REPORT ON MARKET CONDUCT OF VARDHMAN TEXTILES

SUBMITTED TO: SUBMITTED BY: DR. MANOJ KUMAR SHARMA SANJEEV KUMAR SINGH

INTRODUCTION
The industrial city of Ludhiana, located in the fertile Malwa region of Central Punjab is otherwise known as the "Manchester of India". Within the precincts of this city is located the Corporate headquarters of the Vardhman Group, a household name in Northern India. The Vardhman Group, born in 1965, under the entrepreneurship of Late Lala Rattan Chand Oswal has today blossomed into one of the largest Textile Business houses in India. At its inception, Vardhman had an installed capacity of 14,000 spindles, today; its capacity has increased multifold to over 8 lacs spindles. In 1982 the Group entered the sewing thread market in the country which was a forward integration of the business. Today Vardhman Threads is the second largest producer of sewing thread in India. In 1990, it undertook yet another diversification - this time into the weaving business. The grey fabric weaving unit at Baddi (HP), commissioned in 1990 with a capacity of 20,000 meters per day, has already made its mark as a quality producer of Grey poplin, sheeting, shirting in the domestic as well as foreign market. This was followed by entry into fabric processing by setting up Auro Textiles at Baddi and Vardhman Fabric at Budhni,Madhya Pradesh. Today the group has 900 shuttleless looms and has processing capacity of 90mn meters fabrics/annum. In the year 1999 the Group has added yet another feather to its cap with the setting up of Vardhman Acrylics Ltd., Bharuch (Gujarat) which is a joint venture in Acrylic Fibre production undertaken with Marubeni and Exlan of Japan. The company also has a strong presence in the markets of Japan, Hong Kong, Korea, UK and EU in addition to the domestic market. Adherence to systems and a true dedication to quality has resulted in obtaining the coveted ISO 9002/ ISO 14002 quality award which is the first in Textile industry in India and yet another laurel to its credit.

COMPANY PROFILE

Vardhman Group is a leading textile conglomerate in India having a turnover of $700 mn. Spanning over 24 manufacturing facilities in five states across India, the Group business portfolio includes Yarn, Greige and Processed Fabric, Sewing Thread, Acrylic Fibre and Alloy Steel. Vardhman Group manufacturing facilities include over 9,27,430 spindles, 55.5 tons per day yarn and fibre dyeing, 900 shuttleless looms, 90 mn meters per annum processed fabric, 33 tons per day sewing thread, 20000 metric tons per annum acrylic fibre and 100,000 tons per annum special and alloy steel. Vardhman has evolved through history from a small beginning in 1965 into a modern textile major under the dynamic leadership of its chairman, S.P.Oswal. His vision and insight has given Vardhman an enviable position in the textile industry. Under his leadership, Vardhman is efficiently using resources to innovate, diversify, integrate and build its diverse operations into a dynamic modern enterprise.

CONDUCT OF THE COMPANY 1. VISION:

" To be globally recognized as a Leading Supplier of Quality Fabrics"

2.

MISSION: Vardhman aims to be world class textile organization producing diverse range of products for the global textile market. Vardhman seeks to achieve customer delight through excellence in manufacturing and customer service based on creative combination of state-of-the-art technology and human resources. Vardhman is committed to be responsible corporate citizen.

3. PHILOSOPHY Faith in bright future of indian textiles and hence continued expansion in areas which we know best Total customer focus in all operational areas. Product to be of best available quality for premium market segment through tqm and zero defect implementation. All functional areas Global orientation targeting- atleast 20 % production for exports. Integerated diversification/product range expansion. World class manufacturing facilities with most modern r&d and process technology. Faith in everyone potential and respect for human values. Encouraging innovation for constant improvements to achieve excellence in all functional areas. Accepting change as a way of life.

4. BOARD OF DIRECTORS

Mr. Shri Paul Oswal- Chairman and Managing Director Mr. S.Padmanabhan- nominee of IDBI Mr. Arun Kumar Purwar Mr. Prafull Anubhai Mr. Darsan Lal Sharma Mr. Sharvan Talwar Mrs. Suchita Jain- Executive Director Mr. Suchit Jain- Executive Director Mr. Neeraj Jain- Executive Director

5. PRODUCT RANGE: YARNS Yarn is the largest strategic business unit of the Vardhman Group with 9,27,430 spindles and 55.5 MT tons per day yarn and fiber dying capacity. The Group offers one-stop solution for variety of yarn requirements of the leading customers in India and the international markets. Vardhman offers the widest range of specialized greige and dyed yarns (NE 10 to NE 200) in cotton, polyester, acrylic and varieties of blends. The group offers value added products like Organic Cotton, Melange, Lycra, Ultra yarns (contamination controlled), gassed mercerized, super fine yarns and fancy yarns for hand knitting. Vardhman is India's largest exporter of cotton yarn to the most quality conscious markets like EU, USA and Far Eastern countries Products Cotton Yarn Organic Cotton Yarn Fair Trade cotton Yarn Organic Fair Trade Cotton Yarn Ellitwist Vortex Yarn Slub Yarn Acrylic Yarn Poly -Cotton Yarn Acrylic - Cotton yarn Special Blended Yarn Core Spun Yarn Melanges Gassed Mercerised Modal Yarn Tencel Yarn Viscose Yarn Hand Knitting Yarn Speciality Yarn

FABRICS
Vardhman is among the few fully integrated fabric suppliers in the country. An exquisite range of fabrics for shirting and trousers enables Vardhman to offer fashion solutions to the leading clothing manufactures in the world. The state-of-the-art manufacturing facilities having 900 shuttleless looms and producing 90 mn meters per annum processed fabric are located in North and Central India, which cater to the highly customized fabric needs of the buyers. An integrated fabric supply chain extending from raw materials to yarns and from weaving to processing provides the winning edge to the customers.

Shirting Count range Ring spun Ne 20's to 80's Ring spun Blends 2/40's to 2/210's 100% cotton, Polyester cotton, Cotton stretch DowXLA, Cotton Tencel, Cotton Modal, Cotton Bamboo, Cotton silk, Cotton

Nylon, Cotton Nylon stretch, Cotton Linen. Weave Yarn Dyed: Chambray, fil-a-fil, checks, stripes, Oxford, HBT Others (yarn dyed & piece dyed) Plain, twill, satin, oxford, dobby, herringbone, Pique Cord. 2-5.6 oz/yd'2 58"

Fabric weight Finished width

Bottom weights

Count range

Ring spun Ne 20's to Ne 2/80's Open end Ne 6's to Ne 16's 100% cotton, Polyester cotton, Cotton stretch DowXLA, Cotton Tencel, Cotton Modal, Cotton Bamboo, Cotton silk, Cotton Nylon, Cotton Nylon stretch, Cotton Linen Coolmax. Chambray, fil-a-fil, checks, stripes, Oxford, HBT Others (yarn dyed & piece dyed) Plain, twill, Drill, satin, oxford, dobby, herringbone, Pique Cord, Honey comb 6.00 to 12.00 Oz.yd'2 58" to 60

Weave

Fabric weight Finished width

Finishes

Soft, Peach, Mechanical stretch, Microsand, Easy to iron, Water resistant, Stain Release, Stiff finish, Airo finish, Carbon finish, Diamond finish, Airo enzyme, Soft Easy Care, Soil resistant, Thirsty finish, Feather touch, Banana Peel and to add Ammonia finish. Bamboo, Organic Cotton, Linen FLO, OEKOTEX, SKAL.

Eco-Friendly Blends Also certified by

GARMENTS Vardhman Textiles Limited has entered into a Joint Venture agreement with Japan based Nisshinbo Textiles Inc. by the name of Vardhman Nisshinbo Garments Company Limited. The equity participation of Vardhman and Nisshinbo would be in the ratio of 51:49. Nisshinbo is a world class textile manufacturer with comprehensive operations including spinning, weaving, knitting, finishing and sewing. The total manufacturing capacity of the project shall be about 1.8 million pieces per annum. This venture of Vardhman is a step towards a gradual integration of our Textile Value Chain to meet the clothing requirements of the higher end customers in domestic and international market. The estimated capital cost of the project is Rs. 30

crores which will be financed partly from equity contribution by joint venture partners and partly by debt. The joint venture company will supply majority of its production for international markets through Nisshinbo. The Joint Venture Company shall also manufacture shirts for supply to the domestic brands. Nisshinbo shall also provide technical assistance for setting up the facilities and for the manufacturing operations. The Foundation Stone of the project was laid on 21st August, 2009 at Phase D-95, Phase VIII, Focal Point, Ludhiana. Mr. Takeo Shimura, Vice President, Mr. Masatsugu Ohno, Manager, Textile Fabrics Division and Mr. Masami Tsuji, Manager, Global Operation Section from Nisshinbo Textiles Inc., Japan specially came to attend the ceremony. The Project will provide direct employment to about 600 people and is likely to commence production in July/August 2010. A team of technical persons shall go to Japan and China during January to May 2010 for training.

THREADS
Vardhman is a leading player in the Indian sewing thread market. The joint venture with A&E Threads of USA offers complete thread solutions from tailoring to industrial applications. With 33 tons per day capacity spread over three plants located in North and South India, Vardhman is uniquely positioned to serve the garment manufacturers across the world. Vardhman's customer value proposition includes threads made from cotton, polyester, core spun, nylon and filaments, which are AZO free and meet OEKO Tex Standards.

FIBRE

The acrylic fiber of Vardhman is acclaimed for a wide variety of textile applications. The modern manufacturing plant based on renowned Japan Exlan Wet Spun technology produces 20,000 MT per annum acrylic fiber at Gujarat (Western India). The fiber marketed under the brand name VARLAN has achieved high level of recognition in the Indian market because of super soft touch and silky appearance. Product Features Superb soft touch & silky appearance; resilence; excellent dye -ability; brilliant shades, high bulk yarn products incorporating shrinkable fibres; low pill formation; better crease recovery; high resistance to chemicals, light, weathering and midew make VARLAN a preferred fibre in knitted, woven and other applications. Product Range Acrylic Bright & Semi-dull Non shrinkable fibre in 1.2,1.5,2,3,5,7,10,15 deniers in a wide range of cut lenghts.

Acrylic Bright & Semi-dull Shrinkable fibre with different shrinage levels in 2,3,5 deniers in a wide range of cut lengths

Acrylic Tow endless Bright & Semi dull in 2,3 denier.

Specialty acrylic fibres suitable for Open end spinning; Soft handle, Water absorbent applications etc.

Vardhman Acrylics Ltd Vardhman Group ventured into the manufacture of Acrylic Fiber/Tow in 1999. The joint venture, Vardhman Acrylics Ltd. (VAL) was set up together with two leading Japanese business houses namely Japan Exlan Co. Ltd., a part of Toyobo Group of Japan and Marubeni Corporation Japan. The company has set up a 18000 TPA Acrylic Staple Fibre and Tow production plant at Jhagadia, Distt. Bharuch in the state of Gujarat, India. The world class wet spun technology for the manufacture of Acrylic fiber / Tow has been sourced from Japan Exlan Co. Ltd., Japan. It is a state of the art, highly automated production facility making it amongst the most advanced plants of its' type in the world. VAL's products are marketed under the brand name "VARLAN". STEEL Vardhman Special Steel is a niche player in the special and alloy steel market of India. With installed capacity of 1,00,000 MT per annum, Vardhman offers alloy steel made with contemporary technologies like electro-magnetic stirrers, vacuum degasification, auto mould level controlled and auto controlled cooling etc. With continuous research and development efforts, Vardhman Special Steel meets the stringent quality requirements of commercial vehicles, tractors, cars, two wheelers, defence applications, railway components and other engineering products. Engineered for the future Vardhman Special Steels incorporates some of the most advanced manufacturing facilities with equally reliable support facilities. The plant has well conceived layout plan with modern material handling facilities-all designed for economic processing of materials and human skills. Vardhman's ability to adopt changes in technology is evident in its extensive use of automation and contemporary concepts. 6. PERFORMANE During the last 17 years, Vardhman Group has recorded 13.2 percent top line growth rate, which is higher than the industry average growth rate. The Group turnover has grown from Rs 723 crores in 1995 to Rs 5252 crores (about USD 1.1 billion) in 201112. The exports has grown from negligible level in early nineties to Rs 1688 crores (USD 352 million) in 2011-12.

Financial Indicators Of Vardhman Group (Rs. In Crores) Particulars Group 2011-12 Gross Sales Fob Value Of Exports Profit Before Tax Cash Accrual (PBT + Dep.) Gross Block Net Block Capital Employed 5252 1688 276 554 4755 2618 5976 Group 2010-11 4492 1287 755 1020 4416 2690 5754 Group 2009-10 3391 752 411 668 4176 2599 4748 Group 2008-09 3186 689 137 381 3935 2571 4556 Group 2007-08 2693 496 205 377 3461 2219 3918

Financial Indicators Of Vardhman Group (USD In Millions) Particulars Group 2011-12 Gross Sales Fob Value Of Exports Profit Before Tax Cash Accrual (PBT + Dep.) Gross Block Net Block Capital Employed 1096 352 58 116 992 546 1247 Group 2010-11 986 282 166 224 969 590 1263 Group 2009-10 716 159 87 141 882 549 1002 Group 2008-09 693 150 30 83 856 559 990 Group 2007-08 657 121 50 92 844 541 956

"The financial figures represents financials of VTXL( consolidated) and VSS Ltd." 7. CORPORATE SOCIAL RESPONSIBILITY Some of our CSR activities Sri Aurobindo Socio-Economic and Management Research Institute is engaged in the promotion of education, research and publications highlighting social and economic

issues facing the society. The Institute runs a Human Resource Development Centre for providing career counseling and guidance to college students in Punjab. The teams of experts also visit the colleges in the state to prepare college students for gainful employment in the industry.

Sprung from a keen desire to set up an educational institution in Ludhiana and inspired by the writings of Sri Aurobindo and the Mother, the Trust has set up a college - Sri Aurobindo College of Commerce and Management (affiliated to the Punjab University) with the mission to create an institution with distinction dedicated to the ideals of creating disciplined career oriented young people ready for going for administrative and management roles in enterprises or to set up their own business as entrepreneurs. A Vardhman initiative to improve the yield of cotton in Punjab in 2001 when the State had suffered a shock of crop devastation and area under cotton cultivation was dwindling, led to the experiment to adopt villages and see whether concerted efforts in bringing knowledge to farmers could improve the yield of cotton. The experiment was successful as it improved the yield of cotton to 873 kg/hectare in 2005 in adopted villages where the average yield of cotton in the State of Punjab was 587 kg/hectare (world average - 700 kg/hectare). It found mention in the President's broadcast on Technology Day (11/05/04) as a 'technological event which has the potential to penetrate into our everyday lives'. The Village Adoption Programme also found mention in the President's address to the nation on the eve of India's 56th Republic day. The President of India was gracious to bless one of the participating Villages -'Gehri Buttar' (District - Bathinda) by his presence on December 10th 2005. Vardhman is actively engaged in the activities of Nimbua Greenfield Punjab Limited (www.ngpl.co.in) formed by a consortium of Industries of Punjab for developing a common facility for storage, treatment and disposal of hazardous wastes generated by the Industry with a Government of India grant. www.ngpl.co.in).