Textiles

© Cygnus Business Consulting & Research Pvt. Ltd., 2011

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Vol. 1108 August 2011

CONTENTS

INDUSTRY AT A GLANCE ....................................................................................................2

KEY DEVELOPMENTS ..........................................................................................................3

Mergers and Acquisitions ........................................................................................................3

Investments ............................................................................................................................4

Research and Development.....................................................................................................5

New Products .........................................................................................................................6

INDUSTRY STATISTICS .........................................................................................................8

PRODUCT FOCUS ...................................................................................................................9

Jute Products ..........................................................................................................................9

Overview ............................................................................................................................9

Global Scenario...................................................................................................................9

Indian Scenario ...................................................................................................................9

Outlook ............................................................................................................................10

COMPANY SCAN...................................................................................................................11

Gokaldas Exports Ltd ...........................................................................................................11

Overview ..........................................................................................................................11

Cost Structure Analysis .....................................................................................................13

Stock Performance ............................................................................................................13

Outlook ............................................................................................................................13

STOCK SCAN .........................................................................................................................14

UPCOMING EVENTS ...........................................................................................................15

Industry Monitor

Textiles & Garments

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Industry Monitor – Textiles & Garments August 2011


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INDUSTRY AT A GLANCE MERGERS AND ACQUISITIONS

Textile Museum affiliated to The George Washington University, USA Fair Trade USA and Textile Exchange form Strategic Partnership, USA Fisher-Barton Group Acquires Zenith Cutter Co., USA VF Corp. to acquire Timberland, USA Indorama Ventures, Sinterama Complete Trevira Acquisition, Thailand

INVESTMENTS

NGC's ERP System to Streamline Expanding Business, USA Invista plans Investments Across Global Yarn Manufacturing Network, London Govt. Plans Construction of 25 Textile Parks to Boost Production, Export, India ITC to Launch More Designer Wear & International Designs, and Open Boutique, India Dollar Industries Ventures Into Jeanswear, India Avantium Raises Funds to Further YXY Development, The Netherlands

RESEARCH AND DEVELOPMENT

Industrial Nanotech Supplies Nansulate® to Textile Manufacturers, USA Karl Mayer Introduces TM4 T Terry Machine, Germany Biodegradable Water Repellent, Binder For Cellulosic Textiles, Sweden New UGA Technology Makes Textiles Permanently Germ-free, Greece Saint-Gobain Launches Innovative and Versatile Barrier Fabric, Ireland Löffler Introduces Sports Underwear With Transtex Light Fabric, South Korea

NEW PRODUCTS

Wool Textile Introduces Products Featuring SABIC's Ultem* PEI Fiber, Japan New Stain-Resistant Polyester Fabric for water absorption and oil repellency, Japan Kingwhale Develops Low Impact Dyeing Technology For Polyester Fabrics, Taiwan





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KEY DEVELOPMENTS

Mergers and Acquisitions Americas USA: Textile Museum affiliated to The George Washington University George Washington University announced an affiliation The Textile Museum would move to its Foggy Bottom Campus to become a cornerstone of a new museum scheduled to open in mid-2014. Exhibitions and programs would be presented to the public in a custom-built, 35,000-square-foot museum building. The new museum would include dedicated galleries for The Textile Museum, with increased exhibition space compared to its present facilities. Until the new museum opens, The Textile Museum would continue operating at its current location. The affiliation with the university will allow The Textile Museum to expand its rich tradition of scholarship, education and fostering cultural understanding as it broadly integrates its activities into the far-reaching GW academic community. USA: Fair Trade USA and Textile Exchange form strategic partnership Fair Trade USA, the leading third-party certifier of Fair Trade products, and a leader in facilitating the expansion of the global organic cotton and sustainable fiber supply chain, formed a strategic partnership to offer brands new opportunities in responsible sourcing and to better support cotton farming communities around the world. The new partnership would focus on market-linkage, joint conferences and tradeshows, and educational materials development to recognize Fair Trade as the gold standard for sustainability in the textile industry. It also reflects the trend that more and more brands are opting to use dual certified — organic and Fair Trade — cotton in their retail lines. The move to organics was a huge step for many mainstream brands, but as consumers continue to demand more ethical sourcing practices, companies are beginning to look for new, more transparent and verifiable ways to make a difference. The partnership between Textile Exchange and Fair Trade USA offers brands a solution to this challenge. USA: Fisher-Barton Group Acquires Zenith Cutter Co. The Fisher-Barton Group announced the acquisition of Zenith Cutter Co. Operating as an independent division of the Fisher-Barton Group of companies, Zenith Cutter is positioned as one of the leading providers of industrial knives and accessories to the converting and recycling markets. With manufacturing and distribution facilities located in Loves Park, Ill., and Ho Chi Minh City, Vietnam, Zenith provides products for processing equipment utilized in the converting, corrugated, plastics, recycling, textile, tire, tree care, roofing and wood industries. According to John Mink, President/Chairman of the board, Zenith Cutter Co., "The Fisher-Barton Group of companies is world-class when it comes to their metallurgical expertise, and shares its passion and commitment to making customers successful by providing them with the highest quality products possible". USA: VF Corp. to Acquire Timberland Greensboro, branded apparel manufacturer of VF Corp., signed a definitive merger agreement with Stratham, an outdoor apparel, footwear and accessories manufacturer The Timberland Co. under which VF acquired Timberland in a share-purchase deal worth US$43 per share, or approximately US$2 billion net of cash acquired. "The Timberland brand is synonymous with high quality outdoor footwear and apparel. According to Eric Wiseman, Chairman and CEO, VF Corp., the acquisition would continue the transformation of VF's portfolio, propelling VF's Outdoor and Action Sports businesses to 50% of total revenues". Asia pacific: Thailand: Indorama Ventures, Sinterama Complete Trevira Acquisition Thailand-based polyester precursor and fiber manufacturer Indorama Ventures PCL (IVL) and Italy-based dyed polyester yarn manufacturer Sinterama S.p.A. completed the acquisition of polyester fiber and filament manufacturer Trevira GmbH, Germany. The acquisition, follows Trevira's emergence from bankruptcy and reorganization into a new company in January 2010. Werner Schneider, Trevira Group's





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Insolvency Administrator said that Trevira is a traditional enterprise with a qualified workforce and great potential for he future. Werner Schneider also stated that the acquisition by IVL and Sinterama — two companies directly involved in textile activities — created the best opportunity for Trevira's future ongoing development. Trevira Holdings GmbH, formed by IVL and Sinterama to acquire Trevira, would be headed by CEO Paolo Piana, who is also the president of Sinterama and would become Chairman of Trevira's Supervisory Board. Investments Americas USA: NGC's ERP System to Streamline Expanding Business NGC Software® announced that T-Shirt International (TSI), an innovative embellisher of t-shirts, sweatshirts, and other sportswear, implemented NGC's Enterprise Resource Planning software. It experienced significant growth, including a merger and acquiring a new production facility in Indiana. To keep pace with the company's expanding business, it upgraded its existing ERP system to bring new efficiency and productivity to the company's expanding business. The software provides TSI with a number of significant benefits, including flexible reporting features; auto-packs by style, quantity, size and other criteria; auto-generation of UPCs; production of royalty reports for TSI's 200+ college and university customers; automatic calculation of sales commissions; and much more. NGC's ERP software includes a configurable EDI system, sophisticated financial accounting, flexible reporting features and other highlights such as: Europe: London: Invista Plans Investments Across Global Yarn Manufacturing Network To help meet continued demand driven by growth of the global airbag market, INVISTA, one of the airbag industry's leading suppliers, developed plans to invest in multiple projects within the next five to seven years across its global industrial nylon yarn manufacturing network. Coming on the heels of recently announced expansions in Qingpu, China, and Gloucester, United Kingdom, INVISTA is planning to add another seven kilotons of spinning capacity at its Kingston, Canada, facility. Start-up of these latest assets is expected in the second quarter of 2012. Its customers sent a very clear message that their demand is increasing across the world, which creates a need to invest in capital equipment — potentially in the hundreds of millions of dollars". According to John Barnes, INVISTA global business Director for Industrial Nylon Products, these efforts would help to support its customers' needs to secure access to this important raw material." Asia Pacific: India: Govt. Plans Construction of 25 Textile Parks to Boost Production, Export In order to strengthen the domestic textile industry, the Central government is planning to open 25 new textile parks across the country according to Union Minister for Commerce & Industry and Textiles Anand Sharma. There are 40 such parks presently and 25 more parks would be soon set up in industrial areas. According to experts from the industry, due to the downward trend in the domestic market, the traders were incurring heavy losses in exports. And due to increase in interest rate, the cost of exports had also shot up. As a result, the Indian textile was unable to compete with their counterparts from Bangladesh and Pakistan, Sharma added. India: ITC to Launch More Designer Wear & International Designs, & Open Boutique ITC plans to take its flagship Wills Lifestyle stores upmarket, transforming it into a luxury brand to profit from the upgrading Indian buyer who is willing to pay more. In a move analysts consider risky, Wills Lifestyle would revamp its product portfolio with more of designer wear and international designs and explore newer retail formats such as boutique stores and specialised luxury stores to reach out to luxury buyers. "The premium consumers are upgrading themselves to the luxury segment. A transition to the luxury segment would make its business model future-proof for the next ten years,". According to ITC's Divisional Chief Executive (Lifestyle Retail) Atul Chand, Wills Lifestyle soon plans to launch products on





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cashmere wool, including Pashmina jackets, ties and a line of international design women wear on premium silk and chiffon. India: Dollar Industries Ventures Into Jeanswear Hosiery-major Dollar Industries ventured into jeans wear as part of its endeavour to make a foray into lifestyle segment. According to Mr Vinod Kumar Gupta, Managing Director of the company, the company would sell its product under the brand name 'Force'. Its endeavour is to provide trend-setting solutions to meet the needs of Indian consumers. Its jeanswear would be initially launched in the eastern part of the country and then would expand its footprint nation all before the upcoming festive season." It is estimated to grow at 15% - 20% over the next three to five years. The annual sales are targeted to reach a figure of 25 million pairs over this period. Mr Gupta added that the company plans to gain the maximum market share with its new launch within next five years. The Netherlands: Avantium Raises Funds to Further YXY Development Avantium, a technology company specializing in advanced high-throughput R&D, secured €30m. The company would use the cash to advance its YXY technology through the development of green materials such as biobased, recyclable PEF polyester, and the construction and operation of its new pilot plant. According to Michiel de Haan, chairman of the Supervisory Board, Avantium; and general partner of Aescap Venture, this financing round represents a major strengthening of its investor base". IT is experiencing overwhelming interest from consumer goods and industrial companies who wish to use its YXY building blocks for a broad range of applications including PEF bottles for water, soft drinks and beer; PEF fibers for apparel and carpets; and engineering plastics for automotive and electronic materials. Research and Development Americas USA: Industrial Nanotech Supplies Nansulate® to Textile Manufacturers Nanotechnology-based specialty industrial coatings Nansulate® to supply equipment such as dyeing machines, steam pipes and heat exchangers. The company reports that the energy-saving, water-based coating offers thermal insulation and lead encapsulation; prevents corrosion; and resists mold, fire and chemicals. According to Industrial Nanotech, Turkish textile manufacturer Henateks Textile reduced its liquid natural gas consumption by 20% applying Nansulate High Heat insulation coating to its steam process system. Nansulate steam supply cycles were reduced from 24 injections to two injections energy consumption was reduced by 20%, and unit material production costs were reduced by 10%. Europe Germany : Karl Mayer Introduces TM4 T Terry Machine Germany-based Karl Mayer Textilmaschinenfabrik GmbH added a new model to its TM series of four-bar tricot machines. The TM4 T produces terry fabrics that are made using man-made fiber filament yarn such as matrix yarn. The fabrics are used to make wiping cloths, washcloths, hand towels, flannels, bathrobes and semi-technical textiles. The TM4 T features modern drive technology and a new machine concept with all main elements optimized for efficient production. It also features a much higher operating speed than Karl Mayer's HKS 4 F terry machine; and a 186-inch working width, compared with a normal working width of 136 inches. The extended width necessitated a revamping of the area around the brushing unit, which boast an integrated batching facility, but the company reports that the machine's price-performance ratio remains very competitive. Sweden: Biodegradable Water Repellent, Binder for Cellulosic Textiles OrganoClick AB, a developer and provider of biofiber materials and chemical products, introduced two technologies based on biodegradable ingredients — OrganoTex™, a water-repellent finish for cellulose-based fabrics that uses no fluorocarbons or other chemicals that are toxic to the environment; and OC-biobinder™, a biopolymer-based binder that is used to improve mechanical properties of cellulose-based non woven and coated textiles. According to Mårten Hellberg, CEO, OrganoClick, the textile processing industry for many years relied on chemicals that are very effective, but on the other hand are often not





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degradable in nature and even may cause severe effects on eco-systems or on human health. It believed that its new products boast a tremendous potential for textile manufacturers or textile product brands desiring to combine sustainable and organic textiles with functionality. Greece: New UGA Technology Makes Textiles Permanently Germ-Free University of Georgia researcher invented a new technology that could inexpensively render medical linens and clothing, face masks, paper towels-and yes, even diapers, intimate apparel and athletic wear, including smelly socks-permanently germ-free. The simple and inexpensive anti-microbial technology works on natural and synthetic materials. The technology could be applied during the manufacturing process or at home, and it doesn't come out in the wash. Unlike other anti-microbial technologies, repeated applications are unnecessary to maintain effectiveness. The anti-microbial treatment invented by Locklin, which is available for licensing from the University of Georgia Research Foundation, Inc., effectively kills a wide spectrum of bacteria, yeasts and molds that could cause disease, break down fabrics, and create stains and produce odors. Ireland : Saint-Gobain Launches Innovative and Versatile Barrier Fabric Saint-Gobain Performance Plastics launched Coretech™ ShelterGuard, used by manufacturers of protective shelters for military, defence and homeland security equipment. The chemical, biological, radiological, and nuclear (CBRN) shelter fabric is engineered using the advanced Coretech™ barrier membrane technology to provide maximum barrier protection against chemical and biological agents. A light-weight, single skin shelter reduces the set-up and tear-down times and logistics, as well as making operational deployment much easier. According to Ian Hutcheson, Market Manager, Saint-Gobain Performance Plastics, the fabric boasts excellent barrier and flame resistance properties, and provides excellent black-out performance". Asia Pacific: South Korea : Löffler Introduces Sports Underwear With Transtex Light Fabric Austria-based sportswear manufacturer Löffler GmbH introduced a line of sports underwear featuring Transtex light, an innovative fabric comprising moisture-transporting, hydrophobic polypropylene and creora® eco H-550 — a low-heat-set elastane fiber produced by Hyosung Corp., South Korea. The lightweight, single-layered fabric is knitted using new knitting technology, and features larger ventilation holes and extremely flat and soft seams for enhanced breathability and comfort. The underwear is suitable for wearing during moderate to intense activity and in middle to high temperature ranges. Reinhard Hetzeneder, the Marketing Director of Löffler said that creora eco H-550 is selected because of the fibre's gentle touch and its energy saving process. New Products Asia Pacific: Japan: Wool Textile Introduces Products Featuring SABIC's Ultem* PEI Fiber Wool Textile, a manufacturer of yarn and fabrics for uniforms and related products, and men's and women's fashion textiles; and a division of Japan-based Nikke Group, introduced a new line of yarn, fabrics and apparel featuring Ultem* polyetherimide (PEI) fiber from Pittsfield, Mass.-based SABIC Innovative Plastics, a global supplier of engineering thermoplastics to a variety of markets including automotive, healthcare, transportation, and building and construction. Ultem, with wool and other materials in the new products, combines comfort and protection with Ultem's inherent and permanent non-halogenated flame retardance (FR) and ultraviolet resistance. Sabic reports that Ultem could be dyed to a large number of shades using traditional polyester dyeing methods and creates a fabric that is soft and flexible for improved comfort and wear ability. In addition, it meets several standards for heat resistance including the US National Fire and Protection Association 2112 and the European Union EN 531/ISO 11612 standards; as well as performing with low smoke and low toxicity.





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Japan: New Stain-Resistant Polyester Fabric for Water Absorption and Oil Repellency Teijin Fibers Limited, the core company of the Teijin Group's polyester fibers business, announced the development of a new stain-resistant polyester fabric that offers, for the first time in the world, both water absorption to eliminate stickiness and oil repellency to resist oil-based soiling. The new material, planned to be marketed as a comfortable, stain-resistant fabric for all seasons, would be used for sportswear, uniforms and fashionable clothing such as blouses, cut and sewn clothing, and slacks that require both oil repellency and sweat absorption. The key to this breakthrough was Teijin Fibers' leveraging of proprietary fiber processing and nanotechnologies to succeed in covering the fiber surface with a 100-nanometer coating that consists of separate hydrophilic and oil-repellent layers. When sweat or other moisture contacts the fabric, water content is selectively absorbed and quickly spread to the hydrophilic layer, whereas oil is repelled and later could be easily washed off. Taiwan: Kingwhale Develops Low Impact Dyeing Technology for Polyester Fabrics Taiwan-based Kingwhale, a bluesign®- and Oeko-tex®-compliant vertically integrated manufacturer of performance apparel fabrics and finished products, developed Low Impact Technology (L.I.T.) to reduce the use of energy, water and dyestuffs in its manufacturing and dyeing processes. According to the company, the dyeing technology uses 22% less electricity for coloring and heating, 50% less thermal energy for steam creation, 60% less water, and 15% less dyestuff than traditional dyeing processes to achieve comparable results. The technology is designed to conserve energy and raw materials from the start of manufacturing and includes a process to modify the polyester molecules during fiber manufacturing to enable the yarn to take up the dye more quickly than conventional polyester yarn, thereby requiring less dyestuff to be used and cutting the amount of process energy and water needed as well.





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INDUSTRY STATISTICS

Month-wise Total Exports of Readymade Garments (Other Textile Materials) from India (Rs. mn)

Month 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11Apr 864.10 645.40 822.80 1499.70 1366.40 2928.10 2900.10 3637.40May 774.80 713.40 1079.90 1514.00 1577.90 2646.50 3359.80 3131.60Jun 611.60 814.80 1258.10 1652.60 1635.00 2862.90 3519.50 3348.30Jul 695.90 814.80 1124.70 1710.60 1872.30 3304.50 3898.30 3348.70Aug 694.90 1005.80 1702.00 1865.70 2568.40 3239.50 3819.00 3698.90Sep 917.40 1066.20 2031.50 1784.30 2052.60 3044.70 2760.60 -Oct 879.80 833.50 1632.50 1291.60 2124.70 2984.90 2478.30 -Nov 502.60 697.20 1231.60 1603.30 1932.00 2652.60 2316.80 -Dec 727.80 882.60 1637.40 1727.20 2034.90 3157.90 2701.40 -Jan 1423.90 941.70 1748.80 1739.50 2395.80 3267.10 3121.70 -Feb 1018.90 1160.40 1681.80 1921.20 2341.90 3361.20 3215.30 -Mar 1148.40 1141.30 2055.50 1576.30 2517.70 5231.20 3491.10 -Source: CSO, Cygnus Research

Month-wise Total Exports of Readymade Garments (Other Textile Materials) from India

0

2500

5000

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

(Rs.m

n)

2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

Source: CSO, Cygnus Research





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Product Category Jute Yarn Jute Hessian Food grade jute products Jute Geotextile Jute Floor Jute Shopping bag

PRODUCT FOCUS

Jute Products Overview Jute, the 'Golden Fiber' as it is called, is the raw material used for making sacks world over. It is truly one of the most useful fibers gifted to man by nature, which is beautifully crafted in the form of handicrafts and many day to day products. Besides being the cheapest and the most important material of all textile fibers, it also provides work for millions of farmers, landless laborers, industrial workers and many others, both directly and indirectly. Jute is being cultivated in India for over centuries now. It is predominantly a crop of eastern India. The major jute growing states are West Bengal, Assam, Bihar, Orissa, Tripura, and Uttar Pradesh. Presently the production of the fiber in India is around 100 lakh bales and about 79 jute mills are operating in the country. Besides, there are several small scale industries in the decentralized sector producing handicrafts, decoratives, twines, pulp and paper from jute and allied fibers and particle board from jute stick. Strengths of Indian Jute Sector

The largest producer of raw jute in the world. The biggest manufacturer of jute goods in the world. Stable and established domestic market encouraging innovations,

research and development, establishment of packaging standards. A highly diversified production base manufacturing the widest

range of products Quality conscious--employing most modern facilities for TQC. Export history of raw jute and jute manufacture dates back to over 100 years. Enjoys the support of fully developed infrastructure like ports, and shipping facilities. Comprehensive and world class research and development facilities in the area of jute agriculture,

product development and machinery design. Global Scenario The major producing countries of Jute are: Bangladesh, India, China, Thailand, and Myanmar. Bangladesh is the largest exporter of raw jute, and India is the largest producer as well as largest consumer of jute products in the world. Therefore, the local price of raw Jute in Bangladesh is the international price. Again, the local price of Jute Goods in India is the international price. Nearly 75% of Jute goods are used as packaging materials, burlap (hessian), and sacks. Carpet Backing Cloth, the third major Jute outlet, is fast growing in importance. Currently, it consists of roughly 15% of the world's Jute goods consumption. The remaining products are carpet yarn, cordage, felts, padding, twine, ropes, decorative fabrics, and miscellaneous items for industrial use. Indian Scenario Globally, India is the largest producer and second largest exporter of jute goods and this sector supports the livelihood of about 4m farm families, and provides direct and indirect employment to 0.04m workers. There are 78 Jute mills in the country. Of these 61 are in West Bengal, 3 each in Bihar and Uttar Pradesh, 7 in Andhra Pradesh, and one each in Assam, Orissa, Tripura and Chhattisgarh.

Exports of Jute Diversified products from India

Hand & Shopping

Bags59%

Others1%

Floor Cover-

ings40%

Source: Market Source; Cygnus Research





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India is recognized as the largest producer or raw jute and the biggest manufacturer of jute goods. There is tremendous capacity within people to manufacture the widest range of products, tailored to customers’ demands. The country's modern and world class research and development facilities in the area of jute agriculture, product development and machinery design are used for developing high quality jute products matching the international standards. Indian Jute Industry boast the capacity to produce and meet the International demand for food grade Jute bags and cloth. Food grade Jute Bags and cloth manufactured in India - are a boon in the context of global environmental and ecological concern. Indian food grade jute bags offers a twin edged advantage: preservation of food in the most natural way. Jute Policy The Government announced the first National Jute Policy in April 2005 to facilitate the Sector to attain and sustain a preeminent global standing in the manufacture and export of Jute products by enabling the Jute Industry to build world class state-of-the-art manufacturing capabilities, and strengthen research and development activities, through public private initiative, and ensure remunerative prices to the farmers. The National Jute Board Act, 2008 (12 of 2009) received the assent of the President on the February 2009 and was published in the Gazette of India on February 12, 2009. The Act provides for the establishment of the National Jute Board for the development of cultivation, manufacture and marketing of jute and jute products and for matters connected therewith and incidental thereto. Outlook India is recognized as the largest producer or raw jute and the biggest manufacturer of jute goods. The potential market trends related to jute fashion is quite bright. Thanks to the growing concern of people about the welfare of the eco-system. In coming decade, the production of jute-specific fashion products is estimated to be doubled-up. Most importantly, the key to the development of the industry lies in the modernisation of the machinery as consumers are waiting for jute-products like never before. Increase the quantity of exports of jute and jute products by achieving a CAGR of 15% per annum.





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COMPANY SCAN

Gokaldas Exports Ltd Overview Gokaldas Exports is a major player in the readymade garment industry across the globe. They are well established Indian manufacturer and exporter successfully meeting the demands of global readymade garment markets. Their facilities, technology and standards of performance meet international paradigms. It was incorporated in 1979, based in Bengaluru (Bangalore), India. An ISO 9001:2008 Certified Company having 46 fully equipped, modern, manufacturing factories, all based in and around Bangalore. Gokaldas exports ltd boast a capacity to produce and export 3m Woven and 1m knit apparel per month. It employs 47,000 skilled and highly skilled employees along with full fledged in-house design team creating and developing exciting collections each season. Products GEL is a manufacturer and exporter of readymade garments, women clothing, woven readymade garments, kids apparel, men’s clothing, shirts for men, rainwear and jackets, windcheaters. The principal products that GEL produces are outer wear and bottom wear. Outer wear includes both sports wear and winter wear and bottom wear include casual pants, chinos, linen trouser, and denim jeans. Marketing Strategies Gokaldas markets its product through retail chain. In the present Indian fashion retailing, Gokaldas etched a distinguished place for itself in the form of ‘The Warehouse’. Being one of the oldest fashion brands, the Warehouse operates high profile outlets in Bangalore, Chennai, Hyderabad and Coimbatore. It developed strategic alliances with some of the world’s premier fashion brands Company’s Performance at a Glance (Rs in m)

2010-11 2009-10 2008-09 2007-08 Net Sales 11424.11 11523.32 11730.09 10712.12Operating Profit/Loss 737.61 653.46 728.24 1138.63OPM (%) 2.64 5.67 6.21 10.63NPM (%) 7.71 0.17 0.29 4.44Depreciation 351.39 352.46 342.71 321.25Interest 218.26 346.31 351.03 305.21PAT 880.81 19.32 33.65 476.09Source: Company; Cygnus Research

KEY RATIOS 2010-11 2009-10 2008-09 2007-08 Debt-Equity Ratio 0.00 0.74 0.81 0.76Long Term Debt-Equity Ratio 0.00 0.09 0.12 0.16Current Ratio 0.00 6.65 5.94 5.06OPM (%) 2.64 5.67 6.21 10.63NPM (%) 7.71 0.17 0.29 4.44ROCE (%) 0.00 4.76 21.89 13.48ROE (%) 0.00 0.41 0.75 10.54Source: Company; Cygnus Research





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Performance Analysis

For the Financial Year 2010-11, Gokaldas Exports Limited posted a top line of Rs11424.11m, as against Rs11523.32m of last year, thereby showing a reduction of 0.86%. The profit after tax increased from Rs880.81m to a loss of Rs19.32m since apparel export industry is adversely affected. While comparing JFM11 with JFM10, there is an increase of 4.10% to Rs3011.93m in the top line. In JFM11 there is a loss of Rs220m as against a profit of Rs212.17m when compared to the same quarter last year. The additional airfreight is paid in this quarter which is very unusual. This quarter is tough considering higher cotton fabric process, acute pricing pressures from US and European markets, higher wages paid in comparison to the last year, volatile Indian Rupee situation. Common Size Comparison When compared Gokaldas Exports Ltd to its peers Zodiac clothing and KPR Mills Ltd, the former’s operational performance is far better than the latters. KPR bears the highest raw material cost and manufacturing expense, followed by GELand Zodiac Clothing. Staff expenses are considerably less for GEL compared to KPR mills but more thanZodaic Clothing. Interest charges paid by the company are more than Zodiac but less than KPR. The company is lagging behind both the peers in terms of bottom line.

Performance Analysis of Gokaldas Export Ltd. Quarterly Performance Financial Year Performance JFM11 JFM10 Var(%) 2010-11 2009-10 Var(%) Sales 3011.93 2893.36 4.10 11424.11 11523.32 (0.86)Other Income 1.15 7.62 (84.91) 13.33 28.30 (52.90)PBIDT 159.05 212.23 (25.06) 737.61 653.46 12.88 Interest 44.72 83.54 (46.47) 218.26 346.31 (36.98) PBDT 114.33 128.69 (11.16) 519.35 307.15 69.09 Depreciation 95.23 95.75 (0.54) 351.39 352.46 (0.30) PBT 209.55 224.44 (6.63) 870.75 45.32 1821.34 TAX 2.62 80.39 (96.74) 43.06 26.00 65.62 PAT 212.17 144.05 47.29 880.81 19.32 4459.06 Source: Company; Cygnus Research

Common Size Comparison for 2010-11 (% of Sales) Gokaldas KPR Zodiac Other Income 0.12 0.20 0.99Raw Material 54.66 66.73 29.87Staff Expenses 9.11 5.34 16.80Interest 1.91 2.95 0.17 Depreciation 3.08 11.89 1.76PBT 7.62 8.71 10.36Tax 0.38 1.97 2.51PAT 7.71 6.74 7.84Source: BSE India; Cygnus Research

Revenue Performance

8000

10000

12000

14000

2007-08 2008-09 2009-10 2010-11

Rs m

n

Source: Company; Cygnus Research





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Cost Structure Analysis In 2010-11, Company’s cost structure remained almost constant over the years. Other Expenditure forms the major chunk of the cost structure. Consumption of raw material cost decreased to 54.66% from 57.02% in 2009-10 as a percentage of net sales. Staff expenses were increased to 9.11%. Tax declined to 0.38% and 0.23% respectively. Depreciation increased to 3.08% compared to last year. Stock Performance

The company’s stock was Rs153.15 in July 2010 and gone on to reach Rs94.20 in June 2011. The performance not in line with that of Sensex as Gokaldas Ltd business is more than 95% dependant on export and the export market was still going through turmoil thus revenue were low. The company is planning to add new products to its product line and expand its company geographically, as it is planning to enter new unexplored markets. Promoters hold 88.27% of the share, public holds 11.37%. Outlook Gokaldas Exports ltd leads keeping in mind the current market trends and the emerging requirements all over the world. Therefore, chartered their growth plan accordingly and streamlined their manufacturing capabilities for mass production. The global textile and clothing trade undergone a sea-change in recent times. The economic recession in major importing countries last year and the gradual revival of the business optimism in the first few months of the current year paved the way for consolidation in major producing countries like China and India and relatively new entrants like Vietnam.

Cost Structure as Percentage of Net Sales 2010-11 2009-10 2008-09 2007-08Raw Material 54.66 57.02 51.93 52.12Staff Expenses 9.11 7.87 6.77 6.80Other expenditure 10.56 8.81 8.34 8.54Depreciation 3.08 3.06 2.92 3.00Interest 1.91 3.01 2.99 2.85Tax 0.38 0.23 0.01 0.34Source: BSE India; Cygnus Research

Relative Market Cap

50

65

80

95

110

July

'10

Aug '10

Sept

'10

Oct

'10

Nov '10

Dec

'10

Jan '11

Feb '11

Mar

'11

Apr

'11

May '11

Jun '11

BSE Sensex

Gokaldas

Shareholding Pattern

Public11.73%

Pro-moters88.27%

Source: BSE India; Cygnus Research ISIEmergingMarketsPDF adoctor from 27.4.81.122 on 2011-09-16 06:17:14 EDT. DownloadPDF.




14

STOCK SCAN

1st Week (16-23 Jun 2011) 2nd Week (24th Jun-30th Jun 2011) Index

Opening Closing Var(%) Opening Closing Var(%) BSE (Points) 17,985.88 17,727.49 -1.44 18,240.68 18,845.87 3.32Arvind (Rs) 84.55 73.80 -12.71 75.85 78.00 2.83Welspun (Rs) 44.35 40.05 -9.70 40.50 41.80 3.21Raymond (Rs) 386.60 347.65 -10.08 356.25 365.85 2.69Century (Rs) 359.30 345.35 -3.88 354.10 352.35 -0.49

3rd Week (1st Jul-6th Jul 2011) 4th Week (7-15th Jul 2011) Index

Opening Closing Var(%) Opening Closing Var(%)BSE (Points) 18,762.80 19,078.30 1.68 18,858.04 18,561.92 -1.57Arvind (Rs) 82.15 82.60 0.55 80.00 85.00 6.25Welspun (Rs) 43.95 43.15 -1.82 43.00 41.30 -3.95Raymond (Rs) 375.55 383.35 2.08 386.05 391.35 1.37Century (Rs) 365.35 371.80 1.77 367.35 360.10 -1.97

Source: BSE India; Cygnus Research

Relative market cap performance

85

95

105

115

16/0

6/1

1

17/0

6/1

1

20/0

6/1

1

21/0

6/1

1

22/0

6/1

1

23/0

6/1

1

24/0

6/1

1

27/0

6/1

1

28/0

6/1

1

29/0

6/1

1

30/0

6/1

1

01/0

7/1

1

04/0

7/1

1

05/0

7/1

1

06/0

7/1

1

07/0

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08/0

7/1

1

11/0

7/1

1

12/0

7/1

1

13/0

7/1

1

14/0

7/1

1

15/0

7/1

1

SensexArvindWelspun

Relative market cap performance

85

95

105

115

16/0

6/1

1

17/0

6/1

1

20/0

6/1

1

21/0

6/1

1

22/0

6/1

1

23/0

6/1

1

24/0

6/1

1

27/0

6/1

1

28/0

6/1

1

29/0

6/1

1

30/0

6/1

1

01/0

7/1

1

04/0

7/1

1

05/0

7/1

1

06/0

7/1

1

07/0

7/1

1

08/0

7/1

1

11/0

7/1

1

12/0

7/1

1

13/0

7/1

1

14/0

7/1

1

15/0

7/1

1

Sensex

Raymond

Century





15

UPCOMING EVENTS

1. Event TECHNOTEX INDIA Date Aug 25-27, 2011 Venue Bombay Exhibition Centre(BEC) Mumbai, Maharashtra, India Highlights It will pool in participants, visitors and other key decision makers from a diverse

cross section of the technical textile industry with a view to provide more innovative solutions, identify new business opportunities and create a condition, congenial for growth.

Contact Details Federation of Indian Chambers of Commerce & Industry, Federation House, 1, Tansen Marg, New Delhi - 110 001, India. Tel: +(91)-(11)-23738760; Fax: +(91)-(11)-23320714

2. Event Intertextile Shanghai Home Textiles Date Aug 29- 31, 2011 Venue Shanghai New International Expo Centre(SNIEC) Shanghai, China Highlights It is a recognizable event for exploring various avenues about the textile industry.

It offers enormous opportunities to enter into Chinese textile industrial sector. The event proves to be highly effective in attracting various manufacturers, retailers, wholesalers and others from all over the world.

Contact Details Messe Frankfurt (HK) Limited, 3506, China Resources Building, 26, Harbour Road, Wanchai, China (Hong Kong S.A.R.) Tel:+(85)-(2)-28027728; Fax:+(85)-(2)-25988771

3. Event China (Dalian) International Garment & Textile Fair Date Sep 03-06, 2011 Venue Dalian Xinghai Convention & Exhibition Centre Dalian, China Highlights It is China's oldest international fair for garment and textile industry. The stage

for foreign leading garment and textile products and fashion brands entering China market. The gateway for China leading brands to show them to expand trade and export.

Contact Details Dalian International Garment Exhibition Co., Limited, F3, World Expo Center, No.10, F Zone Xinghai Bay, Dalian, China Tel:+(86)-(411)-84892604; Fax:+(86)-(411)-84892900

4. Event India International Yarn Exhibition Date Sep 09-11, 2011 Venue IKF complex Highlights It will bring together under one roof the manufacturers of yarns, both natural and

man-made fibre types, from across the country and overseas. The show being strictly for trade visitors only, allows companies to interact and conduct business in a non-cluttered and extremely business-like environment.

Contact Details SS Textile Media Private Limited, No. 34, 2nd Floor, 17th Cross, Laxmipura, Halasuru, Bengaluru, India; Tel: +(91)-(80)-25544711; Fax: +(91)-(80)-25544711

5. Event Premiere Vision-France Date Sep 20-22, 2011 Venue Paris Nord Villepinte Paris, France Highlights The show is an awaited event of the Apparel and fashion industry. It will

showcase around 700 weavers from 28 countries across the world. The show is held twice a year and showcases the most creative fashion designs from across the world.

Contact Details Premiere Vision20, Boulevard Eugene Deruelle, 69432 Lyon, Cedex 3, France Tel:+(33)-(4)-72606500; Fax:+(33)-(4)-72606509





16

6. Event Tech textil India Date Oct 10-12, 2011 Venue Bombay Exhibition Centre(BEC) Highlights It is the international trade fair for technical textiles and non wovens. It represents

the entire global spectrum of technical textiles, non wovens and innovative apparel fabrics. It will provide the International textile manufacturers, a professional business platform to showcase their products to the Indian market and allow the Indian textile industry to upgrade and install new facilities for the production of technical textiles.

Contact Details Messe Frankfurt Trade Fairs India Private Limited, 2 Bajaj Bhavan, 1st floor Nariman Point, Mumbai, India; Tel: +(91)-(22)-61445900; Fax: +(91)-(22)-61445999

7. Event Home Textile Date Oct 27-31, 2011 Venue Damascus International Fairground, Damascus, Dimashq, Syria Highlights It will offer an unmatched opportunity to Syrian and international manufacturers

and suppliers to display their latest collections and arts to those who appreciate and seek them throughout the Arab region.

Contact Details Arabian Group For Exhibitions & ConferencesP. O. Box 2683, Damascus, Syria Tel:+(963)-(11)-4433444; Fax:+(963)-(11)-4433666

8. Event China Sourcing Fair: Home Products-Mumbai Date 23-NOV-11 to 25-NOV-11 Venue Bombay Exhibition Centre(BEC), Mumbai, Maharashtra, India Highlights Home Products-Mumbai will showcase the latest and innovative home products in

India. The event will offer best meeting grounds for visitors and exhibitors under single roof. For three days this trade show is being organized by Media Data Systems Pte Ltd.

Contact Details Mr. Dharmesh Kapadia; Mobile: +91-989806399; Web: [email protected] 9. Event INDIA ITME Date Dec 02-07, 2011 Venue Bombay Exhibition Centre(BEC) Mumbai, India Highlights It offers an excellent opportunity to the textile machineries manufacturers to show

case their technological advancement for the purpose of increased cooperation between the textile industries of the nations.

Contact Details Indian Textile Machinery Exhibition Society76, Mittal Tower, B-Wing, 7th Floor, 210, Nariman, Mumbai, India. Tel: +(91)-(22)-22020092; Fax: +(91)-(22)-22851578



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