Slcl ar 2014

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.

SHRI LAKSHMI COTSYN LIMITED

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CORPORATE OVERVIEW

STATUTORY REPORT

FINANCIAL STATEMENTS

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

ANNUAL REPORT 2013-14 3

CORPORATE OVERVIEW

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

SHRI LAKSHMI COTSYN LIMITED

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STATUTORY REPORT

FINANCIAL STATEMENTS

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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CORPORATE OVERVIEW

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

SHRI LAKSHMI COTSYN LIMITED

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STATUTORY REPORT

FINANCIAL STATEMENTS

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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CORPORATE OVERVIEW

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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FINANCIAL STATEMENTS

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.

CORPORATE OVERVIEW

ANNUAL REPORT 2013-14 9

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.

SHRI LAKSHMI COTSYN LIMITED

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STATUTORY REPORT

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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CORPORATE OVERVIEW

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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STATUTORY REPORT

FINANCIAL STATEMENTS

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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STATUTORY REPORT

FINANCIAL STATEMENTS

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