Arvind - Initiating Coverage - SPA Securities

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					August 30, 2011                                                                   INITIATING COVERAGE


ARVIND
SENSEX: 16,416.3                                                                  RECOMMENDATION : BUY

IT'S NOT JUST ABOUT DENIMS ANYMORE….
                                                                                                                                                         TEXTILE

Arvind Ltd. is the largest manufacturer, marketer and exporter of textile fabric and garments in the country. The
company has registered 230.1% growth in FY11 net profits, led by growth in domestic market on the back of strong
B2C business model. With the growth momentum carrying forward and improvement in margins, we expect the
company to show a faster growth in its top-line as well as bottom-line.


Growth Upswing Propelled by Strong Domestic Demand                                                             Expanding Product Line - Driving Growth Ahead
The Indian domestic Textile and Apparel market size in 2009 was                                                Arvind is planning to introduce new brands to occupy vacant segment
US$ 47Bn and is expected to grow @ 11% CAGR to reach US$140Bn                                                  opportunities. The company is planning to launch Brand 'Elle' in
by 2020. The company derived ~67% of its business from domestic                                                FY12 catering to the women's premium spaces as well as venturing
sales with 28% accounted by B2C and 72% by B2B model. Going                                                    into technical textiles. Going ahead, the company expects this segment
ahead the company is in process of increasing its B2C share to                                                 to contribute INR 5,000mn by FY15E. Denim Fabric which constituted
41% by FY13E due to better pricing power compared to B2B                                                       around 46% of Textiles sales and 33% of overall revenue is expected
                                                                                                               to come down below 30% on account of increased contribution by
segment.
                                                                                                               other segments, mainly brands & retailing.
Advantage Brand 'Arvind'
                                                                                                               Capacity Expansion to Push Up Volumes
Solid demand growth for apparel in the domestic segment has
                                                                                                               Current denim capacity of 108mn mtrs will be increased to
correspondingly led to increased fabric demand. Strong distributor
                                                                                                               117.6mn mtrs by FY12 while additional 12mn mtrs capacity would
network and an impressive bouquet of established brands
                                                                                                               be added to the Woven division taking the total capacity to 84mn
developed over the last couple of years has helped the company's
                                                                                                               mtrs by FY12. Aggressive capacity expansion across the segments
brand & retail business grow by 47% with the share of apparel &                                                will result in volume expansion, thereby accelerating growth.
fabric retailing growing to 32% in FY11 from 28% in FY10.
                                                                                                               VALUATION AND RECOMMENDATION
Improving ROCE by way of Land Monetizing                                                                       We expect Arvind's topline and bottomline to grow at a CAGR of
The company has around 520 acres of surplus land around                                                        20.5% & 66.8% respectively over the period FY11-13E coupled with
Gujarat which is expected to generate INR 10,000mn over the next                                               margin expansion, due to aggressive growth in existing businesses
4 years. The amount will be used for capex funding and will help                                               and expansion in the high margin retail space and low gearing due
improve ROCE from 10.7% to 15.8% over FY11-FY13E. Debt/EBITDA                                                  to land monetization. We recommend a buy on the stock with a
multiple of 3.7x in FY11 is expected to improve to 2.1x by FY13E.                                              target of INR 108 implying a discount of 6x on FY13E earnings.



Shareholding (%)                                                               Key Data                                    INR mn                 FY10      FY11    FY12E     FY13E
Promoter                                                          43.4         BSE Code                        500101      Net Sales          32255.7 40340.2 49266.3 58125.7
FII                                                               10.3
                                                                               NSE Code                        ARVIND      Growth (%)           19.4%      25.1%    22.1%     18.0%
DII                                                               16.9
                                                                               Bloomberg Code              ARVIND IN       EBIDTAM (%)          11.0%      12.4%    13.1%     13.9%
Others                                                            29.3
                                                                               Reuters Code                 ARVN.BO        PAT                   499.5    1648.7   3345.8    4584.6
Price Performance vs Sensex
280                                                                            CMP (INR)                          76.2     Growth (%)          -150.2%    230.1%   102.9%     37.0%
250
                                                                               No.of Shares (mn)                 254.4     EPS (INR)               2.2       6.5      13.2     18.0
220
190                                                                            Face Value (INR)                   10.0     P/E (x)                35.4      11.8       5.8       4.2
160
130                                                                            Mcap, (INR Mn)               19,372.6       EV/EBIDTA               9.1       6.9       4.9       3.9
100
 70                                                                            52 week H/L                 93.5 / 40.3     Debt/Equity             1.7       1.3       1.0       0.8
      Aug-10


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                                                                               2Wk Avg. Daily Vol. BSE (mn.)       0.7     RoCE (%)               7.4%     10.7%    14.0%     15.8%

                            Arvind                 SENSEX                      Beta (Nifty 1 Year)                 1.5     RoE (%)                3.9%      9.7%    16.4%     18.4%




Manas Majumdar
manas.majumdar@spagroupindia.com                                                                       1
Ph. No. 91 22 4289 5600 Ext.629
                                                                                                                                  TEXTILE


Investment Rationale                                                                        Arrow has been awarded 'Best Iconic Brand' from Pantaloons and
                                                                                            'Super-brands' status by the Superbrands council of India. US
Growth Upswing Propelled by Strong Domestic Demand                                          Polo launched in 2009, won the 'Best debutant Iconic brand' award
India's Textile & Apparel industry (domestic + exports) is expected                         in the same year by Pantaloon.
to grow from current US$ 70bn to US$ 220bn by 2020. The Indian
domestic Textile and Apparel market size in 2009 was US$ 47bn                               Expanding Product Line - Driving Growth Ahead
and is expected to grow @ 11% CAGR to reach US$ 140bn by 2020.                              Arvind is planning to introduce new brands and brand-extensions
Out of this, Domestic Apparel retail market was worth US$ 33bn                              to occupy vacant segment opportunities. The company is planning
in 2009 and is expected to reach US$ 100bn by 2020.                                         to launch Brand 'Elle' in FY12 catering to the women's premium
(source: Indian textile & Apparel compendium 2010, Technopack)                              spaces as well as venturing into Technical textiles. Going ahead,
Consumer spending has revived leading to a strong demand in                                 the company expects this segment to contribute INR 5,000mn by
apparel, thereby leading to a strong demand for fabrics. With the                           FY15E.
increase in disposable income and the India consumption story                               The management is also trying its hand at extension of established
playing out, the demand surge is expected to continue. Arvind is                            brands in related segments. For example, Arrow which was earlier
able to cater to the classes and the masses as its brands portfolio                         a men's formal wear brand has successfully been extended to the
straddles across all segments of the market; i.e. value, premium                            sports segment.
and luxury. This will likely contribute to enhanced revenue growth
at CAGR 20.5% from FY11 to FY13E.                                                           The company has also entered into a multi-year licensing deal
                                                                                            with Iconix Brand Group, Inc to manufacture and distribute
Fig 1: Sales and PAT growth                                                                 'Mossimo' apparel and accessories across India. The youth brand
80000                                                                            5000       'Mossimo' is among the largest in the world for both men and
60000                                                                            4000       women in the 18-22 years age group. Arvind will sell 'Mossimo'
                                                                                 3000       exclusively in its Megamart stores.
40000
                                                                                 2000
20000                                                                            1000       Fig 3: New Brands to Occupy Vacant Segment Opportunities
       0                                                                         0
                     FY10           FY11          FY12           FY13
                              Topline (RHS)            )
                                                     PAT (LHS)
Source: Company, SPA Research

Advantage Brand 'Arvind'
Arvind is the largest textiles manufacturer in the industry and
hence enjoys a considerable advantage of scale over its peers.
Also since the company has its own integrated spinning facilities,
the company has been able to source yarn at a 20% cheaper rate
than its peers who procure the same from the market.
Established Brands
                                                                                            (Source: Company, SPA Research)
Arvind has an outstanding portfolio of brands in its stable, thereby
helping it to cash on the consumption story.                                                Shift in Business Model
Fig 2: Existing Brand Portfolio                                                             Arvind is actively changing its business model from B2B to B2C. In
   Brand Portfolio          Value              Premium                  Luxury              FY10, the B2C business contributed around 28% of the total revenue
                                                                                            while in FY11, the share of apparel and fabric retailing grew to
                                                                                            32%. Going ahead, the management expects B2C share to contribute
       Owned
                                                                                            around 41% by FY13E.
                                                                                            Arvind's revenue from fabric retailing stood at INR 3,550mn while
                                                                                            the rest was contributed by Brands & Retail division at INR
                                                                                            9,350mn. B2C business gives the company a better pricing power
      Licensed
                                                                                            compared to a B2B business in a rising cost environment.
                                                                                            Arvind introduced selling shirt and trouser fabric in specially
    Joint Venture                                                                           designed ready-to-stitch (RTS) consumer kits. This helped the
(Source: Company)



                                                                                        2
                                                                                                                                TEXTILE

retailers with inventory management as with RTS kits they needed             Distribution Expansion of Brands
to store only 1.6mtrs of cloth and can also be sold based on                 The company is rapidly changing its business model towards B2C
consumer demand.                                                             on account of better pricing power. The company plans to have
                                                                             100 exclusive stores, under The Arvind Store, for retailing of fabrics
Looking at Arvind's portfolio of brands and its presence across
                                                                             and innovative products. As of FY11, the company had 9 stores
all segments, a thrust towards B2C business will help Arvind in
                                                                             present across South India.
benefiting from the rising disposable income & increased spending
power across all segments and demographics of the country.                   Fig 6: Strong Brands & Retail Business Distribution...
                                                                                                                         FY10                       FY11
Fig 4: Fabric Retailing Break-up - B2C                                                                         Stores           Sq. Ft     Stores           Sq. Ft
 70%
                                                                             Brands                              139      141,170            227      206,821
 60%
                                                                             Mega Mart                           143      472,155            204      625,000
 50%
                                                                             Total                               282      613,325            431      831,821
 40%
 30%                                                                         Key Account Counters                        191                        304
 20%                                                                         (Source: Company, SPA Research)

 10%                                                                         Fig 7: ….leads to Retail Productivity on Upswing (INR per Sq. Ft sales per Day)
   0%
                                                                              30
            Brands &     Voiles   Wovens     JV-VF   JV-AMBPL    Denim
             Retails                                              RTS         25
                                     FY10   FY11
                                                                              20
(Source: Company, SPA Research)

Arvind Brands & Retail - Extended Run of Purple Patch                         15
Arvind, with its unmatched brand portfolio consisting of around               10
23 brands, is one of the fastest growing brands and retail player                              FY09                     FY10                   FY11
in the industry with an expected 2 year CAGR of 27.5%.                                                         Brands            Mega Mart

Fig 5: Arvind Brands & Retail growth over FY11-13 (INR mn)                   Looking to give a thrust towards its B2C business model, Arvind
                                                                             plans to add 300,000 sq. ft every year leading to INR 2,500mn of
 20,000                                                                      incremental revenue per year apart from Like to Like growth.
                                                   7.5%                      Fig 8: Mega Mart retail space to grow to 1.8mn sq. ft by FY15...
 15,000                                     CAGR 2
 10,000                                                                          2                                                                   1.8

   5,000                                                                      1.5
        0
                  FY10            FY11          FY12E           FY13E            1

(Source: SPA Research)                                                        0.5
                                                                                           0.13
EBITDA margin for Brands & Retail stood at 8.1% in FY11 as against
                                                                                 0
5.2%inFY10.Goingahead,thecompanyexpectsROCEforthesegment
                                                                                           FY06                FY11                FY14E            FY15E
to improve to 13% from the current 10% due to increase in margins,
advantage of scale and improved same store sales. Distribution               Fig 9: …and so will the Exclusive Brand Stores ('000 Sq Ft of Retail Space)
and Category expansion of brands along-with launch of new                     700
brands will help Arvind Brands and retail to grow at a CAGR over              600
27.5% from FY11-FY13E. In FY11, sales increased by 79% to INR                 500                                        3%
                                                                                                                      R4
1,090mn in Key account counters.                                              400                              CAG

Brands sales per sq.ft. per day increased to INR 25 in FY11 - growth          300
of 13%, while for Mega-Mart, it increased by 12.4% to INR 19.9.               200
The company had a total of 431 stores (Brands + MM) with an                   100
area of 8,31,821 sq. ft. of retail space in FY11.                                  0
                                                                                               FY11                     FY12E                  FY14E
                                                                             Source: Company


                                                                         3
                                                                                                                                                     TEXTILE

Fig 10: Department Stores and Multi brand Outlets - Key Account Counters (Sales - INR Mn)
  450                                                                                                                   100%

                                                                                                                        75%          Arvind Brands Occupy 30% of
  300                                                                                                                                Menswear Departments of
                                                                                                                        50%          Department Stores. Some New
                                                                                                                                     Brand Additions to follow are
  150
                                                                                                                        25%          Elle, Joeffrey and Mossimo.

     0                                                                                                                  0%
                 Lifestyle                  Shoppers Stop            Central                      Globus
                                            FY10 Sales      FY11 Sales         % growth

(Source: Company, SPA Research)




Value Retailing Strategy - Doing Wonders for the Company                                  Fig 12: Share of Arvind Brands & Retail in FY11
Arvind has been hugely successful with its Mega Mart format of
                                                                                                                3%   1% 2%                              Denim
value retailing. Company's strategy is different from other players                                                                                     Shirting/Khakis
in the segment such as 'Brand Factory' and 'The Loot' as it does not                          22%                                          32%
                                                                                                                                                        Garments
have to rely on other companies for its merchandise. This serves as                                                                                     Voiles
a key advantage as the company uses older but popular designs                                3%                                                         Knits

from its own premium brands to attract customers at a discounted                                                                                        Brand & Retail
                                                                                                                                                        Engineering
price.                                                                                        5%                                                        Telecom
The number of stores has gone up from 40 in 2007 to 204 now.                                         11%
                                                                                                                                                        Others
                                                                                                                                   23%
Going ahead, the company is planning to grow the Mega Mart
retail space to 1.8mn sq. ft. by FY15 as against 0.6mn sq. ft. in                         Fig 13: Revenue CAGR of 28% in Brands & Retail over FY10-13E…
FY11. Revenue under Arvind Retail grew by 33% in FY11 to INR                               40%                                                                  33%
3,970mn with like to like store growth of ~20%. Revenue per sq. ft.
                                                                                                                                                                               28%
per day increased at a 2 year CAGR of 8% to INR 19.9.                                      30%
                                                                                                                                           22%
                                                                                                                             20%
Fig 11: Number of Mega Mart Stores                                                         20%             17%
 250
                                                                                           10%
 200
                                            50%                                              0%
 150                                   GR
                                  CA                                                                   Denim          Shirting/Khakis     Voiles                Knits     Brand & Retail
 100
                                                                                          Fig 14: …to increase Brands & Retail share to 26% in FY13E
   50
    0
                  FY07                       FY10                 FY11                                           1%    4%                                Denim
                                                                                                           2%
(Source: Company, SPA Research)                                                                                                                28%       Shirting/Khakis
                                                                                                                                                         Garments
International Expansion                                                                     26%                                                          Voiles
Licenses for brands like 'Arrow, Cherokee and USPA' extend beyond                                                                                        Knits
India. Arvind is also planning to take its own brand 'Flying Machine'                                                                                    Brand & Retail
beyond India. 'Arrow' was recently introduced in Splash, the No. 1                                                                                       Engineering
Department Store Chain of the Middle East, adding 70 new doors                                                                                           Telecom
                                                                                                   2%
for 'Arrow' in the Middle East. 'Arrow' was also launched in South                                   6%                                  24%             Others
                                                                                                                6%
Africa while 'Cherokee' License got extended to Middle East.

                                                                                          (Source: SPA Research)




                                                                                    4
                                                                                                                                             TEXTILE

Capacity Expansion - Volume Growth at Play                                                  The company plans to incur around ~INR 3,000mn for capex
Arvind is uniquely placed in the Textile space. It is the largest                           in FY12.
fabric-manufacturing company in India; it is also the largest denim                         Fig 16:Increase in Fabric volume to push up sales - (mn mtrs p.a.)
manufacturing company in the world. In order to reap the benefits
of scale, the company plans to increase its capacity across                                  120
segments in view of buoyant demand for its products.                                         100
Fig 15: Upcoming Capacity Expansion in Fabrics                                                 80
 Capacity                                           Fabric Category                            60
(mn. mtrs/ p.a.)                    Denim               Woven             Voiles
                                                                                               40
Current                               96                  66                38
                                                                                               20
Expansion in FY11                     12                  6
Expansion in FY12                     9.6                 12                10
                                                                                                0
                                                                                                          Denim          Shirting/Khakis      Voiles          Knits
Proposed by FY12                     117.6                84                48
                                                                                                                          FY10    FY11     FY12E   FY13E
% growth (FY10-12)                   23%                 27%               26%
                                                                                            (Source: Company, SPA Research)
(Source: Company, SPA Research)


Land Monetization to improve ROCE
Arvind has a large land bank of around 500 acres which it does not require for its core business. The current market value of the land bank
is around INR 7,000mn. The company plans to generate INR 10,000mn over the next 4 years by converting the land from industrial land to
non industrial land. The company plans to get regulatory approvals to significantly increase the market value of the land and realize the
cash flow either through sale of land or development in form of JV or on its own.
The cash flow would be used for capacity addition across the various segments of the company. In addition, it will also help improve the
ROCE of the company to ~15.8% in FY13E as against 11% in FY11.
Fig 17: Land Monetization Process


      Land Aggregation            Change of Land Use             Regulatory Approvals          Projectlaunch            Construction/Marketing         Handover possesion



(Source: Company, SPA Research)

The company has JV with Safal group to develop about 1 million sq ft of residential complex at Khokhra (Ahmedabad). The construction is
expected to be completed in FY13 and the company expects INR 1,250-1,300mn of revenues in FY13. On the other hand, the company had
sealed a JV with Tata Housing Development Company to develop an integrated township project in Ahmedabad in May 11. The area to be
developed is 9 million sqft and it will be developed in 5-6 years starting from 3QFY12. The pricing is at INR 2,000-2,500 per sqft and
valuation at constant value terms of this deal stands at around INR 20,000mn. As part of the agreement, Arvind will receive a sum of INR
1,250mn (50% share) from the sale land used for proposed township in FY12E.
Fig 18: ROCE to improve following land monetization…                                        Fig 19: …and so does the ROE
18%                                                                                          20%
16%
                                                                                             15%
14%
12%                                                                                          10%
10%                                                                                            5%
 8%                                                                                            0%
 6%
                                                                                              ‐5%
 4%
 2%                                                                                          ‐10%
 0%                                                                                          ‐15%
            FY09            FY10            FY11          FY12           FY13                            FY09            FY10         FY11         FY12         FY13
                                               E                                                                                        R
                                             ROCE                                                                                      ROE
(Source: Company, SPA Research)


                                                                                        5
                                                                                                                                                                                         TEXTILE

                                                                                                                                       Fig 22: PAT and PAT Margins - to follow suit
Financial Overview
                                                                                                                                        5000                                                                      10%
Revenue Mix                                                                                                                             4000                                                                      8%
We expect the company's revenue to increase by a CAGR of 20.5%                                                                          3000                                                                      6%
to INR 59,011mn by FY13E. All the segments are expected to grow,                                                                                                                                                  4%
                                                                                                                                        2000
except for the garmenting business. Denim as % of sales,                                                                                                                                                          2%
                                                                                                                                        1000
experiences a decline, mainly on account of Brands & Retail and                                                                                                                                                   0%
Woven (shirting/khakis) segment catching up faster on growth.                                                                                0                                                                    ‐2%
                                                                                                                                       ‐1000                                                                      ‐4%
Fig 20. Revenue Mix for FY13E - Denim decreases as % of sales
                                                                                                                                       ‐2000                                                                      ‐6%
     30%                                                                                                                    120%
     25%                                                                                                                    100%                   FY08       FY09        FY10        FY11      FY12    FY13
     20%                                                                                                                    80%
     15%                                                                                                                    60%                                       PAT (INR Mn)           PATM (%)
                                                                                                                            40%                                                               P
     10%                                                                                                                    20%
      5%                                                                                                                    0%
      0%                                                                                                                    -20%       Reducing Risk set to improve Capital Efficiency
                                                                                                                                       Arvind's shift towards high capital efficient business like Textiles
                                                                                          Engineering

                                                                                                        Telecom
              Denim




                                                                       Brand & Retail




                                                                                                                   Others
                                                    Voiles

                                                             Knits
                                         Garments
                      Shirting/Khakis




                                                                                                                                       and Brands & Retail and real estate divestment of INR 10,000mn
                                                                                                                                       is set to improve its interest coverage as well as its ROCE in the
                                                                                                                                       coming years. The company is expected to improve its ROCE from
                                                                                                                                       10.7% to 15.8% by FY13E. It is also hopeful of bringing its Debt/
                                         % of sales                   CAGR FY11-13E
                                                                                                                                       EBITDA level to 2.1x on account of increased EBITDA as well as
(Source: Company Data, SPA Research)
                                                                                                                                       reduction in debt going ahead.

Strong Growth going ahead - EBITDA & PAT to increase                                                                                   Fig 23: ROCE (%) vs. Interest Coverage
On account of capacity expansion and superb performance from                                                                           18%                                                                        5.0
its Brands and retail division, we expect the company to experience                                                                    16%
                                                                                                                                       14%                                                                        4.0
a jump in their EBITDA and PAT levels alongwith expansion of the
                                                                                                                                       12%
margins as well.                                                                                                                                                                                                  3.0
                                                                                                                                       10%
We expect the EBITDA margins to expand by 150bps to 13.9% and                                                                           8%
                                                                                                                                                                                                                  2.0
EBITDA to grow by CAGR 63% from FY11 to FY13E.                                                                                          6%
                                                                                                                                        4%                                                                        1.0
The company should see an improvement in realization due to                                                                             2%
change in business model and revenue mix. PAT margins will                                                                              0%                                                                        0.0
expand by ~380bps to 7.9% in FY13E.                                                                                                               FY08       FY09        FY10        FY11       FY12    FY13
                                                                                                                                                                     Interest coverage          ROCE
                                                                                                                                                                                                 E
Fig 21: EBITDA and EBITDA Margins - set to grow going ahead
12000                                                                                                                        16%       (Source: Company Data, SPA Research)
                                                                                                                             14%
10000                                                                                                                                  Fig 24:. Debt/EBITDA level to decrease
                                                                                                                             12%
  8000
                                                                                                                             10%       25,000                                                                       7
  6000                                                                                                                       8%
                                                                                                                                                                                                                    6
                                                                                                                             6%        20,000
  4000                                                                                                                                                                                                              5
                                                                                                                             4%
  2000                                                                                                                                 15,000                                                                       4
                                                                                                                             2%
      0                                                                                                                      0%        10,000                                                                       3
             FY08                   FY09            FY10             FY11                      FY12               FY13                                                                                              2
                                                                                                                                         5,000
                                        EBITDA (INR Mn)                                 EBITDAM (%)                                                                                                                 1
                                                                                         E
(Source: Company Data, SPA Research)
                                                                                                                                              0                                                                     0
                                                                                                                                                     FY08       FY09          FY10      FY11     FY12E    FY13E
                                                                                                                                                   Debt (INR Mn)              EBITDA (INR Mn)        D
                                                                                                                                                                                                   Debt/ EBITDA
                                                                                                                                       (Source: Company Data, SPA Research)




                                                                                                                                   6
                                                                                                                                                                        TEXTILE


Valuation and Recommendation                                                                                   Fig 26: 1 year forward P/BV
                                                                                                               400
Textiles is a cyclical sector and because of high capital                                                                                                                                        4x
                                                                                                               350
requirements and leverage used in the sector, Arvind has endured
                                                                                                               300                                                                               3x
various rough patches in the past, implying a limited P/E history.
Cotton prices has started to fall and we don’t see a drop                                                      250
incompany’s realisation in the same proportion. This will ensure                                               200                                                                               2
growth in sales along with enhanced margins. Also, the way the                                                 150
management has taken this strategy of monetizing the land bank                                                                                                                                   1
                                                                                                               100
and going aggressive on the retail, we maintain a positive view                                                  50
onthe stock.
                                                                                                                  0
We expect Arvind's topline and bottomline to grow at a CAGR of                                                   7-Jul-06      7-Jul-07         7-Jul-08     7-Jul-09        7-Jul-10   7-Jul-11
20.5% & 66.8% resp. over the period FY11-13E coupled with margin
                                                                                                               (Source: SPA Research)
expansion, due to aggressive growth in existing businesses and
expansion in the high margin retail space, and low gearing due to
land monetization. We recommend a buy on the stock with a target
of INR 108 implying a discount of 6x FY13E earnings.
Fig 25: 1 year forward P/E

 250                                      Forward P/E
 200                                                                                      12x
 150                                                                                      9x
 100                                                                                      6x
   50                                                                                     3x
    0
  ‐50
‐100
        Apr‐06
         Jul‐06
        Oct‐06

        Apr‐07
         Jul‐07
        Oct‐07

        Apr‐08
         Jul‐08
        Oct‐08

        Apr‐09
         Jul‐09
        Oct‐09

        Apr‐10
         Jul‐10
        Oct‐10

        Apr‐11
         Jul‐11
        Jan‐07



        Jan‐08



        Jan‐09



        Jan‐10



        Jan‐11




(Source: SPA Research)


Peer Comparison
We feel the company has been through with the raw material pricing pressures and its revenue will grow at a 20.5% CAGR FY11-13E. It will
also show a strong bottom line growth with the PAT growing by ~67% CAGR for the same period. This is reflected in the high ROE delivered
by the company compared to its peers. As against its peers, the company trades at a lower PE and with growth in retail going ahead, the
company is expected to have the best RoE among its peers.
Fig 27: Peer Comparison - Arvind Stands out from the crowd
 Company                   CMP       M-cap                     Revenue (INR Mn)                   EBITDA Margin(%)                 EPS (INR)                      P/E (x)                  ROE (%)
                           (INR)   (INR Mn)             FY11        FY12E         FY13E        FY11    FY12E    FY13E       FY11 FY12E         FY13E       FY11 FY12E FY13E         FY11    FY12E     FY13E

 Arvind                    76.2    19,372.6       40,665.5*      49,763.9    59,010.9       12.4%      13.1%    13.9%        6.5     13.2       18.0       11.8      5.8     4.2    9.7%    16.4%     18.4%

 Pantaloon Retail         280.9    62,747.3      122,117.9      139,890.9   167,740.3           9.9%    8.5%      8.2%       6.5     12.3       15.6       43.1    22.9     18.0    4.5%     7.7%      8.9%

 Raymond                  340.1    20,872.6        30,561.8      34,385.4    37,892.0       15.7%      13.3%    13.4%        8.8     25.6       30.7       38.9    13.3     11.1    3.6%    11.6%      12.6
Source: Bloomberg Consensus, Ace Equity, SPA Research
* Arvind’s Gross revenue for FY11 is estimated




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Investment Concerns                                                              Any further increase in raw material prices would be very difficult
                                                                                 to pass on to the end consumer by the company as it will be in a
Global or Domestic Slowdown                                                      position to lose market share to its competition. The fashion
Arvind is the biggest denim exporter in the country. The company                 segment is known to have less brand loyalty and consumers are
exported over 44mn meters of denim in FY11 which was 47% of its                  known to easily switch over brands. Hence, increased raw material
total production for the fiscal year. Denim demand is highly                     prices can have an adverse effect on the profitability of the
dependent on the macro-economic environment in the developed                     company.
countries as was seen in the last recession. This apart, the
                                                                                 Competition
domestic business will be the key growth driver for the company
                                                                                 We feel that the apparel sector will become more and more
going ahead and hence any unforeseen drop in domestic demand
                                                                                 lucrative going ahead for newer domestic as well as international
would affect our estimates downwards.
                                                                                 players to enter the market. We expect to see the launch of new
Rise in Cotton Fibre Prices                                                      domestic and international brands in India, leading to higher
Raw material is the biggest component on the costs side for the                  competition in every category of the business. However, we believe
company. Because of high demand, the company has successfully                    that companies with a single brand or multiple mediocre brands
been able to pass on the increase in cotton prices over the last                 in their portfolio would not have a long term competitive advantage
year to the end consumer. However, we believe that the same would                in the market.
not come easily especially for the B2C segment going ahead, since
                                                                                 Licensed Brands
pricing power has been extensively leveraged.
                                                                                 Arvind markets various brands which have been licensed from its
Fig 28 : Increase in raw material costs led to passing on the increase           foreign owners under a JV agreement. With increasing interest
to consumers                                                                     amongst international players to independently tap the Indian
                                                                                 market, there is an impending threat of the company losing some
 150
                                                                  139
                                                                                 of these brands. In FY11, INR 1,540mn came from such operations
 130                                       139                                   implying ~4% of sales.
                                                                  125
 110                                       116
                       96
  90

  70
                       64
  50
            Cotton (INR/kg)       Denim (INR/mtr)       Shirting (INR/mtr)

                                    FY10         FY11

(Source: Company, SPA Research)




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                                                                                           Fig 31: Business Performance FY11
Company Background                                                                         Segment (INR Mn.)                         FY11             FY10        Growth %
Arvind Ltd. established in 1931, is the largest textile company in                         Denim                                    13,590           10,510            29%
                                                                                           Wovens (Shirting/Khakis)                  9,870            8,190            21%
India. It was the first company to introduce Denim to India in                             Voiles                                    2,110            1,790            18%
1986. Currently, Arvind is the leading manufacturer of denim with                          Knits                                     1,090              560            95%
a manufacturing capacity of 108mn meters p.a. The company is                               Garments                                  4,580            5,260           -13%
also the largest producer of textile fabrics in India producing                            Brands & Retail                           9,350            7,310            28%
                                                                                           Engineering                               1,070              960            11%
shirting, voiles, khakis and knits with a manufacturing capacity                           Real Estate                                 300                -               -
of 130mn meters p.a.                                                                       Telecom                                     480              360            33%
                                                                                           Others                                      360               70          414%
Arvind is also the preferred supplier to internationally renowned
                                                                                           (Source: Company, SPA Research)
brands like Polo, Armani exchange, Diesel, GAP, Banana Republic,
Calvin Klein, Hugo Boss, Espirit, Zara, Levi's, Miss Sixty, Ann Taylor,                    Denim
Brooks Brothers, Express and Eddie Bauer.                                                  Arvind was the first company to introduce Denim in India in 1986
                                                                                           and currently is the largest denim producer in the world with a
The company also has a strong presence in international brands                             capacity of around 108mn metres p.a. Arvind is a preferred
and retail business with one of the strongest brands portfolio in                          supplier of denim fabric to one of the most reputed denim brands
the country along with "Mega Mart", the fastest growing value                              in the world like Miss Sixty, Diesel, Replay, Armani Exchange, Ann
retail chain in India.                                                                     Taylor, Hugo Boss, Calvin Klein, Polo Ralph, A & F, Jack & Jones,
Arvind has an enviable brand portfolio comprising of in-house                              Levi's, Lee, Wrangler, Gap, Zara, Esprit, H & M and Quick silver.
and licensed brands with names like Flying Machine, Arrow, Tommy                           In FY11, the company sold over 96mn meters of denim fabric of
Hilfiger, Lee, Wrangler, US Polo, Izod, Gant, New Port, Excalibur                          which 47% was exported and 53% was sold in the domestic
etc.                                                                                       markets. We expect the denim volumes to grow at a CAGR of 6% in
Fig 29 : Segmental Performance - FY11 vs. FY10                                             the next 2 years.
 Segment                          FY11                            FY10                     Fig 32: Denim performance in FY11 over FY10
 (INR Mn.)               Revenue EBITDA ROCE%            Revenue EBITDA ROCE%
                                                                                                                                    FY10              FY11            Growth %
 Textile                   29,340 4,670   15%              24,100 3,510    9%
                                                                                           Exports (mn mtrs)                          43                45                 5%
 Brands & Retail            9,350   760   10%               7,130    370   2%
                                                                                           Domestic (mn mtrs)                         45                51                13%
 Others                     2,210   130    1%               1,400    230   3%
                                                                                           Avg. Price (INR / mtr)                    116               139                20%
 Other Income                       370                              210
                                                                                           (Source: Company, SPA Research)
 Total                     40,900 5,930   11%              32,630 4,320    7%
(Source: Company, SPA Research)                                                            Fig 33: Denim Volumes and Sales over FY10-13E
                                                                                            18000                                                                         120
Business Segments                                                                           16000
                                                                                                                                                                          100
                                                                                            14000
Fig 30: Segments at glance
                                                                                            12000                                                                         80
                                       Arvind Ltd
                                                                                            10000
                                                                                                                                                                          60
                                                                                             8000
                                                                                             6000                                                                         40
              Textiles                    Subsidiaries             Joint Ventures
                                                                                             4000
                                                                                                                                                                          20
                                                                                             2000
     Fabric                                                                                     0                                                                         0
                       Garments           Arvind Retail           VF Arvind Brands
(Denim, Woven,       (100% export)     (100% subsidiary)                                                   FY10              FY11            FY12E            FY13E
 Voiles, Knits)                                                 (Arvind’s Stake 40%)
                                                                                                                    Sales (INR Mn)           Volumes (mn mtrs)
                                     Arvind Lifestyle Brands   Arvind Murjani Brands
                                       (100% subsidiary)                                   (Source: Company, SPA Research)
                                                                (Arvind’s Stake 50%)
                                                                                           In the domestic market Arvind has an overall market share of
                                        Arvind Products                                    13%. It supplies around 65% of its production to trade channels
                                       (53.9% subsidiary)
                                                                                           while balance 35% is supplied to the branded garment players. It
                                                                                           is in the branded garment segment that Arvind enjoys an
                                        Anup Engineering
                                       (90.8% subsidiary)                                  undisputable leadership with a market share of over 50%
(Source: Company, SPA Research)


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Expansion Plans: Looking at the uptick in denim demand, the                         Voiles
company has planned to expand its capacity by 9.6mn meters in                       With a manufacturing capacity of 36mn meters, Arvind is a market
FY12 after expanding by 12mn meters in FY11. The company plans                      leader in this segment with a market share of around 40%. Arvind
to increase capacity to 140mn meters by FY15E.                                      has an extensive countrywide distribution network of 250 dealers.
                                                                                    In FY11, the company sold 34mn meters of voiles and is expected
Wovens (Shirting / Khakis)
                                                                                    to grow at a CAGR of 22% for the period FY11-13E.
Arvind with a capacity of over 72mn meters is the largest player
of woven fabric in the country. Arvind has one of the best customer                 Fig 36: Voiles Volumes and Sales over FY10-13
base as it supplies to brands like Banana Republic, Brooks
                                                                                       60                                                         3500
Brothers, Ann Taylor, Hugo Boss, Calvin Klein, Polo Ralph, Eddie
                                                                                       50                                                         3000
Bauer, Express, J Crew, Louis Phillip, Van Heusen, Arrow, Color
Plus, Esprit, Paul Smith, and Park Avenue.                                                                                                        2500
                                                                                       40
                                                                                                                                                  2000
In FY11, the shirting segment of the company saw a stellar volume                      30
                                                                                                                                                  1500
growth of 13% selling 44mn meters while khakis saw an increase                         20
                                                                                                                                                  1000
of 62% to 21mn meters. This growth was mainly driven by the
                                                                                       10                                                         500
rapid expansion in retail distribution and introduction of
innovative products. We expect the volumes to grow at a CAGR of                         0                                                         0
16% in the next 2 years.                                                                          FY10                FY11   FY12E        FY13E
                                                                                                          Sales (INR Mn)     Volumes (mn mtrs)
Fig 34: Shirting performance in FY11 over FY10
                                                                                    (Source: Company, SPA Research)
                                         FY10           FY11        Growth %
Exports (mn mtrs)                           9             15            67%         Expansion Plans: Company is planning to increase its voiles capacity
Domestic (mn mtrs)                         49             52              6%        by 12mn meters, taking the total capacity to 48mn meters by FY12.
Avg. Price (INR / mtr)                    125            139            11%
                                                                                    Arvind Stores
(Source: Company, SPA Research)                                                     Considering the huge opportunity in the fabric retailing business,
Fig 35: Woven Volumes and Sales over FY10-13E                                       Arvind began focusing on the fabric retailing business since FY09.
                                                                                    In just 2 years Arvind has opened over 850 "shops in shops".
 16000                                                                   100
                                                                                    Arvind is also planning to open over 100 exclusive "Arvind Stores"
 14000
                                                                         80         in the next three years on franchisee basis. Currently, the company
 12000
                                                                                    has 23 stores (6 Franchisee operated, rest Company) across South
 10000                                                                   60         India with revenue per sq. ft. per day at ~INR 40-50.
   8000
   6000                                                                  40         Arvind Lifestyle Brands (ALBL) & Arvind Retail (ARL)
   4000
                                                                         20
                                                                                    In FY10, the company de-merged its brands & retail business in
   2000                                                                             two wholly owned subsidiary company's Arvind Lifestyle Brands
      0                                                                  0          Ltd. (ALBL) and Arvind Retail Ltd. (ARL). Currently Arvind has a
                FY10              FY11          FY12E          FY13E                brand portfolio of 23 brands with 14 owned brands, 6 licensed
                         Sales (INR Mn)         Volumes (mn mtrs)                   brands and 3 joint venture brands making it the pioneer in the
                                                                                    branded retail business in India. Arvind also owns India's fastest
(Source: Company, SPA Research)
                                                                                    growing value retail chain "Mega Mart" under Arvind Retail.
Expansion Plans: Company expanded its production capacity by
                                                                                    In FY11, the branded business saw a growth of 65% to INR 4,160mn
6mn meters in FY11 and plans to further increase it by 12mn
                                                                                    with a robust like to like growth (same store growth) of 20%. ARL
meters in FY12, taking the total capacity to 84mn meters. The
                                                                                    saw a revenue growth of 33% to INR 3,970mn and a like to like
company plans to have woven capacity of 100mn meters by FY15E.
                                                                                    growth of 20%. Arvind Brands & Retail business will invest INR
                                                                                    5,500mn over next 5 years. We expect this segment to grow by
                                                                                    27% CAGR over FY11-FY13E to INR 15,194mn, contributing around
                                                                                    26% of the company's turnover.




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Fig 37: Fastest growing Apparel Brands & retail company in India (INR Mn)        Joint Ventures
                                                                                 VF Arvind Brands Pvt. Ltd. (VFABL): This is a 60:40 JV between VF
 9000                                                        8160
                                                                                 Corporation of the US and Arvind Ltd. The JV has an exclusive
 8000
                                                                                 license to sells 2 brands Lee and Wrangler in India. In FY11, this
 7000
                                             5526                                JV posted a top line of INR 2,840mn with Arvind's share at INR
 6000
                                  4426                                           1,140mn.
 5000
 4000                                                                            Arvind Murjani Brands Pvt. Ltd. (AMBPL): This is a 50:50 JV between
                2500
 3000                                                                            Murjani group and Arvind Ltd. The JV has an exclusive license to
 2000                                                                            sell the brand Tommy Hilfiger across India. In FY11, this JV posted
 1000                                                                            a top line of INR 800mn with Arvind's share at INR 400mn.
      0
                                                                                 Fig 38: Arvind's Brands & Retail Business
                FY06              Fy09       FY10            FY11
                                                                                                               VF Arvind JV (60:40)
(Source: Company, SPA Research)
*excluding Joint Ventures                                                                                      Sales: INR 2,840mn
                                                                                                                   Arvind’s Share: INR
Arvind Lifestyle Brands Ltd. (ALBL) - 100% Subsidiary                                                                   1,140mn
                                                                                                                                             Arvind Tommy JV
Arvind has around 227 stores of which ~80% are company operated                          Brands & Retail                                          (50:50)
and ~20% are franchisee operated. The company currently has a                              Subsidiaries                                     Sales: INR 800mn
                                                                                       Sales: INR 7,880mn                                   Arvind’s Share: INR
retail space of around 206,821 Sq. ft with per sq. ft sales per day
                                                                                                                                                  400mn
at INR 25. Going ahead, the company plans to increase the retail
space to 600,000 Sq. ft by 2014.                                                                                     Arvind Brands
                                                                                                                        & Retail
Arvind Retail Ltd. (ARL) - 100% Subsidiary                                                                             Business
                                                                                                                       Sales: INR
Mega Mart is one of the fastest growing value retail chains in                                                         9,350mn
India with a 4 year CAGR of 28%. It has a wide offering of over 200
brands under one roof, which are available at attractive discounts               (Source: Company, SPA Research)
all round the year. Arvind currently has around 204 stores and is                Anup Engineering - 90.8% Subsidiary
targeting to add 60 stores per year.                                             Anup engineering was a BIFR company bought by Arvind in 1997.
The company has stores in 2 formats i.e. Small format stores and                 Anup is in the heavy fabrication industry and is one of the very
large format stores. Arvind uses a hub and spoke model for opening               few companies in the country, which have integrated fabrication
stores where it opens a couple of large format stores in its tier 1              facilities under one roof. Range of products includes process
cities. Arvind operates company operated small format stores in                  equipments, pressure vessels, heat exchangers, columns,
tier 1 and tier 2 cities and franchisee operated stores in tier 3 and            centrifuges, chlorine tonners and vessels, expansion bellows etc.
tier 4 towns. Arvind plans to increase the retail space from 0.6mn               In FY11, the company posted a turnover of INR 1,070mn and an
sq. ft to 1.8mn sq. ft by 2015E.                                                 EBITDA margin of ~20%. We expect this segment to grow at 14%
                                                                                 CAGR for FY11-13E.
(i) Small Format Stores: These are stores with a size of 3000-6000
square feet. Currently Arvind has 198 small format stores of which               Exports
~80% are company operated and rest 20% stores are franchisee                     Exports for the company declined to 33% in FY11 as against 38%
operated. EBITDA margins in small format stores are 8-9%.                        in FY10. This was on account of company's change of model from
                                                                                 B2C and a more focused approach towards its domestic section.
(ii) Large Format Stores: These are stores with a size of 40,000-                In denim, it manufactured 45mn mtrs with 15mn mtrs in its shirting
50,000 square feet and offer a range of around 200 brands. The                   division. In garment segment, where 100% production is exported,
ratio of sales of Arvind brands (owned + licensed) to Outside                    saw a decline due to business stabilization and hence the exported
brands in these stores is 20:80. Arvind currently has 6 large format             value decreased by ~13% to INR 4,580mn. In Brands, the export
stores. EBITDA margin hover around 6-7% for these stores. The                    stood at around ~2-3% and is expected to touch INR 300mn in
company plans to add 2 to 3 large format stores every year.                      FY12E.




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Industry Overview                                                                                  Fig 41: Growth in Organized Domestic Apparel segment

India's total textile and Apparel industry size is valued at US$                                    1.2

70bn in 2009 and is estimated to grow at 11% CAGR to reach US$                                         1
220bn by 2020. The Indian domestic Textile and Apparel market                                       0.8
size in 2009 was US$ 47bn and is expected to grow at 11% CAGR to                                                                                                                     0.6
                                                                                                    0.6                                            0.83            0.75
reach US$ 140bn by 2020. (source: Indian textile & Apparel compendium 2010, Technopack)                         0.87             0.86
                                                                                                    0.4
Fig 39: India's Textile and Apparel Industry size (US$ Bn)
                                                                                                    0.2                                                                              0.4
 250                                                                                                                                               0.17            0.25
                                                                                                                0.13             0.14
                                                                                                       0
 200                                                                                                            FY05             FY09          FY10 (E)        FY15 (E)            FY20 (E)
                                                                                  80
                                                                                                                                        Organized     Unorganized
 150
                                              1%
                                           R1
                                     CAG                            45                             (Source: Technopack, SPA Research)
 100
                                                 26                              140               Currently, Men's wear is the biggest segment with the Women's
  50                            23
               16                                                   89                             wear coming in at second spot. However, women's wear is the
                                47               52
               30                                                                                  fastest growing segment (CAGR 12%) as against Men's wear (CAGR
    0
             FY05            FY09            FY10 (E)          FY15 (E)         FY20 (E)           9%) and is expected to gain majority share in future. In 2009, men
                                                                                                   wear had a share of 43% while women's wear contributed to
                                      Domestic         Exports
                                                                                                   around 38%.
(Source: Technopack, SPA Research)
                                                                                                   Fig 42: Men Wear is the biggest segment in apparel segment
Of the total Domestic textile and apparel market, the apparel
section is poised for a growth of 11% CAGR to reach US$ 100bn
                                                                                                                                              9%
(INR 47,00,000mn) by 2020. This segment surpasses other
                                                                                                                                    10%
segments like Home textile and technical textile in terms of growth,
thereby signifying tremendous growth opportunity coming from                                                                                                       43%
this segment.
Fig 40: India's Domestic Textile and Apparel Industry (US$ Bn)
                                                                                                                                        38%
 120
                                                                               100
 100
  80
                                           1%                  61
                                        R1                                                                               men's           women's           boys'          girls'
  60                              CAG
                                            36                                           31        (Source: Technopack, SPA Research)
  40                       33
          22                                                             22
  20                                                  12                             9
               2 6              3.5
                                   10.5          4                  6
    0
             FY05            FY09            FY10 (E)          FY15 (E)         FY20 (E)

                     Apparel         Home textile          Technical textile

(Source: Technopack, SPA Research)

Indian Domestic Apparel Market is expected to grow at 11% CAGR,
primarily due to high unit value growth (growth in organized and
branded segment) and increase in per capita consumption of
clothing due to favourable consumer demographics.




                                                                                              12
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Financial
Income Statement                                                                      Key Ratios
Year End (INR mn)                      FY10       FY11      FY12E      FY13E          Year End (INR mn)                         FY10          FY11E           FY12E        FY13E
                                                                                      EPS                                         2.2             6.5           13.2         18.0
Gross Sales                          32,526.7   40,665.5   49,763.9   59,010.9
                                                                                      Growth (%)                                    -         201.0%          102.9%        37.0%
Less: Excise Duty                      271.0      325.3      497.6      885.2         Cash EPS                                    9.6           13.3            22.0         27.9
                                                                                      Growth (%)                              243.5%           38.2%           65.9%        27.0%
Net Sales                            32,255.7   40,340.2   49,266.3   58,125.7
                                                                                      Book Value                                55.3            66.7            80.0         97.9
Other Income                           754.0      928.6     1492.9     1,593.3        Valuation Ratios
                                                                                      P/E                                           35.4        11.8               5.8         4.2
Total Income                         33,009.7   41,268.8   50,759.2   59,719.0        Cash P/E                                        7.9         5.7              3.5         2.7
Raw Materials                        14,891.0   18,687.0   22,883.6   26,609.6        P/BV                                            1.4         1.1              1.0         0.8
                                                                                      EV/Sales                                        1.2         1.0              0.8         0.6
Employees Emoluments                  3,416.7    3,947.8    4,976.4    5,724.1        EV/EBITDA                                       9.1         6.9              4.9         3.9
                                                                                      ROE                                           3.9%        9.7%            16.4%       18.4%
Others                               10,386.6   12,699.5   14,929.2   17,703.3
                                                                                      RoCE                                          7.4%       10.7%            14.0%       15.8%
Total Expenditure                    28,694.3   35,334.3   42,789.2   50,036.9        Debt / EBITDA                                   5.1         3.7              2.5         2.1
                                                                                      Turnover Ratios
EBITDA                                4,315.4    5,934.5    7,970.0    9,682.1
                                                                                      Asset T/o                                      1.3             1.6           1.8         2.1
EBITDA margin                          11.0%      12.4%      13.1%      13.9%         Inventory T/o                                  3.7             3.5           3.4         3.7
                                                                                      Debtors T/o                                    9.2             8.8           9.5         9.9
Depreciation                          1,727.0    1,724.9    2,250.3    2,521.5        Debtors (Days)                                 86              92            94          88
                                                                                      Inventory (Days)                               40              42            40          40
Interest                              2,116.9    2,451.0    2,111.6    2,216.6
                                                                                      Creditors (Days)                              168             188           190         190
PBT                                    471.5     1,758.6    3,608.1    4,944.0        Leverage Ratios
                                                                                      D/E                                            1.7            1.3           1.0          0.8
PBT margin                              1.5%       4.4%       7.3%       8.5%
                                                                                      Int. Cov.                                      2.0            2.4           3.8          4.4
Tax Expense                            (58.7)     105.1      252.6      346.1         Growth Ratios
                                                                                      Net Sales                                19.4%           25.1%           22.1%        18.0%
Minority Interest                        30.7        4.8        9.7      13.3         Op. Expenses                             17.8%           23.1%           21.1%        16.9%
Net Profits                            499.5     1,648.7    3,345.8    4,584.6        EBITDA                                   23.1%           37.5%           34.3%        21.5%
                                                                                      PBT                                    -146.5%          273.0%          105.2%        37.0%
PAT margin                              1.5%       4.1%       6.8%       7.9%         PAT                                    -150.2%          230.1%          102.9%        37.0%
                                                                                      * CMP as on 29th August 2011




Balance Sheet                                                                         Cash Flow
Year End (INR mn)                      FY10      FY11E      FY12E      FY13E          Year End (INR mn)                    FY10             FY11E            FY12E         FY13E
Liabilities                                                                           Profit Before Tax                     471.5        1,758.6             3,608.1       4,944.0
                                                                                      Depreciation and Amortization       1,727.0        1,724.9             2,250.3       2,521.5
Share Capital                         2,395.5    2,544.0    2,544.0    2,544.0
                                                                                      Misc. Expenses                      1,316.8        2,351.0                   -              -
Reserves & Surplus                   10,430.8   14,413.4   17,814.9   22,368.7        Operating Workflow bf. WC           3,515.3        5,834.5             5,858.5       7,465.5
NetWorth                             12,826.3   16,957.4   20,358.9   24,912.7        Sundry Debtors                    (1,442.7)        (753.0)             (441.4)       (964.9)
                                                                                      Loans and Advances                    925.8        (510.7)               624.7       (204.7)
Total Debt                           22,024.9   22,110.9   20,110.0   20,150.8
                                                                                      Inventories                         (674.9)      (4,372.8)             (430.8)      (1411.4)
Minority Interest                      140.7      160.5      169.5      185.0         Other Current assets                (502.5)        (396.0)             (278.0)         (82.8)
Def. Tax Liability                     134.4      215.9      157.5      176.5         Current Libilities & Provisions     1,225.1        3,680.7             (542.4)       1,461.9
Total Liabilities                    35,126.3   39,444.7   40,795.9   45,425.0        Income Tax Paid                        58.7        (105.1)             (252.6)       (346.1)
                                                                                      WC Changes                          (410.5)      (2,456.9)           (1,320.4)      (1547.9)
Assets
                                                                                      Net Operating Cash Flow             3,104.8        3,377.6             4,538.1       5,917.6
Fixed Assets (Net)                   24,890.9   26,850.1   26,983.7   29,885.6        Investments                         (354.8)           (3.1)                  -              -
Investments                            437.3      440.4      440.4      440.4         Fixed Assets                      (1,409.5)      (3,684.1)           (2,384.0)     (5,423.4)
                                                                                      Net Investing Cash Flow           (1,764.3)      (3,687.2)           (2,384.0)     (5,423.4)
Current Assets                       16,766.7   22,799.8   23,478.5   26,680.0
                                                                                      Loans                             (1,071.5)           86.0           (2,000.9)           40.8
Current Liabilities                   6,958.0   10,638.7   10,096.3   11,558.1        Change in Equity                     (68.0)          224.2                   -              -
Foreign currency monetary diff A/c     (10.6)      (7.5)     (17.9)     (22.9)        Net Financing Cash Flow           (1,139.5)          310.2           (2,000.9)           40.8
Misc. expenditure                           -        0.6        7.5          -        Net Increase/(Decrease) in Cash       201.0             0.6              153.2         535.0
                                                                                      Cash BOP                              395.5          596.5               597.1         750.3
Total Assets                         35,126.3   39,444.7   40,795.9   45,425.0
                                                                                      Cash EOP                              596.5          597.1               750.3       1,285.3



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Girish Bhutra                 Head of Equity                                 girish.bhutra@spagroupindia.com                              Tel.: +91-22-4289 5600                    Ext.634

Sharad Avasthi                Dy Head - Equity Research                      sharad.avasthi@spagroupindia.com                             Tel.: +91-33-4011 4800                    Ext.832




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