Survive Sustain Secure SHRI LAKSHMI COTSYN LIMITED I I 26th Annual Report 2013-14
Forward looking statement In this Annual Report, we have disclosed forward-looking information to enable investors to comprehend our prospects and take investment decisions. This report and other statements - written and oral - that we periodically make, contain forward-looking statements that set out anticipated results based on the management’s plans and assumptions. We have tried wherever possible to identify such statements by using words such as ‘anticipate’, ‘estimate’, ‘expects’, ‘projects’, ‘intends’, ‘plans’, ‘believes’ and words of similar substance in connection with any discussion of future performance. We cannot guarantee that these forwardlooking statements will be realised, although we believe we have been prudent in assumptions. The achievements of results are subject to risks, uncertainties and even inaccurate assumptions. Should known or unknown risks or uncertainties materialise, or should underlying assumptions prove inaccurate, actual results could vary materially from those anticipated, estimated, or projected, readers should keep this in mind. We undertake no obligation to publicly update any forward-looking statements, whether because of new information, future events or otherwise.
You will come across CORPORATE OVERVIEW
2-3 4-5 2-3 2-3 2-3
Corporate Information In few words... Chairman’s Message Profile of Directors Important certifications
STATUTORY REPORT
12-13 00-00 00-00
Management Discussion and Analysis Directors’ Report Corporate Governance Report
FINANCIAL STATEMENTS
00-00 00-00
Standalone Accounts Consolidated Accounts
Surviving S u in the bad times. Our strong zeal keeps us going despite the external adversities. Determination, focus and positive mindset holds the key to encounter the challenging scenario.
Sustaining with self-belief of better times ahead. We believe in our strengths, our technological innovations and one-of-its-kind product offerings that will do justice to our robust business model once we overcome the bad phase.
Securing with capacities and production plan to reap the benefits of the good time. We have capacities to meet customer aspirations. Strong bounce back is evitable as we have all our plans ready to resurface and rebuild our growth story.
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Board of Directors Dr. M. P. Agarwal Chairman cum Mananging Director Mr. Pawan Kumar Agarwal Joint Managing Director Mr. Devesh Gupta Dy. Managing Director Mr. Dileep Bajaj Executive Director Mrs. Sharda Agarwal Executive Director Mr. R. K. Garg Independent Director
Corporate
Dr. G. N. Mathur Independent Director
Information
Mr. Pramod Kumar Singh Independent Director
Company Secretary & Finance Controller
MR. SHARAD KUMAR BIRLA - Advocate
Mr. RAKESH KUMAR SRIVASTAVA
7/17-A, II Floor, Parwati Bangla Road, Kanpur - 208002 Ph. No. (0512) 2531307
President Works MR. B. R. GARG
P. R. Advisor S. K. ADVERTISERS
Statutory Auditors
MIG F- 4 , Gujaini, Kanpur - 208022
M/s PRADEEP & ASSOCIATES - Chartered Accountants
Ph. No. (0512) 2282265
27/78 A, Gagan Deep Complex Birhana Road, Kanpur-208001 Ph. No. (0512) 2313665
Internal Auditors M/s AJAI SHANKER & COMPANY - Chartered Accountants 112 / 206-A, Swaroop Nagar, Kanpur - 208002 Ph. No. (0512) 2551249
Cost Auditor Mr. A. K. SRIVASTAVA 96 Harjender Nagar, Kanpur - 208007 Ph. No. 09839116989
Legal Advisor MR. RAM GOPAL PANDEY - Advocate Chamber No. – 17, First Floor Pt. M.L. Nehru Adhivakta Bhawan, Civil Court, Kanpur Ph. No. (0512) 2665598
Bankers (CDR Members) 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20.
Central Bank of India Syndicate Bank Union Bank of India Canara Bank Bank of Baroda Punjab National Bank Indian Bank State Bank of Travancore State Bank of Patiala State Bank of Mysore Exim Bank Oriental Bank of Commerce Allahabad Bank IDBI Bank Vijaya Bank Corporation Bank State Bank of Bikaner & Jaipur Axis Bank Saraswat Bank Andhra Bank
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Monitoring Institution for Lenders
(e)
NOIDA UNIT
Central Bank of India
C-40, Sector-57, Noida
CFB, Jeevantara Building, Parliament Street,
Ph. No. (0120) 4722700
New Delhi - 110001
(f)
ROORKEE UNIT Dev Bhoomi Industrial Estate,
Security Trustee for Lenders
Village Banta Kheri, Tehsil Roorkee,
Centbank Financial Services Limited
District Haridwar, Uttaranchal
1st Floor, Link House, Bahadurshah Zafar Marg
Ph. No. (01332) 231961
New Delhi - 110002
(g)
SONEPAT UNIT Village-Libaspur, District- Sonepat, Haryana
Registered Office 19/X-1 Krishnapuram, G.T Road, Kanpur, U.P. 208007 Ph. No. (0512) 2402893, 2402733
Ph. No. (0130) 2381579 (h) SPINNING UNIT UPSIDC Industrial Area, P.O. Malwan Dist. Fatehpur, U.P
Corporate Office C-40, Sector-57, Noida. U.P. Ph. No. (0120) 4544780
Website www.shrilakshmi.in
Subsidiary Companies 1. 2.
3.
SLCL Overseas (FZC)
E-Mail ID
SAIF Zone P.O.8000, Sharjah, U.A.E.
shri@shrilakshmi.in
Shri Lakshmi Defence Solutions Ltd. Rahsoopur Gate No. 133, Tehsil Bindki,
Corporate Identity Number (CIN)
Industrial Area, G.T.Road, Dist. Fatehpur
L17122UP1988PLC009985
Synergy Global Home Inc. 160 Green Tree Drive, Suite 101, Dover
Demat Isin Nsdl & Cdsl
Kent – 19904, USA
INE851B01016
Registrar & Transfer Agents
Listing
M/s Abhipra Capital Ltd.
Bombay Stock Exchange
GF-58-59 World Trade Centre,
Floor 25, P.J. Towers, Dalal Street, Mumbai 400001
Barakhamba Lane, New Delhi
Ph. No. (022) 2272134
Ph. No. (011) 23414629, 23413893
National Stock Exchange
Mail ID: rta@abhipra.com
5th Floor, Exchange Plaza, Bandra (E), Mumbai 400051 Ph. No. (022) 26598100
Units
Uttar Pradesh Stock Exchange
(a)
MALWAN UNIT
“Padam Tower”, Civil Lines, Kanpur - 208002
UPSIDC Industrial Area
Ph. No. (0512) 2338220
P.O. Malwan Dist. Fatehpur, U.P (b)
Ph. No. (05181) 248669
Scrip Code
AUNG UNIT
BSE: 526049
P.O.Aung, GT Road, Dist. Fatehpur, U.P.
NSE: SHLAKSHMI
Ph. No. (05181) 251184 / 48 (c) (d)
ABHAYPUR UNIT
Bloomberg Code
P.O.Aung, GT Road, Dist. Fatehpur, U.P.
SLCL IN
REWARI BUJURG UNIT Village & Post - Rewari Bujurg Pargana & Tehsil - Bindki, Dist. Fatehpur, U.P.
Reuters Code SHLK.BO
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In few
words... Brand umbrella
Shri Lakshmi Cotsyn Limited (SLCL) is recognised amongst the leading players in northern India. It manufactures regular and technical textiles offering world-class quality innovative product offerings to its customer.
Star Track for Fusible Interlining, Alisha for Embroidery fabric, SVL for Zippers, Galaxy for Clothing accessories, Weaves for Home Furnishings and DYFI for Garments.
SLCL is integrated across all verticals from yarn manufacture, dyeing to garmenting. The Company has also installed rise-husk based Captive Power generation capacity and has an in-house chemical auxiliary unit. SLCL has a prominent presence across the globe and has developed a strong client base across USA, Canada, Latin America, UK, Swede, France, Germany, South Africa, Italy, Spain, South Korea and Australia.
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The Company also offers armoured and mine protection
A go-getter! Pioneered the technical innovations through the development of Nanotechnology, Functional fabric and Smart intelligent fabric Enjoys strong relationship with marquee clients including Fortune 500 Companies like Wal-mart and
vehicles (with 360° protection) through its 100% subsidiary – Shri Lakshmi Defence Solutions Limited (SLDSL). It also has an agreement with Ford India Limited for armouring vehicle on Ford chassis. Besides, SLDSL is registered with the some of India’s prominent defence establishments like: Directorate General of Supplies & Disposal
Ikea Approved supplier to Government defence
Director General of Quality Assurance
establishments (Indian Army, Navy, Air Force and
Ministry of Defence (Navy)
State Police) and is registered with several regulatory
Defence Material Stores R&D Est
agencies
Federation of Indian Export Organisation
Acknowledged leader in the field of Microdot Fusible
RDSO (Indian Railways)
Interlining Fabric, Blended Suiting & Shirting, Terry Towels, Home Furnishing, Wider Width Sheeting,
Indian Postal Department
Denim Fabrics, Embroidery / Lace / Quilted Fabrics,
Bullet Proof Jackets etc
1150
Ranked “Star Export House” by the office of the
Retail presence across multi-brand outlets (MBO) wherein the brands are marketed
Camouflage fabrics and Industrial Fabrics like Nuclear Bio-Chemical Fabrics, Infrared protective fabrics and
Joint Director-General of Foreign Trade, Ministry of Commerce and Industry and is a preferred supplier to Defense Research and Development Organization (DRDO) ISO 9001:2000 certified by Transpacific Certifications Limited.
8 State-of-the-art manufacturing facilities at Malwan, Aung, Abhaypur, Rewari Bujurg, Rhasupur, Noida (Uttar Pradesh), Roorkee (Uttarakhand) and Sonepat (Haryana)
Rich product portfolio with adequate capacities Regular textiles
Technical textiles
Suiting & Shirting
Wider width
Technical textile fabric
Flex fabrics
24 Mn Mtrs
30 Mn Mtrs
12 Mn Mtrs
17 Mn Mtrs
Denim
Comforters
Fusible interlining
NBC Fabric
40 Mn Mtrs
0.3 Mn pcs
25 Mn Mtrs
10 Mn Mtrs
Bottom weights
Garments
Black out fabric
IRR/MSCN fabric
6 Mn Mtrs
6.6 Mn pcs
20 Mn Mtrs
5 Mn Mtrs
Terry towels
Quilted fabric
15,000 tons
0.4 Mn Mtrs
Embroidery fabric 0.8 Mn Mtrs Mn: Million
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Chairman’s Message Dear Shareholders,
Dr. M. P. Agarwal Chairman cum Managing Director
We undertook aggressive expansions and capex for different products with an investment of over Rs. 1,400 crore in the past few years.
It is a general saying that when the situation becomes almost impossible, those who are truly strong are wise enough to pull out, rather than being totally decimated. The challenging situation faced by the Company over the recent past has made the Company even tougher and determined than ever. Our strong focus and growth-oriented mindset keeps us optimistic about reaping the benefits of the good times lying ahead.
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Unfavourable moments
Optimistic revival on cards
Your Company was on the growth path until 2011-12. We
Despite such challenges, we are quite optimistic about the
undertook aggressive expansions and capex for different
revival of our business and operations. We are yet to explore
products with an investment of over Rs. 1,400 crore in
optimum and underlying potential of the projects we have
the past few years. However, the unavoidable external
undertaken. Once the required funding is met for these
circumstances in 2012-13 spoilt the good show we had put
projects, we shall implement the following revival strategies
up. The Company entered into financial stress owing to
going ahead:
non-receipt of TUF Subsidy amounting to approx. Rs. 165
Infusion of funds through PE investors: We have
crore. Resultantly, the company opted the mechanism of
initiated discussions with few private equity investors who
Corporate Debt Restructuring (CDR) in F.Y. 2012-13 which
believe in our efficiency and potential to grow. We are in
is under implementation.
advance talks and expect a good fund infusion.
The CDR Package proposed that the Company will receive
Marketing of technical textile products: We shall
Rs. 166 Crore on account of TUFS subsidy by June 30, 2013.
aggressively market the high-margin technical textile
Hence, no additional working capital was demanded from
products to leverage the increasing demand from domestic
the Lenders in the package. Besides, CFSL finalized in TEV
and global markets. We are expecting to generate a sale of
Report that company requires a capex of Rs. 65.40 Crore for
around Rs. 1,400 crore and an EBIDTA margin of 21% by
installation of balancing equipments, mainly in Technical
2017 and gain a significant market share.
Textile plant and Spinning plant to make the projects operational. The funding was expected to be available to the company by August 1, 2013, which would have allowed the Company to revive the operations by middle of 2014. Accordingly, the company requested all the Lenders to release their share to the company. However, time had its own role to play. Rather unfortunately, neither the TUF Subsidy nor was priority loan disbursed by the Banks on time. This led to shortage of sufficient working capital resulting in lower capacity utilization of around 30 to 40%. In order to consolidate the operations, the company liquidated old and damaged warehouse stocks of fabric and yarn at throwaway price to avoid further deterioration. It further set off old receivables at heavy discount. This added further losses to the company and led to the erosion of entire net worth in 9 months accounting year ended on March 31, 2014. The Company is obligated to file a reference with the Board for Industrial and Financial Reconstruction (BIFR) in terms of the provisions of Section 15(1) of Sick Industrial Companies (Special Provisions) Act 1985.
Benefits of backward integration: The spinning unit project at Malwan will acts as a backward integration for the company. This will allow us to mitigate ourselves from the volatile raw material price fluctuations, resulting in a savings of around Rs. 24 crore annually. Government tenders: We are actively participating in various government tenders and being already the supplier of products to Indian Army, Navy, Air Force and State Police, we have received many prestigious orders including order from Wal-mart and Ministry of Defence for Rs. 35 crores. End is not the end Effort Never Dies (END) as changes are inevitable and not always controllable. But, the efforts are undertaken to overcome the challenges. Considering the underlying potential and the order book of Rs 250 crore, we are still technically feasible and economically viable. The Company is thankful to all the bankers, shareholders, customers, suppliers and the employees who have been our strong supporting hands in the challenging times. This inspires us to move ahead and gives us the belief of reaping rich benefits in the coming years.
Warm Regards Dr. M.P.Agarwal Dr. M.P. Agarwal is a first generation entrepreneur and doctorate in textile costing, having over three decades of experience in this line of business.
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Profile of
Directors Dr. M. P. Agarwal Chairman & Managing Director
Experienced professional [Qualified Cost Accountant (FICWAI) and Doctorate in Textile costing (PhD)] turned entrepreneur with over three decades of experience has been awarded by well-known Delhi Ratan Award and honoured by various intellectual forums.
Mr. Pawan Agarwal Joint Managing Director
He is Science graduate and has proficiency in computer application, fabric processing and technical textiles. He has around 20 years of rich experience and controlling production activities, quality controls and marketing.
Mr. Devesh Gupta Deputy Managing Director
He has rich experience of 31 years in Textile Auxiliary manufacturing, Chemical Engineering, procurement and inventory management. He is entirely taking care of raw material procurement textile, chemical engineering process, efficiency and tight control over cost.
Mr. Dileep Bajaj Executive Director
Has more than 36 years of experience in Project & Financial Management especially in Textile Industry, looks after Corporate office at Noida.
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Mrs. Sharda Agarwal Promoter Director
Actively involved in the business of the Company and played an active role in the management of the Company.
Prof. (Dr.) G. N. Mathur Independent Director
An eminent senior scientist and has been the Ex-Director, Defence Materials and Stores Research and Development Establishment (DMSRDE), Post Graduate in Chemical Engg. from Canada university and Doctorate in Engg. from University of Detroite, U.S.A. Presently associated with the University of Arkansas, U.S.A. and is working on Nano Technology and its application in Textiles to manufacture Smart Textiles.
Mr. R. K. Garg Independent Director
A Management graduate with over 35 years of experience. Has worked with DLF & DCM Shriram.
Mr. Pramod Kumar Singh Independent Director
Mr. Pramod Kumar Singh has rich experience of over 26 years in the field of media and Politics and has been a Former Advisor to Union Textile Minister. He is post graduate in Political Science from Allahabad University and M. Phil. (International Politics) from Jawaharlal Nehru University (JNU) New Delhi. He is post graduate in Political Science from Allahabad University and M. Phil.( International politics) –from Jawaharlal Nehru University (JNU) New Delhi.
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FINANCIAL STATEMENTS
Important
certifications NAME OF CERTIFICATE
PURPOSE
GOTS
Global Textile System
O.E. 100 & Blended
User Health & Safety
REACH
Chemical Management
OEKO-TEX 100
Skin Friendly Chemical
SA-8000
Social Accountability
ISO-9001 : 2008
Quality Management System
ISO-14001 : 2004
Environment Management System
OHSAS - 18001 : 2001
Occupational Health & Safety
FAIR TRADE CERTIFICATE
Ethic Trade Practices
Revenues by segment 2013-14 (%)
Suiting/Shirting
2012-13 (%)
Suiting/Shirting
12.13
Technical Textile Fabric
22.69
Fusible Interling
9.19
Quilted Fabric
0.35
Embroidery Fabric
0.27
Denim
15.89
Terry Towel
14.77
Home Furnishing
9.52
Bottom Weight
3.00
Nylon Fabrics
0.92
Garments
1.48
Comforters
0.46
SLCL UAE (Subsidiary)
7.43
SLDSL (Subsidiary)
0.96
Syenrgy (Subsidiary)
0.93
16.93%
Technical Textile Fabric
11.80%
Fusible Interling
10.68%
Quilted Fabric
0.67%
Embroidery Fabric
0.42%
Denim
10.25%
Terry Towel
22.92%
Home Furnishing
16.23%
Bottom Weight
4.25%
Nylon Fabrics
1.19%
Garments
2.53%
Comforters
1.19%
Misc. / Rewari Sales
0.93%
Management Discussion and Analysis
Company overview Shri Lakshmi Cotsyn Limited (SLCL) is amongst the largest textile players in northern India. It has established itself as a manufacturer of cotton and blended fabrics, readymade garments, technical textiles,
embroidered
fabric,
quilts,
fusible interlining, denim, terry towels, bottom weights, home furnishing etc. Besides, the Company also manufactures high margin technical and safety textiles (Water Repellent Bed Linen, Vitamin E bed Linen, Fire Retardant Fabrics, Organic Bedspread, Breathable Fabrics, NBC (Nuclear, Bio-Chemical) Fabrics, MSCN (Multispectral Camouflage Nets) Fabric, Flex Fabric, Black out & ECW (Extreme Cold Weather) Fabric.
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The Company has six state-of-the-art manufacturing
Graphs to see below
facilities located across India. The DSIR approved R&D capabilities and its talented design team has enabled the
SLCL’s extensive marketing and distribution network
Company to develop and deliver innovative textile products.
spans across India and abroad. It has some of the globally recognised clientele like IKEA, Wal-Mart, Macy’s, Bed
Global textile industry
Bath & Beyond, Loblaws, JC Penney, Shopco, Meijer’s,
The Global textile industry has flourished with a great
Lacoste, Frette, Westport, HBC, El-Corte Ingles and Sheet
momentum since the exclusion of global quota scheme. It has
Street, among others. The Company is exploring further
showed more dynamic growth in the last decade in terms of
possibilities of adding more clients in the US and Europe.
trends in the global production, supported by technological innovation and expansions. The key factors for this dynamic
Indian textile industry
growth are the economic revival post recession, rising
Overview
demand for nonwoven disposable textile products, increasing
India’s textile industry is one of the leading textile industries
demand from promising regions, especially Asia-Pacific, and
in the world, exporting to over 100 countries. It contributes
increasing demand for environmentally-friendly fibers.
a significant 17% to India’s overall export earnings and
India is world’s second largest producer of textile and
employs over 45 million people directly, making it the second
apparel after China. China is slowly reducing its focus on
largest source of employment after agriculture. Abundant
textiles and this has had a positive impact on the Indian
availability of raw materials such as cotton, wool, silk and
textile and apparel industry. Even Bangladesh, Vietnam and
jute as well as skilled workforce have made the country a
Turkey’s emerging textile industries are capturing a large
sourcing hub and second largest producer of textiles and
portion of the global demand. According to Euromonitor
garments globally. The growth and all round development
International, Cotton yarn production across 40 leading
of this industry has a direct bearing on the improvement of
producers rose from 31 million tonnes in 2008 to 46 million
the India’s economy.
tonnes in 2013, growing at 8.4% annually.
24% 8%
USD223bn
14% 4% 27%
Global spindle capacity
Potential size of the Indian textiles and apparel industry by 2021
Contribution to IIP
Global rotor capacity
Contribution to GDP
Foreign Exchange Inflows
(Source: Technopak, Ministry of Textiles)
8 6.4
8.3 6.9
7.6 9
7.2
Textile production across 40 countries
9
9.4
9
8.7
9.4
Top 10 textile producers (%)
China India Pakistan Turkey US Brazil 33
36
39
43
46
Egypt
31
77.7
77.1
74.7
74.6
72.9
69.4
Tajikistan
2008
2009
2010
2011
2012
2013
South Korea Vietnam Rest
2008
2009
2010
2011
Source: Euromonitor International
2012
2013
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Despite slow recovery in USA and EU coupled with
consumption growth in the country. The population is
sustained cost of inflationary inputs, the industry put up
largely skewed towards the age group of 21-40, i.e., the
a recommendable performance in 2013. The Government
young population. This segment is always updated about
policy of diversification of market and product base has
the changing tastes and trends. The rising female workforce
helped the industry explore newer markets. The industry
further complements this trend.
also leveraged raw material strengths and sustained
Graphs to see below
better compliance practices that attracted the buyers and international brands across globe to source from India.
Rising income levels
India’s share in Global Textiles trade has increased
Rising income levels, specially in the rural segment, has
phenomenally by 17.5% in the year 2013 compared to
played a key role towards the revival of domestic demand
the previous year. While the global textile industry grew a
from this sector. The upward push on demand from the
mere 4.7%, India registered a growth of 23% beating China
income side is set to continue.
and Bangladesh which has registered 11.4% and 15.4%,
Graphs to see on next page
respectively. Technical textiles
Graphs to see below
The technical textile segment is largely driven by healthcare During 2013, global textiles exports were estimated to the
and infrastructure sectors. The cost-effectiveness, versatility
tune of USD 772 billion with India commanding 5.2% of
and durability of the products has further made the
the share. The reason for India’s export growth is largely
Government frame favourable policies to support further
attributed to the strong rebound of the Apparel and Clothing
growth. It has already allotted fund of USD 1 bn to the SMEs
sector, contributing 43% of the total exports. Moreover, the
and has also exempted custom duty of the raw materials
industry has also witnessed a spurt in investment during
used by this sector. According to the study conducted by
the last five years. The industry has attracted foreign direct
PHD Chamber of Commerce, India’s technical textiles
investment (FDI) worth Rs 6,710.94 crore (USD 1.11 bn)
market, which is currently estimated at USD 14 bn, is
between April 2000 to February 2014.
likely to reach a level of USD 32 bn by 2023. Diversification towards non-woven technical textiles and forging global
Opportunities
partnerships with counterparts shall further drive growth
The Indian textiles and apparel market is on course towards achieving an estimated market value of USD 223 bn by 2021 largely owing to following factors:
in this segment. Home textiles Over the past few years, India has gained a significant market
Favourable demographics
share in the Global Home Textiles segment accounting for
India’s growing population has been key driver of textile
7% of global home textile trade. Super quality offerings
India’s textile industry growth was higher than the global average (%)
Growth in India’s population (bn)
23 CAGR: 1.8%
1.33 1.20
1.23
2010
2012
1.03
15.4 0.85 11.4
0.69
4.7
Global Source: UN Comtrade
India
China
Bangladesh
1980
1990
2000
2018F
ANNUAL REPORT 2013-14 15
CORPORATE OVERVIEW
has further made India a leader in US and UK, accounting
that may hinder the growth momentum. Some of these
for two-third of their exports. Going ahead, the industry is
challenges include:
expected to expand at a CAGR of 8.3% and is expected to be valued at USD 8.2 bn by 2021.
Consistent availability of Medium-to-high skill labour High interest rates and low government support on
Denim
capital
Rising number of working women, lifestyle changes and
Smaller domestic market, huge dependence on export
evolving culture has driven the demand for western wear, specifically jeans amongst women. Growing brand awareness and consciousness has given push to the organized denim market.
Limited Managerial skills to manage large-scale operations and after-sales service Lack of infrastructure (power, ports, roads and railways), supply chain management, IT systems, high lead-time
Increased penetration of organised retail
and customs clearance takes time
With rising disposable incomes, the retail sector has experienced a rapid growth in the past decade. Several international players like Marks & Spencer, Guess and Next have made their mark in the Indian market. As a result, the
Investments in R&D Red tapism and procedural delays (including in judicial proceedings)
Indian Retail Market, estimated at USD 520 bn in 2013 is
Competition from Bangladesh and Vietnam could erode
expected to grow at a CAGR of 13% to reach around US$ 950
India’s share in global trade
billion by 2018.
Government initiatives
E-commerce
Government’s support with favourable policies has been
Increasing numbers of players are expected to get into
a key ingredient for the growth of this industry. Here are
e-commerce bandwagon over the next decade, to take
some of the initiatives:
advantage of the growing consumer acceptance of
Technology Upgradation Fund Scheme
researching and shopping for products online. It is estimated
The scheme ensures a 5% interest rate reimbursement
that around 30-40% of the overall retail in India’s top 75
charged by the banks and financial institutions to ensure
cities will be done online in the next 7-10 years. Increasing
credit availability for technology upgradation. The scheme
Internet penetration, usage of smartphones, tablets,
also proposes 5% reimbursement of interest charged by
long working hours and a growing appetite among Indian
the financial institutions, provides safeguard against
consumers shall be the key drivers for online shopping.
exchange rate fluctuations (not exceeding 5% per annum)
Challenges
and 5% interest reimbursement and 10% capital subsidy for
The Indian textile industry has its own set of challenges
specified finishing machinery, garmenting machinery and technical textiles machinery.
BUDGET HIGHLIGHTS, 2014-15
Trends in per capita income (USD) 2,000
31%
1,600
21%
11%
1,200
1%
400
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013E 2014F 2015F 2016F 2017F 2018F
800
GDP per capita, current prices Source: IMF
Growth
-9%
The Union Budget 2014-15 recognized the aspirations of a new India which is looking towards the government for decisively moving towards high growth and low inflation. Following are the initiatives announced for the textile industry: Allotted Rs 50 crore rupees to set up a Trade Facilitation Centre and a Crafts Museum to develop and promote handloom products and carry forward the rich tradition of handlooms of Varanasi Allotted Rs 500 for developing a Textile mega-cluster at Varanasi and six more at Bareilly, Lucknow, Surat, Kutch, Bhagalpur and Mysore Allotted Rs 20 crore to set up a Hastkala Academy for the preservation, revival, and documentation of the handloom or handicraft sector in PPP mode in Delhi Allotted Rs 50 crore to start a Pashmina Promotion Programme (P-3) and development of other crafts of Jammu & Kashmir
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Scheme for Integrated Textile Parks
SWOT Analysis
The Ministry of Textiles plans to emphasise the weaving
Strengths
sector through the Technology Upgradation Fund Scheme
Promoters have rich experience in the textile industry
(TUFS). The scheme encourages the establishment of
and they are familiar with the change in demand pattern
Greenfield textile infrastructure where the State Government will provide technical advisory and fund 40% of the project. Central Government will provide the balance finance along
Established a good reputation in the market as reliable manufacturer and supplier of quality products
with land acquisition and infrastructure support.
Technically sound with ultra modern machineries
Integrated Skill Development Scheme
Positioned itself as an integrated Multi product player of
This scheme was launched in October 2010 to address the
textile value chain
training needs of the textiles workers to meet manpower
Strong niche product portfolio for domestic and
requirement. It planned to train over 2.7 Mn persons over 5
international brands
years with an estimated cost of Rs 19.5 Bn.
Economies of scale through complete integration
Technology Mission of Technical Textiles
Strong distribution network in the market for its
The mission aims at address infrastructure improvement
various ranges like Polly filled quilted bed covers, home
in terms of testing facilities, market development support,
furnishing products, embroidered dress material and
skilled manpower, R&D and defining specifications and
microdot interlining fusing fabric
standards for technical textiles, among others. Besides,
Global blue chip clients include Ikea, Wal-Mart, Sams
it also focuses on supporting other activities like business
Club, Falabella , BHV, Casino, Primark, Edgars, Frette,
start-ups,
market
Myers, Loblaws, El-Corte Ingles, Myers, E-Mart, etc.
development for institutional and export business and
Some of the major textile players in India have not been
promoting contract research and development through IITs
able to make it to the IKEA approved list of suppliers
/ TRAs / Textile Institutes.
State-of-the-art large manufacturing facilities at 8
Focus Market Scheme
locations
The government has incorporated several measures in the
Strong presence in technical and safety textiles (water
Focus Market Scheme. As per the new measures, textile
repellent bed sheets, mosquito repellent bed sheets, fire
exporters would be able to avail duty credit scrip on export
retardant fabrics etc.) with defense applications
to 26 additional countries apart from existing destinations.
Strong presence in defense related textiles (uniforms,
This will encourage exporters to explore markets outside
camouflage textiles to armored vehicles)
workshops,
social
compliances,
the traditional destinations of the US and EU. These developments are expected to widen the export markets for textile exporters and gradually limit the over dependence on select markets.
Strong R&D capabilities proven over a decade with launch of innovative products Multiple brands for different segments Market leader in fusible interlining segment (30% plus
Indian defence sector
market share)
India has been the world’s top arms buyer for the past three
High-margin Technical Textile set-up
years as it attempts to replace ageing Soviet-era military hardware with modern weapon systems and aircraft from various sources. Considering the increasing security needs, modernisation of the armed forces is critical to enable them
Weakness Sensitive to the change in raw material prices may affect the profitability of the company
to play their role effectively in the defence of India’s strategic
Low brand visibility in readymade garments due to lack
interests. In order to give domestic industry a greater role
of exclusive stores
in producing modern equipment with foreign investments,
Relatively high leverage
the Government raised military spending for 2014-15 to
Since more than 90% of the sales is domestic in nature,
Rs.2.29 lakh crore, marking an increase of 12.5% over the
the company may be losing out on the opportunity cost
previous fiscal, and opened the domestic defence industry
viz a viz the export market which is considered to be
to 49% foreign direct investment to boost the development
very lucrative
of indigenous hardware.
ANNUAL REPORT 2013-14 17
CORPORATE OVERVIEW
Less focus on marketing and creating brand equity for its products
Amount in Rs crore Particulars
Opportunity
2013-14 (9 months)
2012-13
Potential market and ability to capture the growth by
Net sales
880.08
1,922.19
aggressive sale promotion policy
Exports sales
220.63
276.82
Opportunity to launch high quality fabrics in healthcare using nanotechnology Opportunity to add more global blue chip clients in US and Europe Opportunity to cater to defence forces in India and abroad in higher value added areas – armoured vehicles, technical and safety textiles High demand present for technical textile in domestic as well as international market and present Machineries and set-up can be customized to produce different products according to the client requirement Technical textile products can be used as an application across Auto component, construction, home furnishing, defence, hygiene and medical, components of furniture, shoes & clothing, railways and aerospace, packaging, sports & leisure segments Threat Increasing competition from unorganized sectors and other peers Competition from neighbouring countries and in particular from China, Pakistan and Turkey in respect of Home textile and Technical Textile products Fluctuations in raw material (cotton) prices pose a threat, as its production depends upon availability of raw material Increasing competition from existing players in textiles and defense related products The fragmented nature of the industry and compared to
EBIDTA
-
91.55
PBT
-624.58
-367.69
PAT
-624.67
-415.54
Fixed assets Other current assets Quality Quality commitment is aligned with benchmarked quality assurance protocols
globally
The Company understands the underlying importance of quality and pays attention to each detail The procurement team keeps a check on the cost and the quality of the raw materials The manufacturing and packaging team does not leave any stone unturned in checking the quality before releasing product into the market The Company’s TQM enhances further quality awareness Advanced TQM methodologies deliver consistent and internationally benchmarked quality standards Products move in numbered batches; a thorough batch-wise inspection is conducted in line with client specifications In the absence of such parameters, the Company follows internal protocols The TQM teams issue a green card if all parameters are compiled with In the event of non-compliance, the batch is withdrawn and a red card is issued for subsequent analysis and rectification
international standards our capacities are small Availability of all the varieties of cotton, yields is one of the lowest in the world and inconsistent in quality Slow improvement in quality to international standards and adoption to fast changing fashion demands Financial review Accounts prepared on a historical cost basis, based on accrual method of accounting in accordance with applicable accounting standards issued by The Institute of Chartered Accountants of India. The table given below shows a comparative analysis of key financial figures:
Research & Development The in-house Research and Development department enables the Company to achieve cost and product leadership The 50-member strong team keeps itself regularly updated to adapt to the latest technologies Department of Science and Industrial Research, Ministry of Science and Technology have recognised the R&D The Government of India has further recognised the Company as a centre for skill upgradation of Industrial workers.
SHRI LAKSHMI COTSYN LIMITED
18
CORPORATE OVERVIEW
STATUTORY REPORT
FINANCIAL STATEMENTS
Human Resource Development
We promote the improvement of physical and mental health
Your Company believes that safe and healthy working
and the creation of workplace environments where people
conditions at factories and other premises are as necessary
can work with peace of mind.
and as important as production, productivity and quality. Your Company complies with all applicable statutory
Value To Community
provisions pertaining to health and safety and takes all
As a responsible corporate citizen, Shri Lakshmi Cotsyn
possible measures to prevent accidents and occupational
Limited believes in enduring healthy relationships with the
hazards. The Company provides the necessary information,
entire workforce and has successful history of collaboration
promotes awareness and provides training to all employees
with communities at large. The company has consciously
to carry out their tasks in a safe and responsive manner.
chosen the path that has led it to create better working
We ensure healthy working environment and proper housing, medical facilities, gratuity and Insurance (GPA) benefits to the employees for the betterment of our people. We have developed a Housing Colony for our Workers/ staff with all necessary amenities like water purifier, parks etc. at Malwan. We adhere to strict labour compliance to all working conditions and benefits as directed under Indian Labour Laws.
environment and facilities for workers, especially females. On the course to sustainable development, Shri Lakshmi Cotsyn Limited takes care of environment too through its policies that ensure zero discharge ETP, Agro based turbines for power generation and reduced pollution Value To The Country The evolving nature of the threat faced by military forces and police personnel has increased the importance of quality
Health & Safety Measures
force protection over any other times.
We assure that workplace environments are safe and easy for
The Shri Lakshmi Group is dedicated to meeting those needs,
individual employees to work in so that every employee can
as well as those of homeland security and allied military
have peace of mind and concentrate on their work, allowing
forces, with innovative protective products that enable war
them to maximize their willingness and creative power. As
fighters to safely accomplish their missions such as :
we stably conduct all our business activities, we will pursue
Development of High Visibility Fabrics for Night time
safety and health companywide and seek to assure the safety
applications in various Police and Para military forces.
of our employees and promote and maintain their health.
Shri Lakshmi has risen to the challenges and has created
While maintaining a record free from accidents and
mine-protected vehicles and B.P. jackets (successful for AK
disasters, we assure the safety of employees and local
47 and AK 56 for nine bullet firing as against traditional
communities.
firing of six bullets). Our products have been well received
In addition to abiding by laws, regulations and other
by all state police forces.
requirements for occupational safety and health, we make continuous efforts to improve our standards of safety health management. Through education and activities that raise awareness about safety and health, we will seek to improve the safety and health awareness of all employees.
R&D and product innovations The Company is developing nanotechnology fabrics and smart textiles with sensor technology to monitor fatigue, stress, heart condition, blood pressure etc. Besides, it also manufactures various technical textile fabrics which include high altitude fabric, PU-Coated nylon fabrics, flex fabrics, carbon fabrics and IRR fabrics. The Company recently introduced membrane laminated fabrics for rain & extreme cold weather ECW Clothing which do not allow water to come in but allows body sweat and body heat to go out in vapour form, thus saving an individual from getting wait as well as getting a frost bite in extreme cold situations.
Company believes that safe and healthy working conditions at factories and other premises are as necessary and as important as production, productivity and quality.
International Standards
Awarness among workers in relation to negative effects
The Shri Lakshmi Groups believes that strong ethics
of tobacco and forming a healthy living habits
bring good business and to attain that it complies with all necessary international standards.
Environment & Social Responsiblilty
Your Company adhere to following International Standards:-
The Company undertakes numerous initiatives, involving employees and providing direction for participation in
ISO 9001: 2008- Quality Management System.
addition to the office environment.
ISO 14001: 2004 - Environmental Management System. OHSAS
18001:
2007
-Occupational
Health
&
Management Safety System. GOTS -Global Organic Textile Standard Organic Exchange Blended Standard. Oeko-Tex Standard- for Skin Friendly Chemical.
SLCL’s concern for the environment is reflected in the following initiatives: In campus greening. Encouraging judicious use of natural resources. Recycling, pollution control to ensure clean air and water and reduction of landfill wastes.
REACH- Substance of Very High Concern for Chemical
Developed 30 acres of land for organic product
Management.
development.
FLO-CERT - Fair Trade Standards
In-house Chemical auxiliary unit and 16 MW rice-husks
SA-8000-Social Accountability.
based captive co-generation power plants, resulting in optimum resource utilization.
Awarness Programmes
Your Company has followed “Green Initiative in Corporate
Organized Traffic Awareness Programme.
Governance” by allowing paperless compliances through
Modern Techniques Awareness and awareness in
electronic mode. To contribute to the Corporate Social
relation to the use of safety machine
Responsibility,
Cyber Security Awareness
and the Company also continues to pursue its mission
Security Awareness Training to all the employees of the
for environmental excellence and constantly explores
company.
opportunities to improve ecology & environment.
Organized Environmental Awareness Programme.
initiatives
have
already
been
taken
Shri Lakshmi Cotsyn Limited AN ISO 9000:2008 COMPANY www.shrilakshmi.in