Arvind Products Ltd merged Management Discussions

ARVIND PRODUCTS LIMITED ANNUAL REPORT 2010-2011 MANAGEMENT DISCUSSION AND ANALYSIS DISCLAIMER: 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 and risks and opportunities could differ materially from those expressed or implied in such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of their date. The following discussion and analysis should be read in conjunction with the Companys financial statements included herein and the notes thereto. OVERVIEW: The Company is a subsidiary Company of Arvind Limited, which is the largest cotton textiles manufacturer and exporter in India and a leading player in the branded garments in the domestic markets through its subsidiaries. Your Companys principal businesses consist of manufacturing and marketing of voiles fabric, bottom weights fabric and yarn. The yarn manufactured is mainly consumed by the parent Company, Arvind Limited. During the current financial year ended 31st March, 2011, the Company has reported net profit of Rs. 40.33 lacs as compared to net profit of Rs. 406.72 lacs in the previous financial year ended 31st March, 2010. FINANCIAL PERFORMANCE AND REVIEW The summarized Profit and Loss Account is given in following table: Rs. in lacs Sales & Operating Income 61993.92 Other income 66.59 TOTAL INCOME 62060.51 Raw Material 31295.32 Finished Goods 1730.38 Employees Emoluments 5069.25 Power & Fuel 7795.42 Stores Consumed 4743.69 Others 8257.11 (Increase) in stock (2105.79) TOTAL EXPENSES 56785.38 PBIDT 5275.13 Interest & Finance Charges (Net) 2121.61 PBDT 3153.52 Depreciation 3113.19 Net Profit for the year 40.33 Sales and Operating Income for the year ended 31st March, 2011 are Rs.61993.92 lacs (Previous year Rs. 47466.08 lacs). Operating Profit (EBIDTA) for the year is Rs. 5275.13 lacs (Previous year Rs. 5141.54 lacs). The Companys Net Profit for the year is Rs. 40.33 lacs (Previous year Net Profit Rs. 406.72 lacs). Interest & Finance Charges are Rs.2121.61 lacs (Previous year Rs. 2322.24 lacs) and Depreciation is Rs.3113.19 lacs (Previous year Rs. 3623.07 lacs). The Company has made Cash Profit of Rs. 3153.52 lacs for the year (Previous year Rs. 2819.30 lacs). INDUSTRY: Product Group - Voiles: The Voiles Division of the Company is engaged in manufacturing high quality Cotton and blended Voiles (an end product for Indian Blouse) for the domestic and International market. A niche product, made from 2 Ply High twisted fine yarns gives the fabric a characteristic crispy feel. In the Middle East Countries fine Cotton Voiles are used for Guthras (head gears for Men) and Thobes (similar to Indian Sarees for Women). Other prominent products include Cotton and Blended shirting, Trousering material, Long Cloth, Sarees, dress material and a wide range of Lawns, structured fabric etc. The Company enjoys a unique position in the 2x2 rubia segment, a market estimated to be around 25 Million Metres per annum. The Company continues its leadership in terms of quality and quantity, with a major 40% of Market share within its fold. The Companys chief strength is its amazingly rich and fancy color palette. In a business where shades reign supreme, the Voiles Division boasts of its incredibly large shade collection - offering perfect blends for diverse tastes, each bearing the same stamp of quality and excellence. The ability to supply a huge range of colors in a variety of high quality products with rigid adherence to delivery deadline has been the key to Companys sustained growth and performance over past few years. The Company has an impressive countrywide distribution Network comprising of about 150 dealers, to whom goods are directly supplied. The dealers subsequently supply the goods to the retailers. The Company has appointed Agents who take the indenting and Del Credre responsibility. Such a distribution network results into an unprecedented reach and deeper penetration into hitherto unexplored markets. With the capacity expansion in the Processing Department, the Company has made headway into the Polyester, Viscose, Dress material segment, Cotton and Blended Shirting fabrics to reap in higher turnovers and Market presence in the coming years. Product Group - Bottomweights: Performance of Bottom weight fabric division had been satisfactory in the current year. Capacity utilization increase and volume went up from 16.8 million meters in previous year to 18.9 million meters in the current year. Margin continues to remain under pressure with cotton prices reaching at the highest level and realization not increased proportionately due to subdued demand in the developed countries. However domestic demand remains buoyant and going forward would help the Company to improve the margins. The Company has improved the presence in light weight market segment where the cotton dependency in lower. The Company has been able to successfully execute fire retardant fabric orders where the margins are comparatively higher. The Company is also planning to set non-cotton suiting product which would be of great advantage as the Company already has very well set and vast retail distribution network. The Company is also aiming at improving the presence womens wear category for which trials and product development initiatives has shown very encouraging results. Going forward Company is targeting improvement in margin on back of new initiatives, expected buoyant domestic market. INTERNAL CONTROL SYSTEMS: The Company has well defined and institutionalized business processes with effective control systems to ensure that assets and interests of the Company are safeguarded. The Company has a dedicated task force working on budgetary controls, responsible for preparation of the budget, which is reviewed along with the performance on monthly basis and corrective actions, wherever needed to ensure compliance. Considering the size and nature of operations of the Company, the overall control systems are adequate to meet the need and the purpose. The Company has its own internal audit team comprising of qualified professionals and has also hired services of outsourced professional audit firm to monitor and check the efficiency of the system and compliances. HUMAN RESOURCES AND INDUSTRIAL RELATIONS The Company always values its human resources and believes in unlimited potential of each employee and regularly reviews its policies and procedures, necessitated by the fast changing macro economic factors to make the organization high performing and successful. Industrial relations have continued to remain cordial in all the plants of the, Company without any disruptions of manufacturing activities.