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Annual Report 2005-06Alps Industries Limited
WWW.ALPSINDUSTRIES.COM
1
33-year-old Ghaziabad-based company, Alps Industries Limited (hereafter referred to asAlps Industries), is a leading manufacturer of yarn, home furnishing, fashion accessoriesand dyes catering to both the domestic as well as the international market and also sellspremium imported architectural products in the domestic market. A vertically integratedcompany, Alps Industries operates eight manufacturing facilities including a 100 per centexport-oriented integrated textile unit and also owns two premium, well-establishedbrands; "Vista" for home fashions and architectural products and "Le Pashmina" forfashion accessories.
Unique
combination
To produce world-class fashion, furnishing and décor products with the concurrentobjective to protect the environment through the use of eco-friendly material.
Vision
To achieve a leading position in environment-friendly textile products.
To create top-of-the-mind brand recall for its products.
To pursue innovation of new products.
To strengthen market reach in both the domestic and international markets to fullycapture emerging opportunities.
To reach the customers directly for improved responsiveness to changing customerpreferences.
To introduce own brands for home furnishing products in the international market.
To pursue inorganic growth opportunities that would help it strengthen its marketposition, both in the domestic as well as the international market.M
issi
on
Contents:Value proposition 03 Financial summary 04 Operational and business highlights 06 Chairman's letter 08 Product basket 10
Product innovations 12 Manufacturing capacities 14 Field to fashion 18 Natural dye technology 21 Brand "edge" 22
International market 24 Distribution 26 Corporate Directory 30 Board of Directors 31 Directors' Report 32 Management
Discussion & Analysis 41 Corporate Governance 47 Auditors' Report 63 Financials 66
32
India's textile industry is expected to grow almost three timesinto a USD 40 bn business by 2010 from the current levels;
Its share in the global textiles market, which currently stands at4 per cent, is expected to touch 8 per cent by 2008;
After garments, yarn is the next fastest growing textilescategory, likely to grow at a compounded rate of 17 per cent per annum;
Similarly, exports of home textiles has grown by nearly 39 percent in 2006. The anticipated growth in the future is where thereal excitement lies: exports of home textiles (made-ups) are setto touch USD10 bn by the year 2010 from the current USD 1.9 bn.
In addition to the opportunities in the international markets, thedomestic real estate boom presents an opportunity to Alps
Industries to especially cater to the niche commercial and retailsegment and high-end residential demand:
Indian real estate market is on a high growth curve and isgrowing at the rate of 30 per cent per annum;
Looking at the current frenetic pace of commercial realtydevelopment across the country; it is estimated that 103 mn sq ftof office space will be added by the year 2008; and the IT andITES industry would require office space of more than 367 mn sqft till 2012-13;
The next two years from now will see the emergence ofapproximately 117.4 mn sq ft of new retail space with a total of361 mall projects estimated to be under construction.
Lastly, rising disposable incomes, easy financing terms andgrowing urbanization continues to drive housing demand not onlyin the metros but also in smaller cities.
TheopportunityBecause, over the years, we not only strengthened our position asa leading textile manufacturer catering to the internationalmarket, but have also evolved as a principal interiorsinfrastructure player well poised to ride the domestic realtyboom.
And because pre-empting the realty boom and the opportunitiesunfurling in the global market, we not only expanded ourcapacities ten times, but more importantly, made our timely forayinto fast growing and high-value added textile segments,set the base for our entry into the retail segment for our homefurnishings and embarked on prudent integration, cost-competitive and environment friendly initiatives, which we believewill continue to be our value proposition for years to come.
FOR INSTANCE WE,
Enhanced capacities to manufacture value-added fiber-dyed,high quality yarn;
Embarked on installing compact yarn spinning facilitiesand high-value Jacquard fabrics weaving facilities tomanufacture higher value products;
Ventured into the production of high-value office andautomobile upholstery fabrics in addition to fashion orientedhome furnishing;
Undertook cost competitive expansion by choosingUttranchal as our expansion base - a state which offers severaltax incentives, provides quality power supply at subsidised ratesand took loans from the government's TUF scheme to reduceinterest cost;
Enhanced our eco-friendly positioning by purchasing organiccotton, an initiative which enables us to sourcenature friendly cotton;
Pioneered research in the area of natural dyes extraction andapplication to textile fiber which provided us a distinct positioningof being an environmentally friendly manufacturer;
Initiated measures to establish a strong branded retailpresence,
Launched high-value architectural products such asreal wood flooring & aluminum composite panels to ride thedomestic boom and leverage our strong Vista brand, ournational distribution network and our carefully nurturedrelationships with architects and interior designers.
We are confident that all these measures will increase ourvisibility, attract large overseas retail and textile manufacturersand speed up top line growth and protect our profitabilitysignificantly in the long-term.
propositionThe Alps value
Several industry players are scaling up capacities especially toattract overseas retail houses looking to move their productionbases to India in the post-quota regime.
So far, across Asia, textile companies have gained from asurge in sales to developed markets primarily driven by shutting
down of capacities in overseas market.
However, in this business of manufacturing products for leadingbrands, expanding margins beyond a point is imminently difficult.
And that's where our response to these emerging opportunitieswill be truly appreciated.
response The
54
FY 2003 FY 2004 FY 2005 FY 2006
EARNINGS DATA
Total Income 1331.17 1550.31 1797.56 2647.36
Net Sales 1318.70 1525.10 1778.62 2629.95
EBIDTA 197.16 210.47 292.38 446.23
EBIT 128.95 137.82 217.18 356.86
Profit Before Tax 72.82 78.58 151.84 261.72
Profit After Tax 51.82 56.08 141.34 238.03
BALANCE SHEET DATA
Equity 61.99 67.24 67.24 162.57
Term Debt 376.60 334.36 676.31 1259.91
Net Worth 521.89 613.04 749.82 2399.51
Capital Employed 1208.27 1283.58 1899.81 4694.53
STOCK EXCHANGE DATA (in Rs)
Dividend per share 0.50 0.50 1.50 0.75
Earnings per share 8.36 8.45 21.02 27.52
RATIOS & MARGINS (in %)
EBIDTA margin 14.95 13.80 16.44 16.97
PAT margin 3.93 3.68 7.95 9.05
ROCE 10.67 10.74 11.43 7.60*
RONW 9.93 9.15 18.85 9.92*
(Rs in mn)
* Figures of Net Worth and Capital Employed include the GDR issue amount of Rs 972.50 mn. The issue was completed on March31, 2006 the last date of financial year. If this amount is excluded from computations the figures come to 9.59% and 16.68%respectively
Financial summary
500.00
450.00
400.00
350.00
300.00
250.00
200.00
150.00
100.00
50.00
0.00FY 2003 FY 2004
� EBIDTA � EBIT
FY 2005 FY 2006
18.00
16.00
14.00
12.00
10.00
8.00
6.00
4.00
2.00
0
3000.00
2500.00
2000.00
1500.00
1000.00
500.00
0.00FY 2003 FY 2004
� Total Income � EBIDTA margin (in %)
� Home Furnishing & Fashion Accessories
� Yarn
� Architectural products
Revenues segmentwise (for FY 2006 in%) EBIDTA segmentwise (for FY 2006 in%)
� Home Furnishing & Fashion Accessories
� Yarn
� Architectural products
FY 2005 FY 2006
10.0010.00
9.009.00
8.008.00
7.007.00
6.006.00
5.005.00
4.004.00
3.003.00
2.002.00
1.001.00
0.000.00
30
25
20
15
10
5
0FY 2003 FY 2004
� Divident per Share (in Rs) � Earnings per share (in Rs)
FY 2005 FY 2006
250
200
150
100
50
0FY 2003 FY 2004
� Profit After Tax � PAT margin (in %)
FY 2005 FY 2006
84%81%
10%
9%
10%6%
Rs in
mn
Rs in
mn
Rs in
mn
Rs in
mn
14.95
1331.17
7.957.95
3.683.683.933.93
9.059.05
51.82 56.08
141.34
238.03
1550.31
128.95 137.82
217.18
356.861797.56
2647.36
13.80
197.16
8.36 8.45
21.02
27.52
0.50 0.50 1.50 0.75
210.47
292.38
446.2316.44
16.97
76
business highlightsOperational and
Expanded capacity to 97.22 Tons Per Day (TPD) in FY 06 from 5.97 TPD in FY 05.
Location Capacity (TPD)
Haridwar 52.14
Kashipur 26.07
Jaspur 13.04
Sahibabad 5.97
TOTAL 97.22
Launched high-value real wood flooring and aluminum composite panels.
Increased domestic dealership network from 150 distributors (and 1500 outlets) to 192 distributors(and 1,640 outlets).
Captured 20 per cent market share in the window covering range of products where it is leader inthe domestic market and acquired 30 per cent of the branded domestic market share.
Well diversified revenue mix in India (73 % of total revenues)
North 38 %
West 26 %
South 29 %
East 7 %
Floated a wholly owned subsidiary Alps Retail Private Ltd to set up branded retail presence in thedomestic market.
Made two equity offerings during the year.
Declared 1:1 bonus.
Declared a dividend of 7.5% for FY 06.
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CONDUCIVE DOMESTIC ENVIRONMENT
At the same time, in the domestic market, increased urbanisationand the boom in the economy has led to an increase indisposable incomes, translating into an unprecedented growth inthe real estate and construction sector. This has fuelled demandfor home décor products. The growth of organized retailing ismaking available to Indians a whole new retail shoppingexperience. The higher Consumer Confidence Index of Indians isreflected in increased consumer spending, particularly on homesand personal fashion.
GEARING UP
Recognizing the opportunities and the need for scaling up, yourcompany has undertaken significant expansion of its yarnspinning and weaving capacities, with expanded capacitiesexpected to go on stream during 2007-08.
As an incentive to growth, the textile ministry is extending asubsidy on interest costs on debt taken to fund up-gradation andexpansion across the sector through the establishment ofTechnology Upgradation Funds Scheme (TUF). I wish to place onrecord my appreciation for these incentives offered to the textileindustry to fortify its presence in the global textile trade. AlpsIndustries has also availed of loans under the TUF scheme tofund its expansion plan.
ARCHITECTURAL PRODUCTS
One of the main reasons why your company set up this divisionin 1990 is that it dovetails perfectly with the textile productsbusiness. Your company continues to broaden and enhance itsproduct line to offer increasingly functional yet pleasing-to-the-eyes design applications that appeal to the creative senses ofarchitects, designers and end-users. The company accords top
priority to comfort, functionality, durability and continuousevolution of fashion style - aspects which we incorporate in bothconceptualising and promoting our architectural products. As aresult, today we can proudly state that your company hasemerged as a leader in window covering range of products withthe largest market share in the branded segment.
FUTURE ROADMAP
Alps Industries has formulated a strategy to enter the brandedretail segment by forming a 100 per cent subsidiary called AlpsRetail Private Limited. The branded retail initiative is expected tohave a positive impact on the company's margins. Your companyis also actively scouting for an acquisition opportunity that wouldincrease its marketing reach and enhance the design skills for itsfashion accessories and home furnishings business.
SHARING SUCCESS
I have always been very appreciative of the unstinted support ofour shareholders in our growth plans and they deserve to reapthe fruits of success. Your company has declared a 1:1 bonusissue in addition to a dividend of 7.50 per cent for FY06.
The management at Alps Industries attributes its growthprimarily to its most important and valuableasset: its manpower - the driving force ofour continued success. The Board and Iexpress our sincere thanks andappreciation for their contribution,dedication and support.
K.K. Agarwal, Chairman
INDUSTRY PERFORMANCE
The Indian textile industry has done reasonably well in the last 12months, post abolition of the quota regime: the value of textileexports increased by 16.6 per cent, with cotton textiles up 18.5per cent. Much of the export has come in the second half of thelast fiscal primarily due to the commencement of exports tocountries where exports were erstwhile restricted due to MFAquotas. Looking ahead, exports to these regions is expected toincrease further with EU and the US preferring to import textiles(rather than manufacture on their own) from low cost Asiancountries.
INDIA: A PREFERRED TEXTILE OUTSOURCINGDESTINATION
Among the Asian countries, China and India would be thebiggest beneficiaries as both these countries enjoy a dual costadvantage on the labour as well as the raw material front. Apartfrom that, both these countries have the necessary scale ofoperations to supply to the West and have established themselvesas suppliers of quality textiles. While there are fears that Chinamay have an advantage over India, restrictions imposed onChina by the US and EU up to FY08 will provide India thenecessary lead-time to consolidate its position in the internationalmarkets. Many global retailers who were initially lured by thelow-cost option offered by China have now adopted a morecautious strategy by reducing their dependence on a singlecountry (China) for meeting their outsourcing needs, a movewhich again favour India.
With abundant cotton crop, a long history of textiles and lookingat the large-scale expansion undertaken by leading Indian textilecompanies, India is fast emerging as a major global outsourcinghub for textiles.
Dear Shareholders,
Alps Industries has formulated a strategy toenter the branded retail segment by forming a
100 per cent subsidiary called Alps RetailPrivate Limited. Your company may look at
acquiring a design house and renowned brandsto accelerate its fashion accessories and home
furnishings business.
FROM THE CHAIRMAN'S DESK‘ ‘
1110
Total Revenue: Rs 2,629.9 mn increase of 47.9% over last yearAlps Industries Limited
Textile products - 90% of total revenueRs 2354 mn (an increase of 47% over last FY)
Home Furnishings andFashion accessories90% of the textile revenues
Made-Ups like top-of-the bed, curtains
and table linens, etc
Fabrics for upholstery (office furniture
and automobile seats)
Economy range products like viscose scarves,
shawls and other fashionaccessories
Yarns 10% of textile revenues
Natural DyesUsed in dyeing of fibre / yarn /
fabric to make Home furnishingsand fashion accessories
Architectural products - 10 % of total atRs 276 mn (an increase of 41% over last FY)
Window Covering like blinds, drapery rods and
awnings
Aluminum compositepanels
Wooden flooring(Wooden laminate and natural
hardwood floorings)and wooden wall paneling
basketBroad product
PRODUCT DIVERSITY. CONTINUOUS INNOVATIONS. CAPITALIZING ON CHANGING MARKET TRENDS.
Cotton, synthetic & blended yarn.Speciality yarns - fibre dyed andnatural dyed yarn, chenille, slub,
compact and fancy yarns
High end productslike 100% Cashmere,
Sheer and aromatic shawls,scarves, mufflers,stoles, wraps, etc
1312
DURING THE YEAR UNDER REVIEW, THE COMPANY'S INNOVATIVE THINKING LED TO THEFOLLOWING NEW OFFERINGS:
Product innovations
Added an eclectic range of printed bed linen products in thedomestic market.
Designed high quality sophisticated fashion accessories rangefor the export market targeting the upscale customers using ablend of different fabrics including viscose and silk andsimultaneously sharpened its design capabilities to expand the
range beyond Pashmina and silk.
Introduced aluminum composite panels, which are easy tomaintain, strong and durable and can be used in bothcommercial as well as residential complexes. By undertaking thestructural design and subsequent installation, it now provides acomplete solution in this area. The company has received orders
for aluminum composite panels for the construction of 22 mallsacross Delhi Metro stations.
Enhanced its window covering range by introducing newfinishes and fabrics. In the architectural segment, the company'sinnovative and high quality window covering range has beenconsistently recognized for excellence in design and functionality
Unfurled a premium real hard wood flooring range that
exudes class and promise to provide a distinct character anddefinition to homes. The range caters to the design sensibilities ofthe growing affluent class and also to the hi-end users in thecommercial space.
Introduced new shades of laminate flooring that aspire todramatically change the look of homes and offices, at costeffective rates and for which there is a huge market.
1514
Manufacturingcapacities
Capacity expansion started during 2005-06.
Textile production base increased with addition of 3 yarnproduction units taking its capacity to 97.22 Tons Per Day (TPD)as against 5.97 TPD in 04-05.
Added new value-added fiber dyed yarn unit of 52.14 TPDcapacity at Haridwar, Uttaranchal.
Added a leased unit at Kashipur, Uttaranchal of 26.07 TPDcapacity.
Added a leased unit at Jaspur, Uttaranchal of 13.04 TPDcapacity.
Ongoing capacity expansion (2005-08)
Setting up additional compact yarn spinning capacity of 58TPD at Haridwar, Uttaranchal which will be operational in FY08 (Adjacent to the new unit in Haridwar).
Setting up a high-value jacquard fabric weaving facility witha capacity of 8 mn sq ft at Sahibadad, Uttar Pradesh. (This new unit will be adjacent to the existing unit inSahibadad where the company possesses adequate land forexpansion).
LONG-TERM SUCCESS IS BASED ON VERSATILE MANUFACTURING CAPABILITIES THAT HELPS TOSATISFY THE CONSTANTLY EVOLVING NEEDS OF CUSTOMERS.
1716
The enhanced manufacturing capacities will allow Alps Industriesto leverage its deep knowledge in the textile industries and furtherprove its competence.
RATIONALE AND ADVANTAGES
The rapidly shrinking textile production capacities in Europeand USA are throwing open large business opportunities whichwill spruce up yarn demand. The company's yarn business isestimated to contribute approximately 40 per cent to its top linein FY07.
The addition of the compact yarn facilities will help thecompany manufacture high-value superior finish yarn withsuperior technical properties and lower hairness index. Thisexpansion will enable the company to enjoy economies of scaleand at the same time improve the company's margins.
Lastly, the addition of the Jacquard looms will enable AlpsIndustries' to manufacture higher value upholstery and furnishing
fabrics. The company will leverage its fastexpanding distribution network to market
these new products.
LOCATION ADVANTAGE
Low-cost quality power facilities, taxincentives, excellent road network and
Uttranchal's proximity to Ludhiana,the largest yarn market in
India and Panipat, thehub of furnishing fabricmanufacturers in the
country have anchored the company's decision to select thelocation for setting up all its three new spinning units.
Both the Kashipur and Jaspur units in Uttaranchal have beentaken on lease from the Government of Uttaranchal and thecompany has incurred capital expenditure only to refurbish themachines thereby substantially reducing the capital investment ascompared to industry standards for setting up a yarn capacity ofthis size (nearly 40 TPD). The Kashipur unit commencedoperations in October 2005 while the mill at Jaspur went on-stream in May 2006.
Further the company's Jacquard fabric weaving facilities aregoing to be set up in the area adjacent to Unit IV in Ghaziabad,Uttar Pradesh - a vertically integrated textile unit, while thespinning unit is going to be set up in the area adjacent to Unit VIat Haridwar, helping the company benefit from consolidated skillsat one place, significant savings in the power bill and from taxholidays.
CAPEX SPENDING
The total capex on the expansion (to be spread over 3 years)is estimated at Rs 630.44 mn for the weaving project (jacquardlooms) whereas the capex on spinning expansion project (atHaridwar) is estimated at Rs 3311.94 mn. The expansion is beingfunded partly by term loans given by TUF (government promotedTechnology Upgradation Fund Scheme) and the balance from theGDR issue (of Rs 900 mn made in March '06) and internalaccruals. By borrowing under the TUF, Alps Industries is poised toscale up faster and keep its debt service coverage ratio undercontrol.
1918
Field to
STEADY SUPPLY. DESIRED QUANTITY. SUPERIOR QUALITY. A STEP CLOSER TO BEING FULLY INTEGRATED.FROM SPINNING TO RETAILING.
THE COMPANY'S CONTRACT FARMING ANDPROCURING ORGANIC COTTON INITIATIVE IS INKEEPING WITH THEIR OVERALL ENVIRONMENTALFRIENDLY APPROACH.
Cotton is said to be one of the most pesticide-dependent cropin the world whereas organic cotton is produced without the useof harsh chemicals, pesticides and synthetic fertilizers and isknown to be skin-friendly. It normally takes the cotton field
around 3-5 years to be fully organic. In line with its eco-friendlyapproach, the company procures nature friendly organic cottonwhere possible.
Looking ahead, in line with the industry trend, the companymay in future also enter into contract farming arrangements(using superior quality seeds rather than only strong fertilizers) tobalance both the eco-friendly approach with volumerequirements.
fashion
Purchase of organic and inorganic cotton (through auctions and contracts with farmers), textilefiber, natural products for manufacture of natural dyes.
Fiber dyeing
Yarn purchased - as per requirements.
Captive yarn consumption forfabrics
Yarn Sale
Natural dyes manufactured
Synthetic dyes purchased
Fabric weaving & processing Fabric outsourced
Captive consumption for made-ups Fabric sale
Stitching partly outsourced
Made-ups & fashion accessoriesmanufacturing
Reaching out to brand enhancing clients in the overseas marketand leveraging the distribution network and brand visibility to
enhance domestic markets presence. Also set-up up Alps Retail Pvt. Ltd to drive the retail initiative of the company.
Spinning
2120
The large-scale use of natural dyed fabrics is handicapped by theabsence of standardisation of dyes, a limited shade range andpoor fastness properties. Being an eco-friendly company, AlpsIndustries has made efforts to standardize environment friendlynatural dyes - a feat which has been achieved after long years ofpainstaking research carried out by the company.
The company received technical assistance from the IndianInstitute of Technology, Delhi and financial support from theTechnology Information Forecast Assessment Council (TIFAC) ofthe Department of Science and Technology, Government of Indiato conduct this pioneering research.
These efforts have paid rich dividends as it enabled AlpsIndustries to perfect the art of colour extraction from naturalsources and forest wastes and simultaneously master its
application methodology which helps it achieve the requiredcolour fastness of the dyes.
Using this technology, the company has successfully developedthe capability to manufacture over 280 shades, which can beused for dyeing all types of textile substrates such as cotton,viscose, rayon, wool, nylon, polyester and their blends and whichprovides it a premium position in the market.
The company’s commitment to further evolve natural dyetechnology has helped it patent two processes for themanufacture and application of natural dyes till 2014.
Alps Industries has used this technology to advantageouslyestablish a supply line for its home furnishings and fashionaccessories to overseas buyers from US, Europe, Japan and theFar East.
Natural dyetechnology
NATURE. AN INSPIRATION. ECO-FRIENDLY APPROACH. ENHANCING PRODUCT APPEAL.
2322
Brand "edge"SUCCESS FOR ALPS INDUSTRIES CAN BE GAUGED TO A LARGE EXTENT FROM THE TRUST, LOYALTY, VISIBILITYAND RECALL ITS BRANDS GENERATE IN BOTH THE DOMESTIC AND OVERSEAS MARKET.
FOR INSTANCE, THE COMPANY IS ONE OF THE BIGGEST DOMESTIC BRANDS IN THE WINDOW COVERINGSSEGMENT AND IT IS ALSO THE SECOND LARGEST PLAYER IN THE LAMINATE FLOORING SEGMENT.
All the company's brands are positioned at an "aspiration" level in each market segment, helping it garnerbetter realisations.
VISTA
Alps Industries offers its products across different variants underdifferent brands thereby establishing an autonomous brand valuefor a particular product. VISTA is the umbrella brand for thecompany's architectural products and home furnishings in thedomestic market with brand extensions like Vista WindowFashions, Vista Home Fashions and Vista Floor Fashions.
LE PASHMINA
The company sells its fashion accessory products both in thedomestic and the international market under the brand name "LePashmina" which enjoys a distinct position in the premiumpersonal fashion segment.
RESPONSE
In addition, the company uses the "Response" brand for its officefurniture products.
2524
Capturing
international market ALPS INDUSTRIES, THROUGH ITS COMPREHENSIVE MANUFACTURING CAPABILITIES AND DEEP UNDERSTANDINGOF ITS CUSTOMERS REQUIREMENTS HAS ENSURED A STRIKING PRESENCE WITH SOME OF THE LARGEST ANDBIGGEST GLOBAL RETAIL CHAINS, SPECIALTY STORES AND DEPARTMENTAL STORES ACROSS THE GLOBE.
North America42%
South Africa4%
Asia and Australia31%
Europe18%
Sales in the international markets are made either directly toretail chains or to importers overseas, who in turn sell to retailchains. A number of players have buying agents / offices in Indiaand Alps Industries continuously networks and strengthensbusiness relations with them which has resulted in long-termrelationships with many of its clients.
Total exports turnover during the year was Rs 572.86 mn, up20.02 per cent from Rs 477.28 mn in the last fiscal.The company has added new customers in Spain and Greeceand in future plans to make inroads into the New Zealand andScandinavian markets.
Others 5%
2726
DEALER NETWORK
1. Architectural products
REGION NO. OF DEALERS
North 90
East 8
Central 9
West 46
South 39
TOTAL 192
These dealers, in turn, have 1,640 retailers under them.
2. Home Furnishing:
Alps has 800+ retailers dealing in Vista home furnishingproducts all over India.
3. Fashion Accessories' brand Le Pashmina is essentially a NorthIndia centric brand as the product range is largely wool based.Presently the company has put in place around 50 outlets andexpects it to grow to 78 outlets by March '07.
MARKETING AND DISTRIBUTION INITIATIVES:
The key to the company's domestic marketing strategy is itsdistinct relationship with its dealers and distributors (increasedfrom 150 to 192), whom it considers as strategic partners, and
who in addition to its principal sales and marketing team of over80 people have been the biggest driver of the company’sdomestic sales.
In many instances, architectural products are required to notonly match the design aspirations of its customer, but moreimportantly also need to be delivered well in time and in mostcases in minimum lead time. The company has in place a strongsupply chain management system and strong logistics in place toensure the smooth execution of orders i.e. the right productsreach the exact locations in time.
Alps Industries, as a market strategy also ensures it maintainsadequate stock to provide delivery at short notice. Thesemeasures have played a vital role in cementing long-termrelationships with over 4000 architects and interior designersacross the country.
The company positions itself as a premium architecturalsolutions company providing not only premium products but alsofacilitating a high degree of technical and installation support.This supports to translate intricate and complex designs intotechnical and practical realities.
The coming is looking at expanding the distribution networkby including at least 400 more retailers during FY07.
RETAIL INITIATIVES
To promote its brands in the domestic market and strengthenits presence in the retail segment, Alps Industries has floated awholly owned retail company (Alps Retail Private Limited) and hasrecruited key personnel to drive this venture.
In addition to the present dealer network (which also includesthe Khazana stores of the Taj Hotels chain), the company istargeting large format retail stores to showcase its product lines.
To ensure its products appeal to a wider customer base inthese retail formats, different product lines across varying pricepoints are being planned.
Further, to ensure that its domestic sales are not restricted toany one particular season and it is well-placed to offer excitingall-season product ranges, the company is also broadening itsproduct range to introduces more ranges suitable for the non-winter use. The company is also looking at widening its breadthof fashion accessory offerings to include bags, caps, hats andbelts.
To drive these initiatives the company has already recruitedmore designers (in addition to sourcing freelancing designsupport) and merchandisers for superior product and vendordevelopment.
DistributionTHE COMPANY HAS SET UP A STRONG SEGMENT WISE DISTRIBUTIONNETWORK ACROSS THE COUNTRY TO CAREFULLY SERVE THE DEMANDEMANATING FROM THE DIFFERENT SEGMENTS ACROSS THE COUNTRY.
2928
FORWARD LOOKING STATEMENT
In this Annual Report we have disclosed forward-lookinginformation to enable investors to comprehend our prospects andtake informed investment decisions. This report and otherstatements-written and oral-that we periodically make containforward-looking statements that set out anticipated results basedon the management's plans and assumptions. We have triedwherever possible to identify such statements by using words suchas 'anticipate', 'estimate', 'expects', 'projects', 'intends', 'plans',believes', and words of similar substance in connection with any
discussion of future performance.
We cannot guarantee that these forward-looking statements willbe realized, although we believe we have been prudent inassumptions. The achievement of results is subject to risks,uncertainties and estimates taken as assumptions. Should knownor unknown risks or uncertainties materialize, or shouldunderlying assumptions prove inaccurate, actual results couldvary materially from those anticipated, estimated or projected. Allthe concerned should bear this in mind.
30 31
ALPS INDUSTRIES LTD.
Mr. K.K. Agarwal, aged 65 years, is a qualified textile engineer. He commenced the business of textiles in theyear 1962 as a partnership firm and later promoted Alps Industries to corporatize the business activities in 1972.
He has more than four decades of experience in the textile and interior decorative industry. He was instrumentalin exploring the export markets for the Company's products and establishing long term relations with reputedoverseas buyers.
He has also been instrumental in introducing the new product range with the concept of eco-friendly vegetabledyed fabrics and decoratives.
He was the President of All India Manufactures Oraganisation, UP Board in 1980 and Vice President of NorthZone in 1981. He was also the Founder President of All India Cotton Made-ups Association in 1990 and is awinner of Shiromani Award for the export of handloom textiles in 1985 from Indian Business Council.
Mr. Sandeep Agarwal, aged 42 years, joined the Company in 1989 and is presently the Managing Director of theCompany. He was instrumental in identifying the need to add an element of fashion to window covering productslike blinds. He promoted the concept of window fashion with the company’s Vista brand soon becoming aleader in the interior decorative product segment.
He has been completely involved in the evolution and growth of the company’s other brand La Pashmina forfashion accessories. Mr. Agarwal assumes the role of a strategic thinker and is responsible for planning theexponential growth of the company. A significant milestone in this direction is to make yarn a significant revenuestream for the company.
Mr. G.K. Arora, Director, is a retired I.A.S. Officer. He was Finance Secretary to the Government of India andExecutive Director of International Monetary Fund. He was also the Chairman of the Indian Advisory Board ofANZ Grindlays Bank.
Mr. J.P. Kundra, Director, is a former Managing Director of State Bank of India and was also former ManagingDirector of State Bank of Bikaner & Jaipur, Ex-Vice Chairman of SBI Capital Markets Ltd. and former Chairman ofBanking Services Recruitment Board. He was also the Chairman of the Indian Advisory Board of Sanwa Bank. Hehas many years of experience in the banking and financial sector.
Mr. Rakesh Gupta, Director, is a businessman operating out of India and holds substantial experience ininternational trade.
Dr. M.L. Gulrajani, Director, is an eminent textile technologist. He is a professor in the Department of TextileTechnology and former Dean of the Industrial Research & Development at IIT, Delhi.
Mr. P. K. Rajput, Executive Director, aged about 50 years, has been associated with the Company for over 10years. He has experience of over 26 years in Textile Industry and other commercial activities.
Board of DirectorsUnit I Unit II Unit IIIWindow Covering Products Home Furnishings Vista Floor FashionsA-3, Loni Road Industrial Area B-2, Loni Road Industrial Area A-2, Loni Road Industrial AreaGhaziabad - 201007 (U.P.) Ghaziabad - 201007 (U.P.) Ghaziabad - 201007 (U.P.)
Unit IVAn Integrated Textile Unit havinginhouse facilities of spinning, weaving,manufacturing of vegetables dye, fiber,fabric and yarn dyeing, processing andfabrication (made - ups)57/2, Site-IV, Industrial Area, Sahibabad ,Ghaziabad - 201010 (U.P.)
Unit VIFiber Dyeing & Eco-FriendlyYarn Spinning MillPlot No. 1A&1B, Sec.10, Sidcul,BHEL Integrated Indl. Estate,V.P.O. : Roshanabad Road,Distt Haridwar, Uttranchal
R&T AGENCY
Alankit Assignment Ltd.Alankit House, 2E/21, Jhandewalan Extn.,New Delhi-110 055 (INDIA)Ph : 91-11-2354 1234, 5254 1234Fax : 91-11-2355 2001
REGISTERED OFFICE
B-2, Loni Road Industrial Area, Opp.Mohan Nagar, Ghaziabad - 201007 (U.P.)Ph. : 0120-2657649Fax : 0120-2657540
BANKERS
State Bank of IndiaBank of BarodaABN Amro Bank NVING Vysya Bank Ltd.Punjab National Bank
e-mail : [email protected]://www.alpsindustries.com
Unit VVista AwningsB-160-161, MettupalayamIndustrial EstatePondicherry - 605009.
Unit VIIYarn Spinning MillKashipur Spinning Mills,Near Govt. Degree College,Kashipur Bazpur Road,Kashipur,Distt.-Udham Singh Nagar,Uttranchal - 244713
Unit VIIIYarn Spinning MillJaspur Spinning Mills,Afzal Garh Road,Jaspur,Distt.-Udham Singh Nagar,Uttranchal - 244712
AUDITORS
R.K. Govil & Co.Chartered Accountants
CORP. OFFICE & SHARE DEPTT.
57/2, Site-IV, Industrial Area, SahibabadGhaziabad - 201010 (U.P.)
COMPANY SECRETARY
& DGM (LEGAL)
Mr. Ajay Gupta
REGIONAL & MARKETING OFFICES
Delhi : F- 213/D, III Floor, Lado Sarai,M.B. Road, New Delhi - 110030Ph.: 011-29522137/38 Fax : 011-29521567E-mail : [email protected]
Bangalore : 303, Ahuja Chambers, 3rd Floor,Kumar Krupa Road, Bangalore - 560001Ph : 080-22256974 Fax : 080-22258780Email : [email protected]
Mumbai : 3116 / 3117, Oberoi EstateChandivli Farms Road, Chandivli,Andheri (E), Mumbai - 400072, MaharastraPh : 022-28472111-17 Fax: 022-28474745Email : [email protected]
Corporate Directory
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ALPS INDUSTRIES LTD.
PERFORMANCE AND GENERAL OUTLOOK
The business performance during the year has been commendable. Your Directors are pleased to inform thatyour company’s turnover increased significantly from Rs. 1778.62 Millions in the previous year to Rs. 2629.95Millions recording a growth of nearly 48% over previous year. Domestic sales flourished and recorded an increaseof 56.70% to Rs. 2065.80 millions while exports grew above 20% to Rs. 572.86 Millions. The Operating ProfitMargin increased to 16.39% in the current year from 15.37% in 2004-05. The Net Profit Margins also improvedsubstantially from 7.95% to 9.05% in the year under review.
The company’s region-wise textile export revenues during the year were as under:
North America 42%
Asia & Australia 31%
Europe 18%
South Africa 4%
Others 5%
The strong results demonstrate the merits of your company’s growth strategies. The excellent growth is attributedto significant capacity addition made during the year, constant endeavor to make operations economical andcontrolling raw material and personnel costs. Staying close to the marketplace and establishment of strong andenduring relationships with customers, distributors, architects and builders is the thrust of your company’sdomestic operations. During the current year, the improvement in domestic performance is attributable to strongmarketing and distribution initiatives taken in the domestic markets, wide product range, product innovations inboth the textile and architectural segment, high quality standards, prompt delivery and ability to provide the lastleg of service of installing architectural products. All of which helped your company to en-cash the opportunitiesgenerated due to the construction and realty boom prevailing in the country. Your company is ideally poised totake advantage of the opportunities unfolding in the post-quota regime.
Your company enjoys the advantage of complete synergies of manufacturing process through the integration ofits spinning and weaving units. Your company’s versatile production capacities and cost competitiveness resultedin the securing of increased orders and volumes from esteemed global players. Being a fully integrated textileplayer will be a key differentiator in the global textile market and to grow your company’s market share, majorcapacity expansions have been undertaken during the year under review.
CAPACITY ENHANCEMENTS
Haridwar Spinning Mill: February 18, 2006 is a historic date, when the Hon’ble Chief Minister of Uttaranchal, ShriN. D. Tiwari inaugurated your company’s new yarn spinning unit at Integrated Industrial Estate in BHEL, Haridwar.This yarn spinning facility has a production capacity of 50 tons per day.
Your company has chosen to make substantial investments in Uttaranchal, considered to be a tax haven in thecountry due to tax sops offered by the Government for setting up manufacturing units in the hill state. These taxbreaks would benefit your company significantly by improving its operating margins and giving it competitiveadvantage.
Leased Facilities at Kashipur and Jaspur: In addition to the Haridwar unit, your company also won competitivebids for two spinning mills in Kashipur and Jaspur, both in Uttaranchal. Both these mills have now been leasedto your company. The Kashipur unit was handed over to your company in end-August 2005. A dedicated technicalteam worked with great speed to re-start the mill in a very short span of two months. The unit commencedcommercial production on October 26, 2005. The mill at Jaspur was handed over to your company in February2006. This mill has commenced commercial production in the current financial year in April 2006.
All the three spinning mills in Uttaranchal will benefit from the low cost, high quality power available in the Stateenabling your company to enjoy lower cost of production for its yarn. Your company’s Haridwar unit will also bemanufacturing fiber dyed yarn using own-developed natural dyes. This is likely to commence from the secondquarter of FY 2007, adding to the operational profitability of the unit.
To,The Members,Alps Industries Limited
Your Directors have pleasure in presenting the Thirty Fourth Annual Report together with Audited Statementsof Accounts of the Company for the financial year ended on 31st March 2006.
FINANCIAL RESULTS Rs. in Millions
Particulars Year Ended Year Ended31.03.2006 31.03.2005
Total Income 2629.948 1778.621
Profit before Financial Exp., Depreciation & Tax, and Extra Ordinary Items. 431.157 273.444
Finance Cost 95.138 65.341
Depreciation 74.302 56.263
Provision for Tax (Including FBT) 19.740 8.500
Profit from Operations 241.977 143.340
Deferred Tax 3.950 2.000
Profit After Tax 238.027 141.340
Prior year Adjustment 0.743 0.745
Add: Surplus of last year 62.988 62.404
Surplus available for appropriation 301.758 204.489
Appropriations
General Reserve 200.000 130.000
Proposed Dividend on Equity Shares 12.193 10.086
Corporate Dividend Tax 1.710 1.415
Surplus carried to Balance Sheet 87.855 62.988
Surplus available for appropriation 301.758 204.489
Earning Before Financial Cost, Depreciation & Tax andExtra-Ordinary Items as a % to Turnover 16.39% 15.37%
Profit Before Tax as a % to Turnover 9.95% 8.54%
Profit After Tax as a % to Turnover 9.05% 7.95%
Directors’ Report
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ALPS INDUSTRIES LTD.
During the year, the company made two fresh equity issues. It made a domestic issue of 4,150,500 equity sharesin October 2005 and followed it up with a GDR offering under which it issued 5,382,750 shares in March 2006.GDRs have been listed on the Luxembourg Stock Exchange. The total funds raised from the issues were Rs.498.06 millions and Rs. 972.50 millions respectively. The funds from the domestic offering were used to set upthe spinning unit at Haridwar, which has already commenced commercial production in February 2006. Thefunds from GDR offering are being deployed in the expansion projects of spinning at Haridwar unit and weavingat Sahibabad unit.
Your company also allotted 500,000 Zero Coupon Convertible Warrants to promoters on February 2, 2006. Theterms of allotment are as per the “in principle” approval received from BSE and NSE.
UTILISATION OF PROCEEDS OF THE ABOVE ISSUES
The funds raised out of the issue proceed have been utilized for the objects of the issue as mentioned in the offerdocuments, and as stated in the explanatory statements of the Notice calling the general meeting for the respectiveapprovals of the members of the company. While making the final deployment decisions, your Directors havekept the company’s interests in view and the potential profitability from the expansion projects.
INVESTOR RELATIONS
A Shareholder’s Grievances Committee had been constituted to review the status of investor’s grievances.However, no shareholder complaint had to be taken up by the Committee as the Company values its investorsand strives to maintain impeccable standards of investors related services.
Your company continues to appoint Alankit Assignments Ltd., New Delhi as its R&T agent. Your Directors placetheir appreciation of the work of its R&T Agent in the two fresh allotments of equity shares and all issues arisingthere from.
HUMAN RESOURCES & RELATIONS
Your Directors place on record their appreciation for the commitment and loyalty displayed by the workforce infurthering efficient operations at all the units.
The information required under Section 217(2A) of Companies Act, 1956, read with Companies (Particulars ofEmployees) Rules, 1975 duly amended by the Companies (Particulars of Employees) Rules, 1999 for the yearended 31st March, 2006 is not applicable to the company as none of the employee is drawing remunerationmore than the limits presently specified under the said rules.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS ANDOUTGO
Information in accordance with the provisions of section 217(1) (e) of the Companies Act, 1956 read withCompanies (Disclosure of Particulars) in the Report of Board of Directors Rules, 1988 regarding conservation ofenergy, technology absorption and foreign exchange earnings and outgo is given in the statement annexed(Annexure -1) hereto and forms part of this report.
DIRECTORS
In terms of the provisions of Article No. 106, 107 & 108 of the Articles of Association of the company andSections 255 and 256 of the Companies Act, 1956, Mr. J.P.Kundra, Director of the Company, retires at theensuing Annual general Meeting, and being eligible, has offered himself for reappointment.
During the year under review, Mr. P.K. Rajput, Vice President - Commercial, has been appointed as AdditionalDirector with effect from July 28, 2006. He is being designated as “Executive Director” and is being given specificjobs and duties. It is proposed that he will be a Whole Time Director liable to retirement by rotation, subject tothe necessary approval from the members of the company.
A brief note in terms of the requirement of the Corporate Governance on the aforesaid Directors have beenincluded in Part -II of Annexure-2.
ADDITIONAL PRODUCT OFFERINGS
Innovation and quality immediately helps to connect with customers. To enhance your company’s architecturalproduct basket, aluminum composite panels were introduced during the year. Your company’s wide architecturalbasket backed with the ability to provide engineering design and installation services and offer a comprehensivesolution to the clients has received overwhelming response from leading builders.
Your company’s window coverings offer beautiful choices of view, privacy and perfect match to the taste ofupscale customers and are recognized for their excellent finishes and quality. During the year under review,your company has added a number of new finishes in the vertical blinds fabrics. Your company’s strategy is tocontinually broaden and enhance our product line to offer increasing choice of products to architects, interiordesigners, builders and premium customers. Your company has introduced new shades in laminate woodenflooring and premium real hard wood flooring during the year.
To capture the demand generated due to the increasing purchasing power and aspirations of domestic customers,your company has enhanced its merchandise width, by adding an eclectic range of printed bed linen productsoffering in the domestic market. With the growing retail and mall culture, which provide customers a spaciousand uncluttered shopping environment, your company’s products have found ready acceptance in the domesticmarkets.
Your company’s high quality sophisticated fashion accessories range, especially designed for the globallydiscerning customer, has been expanded by blending different fabrics including viscose and silk. Your companystrives to retain its leadership status in the fashion domain - personal as well as for homes and offices.
GOVERNMENT POLICY INITIATIVES
Post dismantling of the quota regime, the Indian market holds great potential of becoming a global center ofdemand for textile products. Recognized the potential of the textile industry and to provide a further growthimpetus to the sector and improve the competitiveness of Indian textile players, the Government has announcedseveral policy initiatives which include:
• Development of Integrated Textile Parks
• Increased budgetary allocation under TUF Scheme
• Continuation of CENVAT exemption
The leading retailers of the world are increasing their off-take from India. This is reflected in their greater presencein India. Apart from exports, the domestic market has also shown a healthy growth on the back of improvedGDP.
DIVIDEND
Your Directors are pleased to recommend a dividend of 7.50% i.e. Re. 0.75 per equity share on 16,257,050equity shares. The shareholders who are the members of the company as on the date of book closure, in case ofshares under demat mode, the data as provided by the depository, for the closing hours of 25.09.2006 and ofshares under physical mode, whose names appear as on 27.09.2006 in the Register of Members, will be eligiblefor dividend, subject to provisions of Companies Act / Income Tax Act / Depository Act and necessary approvalfrom the members of the Company. This will result in a total payout of Rs. 13.90 millions inclusive of corporatedividend tax. A provision to this effect has also been made in the accounts.
BONUS ISSUE
Encouraged by the strong business trends and the growth of the company, your Directors announced a1:1 Bonus issue on April 29, 2006, which was duly approved by the shareholders on June 2, 2006.
ISSUE OF SECURITIES
During the year under review, 525,000 equity shares allotted on 31.05.2003, 02.06.2003 and 04.06.2003 topromoters/Persons acting in Concert with promoters have been listed on the Bombay Stock Exchange Ltd., andthe National Stock Exchange Ltd.
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ALPS INDUSTRIES LTD.
ANNEXURE - 1
(I) Statement of particulars pursuant to Companies (Disclosure of Particulars in the Report of Directors)Rules 1988.
1. Conservation of Energy
a. Energy conservation measures taken : During the period under review, the companyeffected reasonable savings in energy inproduction processes by optimizing theresources. Proper upkeep of the equipment isensured to avoid any wasted energy.
b. Additional investments and proposals, if any, : Rs. 13.514 million.being implemented for reduction ofconsumption of energy.
c. Impact of measures at (a) & (b) above for : The efforts will improve the quality of products,reduction of Energy consumption and saves energy, fuel cost and also improves theconsequent impact on the cost of production efficiency.of goods.
d. Total Energy Consumption and Energy Consumptionper unit of production are as follows:
Annexure to the Directors’ ReportDIRECTORS’ RESPONSIBILITY
In terms of Section 217(2AA) of the Companies Act, 1956, the members of the Board place on record theDirectors’ Responsibility Statement as under:
(i) That in the preparation of the annual accounts, the applicable accounting standards had been followedalong with proper explanation relating to material departures;
(ii) That the directors had selected such accounting policies and applied them consistently and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of theCompany at the end of the financial year and of the profit or loss of the company for that period;
(iii) That the directors had taken proper and sufficient care for the maintenance of adequate accounting recordsin accordance with the provisions of this Act for safeguarding the assets of the company and for preventingand detecting fraud and other irregularities;
(iv) That the directors had prepared the annual accounts on a going concern basis.
FIXED DEPOSITS
During the year, your company has raised money by way of Fixed Deposits without invitation to the generalpublic. As per the requirements under Section 58-A, 58-AA and any other provisions, rules and regulations ofthe Companies Act. Information, as required under the Miscellaneous Non-Banking Companies (Reserve Bank)Directions 1977, is annexed.
AWARENESS OF CORPORATE GOVERNANCE
A report in line with the requirements of clause 49 of the listing agreement on the Corporate Governancepractices followed by the Company and the statutory Auditors’ Certificate on Compliance of mandatoryrequirements along with Management Discussion and Analysis, are given as an annexure to this report.
Your company is committed to implement the Corporate Governances in its true spirit, and adhere to theinherent sprit of proper disclosures. Your company has taken utmost care to comply with not just the mandatorybut also the non-mandatory requirements of the concept. The non-mandatory information is annexed asAnnexure-2.
AUDITORS
M/s. R.K. Govil & Co., Chartered Accountants, the Statutory Auditors of the Company, retire at the forthcomingAnnual General Meeting of the Company and being eligible, have expressed their willingness to continue, ifappointed. Your Directors recommend their re-appointment.
AUDITORS’ OBSERVATIONS
Observations in the Auditors’ Report are dealt with in Notes to Accounts at appropriate places and being self-explanatory, need no further explanations.
APPRECIATION
Your Directors take this opportunity to express their thanks and appreciation for the co-operation and assistancereceived from the Government Authorities, banks, financial institutions, vendors, customers as well as theshareholders and prospective investors, during the year under review. Your Directors also wish to place onrecord their appreciation for the committed services, dedication and support of the Executives, Staff and Workersof the Company.
For and on behalf of the Board
Place : Ghaziabad (SANDEEP AGARWAL)Date : 28th July, 2006 Managing Director
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ALPS INDUSTRIES LTD.
II. TECHNOLOGY ABSORPTION: Efforts made in technology absorption as per Form-B of theAnnexure to the Rules.
A. RESEARCH & DEVELOPMENT (R & D)
1. Specific areas in which R&D carried out by the Company : The company has an active R & D program forextraction of colours from forest waste, flowersand leaves and its applications. The companyhas worked on purification of dyes to improvethe dye properties in the area of textilesapplication.
2. Benefits derived as a result of the above R&D : Greater variety of shades and better colourperformance with improvement in applicationtechnology and purity of dyes results inimproved product offering.
3. Future Plan of Action : Company proposes to maintain its focus onnatural dyes and their application to textiles.
4. Expenditure on R&D
a. Capital : Rs. Nil million
b. Recurring : Rs. 1.644 million
c. Total : Rs. 1.644 million
d. Total R&D Expenditure as a Percentage of : 0.06 %total turnover
B. TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION
1. Efforts, in brief made towards technology absorption : The company set up a yarn spinning plantduring adaptation and innovation.the year. Theplant was imported from Turkey where the samewas dismantled in the presence of thecompany’s technical team and then re-installedat Haridwar. The successful implementation ofthe project is a testimony to the company’stechnical skills and absorbtion of spinningtechnology.
2. Benefits derived as result of the above efforts : Intricate understanding of the machinee.g. product improvement, cost reduction, product operations will ensure proper maintenance ofdevelopment, import substitution etc. the equipment, thus ensuring better and
consistent quality and improved machineefficiency.
3. In case of imported technology : NIL(imported during the last 5 years reckoned from thebeginning of the financial year), following informationmay be furnished
a. Technology imported : N. A.
b. Year of import : N. A.
c. Has technology been fully absorbed? : N. A.
d. If not fully absorbed, areas where this has not : N. A.taken place, reasons therefore and future plans of action
A. POWER AND FUEL CONSUMPTION
Sl. No Particulars Current Year Previous Year2005-2006 2004-2005
1. Electricity
a. Purchased
Units (Nos) 10,370,256 151,005
Total Amount (Rs) 27,559,067 771,109
Rate/Unit (Rs) 2.66 5.11
b. Own Generation
i) Through Diesel/FO
Quantity (Ltr.) 2,430,543 2,230,227
Total Amount (Rs.) 36,758,703 30,974,986
Average Rate (Rs.) 15.12 13.89
Generate (Units) (Nos.) 8,278,410 8,837,656
Unit per-ltr of Diesel oil (Nos.) 3.41 3.96
Cost/Unit (Rs.) 4.44 3.50
ii) Through Steam Turbine N. A. N. A.
2. Coal N. A. N. A.
3. Furnace Oil (Excluding use onGeneration of Electricity)
Quantity (Ltrs) 1,654,461 872,368
Total amount (Rs) 20,818,618 8,648,874
Average Rate (Rs) 12.58 9.91
4. Others/Internal generation N. A. N. A.
B. CONSUMPTION PER UNIT OF PRODUCTION
Sl. Particulars Yarn * Made-ups * Window Covering *No. Per MT Per 1000 Sqm Per 1000 Sqm
Current Previous Current Previous Current PreviousYear Year Year Year Year Year
1 Electricity (KWH) 1879.34 1801.26 34.82 35.76 879.47 937.65
2 Coal N. A. N.A. N. A. N.A. N. A. N.A.
3 Others N. A. N.A. N. A. N.A. N. A. N.A.
* For major products.
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ALPS INDUSTRIES LTD.
Annexure-2
I. TEXTILES INDUSTRY STRUCTURE AND DEVELOPMENT
The Indian textile industry occupies a significant position in the overall global textile trade. India is thesecond largest producer of cotton yarn, third largest producer of cotton and cellulose fibre / yarn and fifthlargest producer of synthetic fibre / yarn. The revenues of the Indian textile industry, estimated at USD 36 bnin 2005-06, is growing at 19% CAGR and is likely to touch USD 85 bn by 2010 according to CRISIL estimates.The industry’s exports, estimated at USD 13 bn, are meanwhile set to grow at 18% CAGR to USD 40 bn overthe same period taking India’s share from 3% of global trade to 6%.
The turning point for the global textile industry came in January 2005 with the abolition of the Multi FibreAgreement (MFA) and subsequent dismantling of the quota regime. There are clear indications that globaltextile production is shifting towards Asian countries, which have a strong raw material base and/or abundantcheap labour. China, India, Pakistan and Bangladesh have been the biggest beneficiaries of the abolition ofthe quotas on textile imports by the US and EU after the Agreement on Textiles and Clothing expired onJanuary 1, 2005. India has both cheap labour and abundant cotton and this will make it one of the biggestbeneficiaries of this global trend.
Abundant cotton
Cotton is a key raw material in the textile and garment industry. India is the third largest producer of cottonin the world after China and US and has the largest area under cultivation. India has an abundant supply oflocally grown long staple cotton, which lends it a cost advantage in the home textile segments. India has thelargest cotton acreage (9 mn hectares) in the world and is the only major producer of textiles in Asia havingsurplus cotton production. Unfortunately, due to low crop yields, Indian ranks third in the world in cottonproduction despite having largest area under cotton cultivation. The efforts on improving the yield perhectare with better agricultural techniques and use of BT cotton seeds would ensure enhanced productionthus providing adequate supply of raw material to textile producers. This feature is also likely to contributeto a check on any undue price increase of cotton.
Labour advantage
India also enjoys a significant lead in terms of labour cost per hour (estimated at USD 0.6 in 2004), overdeveloped countries like US (USD 15.1) and newly industrialised economies like Hong Kong (USD 5.1),Taiwan (USD 7.1), South Korea (USD 5.7) and even China (USD 0.9). Moreover, Indian labour is skilled withability to adapt changes in technology and design. Indian labour provides textile producers the distinct edgein value-added products providing a significant margin advantage.
Domestic demand
Meanwhile, in the domestic market, the trigger for growth came from changing demographics - a youngerworking age population, rising income levels (a factor of growing urbanization) and a change in consumptionpattern in favour of lifestyle items including high end home furnishing products.
Huge capex
Competitiveness however stands redefined, going beyond the conventional issues of labour cost, fiberprices, power cost etc. International buyers are now looking for lower cost sourcing solutions with highreliability, as against cheaper manufacturing or labour cost countries. They are seeking a complete servicepackage including product development support, flexible volumes, vertically integrated manufacturing, qualityand cost management along with a strong logistics support and ethical manufacturing practices.
Naturally, the textile sector has drawn up huge capex plans with investments over the next five to sevenyears. CRISIL estimates that most of the investments would go towards setting up processing facilities(estimated to attract (Rs. 500 bn) followed by spinning (likely to attract Rs. 370 bn), weaving (Rs. 250 bn) and
Management Discussion & AnalysisCorporate Governance - Management Discussion and Ananysis (Part - I)
III. FOREIGN EXCHANGE EARNINGS AND OUTGO
1. Activities relating to export initiatives taken to increase : As anticipated, the removal of quota gave yourexports; development of new export markets for company a marketing thrust. We are nowproducts and services and exports plan concentrating on expanding the customer base
in UK and Eastern European countries to getbetter value and improved realization for ourproducts. Efforts are also on to increase theawareness of the benefits of natural dyes. Yarnexports have also been initiated by thecompany. Fibre natural dyed yarn is exhibitinggood export potential.
2. Total Foreign exchange used and earned : Used Rs. 436.515 mn (Rs. 119.874 mn) EarnedRs.561.876 mn (Rs. 466.523 mn)
IV. INFORMATION AS REQUIRED UNDER THE MISCELLANEOUS NON- BANKING COMPANIES (RESERVEBANK) DIRECTION, 1972.
1. The total number of depositors whose deposits : NILhave not been claimed by the depositors or paidby the company after the date on which thedeposit became due for repayment or renewal,as the case may be according to the contractwith the depositor or the provisions of theDirections, whichever may be applicable
2. The total amounts due to the depositors and remaining : NILunclaimed or unpaid beyond the due dates of repayment
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ALPS INDUSTRIES LTD.
Threats
* In the post WTO era, competition in the international trade of textiles is likely to be intensified.
* Indian textile industry will have to gear up to global standards and expectations of quality, deliveryschedules and still remain sharply cost competitive. The infrastructure in India leaves much to be desired.
* Increase in domestic trade and demand could reduce market share internationally.
* Developed countries may get tempted to impose trade barriers.
II. (B) ARCHITECTURAL PRODUCTS
The real estate boom in India has resulted in huge investments in various segments of the industry especiallymultiplexes, residential complexes/townships and hotels. According to CMIE, investments in real estatehave grown by nearly 40% in less than a year to Rs. 1361 billion in October 2005. Piggybacking this growth,architectural products has seen substantial growth skewed towards the upper end of the segment witharchitects and designers preferring high-value (stylish) designer architectural products over plain vanillaones.
III SEGMENT-WISE OR PRODUCT PERFORMANCE
Till FY ’05, the Company classified its business in only two business segments - Textiles and ArchitecturalProducts. However, during the year under review, the company added large capacities of yarn. Hence, aseparate business segment of yarn has been created, and the residual segment of textiles is now termed asHome Furnishings & Fashion Accessories.
The Home Furnishings and Fashion Accessories division recorded a turnover of Rs. 2054.6 mn, registeringa growth of 32.03% over that of the previous year (Rs. 1556.1 mn). The company’s exports are also entirelycontributed by this segment. The company’s exports were up 20 per cent from Rs 477.28mn in FY’05 to Rs572.86 mn in FY’06. In the domestic market, the company’s products are sold in the brand names “VistaHome Fashions” and “Le Pashima”.
Yarn sales were up from Rs. 40.25 mn in FY’05 to Rs. 299.90 mn in FY’06 as new capacities became operational,albeit for only a small part of the year.
The Architectural Products segment notched up a turnover of Rs. 284.2 mn registering a growth of 42.68 percent over Rs. 199.2 mn of the previous year. The products of this segment are sold under the umbrella brandname of “Vista”. The company’s brands are recognized as leaders in their segment. New product introductionshave maintained excitement around the brand, helping expansion of the market network.
On financial performance front, the Return on Capital Employed (ROCE) of the Home Furnishing & FashionAccessories segment improved to 14.83% from 13.68% in the previous year. The returns earned in the yarnsegment are not meaningful as the segment has performed for a very short period during the year underreview. However, ROCE of the Architectural Products segment declined from 14.55% to 13.34% as largerinvestments were made upon introduction of Aluminum Composite Panel category during the year. Thecurrent year will reflect the full benefits of this product group addition.
IV SWOT ANALYSIS OF COMPANY: CAPITALIZING ON STRENGTHS; REDUCING WEAKNESSES:
(a) Strengths
1. Capacity expansion
With abundant opportunities for the textile sector both in the domestic as well as the export markets, thecompany is undertaking strategic expansions that will not only increase its share of the textile pie butalso adapt its product mix to the changing dynamics of demand supply in the textile industry bothdomestic and overseas.
garmenting (Rs. 250 bn). Investment in setting up of knitting facilities is likely to be the lowest (in the regionof Rs. 30 bn).
Favorable Government policies
The textile sector is the second largest employer after agriculture, the growth of this sector would translateinto direct employment opportunities for at least 5 mn people of which nearly 4 mn would be in garmentingand indirect employment opportunities to nearly 7 mn people primarily in agriculture. By 2010 the textilesector, which currently provides employment to 35 mn people, is likely to employ nearly 94 mn people - 40mn directly in the textile sector and 54 mn in allied industries.
Thus, looking at the opportunities prevailing in the textile sector and the importance in the overall economy,the Government of India (GoI) has launched the Technology Up-gradation Fund (TUF) under which textilecompanies can borrow to finance 85 per cent of their expansion projects from specified financial institutions.The borrowing companies get a 5 per cent interest subsidy from the Government on loans under TUF. Thus,effective interest cost on the loans, which are borrowed at the rate of 7.5-9.5 per cent per annum, becomes2.5-4.5 per cent. These loans are available for long tenors, maximum repayment period being 12 yearsincluding a two-year moratorium. This allows textile companies to scale up faster and increase their leverage,while keeping their debt service coverage ratio under control. It thus encourages investment in state-of-the-art technology while retaining competitiveness in the international markets.
Besides this, Gol has taken several steps to promote the textile industry. A few important amongst them areintroduction of 10 per cent capital subsidy for textile processing machinery (for one year), subsidy oninvestment in textile parks, setting up of SEZs for promoting exports, reduction in customs duty on manmadefibres and yarns from 15 per cent to 10 per cent and reduction in customs duty from 15 per cent to 10 percent on certain textile machinery.
II (A) SWOT ANALYSIS OF THE INDIAN TEXTILE INDUSTRY:
Strengths
* India is a major producer of cotton and has a net trade surplus in this. Other Asian countries China,Bangladesh, Pakistan, Thailand and Indonesia are all importers of cotton.
* A vibrant and growing domestic market.
* It is a major forex earner as well as employment provider for the nation.
* High quality design abilities attract buyers for value added products.
* Abundant availability of unskilled and skilled labour force and competitive cost.
* Integrated industry across the country having presence in the entire value chain from spinning to madeups and garments.
Weaknesses
* Cotton production is subject to the vagaries of the monsoon.
* Weaving and processing is mainly carried out by a large fragmented unorganized sector.
* Labour laws and policies need a lot of reform.
* Several plants are of small size, technology and machinery are not world-class leading to poor qualityand productivity.
Opportunities
* The WTO has replaced the MFA and ended decades of protectionism.
* India Textile industry has received major thrust from the government.
* Production shrinking rapidly in Western countries and shifting to Asia.
* Consolidation of global retail industry facilitating global sourcing.
* Per capita domestic textile consumption offers room for growth with changing demographic profile ofIndia and rising disposable incomes and changing attitudes to expenditure.
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ALPS INDUSTRIES LTD.
to location in neighbouring states of U.P./Rajasthan/ Punjab. Power is a significant cost input in spinning.In addition, the state offers income tax incentives to the extent of 100% for first five years and 30% fornext five years.
The proposed spinning and weaving expansion will also enjoy substantial infrastructure and benefit ofskill sets already available for spinning at Haridwar and for weaving at Sahibabad.
4. Strong focus on R&D
The company enjoys process patents for application of natural dyestuffs valid till July 2014.
5. Innovative high-end architectural products
The company has launched high value products during the year: Real wood flooring and aluminumcomposite panels. The products are in line with the premium image of its brand and enable the companyto increase business from its customers.
6. Others
The company has a strong distribution network and well established relationship with architects anddesigners. Its distribution comprises of:
* 192 distributors with 1,640 outlets (for Architectural products as on March 2006)
* 800+ outlets (for distributing its Home Furnishing)
* 50 outlets (for distributing Fashion Accessories) expected to reach 78 by March 2007.
7. Strong Brand recall and retail initiative
Strong brand recall for its products (Vista for home furnishing and architectural products and Le Pashimafor fashion accessories) would meanwhile serve as a strong foundation for its next step up the valueaddition ladder - a foray into retail.
The company has initiated flotation of 100 per cent subsidiary, Alps Retail Private Limited to drive itsretail initiative.
Recruitment of the designers and merchandisers for proper product and vendor development is inprogress. It is also in discussions with some large format retail chains for carrying the product lines.Naturally, different product lines at varying price points will be developed to cater to the different customerprofiles of each such chain. A complete range is also being developed to cater to the warm climatemarkets also like Mumbai, Hyderabad, Chennai etc. The product range will include, in addition to wraps,ladies’ bags, caps, hats, and belts. The brand(s) will be positioned at an “aspiration” level for eachmarket. The presence of the company’s products in organized retail channel will strengthen its brandimage still further.
(b) Weaknesses
1. Cotton, the major raw material is prone to the vagaries of nature resulting in fluctuations in itsprices. However, having been in the industry for the past 40 years, the company has the ability toanticipate the price movements and hence hedge itself against any adverse price trends.
2. Cheaper manufactured products from Pakistan, China and Bangladesh pose a challenge to Indiancompanies’ international marketing efforts. The company makes continuous efforts to improveproductivity and yield to remain cost competitive. Your company also offers uniquely positionednatural dyed products to its international customers, thus insulating its products from competitionto a certain degree.
3. Competition from other domestic players in the Home textiles segment. The company enjoys thenatural dye advantage that sets it apart from other domestic players which is a major attraction forinternational buyers.
Final installed capacities as at 31.3. 06
Products Installed Capacity (Annual)
Yarn 34028.38 MT
Fabric 19 mn sq mtrs
Made ups 11 mn sq mtrs
Fashion Accessories 0.22 mn sq mtrs
Wooden Floorings 18,000 sq mtrs
Venetian Blinds 70000 sq mtrs
Vertical Blinds 90000 sq mtrs
The total capex on weaving project (jacquard looms) is estimated at Rs. 630.44 million whereas the capex onspinning expansion project (at Haridwar) is estimated at Rs. 3311.94 million. The company is setting up additionalcompact yarn spinning capacity of 58 tons per day at Haridwar. The spinning unit would be state-of-the-art withvery high level of automation to provide for high quality compact yarn.
S. No. Location Capacity (TPD)
1. Haridwar 52.14
2. Kashipur 26.07
3. Jaspur 13.04
4. Sahibabad 5.97
TOTAL 97.22
2. Vertically integrated unit
Vertically integrated manufacturing facilities are important as large overseas buyers are increasinglystipulating control over the entire production process. In fact, the company’s initiative in the current yearto undertake contract farming of organic cotton is an extension of this concept of control on the productionprocess. With the help of such contract farming (the company underwrites to purchase entire quantity ofcotton produced in the contracted farms) and subsequent processing right up to end-use productmanufacture, we are actually controlling the entire chain from Field to Fashions.
3. Locational benefits
The company’s spinning capacities have all come up in Uttaranchal that make available substantiallocational benefits to it. Uttaranchal offers the advantage of substantially lower power cost as compared
46 47
ALPS INDUSTRIES LTD.
(i) Statement on company’s philosophy on : Your Company consciously follows good Corporate code of governance Governance practices. The company has complied with
the latest amendment of Clause 49 of the ListingAgreement related with the Corporate Governance,notified by the SEBI vide their circular reference no. SEBI/CFD/DIL/CG/1/2004/12/10 Dated October 29, 2004. Yourcompany recognizes its enhanced responsibilities withinternationl listing on Luxembourg Stock Exchange.
(ii) Board of Directors The Board comprises of Non-Executive Chairman.Managing Director who is also designated as ChiefExecutive Officer (CEO) of the Company is managingthe day-to-day affairs of the Company.
Nature of Directorship Nos.
(a) Composition and category of directors : Promoter & Executive 1
Executive Director 1
Promoter & Non Executive 2
Non Executive (Independent) 3
Total 7
(b) Attendance of each director at the BoD meetings and the last AGM
Name of the Directors Nature of Relationship Sitting fees No. of Board Attended by
Directorship with other paid during Meetings AGM EGM
Directorthe year
Held Attended 30.09.05 19.01.06
Mr. K.K. Agarwal Non-Executive Father of Mr. 55.00 8 7 Yes Yes Chairman Sandeep Agarwal
Mr. Sandeep Agarwal# Executive Son of Mr. Nil 8 8 Yes YesK.K. Agarwal
Mr. G.K. Arora Independent - 58.00 8 6 No No
Mr. Rakesh Gupta$ Non Executive - 64.00 8 8 No No
Mr. J.P. Kundra Independent - 74.00 8 8 Yes Yes
Dr. M.L. Gulrajani Independent - 78.00 8 8 Yes No
Mr. P. K. Rajput* Executive - Nil 8 Nil No NoDirector
Note : #He is Managing Director and Remuneration has been paid as per the provisions of the Companies Act,1956.
$ He is having business relationship of routine nature for marketing of the products of the company.
*He has been appointed as an additional & Whole Time Director and designated as “Executive Director”of the company w.e.f. July 28, 2006.
Corporate GovernanceCompliance Report on Corparate Governance - Part - II (Mandatory Requirements)
(Rs.in 000s)
V OUTLOOK
* The capacity expansion of value added fiber dyed yarn - expected to contribute 20 per cent of revenueby FY’07.
* Increasing popularization of natural dyes concept - fiber dyed yarn to roll out of Haridwar spinningfacility in the second half of FY’07.
* Yarn capacity expansion - state-of-the-art compact yarn spinning facility to add 58 tons per day capacityunder implementation. New project to contribute during FY’08
* Jacquard fabric weaving facility being added - looms being added at Sahibabad unit. Greater penetrationin the domestic market proposed as the same growing very rapidly. Outlets carrying home furnishingsare proposed to be increased from 800+ to 2000 over the next year.
* Company has floated a wholly owned subsidiary, Alps Retail Private Limited, for undertaking a plannedretail initiative to meet growing domestic demand. It is also building a strong branded retail presence forfashion accessories and home furnishings.
* In order to strengthen its market coverage overseas, the company may look at brand acquisitions.
* The company may also look at acquisition of a design House to propel its home furnishing and fashionaccessories business.
VI INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
According to the size of the company there is adequate internal control system. The Internal Control systemsare aimed at promoting operational efficiencies while emphasizing adherence to policies. Company hasmaintained clear processes and well-defined roles and responsibilities for people at various levels. Awell-defined information system further ensures appropriate information flow to facilitate monitoring. Othermeasures are also in place to ensure proper control. The Audit and other Committees play a very importantrole in controlling affairs of the company.
VII DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE
The performance of the company improved significantly during the year under review. All its businesssegments recorded handsome top line growth. With tight control over costs and astute foreign exchangeand financial management, coupled with economies of scale, the top line growth contributed significantly tothe bottom line. The Net Profit shot up by 68 per cent to touch a new high of Rs. 238 mn. The company madetwo equity offerings during the year. The first one was made in the Indian market and 4.15 mn shares wereissued during October 2005. The proceeds were used for setting up the Haridwar yarn spinning facilities.The second equity issue was the first international equity issue of the company that concluded successfullyon March 31, 2006. As a consequence of these issues, the company’s issued equity shares increased from6,723,800 to 16,257,050 shares as on March 31, 2006. The basic and Dilutive EPS for the year amounted toRs. 27.52 as against Rs. 21.02 in the previous year.
VIII MATERIAL DEVELOPMENTS ON HR/IR FRONT, INCLUDING NO. OF PEOPLE EMPLOYED
With increased size the company is well placed to acquire best of the skills, both managerial and technical.In all, 2400 persons are working with the company comprising of 600 staff and balance workmen.
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ALPS INDUSTRIES LTD.
(f) Details of Additional Director proposed to be : Mr. P.K.Rajput, Vice-President Commercial has beenappointed as rotational & Executive Director at appointed as the Additional Director at the meeting ofthe forthcoming Annual General Meeting Board of Directors held on July 28, 2006. He has been
proposed to be appointed as rotational whole timeDirector designated as Executive Director of theCompany. The necessary resolutions for the approvalof the members has been proposed in the Notice ofAnnual General Meeting. Mr. P.K.Rajput is associatedwith the Company for over 10 years. Presently, he hasno directorship/ membership in any other companies /committees under the Corporate Governance. He is aGraduate from Banaras Hindu University and has awealth of experience of over 26 years in textile industry.He has contributed significantly to the growth of yourcompany during his association of over 10 years.
(iii) Audit committee
(a) Brief description of terms of reference : (a) As specified under clause 49 of the Listing Agreement,
(b) Any matter related with Annual Report.
(c) Review of Un-audited Financial Results,
(d) Review of Internal Audit System.
(b) Composition, name of members and 1. Dr. M. L. Gulrajani - Chairman
2. Mr. Sandeep Agarwal - Member
3. Mr. J.P. Kundra - Member
4. Mr. G.K. Arora - Member
(c) Meetings and attendance during the year : Meeting held: Four
Present Members:
1. Dr. M. L. Gulrajani - Chairman
2. Mr. Sandeep Agarwal - Member
3. Mr. J.P. Kundra - Member
4. Mr. G.K. Arora* - Member
(*Absent in one Meeting)
(iv) Remuneration Committee
(a) Brief description of terms of reference : (a) As specified under clause 49 of the Listing Agreement
(b) To decide the company’s policy and specific remuneration package for the Executive Directors,
(c) To decide any revision/ amendment/addition/deletion/ recomposition in the remuneration packageof the wholetime Directors.
(d) Any matter related with the retirement benefits ofthe executive and wholetime Directors.
(c) Number of other BoDs or Board Committees of which they are a member or Chairperson.
Name of the Director No. of Outside Directorship Held Outside Committees$
Public Private Others Member Chairman/Chairperson
Mr. K.K. Agarwal 1 3 — — —
Mr. Sandeep Agarwal 1 3 — — —
Mr. G.K. Arora 13 2 — 5 2
Mr. Rakesh Gupta 4 — — — —
Mr. J.P. Kundra 5 — — 5 2
Dr. M.L. Gulrajani 2 — — 1 —
Mr. P. K. Rajput — — — — —
$Includes all Committees of the Board across all Companies in which Directorships are held.
(d) Number Board of Directors meetings held, : No. of Meetings held : 8Dates - 11/06/2005, 29/07 2005,1/09/2005,15/10/2005,26/10/2005,19/12/2005, 24/01/2006 and 16/03/2006.
(e) Details of the directors proposed to be : At the forthcoming Annual General Meeting,Mr. J.P.Kundra, Director of the company is proposed tobe re-appointed. He was formerly Managing Director ofState Bank of India, Managing Director of State Bank ofBikaner & Jaipur, Vice Chairman of SBI Capital MarketsLtd. and Chairman of Banking Services RecruitmentBoard. He was also the Chairman of the Indian AdvisoryBoard of SANWA Bank. He has many years of experiencein the banking and financial sector. He holds followingpositions in other companies :
Sl. No. Name of the Company Position Held
1. Credit Capital Asset Non-ExecutiveManagement Co. Ltd Chairman of the Board
2. Ratnabali Capital Director of the BoardMarkets Ltd, and Member of the Audit,
& ShareholderGrievances Committee.
3. Delfin Finance Limited Director of the Board.
4. South Asian Petrochem Director of the Board andLimited Chairman of the Audit
Committee and Memberof the Investor Grievance& Committee.
5. Ginni Filament Limited Director of the Board andChairman of the AuditCommittee.
reappointed
dates on which held
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ALPS INDUSTRIES LTD.
4. Mr. P.K.Rajput has been appointed as Additional & Whole Time Director and designated as “Executive Director”w.e.f. July 28, 2006, subject to the necessary approval at the forthcoming Annual General Meeting of thecompany. Hence no remuneration, as a Director, was paid during the Financial Year 2005-06.
5. The shareholding of directors as on 31st March, 2006 as under:
Details of Shareholding of Directors :
Sl. No. Name Shareholding Percentage
1. Mr. K.K. Agarwal 412,230 2.536
2. Mr. Sandeep Agarwal 190,230 1.170
3. Mr. G.K. Arora NIL NIL
4. Mr. Rakesh Gupta 957,500 5.890
5. Mr. J.P. Kundra NIL NIL
6. Dr. M.L. Gulrajani NIL NIL
7. Mr. P.K.Rajput NIL NIL
(v) Shareholders Grievances Committee
(a) Name of the non-executive director heading the committee : Dr. M.L. Gulrajani - Chairman
(b) Name and designation of compliance officer : Mr. Ajay Gupta, Company Secretary &DGM (Legal)
(c) Number of shareholders’ complaints received so far : 357
(d) Number not solved to the satisfaction of shareholders : NIL
(e) Number of pending share transfers : NIL
(vi) Capital Issue Committee:
During the year, the Board of Directors at their meeting held on 24th January 2006 has constituted CapitalIssue Committee to consider and approve various matters related with the issue of GDRs. There were threemeetings held during the year. The details of the attendance of the members at the various meetings are asunder;
S. No. Name of the Member Attendance
30.01.06 10.02.06 13.03.06
1. Mr. K.K.Agarwal (Director & Non-Executive Chairman) Yes Yes Yes
2. Mr. Sandeep Agarwal (Managing Director) Yes Yes Yes
3. Mr. Rakesh Gupta (Director) Yes Yes Yes
4. Mr. R.K.Gulati (CFO) Yes Yes Yes
General Meetings
(a) Location and time, where last three AGMs held. : Location of Last Three AGMs: B-2,Loni Road Industrial Area,(Opp. Mohan Nagar) Ghaziabad, (U.P.).Date Time30/09/2003 11.00 A.M.30/09/2004 10.00 A.M.30/09/2005 10.00 A.M.
(b) Whether special resolutions were passed : Yes
(b) Composition, name of members and : 1. Dr. M.L. Gulrajani - ChairmanChairperson 2. Mr. Sandeep Agarwal - Member
3. Mr. Rakesh Gupta* - Member4. Mr. J.P. Kundra$ - Member5. Mr. G.K. Arora - Member
(*Resigned w.e.f. April 29, 2006)
($Appointed w.e.f. April 29, 2006)
(c) Meetings and attendance during the year : Meeting held: OnePresent Members:1. Dr. M.L. Gulrajani - Chairman2. Mr. Sandeep Agarwal - Member3. Mr. Rakesh Gupta* - Member4. Mr. J.P. Kundra$ - Member5. Mr. G.K. Arora - Member
(*Resigned w.e.f. April 29, 2006)
($Appointed w.e.f. April 29, 2006)
(d) Remuneration policy : As per Company rule.
(e) Details of remuneration and pecuniary benefits to all the Directors, as per details given below:(Rs. in 000’s)
Name of the Director Salary Perquisites$ Sitting Others* Totalfees#
Mr. K.K. Agarwal — — 55.00 3.50 58.50
Mr. Sandeep Agarwal 1,350.00 84.589 — — 1,434.589
Mr. G.K. Arora — — 58.00 3.00 61.00
Mr. Rakesh Gupta — — 64.00 4.00 68.00
Mr. J.P. Kundra — — 74.00 4.00 78.00
Dr. M.L. Gulrajani — — 78.00 4.00 82.00
Mr. P.K. Rajput — — — — —
Total 1,350.00 84.589 329.00 18.50 1,782.089
$ It includes the reimbursement of Electricity expenses.# Sitting fees for meeting of Board of Directors and Commitee Meetings has been increased w.e.f. 26th Ocotber
2005.
* Out of pocket expenses for attending the meeting of Board of Directors paid by the Company.
NOTES:
1. There are no pecuniary relationships or transactions of the non-executive directors vis-a-vis company exceptas mentioned above.
2. The Company makes payments to non-executive directors with a specified procedure. All the amendmentsin the payment of sitting fee, for Board and committee meeting used to be approved by the members of theBoard, keeping in view the size of the company. Now in line with the requirements of amended CorporateGovernance Regulations, the members of the company have sought the necessary shreholders approval inthe forthcoming Annual General Meeting.
3. In case of Managing Director, the re-appointment had been made w.e.f. 01.02.2004 for five years at theAnnual General Meeting of the company held on 30.09.2003. It is on the recommendation by the remunerationcommittee and members of the Board of Directors.
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ALPS INDUSTRIES LTD.
(ix) General Shareholder’s informations
(a) AGM : Date, time and venue (tentative) : Date: 28th September, 2006Day : ThursdayTime: 10.00 A.M.Venue: B-2, Loni Road Indl. Area,(Opp. Mohan Nagar) Ghaziabad, (U.P.)-201007
(b) Financial Calendar (Tentative) :
Annual General Meeting : 28th September, 2006.
Result for quarter ending June 30, 2006 : 28th July 2006.
Result for quarter ending September 30, 2006 : Fourth Week of October 2006.
Result for quarter ending December 31, 2006 : Fourth Week of January 2007.
Result for quarter ending March 31, 2007 : Fourth Week of April, 2007.
(c) Date of Book Closure : 26th September 2006 & 27th September 2006.(Both days inclusive)
(d) Dividend Payment Date : As per Section 205 of the Companies Act, 1956.
(e) Listing on Stock Exchanges : Equity Shares of the company are listedat the National Stock Exchange of India Ltd. andBombay Stock Exchange Ltd., Mumbai & GDRsof the company are listed at Luxembourg StockExchange.
(f) Stock Code : NSE : EQALPSINDUSBSE : 530715ALPSIND
LSE (USISIN) : US02109V1070
(g) Market Price Data: High, Low during each month in last financial year :
SL. Month High Low
No. Rate Date Rate Date
1. April 2005 105.70 1.04.2005 85.50 19.04.2005
2. May 2005 132.40 23.05.2005 88.05 3.05.2005
3. June 2005 151.75 13.06.2005 114.90 02.06.2005
4. July 2005 147.90 29.07.2005 129.30 01.07.2005
5. August 2005 191.00 18.08.2005 143.00 01.08.2005
6. September 2005 169.40 2.09.2005 129.00 21.09.2005
7. October 2005 142.85 03.10.2005 101.55 21.10.2005
8. November 2005 121.65 07.11.2005 111.50 25.11.2005
9. December 2005 134.35 30.12.2005 111.00 02.12.2005
10. January 2006 162.90 27.01.2006 127.10 18.01.2006
11. February 2006 174.40 13.02.2006 136.35 03.02.2006
12. March 2006 206.50 27.03.2006 150.00 02.03.2006
(c) Were put through postal ballot last year, : By show of hands and Postal Ballot.details of voting pattern
(d) Person who conducted the postal ballot exercise : Mr. S. R. Iyer
(e) Are proposed to be conducted through postal ballot : Yes
(f) Procedure for postal ballot : As per Section 192A of the Companies Act,1956 and Rules made there under.
(vii) Disclosures
(a) Disclosures on materially significant related party : In compliance of the Clause 32 of the Listingtransactions i. e. transactions of the company Agreement and Accounting Standard - 18, theof material nature, with its promoters, the Disclosure of “Related Party Transactions”directors or the management, their have been made in the Notes to Accounts ofsubsidiaries or relatives etc. that may have Financial Statements.potential conflict with the interest ofcompany at large
(b) Details of non-compliance by the company, : Nilpenalties, and strictures imposed on the companyby Stock Exchanges or SEBI or any statutoryauthority on any matter related to capital marketduring the last three years
(c) Compliance of Mandatory requirements under the : As per the details mentioned in part II of theCorporate Governance compliance report.
(d) Compliance of Non-Mandatory requirement under : As per the details mentioned in part III of thethe Corporate Governance compliance report.
(e) Whistle Blower Policies : The company has implemented the WhistleBlower Policy. It is also affirmed that none ofthe personnel has been denied access to theAudit Committee.
(viii) Means of Communication
(a) Half-yearly report sent to each house hold of : Published in the newspapers apart fromshareholders sending to the investor who requests for the
same.
(b) Quarterly results : Published in the News Paper and sent to theStock Exchanges where Shares of theCompany are listed.
(c) Which newspapers normally published in : Economic Times (English), Business Standard(English), Money Makers (English), DainikMahalaxmi (Hindi)
(d) Any website, where displayed : www.sebi.com
(e) Whether it also display official news release : Yes
(f) The presentations made to institutional : The Financial Results used to be sent to theinvestors or to the analysts major investors including Institutional
Investors and analysts.
(g) Whether MD&A is a part of annual report or not : Yes
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ALPS INDUSTRIES LTD.
(i) Performance in comparison to broad-based indices such as BSE Sensex, CRISIL, index etc.
(j) Registrar and Transfer Agents for Demat & : Alankit Assignments Limited Corporate Office,Physical Shares Alankit House, 2E/21, Jhandewalan Extension
New Delhi-110 055 INDIA.
(k) Depository for GDRs : The Bank of New York 22nd Floor, 101,Barclay Street, New York, NY 10286, USA
(l) Share Transfer System and Investors Grievances : In terms of the SEBI Circular for appointment ofcommon agency as R&T Agent for Demat andPhysical Shares, company has appointed the aboveR&T Agent. The share transfer and InvestorGrievances system is in compliance with therequirement of the Stock Exchanges and as specifiedunder the Depository Act, 1996. Company hasShareholder’s grievances committee to review thestatus of the various matters related with theshareholders.
(m) Distribution of shareholding : As on 31st March, 2006
Shareholding of nominal value Shareholders Share Amount
Rs. Rs. Number % Rs. (in 000s) %
Upto - 5000 10745 95.938 7,937.220 4.882
5001 - 10000 208 1.857 1,707.010 1.050
10001 - 20000 96 0.857 1,432.170 0.881
20001 - 30000 30 0.268 783.990 0.482
30001 - 40000 15 0.134 522.770 0.322
40001 - 50000 12 0.107 561.620 0.345
50001 - 100000 17 0.152 1,304.290 0.802
100001 and above 77 0.688 148,321.430 91.235
TOTAL 11200 100.000 162,570.500 100.000
NSE CHART FOR THE YEAR 2005-06 OF ALPS INDUSTRIES LTD. V/S CNX NIFTY
Price: 192.75
ALPSINDUS, S&P CNX NIFTY
PRICE S&P CNX NIFTY
01/04/2005 09/06/2005 22/08/2005 01/11/2005 13/01/2006 31/03/2006
203.30
191.65
180.00
168.35
156.70
145.05
133.40
121.75
110.10
98.45
86.80
3419.00
3267.35
3115.70
2964.05
2812.40
2660.75
2509.10
2357.45
2205.80
2054.15
1902.50
31/03/2006 S&P CNX NIFTY: 3418.95
(h) Shareholding Pattern as on 31.03.2006 :
Category No. of share Percentage ofheld shareholding
A. Promoters holding1. Promoters - Indian 3,854,815 23.712
Promoters - Foreign2. Persons acting in Concert 200,000 1.230
Sub Total 4,054,815 24.942B. Non-Promoters Holding3. Institutional Investorsa) Mutual Funds and UTI 982,846 6.046b) Banks, Financial Institutions, Insurance Companies (Central/
State Gov. Institutions/ Non-Goverment Institutions) 759,559 4.6724. FIIs 5,482,750 33.725
Sub Total 7,225,155 44.4435. Others — —a) Private Corporate Bodies 2,649,473 16.297b) Indian Public 1,710,034 10.519c) NRIs / OCBs 439,957 2.7066. Any other clearing member 177,616 1.093
Sub Total 4,977,080 30.615Grand Total 16,257,050 100.000
Notes : 1. Total Foreign shareholding 5,922,707 (including 5,382,750 Equity Shares representing 2,691,375 GDRs)and percentage of shareholding is 36.431.
2. There is 2,691,375 GDRs holding and there is nil holding of ADRs.
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ALPS INDUSTRIES LTD.
COMPLIANCE REPORT ON CORPORATE GOVERNANCE - PART - III
NON-MANDATORY REQUIREMENTS
1. The Board
(i) Non-Executive Chairman's office : The company has an office for the Non-ExecutiveChairman.
(ii) Tenure of Independent Directors : The Company is having some independent directorswith tenure of more than nine years. The companyintends to retain them, keeping in view their expertiseand contribution in the development of the company.
2. Remuneration Committee
(i) Terms of Reference : Company is having a Remuneration Committee interms of the requirements of the Schedule XIII of theCompanies Act 1956 and in terms of necessaryrequirements of the Corporate Governance. It isauthorized to approve and recommend the company'spolicies on specific remuneration packages forexecutive directors including pension rights and anycompensation payment.
(ii) Constitution of the committee : 1. Dr. M.L. Gulrajani - Chairman
2. Mr. Sandeep Agarwal - Member
3. Mr. Rakesh Gupta* - Member
4. Mr. J.P. Kundra$ - Member
5. Mr. G.K. Arora - Member
(*Resigned w.e.f. April 29, 2006)
($Appointed w.e.f. April 29, 2006)
(iii) Presence at the meeting : All the members are usually present at the meeting.
(iv) Presence of the Chairman of the committee at : The Chairman of the meeting is present at thethe Annual General Meeting Annual General Meetings.
3. Half Yearly Financial Results to the Shareholders : It will be taken care in compliance of the CorporateGovernance.
4. Audit Qualifications : There are no qualifications / reservations in the AuditReport of the Statutory Auditors, for the Financial Year2005-06.
5 Training of Board members : The members of the Board are possessing vastbusiness experience in the line of textile industry,finance and technical know-how. However theirknowledge and experience is also constantly upgradedwith their varied experiences
6. Mechanism for Evaluating Directors : The Chairman of the Board of Directors has theresponsibility to evaluate the performance/contribution of all the Directors.
(n) Dematerialization of shares and liquidity : 98.34% of expanded Issued Capital is inDematerialized form. The shares are listed at the twostock exchanges and GDRs are listed at theLuxembourg Stock Exchange.
(o) Outstanding GDRs/ADRs/ Warrants or any : (i) Outstanding GDRs as on 30th June 2006:Convertible 925,930 at a quoted instrument, conversion date
and likely impact on equity price of USD 4.26.(ii)The company has issued no ADRs. (iii) 500,000Zero Coupon Convertible Warrants into equityshares allotted to Promoter’s Group areoutstanding as per details given below:
S.No. Name of the allottees Number of Convertible Warrants
1. Padam Precisions Dies & Components Pvt. Ltd. 30,000
2. Saurabh Floriculture (P) Ltd. 90,000
3. Roseat Finvest (P) Ltd. 90,000
4. Peek Texfab Ltd. 90,000
5. Mrs. Nidhi Agarwal 25,000
6. Mrs. Sanyog Agarwal 25,000
7. Mr. Rakesh Gupta 1,50,000
TOTAL 5,00,000
Note: All the above 500,000 Zero Coupon Convertible Warrants may be converted into equity shares notlater then by 1st August 2007 i.e. 18 months from the date of issue of the instrument i.e. 2nd February2006. The aforesaid allotment of Zero Coupon Convertible Warrants has been made in terms of the“approval in principle” received from the Bombay Stock Exchange Limited & National Stock ExchangeLimited vide their letters dated 31st January 2006 and 1st February 2006 respectively.
Likely impact on the equity:
(i) The underlying 5,382,750 Equity Shares against the overall issue of 2,691,375 GDRs have beenincluded in the present issued capital of the Company. Hence there will not be any more increase inthe issued capital by reduction/increase in the outstanding GDRs.
(ii) The 500,000 Zero Coupon Convertible Warrants may or may not be converted into equity. Howevermaximum conversion of the warrants may be up to 500,000 Equity Shares because each warrantrepresents one equity share. Due to this the issued capital may be increased to the extent of 500,000equity Shares, which will enhance the issued capital to 16,757,050 equity shares. The diluted EPS iscalculated after taking into account all factor as stipulated by AS-20. However all this is subject to thelisting and trading permission from the Bombay Stock Exchange Limited and National Stock ExchangeLimited.
(p) Plant Locations : (a) B-2, Loni Road Indl. Area, Opp. Mohan Nagar, Ghaziabad-201 007 (U.P.)
(b) A-2, Loni Road Indl. Area, Opp. Mohan Nagar, Ghaziabad-201007 (U.P.)
(c) A-3, Loni Road Indl. Area, Opp. Mohan Nagar, Ghaziabad-201007 (U.P.)
(d) 57/2, Site-IV Indl. Area, Sahibabad, Ghaziabad-201010 (U.P.)
(e) B-160-161, Industrial Estate, Mettupalayam, Pondicherry -605009
(f) Plot No. 1-A & 1-B, Sector 10, Integrated Industrial Estate BHEL, Hardwar, Uttranchal.
(g) Kashipur Spinning Mills, Near Govt. Degree College, Kashipur Bazpur Road,Kashipur, Distt.- Udham Singh Nagar, Uttranchal-244713
(h) Jaspur Spinning Mills, Afzal Garh Road, Jaspur, Distt.- Udham Singh Nagar,Uttranchal - 244712.
(q) Address for correspondence : Corp. Office: 57/2, Site - IV, Industrial Area, Sahibabad Ghaziabad-201010 (U.P.)
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ALPS INDUSTRIES LTD.
The Members ofAlps Industries LimitedGHAZIABAD.
CEO AND CFO CERTIFICATION ON THE FINANCIAL STATEMENTS FORFINANCIAL YEAR 2005-06
We in our official capacity do hereby confirm and certify that:
(a) We have reviewed the financial statements and the cash flows statement for the yearended on 31st March, 2006 and that to the best of our knowledge and belief:
(i) These statements do not contain any materially untrue statement or omit any materialfact or contain statements that be misleading;
(ii) These statements together present a true and fair view of the company’s affairsand are in compliance with existing accounting standards, applicable laws andregulations
(b) There are, to the best of our knowledge and belief, no transactions entered into by thecompany during the financial year 2005-06 which are fraudulent, illegal or violative ofthe company’s code of conduct.
(c) We accept responsibility for establishing and maintaining internal controls and that wehave evaluated the effectiveness of the internal control systems of the companypertaining to financial reporting and have disclosed to the auditors and the AuditCommittee, deficiencies in the design or operation of internal controls, if any, of whichwe are aware and the steps we have taken or propose to take to rectify these deficiencies.
(d) We have indicated to the auditors and Audit Committee:
(i) Significant changes in internal control over financial reporting during the year ended31st March 2006;
(ii) That there are no significant changes in accounting policies during the year andthat the accounting policies have been disclosed in the notes to the financialstatements; and
(iii) That there are no instances of significant fraud, which we have become aware, andthe involvement therein, if any, of the management or any employee having asignificant role in the Company’s internal control system over financial reporting.
For Alps Industries Limited For Alps Industries Limited
Sandeep Agarwal R. K. Gulati(Managing Director) (Chief Financial Officer)(Chief Executive Officer)
Place: GhaziabadDate: 31st March, 2006
7. Whistle Blower Policy : As per the policy of the Company, the HumanResources Development Department, have alreadybeen advised to implement full and free access for anyemployees/labour grievances. All the employees havethe right to report any unethical behaviour, actual orsuspected fraud or violation of the company's code ofconduct or ethics policy. There is also protectionagainst the victimization of concerned employees andthere is a freedom to approach to the Chairman of theAudit committee, in case need arises.
8. Postal Ballot : The company has conducted the Postal Ballot for theItem covered under the Corporate Governance andSection 192A, of the Companies Act, 1956.
9. Code of Conduct : In terms of the requirement of the CorporateGovernance, the code of conduct of the company foremployees, directors and all concerned have beenapproved by the Board of Directors at their meetingheld on October 26, 2005. It has also been displayedon the company’s website www.alpsindustries.com
10. Disclosure for Non-Mandatory requirements : All the Non-Mandatory requirements have beencomplied with.
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ALPS INDUSTRIES LTD.
The Members ofAlps Industries LimitedGHAZIABAD.
We have examined the compliance of conditions of Corporate Governance by Alps IndustriesLimited, for the year ended on 31st March 2006, as stipulated in Clause 49 of the Listing Agreementof the said Company with Stock Exchanges.
The compliance of conditions of Corporate Governance is the responsibility of the management.Our examination has been limited to a review of the procedures and implementations thereofadopted by the Company for ensuring compliance with the conditions of the certificate ofCorporate Governance as stipulated in the said Clause. It is neither an audit nor an expressionof opinion on the financial statements of the Company.
In our opinion and to the best of our information and according to the explanations given to usand the representations made by the Directors and the management, we certify that the Companyhas complied with the conditions of Corporate Governance as stipulated in Clause 49 of theabovementioned Listing Agreement.
We further state that such compliance is neither an assurance as to the future viability of theCompany nor of the efficiency of effectiveness with which the management has conducted theaffairs of the Company.
For R. K. Govil & Co.Chartered Accountants
Place : Ghaziabad (Rajesh K. Govil)Dated : 28th July, 2006 Partner
Membership No. 13632
The Members ofAlps Industries LimitedGHAZIABAD.
CERTIFICATE IN RESPECT OF COMPLIANCEWITH THE CODE OF CONDUCT OF THE COMPANY*
I, Sandeep Agarwal in my capacity as the Managing Director & the Chief Executive Officer ofthe company, do hereby certify that all Directors and Senior Executives of the company, onelevel below the Board have compiled with and adhered the Code of Conduct as approved &prescribed by the Board of Directors of the Company.
Place: Ghaziabad
Date: 28th July 2006
For Alps Industries Ltd
(Sandeep Agarwal)Managing Director & CEO
*The Code of Conduct can be viewed on the Company’s website www.alpsindustries.com.
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ALPS INDUSTRIES LTD.
To,The Members ofM/S. Alps Industries LimitedGhaziabad
SUB: Auditors’ Report on the Accounts for the year ended on 31st March 2006in compliance with Section 227 of the Companies Act.1956
We have audited the attached Balance Sheet of M/s ALPS INDUSTRIES LIMITED as at 31st March 2006 and alsothe Profit & Loss Account of the Company for the year ended on that date, annexed thereto. These financialstatements are the responsibility of the Company’s management. Our responsibility is to express an opinion onthese financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in India. Those standardsrequire that we plan and perform the audit to obtain reasonable assurance about whether the financial statementsare free of material misstatement. An audit includes examining, on test basis, evidence supporting the amountsand disclosures in the financial statements. An audit also includes assessing the accounting principles used andsignificant estimates made by the management, as well as evaluating the overall financial statement presentation.We believe that our audit provides a reasonable basis for our opinion.
As required by the Companies (Auditor’s Report) Order, 2003 issued by the Central Government in terms ofsection 227(4A) of the Companies Act, 1956, We give in the Annexure a statement on the matters specified inparagraphs 4 and 5 of the said order.
Further to our comments in the Annexure referred to in paragraph (3) above, we report that :-
1. We have obtained all the information and explanations, which to the best of our knowledge and belief werenecessary for the purpose of our audit.
2. In our opinion proper books of accounts as required by the law have been kept by the Company so far asappears from our examination of the books of the Company.
3. The Balance Sheet and Profit & Loss account referred to in this report are in agreement with the books ofaccount of the Company.
4. In our opinion, the accounts comply with the accounting standards referred to in section 211(3C) of CompaniesAct.
5. On the basis of written representations received from the directors, and taken on record by the Board ofDirectors, in our opinion, none of the directors is disqualified from being appointed as director u/s 274(1)(g)of Companies Act, 1956.
6. In our opinion and to the best of our information and according to the explanations given to us, the saidBalance Sheet and Profit & Loss Account, together with other notes thereon, give the information requiredby the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India: -
I. In the case of Balance Sheet, of the state of affairs of the Company as at 31st March,2006
II. In the case of Profit & Loss account, of the profit of the Company for the year ended on that date.
III. In the case of Cash Flow Statement, of the cash flow’s for the year ended on that date.
For R.K.Govil & Co.Chartered Accountants
Place : Ghaziabad (Rajesh K. Govil)Date : 28th July, 2006 Partner
Auditors' ReportINFORMATION AS PER REQUIREMENT OF SEBI CIRCULAR NO. SMDRP/CIR14/98 DATED 29.04.98 ANDCLAUSE 32 OF THE LISTING AGREEMENT WITH THE STOCK EXCHANGES
1. Names and Address of The Stock Exchanges of where the Company's Securities are Listed.
S. No. Name Address
1. Bombay Stock Exchange Ltd., Mumbai 1st Floor, New Trading Ring, Rotunda Building,P.J.Towers, Dalal Street, Fort, Mumbai- 400001.
2. National Stock Exchange of India Ltd, Exchange Plaza, 5th Floor, Plot No. C/1, G-Block,Bandra-Kurla Complex, Bandra (E), Mumbai - 400 051.
3. Luxembourg Stock Exchange Societe de la Bourse de Luxembourg, SocieteAnonyme, RC Luxembourg B 6222, BP 165, L-2011Luxembourg, Siege Social, 11, Avenue de la Perto Neuvo
2. The Company has paid listing fees for the year 2006-2007 to both the domestic Stock Exchanges and thereis no overdue towards the listing fees of Luxembourg Stock Exchange.
3. As per the latest SEBI circular no. SMD/POLICY/CIR-02/2004, the following information are being furnishedrelated to the Financial Year 2005-2006:
Sl. No. Particulars Amount
1. Loans and advances in the nature of loans to subsidiary NIL
2. Loans and advances in the nature of loans to associates by name and amount NIL
3. Loans and advances in the nature of loans where there isa) no repayment schedule or repayment beyond seven years orb) no interest or interest below section 372A of Companies Act by name and amount NIL
4. Loans and advances in the nature of loans to firms/ companies in whichdirectors are interested by name and amount NIL
5. Investments by the loanee in the shares of parent company NIL
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Sr. No. Name of Nature of Amount Forum wherethe Statute Dues Dispute is pending
1. Central Excise Excise duty Rs. 70.00 Lacs Commissioner,Act, 1944 (approx.) Central Excise
(Incl. Interest) Ghaziabad
2. Central Entry Tax Rs. 33.00 Lacs High courtSales TaxAct, 1956
3. Nagar Nigam Sewerage Tax Rs. 2.45 Lacs Civil Court,Act, 1959 (Subject to Ghaziabad
Revision of Rates.)
X. The Company has no accumulated losses. The Company has not incurred cash loss during the financialyear under report and in the financial year immediately preceding such financial year.
XI. According to the information and explanations given to us, we are of the opinion that Company has notdefaulted in repayment of dues to financial institutions or banks.
XII. In our opinion and according to the explanations given to us, and based on the information, availablethe Company has not granted any loans and advances on the basis of security by way of pledge ofshares, debentures and other securities.
XIII. In our opinion, the Company is not a chit fund or Nidhi/Mutual Benefit Fund/Society. Therefore, theprovisions of clause 4 (xiii) of the Companies (Audtior’s Report) Order, 2003 are not applicable to theCompany.
XIV. In our opinion, and according to the information and explanation given to us the Company is not dealingin/or trading in Shares, Securities, Debentures and other investments. Accordingly, the provisions ofClause 4(xiv) of the Companies Act (Auditor’s Report) Order, 2003 are not applicable to the Company.
XV. The Company has not given any guarantee for loans taken by others from bank, financial institutions,which is prejudicial to the interest of the company.
XVI. The term loans were applied for the purpose for which the loans were obtained.
XVII. According to the information and explanations given to us and on an overall examination of the Balancesheet of the Company, we are of the opinion that there are no funds raised on short terms basis thathave been used for long term investment.
XVIII. The Company has not made any preferential allotment of shares to parties and companies covered inthe Register maintained under section 301 of the Act.
XIX. During the period covered by our Audit report, the Company has not issued any debentures.
XX. During the period covered by our Audit report, the Company has raised Rs. 4980.60 Lacs by public issueand Rs. 9725.04 Lacs by GDR issue.
XXI. Based upon the audit procedures performed and information and explanations given by the management,we report that no fraud on or by the Company has been noticed or reported during the course of ouraudit for the period under report.
For R. K. Govil & Co.Chartered Accountants
Place : Ghaziabad (Rajesh K. Govil)Date : 28th July, 2006 Partner
ANNEXURE TO THE AUDITORS’ REPORT(Referred to in our Report of even date)
In terms of the information and explanations given to us and the books and records examined by us in thenormal course of audit and to the best of our knowledge and belief, we state as under:
I. The Company has maintained proper records showing full particulars including quantitative details andsituation of its fixed assets on the basis of available information. As explained to us all the fixed assetswere physically verified by the management during the year. We have been informed that no materialdiscrepancies were noticed on such physical verification. Substantial part of fixed assets has not beendisposed off during the year, which will affect its status as going concern.
II. The inventory has been physically verified during the year by the Management at reasonable intervals.In our opinion and according to the information and explanations given to us, the procedures of physicalverification of inventory followed by the management are reasonable and adequate in relation to thesize of the Company and the nature of its business. The Company is maintaining proper records ofinventory. As explain to us the discrepancies noticed on physical verification of stocks as compared tobook records were not material, however, the same have been properly dealt with the books of account.
III. The Company has neither granted or taken any loans, secured or unsecured to/from companies, firmsor other parties covered in the register maintained under section 301 of the Companies Act, 1956.
IV. In our opinion and according to the information and explanations given to us, there is adequate internalcontrol system commensurate with the size of the Company and the nature of its business, for thepurchase of inventory and fixed assets and also for the sale of goods and services. In our opinion, thereis no continuing failure to correct major weaknesses in internal control.
V. (a) According to the information and explanations given to us, we are of the opinion that particulars ofContracts or arrangements referred to in section 301 of the Act have been entered in the registerrequired to be maintained under that section, wherever applicable.
(b) In our opinion and according to the information and explanations given to us, the transactions madein pursuance of Contracts or arrangements entered in the register maintained under section 301 ofthe Companies Act,1956 have been made at the prices, which are reasonable having regard toprevailing market prices at the relevant time.
VI. In our opinion and according to the information and explanations given to us, the company has compliedwith the provision of section 58A & 58-AA or any other relevant provisions of the Companies Act, 1956,the Companies (Acceptance of Deposits) Rules, 1975 and the directives issued by the Reserve Bank ofIndia, with regard to the deposits accepted from the public by private circulation. No order has beenpassed with respect to the deposits accepted from the public by private circualtion by National CompanyLaw Tribunal/Company Law Board.
VII. In our opinion, the Company has an internal audit system commensurate with the size and nature of itsbusiness.
VIII. The Central Government has prescribed maintenance of cost records under section 209(1) (d) of theCompanies Act, 1956 in respect of manufacturing activity of Cotton yarn of the Company. We havebroadly reviewed the account and records of the Company and are of the opinion that prima facie theprescribed records are being maintained. We have not, however, made a detailed examination of therecords with a view to determined they are accurate and complete.
IX. a) The Company is generally regular in depositing undisputed statutory dues including Provident Fund,Investor Education and Protection Fund, Employees’ State Insurance, Income-Tax, Sales-Tax, WealthTax, Service Tax, Custom Duty, Excise duty, Cess and any other statutory dues applicable to it withthe appropriate authorities.
b) According to the information and explanations given to us, no undisputed amounts payable in respectof Income-tax, Wealth tax, Service Tax, Sales-tax, Custom Duty and Excise duty and Cess and otheraforesaid statutory dues were outstanding as at 31st March, 2006 for a period of more than sixmonths from the date they became payable.
c) The disputed statutory dues aggregating to Rs. 105.45 Lacs that have not been deposited on accountof disputed matters pending before appropriate authorities are as under:
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ALPS INDUSTRIES LTD.
PROFIT & LOSS ACCOUNT FOR THE FINANCIAL YEAR ENDED 31st MARCH, 2006SCHEDULE As at As at
31.03.2006 31.03.2005Rs. Lacs Rs. Lacs
IncomeSales (including Excise Duty) 13 26,386.56 17,955.64Less : Excise Duty 87.08 169.43Net Sales 26,299.48 17,786.21Other Income 22.14 19.93Increase (decrease) in Stock 1,172.70 428.92
27,494.32 18,235.06
ExpenditureMaterial Consumed 14 18,713.98 12,517.18Manufacturing Expenses 15 2,479.94 1,431.88Personnel Expenses 16 436.60 396.12Other operating Expenses 17 1,401.54 966.12Misc. and Deferred Revenue Expenditure W/Off 150.69 189.32
23,182.75 15,500.62
Profit Before Depreciation, Financial Expenses & Tax 4,311.57 2,734.44Less : Financial Expenses 18 951.38 653.41Profit Before Depreciation & Tax 3,360.19 2,081.03Less : Depreciation/Amortisation 743.02 562.63Profit Before Tax 2,617.17 1,518.40Less : Provision for Tax 175.00 85.00Less : Provision for Fringe Benefit Tax 22.40 -Profit from operations 2,419.77 1,433.40Less : Deferred Tax 39.50 20.00Profit After Tax 2,380.27 1,413.40Add : Excess Provision Written Back 8.61 -Less/Add : Prior Year Adjustments (1.18) 7.45
2, 387.70 1,420.85Add : Surplus as per last year 629.88 624.04Available for Appropriation 3,017.58 2,044.89
AppropriationsTransfer to General Reserve 2,000.00 1,300.00Proposed Dividend 121.93 100.86Corporate Dividend Tax 17.10 14.15Surplus carried to Balance Sheet 878.55 629.88
Total Appropriation 3,017.58 2,044.89
Basic and Dilutive Earning Per Share (Rs.) 27.52 21.02
Significant Accounting Polices and Notes forming 19part of the financial Statements.Schedules referred to above form an integral part of the Financial Statements
As per our report of even date For and on behalf of the BoardFor R.K. Govil & Co.Chartered AccountantsRajesh K. Govil Sandeep AgarwalPartner Managing DirectorPlace : Ghaziabad Ajay Gupta Rakesh GuptaDated : July 28, 2006 Company Secretary & DGM (Legal) Director
BALANCE SHEET AS AT 31st MARCH, 2006
Schedule As at As at31.03.2006 31.03.2005
Rs. Lacs Rs. Lacs
Sources of Funds
1 Shareholders’ FundsShare Capital 1 1,625.71 672.38Reserves and Surplus 2 23,086.50 7085.51Application Money-ZCCW 75.00 -
24,787.21 7,757.89
2 Deferred Tax Liability - Net 1,224.50 1185.00
3 Loan FundsSecured Loans 3 20,788.24 10218.49Unsecured Loans 4 2,161.95 1,281.43
22,950.19 11,499.92
Total 48,961.90 20442.81
Application of Funds
1 Fixed AssetsGross Block 5 25, 289.97 11042.83Less : Depreciation 3,727.63 3022.54Net Block 21,562.34 8020.29Capital work in Progress 1,059.63 4562.09
2 Investments 6 46.66 46.66
3 Current Assets, Loans & AdvancesInventories 8 11,225.13 6297.29Sundry Debtors 9 4,973.95 1951.80Cash & Bank Balances 10 10,299.47 209.23Loans & Advances 11 1590.73 734.77
28,089.28 9,193.09Less : Current Liabilities & Provisions 7 2,588.16 1639.02
Net Current Assets 25,501.12 7,554.07
4 Misc. Expenditure/Deferred Revenue Expenditure 12 792.15 259.70(to the extent Not Written Off or adjusted)
Total 48,961.90 20442.81
Schedules referred to above form an integral part of the Financial Statements
As per our report of even date For and on behalf of the BoardFor R.K. Govil & Co.Chartered Accountants
Rajesh K. Govil Sandeep AgarwalPartner Managing Director
Place : Ghaziabad Ajay Gupta Rakesh GuptaDated : 28th July, 2006 Company Secretary & DGM (Legal) Director
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ALPS INDUSTRIES LTD.
5. FIXED ASSETS Rs. Lacs
Gross Block Depreciation Net Block
Particulars Opening Additions Deductions Total upto Opening During On Total upto As on As onBalance 31.03.2006 Balance the year Deduction 31.03.2006 31.03.2006 31.03.2005
Brand & Trade Marks 646.07 0.00 0.00 646.07 214.40 64.61 0.00 279.01 367.06 431.67Lands (Lease Hold) 285.86 751.83 0.00 1037.69 19.78 8.41 0.00 28.19 1009.50 266.08Buildings 1628.13 3582.61 0.00 5210.74 410.94 73.77 0.00 484.71 4726.03 1217.19Plant & Machineries 7781.45 9640.00 74.09 17347.36 2024.80 512.29 34.98 2502.11 14845.25 5756.65Furniture & Fixtures 190.14 15.68 0.00 205.82 57.47 9.64 0.00 67.11 138.71 132.67Vehicles 91.24 109.29 7.44 193.09 52.60 7.50 2.95 57.15 135.94 38.64Office Equipments 55.17 55.11 0.00 110.28 19.47 3.51 0.00 22.98 87.30 35.70Computers 364.77 174.97 0.82 538.92 223.08 63.29 0.00 286.37 252.55 141.69
Sub Total 11042.83 14329.49 82.35 25289.97 3022.54 743.02 37.93 3727.63 21562.34 8020.29
Previous Year 10009.28 1160.38 126.83 11042.83 2504.31 562.63 44.40 3022.54 8020.29 7504.97
As at As at31.03.2006 31.03.2005
Rs. Lacs Rs. Lacs
6. INVESTMENTS(A) Quoted (Fully Paid Unless Otherwise Stated)
13400(13400) Equity Shares of Kay Pulp & Paper Mills Ltd. 1.34 1.34720(720) Equity shares of Parasrampuria Synthetics Ltd. 0.22 0.222000(2000) Equity Shares of Global Syntex (Bhilwara) Ltd. (Partly Paid) 0.10 0.10
(B) Unquoted4500000(4500000) Equity shares of 45.00 45.00Improve Interior.com Ltd. of Rs 1/- each
- Figures in Bracket relate to previous year 46.66 46.66
7. CURRENT LIABILITIES & PROVISIONSCurrent LiabilitiesSundry Creditors : SSI 17.72 5.35
: Others 1690.01 1146.68Expenses Payable 439.12 147.29Unclaimed Dividend 1.96 2.16Interest Accrued But Not Due 6.93 44.23Gratuity / Leave Encashment 95.99 93.30ProvisionsProposed Dividend 121.93 100.86Income Tax / Wealth Tax 175.00 85.00Fringe Benefit Tax 22.40 0.00Corporate Dividend Tax 17.10 14.15
2588.16 1639.02
8. INVENTORIES (As Certified by the Management)Raw Materials 6401.82 2688.67Consumable Stores 227.10 185.11Finished Goods 1090.99 900.06Semi finished Goods 3505.22 2523.45
11225.13 6297.29
SCHEDULES FORMING PART OF ACCOUNTS
As at As at31.03.2006 31.03.2005
Rs. Lacs Rs. Lacs
1. SHARE CAPITALAuthorised Capital25000000(15000000) Equity Shares of Rs.10/-each 2,500.00 1,500.00- (10000000) Preference Shares Rs. 10/- each 0.00 1,000.00
2,500.00 2,500.00
Issued , subscribed & paid up16257050(6723800) Equity Share of Rs.10/-each 1,625.71 672.38
1,625.71 672.38
2. RESERVES AND SURPLUSBalance As on Addition Transfer Balance As on
01.04.2005 During the 31.03.2006Year
Share Premium 1,770.62 1,3752.32 — 15,522.94General Reserve 4,685.00 2,000.00 — 6,685.00Surplus in Profit and Loss Account 629.89 2,248.67 2,000.00 878.56
Total 7,085.51 18,000.99 2,000.00 23,086.50
3. SECURED LOANS(A) Term Loans
Bank & Financial Institutions 12,518.43 6,692.57Others 80.70 10.55Term loans from Bank & Financial Institututions are Secured byFirst Pari-Passu charge created / to be created onFixed Assets of the Company, both present andFuture and by Personal Guarantees of some of the Directors.
(B) Working Capital Loans from Banks: 8,189.11 3,455.37(Secured by Hypothecation of Stocks of Raw Material,Finished Goods and Semi Finished Goods,Consumable Stores & Spares, Book Debts , SecondPari-Passu Charge over Fixed Assets and Personal -Guarantee of some of Directors)
(C) Technology Information, Forecasting andAssessment Council (TIFAC) 0.00 60.00(Department of Science and Technology)Research and Development Assistance
Total Secured Loans 20,788.24 10,218.49
4. UNSECURED LOANSShort Term DepositsFrom Bodies Corporate 0.00 1.25Security from Staff & Customers 135.63 17.15Fixed Deposits 62.85 59.89Banks & Others 1,963.47 1,203.14
Total Unsecured Loans 2,161.95 1,281.43
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ALPS INDUSTRIES LTD.
As at As at31.03.2006 31.03.2005
Rs. Lacs Rs. Lacs
15. MANUFACTURING EXPENSESWages including other benefits 321.78 307.30Contribution to Provident & Other Funds 31.85 23.72Security & Vigilance 11.04 9.54Labour Welfare & other Benefits 18.87 7.98Consumption of Stores & Spares 174.97 157.97Production Expenses 897.79 381.86Weaving & Processing Charges 261.50 59.97Power & Fuel 731.74 447.45Carriage & Cartage 13.96 4.40Research & Development Expenditure 16.44 31.69
2479.94 1431.88
16. PERSONNEL EXPENSESSalaries including other benefits 378.47 347.86Contribution to provident & other funds 17.86 18.47Gratuity 19.28 13.92Staff Welfare & other Benefits 20.99 15.87
436.60 396.12
17. OTHER OPERATING EXPENSESRent 19.41 13.42Rates & Taxes 8.61 4.53Postage & Telegram 2.42 1.12Printing & Stationery 25.68 18.13Legal & Professional Expenses 65.06 51.03Travelling & Conveyance - others 158.19 101.62Travelling & Conveyance - Directors 10.28 9.01Telephone & Fax 49.80 39.99Directors' Remuneration 14.35 10.03Books & Periodicals 0.79 1.41Fees & Subscription 9.94 3.70General Expenses 13.88 16.89Insurance 287.54 171.84Payment to Auditors 3.00 6.00Vehicle Running Expenses 39.73 20.78Donation 0.22 2.34Hank Yarn Obligation 1.78 0.00
Repairs & MaintenanceBuilding 6.75 7.42Machinery 8.40 7.33Others 62.87 38.90
Selling & Distribution ExpensesPacking & Forwarding 326.14 259.61Sales Promotion & Incentives 64.16 29.89
As at As at31.03.2006 31.03.2005
Rs. Lacs Rs. Lacs
9. SUNDRY DEBTORSMore than Six months 62.57 64.40Less than Six months 4911.38 1887.40
4973.95 1951.80
10. CASH & BANK BALANCESCash in Hand 82.68 32.68Balances with Scheduled BanksIn Current Accounts 223.56 82.74In Fixed Deposits 47.91 41.35In Margin Money 220.28 52.46GDR Receivable 9725.04 -
10299.47 209.23
11. LOANS & ADVANCES(Unsecured and Considered Good)Advance Recoverable in Cash or in kindfor Value to be Received 1285.10 696.02Security Deposits 118.16 17.65Advance Income Tax & T.D.S. 182.42 21.10Advance Tax - Fringe Benefit Tax 5.05 0.00
1590.73 734.77
12. MISCELLANEOUS EXPENDITURES(To the extent not written off)Preliminary Expenses 432.44 16.41Product Development & other 359.71 243.29Deffered Revenue Expenses
792.15 259.70
13. SALES (Including Excise Duty)Exports 5728.60 4772.84Domestic 20657.96 13182.80
26386.56 17955.64
14. MATERIAL CONSUMEDOpening Stock 2688.67 2130.94Add: Purchases 22427.13 13074.91
25115.80 15205.85
Less: Closing Stock 6401.82 2688.67
18713.98 12517.18
72 73
ALPS INDUSTRIES LTD.
19. NOTES TO ACCOUNTS AND SIGNIFICANT ACCOUNTING POLICIES
A. SIGNIFICANT ACCOUNTING POLICIES
• BASIS FOR PREPARATION OF ACCOUNTS
The Financial Statements are prepared on Going concern basis under the historical cost convention onaccrual basis unless specifically stated and in accordance with applicable Accounting standards.
• USE OF ESTIMATES
The presentation of financial statements requires estimates and assumptions to be made that affect thereported amount of assets and liabilities on the date of the financial statements and the reported amountof revenues and expenses during the reporting period. Difference between the actual result and estimatesare recognized in the period in which the result are known/materialised
• REVENUE RECOGNITION
Sales are recognised on completion of sale of goods and are recorded net of trade discounts, rebates,excise duty and inclusive of exchange fluctuation.
• FIXED ASSETS
All Fixed assets are stated at cost net of modvat/ cenvat less accumulated depreciation and impairmentloss if any. Preoperative expenses including trial run expenses, net of revenue and borrowing cost directlyattributable to acquisition, erection or construction of those fixed assets which necessarily take asubstantial period of time to get ready for their intended use are capitalised.
• DEPRECIATION
The depreciation on the Fixed assets have been provided on Straight Line Method, as per Schedule XIVof the Companies Act, 1956
• CAPITAL WORK-IN-PROGRESS
All cost of construction, acquisition, installation, erection etc. including preoperative expenses directlyrelated to the Fixed Assets, not yet commissioned, have been shown under the head capital work-inprogress, which on completion shall be allocated to the respective Assets.
• INVESTMENTS
Investments are ordinarily stated at cost. Provision for diminution is made to recognize any decline,other than temporary.
• INVENTORIES
Raw Materials, stores and spares are valued at cost (FIFO method) except cotton, which is valued atweighted average cost.
Finished and Semi Finished goods produced & purchased, are valued at lower of cost or net realisablevalue. (The categorization of Semi Finished goods has been based on the location of the goods.)
• TERMINAL BENEFITS
The provision for Gratuity liability has been made in accordance with the actuarial valuation at the end ofthe year.
The provision for the Leave Encashment has been made on the basis of earned leave accrued toemployees.
As at As at31.03.2006 31.03.2005
Rs. Lacs Rs. Lacs
Advertisement & Publicity 73.25 48.21Sales Tax 2.28 0.39Freight on Exports 147.01 102.53
1401.54 966.12
18. FINANCIAL EXPENSESInterest to Banks & Financial Institutions 744.20 567.38Others 207.18 86.03
951.38 653.41
74 75
ALPS INDUSTRIES LTD.
3. During the year, the Authorised Preference Share Capital of Rs. 1000.00 Lacs consisting of 1,00,00,000preference Shares of Rs.10/- each were converted into authorised Equity Share Capital. Consequently,Authorised Equity Share Capital has been increased to Rs. 2500.00 Lacs consisting of 2,50,00,000 Equityshares of Rs. 10/- each.
4. During the year, the company has started the commercial production of its new Dyed yarn spinningproject located at Plot No.1A, Sector-10, SIDCUL, IIE, Roshnabad Road, Haridwar, Uttranchal withmanufacturing capacity of 50 tons per day.
5. The company has also taken factories at Kashipur & Jaspur from SIDCUL on lease for production of yarnwith a capacity of 25 tons per day and 12.50 tons per day respectively. The Kashipur unit has started itscommercial production w.e.f. 26th Oct'05, however, commercial production has not been started till31.03.2006 for Jaspur unit.
6. The management is of the opinion that its International transactions are at arm's length prices. Thus therequirement of transfer pricing legislation u/s 92-92F of the Income Tax Act, 1961 will not have anyimpact on tax liability.
7. Deferred Tax resulting from timing differences of temporary nature between book and taxable profit isaccounted for at the current rate of tax as applicable. The deferred tax liability as on 31.03.2006 isRs. 1224.50 lacs.
8. Sales and Raw Material consumption includes captive consumption of Fabric at Window Covering/HomeFurnishing Division.
9. The confirmations from certain trade debtors, loans and advances given and trade creditors have notbeen obtained and in the absence of such confirmation the entries recorded in the books have beenrelied upon and therefore, such balances are as per books of accounts of the company and subject toreconciliation.
10. In respect of the Unclaimed Dividend as mentioned under Section 205C of the Companies Act, 1956,Rs. 0.37 Lacs (Previous year 0.48 Lacs) for the Financial Year 1997-98 are credited to the Investor Educationand Protection Fund.
11. In the opinion of the Management, all current assets, loans and advances have a value on realization inthe ordinary course of business at least equal to the amount at which they are stated.
12. Assets is carried at balance sheet are more than its recoverable amount, no provision is required to bemade as per the accounting standard (AS 28) "Impairment of assets" as impairment loss.
13. The names of the Small Scale Industrial undertaking to whom the company owes a sum for more than30 days as at 31.03.2006 are as under:
Rs Lacs
Sl. No. Party’s Name 31.03.2006 31.03.2005
1. M/s Diamond Packaging 1.04 -
2. M/s Monsson (India) Pvt Ltd 3.23 -
3. M/s National Adhesive 0.15 -
4. M/s Shanti Industries 0.36 -
5. M/s Superlit Motto 0.68 0.76
6. M/s Venus Polymers 1.49 0.35
7. M/s Press Matel Industries 1.08 1.41
8. M/s Modern Industrial Syndicate 0.43 1.61
9. M/s Varnika Packaging 1.98 1.22
The above information and that given under Schedule 7 - "Current Liabilities and Provisions" regardingSmall Scale Industrial undertakings has been determined to the extent such parties have been identifiedon the basis of information available with the company. The same have been relied upon.
• RESEARCH AND DEVELOPMENT
Research & Development expenses of revenue nature are charged to Profit & Loss Account and those ofcapital nature are shown in Capital Work In Progress or as an addition to Fixed Assets.
• MISCELLANEOUS EXPENDITURE
Preliminary expenses & capital issue expenses are being amortised over a period of ten years.
Deferred Revenue Expenditures includes Product Research & Development, Design Development,Sampling Expenses and Human Resource Development Expenses, are being written off over the periodduring which the benefits are expected to accrue.
• FOREIGN CURRENCY TRANSACTIONS
a) Transaction denominated in foreign currencies are generally recorded at the exchange rate prevailingat the time of the transactions.
b) Monetary items denominated in foreign currencies at the year end are restated at the year end rates.In case of Monetary items which are covered by forward exchange contracts, the difference betweenthe year end rate and rate on the date of contract is recognized as exchange difference and thepremium paid on forward contracts has been recognized over the life of the contract.
c) Non monetary foreign currency items are carried at cost.
d) Any income or expenses on account of exchange difference either on settlement or translation isrecognised in the profit & loss account except in cases where they relate to acquisition of fixed assetsin which case they are adjusted to the carrying cost of such assets.
• EXPORT BENEFITS
All export benefits are accounted for on accrual basis.
B. NOTES TO ACCOUNTS
1. CONTINGENT LIABILITIES Rs. Lacs
As at As atParticulars 31.03.2006 31.03.2005
a) Bills Discounted with Banks 459.34 740.99
b) Counter guarantees given in favour of Company’s bankers 172.10 13.75
for guarantees given by them.
c) Letters of Credit outstanding (trade) 319.47 165.95
d) Estimated amount of capital contracts remaining unexecuted 823.68 5114.26(net of advances )
e) Claims against the company not acknowledged as debt. 283.57 222.05
f) Outstanding forward contract 5432.74 2080.58
2. During the year company has raised funds by public issue of 41,50,500 Equity Shares @Rs.10 per shareat a premium of Rs.110/- per share aggregating to Rs. 4980.60 lacs and by issue of 26,91,375 GlobalDepositary Receipts (GDR) at a price of US$ 8.10 per GDR aggregating to Rs.9725.04 lacs. The companyhas allotted 53,82,750 equity shares underlying the issue of 26,91,375 GDRs. Each GDR represents twoequity shares of nominal value of Rs.10 per Equity Share. The GDR proceeds are shown as GDR receivablesunder cash & bank balance (schedule 10) as the proceeds were received by merchant bankers but werenot transferred in company's account.
76 77
ALPS INDUSTRIES LTD.
Rs. Lacs
Nature of Transactions 2005-2006 2004-2005
Purchase of goods (including job work) 39.84 2.52
Sales of goods - 28.71
Expenses Incurred / Reimbursed - 0.04
Total 39.84 31.27
17. Transactions with the Directors
Transactions with the Directors namely, Mr. K. K. Agarwal, Mr. Sandeep Agarwal, Mr. G.K. Arora,Mr. J.P. Kundra, Mr. Rakesh Gupta and Dr. M.L. Gulrajani, are as under :
Rs. Lacs
Nature of Transaction 2005-2006 2004-2005
Remuneration 14.35 10.03
Board / Committee meeting fee 3.29 1.20
Total 17.64 11.23
18. Auditors' Remuneration Rs. Lacs
Particulars 2005-2006 2004-2005
Audit Fees 3.00 4.50
Other services - 1.50
Total 3.00 6.00
19. Directors’ Remuneration
The Directors’ remuneration is within the limits specified in Section 198/349 of the Companies Act, 1956.Rs. Lacs
Particulars 2005-2006 2004-2005
Salary 13.50 8.90
Provident Fund - 0.03
Perquisites 0.85 1.10
Total 14.35 10.03
20. Additional information required under para 3 and 4 of part II of schedule VI, of the Companies Act, 1956.
A. CAPACITY
Product Unit Licenced capacity Installed capacity
Cotton Yarn M.T. 34028.38 34028.38
Fabric '000 Sq Mtr 19035.17 19035.17
Made Ups '000 Sq Mtr 15228.00 10520.00
Fashion Accessories '000 Sq Mtr -- 216.00
Window Coverings & Floorings '000 Sq Mtr -- 178.00
14. The details of Company’s Segment wise financial results are as under :
Primary Segments Rs. Lacs
Segments
Particulars Home Furnishing & Yarn Window Covering, TotalFashion Accessories Wooden Floorings
Year 2005-06 2004-05 2005-06 2004-05 2005-06 2004-05 2005-06 2004-05
Segment Revenues 20576.14 15874.06 2980.46 ---- 2742.88 1912.15 26299.48 17786.21
Less Inter 252.72 160.64 31.03 ----- 20.02 -- 303.77 160.64Segment Revenue
Net Segment Revenue 20323.42 15713.42 2949.43 ---- 2722.86 1912.15 25995.71 17625.57
Segment Results 2864.15 1897.66 350.63 ---- 331.62 254.22 3546.40 2151.88
Less Financial Expenses 713.68 607.65 178.91 ---- 58.78 45.76 951.37 653.41
Add Other Income 19.51 19.61 2.15 ---- 0.48 0.33 22.14 19.94
Profit Before Tax 2169.98 1309.62 173.87 ---- 273.32 208.79 2617.17 1518.41
Capital Employed 19307.10 13874.89 15915.01 4562.09 2487.55 1746.13 37709.66 20183.11
Secondary Segments Rs. Lacs
Segments Total
Particulars Domestic Export
Year 2005-06 2004-05 2005-06 2004-05 2005-06 2004-05
Segment Revenue 20570.88 13013.38 5728.60 4772.83 26299.48 17786.21
15. Basic/Diluted Earning Per Share has been calculated shown as under.
Particulars Year ended Year ended31.03. 2006 31.03. 2005
-Profit attributable to the Equity shareholders (Rs. Lacs) - (A) 2380.27 1413.40
-Weighted average number of equity shares outstanding during the year-(B) 8648914 6723800
-Nominal value of equity shares (Rs.) 10.00 10.00
-Basic & Diluted Earnings per share (Rs.) -(A) / (B) 27.52 21.02
The Company has contracted to issue 500,000 Zero Coupon Convertible Warrants at issue price of Rs. 150/- per warrant. The issue price being more than the fair value calculated in terms of Accounting Standard 20issued by ICAI, which is anti-dilutive. Therefore the above Zero Coupon Convertible Warrants has not beentaken into consideration while calculating the Dilutive EPS.
16. RELATED PARTY TRANSACTIONS
The members of the Board are interested in the following entities covered under the Related PartyTransactions but there were no material transactions entered into with any of the entities. However thevolume wise details are as under:
Nature of Relationship Name of Entities
Associate Companies Alps Texfab (P) Ltd., Alps Infin Pvt. Ltd., Improve Interior.Com Ltd.,Alps Processers Pvt. Ltd., Careen Fintec (P.) Ltd., Coronation Spinning India(P) Ltd., Padam Precision Dies & Component Pvt. Ltd., Peek Finvest (P) Ltd.,Perfect Finmen Services (P) Ltd., Roseate Finvest Pvt. Ltd., SaurabhFloriculture (P) Ltd., Supreme Finvest Pvt. Ltd.
78 79
ALPS INDUSTRIES LTD.
21. Value of Direct Imports (C.I.F. Value)
Particulars 2005-2006 % of 2004-2005 % of
(Rs in Lac) Consumption (Rs in Lac) Consumption
Raw Materials 673.37 3.60 421.71 3.42
Capital Goods 3392.23 N.A. 648.86 N. A.
Components & Spare Parts 5.16 2.95 20.03 12.68
22. Expenditure in Foreign Currency Rs. Lacs
Particulars 2005-2006 2004-2005
Foreign Travels 46.52 35.49
Dividend (net ) 6.70 2.24
Interest of FCL 23.52 65.11
Others(including GDR issue expenses) 217.65 5.30
23. Earnings in Foreign Exchange Rs. Lacs
Particulars 2005-2006 2004-2005
F.O.B. Value of Exports 5618.76 4665.23
24. Remittance in Foreign Currency on account of dividend
Year No. of Shares No. of non resident (Rupees in Lacs) Relating to F.YHeld Shareholders
2005-2006 4468350 22 6.70 2004-2005
2004-2005 447300 21 2.24 2003-2004
25. Other Income Rs. Lacs
Particulars 2005-2006 2004-2005
Income from Interest 7.23 3.06
Miscellaneous Income 14.91 16.88
Total 22.14 19.94
26. Previous year figures have been re-arranged, recast & regrouped, wherever considered necessary.Figures in bracket represent the figures of previous year.
As per our report of even date attached For and on behalf of the Board
For R.K. Govil & Co. Sandeep AgarwalChartered Accountants Managing Director
Rajesh K. Govil Ajay Gupta Rakesh GuptaPartner Company Secretary & DGM (Legal) Director
Place : GhaziabadDated : 28th July, 2006
B. RAW MATERIAL CONSUMPTION Rs. Lacs
Particulars Unit Current Year Previous Year
Year Qty. Value Qty. Value
Cotton M.T. 5492.86 2614.51 1012.98 511.12
Yarn M.T. 1511.60 1216.38 652.37 529.16
Fabric '000 Sq Mtr 30031.51 13289.40 22723.52 10006.65
Window Coverings & Floorings --- --- 1502.14 --- 1226.32
Others --- --- 91.55 --- 243.94
Total --- --- 18713.98 --- 12517.19
C. FINISHED PRODUCTS
I. Opening Stock
Particulars Unit Current Year Previous Year
Qty. Value Qty. Value
Yarn M.T. 109.33 124.09 44.82 57.20
Fabric/MadeUps/Fashion Access. '000 Sq Mtr 1492.12 769.46 1588.41 868.16
Others --- --- 6.51 --- 18.39
Total --- --- 900.06 --- 943.75
II. Production/Purchases (Net of captive consumption) Rs. Lacs
Particulars Unit Current Year Previous Year
Qty. Value Qty. Value
Yarn M.T. 4226.55 --- 766.24 ---
Fabric/Made Ups/Fashion Access. '000 Sq Mtr 32098.71 --- 23622.16 ---
III. Sales (Inclusive of Excise Duty)
Particulars Unit Current Year Previous Year
Qty. Value Qty. Value
Yarn M.T. 3905.12 2998.97 701.73 402.52
Fabric/Made Ups/Fashion Access. '000 Sq Mtr 32090.62 20545.76 23718.45 15561.40
Window Covering & Floorings '000 Sq Mtr --- 2760.17 --- 1950.72
Others --- --- 81.66 --- 41.00
Total --- --- 26386.56 --- 17955.64
IV. Closing Stock
Particulars Unit Current Year Previous Year
Qty. Value Qty. Value
Yarn M.T. 430.76 364.59 109.33 124.09
Fabric/Made Ups/Fashion Access. '000 Sq Mtr 1500.21 700.30 1492.12 769.46
Others --- --- 26.10 --- 6.51
Total --- --- 1090.99 --- 900.06
80 81
ALPS INDUSTRIES LTD.
AUDITOR’S CERTIFICATE
We have examined the attached Cash Flow Statement of Alps Industries Limited for the yearended on 31st March 2006. The Statement has been prepared by the Company in accordancewith the requirements of clause 32 of listing agreement with the Stock Exchanges and is basedon and in agreement with the corresponding Profit and Loss Account and the Balance Sheet ofthe Company covered by our report of July 28, 2006 to the members of the company.
For R. K. Govil & Co.Chartered Accountants
Place : Ghaziabad Rajesh K. GovilDated : 28th July, 2006 Partner
Cash FlowBalance Sheet Abstract and Company's General Business Profile
1. Registration details
Registration No. 0 0 3 5 4 4 State Code 2 0
Balance Sheet date 3 1 0 3 2 0 0 6
2. Capital raised during the year (Amount in Rs. '000)
Public Issue : 9 5 3 3 3 Right Issue : N I L
Bonus Issue : N I L Private Placement/Others : N I L
3. Position of Mobilisation and Deployment of Funds (Amount in Rs. '000)
Total Liabilities : 4 8 9 6 1 9 0 Total Assets : 4 8 9 6 1 9 0
Sources of Funds:Paid-up Capital : 1 6 2 5 7 1 Reserves & Surplus : 2 3 0 8 6 5 0
Application Money : 7 5 0 0
Secured Loans : 2 0 7 8 8 2 4 Unsecured Loans : 2 1 6 1 9 5
Deferred Tax Liability : 1 2 2 4 5 0
Application of Funds:
Net Fixed Assets : 2 2 6 2 1 9 7 Investments : 4 6 6 6
Net Current Assets : 2 5 5 0 1 1 2 Misc. Expenditure : 7 9 2 1 5
Accumulated Losses : N I L
4. Performance of Company (Amount in Rs. '000)
Turnover : 2 6 3 2 1 6 2 Total Expenditure : 2 3 7 0 4 4 5
Profit/Loss before tax 2 6 1 7 1 7 Profit/Loss after tax 2 4 1 9 7 7
Earning per share in Rs. : 2 7 . 5 2 Dividend @ % : 7 . 5
5. Generic Names of Three Principle Products/Services of Company ( as per monetary terms)
Item Code No. (ITC Code) 6 3 0 3 1 9 0 0
Product Description V E R T I C A L B L I N D S
Item Code No. (ITC Code) 6 3 0 3 9 1 0 0
Product Description O T H E R T E X T I L EM A D E - U P S
Item Code No. (ITC Code) 5 2 0 5 1 2 1 0
Product Description C O T T O N Y A R N
As per our report of even date attached for ALPS INDUSTRIES LIMITEDFor R.K GOVIL & CO.Chartered Accountants
Rajesh K. Govil Sandeep AgarwalPartner Managing Director
Place : Ghaziabad Ajay Gupta Rakesh GuptaDated : 28th July, 2006 Company Secretary & DGM (Legal) Director
(Including other income)
(Basic & Dilutive EPS)
+ - + -
Date Month Year
82
ALPS INDUSTRIES LTD.
CASH FLOW STATEMENT FOR THE YEAR ENDED :
Rs. Lacs
31.03.2006 31.03.2005
(A) CASH FLOW FROM OPERATING ACTIVITIESNet Profit Before Tax and Extraordinary Items 2617.17 1,518.41
Adjustment for :Depreciation 743.02 562.63Interest/Dividend received (22.14) (19.94)Interest on Borrowed Capital 951.38 653.41Loss on Sale of Assets 40.35 21.67Miscellaneous Expenditure W/Off 150.69 1863.30 189.32 1,407.09
Operating Profit Before Working Capital Changes 4480.47 2,925.50Adjustment for Working Capital Changes
Inventories (4,927.84) (1,033.79)Trade & other Receivable (3878.11) (755.72)Trade Payable & other Liabilities 949.14 215.49Increase in Working Capital (7856.81) (1,574.02)Cash Generated from OperationsInterest Paid (951.38) (653.41)Direct Taxes Paid (197.40) (1148.78) (85.00) (738.41)Cash Flow Before Extraordinary Items (4525.12) 613.07Extraordinary Items (Prior Year Adjustment) 7.43 7.45
Net Cash From Operating Activities (A) (4,517.69) 620.52
(B) CASH FLOW FROM INVESTING ACTIVITIESPurchase of Fixed Assets (10,827.03) (5,410.26)Sale of Fixed Assets 4.07 117.04Sale / (Purchase) of Investments - 131.30Interest/Dividend received 22.14 19.94Preliminary/Product Research Expenses (683.14) (127.37)
Net Cash used in Investment Activities (B) (11,483.96) (5,269.35)
(C) CASH FLOW FROM FINANCING ACTIVITIESProceeds From Issue of Share Capital/Share Premium 14,780.65 —Net proceeds / Repayment of long term borrowings 11,450.27 4,794.48Repayment of Finance/Lease Liabilities — —Dividend Paid (139.03) (115.01)Addition/Transfer to Capital Reserve —
Net Cash From Financing Activities (C) 26,091.89 4,679.47
Net Increase in Cash & Cash Equivalents (A+B+C) 10,090.24 30.64Opening Balance of Cash and Cash Equivalents 209.23 178.59Closing Balance of Cash and Cash Equivalents 10,299.47 209.23
For and on behalf of the Board
Sandeep AgarwalManaging Director
Place : Ghaziabad Ajay Gupta Rakesh GuptaDate : 28th July, 2006 Company Secretary & DGM (Legal) Director
