Vardhmān

Rooted in Values, Creating World Class Textiles

Vardhman Group

Vardhmān

Overview of the Presentation

Brief Snapshot of Vardhman Group

Business-wise Analysis

Financial Performance

Strategic Direction

Corporate Social Responsibility

Market Performance

Vardhmān

Vardhman Group

� Incorporated in 1965 under the leadership of Mr. S.P. Oswal

� One of the largest integrated textile houses in the country with a turnover of over $700

million and a workforce of more than 23,000 employees

� One of the largest installed capacity in spinning in India at 800,000 spindles

� Amongst the largest Yarn producer in India

� Amongst the largest manufacturer & exporter of Cotton Yarn from India

� One of the largest consumers of raw cotton in the country

� Market Leader in Hand Knitting Yarn

� Second largest producer of Sewing Threads

� One of the leading integrated fabric producer

� Highest quality acrylic manufacturer of the country

� High economies of scale due to integrated operations and large cotton inventory holding

capacity

VALUE ADDITION THROUGH SUPPLY CHAIN

The unique business model of the company having presence in entire value chain

from Fibre (acrylic) to Fabric gives it flexibility in down turn and advantages over

competitors to rise in upturn of the industry cycle

Vardhmān

1965

Investment & Financing

93

Listed on BSE, NSE

ISIN Code: INE701A01023

1973

Yarn, Fabric, Steel

24,954

Listed on BSE, NSE

ISIN Code: INE825A01012

Vardhman Textiles

Limited (VTEX)

Vardhman Holdings

Limited (VHL)

Year of Commencement

Business

Revenue (Rs.Mln)

Market Status

Group Snapshot

59%

Acrylic Staple Fibre

60,400 tpa

Vardhman Acrylics

Limited (VAL)

2,539

51%

RMG / Industrial /

Speciality Threads

33 tpd Threads

60k spindles (captive)

Vardhman Yarns &

Threads Ltd (VYTL)

3,324

73%

100% Cotton Yarn

45,872 spindles

1,010

VMT Spinning Co.

Limited (VMT)

Stake

Business

Capacity

Collaborations

Revenue (Rs.Mln)

100%

NBFC

N.A

VTL

Investments Ltd

37

Stake 26.66%

Listed on NSE

ISIN : INE116G01013Unlisted UnlistedMarket Status Unlisted

-J.V with A&E, USAJV with Marubeni &

Toho Rayon, Japan-

Vardhmān

Major Alliances...Partnering with Global Players

2002NISSHINBO, JAPANCotton Yarns

2007NISSHINBO, JAPANCotton Fabric

2001AMERICAN & EFIRD (A&E) INC USASewing Threads

1998TOKAI SENKO, JAPANFabric Dyeing & Finishing

1996EXLAN AND MARUBENI CORP, JAPANAcrylic Fibre (ended in 2009)

1995TOHO RAYON, JAPANCotton Yarns

1994KYUNG BANG, SOUTH KOREAGassed Mercerized Yarns

1992NIHON SANMO, JAPANFibre and Yarn Dyeing

2009NISSHINBO, JAPANGarments

USA, EU, Australia, Canada, China, Egypt, Mauritius, Hong Kong,

Indonesia, Israel, Italy, Japan, Korea, Malaysia, Singapore, U.K.

Major Export Destinations

Vardhmān

Group Capacities

Sewing Thread (Tons per day)

1619 19

25

3033 33 33

2000 2002 2006 2007 2008 2009 2010(E)1998

Greige Fabric - Looms (No.)

144 160208

432460

810

900 900

2000 2002 2006 2007 2008 2009 2010(E)19981998 2000 2002 2006 2007 2008 2009 2010

(E)

828282

4230

2015

0

Processed Fabric (Mln Mtrs pa)

0.87

0.79

0.75

0.59

0.51

0.50

0.40

0.39

Yarn - Spindles (Mln)

1998 2000 2002 2006 2007 2008 2009 2010 (E)

1998 2000 2002 2006 2007 2008 2009 2010 (E)

Dyeing-Tpd 25.50 34.50 52.00 55.00 55.00 55.00 55.00 55.00

Mercerization-Tpd 1.70 5.00 6.75 6.75 8.00 8.50 10.00 10.00

Acrylic Fibre-Tpa 16,500 16,500 16,500 16,500 18,000 18,000 18,000 18,000

Steel-Mtpa 65,000 40,000 40,000 80,400 80,400 80,400 80,400 80,400

Other Capacities:

Vardhmān

Business-wise Analysis

Brief Snapshot of Vardhman Group

Business-wise Analysis

Financial Performance

Strategic Direction

Corporate Social Responsibility

Market Performance

Vardhmān

Business - Yarn

� Largest spinning capacity in the country with > 0.87 mln spindles

� 12 production plants located in the states of Punjab, Himachal Pradesh and Madhya

Pradesh

� Technical tie-ups with the world leaders from Switzerland, Germany, Japan and Korea

� Amongst the largest exporter of yarn from India. The total export of the group is about 5%

of total export of cotton yarn from the country

� Virtually a “Supermarket for Yarn” with a wide range of specialized grey, dyed, & a variety

of blended yarns

Gas

Mercerised

Auto-ConedBranding of

Carded Yarn

Blends (Acrylic,

P/C, A/C)Yarn Dyed

Melange

(Rangoli)Grey Carded

Grey Combed

Compact / Contamination

ControlledLycra

Organic

Fair TradeVortex (MVS) … > 0.87

million spndls

…14,000

spndls

Yarn - The journey so far….

Vardhmān

Yarn : De-risking the Revenue Model

Cotton Lyocell Cotton Silk

Cotton Bamboo Cotton Modal

Cotton Tencel Cotton Viscose

Specialized Products

De-risking by Value Addition

Compact Yarn Fibre Dyed

Cotton Lycra Gas Mercerised

Melange Yarn Fancy Yarns

Cotton Dyed Slub Yarns

PC Yarn Dyed Acrylic Yarns

Yarn Dyed Hand Knitted Yarns

Value Added Products

Gas Mercerised

MelangeCompact

Slub Yarns

Fancy YarnsHand Knitted yarns

Cotton Lycra Yarn

De-risking by Specialization

Environment Friendly Yarns Organic Cotton Fair Trade Yarn

Environment Friendly Products

Contamination Free Yarn

Cotton BambooCotton Silk

Organic Cotton yarn

Vardhmān

Changing Spreads in Cotton Yarns

1.0

1.2

0.66

0

1

1

2

2

3

3

4

Jun06 Dec06 Jun07 Dec07 Jun08 Dec08 Jun09 Dec09

($ p

er

kg)

0

0

0

1

1

1

1

1

($ p

er

kg)

Avg Cotton Prices

Avg Yarn Prices (30s CH)

Spread

53.0156.80

34.77

0

20

40

60

80

100

120

140

Jun06 Dec06 Jun07 Dec07 Jun08 Dec08 Jun09 Dec09

(Rs. per

kg)

0

10

20

30

40

50

60

(Rs. per

kg)

Avg Cotton Prices

Avg Yarn Prices (30s CH)

Spread

Spread over Indian Cotton

(Rs./kg)

Spread over Cot-A Index

($/kg)

Vardhmān

Business - Fabric

� Continuing its onward march on the value curve, the group entered

Fabric business in 1992 with Greige (unprocessed) Fabric

� Entered the Processed Fabric market in 1999

� Current capacity 900 Looms & 82 million meters of processed fabric.

� One of the few fully integrated fabric suppliers in the country

� Dedicated to product innovation, world class quality, state-of-art

technology and excellence in service

� Produces fabrics for both tops (shirting) & bottom weights

(trousers/pants) for the apparel segment

� Making specialized fabrics like

� Yarn Dyed, Special White, Melanges, Nylon, Modal & Linen.

� Doing specialized finishes like

� Teflon / Nanocare (oil & water repellent), ETI etc.

Supplier

of Fabric to

Top of the

Line customers

Vardhmān

Changing Proportion of Fabric Sales

4%6%

14%

35%

41%

6%7%

19%

30%

39%

4%

7%

17%

31%

42%

7%4%

17%

35%37%

0%

10%

20%

30%

40%

50%

2006-07 2007-08 2008-09 2009-10 (Est.)

Other Exports Brands RMG Exports

Distributors Buying Houses

Segment-Wise Sales Process-Wise Sales

� Buying Houses: Associated with International Labels, engaged in

the sourcing & merchandising activity for them. Usually result in

higher margins for fabric suppliers.

� Distributors: Works for a number of smaller brands / garmenters

and places a collective larger order.

� RMG Exports: fabric can be sold directly to the vendor factory

� Brands: fabric supplied to prestigious Indian Brands like Madura

Garments (Indian Rayon), Color Plus, Raymonds, Zodiac etc

� Other Exports: To Customers & Buying houses operating

overseas which source fabric for vendors factories that are outside

India

� Full Bleach : Special whites

� Ready for Dyeing : For Prints & Garment Dyeing

� Yarn Dyed : Yarn is first dyed and then converted to fabric

� Piece Dyed : Fabric is manufactured first and then dyed

9% 10%13%

68%

12%9%

19%

60%

10% 11%14%

65%

9%

16%12%

63%

0%

10%

20%

30%

40%

50%

60%

70%

2006-07 2007-08 2008-09 2009-10 (Est.)

Full Bleach RFD Yarn Dyed Piece Dyed

Vardhmān

Business - Sewing Thread

� The Group entered Thread business in 1982 as a forward integration to its Yarn business.

� Current capacity 33 tpd in 4 plants at Punjab, Tamil Nadu & Himachal Pradesh.

� In 2002, joined hands with American & Efird, Inc. USA (A&E) for manufacturing &

distribution of A&E branded sewing threads in India.

� Spun off the Threads business into a new company (Vardhman Yarns & Threads Ltd) in 2007

and entered into a 51:49 Joint Venture with A&E.

� The second largest brand of specialized threads in the country.

� A wide product range, which includes:

� Apparel Sewing Threads

� Specialty Threads

� Textile Crafts

� Embroidery Threads

� Kite Flying Threads

� Tea Bags

� Cosmetic Threads

� Industrial Threads

Vardhmān

Business - Acrylic Fibre

� Ventured into manufacture of Acrylic Staple Fibre in 1999 - Vardhman Acrylics Limited

� The plant was set up in Gujarat, in collaboration with Marubeni & Japan Exlan of Japan.

� Current Capacity 18,000 mtpa

� World class wet spun technology with highly automated, microprocessor controlled systems

� Products are marketed under the brand name VARLAN©

� It is used in manufacturing of hand knitted yarns, blankets, jerseys, sweater, saris,

upholstery, carpets etc.

Vardhmān

Business - Steel

� Started Steel business in 1972 as a diversification strategy, with capacity of 35,000 mtpa.

� Subsequently capacity has been expanded to 100,000 mtpa.

� Caters to high technology quality conscious special & alloy steel segment

� Application of products in automotive components, forging, ball bearings, piston

pins, engineering applications, railways, defense etc.

� Preferred OE supplier to leading OEMs like Telco, Ashok Leyland, Maruti, Hindustan

Motors, Toyota, M&M and Escorts among others

Greaves, Simpson, Siemens India, Caterpillar India, Bharat Earth Movers, RailwaysOthers

Graziano, Bonfiglioli, Spicer, Dana, Meritor, Arvin Meritor, Isuzu, Shriram Pistons & Rings,

India Pistons, Sona Okeygawa, Sona Koyo, Brakes India, Toyota Kirloskar Auto Parts

Auto Components

HMT, PTL, ITL, Eicher Motors, Escorts, Tractor Engineers, TAFE, L&T John Deere, Mahindra &

Mahindra

Tractors

Bajaj TempoThree-Wheelers

Hero Honda, Yamaha, Honda Scooters & Motorcycles, Kinetic, LMLTwo-Wheelers

Maruti Udyog, Toyota, Tata Motors, General Motors, Hindustan Motors, Mahindra & MahindraCars / Multi Utility

Vehicles

Tata Motors, Ashok Leyland, Mahindra & Mahindra, Eicher Motors, Swaraj MazdaCommercial Vehicles

OEMCategory

Vardhmān

Financial Performance

Brief Snapshot of Vardhman Group

Business-wise Analysis

Financial Performance

Strategic Direction

Corporate Social Responsibility

Market Performance

Vardhmān

Group Financials

90

510

95

584

95

646

111

749

0

200

400

600

800

1000

(Mln

$)

2006 2007 2008 2009

Vardhman Group

EBIDTA Revenue

511

613795

931

0

200

400

600

800

1,000

(Mln

$)

2006 2007 2008 2009

Capital Employed

Revenue Mix

FY 2008-09Thread , 10%

Yarn, 55%

Fibre, 7%Steel, 8%

Fabric, 20%

Note: Conversion for above data taken @ Rs.47/$

Vardhmān

Business-wise Financials

52

277

57

313

60

361

64

416

0

100

200

300

400

500

(Mln

$)

2006 2007 2008 2009

Yarn Business

EBIDTA Revenue

11

70

10

88

11

96

19

146

0

50

100

150

200

(Mln

$)

2006 2007 2008 2009

Fabric Business

EBIDTA Revenue

10

68

11

73

11

71

15

72

0

20

40

60

80

100

(Mln

$)

2006 2007 2008 2009

Thread Business

EBIDTA Revenue

3

36

8

46

7

49

4

54

0

20

40

60

80

100

(Mln

$)

2006 2007 2008 2009

Fibre Business

EBIDTA Revenue

11

59

10

64

9

70

9

61

0

20

40

60

80

100

(Mln

$)

2006 2007 2008 2009

Steel Business

EBIDTA Revenue

Note: Conversion for above

data taken @ Rs.47/$

Vardhmān

Strategic Direction

Brief Snapshot of Vardhman Group

Business-wise Analysis

Financial Performance

Strategic Direction

Corporate Social Responsibility

Market Performance

Vardhmān

Yarn

� Continuous capacity expansion to maintain customer satisfaction. There is a capital

proposal of Rs.2,500 mln currently on the drawing board to increase the spindlage by 55 k

taking the total capacity upto 0.93 mln spindles

� Continuous improvement in capacity utilisations through line balancing

� Focus on Value Added yarn (compact, blends, core spun, slub, organic etc)

� Focus on high value customers

� Focus on diversifying customer base

Strategic Direction

Fabric

� Focus on Value Added products esp. cotton Lycra based fabrics & compact yarn based fabric

� New project commissioned in M.P. with reduced energy costs & improved logistics

� Formation of Creative Design Cell for strong thrust on Designing & Product Development

� Entering new market segments like work wear & OTC

� Developing new small distributors for high value fabric

� Strengthening of the RMGE segment

� Reducing cycle time & reducing lead time

� Strategic relationship with key exporters

� Developing yarn dyed shirting market

Vardhmān

Thread

� In 2007 entered into a Joint Venture Agreement with American & Efird, Inc. USA in

51:49 ratio, for manufacturing & distribution of A&E branded sewing threads

� Consolidation of the thread business under Vardhman Yarns & Threads Limited

� It opens up a possibility of strategic tie-ups or attracting financial investors

Garments

� Vardhman has forayed into Garments with a joint venture with Nisshinbo Textile Inc.

for production of shirts in Ludhiana, Punjab (India) with Vardhman holding 51% stake.

� The shirts will be sold in India as well as exported to US, Europe & Japan.

� Vardhman is producing yarns & fabrics and will perform liquid ammonia processing

with technology cooperation from Nisshinbo.

� Production expected to start from Dec 2010 with 1.20 mln units of which 400,000 will be

sold in domestic market.

� Production slated to increase to 1.80 mln in 2nd year.

Strategic Direction (cont…)

Vardhmān

Corporate Social Responsibility

Brief Snapshot of Vardhman Group

Business-wise Analysis

Financial Performance

Strategic Direction

Corporate Social Responsibility

Market Performance

Vardhmān

Corporate Social Responsibility & Human Development

� Sri Aurobindo Socio-Economic and Management Research Institute

� Sri Aurobindo College of Commerce and Management (One of the leading colleges of

management in Ludhiana)

� Sri Aurobindo Public School

� Promoter member of Nimbua Greenfield Punjab Limited

�Setting up of HRD centers for worker training

�In House Training and Development Centre for staff and management

� TQM and TPM

� Quality Circle, Competitions,

•Suggestion Scheme

� Olympiads –

•Workers competition on

skills and productivity

�Regular benchmarking

Vardhmān

� Active member of Village Cluster Adoption Program (VCAP) in Punjab to improve the yield of

cotton per hectare to match World average (724kg)

Corporate Social Responsibility

75196543324694055266502006-07

59282354099916246557702007-08

64187019185329342947252005-06

55182013445292132058102004-05

3918001241160812112003-04

Punjab Yield

(Kg lint/ ha)

Yield

Achieved

(Kg lint/ ha)

Area under

Cotton

(Acre)

Total

cultivated

area (Acre)

No of

Farmers

No of

Villages

Year

� Started the Village Cluster Adoption Program in M.P. as well following the huge success of

the same in Punjab. 2 Villages have been adopted so far with 316 farmers and total area

under cultivation of 480 acres.

Vardhmān

Market Performance

Brief Snapshot of Vardhman Group

Business-wise Analysis

Financial Performance

Strategic Direction

Corporate Social Responsibility

Market Performance

Vardhmān

Market Performance (VTXL)

0

50

100

150

200

250

300

350

400

450

2003 2004 2005 2006 2007 2008 2009

40.1052 Week Low

280.9552 Week High

13,186Market Cap (Rs mn)

228.25Last price

Rs/shareVardhman Textiles