D&B – Company ReseaRCh RepoRt...D&B – Company Research Report 5 vadilal industries limited executive summary • ice-cream refers to frozen dessert which is usually made from dairy

vadilal industries limited

D&B – Company ReseaRCh RepoRt

april 2011

D&B – Company Research Report 1


executive summaryvadilal industries limited

vadilal industries limited (hereinafter referred to as “vadilal”or ‘the company’), promoted by mr. r. Gandhi and mr. l. r. Gandhi, was incorporated under the name of vadilal Oxygen Private limited (vadilal Oxygen) in april 1982 to carry on the business of purification and refilling of oxygen gas and selling the same. vadilal ice-cream Private limited which was incorporated in June 1981 to carry on the business of manufacturing ice-creams and ice-cream candies was amalgamated with vadilal Oxygen on July 1985. subsequently, the name was changed to vadilal industries. the company became a public limited company on 4th august 1989 and its shares were listed on the Bombay stock exchange limited on 5th July, 2001.

the company is a part of the vadilal group which has diverse businesses like processed foods, chemicals and specialty gases, forex advisory services, besides its core business of manufacturing and marketing ice-creams.

vadilal operates in three segments:

manufacturing of ice-creams •

Processed foods products •

Others: Forex management, money changing and cold storage •

Business overviewD&B D-U-n-s® number 65-011-9480

Line of Businessice-cream, Frozen deserts and Processed Food Products

managementChairmanramchandra r Gandhi

managing Directors devanshu l Gandhivirendra r Gandhirajesh r Gandhi

shareholding pattern (%)mar 10 dec 10

promoter 61.17 61.68

indian 61.17 61.68

Foreign - -

public 38.83 38.32

Fis/Banks/mFs 0.10 0.10

Fiis 6.99 6.98

Others 31.74 31.24

Custodians - -

total 100 100

Financials (InR in Crore)year Fy10 Fy09revenue 188.66 152.26net Profit after tax 5.75 1.09net Worth 39.27 35.23Ratios (%)eBitda margin 10.90 8.82nPmargin 3.05 0.71roe 14.64 3.08ePs (in inr)* 25.04 20.94

*Source: BSE website

D&B – Company Research Report


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Business Highlights

surge in Revenue and Improved margins

the company witnessed an increase in its revenue by 23.90% in Fy 2010 from 17.37% in Fy 2009 as all the three segments i.e. ice-cream (23.72%), processed food (42.55%) and forex division under others (12.09%) showed an increase in the revenue during the year.

Change in Investment structure

the company incorporated a wholly owned subsidiary known as vadilal industries (usa) inc. in Fy 2010. also during Fy 2010, the company disinvested its entire holding in vadilal chemicals limited.

expansion in Domestic market

in Fy 2010, the company’s processed food division initiated its operations in new territories like uttar Pradesh and Haryana. also new products like frozen lilva, kachori and patra were introduced during the year.

additions to the product portfolio

On the food front, as a part of its expansion plans, the company increased capacity by adding an imported candy machine and double sundae machine in Fy 2008. Further, the company also expanded its product portfolio by introducing three layered candies and mini cadies and chocolate candies.

as regards the FOrex business, in Fy 2010, the company’s forex division applied for permission to conduct trade related transactions. currently, the same is under consideration by the reserve Bank of india (rBi).

Quarterly Results (InR in Crore)

Quarter Q3 Fy2011

Q3 Fy2010

Q2 Fy2011

number of months 3 3 3

revenue 42.83 31.01 53.42net Profit after tax -2.88 -1.54 1.53

ePs (in inr)* -4.00 -2.14 2.13*Source: BSE website



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Key challenges

Infrastructure Bottlenecks

the most crucial challenge today that the indian food processing industry is facing is the lack of suitable infrastructure in the form of cold chain, packaging centers, value added centre, etc.

stiff Competition

the indian food processing sector is highly competitive. there are a large number of players in the organized as well as unorganized sector.

Cost of the product

in the existing market scenario, the challenge for companies is to manage costs, as affordability of any product is an essential in driving the success of a product, especially in rural areas. Over its history, the industry has, at times, suffered margin pressure due to severe input cost inflation in the form of higher prices for ingredients and fuel (used to power processing plants and distribute goods to the retail trade).

Low short term Liquidity position

the company’s quick ratio during the period under study stood below one indicating inadequate short term liquidity. also in Fy 2010, the company had negative working capital.

significant Contribution of non-operating Income to maintain profitability

non-operating income consisted of rent received, interest income, liabilities and provisions written back and profit on sale of fixed assets. non-operating income of the company was substantial as compared to the net profit during the period under study. in Fy 2010, non-operating income was inr 33,592 thousand as compared to inr 22,573 thousand during Fy 2009. in percentage terms, the same was 90.17% in Fy 2008, 111.47% in Fy 2009 and 38.62% in Fy 2010 as a percentage of profit before tax.



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General DetailsBse code 519156

Bse id vadilindQ

listing Group B

industry Packaged Foods

market statistics (as on 7th april 2011)Face value (inr) 10

current market Price (inr) 158

market cap (inr in crore) 113

Free Float m cap (inr in crore) 45

2w avg volume (lakh) 0.16

circuit Filter aa: applicable, na: not applicable, w: WeekSource: BSE website

stock Returns (%) 1m* 6m* 1 yr*

vadilal 36.50 10.26 88.43

sensex 6.86 (4.49) 9.52

* m: represents duration in months, yr: represents year

Source: BSE websiteNote: Both Vadilal and BSE Sensex values are indexed to 100 as on 7th April 2010

capital market Overview

the vadilal industries limited is listed on the Bombay stock exchange limited (as part of Group B shares) and ahmedabad stock exchange limited. the company got listed on the Bombay stock exchange limited on 5th July, 2001.

shareholding Detail

the company has a total paid up capital of inr 7.19 crores with 7,187,830 outstanding shares . the indian promoters held 61.68% stake in the company as on 31st december 2010.

stock market performance

the company’s total market capitalization stood at inr 113 crore and the free float market capitalization at inr 45 crore as on 7th april 2011. during the last one year the stock has risen by 88.43 % as against 9.52 % rise in benchmark Bse sensex.



executive summaryice-cream refers to frozen dessert which is usually made from •dairy products (such as milk and cheese). its available in different flavours depending upon the additional ingredients used during manufacturing.

market size of the ice-cream industry is estimated at ~inr 22 Bn at •the end of Fy 2010, with organising sector accounting for ~50-55% share in the total market size.

in volume terms, demand for ice-cream has grown at an estimated •caGr of ~8.2% over the period Fy 2006-10.

market size of food processing industry (in consumption terms) •has grown at an estimated caGr of ~10.7 over the period Fy 2006-10.

rising income levels, changing age profile, changing lifestyle and •growth of the food retail sector are driving the demand for food products and thereby food processing industry.

PrOduct PrOFileFood processing sector includes any type of value addition to •agricultural or horticultural produce and also includes processes like sorting, grading, packaging, etc. which enhances shelf life of food products.

the indian food processing sector can be segregated into fruits and •vegetables, milk and milk products, beer and alcoholic beverages, meat and poultry, marine/fish products, grain processing, packaged/convenience food and packaged drinks and beverages.

ice-cream is a type of frozen dessert made from milk and cream •which is often combined with fruits and other artificial flavours.

indian ice-cream sector is broadly divided into organised and •unorganised segments, with the former accounting for ~50-55% share of the total market size in Fy 2010.

industry OvervieW

market size of the ice-cream

industry is estimated at

~InR 22 Bn at the end of

Fy 2010, with organising

sector accounting for ~50-

55% share in the total

market size.

market size of food

processing industry (in

consumption terms) has

grown at an estimated

CaGR of ~10.7 over the

period Fy 2006-10.



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GOvernment reGulatiOns ice-cream segment, which was earlier reserved for manufacturing •in the small scale sector, has been de-reserved. therefore, no license is required for setting up of large scale production facilities for manufacturing ice-cream.

With the aim of providing a boost to the food processing sector, •the Government of india (Goi) is working on the concepts of mega Food Parks and agri Zones. as per the ministry of Food Processing industries, around 20 mega Food Parks are likely to be set up in various cities so as to attract Fdi in the sector.

100% Fdi is allowed in the food processing industry. •

the Goi has proposed a 15-year national dairy Plan (ndP) to be •implemented by the national dairy development Board (nddB) with an outlay of inr 170 Bn. the objective of the plan is to nearly double the country’s milk production by 2020. the total outlay of inr 16 Bn has been provided for the first phase of plan i.e. from Fy 2011 to Fy 2017. as per the union budget for Fy 2011, an outlay of more than inr 865 mn has been provided for intensive dairy development programs including improving infrastructure for clean milk, assistance to cooperatives and venture capital fund.

the ministry of Food Processing industries (moFPi) had sponsored •a study for growth of the food processing sector. Key findings of the study were – (1) an investment of inr 1 tn would be required for by 2015 for enhancing the level of processing of perishable food products from 6% to 20 %,( 2) enhancing value addition from 20% to 35% and expanding india’s share in global food trade from current 1.5% to 3% by 2015.

demand suPPly dynamics

Demand Growth

in volume terms, demand for ice-cream has increased from ~312 •million litres in Fy 2006 to ~428 million litres in Fy 2010.

in value terms, market size of the ice-cream industry is estimated •to be ~inr 22 Bn at the end of Fy 2010, out of which organised sector accounts for an estimated ~inr 11-12 Bn.

market size of food processing industry is estimated at ~inr 7.9 tn •at the end of Fy 2010.

Ice-cream segment, which

was earlier reserved for

manufacturing in the small

scale sector, has been

de-reserved.

as per the ministry of

Food processing Industries,

around 20 mega Food

parks are likely to be set

up in various cities so as to

attract FDI in the sector .

100% FDI is allowed in the

food processing industry.



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Demand Drivers

india is the largest producer of milk in the world, which •provides a huge growth potential to value added dairy products like ice-cream. Production of milk has grown at an estimated caGr of ~3.96% over the period Fy 2006-10.

rising income levels have driven the demand for processed •foods/ready to eat foods and thereby the overall food processing industry. the private final consumption expenditure (PFce) on food and beverages is increasing continuously which explains for the growing demand of the processed food products.

Food and grocery is a major segment accounting for ~ 61% share •in overall indian retail industry. increasing preference towards franchisee based ice-cream parlours coupled with growing presence of specialized ice-cream outlets at malls and other public areas augurs well for the growth of the sector.

market size of retail industry has grown at an estimated caGr of •~10.8% over the period Fy 2006-10, top reach ~inr 18.1 tn at the end of Fy 2010.

projections

d&B estimates demand for ice-cream to grow at a caGr of ~8.8% •over the period Fy 2010-13, to reach ~552 million litres by the end of Fy 2013.

d&B estimates market size of food processing industry to grow at a •caGr of ~11.7% over the period Fy 2010-13, increasing from ~inr 7.9 tn in Fy 2010 to ~inr 11 tn in Fy 2013.

In volume terms, demand

for ice-cream has increased

from ~312 million litres in

Fy 2006 to ~428 million litres

in Fy 2010.

Food and grocery is a

major segment accounting

for ~ 61% share in overall

Indian retail industry.

market size of retail industry

has grown at an estimated

CaGR of ~10.8% over the

period Fy 2006-10, top reach

~InR 18.1 tn at the end of

Fy 2010.



the company is engaged in the business of manufacturing ice-cream and frozen desserts, processing and exporting processed food products such as frozen fruits and vegetables, canned fruit pulp, and ready-to serve products, etc. the company also has a forex division dealing in current account related transactions and money changing business such as buying and selling travelers cheques and currency notes of all major traded currencies of the world.

the company exports nearly 60 products to usa, canada, uK, Kuwait, uae, singapore, new Zealand, and australia.

“Happinezz parlours” were started in 1991 as vadilal’s exclusive ice-cream boutiques.

the company has received isO 9001:2000 certification for Quality management system and isO 22000:2005 from nemko as certification department, towards food safety management system for its processed food division. vadilal also has been awarded ‘two star export House’ by ministry of commerce and industry for export of processed food products.

Operational Overview

the company operates in three segments:

ice-cream •

Processed foods •

Others- Forex division •

the plant locations of vadilal industries are:

Division Location

ice-cream dudheshwar road, ahmedabad •(Gujarat)village Pundhra, taluka mansa, •dist. Gandhinagar (Gujarat)Parsakhera industrial agra, •Bareilly, (uttar Pradesh)

Processed Food division dharampur, dist. valsad (Gujarat)

Forex division vadilal House, navrangpura, ahmedabad (Gujarat)

Business OvervieWBusiness overviewLine of BusinessPackaged Foods

productsice-cream, processed food and others

Contact DetailsRegistered address vadilal House, shrimali society, near navrangpura railway crossing, navrangpura, ahmedabad - 380 009,Gujarat, india

Website www.vadilalgroup.com

email [email protected]

telephone: 079- 26564018 - 24Fax: 079-26564025 079-26564027

Company DetailsCompany secretary & Compliance officer nikhil m Patel

auditorsm/s Kantilal Patel & co.chartered accountants, ahmedabad

BankersBank of Barodastate Bank of indiastate Bank of travancoreexport-import Bank of indiaidBi Bank limited



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1. Ice-cream Division:

vadilal’s ice-cream division operates with three plants, two in Gujarat and one in uttar Pradesh (uP). the company has an installed capacity of 57,900 Kilo liters per annum. in 1992-93, the company entered into an agreement with a leading company in uP to produce ice-cream under its brand name. in 1997-98, the company acquired land worth inr 2,668 thousand for setting up an ice-cream facility at Pundhara in Gujarat.

2. processed Food Divison:

vadilal’s processed foods division started its operations in march 1991 with a 5,400 metric tons Per annum (mtPa) plant, which has since grown to a 32,500 mtPa. this dharampur facility which produces frozen fruits and vegetables like mango pulp, mango slices, pineapple tit-bits, tutty fruity, peas, grapes, etc. was part financed by the public issue in October 1989.

the company then entered the international market in 1994-95 by exporting processed foods, vegetables and fruit pulp to europe, West asia and the us. in 1996-97, the company installed individually Quick Frozen (iQF) facilities with a capacity to process 2 mt of fruits and vegetables per hour at its existing dharampur plant. this entailed a total project cost of inr 6 crore.

3. others:

the Forex division of the company is engaged in activities linked with money changing and current account related transactions. activities undertaken involve buying and selling travelers cheques, currency notes of all major traded currencies of the world. Besides having a license under ad.ii category which got renewed by reserve Bank of india (rBi) in Fy 2010, the forex division has also applied for permission to conduct trade related transactions, which is under consideration by rBi.

corporate structure

the company belongs to the vadilal group of industries.

it has a wholly owned subsidiary known as vadilal industries (usa) and vadilal cold storage, a partnership firm.



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Company Relationship Line of Business

vadilal industries (usa) Wholly owned subsidiary

importer and wholesaler of frozen food products

vadilal cold storage Partnership firm -Note:

Vadilal Financial Services Limited, which was a subsidiary company, was •amalgamated with the Company w.e.f. 1st April 1997.

During FY 2010, Vadilal Chemicals Limited ceased to be an associate of the Company •due to disinvestment of entire holding by Vadilal. Vadilal chemicals holds 2% share in profit/losses of the Vadilal Cold Storage partnership firm.

revenue composition

the company is engaged in manufacturing of ice-creams and frozen desserts, processed food products and forex. revenue from sale of ice-cream and frozen desserts constituted a major portion of total revenue generated by the company.

segment Revenue Bifurcation as percentage of total sales:

particulars 2006 2007 2008 2009 2010

ice-cream 71.85 73.42 76.11 83.18 81.35

Processed Foods

26.75 24.98 22.42 15.55 17.52

Others 1.40 1.60 1.47 1.27 1.13

total 100.00 100.00 100.00 100.00 100.00

revenue of the company increased from Fy 2006 to Fy 2010 primarily on account of increase in revenue from sale of ice-cream and frozen desserts. ice-cream division witnessed a steady growth yoy on account of increasing demand for newer varieties and favourable change in consumer preferences.



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the revenue increased to 23.90% in Fy 2010 from 17.37% in Fy 2009.

after completion of expansion process at dharampur plant in Fy 2008, the company started offering temperature sensitive products such as frozen pomegranate, kernel, etc. in Fy 2010 processed food division also added new territories like uttar Pradesh & Haryana further increasing the share in the total revenue of the company.

Geographic spread

majority of the company’s revenue comes from domestic business. Over the period under study, the contribution of exports in the total revenue of the company gradually decreased and stood at 11.65% in Fy 2010.

particulars 2006 2007 2008 2009 2010

domestic sales 79.18 80.82 84.94 86.39 88.35

exports 20.82 19.18 15.06 13.61 11.65

total sales 100.00 100.00 100.00 100.00 100.00

vadilal exports to north america, europe, asia Pacific, africa and the middle east asia.

particulars 2006 2007 2008 2009 2010

ice-cream 792,415.00 888,569.00 1,024,117.00 1,253,716.00 1,551,078.00

Processed Foods 295,005.00 302,279.00 301,683.00 234,336.00 334,057.00

Others 15,412.00 19,334.00 19,781.00 19,172.00 21,489.00

total 1,102,832.00 1,210,182.00 1,345,581.00 1,507,224.00 1,906,624.00



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major Growth drivers

Recent trends in Indian Food market

rising income levels, changing age profile, changing lifestyle and growth of the food retail sector are driving the demand for food products and thereby food processing. these trends will translate to increased demand for ice –creams and instant and processed foods and will result in expanded topline growth for the company.

Innovation - a Key trigger

ice-cream finds round the year market as widely accepted dessert and is consumed by all class of people as readily available food for all ages. ice-cream division of vadilal has shown sustainable growth on yoy basis triggered by increasing demand for newer varieties and change in consumer preferences which has been catered to by novel and value added products. mini candies, 3 layered candies and innovative chocolate candies were the latest additions in the product portfolio of the company.

Future expansion plans

the company is primarily focusing on increasing the ice-cream consumption through novel product offerings at affordable rates. With the addition of imported candy machine and double sundae machine in its manufacturing capacity in Fy 2008, vadilal is planning to have further expansion cum modernization of its ice-cream manufacturing units in both the Pundhra and Barielly plants. this will enhance the existing production and storage capacity along with automation of existing manufacturing units.

organized Retail and private Label penetration

“Happinezz parlours” were started in 1991 as vadilal’s exclusive ice-cream boutiques. the company has plans for increasing the coverage of products in vadilal’s brand through distribution to asian cash & carry and grocery retail store formats. another growth area identified is placement of products under vadilal’s brand or private labels for supermarket chains, multiplexes.



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Key challenges

Infrastructure Bottlenecks

the most crucial challenge today that the indian food processing industry is facing is the lack of suitable infrastructure in the shape of cold chain, packaging centres, value added centre, etc. india is a market where there is a significant amount of loss due to pilferage and wastages as infrastructure (setting up of storage facilities) remains inadequate and faulty.

as the company has plans for expansion cum modernization in terms of storage capacity and automation of its ice-cream manufacturing units, this will further strengthen its infrastructure.

stiff Competition

the indian food processing sector is highly competitive. there are a large number of players in the organized as well as unorganized sector.

the companies need to adopt various strategies to maintain and increase their market share in india. these include competitive pricing, aggressive advertising campaign, expansion plans, etc. Presently, the markets are flooded with new local and regional players and also foreign players. the company has the advantage of the experience and expertise of more than 8 decades for providing quality ice-cream products.

Cost of the product

in the existing market scenario, the challenge for companies is to manage costs, as affordability of any product is an essential ingredient in driving the success of a product, especially in rural areas. Over its history, the industry has, at times, suffered margin pressure due to severe input cost inflation in the form of higher prices for ingredients and fuel (used to power processing plants and distribute goods to the retail trade).

For vadilal, cost of materials and finished goods consumed is around 59% as a percentage of revenue. continuous rise in fruit and milk prices, which are the major raw materials for the ice-cream division, further resulted in an increase in cost.



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Low short term Liquidity position

the company’s quick ratio during the period under study stood below one indicating inadequate short term liquidity. also in Fy 2010, company was having negative working capital. as per the auditors’ observation in carO report for Fy 2010, there was a slight shortfall in maintaining liquid assets during the Fy 2010 due to inadvertence.

significant Contribution of non-operating Income to maintain profitability

non-operating income consisted of rent received, interest income, liabilities and provisions written back and profit on sale of fixed assets. non-operating income of the company was substantial as compared to the net profit during the period under study. in Fy 2010, non-operating income increased to inr 33,592 thousand as compared to inr 22,573 thousand during Fy 2009. in case the non operating income is not considered, net profit margins would decline to 1.25% from 3.05% in Fy2010.

Note: While calculating net operating margins without non operating income, impact of tax on removal of non operating income has not been considered.

Profitability

Gross profit, operating profit and net profit margins showed an uneven trend during the period under study.

Gross profit margin dropped in Fy 2008 after witnessing an increase in Fy 2007 mainly due to increase in cost of material and finished goods consumed as a percentage of revenue. it improved marginally in Fy 2009 and Fy 2010 on account of decrease in power and fuel expenses along with freight expense as a percentage of revenue.

Note: While calculating return on revenue without non operating income, impact of tax

on removal of non operating income has not been considered.

profitability Ratio mar-06 mar-07 mar-08 mar-09 mar-10

return on revenue (%) (With non-operating income)

3.87 4.78 2.93 0.71 3.05

return on revenue (%)(Without non-operating income)

0.69 2.85 (1.15) (0.77) 1.25



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the increase in the operating profit in Fy 2010 was on account of reduction in general and administration expenses (inr 64,871 thousand) and selling and distribution expenses (inr 2,875 thousand) as a percentage of sales.

net profit margin declined in Fy 2009 on account of decrease in non operating income and increase in interest expenses.

non-operating income constitutes a substantial part of the total revenue. net profit margins would decline to 1.25% from 3.05% in Fy 2010 incase non-operating income is excluded from the revenue.

revenue distribution

cost of material and finished goods consumed, power and fuel and other direct expenditure (inclusive of freight expenses, salaries and wages and job work charges) constitutes a major cost for the company.

the total operating cost and other main costs of vadilal as a percentage of total revenue are given below:



Peer cOmParisOnline of Business: companies engaged in manufacturing of ice-creams and processed food products

no. of companies: 27

vadilal has performed better than its peer on parameters like revenue growth and profit growth.

the company’s collection period is quite high as compared to its peers. also liquidity of the company is low and stood at 0.996 in Fy2010.

the company has lower returns on revenue, networth, capital employed and fixed assets in comparison to its peer.

peer Group Comparison based on Fy 2010

particulars min Value

25th percentile

40th percentile

60th percentile

75th percentile

max Value Vadilal

revenue (inr crore) 6.60 65.44 137.15 210.00 663.46 5232.59 188.66

Profit after tax (inr crore) (1.77) 0.90 2.09 6.03 8.97 655.00 5.75

revenue Growth (%) (9.82) 10.84 13.87 20.57 32.62 80.87 23.91

Profit Growth (%) (100.00) 0.00 8.99 21.56 75.43 2142.86 429.23

current ratio (times) 0.60 1.01 1.11 1.49 1.70 4.67 0.996

Quick ratio (times) 0.21 0.33 0.39 0.68 1.02 3.94 0.46

collection Period (days) 0 6 16 31 53 130 64

total debt equity ratio (times) 0.00 0.47 0.95 1.66 2.13 5.80 1.89

return on revenue (%) (0.39) 0.96 2.38 4.08 5.83 14.39 3.05

return on Fixed assets (%) (1.64) 6.64 9.49 13.02 25.74 100.22 6.94

return on networth (%) (4.53) 6.89 9.39 16.54 20.09 112.68 14.64

return on capital employed (%) 6.03 12.36 14.15 18.93 28.77 158.00 13.16 Source: CMIE



Financial statements

profit & Loss accountFor the period ended mar-06 mar-07 mar-08 mar-09 mar-10

number of months 12 12 12 12 12

Income / Revenue / sales 955,929 1,169,900 1,297,343 1,522,648 1,886,611

Less: Direct expenditure (836,121) (1,014,070) (1,148,743) (1,279,576) (1,624,391)

cost of materials and Finished Goods consumed (554,954) (673,961) (768,478) (864,637) (1,122,396)

electricity / Power and Fuel and Water expenses (68,447) (80,421) (90,639) (118,565) (137,922)

salaries and Wages (50,706) (57,852) (63,270) (77,882) (100,643)

Other direct expenditure (162,014) (201,836) (226,356) (218,492) (263,430)

Gross profit 119,808 155,830 148,600 243,072 262,220

add: other operating Income 11,280 28,094 13,698 13,456 13,677

Less General and administration expenses (40,045) (45,561) (57,948) (66,351) (64,871)

Less: selling and Distribution expenses (5,139) (3,586) (3,698) (2,904) (2,875)

less: loss on sale of Fixed assets - - (337) - -

less: loss on sale of investment - - - - (813)

less: loss on Foreign exchange transactions - - - (57,014) (11,300)

less: Provision for diminution in value of investments - (1) (24) (17) (642)

less: Bank and Finance charges (4,285) (10,152) (14,382) (17,687) (19,807)

less: Bad debts written off - (1,195) (280) (230) (32)

less: Provision for Bad debts (376) (230) (720) (22) (29)

less: Other expenses written off - (380) (11) - (2,860)

less: research and development expenditure (696) (320) (541) (628) (612)

less: depreciation / amortization and depletion (24,583) (29,141) (41,066) (48,322) (56,497)

operating profit 55,964 93,358 43,291 63,353 115,559

add: Other non Operating income 30,384 22,528 52,954 22,573 33,952

earnings Before Interest and tax (eBIt) 86,348 115,886 96,245 85,926 149,511

less: interest expenditure (29,741) (26,915) (37,519) (65,675) (61,591)

less: Prior Period expenditure (105) (221) (30) 1,711 (5)

net profit before taxation and after extraordinary Items

56,502 88,750 58,696 21,962 87,915

less: total tax Provision (19,516) (32,864) (20,678) (11,094) (30,398)

profit after tax and extraordinary Items 36,986 55,886 38,018 10,868 57,517

less: dividends (8,196) (10,092) (10,092) (10,091) (12,573)

transfer to reserves (42,107) (45,000) (25,940) (500) (39,500)

Plus: retained earnings b/f 38,888 25,571 26,365 28,351 28,628

Retained earnings c/f 25,571 26,365 28,351 28,628 34,072

(inr in thousand)



Balance sHeetsoURCes oF FUnDs 2006 2007 2008 2009 2010

shareholders Fund

equity share capital 71,878 71,878 71,878 71,878 71,878

capital reserve 882 882 882 884 884

General reserve 120,000 165,000 190,000 190,500 230,000

revaluation reserve 19,534 17,229 14,485 12,343 10,250

securities Premium account 48,727 48,727 48,727 48,727 48,727

capital Grants and subsidies 4,475 4,156 3,836 3,516 3,197

retained earnings 25,571 26,365 28,351 28,628 34,072

total shareholders Fund 291,067 334,237 358,159 356,476 399,008

non-Current Liabilities

long term loans : secured 46,262 45,229 110,910 154,938 314,362

long term Borrowings from Financial institutions (secured) 17,490 20,560 52,500 50,313 41,563

deferred tax liability 46,459 42,300 50,568 57,768 54,919

Other deposits (long term) 15,643 17,747 32,089 41,509 36,690

total non-Current Liabilities 125,854 125,836 246,067 304,528 447,534

totaL soURCes oF FUnDs 416,921 460,073 604,226 661,004 846,542

appLICatIon oF FUnDs 2006 2007 2008 2009 2010

Fixed assets

Property, Plant, machinery and equipment 157,427 162,667 276,173 326,061 310,695

land and Buildings 106,845 110,677 153,974 182,071 183,518

leasehold land 9,476 10,066 11,116 11,257 11,078

transportation vehicles 4,268 4,399 6,917 5,702 8,195

Furniture, Fixtures and Fitting 2,257 2,061 1,815 3,073 2,716

Office equipment 4,602 5,624 6,761 6,767 7,508

capital Work in Progress 9,195 73,081 64,105 15,881 304,990

total Fixed assets 294,070 368,575 520,861 550,812 828,700

Intangible assets 6,175 3,215 4,265 4,157 6,262

total Investments 33,063 33,063 33,063 32,822 15,655

Current assets

cash and Bank 26,613 10,354 14,650 16,227 24,656

margin deposit account 7,467 8,731 10,868 10,796 18,100

accounts receivable 195,463 219,153 273,701 295,896 332,148

inventory 177,304 243,817 308,606 369,998 557,321

Other loans and advances 27,866 35,568 46,157 40,044 45,195

Other current assets 53,062 52,262 58,058 56,902 65,252

total Current assets (a) 487,775 569,885 712,040 789,863 1,042,672

Current Liabilities and provisions

accounts Payable 68,095 94,993 126,621 121,855 211,953

Bank loans 165,342 189,701 272,473 293,333 320,232

Provision for income tax 7,130 29,454 6,470 816 22,180

Other current liabilities 163,595 200,517 260,439 300,646 492,382

Less: Current Liabilities & provisions (B) (404,162) (514,665) (666,003) (716,650) (1,046,747)

net Current assets (a - B) 83,613 55,220 46,037 73,213 (4,075)

totaL appLICatIon oF FUnDs 416,921 460,073 604,226 661,004 846,542

(inr in thousand)



Key Financial ratiOsKey Financial Ratios 2006 2007 2008 2009 2010

GRoWth RatIos

revenue Growth (%) - 22.38 10.89 17.37 23.90

net Profit Growth (%) - 51.10 (31.97) (71.41) 429.23

Operating Profit Growth (%) - 66.82 (53.63) 46.34 82.40

pRoFItaBILIty RatIos

Gross Profit margin (%) 12.53 13.32 11.45 15.96 13.90

Operating Profit margin (%) 5.85 7.98 3.34 4.16 6.13

return on revenue (%) 3.87 4.78 2.93 0.71 3.05

return on tangible networth (%) 12.98 16.88 10.74 3.08 14.64

return on average tangible networth (%) - 18.15 11.10 3.08 15.44

return on capital employed (%) 15.95 18.88 11.43 9.40 13.16

return on average capital employed (%) - 20.06 13.22 9.78 14.59

return on Fixed assets (%) 12.58 15.16 7.30 1.97 6.94

return on total assets (%) 4.54 5.75 3.00 0.79 3.05

LIQUIDIty RatIos

Quick ratio (times) 0.77 0.63 0.61 0.59 0.46

current ratio (times) 1.21 1.11 1.07 1.10 0.996

tURnoVeR RatIos

inventory turnover ratio (times) 4.76 4.19 3.76 3.50 2.94

Fixed asset turnover ratio (times) 3.25 3.17 2.49 2.76 2.28

soLVenCy RatIos

long term debt equity ratio (times) 0.28 0.25 0.55 0.70 1.00

total debt equity ratio (times) 0.90 0.85 1.38 1.59 1.89

total liabilities to tangible networth (%) 186.04 193.49 257.72 289.84 380.47

interest coverage ratio (times) 2.90 4.31 2.57 1.31 2.43

eFFICIenCy RatIos

Payment Period (days) 71 100 95 79 99

average Payment Period (days) - 86 83 81 78

collection Period (days) 75 68 77 71 64

average collection Period (days) - 65 69 68 61

WoRKInG CapItaL RatIos

current liabilities to tangible networth (%) 141.86 155.48 188.19 203.41 266.52

Working capital turnover ratio (times) 11.43 21.19 28.18 20.80 *

Note: Working capital turnover ratio for FY 2010 could not be calculated due to negative working capital during the year.



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