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INDUSTRY INSIGHT
INDIAN TEXTILES
April 2005
Cygnus Business Consulting & Research

4th & 5th Floors, Astral Heights, Road No. 1, Banjara Hills, Hyderabad-500034, India Tel: +91-40-23430203-07, Fax: +91-40-23430208, E-mail: info@cygnusindia.com Website: www.cygnusindia.com
Disclaimer: All information contained in this report has been obtained from sources believed to be accurate by Cygnus Business Consulting and Research (Cygnus). While reasonable care has been taken in its preparation, Cygnus makes no representation or warranty, express or implied, as to the accuracy, timeliness or completeness of any such information. The information contained herein may be changed without notice. All information should be considered solely as statements of opinion and Cygnus will not be liable for any loss incurred by users from any use of the publication or contents
Industry Insight Indian Textiles
Table of Contents
1. EXECUTIVE SUMMARY .............................................................................. 4 2. HIGHLIGHTS................................................................................................ 6 3. INDUSTRY STRUCTURE ............................................................................... 7
3.1 Indian Textile Industry ............................................................................................. 7 3.2 Overview.................................................................................................................. 7 3.2.1. Global Scenario ........................................................................................... 7 3.2.2 Indian Scenario ............................................................................................. 8 3.3 Contribution of Textile Industry in 2004-05........................................................... 9 3.4 Production of Textiles ............................................................................................. 9 3.5 Growth Projections ............................................................................................... 11
4. IMPORTS & EXPORTS............................................................................... 14

4.1 Textile Exports: ....................................................................................................... 14
5. REGULATIONS.......................................................................................... 16
5.1 Foreign Direct Investment ................................................................................... 16 5.2 Labor laws.............................................................................................................. 18 5.3 Intellectual Property Rights.................................................................................. 18
6. MAJOR PLAYERS ..................................................................................... 19

6.1 Indian Rayon ......................................................................................................... 19 6.2 Arvind Mills ............................................................................................................. 23 6.3 Raymond ............................................................................................................... 27 6.4 Alok Textiles............................................................................................................ 31 6.5 Century Textiles ..................................................................................................... 35 6.6 Bombay Dyeing .................................................................................................... 39 6.7 Indo Rama Synthetics .......................................................................................... 43 6.8 Welspun India........................................................................................................ 47
6.9 Vardhman Spinning Mills ..................................................................................... 51 6.10 Himatsingka Seide .............................................................................................. 55
7. GROWTH DRIVERS .................................................................................. 59 8. OUTLOOK................................................................................................. 60 BIBLIOGRAPHY & REFERENCES.................................................................. 61 ANNEXURE ................................................................................................... 62

A) Textile policy ........................................................................................................... 62 B) Industry Associations .............................................................................................. 63
1. EXECUTIVE SUMMARY
The phasing out of world trade quotas from January, 2005, thrust Indian textile industry into a new era where it not only needs to fend for itself in the global markets, but also faces competition from global players in its own backyard. Undoubtedly the removal of quota restrictions presents India with an opportunity to increase its share of global market. But India needs to reform its laws, modernize machinery and scale up capacities to global level to exploit this opportunity. Textile is among the leading sectors in the Indian economy in terms of production, exports, employment and contribution to the exchequer. According to Confederation of Indian Industry (CII), textile industry has high growth potential given inherent strengths such as abundant raw materials, low labor cost and a thriving domestic market. Textile industry is also important from a foreign exchange and employment perspective. Indian textile industry comprises a diverse, fragmented group of establishments that produce and/or process textile-related products (fiber, yarn, fabric) for further processing into apparel, home furnishings, and industrial goods. The total production of cloth by all sectors that is mill, power loom, handloom, hosiery and khadi, wool and silk was 42,708 million square meters (provisional) in 2003-04 and expected to touch 44,322 million square meters in 2004-05. India accounted for 22 per cent of the world installed capacity of spindles in 2004. India has a share of 14 per cent in US$31 billion global cotton export trade. Not surprisingly, cotton yarn accounts for a large portion of yarn production in the country. The country has the largest cotton acreage of nine million hectares in world. In fiscal 2003-04, Indias cotton production totaled 2.84 million tons making it the third largest producer of cotton in the world, accounting for 13.90 per cent of the global production. But India fares poorly in terms of productivity due to heavy dependence on rainfallabout 65 per cent of area under cotton is rain-fed. The country has also made headway in denim. The denim sales are projected to grow at about 15 per cent in 200506. Arvind Mills is the largest denim player in India. India ranks fourth in staple fiber production and sixth in filament yarn production. The synthetic fiber industry performed well in 2003-04 due to higher demand. Demand for Partially oriented yarn (POY) is expected to go up by seven per cent and polyester staple fiber by five per cent in 2005. The growth will be driven by improving price competitiveness of polyester vis--vis cotton yarn and the rising share of synthetic fiber in cloth production. Polyester has also benefited form progressive reduction of excise duty from 64 per cent in 1994 to 24 per cent in 2003-04. Indian textile exports have been growing at a rate of 5-7 per cent and expected to grow at a rate of 15-16 per cent in 2005-06. The share of textile and garment exports in Indias total exports stood at 20 per cent in 200304, amounting to US$12.5 billion. Major export destinations for textiles include US, Europe, UAE, Hong Kong and Japan. US, EU and Canada accounted for nearly 70 per cent of Indias garment exports and 44 per cent of Indias textile exports. Among other countries, UAE is the largest market for Indian textiles and garments; Key exports include sheets and towels. The players that performed well in fiscal 2003-04 include Indian Rayon, Alok Industries, Raymond and Vardhman. Indian Rayon posted good results largely due to improved performance of its garment division. Raymond and Vardhman posted better sales owing to higher exports. Century Textiles, however, focused more on its cement business. CRISIL, the Indian credit rating agency, believes Indian textile industry can grow from US$36 billion in 2004 to US$85 billion in 2010. Main growth drivers for Indian textile industry include low labor costs, competent
technocrats, abundant raw materials, efficient supply chain network, new product development and increased presence in branded apparels among others. Investment in scaling up production and modern machinery will also help Indian textile companies in coping with growing competition in the domestic market. The Union government of India is opening up domestic market to foreign investment. Earlier, the government kept foreign investment out of textile and apparel manufacturing. Now it is gradually lifting these restrictions. At the same time, India has introduced a National Textile Policy in 2000 aimed at improving growth prospects and competitiveness of Indian textile industry. Through NTP 2000, Indian Government hopes to boost textile and apparel exports from US$11 billion in 2000 to US$50 billion in 2010. Furthermore, the Ministry of Agriculture and the Ministry of Textiles have jointly taken up Cotton Technology Mission in February 2000 to make available quality cotton to the industry through initiatives such as raising productivity, improving research, reducing contamination, tackling obsolete ginning and pressing factories, improving storage facilities and strengthening marketing. Restrictive labor laws, outdated machinery and conservative government policies have held back Indian textiles industry from fulfilling its potential. Other constraints include contaminated cotton, high cost of clean water, steep power tariffs and low productivity per spindle. High interest rates, meanwhile, discourage modernization of machinery. Now the lifting of world trade quota restrictions offers India with an opportunity to increase its share of the global textile market particularly in value-added segments such as apparel exports. Management consultant Mckinsey believes that India can capture a five per cent share of global apparel exports market by 2008 if government accelerates regulatory reforms and Indian producers become competitive. Indeed India has the potential to emulate China if government and industry work together.
2. HIGHLIGHTS
Indian textile industry, according to Ministry of Textiles, constitutes 20 per cent of industrial production, 9 per cent of excise collections and 18 per cent of employment in industrial sector. India with its share of 14 per cent in the US$31 billion global cotton textiles trade is second only to China in the global market. Indian textiles industry accounted for share of 37 per cent of countrys gross export earnings and four per cent of gross domestic product in 2003-04. It has been growing at a rate of 5-7 per cent and expected to grow at the rate of 15-16 per cent in 200506. India accounts for 22 per cent of the world installed capacity of spindles. It is one of the largest exporters of yarns in the international market. The industry accounts for 25 per cent share of world trade in cotton yarn. Indian industry has the largest cotton acreage of nine million hectares. India ranks fourth in terms of staple fiber production and sixth in filament yarn production. A study of CRISIL, the Indian credit rating agency, says Indian textile industry can grow from US$36 billion in 2004 to US$85 billion in 2010. Indian government has relaxed rules in Special Economic Zones. Sheets and towels, which make up 40 per cent of the industry's sales, are the two largest product categories. US is the world's largest market for terry towels and Home Textiles, accounting for around 50 per cent of the industry's sales in value, and 30-33 per cent in volumes. US and European Union (EU) together account for 70 per cent of the world's home textile imports. Among the other countries, Japan, Australia and New Zealand are the biggest consumers of home textiles. The Union government of India is opening up domestic market to foreign investment. Earlier, the government kept foreign investment out of textile and apparel manufacturing. India has introduced a National Textile Policy in 2000 to improve growth prospects and competitiveness of Indian textile industry. Through NTP 2000, Indian Government hopes to boost textile and apparel exports from US$11 billion in 2000 to US$50 billion in 2010.
Ministry of Agriculture and the Ministry of Textiles have jointly taken up Cotton Technology Mission in February 2000 to make available quality cotton to the industry
Main growth drivers for Indian textile industry include low labor costs, abundant raw materials, efficient supply chain network, new product development and increased presence in branded apparels among others. Management consultant, Mckinsey, believes that India can capture a five per cent share of global apparel exports market by 2008 if government accelerates regulatory reforms and Indian producers become competitive.
3. INDUSTRY STRUCTURE
3.1 Indian Textile Industry
Indian textile industry comprises a diverse, fragmented group of establishments that produce and/or process textile-related products (fiber, yarn, fabric) for further processing into apparel, home furnishings, and industrial goods. Indian textile sector comprises spinning sector, consisting of mainly medium to heavy counts. Small weaving and processing firms operating in handloom and power loom sector undertake most of the weaving and fabric processing activity. Weaving and processing activity in composite mills sector has gone down considerably due to the closure of many composite mills in recent past. In its broadest sense, Indian textile industry comprises: Spinning units Weaving units Processing units Composite units
Spinning: India is the third largest producer of cotton in the world. It also has a strong production base for synthetic fibres. Indian spinning industry is dominated by cotton yarn. With an installed capacity of 40 million spindles, India accounts for about 22 per cent of the world's spindle capacity. This segment is concentrated in Gujarat, Tamil Nadu, Maharashtra and Madhya Pradesh. Weaving and knitting: The woven fabric production industry can be divided into three sectors: power loom, handloom and mill sector. The decentralized power loom sector accounts for 95 per cent of the total cloth production. The knitted fabric forms 18 per cent of the total fabric production. India is equipped with 1.80 million shuttle looms (45% of the world), 0.02 million shuttle less looms (3% of the world) and 3.90 million handlooms (85% of world).This segment is concentrated in Tamil Nadu and Gujarat. Processing Industry: Processing is the weakest link in India's entire textile value chain. The processing industry is largely decentralized and marked by hand processing units and independent processing units. Composite mill sectors are very few falling into the organized category. Indian processing industry has deployed low end technology with little investment initiative in technology upgradation. The decentralized processing industry lacks R&D and innovation. Garment manufacturing: The apparel industry is the largest foreign exchange earner accounting for 12 per cent of India's exports in 2003-04. Small scale fabricators dominate garment manufacturing. Most garment manufacturing units fare reasonably well on the technology count.
3.2 Overview
3.2.1. Global Scenario
The global textile and clothing industry is worth over US$4,395 billion with clothing accounting for 60 per cent of the market and textiles remaining 40 per cent. USA and European Union (EU) together dominate consumption, accounting for 64 per cent of clothing consumption and 39 per cent of textiles consumption in 2004.
USA is the largest market for home textiles and Terry towels. The US market alone accounts for US$15 billion and growing at five per cent a year. Sheets and towels, which make up 40 per cent of the industry's sales, are the two largest product categories. USA and EU together account for a majority of world's home textile imports. Among the other countries, Japan, Australia and New Zealand are the biggest consumers of home textiles.
Key Textile Exporters 2004

10% 6% 36%
23% 25%
China Hong Kong Korea With World Trade Organization (WTO) Taiwan Indonesia replacing multi-fiber agreement (MFA), global Source: Cygnus Research textile industry is slated to undergo major structural changes. The globalization of the textile trade will increase sourcing from developing countries owing to low labor costs and indigenous fiber supplies. The countries such as China and India, who are already out of the quota system, will benefit post March 2005. China is the leading textile exporter in the world.
Pakistan is also emerging as one of the major cotton textile product suppliers in the world market with a 30 per cent share of world yarn trade and eight per cent share of cotton fabrics. Its total export amounted to US$7.4 billion in 2003-04. Asian countries such as India, Pakistan and China, have a competitive advantage thanks to large cotton cultivation base and low cost labor.
3.2.2 Indian Scenario

Indian textile industry encompasses a range of activities from production of raw materials to providing the consumers with high value-added products (fabrics and garments). Textile Industry plays a significant role in Indian economy. According to Ministry of Textiles, it constitutes 20 per cent of industrial production, 9 per cent of excise collections and 18 per cent of employment in industrial sector. Indian textile industry has a high growth potential because textile business is labor intensive where India has a natural advantage. However, despite these advantages, industry performance has been sub-optimal in comparison to other countries. Indias share in re-location of world trade has been extremely low in comparison to countries like China and even Sri Lanka and Bangladesh. Indian Textile Industry is the second largest in the world in cotton trade. It has the largest cotton acreage of nine million hectares. It is the third largest producer of cotton fiber. It ranks fourth in terms of staple fiber production and fourth in polyester yarn production.
Position of Indian Textile in Global Arena Product Rank Cotton exports 2 Jute production 1 Cotton production 3 Silk production 2 Synthetic fiber manufacturing 4 No. of looms 1 No. of spindles 2 Source: Cygnus Research
3.3 Contribution of Textile Industry in 2004-05

India with its share of 14 per cent in the US$31 billion global cotton textiles trade is second only to China in the global market. Indian textiles constituted four per cent of gross domestic product in 2003-04. It has been growing at a rate of 5-7 per cent and expected to grow at a rate of 15-16 per cent in 2005-06. This industry contributed about 30 million as direct employment. . Man-made and blended fabrics amounted to 60 per cent of the total fabric consumption in 2003-04.
3.4 Production of Textiles

The total production of cloth by all sectors i.e. mill, power loom, handloom, hosiery and khadi, wool and silk was 42,708 million square meters (provisional) in 2003-04 and expected to move up to 44,322 million square meters in 2004-05 based on sector-wise annual growth during the last five years at 3.78 per cent. The per capita availability of cloth during 2003-04 was provisionally estimated at 31.24 square meters and forecast to remain at the same level in 2004-05.
Sector-wise Textile Production 2003-04 Fibers Viscose staple Fiber Polyester staple Fiber Acrylic staple Fiber Polypropylene Fiber Filaments Polyester Filament Yarn Viscose Filament Yarn Nylon Filament Yarn Power Loom Sector
Production 000 metric tons 225 582 105 2 993 51 30
The decentralized power loom sector plays a pivotal role in meeting the clothing needs of the country. This sector not only contributes significantly to the cloth production in the country, but also provides employment to millions of people. The power loom industry produces a wide variety of cloth, both greys as well as processed with intricate designs. Power loom fabric also successfully competes in the global market and contributes to the export earnings of the country. The provisional production of cloth in the decentralized power loom sector was 27,258 million square meters in 2003-04 while employment generation totaled 4.59 million (provisional).
Handloom Sector
The handloom sector is one of the key economic activities in India. About 124 lakh persons are engaged in handloom weaving and allied activities. The production of handloom fabrics has gone up to 5,536 million square meters during 2003-04 (Provisional) from 500 million square meters in the early fifties.
Mill Sector
Mills production stood at 218.06 million kg during Apr-Sep 2004 as against 194.42 million kg in 2003. The organized mill sector recorded a significant growth during the last decade, with the number of spinning mills increasing from 873 to 1,564 by the end of March 2004.
Silk
Sericulture is an important labor intensive and agro-based cottage industry, providing gainful employment to more than five million persons in the rural and semi-urban areas in India. Of these, a sizeable number of workers belong to the economically weaker sections of society. There is substantial involvement of women in this industry. India is the second largest producer of silk in the world. It has the distinction of producing all the four varieties of silk. In 2003-04, production was 15,700 metric tons, of which mulberry accounted for 13,930 tons (88.73 per cent), and non-mulberry silks 1,770 tons comprising varieties such as Eri (8.6%), Tasar 2 (%) and Muga (0.67%). During tenth plan period, thrust has been placed on production and productivity of bivoltine mulberry silk and non-mulberry silks and improving quality of cocoons. Indian silk exports amounted to Rs 1,806.94 crore in 2003-04.
Wool
In India 50% of the total wool production is used for manufacturing blankets, 30% is used for mills and 10% is used by the carpet industry. The rest is used by other industries like Shawls and Sweaters. Wool cottage industry is spread all over the country. Carpet industry is mainly in U.P, Agra, J&K and Jaipur. Wool garments made in India also command good market abroad. During the period April-February 2003-2004, woollen textiles exports were US$ 328.7 million, recording a growth of 31.1% as compared to the corresponding period of 2002-2003
Spun Yarn
The provisional production of spun yarn stood at 3,112 million kg in 2004-05.
Non-Cotton Yarn
The production of 100 per cent non-cotton yarn was 341 million kg (provisional) during 2003-04. The production of 100 per cent non-cotton yarn for 2004-05 is estimated at 383 million kg.
Cotton
Cotton is one of the principal crops of the country. It plays a vital role in the Indian economy providing substantial employment and making significant contributions to export earnings. The ratio of the use of cotton to man-made fiber and man-made continuous filament yarn is 57:43 for Indian Textile Industry for fiscal 2002-03. Millions of farmers and laborers survive on cotton cultivation, trade and processing. Cotton is the principal raw material for the domestic textile industry comprising 1,600 spinning mills and 276 composite mills, with an installed capacity of 36.10 million spindles, 379,000 open end rotors and 119,000 looms in the organized sector plus another 1,146 small scale spinning units with 2.93 million spindles and about 89,000 rotors in the small scale decentralized sector. The cotton and cotton related textile items contribute significantly towards exports earnings of the country.
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India is the third largest producer (2.84 million tons) of cotton in 2003-04. India leads in terms of cultivated area with nine million hectare in 2003-04. In productivity, however, India (371.88 kg/ha) lags behind US (814 kg/ha), China (953 kg/ha), Australia (1,667 kg/ha) and pales in comparison with a world average of 620 kg/ha. One of the major reasons for low yield is heavy dependence on rainfallabout 65 per cent of area under cotton is rain-fed. Handloom industry is concentrated in Banaras, Delhi, Ajmer and Jaipur in the North and Tamil Nadu in the south. The cotton mills are found largely in places such as Mumbai, Ahmedabad and Tamil Nadu. Major silk producing states in India are Karnataka, Andhra Pradesh, West Bengal, Tamil Nadu and Jammu & Kashmir (J&K). The largest wool producing states in India is Rajasthan and the industry is also dominant in other states such as J&K, Uttranchal, Himachal Pradesh, Punjab, Haryana, Gujarat, Uttar Pradesh, Maharashtra, Karnataka and Andhra Pradesh. The power loom industry is situated in Punjab, Tamil Nadu, Orissa and Kerala. Manmade Fibers For long, Indian government discriminated against manmade fibers industry, but changed its policy in the mid eighties. Manmade fibers comprise synthetic fibers such as polyester filament yarn, polyester staple fibre, acrylic staple fibre and nylon filament yarn and cellulose fibre/yarn such as viscose staple fibre and viscose filament yarn India is the leading producer of viscose filament yarn. Over past few years, Reliance Industries has emerged as a key player in the synthetic fibers segment, pursuing a breathtaking integration from the well head to the fabrics and chasing global scale. Other significant players include Indo Rama Synthetics and Bombay Dyeing. The synthetic fibres have a large number of medium to small players. The viscose segment, by contrast, is highly consolidated with a handful of players such as Century Textiles, Indian Rayon and Grasim holding sway. In viscose staple fibre industry, for instance, Grasim and SIV Industries control threefourths of the market.
3.5 Growth Projections

According to the Tenth Five-year Plan projections (2002-07) of Ministry of Textiles, Hosiery sector is likely to show the highest growth rate amongst all sectors in 2005-06. The sector is expected to grow at a rate of 10.36 per cent. The power loom sector will continue to dominate, but its share of total cloth production cloth is expected to reduce in 2005-06. Mill sector is also slated to show a good growth rate of 9.6 per cent. Its share of total cloth production is also expected to grow from 16 per cent in 2000-01 to 20 per cent in 200506.
Sector Power loom Handloom Mill sector Hosiery Khadi, wool, silk
Source: Ministry of Textiles
Expected Growth (%) 4.35 5.95 9.6 10.36 2.94
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Sector wise, Year wise l d 400 Mn.Sq.Mtr 300 200 100 0 24 M ll 27 38 40 276 288 82 91 68 70 Hois Khadi,Wo l lk
Powerl
Handl 2005 2006
Projection Of Sector Wise Share of Cloth Production
100% 80% 60% 40% 20% 0%
2 16 9
2 20 9
68
63
4 2000-01
6 2006-07
Mill
Powerloom
Handloom
Hoisery
Khadi,Silk,Wool
Projection of Year Wise,Fibre Wise Cloth Production 2005-06 25000 20000

Mn.Sq.Mtr
2006-07
16850 17500
1913020400
15000 10000 5000 0 Cotton 100% Non Cotton 6290 6900 68 700
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Projected Production of Filament Yarn

1600 1400 1200 1000 800 600 400 200 0
Viscose
Nylon
2 0 0 5-0 6
Polyester
2 0 0 6 -0 7
Polypropylene
Projected Production of Spun Yarn

3000 2500 Mn. Kg 2000 950 1500 1000 500 0 2005-06 Cotton 2006-07 Blended 100% cotton 1025 2630 2710
Source Ministry of Textiles, India
380
415
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4. IMPORTS & EXPORTS

World trade in textiles and clothing amounted to US$4,396 billion in 2003, of which textiles accounted for 40 per cent and the remaining 60 per cent was by clothing. Developed countries accounted for little over one third of worlds exports in textile and clothing. India is one of the largest exporters of yarn in the international market. Indian textiles constituted four per cent of gross domestic product 2003-04. It has been growing at a rate of 5-7 per cent and expected to grow at a rate of 15-16 per cent in 2005-06. This industry contributed to about 30 million as direct employment. The share of textile and garment exports in Indias total exports in 2003-04 stood at about 20 per cent, amounting to US$12.5 billion. US, EU and Canada accounted for nearly 70 per cent of Indias garment exports and 44 per cent of Indias textile exports. Among other countries, UAE is the largest market for Indian textiles and garments; UAE accounted for 7 per cent of Indias total textile exports and 10 per cent of garment exports. Major export destinations for textiles include US, Europe, UAE, Hong Kong and Japan. The US market alone accounts for US$15 billion and is growing at five per cent a year. Sheets and towels, which make up 40 per cent of the industry's sales, are the two largest product categories. US is the world's largest market for terry towels. US and EU together account for 70 per cent of the world's home textile imports. Among the other countries Japan, Australia and New Zealand are the biggest consumers of home textiles. Asian countries, particularly India, Pakistan and China, have a competitive advantage over their competitors in other parts of the world. This advantage stems from their large cotton cultivation bases and low cost labor. In terms of products, cotton yarn, fabrics and made ups are the leading export items in the textile category. In the clothing category, major exports include cotton readymade garments and accessories. However, in terms of share in total imports by EU and USA from India, these products hold relatively lesser share than product made of other fibres, thus showing the restraint in this category.
4.1 Textile Exports:

Sector Readymade Garment Cotton Textiles Man-made Textiles Wool Silk Handicraft Coir Jute
Source: Ministry of textiles, India
April-Feb(2002-03)(US $Mn) 4,746.4 3,033.6 1,269.7 250.6 411.6 1,190.1 66.5 173.7
April-Feb(2003-04)(US$ Mn) 4,946.7 3,106.9 1,633.8 328.7 482.8 919.0 69.1 211.6
% increase/decrease 4.2 2.4 28.7 31.1 17.3 -22.8 3.8 21.8
Cotton: India with a share of 14 per cent in the US$31 billion global cotton textiles trade is second only to China in the global market. The total cotton textile exports in 2003-04 were US$3,106 million. The demand for cotton yarn is expected to increase at 6 per cent in the medium-term as against a negative growth of around 2 per cent between 2000-01 and 2003-04. Yarn exports are also expected to rise at 6 per cent due to higher demand from countries such as Bangladesh, Sri Lanka, Korea, Hong Kong, Italy, China and Japan, which import yarn and re-export value-added fabrics and garments.
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Readymade Garments: Readymade garments account for 42 per cent of countrys total textile exports. The total export in this segment was US$4, 94.67 million. In this segment, the ladies garments will be the main drivers of growth. The ladies product category accounted for exports worth US$2 billion last year and is billed as the top driver of growth this year. Ladies garment segment already holds the top slot in countrys apparel exports accounting for over 45 per cent of shipments. This segment includes items such as blouses, dresses, night dresses and skirts. Besides ladies segment, other items in exports last year include T-Shirts (US$882m), gents shirts(US$570m), trousers and shorts(US$503m), sweater and cardigan (US$255m), overcoats and blazers (US$222m), babies garments (US$180m). This segment is expected to grow by 20 per cent this year as compared to 2004. Man made textiles: This segment recorded a growth of 28.7 per cent in 2003-04 as compared to 2002-03. Total exports were US$1,633.8 million in 2003-04. Wool: The exports in this segment were US$328.6 million recording a growth of 31.1 per cent as compared to 2002-03. This sector is expected to grow at 3.62 per cent in 2005 due to improvement in demand in importing countries. Silk: The silk exports were US$482.8 million in 2003-04, recording a growth of 17.3 per cent as compared to 2002-03. The Ministry of Textiles has forecast silk exports to touch INR 2,650 crore in 2004-05. Central Silk Boards figures placed the actual earning at INR 2,779.19 crore for 2003-04, while exports were up at INR 1,306.37, up 49.3 per cent of the target as compared to the same period of 2003-04. For the six-month period of 2004-05 (Apr-Sep), the top five importing countries include US (29.5%), UK (9.2%), UAE (7.3%), Italy (6.5%) and Hong Kong (5.9%). In rupee terms, these countries accounted for INR 762.90 crore, which was 58.4 per cent of the total export earnings (INR 1,306.37 crore) during the period. Handicrafts including Carpets: Handicrafts including carpet exports stood at US$19 million in 2002-03, down 22.8 per cent. Silk carpets accounted for 2.9 per cent of exports. It also recorded a decline export earnings from INR 47.43 crore during first half of fiscal 2003-04 to INR 37.26 crore in corresponding period of 2004-05.
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5. REGULATIONS
5.1 Foreign Direct Investment
FDI in Textile at a Glance (1991- 2004) FDI in the apparel and textile industry has been recently opened up, as liberalisation has gathered 641 steam. Manufacturing is a thrust area for the 1. No. of FDI Approval US$1.02 bn Indian government, as Indian industry and the 2. FDI Approved 1.20% government see foreign companies more as 3. % of total FDI approved US$0.31 bn partners in building domestic manufacturing 4. FDI inflows 1.21 % capabilities rather than a threat to Indian 5. % of total FDI inflows Source: indiabudget.nic.in businesses. Following this through, the central government as well as various states are executing schemes such as integrated textile and apparel parks.Although direct investment in retail remains closed to FDI as of now, companies have found alternative structures through which they can approach Indian consumers (examples include Levi Strauss, Marks & Spencer, Royal Sporting House, adidas, Nike and Reebok in fashion products). There is certainly a broader opportunity to "grow the market from inside" as companies can freely set up fully-owned sourcing (liaison) offices, as well as marketing operations. FDI from Japan has exhibited an uneven and fluctuating trend. In recent years there has been sharp decline in FDI from Japan overall. The chart suggests the downward direction of overall FDI declination.
Japanese FDI (US$ bn)

0.5 0.4 0.3
0.41 With the liberalization of the Indian economy, 0.23 0.22 large Indian market is being opened up to 0.2 0.09 foreign investors. Earlier, Indian government 0.1 0.01 kept foreign investment out of textile and 0 apparel manufacturing. It has gradually removed these restrictions. The Foreign 2000 2001 2002 2003 2004* Direct Investment (FDI) limit of 24 per cent is removed and now the foreign investors will be Source: Economic Survey of India, 2004 able to invest up to 100 per cent through Foreign Investment Promotion Board (FIPB). The obligation of the firms with foreign investment to export 50 per cent of the production is also removed. A foreign investor can enter the Indian market through following ways. 1. A foreign investor may directly set up operations in India through a branch office or a representative office or liaison office or project office of the foreign Company. Such companies have to register themselves with the Registrar of Companies (ROC), New Delhi within 30 days of setting up a place of business in India. Liaison Office: A foreign company can set up a liaison or representative office in India to test the Indian Market. It can enter with much greater investment later if it is convinced about the potential of the Indian market. . A liaison office is not allowed to undertake any business activity in India. The opening and operation of such offices is regulated by the Foreign Exchange Regulation Act (FERA). Approval from the Reserve Bank of India (RBI) is required for opening such offices. Project Offices: Foreign companies planning to execute specific projects in India can set up temporary project /site offices in India for the purpose. Specific approval from the RBI is required for setting up a project office. Such approval is generally accorded in respect of Government FDI
16
approved projects, but the RBI can give approval for setting up project offices even for executing private sector projects. Branch Offices: The Government has allowed foreign companies engaged in manufacturing and trading activities abroad to set up Branch offices in India for the following purposes: To represent the parent company/other foreign companies in various matters in India e.g. acting as buying / selling agents in India. To conduct research work in the area in which the parent company is engaged provided the results of the research work are made available to the Indian companies. To undertake export and import trading activities. To promote possible technical and financial collaborations between the Indian companies and overseas companies. A branch office is not allowed to carry out manufacturing activities on its own but is permitted to subcontract these to an Indian manufacturer. Permission for setting up branch offices is granted by the Reserve Bank of India (RBI) on a case to case basis. Foreign companies i.e., companies (other than banking companies) which are not incorporated in India and foreign nationals (whether resident in India or not) are subjected to special regulations relating to their business, etc., activities in India through the provisions of Sections 28, 29 and 30 of FERA 1973. Acquisition/disposal of immovable properties in India by foreign companies/foreign nationals is also subject to regulation under Section 31 of FERA 1973. 2. It may do so through an Indian arm i.e. through a subsidiary company set up in India under Indian laws: Generally, setting up operations through an Indian arm is advisable, especially if the quantum of investment is huge. The other investment option open to foreign investors is the setting up of a wholly owned subsidiary. This implies that the foreign company can own 100 per cent shares of the Indian company. All such cases are subject to prior approval from the FIPB. FIPB considers cases on a flexible basis and grants permission for 100 percent ownership based on the following criteria: Where only "holding" operation is involved and all subsequent downstream investments to be carried out would require prior approval of the Government; Where proprietary technology is sought to be protected or sophisticated technology is proposed to be brought in Where at least 50 per cent of production is to be exported Proposals for consultancy and Proposals for power, roads, ports and industrial model towns\industrial parks or estates. 3. Automatic route for foreign direct investment: Under the Automatic Route for Foreign Direct Investment in India, Indian companies engaged in all industries except for certain select industries/sectors may issue shares to foreign investors up to 100 per cent of their paid up capital in Indian companies. Textiles industry does not come under the select industries reserved for the government and hence not proscribed for automatic route. Automatic Route is not available to those foreign investors who already have a financial or technical collaboration in the same or allied field or where more than 24 per cent foreign investment is made in a company which is engaged in manufacture of an item reserved for small scale industry. In case of any ambiguity regarding the eligibility of the investee or the investor company, it could be clarified from the RBI Notification No. FEMA 20 dated 3-5-2000 and also from the Secretariat of Industrial Assistance (SIA), Ministry of Commerce & Industry, Government of India, Udyog Bhavan and New Delhi. In case of ineligibility, a request on a plain paper could be forwarded to the SIA.
17
5.2 Labor laws

One factor that has been keeping the foreign investors at bay is the rigid labor laws. Industrial Disputes Act, 1947 is proving to be a major bottleneck. When any employer discharges, dismisses, retrenches or otherwise terminates the services of a workman without complying with the conditions of retrenchment provided in the ID Act, the dispute or difference that can arise as a result between the workman and the employer is deemed to be an industrial dispute. The act states that if a company employs more than 100 workers, the company cannot close shop without the permission of the government. Further appointment of contract labor, which is crucial to the garment industry, is not permitted
5.3 Intellectual Property Rights

Patenting in the textile industry can be obtained by the foreign players in the following areas of spinning (machine, devices, rings, frames, wet spinning, dry spinning), Yarn manufacture, guiding units (yarn winding, feeding, take-up devices), Webs, Knitting machines, Quality control devices, Treatment of fibres/yarns (thermal treatment, cooling devices), weaving looms (including circular), carding machines, screen printing machines and cabled machines.
18
6. MAJOR PLAYERS
6.1 Indian Rayon
INCORPORATION YEAR: 1956 BUSINESS GROUP: A.V.Birla group FORM: Public
CORPORATE ADDRESS
Aditya Birla Management Corporation Ltd. Aditya Birla centre 1st floor , C-wing, S.K.Ahire marg Worli, Mumbai-400025
SHARES DATA
Equity Capital (US$ Millions) Face Value (INR) Book Value (INR) Market Value (INR) Market Capitalization(US $ Mn) Latest P/E ratio 1.39(as on 30th Dec 04) 10 .212 188.95(as on 30th Dec 04) 260.59(as on 30th Dec 04) 10.16
PLANT LOCATIONS
Location Bangalore Address Madura Garments, 110,4th cross, 5th block, Koramangala Industrial layout, Koramangala, Bangalore560095 Rayon division, Veraval 362 266, Gujarat Hi-Tech carbon, Murdhawa industrial area, P.O. Renukut 231 217, Dist. Sonbhadhara, U.P. Jaya Shree Textiles P.O. Prabhasnagar 712 249 Dist. Hooghly, West Bengal Insulator Division (Domestic Marketing) P.O. Meghasar, Tal. Halol Dist. Panchmahal, Gujarat 389330
Sharholding pattern 29%
34%
Gujarat U.P
9%
Promoters FIIs
12% 16%
Banks & insurance
West Bengal
Mutual funds &UTI Others
Gujarat
Segmental revenue for 2004 22 % 3 % 21 25 % % Garment VFY Textiles Insulators Others Carbonblack
Source: Annual report, Indian rayon
24 %
5 %
19
INTRODUCTION
Indian Rayon (IRIL) is Aditya Birla groups most diversified conglomerate. It is the second largest producer of viscose filament yarn in India. It is also the largest branded apparel company in India .The production capacities of the company in textiles is as follows.
MILESTONES
2004 Brownfield expansion of 40,000 TPA completed at Hi-Tech Carbon, Gummidipundi, taking total capacity to 1,60,000 TPA Greentech Environment (Silver) Award 2002-2003 in Chlor-Alkali sector for outstanding achievement in environment Joint venture with NGK of Japan Birla NGK Insulators Pvt Ltd launched on 6 February 2003 Entry into BPO with acquisition of TRansworks
2003
2003 2002 2001 2000 1999 1998
Insulators business hived into a separate subsidiary, effective from 1 August 2002
Indian Rayon acquires PSI data systems Indian Rayon acquires Madura Garments, taking the Aditya Birla Group to the top of the league in the branded apparels sector Indian Rayon returns surplus cash to shareholders through a buyback Indian Rayon's cement business transferred to Group company Grasim, as part of cement business consolidation
SUBSIDIARIES
Birla sunlife insurance PSI data systems Transwork information services
MANAGEMENT TEAM
Name Designation Chairman Company secretary Senior president & CFO VFY head Garments head Textiles head Director Director Director Director Designation Name Kumar Mangalalm Birla Devendera Bhandari Adesh Gupta K.k.Maheshwari Vikram Rao S.K.Saboo Rajshree Birla B.L. Shah Vikram Rao H.L.Vaidya
20
PERFORMANCE ANALYSIS
Operational Performance The operating profit margins have increased for the garment sector. The margins in textile segment have decreased due to higher input costs in Worsted segment. The operational efficiency decreased in VFY segment also due to demand disruption by the weavers strike, leading to inventory built-up and lowering of realizations, which affected the production.
60 50 40 US $ Mn 30 20 10 0 2002 PBDIT 2003 PBDIT Margin 2004
PBDIT vs PBDIT margin

18 16 14 12 % 10 8 6 4 2 0
Financial Performance Viscose filament: The industry witnessed demand disruption by the weavers strike, leading to inventory built-up and lowering of realization. It was impacted further with higher input costs and import of low price yarn from China. Due to all these factors the sales and PBIT of the company was affected. Garment: The Garments Division has gained from a better business environment and implementation of various strategic initiatives to grow volumes, control costs and enhancement in overall profitability.
Trend of sales Vs PAT(US $ Mn) 500 400 Sales 300 200 100 0 2002 2003 Sales 2004 PAT 35 30 25 20 15 10 5 0
Source: Annual report, Indian Rayon
Textile: Textiles business had another tough year with revenues growing, but profitability taking a hit. Demand conditions remained weak, relatively lower realizations and an appreciating rupee adversely affected performance. However, the silver lining has been the strong growth in Flax Yarn and Linen Fabric under the Linen Club brand. Exports constitute about 48 per cent of Textile Divisions revenue.
PAT
21
Financial Highlights (all figures in US$ millions)

Balance Sheet Items Net Worth Capital Employed Fixed Assets (Gross Block + Capital WIP) Total Debt P&L Items Sales Exports PBDIT Depreciation Interest & Financial Charges PBT PAT EPS* (INR) Cash Profit 394.94 88.20 55.99 18.7 3.41 41.80 30.24 21.92 24.02 335.23 76.33 45.936 15.09 4.56 29.3 22.16 17.56 16.83 317.45 79.5 29.95 15.06 9.37 14.89 8.90 7.32 4.85 2004 2,603.7 4,432.37 2,609.12 935.04 2003 2002 2,202.2 1,954.8 3,526.57 3,592.48 2,191.6 2,271.37 563.6 940.26
KEY RATIOS Debt-Equity Ratio Current Ratio Interest Cover Ratio Operating Profit Margin (%) Net Profit Margin (%) Return on Capital Employed (%) Return on Net Worth (%)
2004 0.32 1.91 17.40 15.44 7.07 10.48 10.77
2003 0.23 1.92 11.06 15.15 7.80 10.47 9.31
2002 0.42 1.99 4.20 10.37 2.99 7.26 3.89
22
6.2 Arvind Mills

INCORPORATION YEAR: 1931 BUSINESS GROUP: Lalbhai group FORM: Public limited
CORPORATE ADDRESS
The Arvind mills limited Naroda road Ahmedabad-380025 Gujarat Tel: 91-79-22203030 Fax: +91-79-22201270 E-mail: arvindmills.com
SHARES DATA
Equity Capital (US$ Millions) Shareholders Fund (US$ Millions) Face Value (INR) Book Value (INR) Market Valu (INR) Market Capitalization (US$ Millions) Latest P/E Ratio 61.02(as on 30th Dec 04) 272.19 10 56.91 42.50(as on 30th Dec 04) 191.3(as on 30th Dec 04) 4.09
PLANT LOCATIONS
Location Denim, Gujarat Address Denim Division, The Arvind mills limited, Naroda Road, Ahmedabad-380025, Gujarat Shirting and Khakis Shirting division, Gujarat Santej Road, Near Khatrej, Taluka Kalol, Distt. Gandhi nagar382721, Gujarat Voils, Gujarat Ankur Textiles, Outside Raipur gate, Ahmedabad-380022 Bangalore ,Garment The Arvind mills export division limited, 10th floor, Du Parc Trinity, 17 MG road, Bangalore-560001 Gut no.172, Daravi Garment,Maharashtra village,Taluka Mulshi,Pune-412018
shareholding pattern
33% 38%
1% 1% 21% 6%
promoters Banks & Insurance compaies GDR
Mutual fund& UTI FIIs Indian public
Source: Annual Report, Arvind Mills
Segmental revenue: Textiles is the major business of that company and thus contributes the maximum (almost 100%). The company has forayed into some other businesses but they are contributing a negligible amount to the companys revenues.
23
INTRODUCTION
The Arvind Mills Limited is the flagship company of INR 20 billion (US$550 million) of the Lalbhai Group. It is World's largest exporter of Denim and Asia's largest Denim Producer. Ranking amongst the top denim manufactures of the world, 120 million meters of denim roll out every year from Arvind Plants and is stitched into leading international denim brands in more than 70 countries.
MILESTONES
Year 1997 1991 1987-88 Milestone Arvind set up a state-of-the-art shirting, gabardine and knits facility, the largest of its kind in India, at Santej. Arvind reached 1,600 million meters of Denim per year and it was the third largest producer of denim in the world. Arvind entered the export market for two sections. Denim for leisure and fashion wear. And high quality fabric for cotton shirting and trousers
SUBSIDIARIES
Arvind products Ltd. Arvind overseas (Mauritius) Ltd. Arvind spinning ltd. Arvind worldwide Inc and USA
MANAGEMENT TEAM
Name Designation Chairman Managing director Director finance Director Director Director Director Director Director Designation Name Arvind. N. Lalbhai Sanjay.l.Lalbhai Jayesh. K. shah Deepak M. Satwalekar Rama Bijapurkar S.Sridhar Balaji Swaminathan V.K.Pandit Jaitirth Rao
24
Operational Performance The operating income has increased with costs also increasing. Continued high prices of cotton and further increase in prices of Naphtha have affected the operating profits and margins during the current quarter.
PBDIT vs PBDIT Margin

PBDIT (US $ Mn) 100 80 60 40 20 0 2002 2003 2004 24 23.5 23 22.5 22 %
PAT
Financial Performance The sales of the company improved 19 per cent over 2003. Increase in volumes of denim contributed to the increase in sales. The unexpected depreciation in the value of Indian rupee during the quarter has helped raise export realizations, but led to accounting provisions due to revaluation of liabilities, and overall, had a negative impact on margins.
PBDIT
PBDIT Margin
Trend of Sales Vs PAT( US $ Mn)

400 300 Sales 200 100 0 2002 2003 Sales PAT 2004 30 25 20 15 10 5 0
Source: Annual report, Arvind Mills
25

Balance Sheet Items Net Worth Capital Employed Fixed Assets (Gross Block + Capital WIP) Total Debt P&L Items Sales Raw Materials Cost Employee Cost Selling & Administration Cost PBDIT Depreciation Interest & Financial Charges PBT PAT EPS* (INR) Cash Profit 2004 272.19 681.5 479.4 328.3 330.73 118.28 25.46 110.32 75.0 8.52 4.01 23.2 22.29 4.95 56.9 2003 224.61 558.9 430.6 296.5 311.40 103.95 21.37 103.93 91.06 7.98 5.93 27.2 27.2 7.34 58.3 2002 206.46 582.6 415.3 345.6 142.66 46.43 10 51.47 33.94 8.4 10.0 4.19 4.1 2.30 19.3
KEY RATIOS Debt-Equity Ratio Current Ratio Interest Cover Ratio Inventory Turnover Ratio Operating Profit Margin (%) Net Profit Margin (%) Return on Capital Employed (%) Return on Net Worth (%)
2004 1.21 3.14 4.37 1.087 22.67 6.9 7.07 8.7
2003 1.48 3.71 2.71 0.908 22.94 8.7 12.34 12.96
2002 1.31 3.10 2.26 1.01 23.7 3.2 7.64 4.84
26
6.3 Raymond
INCORPORATION YEAR: 1925 BUSINESS GROUP: Raymond group of companies FORM: Public
CORPORATE ADDRESS
Raymond Ltd. Mahindra Towers, 2nd Floor, B Wing, Pandurang Budhkar Marg, Worli, Mumbai 400018
SHARES DATA
Equity Capital (US$ Millions) Shareholders funds(US $ Mn) Face Value (INR) Book Value (INR) Market Value (INR) Market Capitalization(US $ Mn) Latest P/E ratio 14.11(as on 30th Dec 04) 241.60 10 170.8 314.75( 30th Dec 04) 44.5(as on 30th Dec 04) 7.92
PLANT LOCATIONS
Location Textile, Jalgaon Address Plot No. E/1, MIDC Area, Phase II, Ajantha Road, Jalgaon 425 003, Maharashtra; B 1, A.K.V.N., Boregaon Industrial Growth Centre, Kailash Nagar, Tehsil Sauser, Dist. Chhindwara 480 001, Madhya Pradesh. Plot C-1, MIDC Yavatmal, Lohara Village, Yavatmal District, Maharashtra 445 001. Jekegram, Thane 400 606. A-1 Mirjole Industrial Estate, MIDC, Kolhapur Road, Ratnagiri 415 639, Maharashtra; Plot No. C 1/1, MIDC Area, Gane Khadpoli, Chiplun 415 605, Maharashtra; Shed No. S/1 & S/2, Sector 1, Road No. 10, Pithampur 454 775, Dist. Indore, Madhya Pradesh.
Share holding pattern

30% 34%
Textile, Chhindwara
5% 20% 11% Mutual funds & UTI FIIs
Denim division, Yavatmal J.K.Files, Thane J.K.Files,Rat nagiri
promoters Banks & financial Inst. others
segmental revenue (INR Crore)

133.1 90.38 507.11 textile files and toolsdenim others
Source: Annual report, Raymond
3.51
J.K.Files,Chi plun J.K.Files,Pit ampura
27
INTRODUCTION
Incorporated in 1925, the Raymond Group is a INR 1400 crore plus conglomerate having businesses in Textiles, Readymade Garments, Engineering Files & Tools, Prophylactics and Toiletries. The group is the leader in textiles, apparel, & files & tools in India and enjoys a pronounced position in the international market. Raymond believes in Excellence, Quality and Leadership.
MILESTONES
1996 1994 1991 1969 1964 1925 J.K.Chemicals formed by 50:50 JV with Ansell International, world leader in latex products Established Colorplus J.K.Chemicals (subsidiary ) commenced business and launched Kama Sutra condoms Established Raymond Apparel Limited Established J.K. Helene Curtis, maker of brands like Park Avenue and Premium Raymond was incorporated
SUBSIDIARIES
Raymond apparels Hindustan files ltd. Colorplus fashions Ltd. Everblue apparel Ltd. Silver spark apparel ltd. Plug in sales ltd. Pashmina holdings ltd.
MANAGEMENT TEAM
Designation Chairman and MD President Whole time director President (Denim) VP (Textile) VP (Files & Tools) VP (Project) VP (HR) Director marketing Name Gautam Hari Singhania Nabankur Gupta P.K.Bhandari & Anant Singhania Ajit Mantagani S.K.Gupta Harshal Jayavant S.K.Kaul Marcel Parker K.G.Jain
28
Operational Performance The operating profits for the company in textile sector have decreased due to increase in costs in textile segments due to excise duties and reduction in demand due to which the production decreased. The decrease in production also came due to sharp decrease in exports owing to severe price competition. Also the costs increased as the company did a capital expenditure of INR 13.91 crores towards modernization and up gradation of technical facilities. Financial Performance The sales of the company in the textile segment have increased by 9% as compared to 2003 due to product development, technological up gradation and strengthening of distribution network
sales

33 US $ Mn 32.5 32 31.5 31 30.5 2002 PBDIT 2003 2004 20 15 10 5 0
PBDIT Margin
Trend of sales vs PAT (US $ Mn)

250 200 150 100 50 0 2002 2003 Sales PAT 2004 35 30 25 20 15 10 5 0
Source Annual report, Raymond
PAT
29

Balance Sheet Items Net Worth Capital Employed Fixed Assets (Gross Block + Capital WIP) Total Debt P&L Items Sales Raw Materials Cost Employee Cost Selling & Administration Cost PBDIT Depreciation Interest & Financial Charges PBT PAT EPS* (INR) Cash Profit 2004 240.22 426.58 229.10 109.78 235.92 71.73 41.57 41.75 32.70 3.81 5.31 18.57 30.48 21.55 45.27 2003 200.72 371.68 193.7 101.27 196.47 50.37 35.37 36.39 32.68 3.29 8.14 14.19 19 14.7 32.82 2002 182.8 354.54 173.79 108.76 199.81 46.91 34.15 34.10 31.35 3.20 12.28 7.48 18.05 14.36 28.18
2004 0.46 3.90 -94.30 3.47 13.86 13.2 11.70 12.63
2003 0.45 2.93 7.86 3.36 16.63 9.7 10.82 9.46
2002 0.50 3.35 3.86 3.76 15.69 10.28 12.53 9.87
30
6.4 Alok Textiles

INCORPORATION YEAR: 1986 BUSINESS GROUP: Alok Industries FORM: Public Limited
CORPORATE ADDRESS
Alok Industries Limited. Peninsula Towers Ganpatrao Kadam Marg, Lower Parel, Mumbai-400 013. Tel: 91-22-2499 6200 / 6500 E-mail: info@alokind.com
SHARE DATA
Equity Capital (US$m) Shareholders fund(US$m) Face Value (INR) Book Value (INR) Market Value (INR) Market Capitalization (US$m) Latest P/E Ratio Financial year 20.32 (as on 30th Dec 04) 94.77 10 35.08 59.7( as on 30th Dec 04) 121.36(as on 30th Dec 04) 6.37 April-March
PLANT LOCATIONS
Location Navi Mumbai Gujarat Dadar Nagar Haveli Address 108, Shahe Nahar industrial estate, Opp. Dr.E.Moses Road, Worli, Mumbai-400018 Balitha, Vapi, Gujarat & Alok Industries, Silvassa, Dadar Haveli.
Shareholding Pattern 2004

23% 36% 1%
&
Nagar
17% 8% 15%
Banks, FIs & MFs Pvt. Corp. Bodies General public
INTRODUCTION
Established in 1986 as a private limited company, Alok Textiles began as fabric traders and suppliers to the garment industry. Beginning with texturizing of yarn, the company steadily expanded into weaving, knitting, processing, home textiles and readymade garment. In 1993, it became a public limited company. In less than two decades, it has grown to become a diversified manufacturer of world-class apparel fabrics selling directly to garment manufacturers and exporters
promoter FIIs Foreign,others Source: Annual report, Alok textiles
Segmental Revenue in 2004

17.49% 0.47% 5.24% 76.80%
Home textiles
Apparels
Texturised Yarn
Garments
31
MILESTONES
2002 Modernization and Expansion of weaving and process project Expansion of 28 knitting capacities at Silvassa. Turnover surpasses INR 550 crore. Conversion of Rights FCDs into Equity Shares Grant of Export House Status Expansion of weaving and processing capacities under Technology and Up gradation Fund scheme (TUFS) at an aggregate cost of INR190 crore. Foray into the domestic ready made Garments sector. Rights Issue of 56,70,098 FCDS of INR90/- each aggregating to INR.51.03 crore to part-finance the weaving and processing projects Turnover surpasses INR 350 crore Turn over of INR250 crore Modernization and expansion of weaving and knitting capacities at Silvassa. Private placement of 91,42,700/- equity shares of INR10/- each at a premium of INR 7.50 per share aggregating to INR1600 lakhs with FIIs Setting up of Knitting Division at Silvassa and state-of-the-art eco-friendly Process House at Navi Mumbai. Turnover of INR 150 crores achieved. Completion of Rights Issue of 74,90,192/- equity shares of INR10/- each at a premium of INR10/- per share aggregating to INR1498.04 lakh to part-finance the process house and knitting projects Expansion of Texturising capacity at Silvassa Financial and Technical collaboration with Grabal, Albert Grabher Gesellshaft GmbH & Co of Austria for manufacture of embroidered products through a Joint Venture Co. viz. Grabal Alok Impex Ltd Expansion of weaving capacity at Bhiwandi and texturising capacity at Silvassa. Turnover of Rs. 50 crores achieved Conversion into Public Limited Company and IPO of 22,50,000 equity shares of INR10/each for cash at a premium of INR10/- each per share aggregating INR 450 lakh. Commencement of weaving operation at Bhiwandi, District Thane Setting up manufacturing facilities for texturized yarns at Silvassa
2001 2000 1999 1998
1997 1996 1995 1994 1993 1991 1989
MANAGEMENT TEAM
Designation Executive Chairman Managing Director Executive Director Executive Director Director Director Nominee Director (IDBI) Nominee Director (UTI) Nominee Director (IDBI) Nominee Director (IFCI) Name Ashok. B.Jiwarjka Dilip. B .Jiwarjka Surender. B. Jiwarjka Chandrakumar Bubna Ashok .G. Rajani K.R.Modi Ashok Kumar M.C.Verma K.C. Jani A.K. Bhan
32
Operational Performance The operating profit of the company has increased. There was an increase in cost due to the expansion plans of the company but it did not affect the operating margin due to higher sales.
50 40 US $ Mn 30 20 10 0 2002 PBDIT 2003 2004 PBDIT Margin PBDIT vs PBDIT margin 21 20 18 17 16 % 19
Financial Performance The sales of the company have increased due to 297 per cent hike in exports. Net profit has also shown an improvement. The major contributor to this increase has been readymade garment segment.
Trend in Sales & PAT(US$m)
300 250 200 150 100 50 0 2002 2003 Sales 2004 PAT 20 15 10 5 0
sales
Source Annual report,Alok Textiles
PAT
33
Financial Highlights (all figures in US$m)

Balance Sheet Items Net Worth Capital Employed Fixed Assets (Gross Block + Capital WIP) Total Debt P&L Items Sales Exports Raw Materials Cost Employee Cost Selling & Administration Cost PBDIT Depreciation Interest & Financial Charges PBT PAT EPS* (INR) Cash Profit 2004 70.6 329.4 159.17 207.85 246.27 22.14 12.31 3.52 4.32 45.71 8.82 15.29 21.32 16.37 7.9 25.46 2003 52.47 206.7 95.49 115.6 167.45 5.223 23.68 1.82 6.96 28.87 5.35 10.84 12.49 8.90 7.36 14.43 2002 37.52 151.4 72.75 92.94 120.4 4.53 15.65 1.39 5.23 20.11 3.22 8.02 8.7 7.76 11.77 11.15
2004 2.75 3.88 2.79 5.04 19.08 6.92 13.36 22.96
2003 2.2 3.25 1.94 2.79 7.78 2.72 10.56 8.54
2002 1.09 4.19 2.33 2.51 20.37 7.50 15.68 20.48
34
6.5 Century Textiles

INCORPORATION YEAR: 1897 BUSINESS GROUP: B K Birla Group FORM: Public limited
SHARE DATA CORPORATE ADDRESS

Century Bhavan, Dr Annie Besant Road, Worli, Mumbai-400025 Tel.: 91-22-2495 7000; Fax: 91-22-2 430 9491/2 436 1980 Mumbai. Equity Capital (US $m) Face Value (INR) Book Value (INR) Market Value (INR) Market Capitalization (US$m) Latest P/E Ratio Financial year 21.43(as on 30th Dec 04) 10 81.29 93.15 ( 30th Dec 04) 109.11(as on 30th Dec 04) 0.33 April-March
PLANT LOCATIONS
Location Address Century Textile Pandurang Budhkar Marg, Mumbai 400025. Tel.: 91-22-2495 7000; Fax: 91-22-2 430 4144/ 2 430 5473; Gram: "CENTEXTILE" Mumbai. Century Yarn & Century Denim Satrati, Agra-Mumbai Road, Tehsil Kasrawad Dist - Khargaon, Pin : 451660 (M.P.) Tel.: 91-7285-2232040/72852265277
Shareholding Pattern
15% 7% 45%
Mumbai
22% 11%
promoters Private Bodies
MFs & UTI others
Banks & FIIs
M.P
Se g me nt al Re v e nu e fo r 2004 4% 33%
20%
INTRODUCTION
Century Textiles & Industries was incorporated in 1897. Till 1951, it had only one industrial unitCotton Textile Mills. It has Asias largest composite 100 per cent cotton textile mill. Century has diversified into other businesses as well. Now, Century is not only the trend setter in cotton textiles, but also built a presence in yarn, denim, viscose filament rayon yarn, tyrecords, caustic soda, sulfuric acid, salt, cement and Pulp & Paper.
43% textile cement pulp&paper others
Source: Annual Report, Century Textiles
35
MILESTONES
International Textile Mill award from The Textile Institute, Manchester, UK in the first ever contest First in India to get Oekotex Certificate for entire product range from Germany on account of elimination of banned dyes and chemicals Winner of Rajiv Gandhi National Quality Award Recipient of 61 awards for outstanding exports from Central/State Governments, Texprocil and Indo German Chamber of Commerce Accredited with IS/ISO9001:2000 quality system Accredited with ISO 14001 Environmental Management System Star Trading House status from Government of India SUBSIDIARIES
N.A
MANAGEMENT TEAM
Designation Chairman President Company Secretary Director Director Director Director Director Whole time Director Additional Director Name B.K. Birla R.K. Dalmia D.K.Aggarwal Pradip Kumar Daga S.K. Birla E.B. Desai Arvind C Dalal C. K. Birla B.L. Jain Amal Ganguli
36
Operational Performance The operational efficiency of the company has decreased due to weak demand conditions. The company thus concentrated more on the cement division and decreased textile production.

66 64 62 60 58 56 54 2002 PBDIT 2003 2004 PBDIT Margin 16 14 12 10 8 6 4 2 0
US $ Mn
Financial Performance Net sales increased and so have profits. The segment that has shown maximum growth for the company is cement.
550 500 450 400 350

20 15 10 5 0 2003 sales 2004 PAT 2002
Sales
Source Cygnus Research
Source: Annual report, Century Textiles
PAT
37
Financial Highlights (all figures in US$ Mn)

Balance Sheet Items Net Worth Capital Employed Fixed Assets (Gross Block + Capital WIP) Total Debt P&L Items Sales Raw Materials Cost Employee Cost PBDIT Depreciation Interest & Financial Charges PBT PAT EPS* (INR) Cash Profit 2004 174.27 595.44 685.28 250.28 511.96 114.68 47.55 58.73 21.18 7.65 18.09 17.64 8.23 52.97 2003 154.7 520.34 616.56 217.2 457.3 90.24 45.21 65.14 19.566 11.28 14.38 14.77 7.54 48.26 2002 144.7 489.8 586.8 247.11 430.14 109.48 53.97 62.74 19.78 30.44 -0.54 2.4 1.26 31.14
KEY RATIOS Debt-Equity Ratio Current Ratio Interest Cover Ratio Inventory Turnover Ratio Operating Profit Margin (%) Net Profit Margin (%) Return on Capital Employed (%) Return on Net Worth ( %)
2004 1.4 1.47 7.11 4.73 11.47 3.8 7.06 10.13
2003 1.40 1.31 3.29 6.05 14.24 4.1 10.36 9.55
2002 1.70 1.60 2.10 5.81 14.5 4.1 9.42 1.66
38
6.6 Bombay Dyeing

INCORPORATION YEAR: 1879 BUSINESS GROUP: Wadia Group FORM: Public
CORPORATE ADDRESS
Neville House, J.N. Heredia Marg, Ballard Estate, Mumbai-400 038., India Telephone Number(s):(91)-(022)-2261 8071, (91)-(022)-2265 7895 Fax Number(s): (91)-(022)-2261 4520
SHARE DATA Equity Capital (US$m) Face Value (INR) Book Value (INR) Market Value (INR) Market Capitalization (US$m) Latest P/E Ratio Financial Year
8.875(as on 30th Dec 04) 10 100.19 233.20( 30th Dec 04) 118.07(as on 30th Dec 04) 16 April-March
PLANT LOCATIONS
Location Mumbai Address Bombay Dyeing and Manufacturing company Ltd. B.D.Budhkar Marg Worli, Mumbai-400025 Bombay dyeing and manufacturing company Ltd. G.D.Ambedkar marg, Wadala Dadar(east) Mumbai-400031
7% 21% 43%
Mumbai
13% 14%
Promoters FIIs
2%
Banks & Fis others
MF & UTI indian public
INTRODUCTION
Bombay Dyeing is one of India's largest producers of textiles. It has promoted dozens of companies in technical and financial collaboration with world leaders. Such companies have pioneered the manufacture of various chemicals and have grown to be leaders in their new fields.
Segmental Revenue
41% 59%
Textile
DMT
Source: Annual Report, Bombay Dyeing
39
MILESTONES
2005 2003 1999 1879 Bombay Dyeing sets up polyester staple fibre unit Company goes into consolidation mode by forming a JV with Proline India Company won S.R.T.E.P.C and Texprocil trophies for its outstanding export performance for poly cotton blended fabrics and made ups. Bombay Dyeing was incorporated by Wadias
SUBSIDIARIES
Scal Investments Archway Investment company Pentafil Investments Scal Services
MANAGEMENT TEAM
Designation Chairman Managing Director Joint managing Director Deputy Managing Director Director Director Director Director Director Director Director Director Director Name Nusli. N. Wadia Ninu Khanna P.V. Kuppuswamy Ness. N. Wadia Keshub Mahindra Shantanu. N. Desai R.N. Tata R.A.Shah Dr.H.N.Sethna S.S.Kelkar M.K. Singh S.Ragothaman A.K.Hirjee
40
Operational Performance The operational performance of the company has improved due to cost containment. However, Dimethyl Terephthalate (DMT) production was restricted due to lower domestic demand. The division exported 20,662 tons of DMT during the year.
20

8 6 4 2 0 2002 PBDIT 2003 2004 PBDIT Margin
US $ Mn
15 10 5 0
Financial Performance The financial performance of the company has improved over the years. DMT margins have been significantly better during the year enabling the division to absorb significant cost escalations and yet earning a reasonable return. The textile business, however, faced competitive pressure both at home and abroad.

250 200 15
sales
100 50 0 2002 2003 Sales 2004 PAT
5 0
Source: Annual report, Bombay Dyeing
PAT
150
10
41
Financial Highlights (all figures in US$m)

Balance Sheet Items Net Worth Capital Employed Fixed Assets (Gross Block + Capital WIP) Total Debt P&L Items Sales Raw Materials Cost Employee Cost PBDIT Depreciation Interest & Financial Charges PBT PAT EPS* (INR) Cash Profit 2004 88.94 218.62 183.27 83.54 208.6 46.57 3.36 15 1.59 0.278 4.04 12.32 13.89 20.2 2003 74.39 204.01 174.16 80.18 176.72 31.00 3.65 13.44 1.83 0.747 1.37 6.8 8.28 14.37 2002 68.44 189.04 179.46 59.92 162.37 27.28 4.00 0.66 1.68 0.648 -17.37 5.95 8.24 0.04
2004 0.94 3.32 8.08 5.39 7.18 5.90 9.63 13.86
2003 1.07 2.85 4.59 4.21 7.5 3.848 7.54 9.14
2002 0.87 1.92 1.58 4.82 0.4 -1.00 -8.00
42
6.7 Indo Rama Synthetics

INCORPORATION YEAR: 1989 BUSINESS GROUP: Lohia Group FORM: Public
CORPORATE ADDRESS
Reshab Raizada Ranvir K Vij Dr.Gopal Das Bhawan 28, Barakhamba Road, New Delhi - 110 001 Tel : +91 11 23351101 reshab.raizada@indorama-ind.com ranvirk.vij@indorama-ind.com
SHARE DATA
Equity Capital (US$m) Face Value (INR) Book Value (INR) Market Value (INR) Market Capitalization (US$m) Latest P/E Ratio Financial Year 30.37(as on 30th Dec 04) 10 39.17 76.3 (as on 30th Dec 04) 100.97( as on 30th Dec 04) 5.90 April-March
34%
PLANT LOCATIONS
Location Address 31-A, MIDC Industrial Area, Butibori, Nagpur-441122 Tel: 07104-265314 fax: 07104-265307, 265305
Nagpur
57% 0% 2% promoters 7% FIIs Mfs& UTI others Banks & Fis
INTRODUCTION
Indo Rama Synthetics (India) started operations in 1989 with a state-of-the-art Plant near Indore, Madhya Pradesh, where it set up 21,120 spindles (presently 122,880 spindles) for the manufacture of spun yarn. Today, Indo Rama is the largest dedicated polyester manufacturer and exporter in the country with an Integrated Polyester Plant near Nagpur, Maharashtra for the manufacture of 350,000 tons per annum of polyester fibers and yarns in technical collaboration with Toyobo, Japan and DuPont, USA, respectively
Segmental Revenue
13%
87%
polyester
Yarn
Source: Annual Report, Indo Rama Synthetics
43
MILESTONES
2003 2003 2002 2001 2000 1997 1991 1989 Demerger of Indo Rama into petroleum and Synthetic divisions Entered into an agreement with Pegasus Global and formed a joint venture Gold medal for man made fabric blended with Natural fiber Gold medal for highest export to Latin American countries SRTEPC special award National export award by ministry of commerce. gold award in Viscose spun yarn Gold medal for Viscose spun yarn
SUBSIDIARIES Not Available
MANAGEMENT TEAM
Designation Chairman Managing Director Whole time Director Director Director Director Director Director Director Whole time Director Name M.L. Lohia O.P.Lohia Vishal Lohia O.P.Vaish Anil.D.Rege A.K. Ladda U.K.Khaitan H. Hirako Kamal Kishore Shailander Tandon
44
Operational Performance Operating profit has decreased and so have margins. The new plant has increased operating efficiency, but not enough as it turned to be.
80 70 60 50 40 30 20 10 0 2002 2003 PBDIT 2004 PBDIT Margin

21.50% 21.00% 20.50% 20.00% 19.50% 19.00% 18.50% 18.00% 17.50% 17.00%
US $ Mn
Financial Performance The financial performance has improved due to better production and improved quality. Net profit has also improved year after year.

500 400 50 40 20 10 0 2002 2003 sales 2004 PAT
sales
200 100 0
Source; Annual report, Indo Rama
PAT
300
30
45
Financial Highlights (all figures in US$ mn)

Balance Sheet Items Net Worth Capital Employed Fixed Assets (Gross Block + Capital WIP) Total Debt P&L Items Sales Exports Raw Materials Cost Employee Cost Selling & Administration Cost PBDIT Depreciation Interest & Financial Charges PBT PAT EPS* (INR) Cash Profit 2004 120.03 489.02 441.77 181.69 383.31 47.11 249.93 7.76 53.82 71.39 22.23 10.80 40.92 39.63 12.93 62.29 2003 86.36 425.89 405.45 208.29 362.98 103.5 224.31 7.00 50.66 76.14 19.91 13.05 43.44 29.07 10.38 66.17 2002 85.29 385.74 425.7 225.65 293.31 101.5 170.14 10.23 62.77 59.65 21.41 21.9 12.2 8.45 2.48 35.33
KEY RATIOS Debt-Equity Ratio Current Ratio Interest Cover Ratio Inventory Turnover Ratio Debtors Turnover Ratio Operating Profit Margin (%) Net Profit Margin (%) Return on Capital Employed (%) Return on Net Worth (%)
2004 1.51 1.13 9.10 3.86 15.48 18.62 10.34 16.23 33.02
2003 2.41 1.17 5.24 3.84 18.27 20.97 8.01 14.87 33.67
2002 2.64 1.29 2.22 4.88 19.23 20.33 2.88 11.11 9.92
46
6.8 Welspun India

INCORPORATION YEAR: 1985 BUSINESS GROUP: Goenka FORM: Public
CORPORATE ADDRESS
Welspun Gujarat Trade World, 'B'-wing, 9th Floor, Kamala Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai 400 013, Tel: (91)-22-5650 3000/5650 3333/2490 8000 Fax: (91)-22-2490 8020/2490 8021 Email: mohan_manikkan@welspun.com
SHARE DATA Equity Capital (US$m) Face Value (INR) Book Value (INR) Market Value (INR) Market Capitalization (US$m) Latest P/E Ratio Financial Year
10.60(as on 30th Dec 04) 10 47.06 128.15( as on 30th Dec 04) 135.89(as on 30th Dec 04) 19.65 April-March
PLANT LOCATIONS
Location Gujarat Address Welspun India Ltd., Village Morai,Vapi, dist. Valsav, Gujarat-396191 Tel: 0260 2437001/02/03/04 Welspun Gujarat Stahl Rohrel Varsamadi, Anjar, Kutch370110 Gujarat Welspun Syntex & Survey no.394(P), Saily village, Silvassa, Dadar & Nagar Haveli. Welspun, village Vadadla. Near Dahej, Taluka Vagra, Baruch, Dahej road, Dist. Gujarat-392130
6% 3% 34% 24%
Gujarat Dadar Nagar Haveli Gujarat
12% promoters FIIs
21% MFs and UTI Indian public Banks & Fis others
Source: Annual Report, Welspun India
47
INTRODUCTION
Beginning with a small texturising unit in 1985, the Group has significantly expanded and diversified its business. It now has interests in terry towels, LSAW pipes, pipe coating, cotton yarns, PFY, bathrobes and buttons. The Group's annual turnover exceeded INR 20,000 million, of which more than INR 11,500 million is from exports. The Group has ties with 12 out of top 20 retailers in the world namely Wal-mart, K-mart, JC Penny and Target to name a few. LSAW pipe clientele includes names such as Shell, Gazprom, ExxonMobil, etc.
MILESTONES
2005 2004 2004 2001 1999 1998 1997 1995 1993 1985 10,000 plus employees, 2500 vendors, indirect employment to over 100,000 people and over 50,000 shareholders. Set up power and steel plant in Anjar. Integrated terry towel and bed sheet plant with spinning units and modernized process house. Set up pipe coating facility at Baruch in JV with EUPEC. Set up bath robe unit in joint venture with Zucchi in Vapi. Integrated the plant in Silvassa. Started pipes and spiral pipes project in Baruch. Started cotton spinning project under which Terry towel backward integration was done in Vapi plant. Started terry towel project in Vapi Started POY texturising plant in Palghar.
SUBSIDIARIES
Welspun Gujarat Stahl Rohren Welspun Syntex Glofame Cotspin Industries Welspun Zucchi Textiles
MANAGEMENT TEAM
Designation President President CEO Sr. Vice President Sr. vice President Vice president CEO & Director COO-Welspun USA President President Director finance President President Director Director President Name Akhil Jindal Anil Channa Anshuman Singh Anurag Sharma Ashok Jain Ashim Chakraborty Braja Mishra Charles Gaenslen K.K.Purohit L.T. Hotwani M.L. Mittal Prashant .K. Mukherjee S.K. Agarwal S.R. Somani Swapan Nath Vijay Phatarphekar
48
Operational Performance The operational performance has improved over 2002 due to decrease in costs and increase in Sales.

20 40 30 20 10 0 2002 PBDIT 2003 2004 PBDIT Margin
US $ Mn
15 10 5 0
Financial Performance Revenue has increased 56.7 per cent since 2002 owing to increase in exports.
90 80 70 60 sales 50
Trend in Sales & PAT (US$m)

8 7 6 5 4 40 30 20 10 0 2002 2003 2004 3 2 1 0 PAT
sales
PAT
Source: Annual report, Welspun
49
FINANCIAL HIGHLIGHTS (all figures in US$m)

Balance Sheet Items Net Worth Capital Employed Fixed Assets (Gross Block + Capital WIP) Total Debt P&L Items Sales Raw Materials Cost Employee Cost Selling & Administration Cost PBDIT Depreciation Interest & Financial Charges PBT PAT EPS* (INR) Cash Profit 2004 49.9 123.6 67.27 54.31 77.99 3.2 6.67 24.4 17.53 3.38 5.39 10.12 6.91 6.52 10.30 2003 39.27 102.3 57.05 45.228 58.43 1.54 2.89 18.40 13.69 2.98 5.23 5.60 3.95 9.77 6.93 2002 34.37 89.69 50.29 45.64 49.74 0.51 2.23 16.14 14.7 2.63 8.45 3.25 2.35 2.49 5.82
2004 1.08 3.26 3.6 5.57 22.48 8.87 11.28 13.87
2003 1.15 2.93 3.44 7.74 23.43 6.76 18.58 24.10
2002 1.32 4.5 1.62 10.2 29.55 4.72 14.42 6.84
50
6.9 Vardhman Spinning Mills

INCORPORATION YEAR: 1965 BUSINESS GROUP: Vardhman group of companies FORM: Public
CORPORATE ADDRESS
VARDHMAN SPG & GEN. MILLS Corporate office Chandigarh road, Ludhiana Punjab-141010. Tel.: 91(0161)-2662543-48 FAX: 91(0161)-2601048, 2602710, 2642616
SHARE DATA
Equity Capital (US$m) Face Value (INR) Book Value (INR) Market Value (INR) Market Capitalization (US$m) Latest P/E Ratio Financial Year 3.68(as on 30th Dec 04) 10 169.88 279.40( as on 30th Dec 04) 303.59as on 30th Dec 04) 13.49 April-March
PLANT LOCATIONS
Location Punjab Punjab Punjab H.P M.P Gujarat Address Vardhman Polytecs Bhatinda,Punjab-151001 Vardhman Spinning Mills Malerkotla, Punjab-148023 Vardhman Spinning mills Chandigarh road, Ludhiana Vardhman Fabrics Baddi. Mandideep, Madhya Pradesh Vardhman Acrylics Ltd. Plot no.755, GIDC industrial estate, Jhagadia, Bharuch
6%
24%
0% 5%
promoters FIIs
61%
4%
MFs& UTI Indian public
Banks & Fis others
Segmental Revenue
18% 37% 13% 15% Yarn Sewing threads 17% Steel Acrylic Fabric
INTRODUCTION
The Vardhman Group, established in 1965, under the entrepreneurship of Late Lala Rattan Chand Oswal has today blossomed into one of the largest Textile Business houses in India. At its inception, Vardhman had an installed capacity of 14,000 spindles. Today its capacity has increased multifold to over 5.5 lakh spindles. Today Vardhman Threads is the second largest producer of sewing thread in India. The grey fabric weaving unit at Baddi (HP), commissioned in 1990 with a capacity of 20,000 meters per day, has already made its mark as a
Source: Annual Report, Vardhman
51
quality producer of Grey poplin/sheeting/shirting in the domestic as well as foreign market. This was followed by entry into fabric processing by setting up Auro Textiles at Baddi, which currently has a processing capacity of 1 lakh metres/day.
MILESTONES
2003-04 2002-03 1999 1990 1982 1965 Gold trophy in EOU/EPZ for export of cotton yarn Gold Trophy in EOU/EPZ for export of cotton yarn Set up Vardhman Acrylic in Baruch in a joint venture with Marubeni & Exlan of Japan. Diversification into weaving business with setting up a plant in Baddi with a capacity of 20,000 metres per day. Entered the sewing thread market which was a forward integration of the business. The group established.
SUBSIDIARIES
Mahavir Spinning Mills Vardhman Acrylics Vardhman Steel
MANAGEMENT TEAM
Designation Chairman Executive Director Business head Fabric President & Business head (Thread) President & Business head(Fibre & Steel) Corporate GM Vice President Exports Vice president Marketing Corporate GM (HR) Vice President Taxation Vice President Projects & Purchase Name S.P. Oswal Sachet Jain Suchita Jain D.L. Sharma B.K. Choudhary. I.J.Dhuria Kuldeep Jain Mahesh Arora Neeraj Jain Rajeev Thapar Udip Singh
52
Operational Performance The operational performance of the company has increased in 2003 due to increase in Sales but the margin has decreased in 2004 due to increase in costs.

30 25 18 17 15 14 13 2002 2003 2004 PBDIT PBDIT Margin 16
Us $ Mn
20 15 10 5 0
Financial Performance
160

8 7 6 5 4 3 2 1 0 2002 2003 Sales PAT 2004
The financial performance of the company has improved with sales increasing by 31.7 per cent due to better performance of Fabrics.
sales
140 120 100 80 60 40 20 0
Source: Annual report, Vardhman
53
PAT
Financial Highlights (all figures in US $mn)

Balance Sheet Items Net Worth Capital Employed Fixed Assets (Gross Block + Capital WIP) Total Debt P&L Items Sales Exports ( For Group) Raw Materials Cost Employee Cost PBDIT Depreciation Interest & Financial Charges PBT PAT EPS* (INR) Cash Profit 2004 62.44 176.67 152.88 88.46 146.79 109.00 71.36 8.92 25.27 9.64 6.76 32.0 7.6 20.70 17.42 2003 51.70 153.91 134.7 81.13 121.59 81.55 46.76 6.08 21.26 6.78 4.57 23 4.42 13.17 14.9 2002 46.08 152.98 124.57 81.42 111.48 90.00 46.45 7.42 16.67 7.42 5.57 10.34 1.059 3.24 9.34
2004 1.416 2.86 4.00 3.26 17.22 5.18 10.09 12.18
2003 1.569 2.93 3.97 3.38 17.48 3.63 8.82 8.56
2002 1.766 2.55 2.13 3.56 16.67 1 7.17 2.30
54
6.10 Himatsingka Seide

INCORPORATION YEAR: 1985 BUSINESS GROUP: Himatsingka Group FORM: Public
SHARES DATA CORPORATE ADDRESS

Himatsingka Seide 2/1, Midford Gardens, Mahatma Gandhi Road Bangalore-560001 Tel: 91-80-25584038/4307 Fax: 91-80-23340117/25584249. E-mail:seide@himatsingka.com Equity Capital (US$m) Face Value (INR) Book Value (INR) Market Value (INR) Market Capitalization (US$m) Latest P/E Ratio Financial Year 4.4(as on 30th Dec 04) 10 145.31 394.05( as on 30th Dec 04) 170.18( as on 30th Dc 04) 14.90 April-March
PLANT LOCATIONS
Location Address 23-A, KIADB industrial area VirapuraVillage, Doddaballapur, Taluk Bangalore-561203
18%
3%
Karnataka
10% 2% 5%
promoters FIIs MFs and UTI Indian public Banks & Fis others
62%
Segmental Revenue
INTRODUCTION
The company commenced its operations on February 15, 1985. It was promoted by Ajay Kumar Himatsingka and Dinesh Kumar Himatsingka. It manufactures natural silk fabrics under a 100 per cent export oriented unit scheme. The company undertook to set up a composite Silk mill with an annual capacity of 7,50,000 square meters for producing natural silk fabrics.
18%
82%
fabrics
yarn
Source: Annual Report, Himatsingka Seide
55
MILESTONES
2004 2003 1998 1995 1994 1985 Company sets up a wholly owned subsidiary in New York By the name of Himatsingka America Incorporation. Acquires M/S ABC trading private Limited as its wholly owned subsidiary Sets up a 100 per cent export oriented unit at Dodaballapur Receives SIA approval for setting up a 100 per cent export oriented unit. Credit Himatsingka Ltd. became a subsidiary of the company The company was incorporated
SUBSIDIARIES
Himatsingka Wovens Private Limited Himatsingka America Inc. ABC trading Pvt. Ltd Credit Himatsingka Ltd.
MANAGEMENT TEAM
Designation Chairman Director Director Director Director Director Ex. Director Ex. Director Managing Director Vice Chairman Name N. Vaghul Jayshree Podder Dilip. J. Thakkar A.K. Dasgupta Rajiv Khaitan Basant Poddar Shrikant Himatsingka Aditya Himatsingka Dinesh Himatsingka A.K.Himatsingka
56
Operational Performance The operational profit has increased, but margins have come down to increase in costs .The costs have increased due to higher depreciation stemming from the purchase of new equipment.
US $ Mn

15 10 5 0 2002 PBDIT 2003 2004 PBDIT Margin 44 43 41 40 39
%
14 12 10 8 6 4 2 0 2002 2003 Sales PAT 2004
42
Financial Performance The financial performance of the company has improved due to higher sales. PAT has also increased by 48 per cent due to higher silk demand in US markets. Also, demand in domestic market has improved.
sales

35 30 25 20 15 10 5 0
Source Annual report, Himatsingks Seide
57
PAT
Financial Highlights (all figures in US$ mn)

Balance Sheet Items Net Worth Capital Employed Fixed Assets (Gross Block + Capital WIP) Total Debt P&L Items Sales Raw Materials Cost Employee Cost Selling & Administration Cost PBDIT Depreciation Interest & Financial Charges PBT PAT EPS* (INR) Cash Profit 2004 64.00 76.72 47.17 3.17 31.23 8.70 3.52 3.22 13.34 3.39 9.85 11.64 26.43 15.03 2003 52.38 60.29 42.41 0 26.42 7.43 2.92 2.45 11.55 2.93 8.41 8.44 20.98 11.38 2002 45.86 50.69 45.87 0 24.95 8.47 2.45 2.28 10.24 2.64 7.86 7.86 19.93 10.86
2004 0.05 5.41 153.97 3.77 42.7 37.26 18.83 18.19
2003 0 4.44 60.19 3.82 43.75 31.96 18.92 16.12
2002 0 5.01 -541.47 3.46 41.03 31.27 18.29 17.02
58
7. GROWTH DRIVERS
With the phasing out of MFA by the end of 2004 and with full implementation of Agreement on Textile and Clothing under WTO from January 1, 2005, Indian textile industry has entered a new age full of opportunities and threats. Industry leaders and policy makers need to come forward and chalk out a road map for Indian textile industry. The idea of Made in India brand otherwise will remain on paper. Abundant raw material: India is among leading producers of cotton, but quality does not always measure up to world standards due to high level of contamination. The access to raw material will no doubt drive growth, but this factors contribution to growth of textile industry can be higher if yield and quality of cotton improves. Low labor costs: The labor costs in India are among the lowest in the world. This provides a significant advantage in a labor intensive industry such as textiles. Focus on upgrading technical skills and design skills of Indian workforce will fetch even better dividends. Capitalize on lost sale opportunities: Unpredictable demand and short-lived products are the hallmarks of the world market for apparel. Demand for fashion apparel, being a function more of taste than of objective consumer needs, long range forecasts tended to be highly inaccurate. Demand for many products like fashion garments, shoes, sportswear is highly seasonal, fluctuating and often hard to predict. Thus resulting shortages (stock outs) represent lost sales opportunities and surpluses result in lost revenues consequent to successive reductions (markdowns), often to a point below the cost of production. Thus first time right quality, timeliness and frequent delivery of small lot sizes with a short lead time are the key success factors for Indian industry as it is a supplier. Increase the presence in branded apparels: The branded apparel market size is of INR 20,000 crore, out of which only INR 4,000 crore is catered to by branded apparel. So there is still a INR 16,000 crore market, which is catered by the unorganized small size units. The developed nations, which are the destinations for Indian textile products, use textiles in the form of apparel. . Competitive advantage: A successful high-income nation stays successful only by competing with distinctive, differentiated products or services and that is what helps in making the image for country. It is the cumulative impression of the performance of the organizations that builds the brand image for a nation. Besides, differentiated, modern products are less sensitive to pricing increases. Whereas Indian textile and apparel industries were found to grow many fold when it could move its pricing southwards, either due to increase in government subsidies or driven by currency devaluation, which are neither distinctive nor sustainable capabilities. Implement upcoming technologies: Upcoming technologies for mass customization such as three dimensional non-contact body measurement and digital printing ought to be discussed thoroughly and implemented fast. This mass customization shall be successful for meeting unpredictable demand levels, for luxury goods, uncertain customer wants and for heterogeneous demand.
59
8. OUTLOOK
Indian textile industry can grow to US$85 billion by 2010 from the current figure of around US$36 billion, according to a study conducted by credit rating agency, CRISIL. With MFA ending in 2005, patterns of trade flows are undergoing a major change. This will impact the growth of the industry in India too. With uncertainty regarding future exports, Indian players have been cautious about capacity expansion plans. Industry experts feel that demand growth would witness significant increases if the bias against manmade fibres in terms of duties is eliminated. There has been a recent uptrend in polyester industry operating rates, which is likely to boost margins and enhance profitability. If demand does find strength, there is scope for additional capacities but these will be restricted to the larger, integrated and financially strong companies. In India, the clothing market, even today, is predominantly skewed towards tailored clothes. There has been a shift in urban markets with significant progression towards ready-to-wear clothes, especially in shirts. Unfortunately, due to Government tariffs and trade discounts, which have a telescopic effect, comparing apples with apples, tailored garments still remain the cheaper option when compared to ready-to-wear. It will be still many years before the market moves from consisting mainly of tailored clothing to becoming a 50:50 market between ready-to-wear and tailored clothing. The current growth rates in the ready-to-wear sector are 15-20 per cent annually in the organized shirts and trousers market. The key differentiating factor between success and failure of the ready-to-wear apparel industry in future would be distribution, logistics (including supply chain management), commitment and dedication to quality. Elements of design will play an increasing role. Indian textile industry has some inherent positive points, like dyed yarn is mostly produced in India. Our production costs are relatively lower than others. No doubt, the labor costs of Indonesia or Pakistan are be lower than ours. But our designs, technology and government policies are better. Our producers do not hesitate to execute small orders at lower margins. So the industry has a promising future. The trends in suitings are changing and because of global warming, the period of winter is declining every year so people are consequently shifting from costly woolen garments to cotton and polyester viscose. With the opening of imports, now companies are importing raw material at international costs and are making any type of garments on demand. Retail industry is also gaining ground now. The introduction of new range and aggressive marketing strategies will help the companies in future in increasing their sales. Impact of WTO agreement: With the phasing out of quotas in global trade in textile and clothing, the worlds markets would become more accessible to competitive players. The ones who are not so competitive are in grave danger of being marginalized. India can ill-afford to ignore these global trends. While the export market would become more competitive from 2005, the domestic turf too would be threatened by increased imports as custom tariffs fall. The big markets of the world are increasingly becoming inaccessible to India due to the proliferation of regional/bilateral arrangements that exclude India from the preferential benefits accorded to other member countries. India has the inherent strengths to emerge as a significant player on global stage. But speedy resolution of long-standing issues such as outmoded labor laws and modernization of machinery is downright critical if India has to translate that promise into reality.
60
BIBLIOGRAPHY & REFERENCES

www.texmin.nic.in www.indianrayon.com www.arvindmills.com www.aloktextile.com www.centurytext.com www.raymond.com www.vardhman.com www.himatsingka.com www.indoramaindia.com www.bombaydying.com www.welspun.com www.myiris.com www.bseindia.com www.indiainfoline.com www.equitymaster.com www.google.com www.dogpiles.com www.yahoo.com www.indiabudget.nic.in
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ANNEXURE
A) Textile policy
For historical reasons, India accorded more importance to labor-intensive textiles and as a result, Indian textile industry did not take to machinery in a big way. The government also encouraged small scale sector through tax sops and reservation of segments. The government imposed capacity, price and machinery restrictions on bigger players. Tight labor laws discouraged flow of investment into textile industry and made production uncompetitive. In the mid eighties the government attitude towards textile industry underwent a significant change. The Textile Policy of 1985 marked a clean break from the past. It relaxed regulations governing composite mills and tried restructure government mills. Indian government also sought to readdress its neglect of manmade fibers by reducing fiscal duties in a bid to boost consumption of manmade fibers and blended fabrics. Industrial Development Bank of India (IDBI) promoted a Textile Modernization Fund Scheme in 1986 to help sick textile mills modernize their machinery. The removal of licensing in early nineties together with signing of General Agreement of Tariffs and Trade agreement in 1995 signaled Indian governments intention to loosen hold on Indian textile industry and switch to market-driven regime. Indian government introduced National Textile Policy (NTP) in 2000 to improve growth prospects and competitiveness of Indian textile industry. The main objectives of this policy are: To attain and sustain a pre-eminent global standing in the manufacture and export of clothing Equip the Industry to withstand pressures of import penetration and maintain a dominant presence in the domestic market; Liberalise controls and regulations so that the different segments of the textile industry can perform in a greater competitive environment; Enable the industry to build world-class manufacturing capabilities in conformity with environmental standards, and for this purpose to encourage both Foreign Direct Investment as well as research and development in the sector; Develop a strong multi-fibre base with thrust of product up-gradation and diversification; Sustain and strengthen the traditional knowledge, skills and capabilities of weavers and craftspeople; Enrich human resource skills and capabilities, with special emphasis on those working in the decentralised sectors of the Industry; and for this purpose to revitalise the Institutional structure; Expand productive employment by enabling the growth of the industry, with particular effort directed to enhancing the benefits to the north east region; Make Information Technology (IT), an integral part of the entire value chain of textile production and thereby facilitate the industry to achieve international standards in terms of quality, design and marketing and; Involve and ensure the active co-operation and partnership of the State Governments, Financial Institutions, Entrepreneurs, Farmers and Non-Governmental Organizations in the fulfillment of these objectives.
The thrust areas in this policy are technological up-gradation, enhancement of productivity, quality consciousness, strengthening of raw material base, product diversification, increase in exports and innovative marketing strategies, financing arrangement and integrated human resource development. Through NTP 2000, Indian Government hopes to improve textile and apparel exports from US$11 billion in 2000 to US$50 billion in 2010. The policy provides for setting up a venture capital fund for tapping knowledge-based entrepreneurs and assisting the private sector to set up specialized financial arrangements to fund the diverse needs of the textile industry. The new policy would also encourage the private sector to set up world class,
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environment-friendly, integrated textile complexes and textile processing units in different parts of the country and would review and revitalize the working of the Textile Research Associations to focus research on industry needs. Furthermore, the Ministry of Agriculture and the Ministry of Textiles have jointly taken up Cotton Technology Mission in February 2000 to make available quality cotton to the industry through initiatives such as raising productivity, improving research, reducing contamination, tackling obsolete ginning and pressing factories, improving storage facilities and strengthening marketing. Indian government has launched Technology Up-gradation Fund Scheme (TUFS) in 1999 to provide funds to textile and jute units for modernizing equipment. Till February 2003, an amount of Rs 5950 crore has been sanctioned to 1,809 units under TUFS scheme. Other key measures taken by the government in the recent past include introduction of CENVAT across the textile chain and cut in customs duty on textile machinery.
B) Industry Associations
Contacts of various industry associations
Industry Associations Address Northern Indian textile Sector-23, research association Rajnagar,Ghaziabad201002. Bombay textile research Dr. A.N. Desai, association Director head office, Lal bhadur shashtri marg, Ghatkopar (west), Mumbai, 400096. South India Textile Post Box No. 3205, Research Association Coimbatore Aerodrome post, Coimbatore, 641014. The Synthetic and Art Silk Mills Research Association. Manmade Textiles Research Association. Sasmira marg, Worli, Mumbai, 400025. Telephone Tel: 0120-4783638 Fax -E-mail & URL www.nitratextile.org nitra@nde.vsnl.net.in www.btraindia.com btra@bsnl.com Tel: 022-5002766. --
www.sitraindia.org sitra@vsnl.com 0422-574367/8/9 -www.sasmira.org sasmira@vsnl.com www.mantrasurat.org director@mantrasurat. org ijira@vsnl.com www.ijira.org wraindia@bom8.vsnl.n et.in 022-5414284 --
022-4935351/2
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Near textile market, Telephone exchange, ring road, Surat, Gujarat, 395002 Indian Jute Industries 17, Taratola road, Research Association. Kolkata, 700088 Wool Association. Research Post office sandoz baug, Kolshet road, Akbar camp road, Thane (west), Mumbai, 400607.
0261-8323211
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033-4014615/6/7
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INDUSTRY INSIGHT

Cygnus Business Consulting & Research

Industry Insight Indian Textiles

4. IMPORTS & EXPORTS............................................................................... 14

6. MAJOR PLAYERS ..................................................................................... 19

Industry Insight Indian Textiles

6.9 Vardhman Spinning Mills ..................................................................................... 51 6.10 Himatsingka Seide .............................................................................................. 55

Industry Insight Indian Textiles

Industry Insight Indian Textiles

Industry Insight Indian Textiles

Industry Insight Indian Textiles

Industry Insight Indian Textiles

Key Textile Exporters 2004

3.2.2 Indian Scenario

Industry Insight Indian Textiles

3.3 Contribution of Textile Industry in 2004-05

3.4 Production of Textiles

Production 000 metric tons 225 582 105 2 993 51 30

Industry Insight Indian Textiles

Industry Insight Indian Textiles

3.5 Growth Projections

Expected Growth (%) 4.35 5.95 9.6 10.36 2.94

Industry Insight Indian Textiles

Handl 2005 2006

Projection Of Sector Wise Share of Cloth Production

100% 80% 60% 40% 20% 0%

Projection of Year Wise,Fibre Wise Cloth Production 2005-06 25000 20000

Industry Insight Indian Textiles

Projected Production of Filament Yarn

Projected Production of Spun Yarn

Source Ministry of Textiles, India

Industry Insight Indian Textiles

4. IMPORTS & EXPORTS

4.1 Textile Exports:

% increase/decrease 4.2 2.4 28.7 31.1 17.3 -22.8 3.8 21.8

Industry Insight Indian Textiles

Industry Insight Indian Textiles

Japanese FDI (US$ bn)

Industry Insight Indian Textiles

Industry Insight Indian Textiles

5.2 Labor laws

5.3 Intellectual Property Rights

Industry Insight Indian Textiles

Sharholding pattern 29%

Mutual funds &UTI Others

Industry Insight Indian Textiles

2003 2002 2001 2000 1999 1998

Industry Insight Indian Textiles

PBDIT vs PBDIT margin

Source: Annual report, Indian Rayon

Industry Insight Indian Textiles

Financial Highlights (all figures in US$ millions)

2004 0.32 1.91 17.40 15.44 7.07 10.48 10.77

2003 0.23 1.92 11.06 15.15 7.80 10.47 9.31

2002 0.42 1.99 4.20 10.37 2.99 7.26 3.89

Industry Insight Indian Textiles

6.2 Arvind Mills

promoters Banks & Insurance compaies GDR

Mutual fund& UTI FIIs Indian public