EXECUTIVE SUMMARY

Vardhman, a household name in Northern India, has carved out a niche for itself in textile industry. The Vardhman group was setup in 1962 by late Lala Rattan Chand Oswal, father of present Chairman cum Managing Director, Sh. S.P. Oswal. Vardhman aims to be world class textile organization producing diverse range of products for the global textile market. Vardhman seeks to achieve customer delight through excellence in manufacturing and customer service based on creative combination of state-of-the-art technology and human resources. Vardhman deals with Fabrics, Sewing Thread, Fibre and Alloy Steel. It became India's first textile company to be awarded ICO9002/ ISO 14002 Certification and has received many other awards since the beginning. It lays a lot of emphasis on building and sustaining an excellent organizational climate based on human performance and works for the betterment of its human resource. It has adopted international accounting standards for the presentation of the financial statements and has a centralized accounting system. The company works on its technological upgradation and always works on expanding its base. The company believes in its corporate social responsibility and takes full pride in fulfilling them through various means. It is affected tremendously by the political, economic, social and technological environment. The company has high gross profit margin ratio and can make profits while controlling its costs. Also it has greater assets than liabilities and is performing well. Even during the times of recession the company kept on providing superior quality goods and has been able to survive

1. ORGANISATIONAL PROFILE
Vardhman Group is a leading textile conglomerate in India having a turnover of $700 mn. Spanning over 24 manufacturing facilities in five states across India, the Group business portfolio includes Yarn, Greige and Processed Fabric, Sewing Thread, Acrylic Fibre and Alloy Steel. Vardhman Group manufacturing facilities include over 8,00,000 spindles, 65 tons per day yarn and fibre dyeing, 900 shuttleless looms, 90 mn meters per annum processed fabric, 33 tons per day sewing thread, 18000 metric tons per annum acrylic fibre and 100,000 tons per annum special and alloy steel.

Vardhman has evolved through history from a small beginning in 1965 into a modern textile major under the dynamic leadership of its chairman, S.P.Oswal. His vision and insight has given Vardhman an enviable position in the textile industry. Under his leadership, Vardhman is efficiently using resources to innovate, diversify, integrate and build its diverse operations into a dynamic modern enterprise. http://www.vardhman.com/about_vardhman.asp

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

1.2 MISSION

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

S P Oswal, Chairman - Vardhman Group

http://www.vardhman.com/about_mission.asp

1.3 GROUP OF COMPANIES

1.4 HOLDINGS
Vardhman Holding Limited Vardhman Textiles Ltd. Vardhman Acrylic Ltd VMT Spinning Company Ltd Vardhman Yarns and Threads Ltd http://www.vardhman.com/about_holdings.asp

1.6 MARKET SHARE OF VARDHMAN TEXTILES LTD

Spinning Business Spindle Capacity ( financial year 2005 -06 ) Existing About 600,000
Post Expansion 800,000 http://www.fibre2fashion.com/textile-market-watch/company-brief/vardhman

Fabric Business Fabric Production in Lac (100 thousand) Metres/Month Auro Textiles (Existing) 42 Post Expansion 85-90 Sewing Thread Business Production in Metric Tonnes/Day Total 28.30 Dyeing (Yarn & Fibre) & Mercerising Production in Metric Tonnes/Day Total 54.5 Steel Business Production in Metric Tonnes/Annum SMS 100000 Rolling Mill 84000 Acrylic Fibre Business Production in Metric Tonnes/Annum Total 18500

YARNS
Yarn Manufacturing is the major activity of the group accounting for 47 percent of the group turnover. Vardhman is virtually a supermarket of yarns, producing the widest range of cotton, synthetics and blended, Grey and Dyed yarns and Hand Knitting Yarns, in which Vardhman is the market leader in India. The group has twenty one production plants with a total capacity of over 8 lacs spindles, spread all over the country. In many of the yarn market segments, Vardhman holds the largest market share. Vardhman is also the largest exporters of yarn from India, exporting yarns worth more than USD 150 million.

SEWINGTHREADS
Vardhman is the second largest producer of sewing thread in the country. The sewing thread manufacturing capacity is being expanded from 17 tons per day to 33 tons per day in its sewing thread plants located at Hoshiarpur, Baddi and Ludhiana. Sewing threads contributes 11 percent of the group turnover.

FABRICS
The group has created state-of-the-art fabric weaving and processing facilities in its plant at Baddi, Northern India. The group has installed 900 shuttle less looms and a fabric processing capacity of 90 million meters per annum in collaboration of Tokai Senko of Japan. Fabrics business contributes 22 percent to the group turnover.

FIBRE
The group has set up an Acrylic Staple Fibre plant at Bharuch in Gujarat in collaboration with Marubeni and Japan Exlan of Japan. The plant has annual capacity of 18000 tons per annum. Fibre contributes 8 percent to the total turnover of the group.

STEEL
The Group is also present in upper-end of the steel industry. The group has manufacturing

capacity of 100000 tons of special and alloy steel. The group supplies its steel products to some of the most stringent quality steel buyers like Maruti and Telco. It contributes 10 percent to the total turnover of the group. http://www.vardhman.com/about_portfolio.asp

2. PRODUCT PROFILE
2.1 YARNS
2.1.i Overview Yarn is the largest strategic business unit of the Vardhman Group with 8,00,000 spindles and 65 MT tons per day yarn and fiber dying capacity. The Group offers one-stop solution for variety of yarn requirements of the leading customers in India and the international markets. Vardhman offers the widest range of specialized greige and dyed yarns (NE 10 to NE 200) in cotton, polyester, acrylic and varieties of blends. The group offers value added products like Organic Cotton, Melange, Lycra, Ultra yarns (contamination controlled), gassed mercerized, super fine yarns and fancy yarns for hand knitting. Vardhman is India's largest exporter of cotton yarn to the most quality conscious markets like EU, USA and Far Eastern countries. Products Cotton Yarn Organic Cotton Yarn Fair Trade cotton Yarn Organic Fair Trade Cotton Yarn Ellitwist Vortex Yarn Slub Yarn Acrylic Yarn Poly -Cotton Yarn

Special Blended Yarn Core Spun Yarn Melanges Gassed Mercerised Modal Yarn Tencel Yarn Viscose Yarn Hand Knitting Yarn Speciality Yarn

http://www.vardhman.com/products_yarns_overview.asp 2.1.ii Yarn product profile Grey cotton yarn Grey acrylic yarn Grey polyester cotton yarn Special blended yarn Crayons Rainbow Rangoli Gassed mercerised cotton yarn

 Paragon Harmony Padam Daffodil Hank dyed acrylic yarn Vardhman knitting yarn Speciality yarns http://www.vardhman.com/products_yarns_productprofile.asp 2.1.iii Yarn machinery Preparatory reiter, trutzschler Pre-spinning reiter, cherry hara, toyoda Spinning lakshmi reiter, kriloskar toyoda Post spinning - schlaforst, murata Doubling volkman, leewha, vijaylakshmi

http://www.vardhman.com/products_yarns_machinery.asp 2.1.iv Integrated yarn dyeing unit 1994 has witnessed a milestone toward our mission, to supply value added product i.e. cone and fibre dyed yarn and tops. A fully integrated dye house plant with technology from Nihon Synmo, Japan, the leader in dyeing technology in the world, emerged on the landscape of Vardhman. With setting up of this new dye house , the installed capacity to process has increased to 20 tons of Yarn and 15 ton of Fibre per day. Technological collaboration with Nihonsanmo, Japan. Dyeing capacity :- fiber dyeing 15 tons per day and yarn dyeing 20 tons per day. Facility of dyeing a vast range 100% cotton , P/C blends, cotton/ wool, cotton/ viscose, acrylics/ cotton, 100% acrylics. Lot size flexibility. 2.1.v Yarn operation The unique combination of man and machine, competing and supplementing each other with continuous increase in productivity has enable Vardhman to dexoterously ripe the fruit of economies of scale and process variety of raw material required for variety of end products to textile. Evennes Results fall in 5% to 15% of Uster standards, achieved through Proper selection of Raw Material

World class Pre-spinning and Spinning Facilities

Technical Know How

Human Skills

100% Quality Assurance System

http://www.vardhman.com/products_yarns_operations.asp

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

Shirting Count range

Weave

Fabric weight Finished width Bottom weights Count range

Ring spun Ne 20's to 80's Ring spun Blends 2/40's to 2/210's 100% cotton, Polyester cotton, Cotton stretch DowXLA, Cotton Tencel, Cotton Modal, Cotton Bamboo, Cotton silk, Cotton Nylon, Cotton Nylon stretch, Cotton Linen. Yarn Dyed: Chambray, fil-a-fil, checks, stripes, Oxford, HBT Others (yarn dyed & piece dyed) Plain, twill, satin, oxford, dobby, herringbone, Pique Cord. 2-5.6 oz/yd'2 58"

Ring spun Ne 20's to Ne 2/80's Open end Ne 6's to Ne 16's 100% cotton, Polyester cotton, Cotton stretch

Weave

Fabric weight Finished width Finishes

DowXLA, Cotton Tencel, Cotton Modal, Cotton Bamboo, Cotton silk, Cotton Nylon, Cotton Nylon stretch, Cotton Linen Coolmax. Chambray, fil-a-fil, checks, stripes, Oxford, HBT Others (yarn dyed & piece dyed) Plain, twill, Drill, satin, oxford, dobby, herringbone, Pique Cord, Honey comb 6.00 to 12.00 Oz.yd'2 58" to 60

Eco-Friendly Blends Also certified by

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

http://www.vardhman.com/products_fabrics_productprofile.asp

2.2.ii Machinery
Grey State of the art looms: Airjet and Rapier looms of Picanol Delta/Omni Plus, Tsudakoma, Zax, Rapier GTX/Gammax and Toyota Benninger and Sucker Muller Warping & Sizing Machines

2.2.iii Fabric Processing

Continuous Bleaching Range Singeing with 4 burners Chemical doising electronically controlled Suitable for wide range of fabrics Chain Mercerizer Electronically controlled caustic concentration and temperature Ecofriendly Pad steam ranges Unique steamer. Efficient washing range. Continuous Dyeing Ranges

Kuster mangle ensures uniform dyeing. Curing Machines Enables us to give Resin Finish to Fabric Sueding Ranges Precise levels of Peaching Stenters and Shrinking Ranges Stenters with 7 heat chambers

2.2.iv Quality Assurance

4 Point inspection system. SO - 9002 certified plant CAT System from Datatex for Fabric Inspection CAD System from Technograph Infotech Services for Fabric Inspection

2.2.v Fabric Testing Capabilities

Laboratory having state-of-the-art Testing equipments from USA & UK to test various fabric parameters Stretch, Recovery & Growth Test (Stretch fabrics) Abrasion Test ICI Pilling Tearing Strength Tensile and Seam Strength Formaldehyde Content Skew / Bow test D P Rating CRA test GSM test Sample Drying Shrinkage test Perspiration, Water Fastness Perspiration, Water Fastness Rubbing Fastness Sublimation Pilling Test Washing Fastness Light Fastness

http://www.vardhman.com/products_fabrics_machinery.asp

2.3 THREADS
2.3.i Overview Vardhman is a leading player in the Indian sewing thread market. The joint venture with A&E Threads of USA offers complete thread solutions from tailoring to industrial applications. With 33 tons per day capacity spread over three plants located in North and South India, Vardhman is uniquely positioned to serve the garment manufacturers across the world. Vardhman's customer value proposition includes threads made from cotton, polyester, core spun, nylon and filaments, which are AZO free and meet OEKO Tex Standards. http://www.vardhman.com/products_threads.asp Embroidery They manufactured products through following ways: Machine Hand / Needle Schiffli / Lace

2.3.ii MACHINE
Vardhman textiles ltd. Manufacture the following machine stitched embroidered products: Polymerized: - Pride is a 100 % Trilobal polyester continuous filament thread ideally suited for embroidery on high speed machines. It offers sparkling lustre and enhanced productivity due to low breakages. The dye fastness rating is also very good. Metallic: - Eureka metall is a metallic embroidery thread with a nylon core and a

metallised foil cover. A special lubrication ensures proper running of the thread on high speed machines. Available in 36 colours including Gold and Silver. Specials -- Puff is a 100 % Acrylic thread which is ideal for raised effect embroidery.

It can be used on Multi head machines as well as manual machines Application Embroidery on all types of fabric for raised effect with Matt finish. Sizes Available Tex 70

Puff wool is composed of 50 % Wool and 50 % Acrylic. Embroidery done with Puff Wool gives a raised and wool effect . Application Embroidery on all types of fabric for raised effect. Sizes Available Tex 60Puff wool MULTI COLOUR Multi Colour or better known as space dyed is a combination of two or more colours in the same thread. PRIDE offers multi colour threads in a combination of two or four colours. It is available in Tex 27. Cotton embroidery threads Superseam is a 100% extra long staple mercerized cotton thread. Its available in Tex 35. http://www.vardhman.com/products_threads_embroidery.asp

2.3.iii HAND/NEEDLE
People have always found deep personal pleasure and sense of satisfaction in creating articles of daily use and artistic works from basic equipment and materials. One of the crafts practiced since times immemorial is needlecraft and embroidery - the urge to create with colourful threads. Embroidery was used in Ancient Egypt to decorate the hems of royal robes, in tapestries in the Middle Ages, and in ladies' samplers during the Colonial and Victorian eras. It continues as an art form today. Hand embroidery is used to decorate wall hangings, pillowcases, quilts and table runners. Hand embroidery differs from counted cross stitch in that it uses many different types of stitches to achieve texture and interest, whereas counted cross stitch uses a single stitch and relies on color and shading for texture. Five stitches form the basis for hand embroidery. The stitches are outline, satin, lazy daisy, cross and French knot. Hand embroidery is a beautiful art that almost anyone can learn. It is an art that should be preserved and well worth learning. The hand embroidery market in India is segmented into three segments. Premium Embroidery Threads Popular Embroidery Threads Crochet Threads Usage of Hand Embroidery Thread Cross stitch Counted thread work Embroidery Smocking

 Tapestry Applique work Quilting

2.3.iv SCHIFFLI/LACE
Embroidery, the art of forming attractive designs with hand or machine needlework, has been around virtually as long as clothing itself. Schiffi embroidery is a single needle and single/multi head machine embroidery. Both mercerized cotton as well as staple polyester fibers is used to manufacture this thread. It gives excellent resistance to heat and organic solvent and good resistance to alkalis but sensitive to acdis. Application: All Kinds of Embroidery with Lock stitch. Top Thread (Cotton) Tex Sizes Available: 14, 18, 27, 35, 60, 80, 105, 120 Bobbin Thread (Polyester) Tex Size Available: 16, 18 http://www.vardhman.com/products_threads_embroidery.asp INDUSTRIAL PRODUCTS Apparel :- they manufacture the following categories of threads for industrial Knits Wovens Denim Over dyed Special application Shoes , leather & non apparel : Footwear Leather garments Leather accessories Automotive seating and upholstery Luggage Mattress and quilting Saddler industrial Filter Compressor Winding curtains and tents Book bindin application

2.4 FIBRES
2.4.i Overview The acrylic fiber of Vardhman is acclaimed for a wide variety of textile applications. The modern manufacturing plant based on renowned Japan Exlan Wet Spun technology produces 18000 MT per annum acrylic fiber at Gujarat (Western India). The fiber marketed under the brand name VARLAN has achieved high level of recognition in the Indian market because of super soft touch and silky appearance. 2.4.ii Product Features Superb soft touch & silky appearance; resilence; excellent dye -ability; brilliant shades, high bulk yarn products incorporating shrinkable fibres; low pill formation; better crease recovery; high resistance to chemicals, light, weathering and midew make VARLAN a preferred fibre in knitted, woven and other applications.
2.4.iii Product Range

Acrylic Bright & Semi-dull Non shrinkable fibre in 1.2,1.5,2,3,5,7,10,15 deniers in a wide range of cut lenghts. Acrylic Bright & Semi-dull Shrinkable fibre with different shrinage levels in 2,3,5 deniers in a wide range of cut lengths Acrylic Tow endless Bright & Semi dull in 2,3 denier. Specialty acrylic fibres suitable for Open end spinning; Soft handle, Water absorbent applications etc.

3.1.v.PERFORMANCE
In markets like the EEC, USA, Canada, China, Japan, Korea, Mexico, Brazil and Mauritius, Middle East. Vardhman has a share of more than 6% in total Yarn exports from India. Its trusted, tested and reliable workforce, coupled with the latest technology, quality consciousness, customer oriented services and strong logistics has given Vardhman an edge over its competitors and in the worlds most quality conscious and price sensitive markets. Thereby making Vardhman a truly international organisation in terms of sourcing from and catering to the world market.

FINANCIAL STATUS
PARTICULARS Yarns Sewing thread SALES REVENUE (RS CRORE) 102873.31 29634.83

Steel Fabric

34702.19 33239.58

% SALES REVENUE

fabric, 13% steel, 15% sewing thread, 15% yarns , 57%

During the last 5 years, Vardhman Group has recorded 10 percent top line growth rate, which is higher than the industry average growth rate. The Group turnover has grown from Rs 723 crores in 1995 to Rs 3186.32 crores (about USD 700 million) in 2008-09. The exports has grown from negligible level in early nineties to Rs 689 crores (USD 150 million) in 2008-09.

6. SWOT ANALYSIS
6. 1 STRENGHS
Company has large and diversified segments that provide wide variety of products. Industry has Manufacturing Flexibility that helps to increase the productivity. Hard work put in is recognized and felicitated. A feeling that galvanizes the Group into believing in more, in itself and reaffirming its commitment to offer products that invoke trust and reliability. Vardhman offers the widest range of specialized greige and dyed yarns (NE 10 to NE 200) in cotton, polyester, acrylic and varieties of blends. The group offers value added products like Organic Cotton, Melange, Lycra, Ultra yarns With setting up of INTEGRATED YARN DYEING UNIT,the installed capacity to process has increased to 20 tons of Yarn and 15 ton of Fibre per day. Offers eco friendly blends, Anti bacterial finished yarn also available

 Though automation has taken place in many operations the industry is largely labour oriented. Hence they can capitalize on cheap labour. The company is financially sound and has good amount of current assets and reserves to pay off the liabilities, fulfill the anticipated cash requirements and to work on the expansion plans. http://0301.netclime.net/1_5/R/H/Y/Textile%20Industry.pdf

6.2 WEAKNESS
Company is highly depended on cotton Lower productivity in various segments Lack of technological development that affect that productivity and other activities in the whole value chain Profits before taxes are declining which can create financial decline Changing trends could lead to lower volumes Competition from other low cost industry or country Eg: china A lot of money is blocked because there is a lot of unsold stock. Improper use of available funds which are lying idle

6.3 OPPORTUNITIES Abundant raw material availability that helps company to reduce costs and control lead time across the operation Availability of low cost and skilled manpower gives company a competitive advantage. Availability of large varieties of cotton fibre and has a fast growing synthetic fibre increase market India is one of the largest exporters of Yarn in international market and contributes around 25% share of the global trade in Cotton Yarn Large potential ,domestic, international market Company has manufacturing flexibility that increase productivity.. Product development and diversification to cater global needs Elimination of quota restriction leads to greater narket development Market is gradually shifting towards branded readymade garments Increase disposable income and purchasing power of Indian consumer opens new market development Textile being 2nd largest employment generator already has captured government attention Greater investment and FDI opportunities are available Product development and Diversification to cater global needs.

Growth rate of Domestic Textile Industry is 6-8% per annum. There is increasing growth potential in sustainable products A Japanese joint venture has opened wide opportunities for their textile industry Overseas alliances to help move up the value chain and gain global presence.

6.4 THREATS Competition from other developing countries specially china Continuous quality improvement is needed as there are different demand patterns all over the world Elimination in quota system will lead to fluctuations in export demand. Threat for traditional market for power loom and handloom products and forcing them for product diversification Geographical disadvantages Lack of trade membership which restrict to tap other potential market International labour and environment laws. To balance the demand and supply. To make balance between price and quality. Unfavourable labour laws Fibre prices, especially cotton is determined to a large extent by factor such as weather
conditions

Higher indirect taxes, power and interest rates Indian Textile Industry is highly Fragmented Industry. Infrastructural Bottlenecks and Efficiency such as, Transaction Time at Ports and transportation Time. The fabric and garmenting sector need modernization, which is under process.