ARVIND INTERNATIONAL LIMITED
ANNUAL REPORT 2011-2012
Arvind International Ltd.
Your Directors have the pleasure in presenting the Twenty First Annual
Report on the business and operations of your Company, together with the
Audited Financial Statements for the year ended 31st March, 2012.
The performance of the Company, on standalone basis, for the financial year
ended 31st March, 2012 is summarized as below:
Particulars (Rs. In Thousands)
Turnover/Income from Operations 785541 1173905
Other Income 7708 1382
Total Income 793249 1175287
Less: Expenditure 756673 1143600
Less: Depreciation 5042 5069
Less: Interest 18572 17072
Profit/(Loss) Before Tax 12962 9546
Less: Provision for Tax (Incl. FBT) 2900 1850
Profit/(Loss) before Deferred Tax Adjustments 10062 7696
(Add)/Less: Deferred Tax 921 1.00
Profit/(Loss) After Taxation 9141 7697
Prior Period Adjustments (5280) (6400)
Extraordinary items 0.00 0.00
Profit/(Loss) after Extraordinary items 3862 1297
Profit/(Loss) brought forward from previous year (21007) (22304)
Balance Carried over to Balance Sheet (17145) (21007)
During the year under review your company maintained growth in terms of
Performance in manufacturing sector.
The financial year under review has resulted into recovery of previous year
losses which has been possible due to better product mix, focused marketing
efforts and strategical plans of the management.
It also started trading activity to increase the top line and to strengthen
the bottom line so that the company is able to become stronger in years to
come. Due to sleek and cess margin the company is gradually coming out of
trading activity and not focusing on the same.
The operational performance of the Company has been comprehensively covered
in the Management Discussion and Analysis Report which forms a part of this
The Board of Directors did not recommend any dividend for the year under
review as there are carry forward losses.
During the year under review, the company has issued 84,12,540 Equity
shares of Rs.10/- each for cash at a price of Rs. 13.50 each including a
premium of Rs 3.50 per Equity Shares aggregating to an amount of Rs.1135.69
Lacs to the equity shareholders of the company on rights basis and it was
fully subscribed and hence successful. The above shares were duly listed on
BSE and also admitted to the depository System of National Security
Depository Ltd. (NSDL) and Central Depository Services (India) Ltd. (CDSL).
The Company has not accepted any Deposit within the meaning of Section 58A
of the Companies Act, 1956.
In accordance with the provisions of Section 255, 256 of the Companies Act,
1956 and the Articles of Association of the Company, Mr. Manish Lohia
retires by rotation at the ensuing Annual General Meeting and being
eligible offers themselves for re-appointment. The Board recommends their
reappointment. None of the Directors of the Company are disqualified for
being appointed as Directors as specified in Sec.274(1)(g) of the Companies
A brief resume of expertise and details of other directorships of
appointed/reappointed Directors is attached along with Notice of the
ensuing Annual General Meeting.
DIRECTORS RESPONSIBILITY STATEMENT:
In terms of section 217 (2AA) read with section 292A of the Companies Act,
1956, we the Directors of Arvind International Limited, state in respect of
financial year 2011-12 that:
i) In the preparation of annual accounts, the applicable accounting
standards have been followed along with proper explanation relating to
ii) The directors have selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of the affairs of
the Company as at 31st March, 2012 and of the profit of the Company for the
year ended on that date.
iii) The directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act,1956 for safeguarding the assets of the
company and for preventing and detecting fraud and other irregularities;
iv) The directors have prepared the annual accounts on a going concern
M/s. N.C. Banerjee & Co., Chartered Accountants the Auditors of the Company
retire at the end of the ensuing Annual general meeting and are eligible
for re-appointment. The Company has received the Certificate from them that
their re-appointment, if made, would be within the limits prescribed
u/s. 224 (1B) of the Companies Act, 1956.
The Board recommends their Re-appointment.
The Notes to the Accounts which to be read with the Auditors' Report are
self explanatory and therefore do not call for any further clarifications
under section 217(3) of the Companies Act, 1956.
PARTICULARS OF CONSERVATION OF ENERGY, ABSORPTION OF TECHNOLOGY AND FOREIGN
EXCHANGE EARNING AND OUTGO:
The information related to conservation of energy, as required under
section 217(1)(e) of the Companies Act, 1956 read with the Companies
(Disclosure of Particulars in the report of Board of Directors) Rules, 1988
is annexed and forms part of this report.
PARTICULARS OF EMPLOYEES:
Disclosure about particulars of employees in relation to sub section (2A)
of section 217 of the Companies Act, 1956, read with the Companies
(Particulars of Employees) Rules, 1975, and forming part of Director's
report for the year ended March 31, 2012 is not applicable to this company
as there was no employee drawing remuneration in excess of Prescribed in
CASH FLOW STATEMENT:
As required under Clause 32 of the Listing Agreement with the Stock
Exchanges in India, a Cash Flow Statement, as prepared in accordance with
the Accounting Standard on Cash Flow Statement (AS-3) issued by the
Institute of Chartered Accountant of India, is given along with Balance
Sheet and Profit and Loss Account.
The Securities of your Company are listed at Bombay Stock Exchange Limited
and Calcutta Stock Exchange Limited. The Company has paid the Annual
Listing Fees to both the Stock Exchanges up to date and has been generally
regular in complying with the provisions of the Listing Agreements.
Your Company believes that Information Technology is the backbone of any
industry in today's business world. The Company has taken it as a tool to
improve productivity, efficiency and reliability. As such, a Customized ERP
Module called 'IN SYNC' has already been developed & substantially
implemented at manufacturing facilities and offices of the Company, and the
same has been working successfully.
CORPORATE GOVERNANCE AND COMPLIANCE CERTIFICATE:
As required under Clause 49 of the Listing Agreement with the Stock
Exchanges, Corporate Governance Report forms a part of this Annual Report.
The Company is in full compliance with the requirements and disclosures
that has to be made in this regard.
A Certificate from the Statutory Auditors of the Company confirming
compliance of the Corporate Governance is appended to this Report on
Arvind International Ltd. believes in building teams across the business
and functions with the aim to share knowledge and experience. Cross
functional team work with clear objectives to solve the issues and create
value for the Company. The Company fosters to open dialogue among the
employees with the belief that the people, who communicate continuously and
openly, build trust and mutual respect.
The Directors would like to express their appreciation for the assistance
and co-operation received from the, Banks and Government Authorities.
The Directors are also thankful to the Shareholders for their continued
support to the Company.
The Company maintained healthy, cordial and harmonious industrial relations
at all level. Despite competition, the enthusiasm and unstinting efforts of
the employees have enabled the Company to remain at the fore-front of the
Your Company continued to receive co-operation & unstinted support from the
distributors, retailers, stockists, suppliers and others associated with
the Company as its trading partners. The Directors wish to place on record
their appreciation for the same and your company will continue in its
endeavour to build and nurture strong links with trade, based on mutuality,
respect and co-operation with each other and consistent with consumers
For and on Behalf of the Board of Directors
Dated: 6th June, 2012
ANNEXURE TO DIRECTORS' REPORT:
Information under section 217(1)(e) of the Companies Act, 1956 read with
Companies (Disclosure of particulars in the Report of Board of Directors)
Rules, 1988 and forming part of the Directors' Report for the year ended
31st March, 2012.
A. CONSERVATION OF ENERGY:
(a) Energy Conservation measures taken:
The Company is making continuous efforts to improve energy efficiency by
close monitoring of additional parameters resulting in general improvement
in energy consumption across business.
(b) The manufacturing units of the Company are well planned and adequately
equipped for ensuring optimum energy utilization.
(c) Additional investments and proposals are being implemented for
reduction of consumption of energy. The efforts to conserve energy on other
areas are in progress.
(d) Impact of above measures: More efficient utilization of power &
reduction in energy consumption.
(e) Total energy consumption and energy consumption per unit of production:
As per Form 'A' annexed.
B. TECHNOLOGY ABSORPTION:
(a) Efforts made in technology absorption: As per Form 'B' annexed.
C. FOREIGN EXCHANGE EARNING AND OUTGO:
(a) Total foreign exchange earned and used:
(Rs. In Thousand)
Current Year Previous year
Total foreign exchange earnings NIL NIL
Total foreign exchange outgo NIL NIL
Total Value of Import 12576 6625.92
FORM FOR DISCLOSURE OF PARTICULARS WITH RESPECT TO CONSUMPTION OF ENERGY:
PARTICULARS Current Year Previous Year
A. POWER AND FUEL CONSUMPTION:
- Unit (in thousand) 162.53 133.56
- Total Amount (Rs. In thousand) 914.25 681.69
- Rate (Rs./Unit) 5.63 5.10
(b) Own Generation
- Cost (Rs./Unit) 9.33 8.59
B. CONSUMPTION PER UNIT OF PRODUCTION:
1. ELECTRICITY (UNIT/KG)
- P.U. Foam 0.17 0.22
FORM FOR DISCLOSURE OF PARTICULARS WITH RESPECT TO ABSORPTION, RESEARCH AND
DEVELOPMENT (R & D):
The future course of action for carrying out research & development will be
1. SPECIFIC AREAS IN WHICH R&D PROPOSED TO BE CARRIED OUT BY COMPANY:
The R & D activities of the company have been directed towards improvement
in the existing product range as well as to develop new products.
Continuous efforts have been made to achieve the above.
2. BENEFITS DERIVED:
With the introduction of R& D activities, the Company has been able to
improve the quality of its products, reduce the cost and has improved
3. FUTURE PLAN OF ACTION:
With the object of attainment of better future and growth, new products
will be developed and launched.
4. EXPENDITURE ON R & D:
(a) Capital (if any) :
(b) Total R&D Expenditure as a
Percentage of total turnover : N.A.
TECHNOLOGY ABSORPTION, ADAPTION AND INNOVATION:
1. EFFORTS MADE:
Continuous efforts are made for improvement in the existing production
process and products.
The Company has been able to improve the quality of its products.
MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion & Analysis Report has been included in adherence
to the spirit enunciated in the code of Corporate Governance approved by
the Securities and Exchange Board of India. The report Contains forward
looking statements identified by words 'Plans', 'Expects', 'Will',
'Believes', 'Projects', 'Estimates' and so on. These statements are based
on the assessment of the current environment which may vary due to economic
and other developments in the universal arena, in the month to come. Since
these are based on certain assumptions and expectations of future events,
the Company cannot guarantee that these are accurate or will be realised.
INDUSTRY STRUCTURE AND DEVELOPMENTS:
In past few years the Polyurethane industry in India was believed to be in
its infancy but due to the changing dimensions of the corporate giants and
their expansion plans, the whole of the PU Foam industry is moving
gradually to a boom in India. Although this industry is characterized by
the fact that the per capita consumption is among the lowest in the world,
as compared to developed and developing countries, but the recent steps
taken in liberalizing the Indian economy and overall improvement in
business environment has given a positive impetus to the PU Foam industry.
Also the high growth phase of the Indian economy has reflected a steady
improvement in infrastructure thereby creating an ample demand of products
of the PU Foam Industry and this industry is registering double digit
India will consume 1 kg of polyurethane (PU) per capita by 2020 at 1200,000
tpa, as per a conservative estimate by the chairman of the Indian
Polyurethane Association (IPUA). Current per capita PU consumption in India
is about 200 grams. The 1 kg per capita target will be possible, depending
mainly on easing bureaucracy by the government that will speed up some of
the processes and make it easy to set up factories and help to build
infrastructure, as well as initiatives by the industry. At annual
consumption levels of 180,000 tons of Polyurethane (PU) in 2007, India has
just about 1.5% share of the global PU consumption of 11.25 min tons. In
the last few years PU has grown at over 15% pa, and is expected to continue
to be robust at an average rate of 15%. PU consumption in 2012 could reach
more than 350,000 tons.
Recent government reforms of the banking sector in India allow an
environment where people feel more confident about investing. There is a
classic trend in India's rising wealth and it's distribution, where
availability of wealth is not only because of foreign investment, but
mainly because of domestic entrepreneurs and businesses that are creating
their own wealth within the economy. Increased consumer spending power of
India's evolving middle class is fuelling the demand growth for foam
products. India has a population of over one billion people, of which it is
estimated less than 10% sleep on foam based mattress. Hence there exists a
good growth potential growth for PU foam in India. However, the dominance
of natural bedding products, at times subsidized or protected by import
duties on substitute materials, has also hindered the market penetration of
PU foams at times. The Indian bedding market is substantial and dominated
by low cost coin (coconut fibre), latex and cotton mattresses, but people
are increasingly looking to upgrade to higher quality products made from or
incorporating PU foam. As their wealth increases, the comfort of PU foam
mattresses is also becoming increasingly important along with rising
standards of living in India. The company is also diversifying and focusing
on other segment and is investing in spring mattress making machine.
COMPANY'S PERFORMANCE AND OUTLOOK:
The Company's products find wide usage in varied industries like
automobile, garments, mattresses, electronics, packaging, leather, shoes,
transport, furniture, hospitality etc. The booming Indian economy, the
growth of the infrastructure segment, the increased amount of disposable
income in the hands of the consumers had added to the demand picking up,
creating in its wake bigger markets, volumes and realizations. The Company
is constantly striving to provide quality products. The Company's products
have been well established in the market over the years and our brand
'Arvind' has a substantial recall value, creating an edge over other
competitors. The Company is planning and endeavoring to increase its sales
by implementing better policies. Your Company's endeavor to provide high
quality products aiming to grant full value of money to the customer, are
expected to take place.
The Company has taken measures expected to yield positive results in the
coming financial years. With the increased production capacity, the future
outlook of the company should be considered very positive leading to
expanded top line. The profitability however, will have to reckon with
several factors such as competition in the domestic and export market,
exchange rate fluctuations and overall global economic developments within
and outside the country. From the last few years company has taken a number
of initiatives to re-structure and re-engineer the operations to enable the
company to compete better in the profound competitive regime.
The strength of the brand, the enhanced product range, excellent
distribution network, loyalty of customers and consumers, the booming
market conditions all such factors are expected to act as synergies having
potential of propelling the working of the Company in the years to come by.
MARKETING AND PROSPECTS:
Proximity of the Company's manufacturing units to the most potential market
in the northern part of the country greatly helped the company to compete
effectively with other established producers of the country.
The company is now focusing its attention to the fast growing segment of
low-value items with higher demand in volumes and better margin prospects.
With this view, the Company has introduced two new products in last year
are Ecstasy and Desire, the demands of which is expected to grow further.
The Company has also installed some advance equipment for production of
value added products like Fire retardant Foam, Peeled Foam, etc which will
bring a change in the customer's profile.
OPPORTUNITIES, THREATS, RISK & CONCERN:
Due to change in business policies the Company is facing various risks
internally and externally. India as a country with enormous potential,
hence new foreign and domestic investments in the polyurethane industry
will accelerate competition through higher growth, and measures by Indian
government to encourage investments. The external business risks include
fluctuation in raw material prices, entry of new manufacturers,
introduction of advanced technology by existing manufacturers of
Polyurethane products and shortage in the flow of raw material. The
internal risk consists of operational efficiency and ability to withstand
Foam production in India is still fragmented and localized, with many small
players, while transport infrastructure and distances involved makes it
difficult for regional producers to expand. The market still requires a lot
of development in terms of appropriate products, logistics and technical
and marketing expertise. Standards in foam production vary widely among the
small players, and need to be regulated. PU foam mattresses in India are
generally restricted to low and medium density foams that contains lots of
fillers. Indian PU market is very price sensitive in relation to
alternative, value added products, hence better understanding of the
technical issues around efficient, consistent production of good quality
foams is also required.
The main threat is from the unorganized sectors comprising of low grade
products which leads to quality problems in the domestic market these are
the key risk factors which PU industries has to tackle in the future.
* The Company has most strategically located plant with varied and advanced
production techniques being adopted.
* The Company's products have been very well established in the market over
the years having their reach to every class of customers.
* The Company has an excellent customer base and an efficient Dealer/
The products of the Company are raw material intensive, constituting about
80% of its cost of production, so the profitability of the company depends
mostly on the movement of the prices and availability of the raw material.
* Due to expansion of the manufacturing base of the company, there will be
substantial increase in demand of Company's products.
* There are opportunities to explore geographical insights of the country.
* There are opportunities to increase distribution network for better
* There are opportunities to increase sale of different range of products
manufactured by the company by way of association/tie-ups with retail
outlets, super market, retail stores, marts etc.
* The cost of Marketing, Advertising and after sale services are on an
* Due to stiff competition, prices are continuously reducing and if the
costs are not controlled then it may prove to be a threat and margins will
be under pressure.
* There are no entry barriers and hence, the new manufacturers may pose a
threat to the Company in short and medium term by fragmenting the market
that company has created.
* The company is also dependent on imported raw material. Due to increased
amount of competition, the company is open not only to normal risks of
price fluctuation but also in fluctuations of exchange rates and other
* Negative changes in Govt. Policies.
INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY:
The company is in the process of designing and putting in place new
internal control system for all the key departments including production,
purchase, finance with specific thrust on material wastage, environmental
issues and regular compliances at all levels. The Company has expanded its
system to other departments with recruitment of managerial cadre personnel
more exhaustive reporting and rigorous follow up actions where any signs of
shortcomings. Further internal Audit system will also be placed and
proposed to be carried to check the implementation of the internal system.
DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL
The Financial Statements have been prepared in compliance with the
requirements of the Companies Act, 1956 and Generally Accepted Accounting
Principles (GAAP) in India.
MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/INDUSTRIAL RELATIONS:
In order to achieve substantial growth, Arvind International Limited
manages a lean organization structure. The Company has an experienced and
motivated team of professionals. For the benefit of the Company, it is
necessary to empower the skills of their personnel. Looking to this, the
Company provides appropriate training and conducting development programmes
to improve the skills and efficiency of their employees. The Company's
human resource activities are focused on building talent to meet future
The Company is conscious of its obligation towards health safety and
environment to meet the norms of local pollution control.
Statement in the management, discussions and analysis describing the
company objectives, projections, estimates and exceptions may be 'Forward
Looking Statements' within the meaning of applicable securities laws and
regulations. Actual results could differ materially from those expressed or
implied. Important factors that could make difference to company operations
include economic condition affecting demand/supply and price conditions in
the domestic and overseas market in which the company operates changes in
the government regulations, tax laws and other statutes and other
Company has made a right issue to expand its business which will enable the
company to have more money and to avail the emerging opportunities in PU