cent.

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@.+. $exti%es and '((are% $rade

7s per the latest figures aaila$le ith the ?inistry of Textiles, India exported

textiles orth /0 1.8 $illion during 7pril-"ecem$er &&9. Indian textiles, handlooms and

handicrafts are exported to more than 1&& countries, ith the / $eing the largest $uyer.

=eadymade garments 3=?! are the largest export segment, accounting for almost 41 per

cent of total textile exports. =?! exports from India ere orth /0 >.&2 $illion in &&8-

&9. "uring 7pril &&9-)e$ruary &&>, =?! exports ere orth /0 9.> $illion, an

increase of 4.92 per cent oer the corresponding period of &&8-&9. /ignificantly, apparel is

the second largest retail category in India. The domestic apparel retailing industry is

estimated to $e round /0 .8 $illion and in spite of recession is li5ely to gro at -8 per

cent in &&>-1&. The domestic organi*ed garment retailing cloc5ed a groth of 1-14 per

cent for year ended ?arch &&>.

@.>. Investments in the $exti%e Sector

The domestic textiles and apparels mar5et in India is itnessing strong

groth oing to a young population, an increase in disposa$le incomes and a rapid groth in

organi*ed retail. Conse(uently, the domestic mar5et is estimated to gro to oer /0 &

$illion $y &14. /ignificantly, the textile sector is estimated to offer an incremental reenue

potential of no less than /0 & $illion $y &14 and oer /0 1 $illion $y &&. The

textile industry has attracted )"I orth /0 9& million during 7ugust 1>>1 and "ecem$er

&&9.

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$exti%e and '((are% Sourcing

India is fast esta$lishing itself as a glo$al textile and apparel-sourcing hu$ ith its a$undant

multi-fi$er ra material $ase, ell esta$lished production $ases, design capa$ility and s5illed

la$our force. 7ccording to the Confederation of Indian Industry-Ernst : Loung Textiles and

7pparel =eport &&8, the Indian sourcing mar5et is estimated to gro at an annual aerage

rate of 1 per cent from an expected mar5et si*e of /0 $illion-/0 $illion in &&9 to

/0 $illion-/0 8 $illion $y &11. /imultaneously, orld's cutting edge fashion $rands

such as ;ugo oss, "iesel and 8 million.

The goernment ill shortly launch a /0 1.4 million Technology ?ission on Technical

Textiles and also create a "eelopment Council for Technical Textiles. In an effort to promote

the technical textile industry in the country, the central goernment has formed a committee

to put in place a regulatory frameor5 for usage of technical textile products in different

areas

.

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@.@. G%o"a% $exti%e Scenario- ,rotectionist ,re-uota Regime:

"eeloped economies li5e the / : European mar5ets resorted to protectionist

measures against lo cost 7sian Textiles and !arment producers since the 1>&s in order to

safeguard their domestic industry. These protectionist measures ere formali*ed in 1>84

through the '?ulti )i$re 7greement 3?)7'. /ince 1>84, up to the end of ruguay =ound in

1>>4, trade in glo$al textiles and clothing industry ere goerned $y oer 1&& $ilateral

(uotas, hich ere part of the ?)7. /u$se(uently, (uotas ere imposed on 7sian countries

$y the deeloped countries to curtail imports of cheaper products into their country. 7s a

result, despite 7sian countries haing a competitie adantage, many non-7sian countries

enoyed the (uota and duty free access to the deeloped mar5ets. This alloed them to

compete effectiely ith 7sian producers. The (uota system also faoured the under

deeloped countries, hose export (uotas ere higher than those of deeloping countries.

This ena$led textile industries in angladesh and /ri >, the 7greement on Textiles and Clothing 37TC as signed, ith the

DTB replacing the !7TT. 7TC aimed at phasing out (uotas on imports oer a decade,

there$y resulting into total dismantling of (uotas from +anuary 1, &&. The period $eteen

1>> and && as a period of slo phasing out of the (uota restrictions completely oer a

period of 1& years. 12% of textiles M garment items ere remoed from (uota restrictions

from 1>> ith the 7TC coming in place. This as expanded to 19% $y && and fully

phased out $y +anuary &&.

India's textile exports amounted to around /01 $n, constituting 4% share of the

glo$al textile import mar5et. Though small, as compared to China's 12% share, India is

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expected to emerge as the orld's second most important textile M garment manufacturing

centre. / imports of cotton pillocases and cotton sheets ere the highest from India at

&% and 19% respectiely. China dominated the apparel mar5et in the to countries ith a

mar5et share of 8&%. This as despite the close proximity of other poerful competitors

such as India, angladesh, #a5istan, ietnam and Indonesia.

@.


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is a must to meet this emerging challenge of glo$al competition. )urther, there is an

increasing trend from the orld $uyers toards reducing the num$er of endors and

opting for ertically integrated companies to eliminate inefficiencies in the supply chain.

The Indian companies hae $een expanding capacities in anticipation of the opportunities

emerging from the phase-out of the (uota system. Indian textile industry needs to ma5e

for more inestments in the coming years to capitals on the post (uota regime

opportunities. 7ssuming a capital-to-turnoer ratio of one, there is a need to inest =s.

1,4&,&&& crore in the next six years to achiee the ision of reaching the textile and

clothing exports target of /0 4& $illion $y &1& and to meet the groing domestic

demand.

Close attention needs to $e paid to the composition, olume and alue of products as ell

as competitie strengths is-N-is countries li5e China, /ri


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/eeral steps hae already $een ta5en to improe IndiaGs textile industry. 7part from the

setting up of the Technology p gradation )und /cheme 3T)/, these include ne

schemes of 7pparel #ar5s for Exports, and Textile Centres Infrastructure "eelopment

/cheme, de-reseration of the garments sector, increase in inestment ceilings, and

introduction of a Technology ?ission on Cotton to improe the productiity and (uality

of cotton. )"I is freely alloed in the sector. asic customs duty on designated textile

machinery and spare parts has $een reduced and the 7dditional Excise "uty on Textiles :

Textile 7rticles 37T:T and 7dditional Excise "uty 3!oods of /pecial Importance 7ct

has $een a$olished. The folloing charts shos ?ar5et share of arious countries in #re-

Juota and #ost-Juota regime to the ./ mar5etK

)ig 8.#re-Juota : #ost-Juata =egim to / ?ar5et

1>


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@.B. Structure of texti%e industry:

The Indian Textile industry has a complex structure. Bn one hand it is mar5ed

$y the presence of large-scale production organi*ed players, hile on the other hand are the

numerous small-scale independent units.

)ragmentation in the industry, per se, is not $ad. =ather it has posities attached to it

li5e chec5 of price rise for consumers, possi$ilities of running smaller lots. ;oeer the

negaties are more than the posities in the Indian context. /mall si*e does not present

economies of scale and hence reduces the a$solute margin aaila$le that could hae $een

used into technological adancement, research and deelopment and $rand $uilding.

IndiaGs textile industry comprises mostly small-scale, non-integrated spinning,

eaing, finishing, and apparel-ma5ing enterprises. The figure $elo depicts the Berall

alue chain and the num$er and type of units ithin the industry.

Ta$le @BK

,R!CESS

A/I$

/pinning ?illsDeaingMAnittingnits

#rocessingnits

7pparel?anufacturers

!A$,A$

)i$reCotton, +ute,/il5, Dool,

?an-made

Larn )a$ric#rocessedLarn

!arments

FA/I$S

114& //I

nits

122

?n

#oerloom

s- 1.9?n

Brganised

/ector-&.11?n

1&&nits

88&&& nits3?ostly /mall /cale

&

Raw

ateria%

S(in 4eave

Hnit,rocessin

g

Switch5Garment

'((are%6

Composite ?ills


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S(inning:

)rom the statistics it can $e seen that there has $een nearly to-fold increase in the

export of $lended and non-cotton spun yarn. There has also $een phenomenal ten-fold groth

in the export of filament yarn since the year 1>>2->8. Cotton yarn contri$utes to a$out 9&%

of the total alue of yarn exports

Larn production has $een groing at a compounded annual groth rate of 4. per

cent a year, from 1>>& to &&4. Dhile man-made and $lended yarns gre at annual rates of

9.2 #ercent and >.1 per cent respectiely, production of cotton yarn gre at a loer rate of

. per cent per year. Dith an installed capacity of 4& million spindles, India accounts for

a$out #ercent of the orldGs spindle capacity.

4eaving and Hnitting:

The eaing sector ranges from the handloom units producing around metres a day

to mills ith adanced machines, each producing &-&& metres in an eight-hour shift. The

non-mill sector is also referred to as the "ecentrali*ed /ector that includes poer looms,

handlooms, and the hosiery sector. The decentrali*ed sector produces around >% of the total

cloth in and is the maor employer, income generator, as ell as export earner for the eaing

the country and 5nitting industry.

The 5nitting industry concentrated primarily in the unorgani*ed sector, only a handful

of large organi*ed players. Anitting is concentrated primarily concentrated in cities of Tirupur

and >& and &&, drie n primarily $y the small scale,

independent poer loom sector.

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a"ric (rocessing:

The processing sector is one of the ea5 lin5s in the textile supply chain. The

processing industry is dominated $y ;and processing hich constitutes 9. per cent of the

total num$er of processing units. #oer processing units can $e diided into Independent

#rocess ;ouses that do o$ or5 and those ith composite mills that process their on

fa$ric. 7round 9> per cent of poer processing units are Independent.

p gradation in this segment is also intended to promote integrated large units ith an

improed (uality and loer cost structure. ;and #rocessors ill $e phased out in a process.

Garment anufacturing:

!arment manufacturing is one of the most fragmented sectors of the Indian textile

industry. Cutting, seing and furnishing are the three maor operations in the garment sector.

!arment : 7pparel sector is structurally a lo age la$our-intensie industry. The

competitie adantage of players in this mar5et segment is dependent on the a$ility to

produce designs that capture and influence tastes and preferences of consumers in addition to

cost effectieness.

%of the total cost and as a result of this lead to relocation of production

$ase many times. 7pparel segment is one of the least capital-intensie segments in the entire

textile chain. )ixed capital cost per unit of production is loest as compared to spinning :

eaing, processing and een other textile manufacturing. The apparel industry is one of

India's largest foreign exchange earners, accounting for 1% of the country's total exports.

The garment industry comprises manufacturers of ready-made garments for either the

domestic or export mar5ets or, in certain cases, $oth.

The focus of the industry is increasingly shifting toards mar5eting, $rand names,

design and retailing complexes and alue-added diersified production such as OtechnicalG


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textiles. nder the post (uota regime, $oth India and China are expected to almost dou$le

their mar5et share in the glo$al apparel mar5et. China is undou$tedly expected to emerge as

the $iggest $eneficiary of the dismantling of (uotas een in the apparel segment.

@.. Ex(orts:

Exports of textiles and clothing from India hae also $een groing strongly oer the

last 1&-1 years. /o far, the textile industry has played a significant role in the country's

exports contri$uting alua$le foreign exchange for the country. The sector accounts for nearly

&% of the country's total exports. "uring the last decade, from )L1>>4 to )L&&>, textiles

exports hae gron at a C7!= of 2.4% to /01. $n.

Though, textile exports in alue terms hae shon steady increase oer the years, in

percentage terms its share in total exports has declined from 9.8% 3)L1>> to &.8%

3)L&&>. The fall in contri$ution to total exports is primarily due to rising contri$ution from

the serices sectors li5e IT to the total exports. To some extent the slodon in the textile

industry is also reflected in these num$ers. ;oeer, &.8% is significant enough to ma5e an

impact on the Indian Economy.

Dith a consistent groth of nearly per cent in the domestic mar5et and the opening

up of exports options post ?)7, IndiaGs textile industry is poised to gro further and ta5e up

a more significant position in the domestic and glo$al mar5ets. )olloing is rea5-p of

Exports of India oer the yearsK

4.9. !oernmentpolicies

In an effort to increase India's share in the orld textile mar5et, the goernment

has introduced a num$er of progressie steps.

"e-reseration of readymade garments, hosiery and 5nitear from the small-scale

industries sector in end-&&&.


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export credit, hae only had a marginally positie impact.

Cotton yarn and cotton

Cotton yarn demand is expected to gro at a C7!= of -4 per cent 3olume terms in

the medium-term, supported$y the domestic mar5et, hich accounts for 2& per cent of total

demand. ;oeer, the oercapacity situation isli5ely to persist, particularly in the spinning

segment.

C=I/I< =esearch expects a $umper Indian cotton crop and the easing of the glo$al

demand-supply situation to lead to cotton prices softening to leels of =s -8 per 5g in

cotton season &&>-1&. ;oeer, oercapacity illcompel spinners to pass on the $enefit of

loer cotton prices to consumers, leading to continued margin pressure.

??)

#olyester demand is estimated to gro $y 9-> per cent. "espite this, C=I/I leels due to an easingdemand-supply situation in the feedstoc5

mar5ets and the softening of crude oil prices from their pea5 leels. ;oeer, oercapacity

ill compel polyester producers to pass on the $enefit of loer input prices to consumers.

=eadymade garments

!arment exports hae $een seerely impacted post /eptem$er &&9 on account of

the economic slodon in the / and the E8. ?argins of exporters hae not improed

despite & per cent rupee depreciation from +anuary &&9 to +une &&>, as ea5 demand

forced them to pass on the $enefit to customers. India's mar5et share 3in alue terms in $oth,

the / and the E, has remained stagnant at .8 per cent 3+anuary-?arch &&> is-N-is


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+anuary-?arch &&9 and .2 per cent 3+anuary-"ecem$er &&9 is-N-is +anuary-"ecem$er

&&8 respectiely.

The highly fragmented nature of the industry and a ea5 eaing and processing sector has

hindered India's attempts to gain a larger share of the glo$al apparel mar5et. !reater

inestments in the eaing and processing segment hold the 5ey to improing India's

competitieness in the glo$al apparel mar5et.7lthough the domestic mar5et has continued to

exhi$it groth of 2-8 per cent, margins of manufacturers are under pressure as they hae had

to resort to discounting in order to push olumes.

I?#7CT )7CTB=K

7 The excise duty on pure cotton textiles $eyond the fi$re stage hich had $een reduced to

*ero in the stimulus pac5age has $een restored to a 4 per cent optional duty. Dhen the excise

duty had $een reduced to *ero,companies ith accumulated CE@7T credit ere left ith

no aenue to use that credit. @o, ith the excise duty $eing restored to its earlier 4 per cent

optional leel, companies ill $e a$le to utilise their accumulated CE@7T credit.

. The excise duty on man-made fi$res and yarns has $een raised to 9 per cent from the

earlier leel of 4 per cent.Dhile this ill increase polyester prices $y =s . per 5g, it ill

not affect demand as polyester continues to $e cheaper than cotton and su$stitution ill

continue.

C. The extension of per cent interest su$ention on pre and post shipment export credit $y

a period of six monthstill ?arch 1, &1&, ill result in interest costs for exporters declining

$y around 1 per cent.

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/hould inest in trend forecasting to ena$le the groth of the industry.

/hould 5eep focus on ne product deelopment.

Juota restrictions on china till &&9.

$hreats:

Increasing competition from domestic as ell as glo$al players.

Ecological and social aareness may lead to increase the pressure on the industry to

follo international la$our and enironmental la.

7 rapid slodon in the denim cycle poses ris5s to fa$ric players.

Threats from ne entrantsK smaller players ho cannot enture into the glo$al

mar5ets are flooding the domestic mar5ets ith excess supply, thus ea5ening the

pricing scenario

China is the $iggest threat to IndiaGs textile industry. ChinaGs scale, Infrastructure and

cost competency gie it an edge

7s one can comprehend from the a$oe analysis, the potential for the sector's groth are

ample, $ut the tric5 lies in competing effectiely against rials. Consolidation of the industry

and deliery of $etter (uality at effectie rates and minimum lead time ould certainly help

the players surmount all competitie pressures

9


29/82

>

COMPANY

ANALYSIS


30/82

6.1 Aditya Birla Nuvo Ltd. (IRIL):

Market data: Bui!e Pro"ile:

#a$le No: %

Indian =ayon and Industries 2

is an =s19&& Cr. multi-product and multi-locational

industrial conglomerate, a part of 7ditya irla !roup, the

organi*ation of a long, illustrious and magnificent legacy

spread oer a period of 1 years. The !roup is

consolidating its position under the chairmanship of /hri

Aumar ?anglam irla ta5ing the aspirations from the

legacy of a leading industrialist,


31/82

The su$sidiaries of Indian =ayon and Industries


32/82

consideration of =s 44&2& million constituted $eteen the company .8%, irla T?T

;oldings %, !rasim Industries .9 &2.19 1.& 2>.9&

"epreciationM7morti*ation 111.9& 88.84 88.> 28.91 2>.21 .& &.2&

E)I$ 5!(erating ,rofit6 111.; .@ 1 @.++ 1;.>; .?; 28.91 2>.21 11.8& .&

#T 21.1& 18.&9 191.4 19.&8 84.&8 82.1& 44.&&

Taxes 94.9& 4.2 &.1 .84 &.21 1.>& 4.&

,'$ 1B.?; 11>.+ 1>1.+ 1;> @>.@B ?.9 crore

reached $y its fertili*ers $usiness, incorporating the period from /eptem$er to ?arch.

!arments, Car$on lac5 and textiles hae $een the groth driers, hile on a

consolidated $asis sales increased $y 29%.

The reenue from !arments increased $y 4%, hile that of Car$on lac5 and Textiles

increased $y 2% and 1% to =s 1.4& crore and =s 148 crore respectiely. The

contri$ution to profita$ility of these segments increased $y 1>1%, 11% and >%

respectiely due to higher margins.


33/82

Ratio A!alyi:

#a$le No: 6

R'$I!S +;;-;? +;;-; +;;B-; +;;.&& .>9

=BCE 3% 9.84 >.8 1.8 11.>4 9.910a%uation

#ME 1.11 1.& 9.2 4.9 >.9>

#M .4> 1.88 &.9> &.> &.>

#MCE#/ 12.84 11.1 4.92 .&9 .4

EMBperating income &.1 1.9 8. 4.14 2.42

EM/ales .1 1. &.>8 &.1 &.24

everage Ratio

"e$tME(uity 1.2 1.2 1. 1. 1.4

!ther

Int. coerage .8& . .2 . 1.>2"iidend #ayout 4.14 4.& &.2 4.& 4.48

*i!di!+ a!d Re&oe!datio!:

Bn a standalone $asis, 7ll parts of the $usiness continue to generate exciting cash to the

company. Bn a consolidated $asis the 5ey monitora$le in I=I


34/82

of =s.41&cr.


35/82

6., Alok I!dutrie Ltd.:


#a$le No: -

7lo5 Industries is an integrated ne generation textile

company promoted $y the +ira5a family. Company $egan

its or5 as fa$ric traders and suppliers to the garment

industry in 1>92 as a priate limited company. eginning

ith texturising of yarn, the company steadily expanded

into eaing, 5nitting, processing, home textiles and

readymade garments. It also controls an extensie

em$roidery operation through its sister concern, !ra$al 7lo5 Impex > company made a )inancial and Technical colla$oration ith !ra$al, 7l$ert !ra$her

!esellshaft !m$; : Co of 7ustria for manufacture of em$roidered products through a +oint

enture Co. i* !ra$al 7lo5 Impex


36/82

Fig No: 9

Key positives:

;as created significant capacities to meet the increasing demand of importers.

Esta$lished relationship ith renoned clients in the apparel and home textiles.

Exports in ;ome textiles are groing at a higher tic5, groth momentum expected to

continue.

)ruits of its massie capital expenditure to accrue oer the next years.

7I< is one of the fe fully integrated textile players present in the Indian textile industry.

This is important, $ecause international importers ant ertically integrated players ith

a presence from yarn to garments.

Company is already supplying to renoned manufacturers, exporters and stores li5e !7#,

+C #enny, Dal-?art, Target, etc.

I!vete!t i+/li+/t:

7lo5 has the presence in the entire alue chain of textiles and offers fully integrated

facilities for yarn texturi*ing, eaing, 5nitting, processing, made-ups and garments

$esides haing the largest processing capacity in India. Thus it is ery ell positioned as

a OBne-/top-/hoppeeG for its mar(uee glo$al clients.

2


37/82

It has put plans in place to increase its exports $y focused expansion in ;ome Textiles

and !armenting segments. It has a target to ta5e export share to &% of the sales $y

)L&1& from 1&% in )L&8 and 8.>% in )L&9.

The company is loo5ing to improe its product mix to generate $etter operating margins.

The high-end, high-margin products li5e home textiles hich contri$uted only around

18% of the $usiness in )L& is expected to contri$ute around 4% of the reenues of the

company $y )L&8E. The total high margin $usiness 3B#? of -% share is expected

to increase from 8% in )L&9 to 8>% in )L1&E. This ill increase the oerall B#? of

the company from 1>.% in )L&9 to 1.% in )L1&E.

Re&e!t 'eveloe!t a!d *uture la!:

7lo5 Industries is all set to start a garment-manufacturing plant in /ayli at an inestment

of =s 1,&& crore.

Company has conerted & )CC and issued : allotted 2, &2,>4> e(uity shares at the

face alue of =s 1& each for cash at a premium of =s 21.9 per share as a outcome of it.

"irectors of 7lo5 Industries transferGs shares to the promoter group company @ira

=ealtors and shares pt.


38/82

*i!a!&ial A!alyi:

#a$le No:0

,articu%ars $we%ve onths Ended

@th tr

Ended

ar-;? ar-; ar-; ar-;B ar-;1.;>.;

?

>1.;>.

;

/et sa%es [email protected] 1++@. 1.1< 1B;.1+ 111.+ +.@; B.

argin 56 1.2 4.4 &.2 44.

Taxes 44.12 4.2 1.4> 18.& 4.4 1.8 1.4>

,'$ 11;.1? ?.+< 1.; @+.>1 >.?1 >@.B? >1.;>

argin 56 .B .+ B.B< 1 B.1 .% to =s.99.22 Cr.

EIT"7 increased to =s.9>.&> crores as compared to =s.82.&& crores an increase of

18.% oer the preious corresponding (uarter. The increase in EIT"7 is due to the

$enefit of $ac5ard integration into eaing and the increase in sales of alue added

product and higher sales.

9


39/82

It can $e seen from the financials oer the year that the groth rate of sales hae $een

more in the preious years $ut had came don in the recent past. .89 &.>9 1.2

2.8 &.28 44.42 44.> 4.1&

E 21. 18.> 1&2>.1 >.11 48.29

,rofita"i%ity

=BE 3% 1.4 1.14 19. 12.2 1>.99

=BCE 3% 8.9 >.8 1.12 1.98 1.9&

0a%uation

#ME 9.9 1&.11 4.28 1.2 1.&2#M &.>8 1.& &.9 &.8 &.1

#MCE#/ 4.8 .99

EMBperating income 9.84 8.&4 .> 4. 4.9

EM/ales 1.9 1.41 1.&& &.8 &.94

everage Ratio

"e$tMe(uity .4& .>4 .1& .1 .4

!ther

Int. coerage .1 .>4 .> .1 .&9

"iidend #ayout 2. 1.9 12.> 12.24 9.48


Dith its capex plans in place for $ac5ard integration, as for moing up the alue chain,

7lo5 is turning out to $e a fully integrated textile house.

>


40/82

7lo5Rs capacities in the apparel fa$ric segment ent on stream in )e$ruary &&2. The

$enefit of the same ould get reflected in the )L&8 performance.

7lo5 is also not aerse to groing ia the inorganic route. ;oeer it has a selectie

strategy.

The concerted efforts of the company ould lead to olume groth and the changing

product mix ill lead to enormous improement in the margins. The increase in the share

of alue added products ould definitely increase the reali*ations of the company.


41/82


#a$le No:12

7rind ?ills


42/82


43/82

The company has ac(uired the $alance .4% e(uity in 7rind rands for =s.1, &2& ?n

from ICICI enture, hich made it into a fully oned su$sidiary of the company.

*i!a!&ial A!alyi:

$a"%e /o: 11

,articu%ars $we%ve onths Ended @th tr Ended

ar-;?ar-; ar-; ar-;B ar-;1.;>.;?>1.;>.;

/et sa%es 1


44/82

R'$I!S ar-;? ar-; ar-; ar-;B ar-;.&> >.>4 9.1> 1.1 .4

=BCE 3% 8.94 >.>2 >.> 1.8 .8

0a%uation

#ME >.21 1.>8 1&.& .&& 2.88

#M &.9 1.4 &.8 &.4 &.1

#MCE#/ .98 .9>

EMBperating income 8.22 8.89 .> .>9 >.

EM/ales .& .&> 1.2 1.& .4

everage Ratio

"e$t M E(uity .4 .1 .1 .2 .91

!ther

Int. coerage .& . 1.84 1.89 1.8

"iidend #ayout 12.42 1.4 &.&& &.&& &.&&


7rinGs strong $rand portfolio, presence across the retail pyramid and ide distri$ution

netor5 in $randed apparels S a proxy for playing the retail story in the domestic

mar5et.

The company is expected to generate )C) of =s1.1$ in )L&> and =s.2$ in )L1&, hich

it ill largely use to reduce its gearing.

.21 is (uite lo as compared to other maors in the industry

and also E#/ of the company is ery lo as compared to others in the industry.

The CompanyGs "e$tME(uity ratio is (uite high $ut is expected to reduce it near future.

The high de$t as the part of deelopment and company plans to minimi*e it ith its

)C).

44


45/82

Bnce the $enefits of (uota dismantling start filtering in, integrated players li5e 7rind

?ills shall stand to yield the maximum $enefit, as smaller players ill hae ery limited

scope in the glo$al mar5ets.


46/82

6.% Bo$ay 'yei!+ 3 Ma!u"a&turi!+ Co. Ltd.:

Market data: usiness #rofileK

$a"%e /o:1>

The om$ay "yeing : ?anufacturing Co.


47/82


48/82

*i!a!&ial Reult:

$a"%e /o: 1@ 3=s. in crores


ar-;? ar-; ar-; ar-;B ar-;< >1.;>.;?>1.;>.;

/et sa%es 1;1>.;1 1;1+.? ?1. @@.+> ?.>@ +1+.B+ +B.?.& 1>.9 4.4 8. 49. .> .4&

E)I$ 5!(erating ,rofit6 B.> @.1+ .. .29 8.2 . -&.29 -1&.4 -.12

Taxes -.1 8.1 1>.&2 1. -1.2 .>4 -&.9

,'$ B1.>@ +B.1 -+?.;B -.@; ->.@@

argin 56 B.;B +.B+ B.;; >.> ->.B ->.@ -1.+;

om$ay "yeing : ?fg Company has disclosed that the loss for the (uarter ending in

?arch, &&2 has idened. "uring the (uarter, the company sa a 11.1% rise in loss

from =s .44 Cr to =s 8.4 Cr. /ales for the (uarter declined .>% to =s. 1.2 Cr as

compared to 29.> Cr. in the corresponding (uarter, a year ago.

Bperating margins continued to remain negatie and the @et margins, on the other hand,

fell from a negatie 1.% to .49% during the (uarter. Earnings per share 3E#/ for the

(uarter ere negatie at =s 1.>.

49


49/82

Ratio A!alyi:

#a$le No:14

R'$I!S ar-;? ar-; ar-; ar-;B ar-;.14 -9.8&

=BCE 3% 8.1 2.>1 11.9 8.& -.

0a%uation

#ME 8.44 4>.2 1&.28 .> -.84#M 4.>4 .9 1.49 &.4> &.&

#MCE#/ .>2 1.9& .4> 1.>> .&1

EMBperating income &.41 4.28 8. 2.18 1.1

EM/ales .91 1.24 1.&4 &.2 &.8

everage Ratio

"e$tME(uity .& .&4 1.>4 .&9 1.99

!ther

Int. coerage 4.2 . . .9 -&.4&

"iidend #ayout 1.48 9.&> 9.9& .8 -2.>4


om$ay "yeing is a strong play on the textiles, petrochemicals and real estate $usinesses

and Company has also made a come $ac5 in its retail $usiness, hich ill further drie

the groth of the company.

The company has tremendous potential to leerage its strong $rand e(uity and re-inent

itself through its ongoing restructuring exercise.

The company has a mar5et capitali*ation of =s$n and an E of =s9.$n. Its reali*a$le

real estate alue oer the next -4 years alone is close to =s1.9$, hile it is li5ely to earn

=s4&mn per annum of recurring income from lease rentals )L1& onards from &.mn

s( feet of retail property.

4>


50/82


51/82

6.4 5okalda 7ort Ltd.:


#a$le No:16

!o5aldas Exports .

7t that time the group expanded through partnership

firms. The preailing regulatory enironment, la$our las

and reseration for small-scale industries made it

conducie for groth through forming partnership firms.

The Company as conerted into #riate limited

company in order to expand further.

!E< at present, is a maor player in the readymade garment industry across the glo$e.

It is one of the largest manufacturerMexporters. The companyGs ide product range 3for men,

omen and children, design capa$ilities, focus on niche segments li5e outerear and

expertise in managing multiple orders concurrently 3it has 42 plants in and around angalore

ma5e it a preferred endor to many fashion $rands and retailers around the orld. The

company is highly dependent on export groth, as exports account for >9% of sales currently.

The ;indua !roup in angalore controls the company 3ith promoters holding a 88% sta5e

after its recent pu$lic offering.

!o5aldas Exports #t


52/82

ig. /o:1+

8ey Poitive:

O#referred endorG for some of the orldGs largest and ell 5non $rands li5e @i5e, !7#,

Bld @ay, Tom Tailor and


53/82

The company ill $e inesting =s 8& crore to set up four ne manufacturing units oer

1 to 19 months. The ne facilities ill come up in ?ysore, ;ydera$ad, Chennai and

another one near angalore.

The company plans to upgrade machinery at its existing units. It ill inest a$out =s &

crore for installing material handling systems, coneyors and productiity-enhancing

e(uipment.

7 large laundry unit around angalore had commissioned in "ecem$er last year to meet

its capacities and to come up as complete integrated player.

*i!a!&ial Reult:

#a$le No:1- 5=s. In Crores6


ar-;?ar-

;

ar-

;

ar-

;B

ar-

;?.11 >;.

>B+.>

+>?.1

+ +1?.>;

Growth 56 ++.

1@;.

@+ -?.@< +.>; ?.;@

EIT"7 1&&. 28.&2 4.1 >. 4.22 >. .21

"epreciationM7mortisation

19.&8 11.8 &. . .8>.44 4.>>

E)I$ 5!(erating

,rofit6+.+> ; .1 ?.1< +?.?1 ++. 11.9 &.2 .>4 .4 .48 .2>

#T 28.>4 4.2> .& .12 8.4 &.41 12.8

Taxes 8.&2 4.11 &.&9 & & .9 &.9

,'$ B;. >?.+.1B >.@+ 1


54/82

!BA7.9 Cr to =s 2&.99 Cr. shoing an increase of

.9 %. /ales of the fourth (uarter ended ?arch 1,&&2 stood at =s ,&& million, the

corresponding net profit $eing =s 1&. million.

Ber 9& percent of the reenues ere generated from the export of outerear and $ottoms

and $oth these items hae remained the 5ey components to reenue generation for the

company. Buterear includes $oth sportsear and inter ear and $ottoms include

casual pants, chinois, linen trousers, denim eans, etc.

There is a ump of 1&% in the Capex this year. The Capex for )L &2 is =s.92 Crores

hereas the Capex for )L &9 as =s. > Crores. The depreciation also has $een higher to

the tune of 2%. The depreciation for )L &> is =s. 19.&8 Crores and the same for last

year as =s. 11.8 Crores. 7s a conse(uence of this high Capex, deferred tax lia$ility has

also increased.

Ratio A!alyi:

#a$le No:10

R'$I!S ar-;? ar-; ar-; ar-;B ar-;4 .2& 8.

CE#/ 4. 44.82 4.& 2.9 9.91

&4.42 119.4 1.>4 1&.&& 1&.

,rofita"i%ity

=BE 3% 18. .9& .8 2.&1 8&.4

=BCE 3% 1.29 1. .21 41.8& 8.1

everage Ratio

"e$tME(uity 1.81 .1 1&.> 1.1 1.1&

!ther

Interest Coerage .8 4.8& 2.> >.12 8.98

"iidend #ayout 9.48 8.1& ---- ---- ----

4


55/82


!o5aldas Exports is the largest garment exporter in India and should definitely $enefit

once the dismantling of (uotas effect starts increasing outsourcing trend.

In my opinion #ME captures the strong earnings groth potential and hence is primary

aluation tool. The stoc5 is trading at a #ME of 14.21 in )L&> earnings hich is near to on

an aerage of the industry. #remium multiple is a function of !o5aldas rapid earnings

groth of 41% C7!=, on par ith the groth leaders in our textile industry.

Company has a ery ell E#/ and =BE as compared to other maors in the industry

hich implies that company is using its resources ery ell and itGs a good sign to

inestors to loo5 in.

Dith glo$al reforms seeming to faor India since the remoal of (uotas and ith anti-

surge measures on China, e expect companyGs groth to continue.


56/82


57/82

Sale Break9:

7s can $e seen from the pie charts that company is /hifting focus on alue added

products.

/ales for the year )L&2 ere more-or-less maintained at the preious year leel gien the

fact that the sales of #/) ere don $y % mainly due to stiff competition from Cotton.

The share of Larn in the total sales has increased from 14% to 1>% in &&>.

/ales for #BL ere loer mainly due to sudden increase of ne players in the industry.

"ue to sudden increase in the players, the industry dynamics ere distorted to some

extend and impacted I=/1.;>.;?>1.;>.;

/et sa%es 1&;.?; 1&@.? 1&BB>.?@ 1&11.B? 1&@@


58/82

ended ?arch 1, &&9. Total Income has decreased $y .19% to =s 12.> Cr. for the J4

)L &9-&> from =s 9.8 Cr. in J4 )L &8-&9.

The company has posted 2.18% decrease in profit after tax to =s 19.& million for the

year ended ?arch 1, &&> as compared to =s 8&.1& million for the year ended ?arch

1, &&9. Total Income has marginally increased to =s 1>&44.& million in )L &8 - &9 to

=s 1>2.8& million for the year ended )L &9 - &>.

Ber the years, @et sales of the company are increasing marginally $ut there is declining

trend in Bperating #rofit margin and #rofit after tax margins.

Ratio A!alyi:

#a$le No: ,1

R'$I!S ar-;? ar-; ar-; ar-;B ar-; . 1.& >.> .49

CE#/ 1.21 1.2> .>1 1.2> 12.1

&.2 1. 1.49 4.> 4&.&8

E 1&8.> 1418.82 18. 14>.91 14.4>

,rofita"i%ity =BE 3% 8.82 1&.4& .& 1.8 2.&

=BCE 3% 8.98 11.21 &.41 18.>4 1&.29

0a%uation

#ME 1.28 1.8 .& .> .4&

#M &.>9 1.9 1.> &.2 &.1

#MCE#/ .22 4.12 .&& 1.2 &.

EMBperatingincome 1.4> >.8 .82 4.88 2.49

EM/ales &.2 &.82 1.&4 &.8> &.9

everage Ratio "e$t M e(uity 1.94 1.9 .12 .8& .2

!ther

Int. coerage .9 .84 2.9 4.1& 1.

"iidend #ayout 82.1 8.1& &.81 .>9 4&.>

9


59/82



60/82

6.- Ma/avir Si!!i!+ Mill Ltd:


#a$le No:,,

Incorporated in Bcto$erG 1>8, ?ahair /pinning ?ills

3?/?


61/82

alue-added products ma5e it a preferred supplier to domestic and international

manufacturers in textiles and apparels. "irect exports contri$ute % of reenues.

The company caters to its international customers through an EB, ?T

/pinning Company, a oint enture $eteen ?aru$eni Corporation and Toho =ayon

Company


62/82

7ll the segments recorded an increase oer last year except the steel segment, hich

shoed a decrease of 4% in reenue hile % in #rofit $efore tax.

8ey Poitive:

?ahair plans to inest =s1$n oer )L&9-&> to large-scale expansion capacities,

hich ill drie the groth and place the company to ne heights. Eighty percent of

this ill $e funded $y de$t leeraging on lo cost funds under T) and internal

accruals.

?ahair has lined up an expansion in fa$ric after ac(uisition of ardhmanGs textile

$usiness, after hich it offers integrated fa$ric capacities of 9m meters.

Dith the groth outloo5 for textiles improing, there is an increasing demand for

superior (uality yarn. ?ahair has differentiated itself $y focusing on speciali*ed

yarns li5e compact, lycra, dyed, gassed merceri*ed, hand 5nitting and $lended yarns.

This alue addition is expected to drie the groth of the company.

Company is the second-largest seing thread manufacturer in India after Coats. Dith

the increase in IndiaGs apparel exports and the fiscal changes made $y the goernment

hae created a leel playing field and the company ill $e a$le to leerage its strong

position in the seing thread $usiness.

/oftening steel prices adersely impacts the decline in price reali*ations of the steel

alloy $usiness and also the operating profita$ility of that $usiness.

;igher than a -% fall in yarn price reali*ations due to commodity nature of $usiness

ould impact the profita$ility of the yarn $usiness $y -%

Re&e!t 'eveloe!t a!d 7a!io! Pla!:

The company enters into a su$scription agreement ith "eutsche an5 7!, ;ong Aong

ranch for an issue of foreign currency conerti$le $onds of /0 2& million ith

maturity of years and 1 day. The )CCs are to $e listed on the /ingapore Exchange.

2


63/82

?ahair /pinning ?ills .

The company has planned to expand all its existing capacities as $eloK

o Larn - /pindles to expand from its existing 429,299 units to 2&,299 units $y

"ecG&>

o )a$ric 3m meters from &.& to 9 "ec'&>

*i!a!&ial Reult:

#a$le No: , 3=s. In Crore

,articu%ars $we%ve onths Ended @th tr Ended ar-;?ar-; ar-; ar-;Bar-;1.;>.;?>1.;>.;

/et sa%es

1?.1

B

1&

EIT"7 >1.41 1.28 18>. 149.4 11.4 >.4 92.21

"epreciationM7morti*ation

1&1.4 >8.&1 2.89 1.18 4.9 4.44 .9

E)I$ 5!(erating ,rofit6 +?;.; +1.BB 1++.

argin 56 1< 11.1 11.> 11. 1;.@ 1@.>< 1>.@?

Interests >.4> >.&> 4&.4 9.9 41.2 >. 11.2

#T &.9 1>.8 9. 9. 2.4> 99.94 .28

Taxes 4.8 9.91 .14 1.8 11.&9 1.29 .41

,'$ 1?B.>+ 1+;.B B;.1B @+.


64/82

profits from =s. 48. Cr to =s. 82.12 Cr. /ales for the (uarter rose .>% to =s. 4,>48.2

million compared ith the corresponding (uarter, a year ago.

)or the full year ended ?arch &&2, =eenues increased $y a marginal % to =s 199>.12

crore. B#? umped to 1.% resulting in .2% increase in operating profits at =s

>&.&8 crore. =a material cost as a % to net sales 3net of stoc5 adustment decreased

from 49% to 4% hile /taff cost and other expenditure increased from % and 1% to

2% and 4% respectiely.

The companyGs sales had increased oer the years except oer the last year $ut it can $e

seen that though the sales are nearly same $ut Bperating profit margin and #7T margin

had increased su$stantially increased oer last year. 7lso company is trying to improe its

margins oer the years.

Ratio A!alyi:

#a$le No: ,%

R'$I!S ar-;? ar-; ar-; ar-;B ar-;9 1.2 .2 12.1 >.98

122.48 &8.9 1>4.9 182.1& 12.>&

E 81.& 14&.21 91.42 >9.9& 429.9&

,rofita"i%ity

=BE 3% &.41 1.&> 1.& >.9 2.&

=BCE 3% 1.>1 14.11 1.2 1.&4 >.>8

0a%uation

#ME 8.9 .9 .9 . .2

#M 1.2& &.99 &.8& &. &.

EMBperatingIncome 9.18 2.4 .2 .4& .84

EM/ales 1. &.88 &.8>1 &.811 &.244

everage

"e$tME(uity 1.>& 1.>4 .& .& 1.>4

!ther

Int. coerage 8. .8& .> .92 1.>2

"iidend #ayout 11.>8 14. 1>.8 .4 4.4


24


65/82

The premium is a function of the companyGs efforts to moe aay from the commodity

$usiness of yarn and its ertical integration into fa$ric $ut it also recogni*es that earnings

C7!= of 1% is $elo that for other top pic5s in the sector.

7s company $eing one of the largest players in cotton yarn, loer cotton prices and a

sharp drop in the interest cost hae resulted in profits.

EMBperating income of 9.18, the stoc5 is trading at 1% discount to the

sector aerage. The company has lo EMBperating margin ratio $ut gien the companyGs

initiaties to improe its product mix to achiee superior margins, an EMBperating

margin ill improe a lot.

Dith future expansion largely drien $y fa$ric and ne capacities going on-stream in

phases, the stoc5 to trade at premium to the industry as the groth theme plays out.


66/82


67/82

innoator, =aymond Textile has $een responsi$le for raising the standard of the Indian

textiles industry.

*i+. No:14

Reve!ue Cooitio!:

The company generates the large reenue from textile and related sectors and Engineering

segment comprise only 1&-1%. @et =eenue as =s.14.84 Cr ith a LBL groth of

12%.

7s it seems the percentage of textile segment has reduced in the reenue composition $ut

the reenue of textile diision stood at =s.929.44 Cr. Dith an increase of 1% in reenue

from textile diision.

/ales of the textile diision contri$uted 28% to the oerall sales and maor part of the

profita$ility of the company. Dith 4% of alloca$le capital employed for the year, textile

diision's contri$ution in the #I"T figure is 9%. The profita$ility of this diision

increased $y % to =s 2.82 crore.

The groth in the reenue of "enim "iision increased $y %, Engineering $y >% and

rands $y 11%.

Re&e!t 'eveloe!t a!d *uture Pla!:

=aymond has entered into definitie agreements ith CB @.., elgium for com$ining

the denim $usiness of the company and CB @.., and its su$sidiaries in a proposed

&K& oint enture company to $e located in India.

28


68/82

=aymond has plans to expand its capacity for orsted suiting at api in !uarat $y

million meters per annum ma5ing the companyGs total capacity for orsted suiting of 1

million meters per annum. This ould $e an integrated facility starting from spinning up

to finishing of fa$ric. The total cost of expansion is estimated at =s 1>8 crore.

=aymond has announced the setting up of a "esign /tudio in Italy $y setting + ith

!ruppo am$aiti. It ill proide the Company ith strategic, cutting edge design

capa$ilities for all its textile and apparel $usinesses. The design studio ill proide access

to international design talentW proide isi$ility to its products glo$ally.

*i!a!&ial Reult:

$a"%e /o: +B 3=s in Crores


ar-;? ar-; ar-; ar-;B ar-;< >1.;>.;?>1.;>.;

/et sa%es 1&>@;.@.& 1>.>

E)I$ 5!(erating ,rofit6 1?.B< 1+;.@1 +;?.@+ 11.>< 1B? 1?.+1 1B.?@ 1.;B 1+.?B 1+.@+

Interests .9 9.9 .&> 9.8 .41 .8 .&8

#T 12.8 >1.9 192. 1.2 11&.4 44.4 9.&

Taxes 41.&9 14.82 4.4> 41. 2.8> >.21 -2.9

,'$ 1++.+? B.+ 1>1.@ ?1.@> >.B@ >@.1 @@.@>

argin 56 ?.1+ B.B> 1+.1; ?.;@ .B; ?.;B 11.

)or the (uarter ended ?arch &&>, the company reported a 1>% increase in sales.

;oeer the B#? decreased to 1%. ottomline for the (uarter declined $y % mainly

due to fall in B#?, increase in interest and tax proision. ;oeer the yearly

performance remained ro$ust. The main driers for the groth ere Textile and "enim

segment.

29


69/82

The company has shon the good figures for the year ending &&>. The company has

shon nearly 12% groth in the topline here as nearly 2&% groth in $ottomline. The

operating margins sa an increase from 1&.% to 1%, hich resulted in 2% ump in

the operating profits at =s 1>9.2 crore

7s can $e seen the performance of the company oer the years there has $een increase in

the sales of the company su$stantially $ut the Bperating profit margins and @et profit

margin has $een fluctuating due to fluctuating ra material prices, taxes and ages.

Ratio A!alyi:

#a$le No: ,-

R'$I!S ar-;? ar-; ar-; ar-;B ar-;.> 1. 1.49 14.>& 1.2

CE#/ 8. 8.2& .8 &.28 1.

1>.92 18>.9 18&.9 1.49 14.9

E 92&.1 4. 1. 1&12.1 1&9.&&

,rofita"i%ity

=BE 3% 1&.9 2.>2 1.8 >.9 >.4

=BCE 3% 1&.1 8.19 1.8 11.> 11.2

0a%uation

#ME 18.1 .9 9.8 2.&1 8.&

#M 1&.> 11.& 2.42 .4 4.&

#MCE#/ >.1> 11.81 .&2 .> .&8

EMBperatingincome

14.4& 1.91 .2> 4.4 4.>8

EM/ales .1 .1> 1.4 1.&& 1.1

everage

"e$tME(uity 1.2 1. 1.4 1.& 1.>

!ther

Int. coerage .2 4.19 >.&8 4.4 .>>

"iidend #ayout .1& 1.>2 .21 &.1 .&


Company is expanding its fleet across different categories. Company entered into the

$randed 5ids ear mar5et $y launching app, targeted 4-1 years age group that at

2>


70/82

present cloc5s percent groth rate. Except this, Indian textile industry is in one of the

most $uoyant periods.

Dith its premium $rand positioning alloing some pricing poer and the expectation of

rapid earnings groth, it is expected for the stoc5 to trade at a premium to the industry.

hich gies a good signs. Company has a "e$tME(uity ratio of 1.2 hich

is less as compared to others in the industry and its part of deelopment plans.

and the

partnerships forged ith leading international players ill contri$ute significantly to the

CompanyGs $usiness in the coming years.

)rom the analysis of arious ratios and loo5ing at the fundamentals of the company and

industry it can $e recommended to L the shares as company is ell doing.

8&


71/82

6.; S.8uar Natio!2

Dorsted )a$ric 31>>> Q =eid : Taylor 3#remium

=eady-to-ear 3&&1 Q Tamariind 3?id price, =eid : Taylor 3#remium

"ue to this diersification, /A@< is the only Indian company, to hae a presence across all

fi$re categories - ool, polyester $lends and cotton. The company has recently formed 4

81

Current ?ar5et#rice >.4

?ar5etCapitalisation

3=s in Crs >28.1

)ree )loat% 48.

Dee5 ;igh 81.>

Dee5


72/82

/pecial usiness nits 3/s, corresponding to the 4 segments so as to ena$le independent

functioning and decision-ma5ing at the unit leel.

/. AumarGs has tied up ith the =eid : Taylor 3International


73/82

/ Aumars has a ide distri$ution netor5 of && holesale dealers and &,&&& retail outlets

for the S Kumars $rand, and 12 exclusie outlets and 9,&&& retail outlets for the Reid &

Taylor$rand.

Ex(ort o((ortunity in the (ost u%ti i"re 'greement 5'6 era:

Increasing exports is the clear focus in the post ?)7 era ith exports to reach % of sales

$y )L1&, hich as ust a$out 4% of sales in )L&. ;ome textiles, Dorsted /uitings and

;)C /hirtings are expected to $e the future export driers for the company

Re&e!t develoe!t 3*uture Pla!:

/.Aumars @ationide & crore

o =eady-to-ear garments 3Total Dardro$e /olutions - =s & crore

o ;ome Textiles - =s 9& crore

o ;igh alue )ine Cotton /hirting - =s 1& crore

o Dor5ing Capital ?argin - =s & crore .

*i!a!&ial Reult:

#a$le No: ,;


ar-;?ar-;ar-;ar-;Bar-;1.;>.;?>1.;>.;

/et sa%es ?.> >@@. B1.; ++ &.9> 9.2 9.8> 49.99 1&. 2.4

E)I$ 5!(erating ,rofit6 1.@ ->.;+ ->.1< +.1< 1B. 11.92 1.4> 1.9 1.2

#T 11&.8 >.1 -1.1 -1.41 -119.1 . 14.>8

Taxes 1&.4> & - -&.&4 -1&.84 .> &.&&

,'$ ??. ?.1< -1?.1< -1> -1;.@1 ++.B 1@.?

argin 56 11.+1 +.BB ->.11 -+1.; -1>.>1 ?.1 .B+

8


74/82

The company has came out ith the outstanding figures for the year ended ?ar-&2.

Company has shon a topline groth of 19.4% and $ottomline groth of nearly

1&&&% oer the preious year. The company has also increased the Bperating profit

margin and @et profit margin tremendously.

7s can $e seen from financials oer the year, The CompanyGs B#? and net profit margin

ere ery lo and negatie for some years $ut company has increased it this year and a

strong groth is expected from the expansions to $e completed. =eason for the lo

performance preiously can $e thought of as high interest payments and depreciation.

Ratio A!alyi:

#a$le No: 2

R'$I!S ar ;? ar ; ar ; ar ;B ar ; 1.> 1&.82 9.>2

9. -&.>9 1.1 12.2 .8E &2. 1&8.& 18.4 1&4.2 1&9.49

,rofita"i%ity

=BE 3% 8.8 ->.&8 -8.>9 -1.22 -2.94

=BCE 3% 1.1 1.& 11.8 9.& 2.11

0a%uation

#ME >.4& .29 -.88 -&. -&.2>

#M 8.1 -1.&9 &.42 &.8 &.1>

#MCE#/ .14 >.> .2 1.9 &.>2

EMBperating income 1&. 4.9 &.22 &.2> 1.

EM/ales .1 4.9 .&& 1.>4 1.8everage Ratio

"e$tM E(uity >.1 -8.92 .2 .9 .4

!ther

Int. coerage . 4.1 21.9 &.>2 &.2&

84


75/82


/ Aumars @ationide is one of the turnaround stories in the Textile space ith strong

$rand and diersified product portfolio. The company is ell poised to leerage the

opportunity in the Textile /ector $oth in the domestic space and also the exports mar5ets.

/uccessful implementation of its groth strategy ith focus on 'Home Textiles' : 'Total

Wardrobe Solutions' ould drie the future profita$ility in coming years, hich ill in

turn trigger a re-rating in the stoc5 aluation.

I $eliee #ME is not a suita$le aluation tool to alue this company $ecause the company

has ust turned around so instead e can 5eep EM/ales in ie of its recent thrust on

retailing and $randing. =etailers in general hae $een trading $eteen .& and .

EM/ales. The stoc5 may hae more than discounted the turnaround and prospect of

strong groth ith aluations at . EM/ales for )L&>.

Company has a ery high "e$tME(uity ratio hich started from >&Gs as company financed

most of its expansion plans through $orroings and it rose year $y year and also

company as in $urden of paying high interest. )inally de$t restructuring plan has $een

sanctioned no and company ill reduce its $urden soon.

Though company has high de$t repaying program and also expansion plans hich are

li5ely to generate huge cash flos in the future $ut loo5ing at the ris5 attach it is

recommended to inestors to /E


76/82

6.12 =elu! I!dia Ltd:


#a$le No: 1

Delspun India, the flagship company of Delspun

group as incorporated in the year 1>9. Delspun India is

one of IndiaGs largest home textile companies, the largest

producer of Terry Toel in 7sia and the fifth largest terry

toel player in the orld The company is ell positioned to

exploit the huge opportunities in the home textiles arena

in the post (uota scenario, as glo$al manufacturing capacities in the deeloped orld are

closing don. Delspun has timed its capex extremely ell and has a ide product mix and

glo$al capacities. It is highly regarded $y glo$al $uyers for its product deelopment and

innoation s5ills. The Company transferred the /pinning diision ith its assets and

lia$ilities to Delspun Cotton Larn

Dee5 ;igh 14.&& Dee5


77/82

ig. /o: 1

Re&e!t 'eveloe!t a!d *uture Pla!:

Delspun group has ac(uired an 9% interest in Christy 3C;T ;oldings


78/82

Bther expenditure for the year also increased $y 8 per cent on higher poer costs and

ne capacities coming on-stream. 7s a result, operating profit margin fell to 1. per

cent. Delspun is increasing its capacity and as a result, interest and depreciation are li5ely

to remain high going forard.

7s seen from the financials oer the years, @et sales hae $een increased su$stantially

and the margins hae also $een increased ust left to this year.

Ratio A!alyi:

#a$le No: ,

R'$I!S ar-;? ar-; ar-; ar-;B ar-;9 2.1& .8 1.9>

CE#/ 18.& 12.24 14.>> 1.22 14.1

8.8 24.> &.2& 44.8> 41.

E 1&8.& 1.4> 8.4 29.2 .1&

,rofita"i%ity

=BE 3% 8.4 1&. 1.9> >.11 2.&&

=BCE 3% 8.&1 >.& 1.& 1.1 1.1

0a%uation

#ME 1. &.2> 1.84 >.8> 8.>M &.>4 1.>1 1.22 &.89 1.8

#MCE#/ 4.1 8.4 .> .82 .&&

EM Bperating Income 1.> 14.&1 9. 8. >.9

EM/ales .&2 .8 1.2> 1. .1

everage Ratio

"e$tME(uity . .2 1.> 1.> 1.>

!ther

Int. coerage .94 .1& .94 1.> 1.4

89


79/82


The company is -4 years ahead of its competitors in the home textile space and hence,

$est poised to capitali*e on the huge opportunity in this segment in the post-(uota era.

7ny strategic ac(uisitions of a retail outlet or $rand ill $e a further positie for the

stoc5.

Delspun is one of the most expensie textile stoc5s, ith a high de$t-e(uity ratio of .-

.2 and lo =oE of 8.% hich is not a good sign from the inestorGs point of ie.

#ME $eing the primary aluation tool as e can see that companyGs stoc5 is currently

trading at #ME of 1. hich is ell at an aerage of the industry. Dhile loo5ing at lo

=BE in the industry it can $e udged that company is not $een a$le to use its resources

ell.

Dith an expected earnings C7!= of 4% oer )L&>-1&E $eing the highest in the sector,

glo$al scale capacities in terry toels and a $usiness model getting more dynamic ith

the companyGs entry into high alue add segments, it seems aluations appreciating and

expect the stoc5 to trade at premium as groth plays out.

The stoc5 is not $een rated up to the mar5 $ecause of the ris5 perceied $y inestors due

to its fre(uent dilution.

8>


80/82

. Com(arative 'na%ysis:

ig. /o: 1

ig /o: 1?

ig /o: +;

9&


81/82

)ig @oK1

ig. /o: ++

ig /o: +>

91


82/82

)i"%iogra(hy:

1. )inancial ?anagement Q I ? #andye

. .texmin.nic.in

. .i$ef.org

4. .icicidirect.com

. .r$i.org.in

2. .myiris.com

8. .cline.capitaline.com

9. usiness /tandard @espaper
http://www.ibef.org/http://www.icicidirect.com/http://www.rbi.org.in/http://www.ibef.org/http://www.icicidirect.com/http://www.rbi.org.in/

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