WIL Annual Report FY 2007-08

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WELSPUN INDIA LIMITED
23rd ANNUAL REPORT 2007-2008
Sustainability
Revenue
9,736
76%
12,409
46%
Exports
8,702
65%
10,782
21%
6,530
5,500
06-
07
07-
08
07-
08
0 05-
, M . 12 $ 310 Rs
US
409
Mn
06-
n*
06 05-
, M . 10 $ 269 Rs
US
n 2 M n* 78
07
Net Worth
5,508 5,428
69%
5,588
31%
Fixed Assets 17,034 (Gross Block)

15%
13,960
57%
10,655
07-
08
07-
08
06-
07
6 5-0
, M s. 5 $ 139 R
US
428
Mn
06-
n*
0 05-
M 3, s. 1S $ 425 R U
n 0 M n* 96
07
% - Percentage of growth
*US $ 1 : Rs. 40.075 As of 31.03.2008
Sustainability literary means: A characteristic of a process or state that can be maintained at a certainlevel indefinitely. At Welspun, we strongly believe that our business in all sense of the term is Sustainable. We manufacture products which not only stand the test of time, but also enhance them in each and every step. We leave no stone unturned to increase stakeholders' wealth through ethical practices while sustaining our environment and contributing back tothesocietywelivein. This is evitable in the position we are in today as one of the largest Home Textile Companies intheWorld. Welcome to the'WorldofWelspun'
WELSPUN City entrance,Anjar.
Vision Statement
WELSPUN INDIALIMITED
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Contents
Corporate Information Vice Chairman and Managing Director's Statement Director's Report Corporate Governance Report Practicing Company Secretary's Certificate Management s Discussion and Analysis Financials 04 08 12 26 33 36 54
Forward looking statement

In this Annual Report we havedisclosed forward-looking information to enable investors to comprehend our prospects and take informed investment decisions. This report and other statements that set out anticipated results based on the management's plans andassumptions. We have tried wherever possibletoidentify such statementsbyusingwordsas'anticipate','estimate','expects','projects','intends','plans','believes',andwords of similar substance inconnection with any discussion of future performance. We cannot guaranteethat these forward-lookingstatementswill berealized,althoughwebelieve wehavebeenprudentinassumptions.Should knownorunknownrisksoruncertainties materialize, or shouldunderlyingassumptionsproveinaccurate,actual resultscouldvarymateriallyfromthoseanticipated,estimatedorprojected.Readersshouldbearthisinmind.We undertakenoobligationtopublicityupdateanyforward-lookingstatements,whetherasaresultofnewinformation, futureeventsorotherwise.
23rd ANNUALREPORT 2007-2008
Corporate Information
Board o f Directors
Shri.G.R.Goenka (Chairman) Shri. B. K.Goenka ViceChairman& Managing Director Shri. DadiB.Engineer (Director) Shri. A. K. Dasgupta (Director) Smt. Bala Deshpande (Director) Smt. RevathyAshok (Director) Shri. Arun Todarwal (Nominee DunearnInvestments (Mauritius) Pte. Ltd.) Shri. R. R. Mandawewala (JointManaging Director) Shri.M.L.Mittal (Executive Director - Finance)
Company Secretary
Shri. D. K. Patil
Audit Committee
Shri. DadiB.Engineer Shri. Arun Todarwal Smt. Bala Deshpande Shri. A. K. Dasgupta
Auditors
Price Waterhouse & Co
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Remuneration Committee
Shri. A. K. Dasgupta Smt. Bala Deshpande Shri. Arun Todarwal
Share Transfer Committee

Shri. A. K. Dasgupta Shri. B.K.Goenka Shri. R.R.Mandawewala Shri.M.L.Mittal
Registered Office and Works

Survey no.76,VillageMorai, Vapi, Dist. Valsad, Gujarat - 396 191,INDIA Tel:(0260)2437437,Fax:(0260)2437088, E-mail: [email protected] Works : WelspunCity,Tal.Anjar, Dist. Kutch Gujarat - 370 110,INDIA Tel:(02836) 573428/9,Fax:(02836) 247070
Bankers
State Bank of Bikaner & Jaipur State Bank of India Punjab National Bank Andhra Bank Canara Bank Exim BankLtd. Bank ofIndia State Bank of Patiala Bank of Baroda Oriental BankofCommerce IDBI Bank
Corporate Office
Stock exchanges where the company s securities are listed

Bombay Stock Exchange Ltd PhirozeJeejeebhoyTowers, Dalal Street, Fort Mumbai - 400001 The National Stock Exchange ofIndiaLtd Exchange Plaza, Bandra Kurla Complex, Bandra (E), M u m b a i - 4 0 0 0 5 1
Trade World, 'B'-wing, 9th Floor, KamalaMills Compound, Senapati BapatMarg,LowerParel, Mumbai 400013,INDIA Tel: 022-66136000/ 2490 8000 Fax: 022-24908020 Website:http://www.welspun.com
My dear fellow Investors,

Sinceourlastcommunication,ourcompanyreceivedanumberofawardsandrecognitions.Iwishtostart mymessage to youwiththeseachievements.JCPenny,oneofthelargestretailersintheworldbestowed uswiththe'SupplieroftheYear'AwardinQualityataglitteringceremonyheldatNewYork.Thisawardfor Quality furtherendorses thequalityparameters of Welspunandreinstatesour special efforttosupplyall our productswithvirtually'zero-defect'.
Incontinuation with this award, Dun & Bradstreet (D&B),Worlds largestandmostrecognized corporate informationservices Company inassociationwithECGC (Export Credit Guarantee Corporation of India) awarded us with the 'Indian Exporter Excellence Award' and the 'Emerging exporter of the year'Award. ThisrecognitionfromD&BsignifiesWelspun'scredibilityintheinternationalmarket.
Appreciating Welspun's commitment towards environmental protection, waste disposal and effluent treatment,theTimesofIndia,themost-readnewspaper in India, together with JSW,India'sleadingsteel company bestowed 'The Earth Care Award' to Welspun. This award is the icing in cake to the 'SustainabilityAward'webaggedlastyearfromWalMart-Worldslargestretailer.
These awards andrecognitionscertainlygiveusalotofmotivationandmomentumintoday'schallenging environmentwhichIwouldliketoelaboratefurther.
Today, the global textile industry is at cross-roads where on one hand, there is tremendous pressure on all retailers due to acute economic slow-down happeninginUSandpartsofEurope.Therecent financial sub-prime crisis has also led toconsiderable deflation and some retailersareevenfightingtoremain solvent. At the same time, pressure on raw material prices and production are squeezing the margins. You all must be aware that the recent boom in the community cycle has not left cotton unscathed. Cotton is almost trading at its many-year high increasing raw material costs across segments significantly.Along withit,theascendingoilpricesatitsall-time-highhave affectedenergy costsdearly. Similarlythe recentincreaseinlaborcostsis also affecting conversion costs making the environment much more challenging.
In this scenario,fullyintegratedcompanies withspecialskill-sets (beit retailers or vendors) are the only ones who can make a mark. Within Welspun, for many years in a row, we have been trying to develop a
B. K. Goenka Vice Chairman & Managing Director
culture of competitiveness, highest end of service, continuous innovation, seamless execution, multiple product offerings, and investment in people and finally, making sustainability the way of life. Let me elaborate concreteeffortsbeingtakeninallthesedirections.
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On cost competitiveness, Welspun has been increasing its capacities to reach the global scale, while becoming as vertically integrated as possible. We make sure that our global locations get us closer to our customers. Our initiativeinMexicoisastrategicstepinthisdirection.Wehavedevelopedspecialskill-setsforincreasing efficiencyatallstagesofproduction.
On the service front, effective product development, new designs, efficient product pricing, product placement and inventory efficiency have been the hallmark ofWelspun's highest levels of service.This clubbed with flawless execution involving on-time availability, enviable quality, matchless consistency andfasterreactiontime/leadtimeisleadingtoanextremelystrongbusinessproposition.
Whilealltheabovementionedpointswereimportantforimprovingourperformance,thesamewouldnot have been achieved without our strong reserves of talented work force. Welspun has commissioned Project 'Parivartan' (Meaning Change) with HAY Group, World's largest consultants onhumanresouce. Under this project covering all employees, redefining the roles and responsibilities and improving efficacyandefficiencyenablingthemtomeetallglobalchallenges,Welspunispreparingforyear2010.
LastbutnottheleastWelspunhastakensustainabilitytobeawayoflife.Withcompletefocusonenergy efficiency, usage of eco-friendly material, effective waste recycling, emphasis on waste reduction the Companyiseventuallyputtingitsbestfootforwardforpreservingoureco-systeminallpossibleways.
Appreciation
Finally,Iwouldliketoputonrecordmysincereappreciationtowardsallmystake-holdersbeittheBanks, Financial Institutions, Private equity partners and each Welspunite for their overwhelming support. My friends,letsgettogetherinourjourneytomakeourcompanyatrulysustainableandinternationalone. Yours sincerely,
MANAGEMENT DISCUSSION AND ANALYSIS

Readersarecautionedthatthisdiscussionandanalysiscontainsforward-lookingstatements that involverisks and uncertainties. When used in this discussion, the words anticipate, believe, estimate, intend, will, and expected and other similar expressionsastheyrelatetotheCompanyoritsbusinessareintendedtoidentifysuchforward-lookingstatements. TheCompany undertakesnoobligationtopubliclyupdateorreviseanyforward-lookingstatements,whetherasaresultofnewinformation,future events, or otherwise. Actual results, performances or achievements, risks and opportunities could differ materially from those expressedor implied in these forward-looking statements. Readers are cautioned nottoplaceunduerelianceonthes e forwardlooking statements as these are relevant at a particular point of time & adequate restrain should be applied in their use for any decisionmakingorformationofanopinion.Thefollowingdiscussionandanalysisshouldbereadinconjunctionwith theCompany's financialstatementsincludedhereinandthenotesthereto.
At Welspun, Sustainability is the way of life. We take pride that every Welspunite takes utmost care to keep the CompanyatthepinnacleofSustainabilityin each and every step of manufacturing and production. In testing times, we have been bestowed with numerous recognitions which have reinstated the fact that we are amongst the best Home Textile companies intheworld.
Rajesh R. Mandawewala, Joint Managing Director
A.INDUSTRYSTRUCTUREANDDEVELOPMENTS ECONOMICOVERVIEW: The global environment in the home textile industry has been undergoing change in view of the increasing impetus onbuildingcapacities intheeastwhileconsolidatingdistributionchannels in thekey markets of the EU region and the United States. There have been consistent capacity additions in the weaving and processing of high-end home furnishing fabrics in India as well as in China. The global distribution of high-end home furnishing fabrics has been marked by increasing product complexity, higher service standards by manufacturers and shorter delivery cycles. The higher dependence on suppliersforresearchanddevelopmentandinnovationcontinue.Hence,investingindesignandproduct development expertise has become a key differentiator in the global equation between buyers and suppliers. The global textiles and apparel trade is reportedly worth about US$ 450 bn with US and Europeanmarketsdominatingglobal trade in thisindustrywhichisexpectedtotoucharoundUS$700bn by2010. India'scurrentshareoftheglobaltextilesandapparelmarketisonlyUS$19bn.Indiatherefore stands to benefit immensely from this growth as international brands andbuyersincreasingly look tolow cost producingnationstoenhanceandbroadentheirsourcingbase.
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SEGMENTANALYSISANDREVIEW: Operating in this segment of the market tests a manufacturer's ability in coping with the best in the class technology,globaldesigntrendsandtheabilitytoharness talent in creating new product lines for the market. To address these challenges the industry today is continuously investing in new technologies and striving to shorten its delivery cycles to meet customer demands. Expanding the products breadth and expanding the designing team, both domestically and
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internationally,havebeenanintegral partofthetoday'scorporatestrategyinthissector.Theurbanhome textiles marketinIndiaisestimatedtobeRs.9,300CroresandexpectedtogrowtoRs.20,000Croresby 2011. Out of this only 6% of the market is organized. Bed and Bath constitute about two thirds of this market. IndianHomeFurnishingMarketSizeBreakup
Others, Rs800Cr. 9%
Kitchen Rs300Cr. 3%
Upholstery Rs 1000Cr.11% Bed Rs5000Cr. 53%
Curtains Rs1000Cr. 11%
Bath Rs1200Cr.13%
Source:TechnopakAnalysis
GlobalTextilesTrade TheincreasingacceptanceofIndiantextileproductsin the U.S.andEuropeanUnion aregoodsignsfor further growthofexportsinthissector. OtherregionsthattheIndianexporterscantargetaretheMiddleEastAsianandSouth-EastAsianCountries.
The elimination of quota restrictionhaspaved the way for themostcompetitive developing countries to generatestrongerclustersoftextileexpertise,enablingthemtohandleallstagesoftheproductionchain, from growingnaturalfiberstoproducingfinished clothing. The Organization for Economic Co-operation and Development (OECD) paper says that while low wages can still give developing countries a competitive edge in the world markets, time factor now plays a far more crucial role in determining international competitiveness. Countries that aspire to maintain an export-led strategy in textiles and clothingneedtocomplementtheirclustersofexpertiseinmanufacturingbydevelopingtheirexpertisein higher value-added service segments of the supply chainsuchasdesign,sourcingorretaildistribution. To pursuetheseavenues,nationalsuppliersneedtoplacegreateremphasisoneducationandtrainingof services-related skills and to encourage the establishment of joint structures where domesticsuppliers
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cansharemarketknowledgeandoffermoreintegratedsolutionswithprospectivebuyers India,China&PakistanaredominantparticipantsintheHomeTextilewiththeirimportsintoUSA, they: Accountfor65%shareinTowels; Accountfor81%shareinSheets; Accountfor79%shareinComforters; Accountfor84%shareinPillows/Pads/OtherBedProducts;
Source:OTEXA(OfficeofTEXtiles&Apparels)
WorldTextile&ApparelTradeFutureProjections
900
700
505 500 390
280 300 300
200 100 2005
260
2010
2015
Textile
Apparel
Source:WTO
THEINDIANTEXTILEINDUSTRY Textiles and apparels is a US$ 49bn industry in India of which 61% is accounted for by the domestic market and39%bytheexportmarket.Segmentedbyproductcategory,textilesaccountforthedominant shareof59%oftheindustry.TheDome stic andExport markets areexpected to grow at 6.5% and 12% CAGRrespectively.The growthdriversforthedomestic market wouldbefavorabledemographicfactors, rise in disposable income and shift towards the branded apparel items due to increasing penetration of organizedretail.Theindustryaccountsnearly21%ofthetotalemploymentinthecountry.
The Indian domestic textile market is witnessing strong growth led by young consuming population (medianageof24years),itsfastgrowingeconomyandrisinghouseholdincomelevels andover30% growthintheorganizedsector.Goingforward,theorganizedtextileandapparelsegmentwillcontinueto rise as the number of urban household in the high and middle segments are growing and disposable incomeoftheyoungerpopulation increasing rapidly. Increaseinthenumberofnewurbanhouseholds, higher spending on home furnishing by Indian consumers and growth in organized retail will fuel the growthinhometextilesmarketinIndia.
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SWOTAnalysisofIndianTextileIndustry STRENGTHS Second largesttextileproducerintheworld.Longand deep rooted textile tradition and highest net forex earner forthecountry. Integrated industry across the entire chain from fibre to garments/hometextilesi.e.concepttoconsumer Abundant skilled and technical labour force, which are
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especially
suitedforapparels/MadeUpsmanufacturing. Largeandgrowingdomesticmarkettoimpartstabilitytoexportthrust StrongCotton base - India-the3rdLargestCottonProducerintheWorldwiththelargestareaunder cottoncultivation aclearcompetitiveedge Huge Domestic demand Large Consuming Class increasingpercapitaconsumptionandgrowthin residentialreal estate Flexibilityinproduction ofsmallorder lots Cost of Capital near bottom end of the curve. TUF benefits (reimbursements for exports oriented projects)makeitinternationallythelowest
WEAKNESSES Small size and technological outdated plants result in lack of economics of scale, low productivity andweakqualitycontrol Poor work practices resulting inhigher labor costcomponent inmanystaplegarment,inspiteoflow labor costs Withtheexceptionofspinning,othersectorsarefragmented Rigidgovernmentlaborlawsandpolicieslackreforms Hightransaction&powercost Low InvestmentinBrandBuilding PoorEthicalStandards Low logistics&infrastructuresupport
OPPORTUNITIES Replacement of the M FA by the WTO ended four decades of protectionism and is likely to increase globaltrade QuotascontinuedforChinaafter2005 Textileindustryidentifiedasathrustareabygovernmentfordevelopmentandpromotionofexports Phasingoutoftextilemanufacturingbywesterncountriesduetohighcostofproduction.Production facilities are likely to move to developing economies and thus they are expected to be major
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beneficiaries Consolidationintheglobalretailindustryfacilitatingglobalsourcing Shift in domestic market towards readymade garments. Per capita domestic textile consumption offersroomforgrowthwithincreasingdisposableincomes
THREATS,RISKSANDCONCERNS: Survival ofthefittest in termsofquality,size,deliveryandcost In the post WTO era, competition in the international trade and textile is likely to be intensified. Competition from other textile exporting countries would need to be faced in the domestic market also, which will lead to a threat of dumping with lower tariff barriers. However, so far, lowered tariffs havenotincreasedapparelimportsintothecountry Developedcountriesadoptingnon-tariffbarriersintheformofanti-dumpingdutiesandregionaltrade agreements(thoughtheirlegalityisquestionable) Theenvironmentalissues Increasing operationalcosts Lackofgoodphysicalinfrastructure LabourlawsinIndia Lackofscalabilityoftalent ITenvironment
THEWELSPUNADVANTAGE Welspun IndiaLimited (Welspun) is the Asia's largest and amongst the top 4 Terry Towel producers in the World, withbusiness spread acrosscontinentsandadistributionnetwork in32countries,likeU.S.A., U.K,Canada,Australia,Italy,Sweden,Franceetc.94%ofthetotalproductsareexported.Welspunoffers avarietyofProductslikeTowelsindifferentsizesandqualities,Bedlinenusingstateofthearttechnology and the best quality of Egyptian cotton. Welspunhasadditionally launchedorganicproductsutilizingthe benefitsofSoya,Seaweed,milkandBamboo.Itisthepreferredsupplierto14outoftop20retailersinthe world. Welspun has two world class modern plants at Vapi and Anjar in western Gujarat, India. It possesses the ability and vigour to capitalize on the potentials of this new era and attain the leadership position in its market place. Welspun is the leader in terms of embracing new technologies, product innovations, market intelligence etc. and offering competitive end-to-end solutions to customers at globally competitiveprices with effectivesupply chain management. TodayWelspunisaUS$400million Companywithmanufacturing facilitiesinIndia,UK,MexicoandPortugal,whichisexpectedtobecomea $1billionCompanybytheyear2010.
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ScalableVolumesthroughCapacityAdditions Post expansions in Terry Towel and Bed Linen and backward Integration like Spinning etc., Welspun be one oftheleadinghometextilesplayerswith a market share of 26% in the toweling capacity and 21% share in the projected sheeting capacity in India. It has expanded its product portfolio andtappingretailopportunitiesatagloballevelthroughitsinorganic growth strategies. The total capacity including the new capacity additionsareasunder: IntheCompany:
Segments Pre-Phase II Capacities (including Phase I expansion) *24,500 MTPA 35.7 m Mts **26,202 MTPA Nil Expansion (Phase II) Capacities Status : as at 31.03.2008 *12574 MTPA Commissioned To be Commissioned **2093 MTPA Commissioned To be Commissioned Expected Commissioning Date (Phase II)
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Total Capacities (after full commissioning of Phase II) ) 41, 000 MTPA 40.7 m Mts 47,529 MTPA
Terry Towels Bed Lenin Spinning (Internal Consumption) & Utilities Decorative Bedding
*16,500 MTPA 5 m Mts **21,327 MTPA 0.72 m Mtrs
Q2 FY 09 Q2 FY 09 Q1 FY 09
Q1 FY 09
0.72m mtrs
*Phase II of 16,500 MTPA has already been partly commissioned to the extent of 12,574 MTPA and hencetheinstalledcapacityasat31.3.08is37,074MTPA. **Phase II of 21,327 MTPA has already been partly commissioned to the extent of 2,093 MTPA hencetheinstalledcapacityasat31.3.08is28,295MTPA. and
InSubsidiarycompanies: In addition, a unit for manufacturing Decorative Bedding at capacity of 1.04 m sets/ p.a. of Comforters, 1.30mpieces/p.a.ofMattressPads,and2.34mpieces/p.a.ofPillows,atacapitaloutlayofRs.420m has been set upduringtheyearinMexico, in a wholly owned subsidiary Viz. Welspun Mexico SAdeCV. The capacity has been set up for attaining advantages of saving in freight cost and tariff, nearness to market, and availability of business knowledge. This facility will add considerably to the product lines offered by Welspun. Additionally, it provides warehousing facility to service the clients which are in and aroundtheUnitedStates.
SOREMA TapetesECortinasDEBanho,S.A.,,anothersubsidiaryofWelspunthatwasacquiredduring theyear,hasafacilitytomanufacture910MTPA of BathRugsinPortugal.
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EconomiesofScale Welspun operates at a world scale level, contributing to more than 25% of the total Indian towel export across the globe, with around 34% i n Towels and around 21% in Sheeting & Bed Products to the US in 2007. With capacity expansion i n Towels and Sheeting, thecompany is achieving higher productivity at lower cost of production catering to the need of the global scale in which the quality at the highest throughput.Thestate-of-the-art machinery from the renownedcompanies in Germany, Switzerlandand Japan gives the Welspun technological as well as product quality edge in the competitive arena. The Welspunexpects to leverage its position as a leadingplayerinthehometextilesegmentbybeingableto negotiaterawmaterialcostsasaresultofbulkbuying.
FinancialPrudence Over thelastfewyears,through prudentfinancialmanagementanddebtstructuring,Welspunhasbeen successfulinreducingtheaveragecostofdebtyearonyearbasisbybeingabletoborrowcosteffectively. Welspunenjoysamongstthebestcreditsupportfromitslenders.Bybeingabletofinanceitsgrowthatthe most optimal rates of interest, for capacity expansions and inorganic growth through mergers and acquisitions,theWelspunisatparwithitsglobalcompetitorsintermsofitscostoffunds.
ProvenQuality Welspunisalreadyleveragingonitsstrongrelationships withtheglobalretailersandmovingupthevalue chain by focusing more on the designer brands and specialty stores. Focusing strongly on its product quality, all internal quality checks are carried out in its state-of-the-art in-house laboratory. Through its compliance to ISO 9002/14001 standards and high end products, Welspun displays overall superior qualityinitsproductsaswellasservices.
IntegratedManufacturing Welspunenjoystheadvantageofcompletesynergyof themanufacturingprocessthroughtheintegration of its spinning and manufacturing units. Through this synergy , research and its strict quality controls, ( right from the picking of cotton to the final product in integrated way) , Welspun is meeting the highest standardsandprotocolsofitsqualityconsciouscustomers. Post expansionsin Terry Towel andBedLinenandbackwardIntegrationlikeSpinningetc.itwillbeoneof the leadinghometextilesplayers with a market shareof26%inthetowelingcapacity and 21%sharein the projected sheeting capacity in India. It is also expanding its product portfolio and tapping retail opportunitiesat a globallevelthroughitsinorganicgrowthstrategies.
CustomerRelations Throughitsexposuretointernationalclients,Welspunhasaninsightintolatesttrendsanddesignsaimed attheworldmarket.AttheheartofWelspunisthestrategytolistentoitscustomersanddevelopstronger relationships with them. Welspun has a 100% owned subsidiary in US to establish proximity to the
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customers for focused brand support, marketing and business development. Strengthened by 4 sales representative organizations,a 5600 sq.feetshowroomin Manhattan , New York city and DI based warehousing in New Jersey, Welspun is well structured to service its customersintheAmericansubcontinent.
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NewProductsandDesigns As Innovation is the key to the textile industry, Welspun is allocating more resources to innovate on its widerangeofproducts.
SalesAnalytics
Innovation Innovation
Service
Delivery
PRODUCT
Design
Consumer Research Product Development
Packaging
Welspun is supplying the marketplace with a basket of new and value added home space products reinforcingitsfocusonbuildinghighmarginbusinessthroughthe followingsteps:
Dedicatedrelationshipteams Collaborativeapproach towards Design Productdevelopment Analytics PointOfSale(InAdvertisingTerms) Extendedsupportinfrastructure Sales/design/marketing Merchandising Supplychain
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Brand Strategies Supported by a distribution network spread across all major markets, the Welspun exports more than 90%ofitstotalproductiontoover34countriesandcatersto14outofthetop20retailersintheworld.wide product ranges within exclusive designer brands (including licensee - where the newest acquisition is Umbra) in addition to Nautica. Nauticahasadditionally been licensed for not just towels but also for the bedlinenrange.TherecentacquisitionsofChristyinUKandSoremainPortugalhaveaddedtoitsbrand value in UK, Portugaland other European countries. With licensinglife-stylebrandsinhometextiles,the Welspun desires to expand its business on high value products and distribution channels as part of its overallde-riskingstrategy.
B.MERGER&ACQUISITIONS On20th December2007,Welspun acquired76%interestinbath rugmajor Sorema Tapates e Cortinas deBanho,SA(Sorema)ofPortugal.Setupin1974withmorethanthreedecadesofexperience,Sorema isaleadingplayerinbathrugsandshowercurtainsaroundtheworldwithanannualestimatedturnoverof 10 million (INR 570 m) in CY 2007. With its network across 44 countries, USA, England, Spain and Germany constitutes78% of Sorema'sexport.This acquisition hasgivenWelspunanaccesstopremium and high-end Sorema brands which could be extended to other home products with complimenting its strong presence in US and UK with pan-European presence.TheSorema'sexperienceand knowledge willhelpWelspuninmarketinghighvalueproductsintheEuropeanmarkets.
On 3rd July, 2006, WELSPUN had acquired 85% stake (further increased to 100% on 2nd April 08) in U.K.'s leading Brand, ChristyUK.,whichsuppliestowelstosomeofthebeststoresinU.K.viz.Selfridges, JohnLewis, Marks & Spencer and Debenhams, to name a few. It is also theexclusive supplier of towels for the famous Wimbledon Tennis Championship. Acquisition of Christy has strengthened Welspun's position in the branded segment within Europe and increased the sales considerably. Acquisition of Christy hasgivenanaccesstotheprovenretailexperience,brandmanagementwithinnovativeproduct designskill setsandalsothetransferoftechnology/productdevelopmentskillstomanufacture/manage premiumendproducts.IthasgivenWIL,leverageonexperiencedpoolofprofessionalswellversedwith skillsofdevelopinginnovativeproductsandmanagingbrandsindevelopedeconomies.
C.OUTLOOK Welspun envisions to become a fully integrated home textile Welspun (Bed and Bath) from cotton farmingtoretailingbytheyear2010withthelargestmarketcapitalinIndiaandtobeamongthe topthree hometextilecompaniesintheworld. Welspunistheleaderintermsofembracingnewtechnologies, product innovations, marketintelligence etc. and offering competitive end-to-end solutions to customers at globally competitive prices with effectivesupplychainmanagement. Welspun targets cost optimization with an aim to become the lowest cost producer of home textiles
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globally and further aims tobecomethepreferred partner inhometextilesforglobalinitiativewithitsbusinessmodel asunder:
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The BusinessModelofWelspun
Front-End
ConsumerResearch ProductInnovation DesignTrends BrandManagement MarketIntelligence
Middle-End
ProductDevelopment Distribution ExtendedSupplyChain QualityControl
Back-End
Manufacturing Outsourcing ContemporaryIntegratedInfrastructure
D.OPPORTUNITIES The Welspun's strategy to enter capital intensive projects, taking advantage of TUFS, is expected to increase the topline significantly and also reduce dependence on the terry towels business. It will transformitselffrom a single product Welspun to a diversifiedhometextilesbusiness.Theentireproject has beenappraised by premier financial institutions and is already fully funded through a mix of equity, debtandinternalaccruals.
E.RISKSANDCONCERNS Closecompetition In a free trade regime, competition could be intense on both, domestic and international fronts. In such a scenario, success of enterprise would belargely determined in terms of their ability to meet quality,size,deliveryandcostparameters.Welspunhasforeseenthisscenarioandhadaccordingly geareditselfupwithstate-of-the-artfacilitiesacrossthetextilechain.TheIntegratedoperationsand largevolumesenableWelspuntokeepcostsundercontrolandmeettightdeliveryschedules RawMaterialsandOtherInputs Welspun's risks being cost fluctuation in dyes and chemicals etc. is likely to affect the price of the finished product. Welspunadopts thephilosophyofbookingitsrawmaterialsduringthecropseason (Oct-March) period. RisingEnvironmentalDeterioration: There is an increased pressure on the Indian Industry to conform to internationally accepted environmental laws. Welspun has been fully geared and the efforts have been recognized by WalMart in awarding the 'Sustainability Award' to Welspun as Welspun is the only Welspun in Asia amongst the two companies chosen for this award. This a new initiative instituted by Wal Mart for

takingenvironmental protection tonewlevels,adheringtoWal-Mart'sStandardsforsuppliesaswell as for the quality of goods manufactured. This award appreciates the efforts put in by Welspun to ensurenotonlythesafetyatourplantsbutalsoenvironmentalprotectionatlarge. TheInterestrateRisk: Welspunhasbothrupeeand foreigncurrencyborrowings with floating rates of interest. Any upward revisionofInterestratesintheIndianmarketwouldimplyahigherfinancialburdenonWelspun. Discrimination An important disadvantage for India is that US, Europe and Other developed countries are given preference in trade, through treaties such as NAFTA, AGOA and Caribbean Basin Initiative, to variousunderdevelopedcountrieswiththedutyandquotafreestatus. The shortage of skilled manpower also acts an area of concern for this industry as well as for Welspun. The Industry faces the risk of a change in Government policy affecting the textile industry. Traditionally,theGovernmenthasbeensensitivetotherequirementoftextileIndustryasawholeand has implemented gradual changes in its policies in order to avoid any drastically adverse effects, givingtheindustryareasonableperiodtoadjustaccordingly.
F. INTERNALCONTROLSYSTEMSANDTHEIRADEQUACY Internalcontrolsystemsareimplemented: -tosafeguardtheCompany'sassetsfromlossordamage. -tokeepconstantcheckonthecoststructure. -topreventrevenueleakages. -toprovideadequatefinancialandaccountingcontrolsandimplementaccountingstandards. The systemisimprovedandmodifiedcontinuouslytomeetthechangesinbusinessconditions,statutory andaccountingrequirements.
The Audit Committee of the Board of Directors actively reviews the adequacy and effectiveness of internalcontrolssystemsandsuggestsimprovementsforstrengtheningthem.TheWelspunhasastrong ManagementInformationSystemwhichisanintegralpartofthecontrolmechanism. TheWelspun hassuccessfullyimplementedanenterprisewidesolution(ERP)initstextileplantsandisin theprocessofcoveringallitsbusinesses,planningandaccountingprocesses.
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G. HUMAN RESOURCES AND INDUSTRIAL RELATIONS: Material developments andotherinformationpertaining to Human Resources have been provided in the Directors' ReportforFY07-08.
DaretoCommit
DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TOOPERATIONALPERFORMANCE Highlights: Sales intermsofamountincreased by 27.5% in FY07-08on account of higher volumes andincreased per tonnerealizationintowels. Capacityutilisationincreasedasunder:
Particulars Product Terry Towel Bed Linen Products Unit MTPA Mtrs Installed Capacity 31,160 35.7m F.Y. 06 -07 Actual Production 24,552 17.5 m Capacity Utilisation 78.79% 48.94% Installed Capacity 37,074 35.7m F.Y.07- 08 Actual Capacity Production Utilisation 29,822 80.43% 28.4 m 79.50%
Resultsofoperations Thefollowingparagraphswilldiscussthetablegivenbelow:
(Rs. Million)
Particulars Sales ( net of excise duty)(Net Sales) Other Income Cost of Materials Manufacturing Expenses Employee Cost Selling, Administration Other Expenses EBIDTA Financial Expenses Depreciation Taxes Net Income Earning Per Share (Basic and Diluted) (Rs.)
FY 07-08 12,409 247 5,035 3,304 963
% 100% 41% 27% 7.8% 11% 16% 5% 7% 1% 2% -
FY 06-07 9,736 379 3,829 2,570 804 958 1,954 478 651 304 521 7.1
% 100% 39% 26% 8.3% 10% 20% 5% 7% 3% 5% -
YoY change (%) 27% -35% 31% 29% 20% 48% -1% 42% 30% -50% -50% -49%
and 1419 1,935 677 847 152 263 3.9
1. Income a) Net Sales The Company achieved Net Sales ofRs.12,409 m in the FY07-08, registering an increase o f 2 7 %

over the previous financial year. Commissioning of new capacities at Anjar supported the growth. Sales volume for towels grew by 19% whereas the average price realization dropped by 4%. With respecttobedlinenproductstheyear being2ndyearofbusinessandproductrangebeingdifferent, newpricelevelsandnewvolumeswerereached,that resultedinrealizationbeinglowerby9%.The exportincludingbenefitsfortheyearareRs.11443.0mwhichis92%oftotalSales. SalesGraph
44%
Sales & Services

12,409 14,000 12,000 10,000 6,530 8,000 6,000 4,000
12%
49% 49%
9,736
27%
4,531 3,010
16%
3,380
34%
44%
2,000 -
2002-03
2003-04
2004-05
2005-06
2006-07 2007-08
Year
b) Otherincome Theincomefromother sources dropped from Rs.379.0mtoRs.246.6minFY07-08mainlydueto thecumulativeeffectsofthefollowingincomes/losses: i) Non- availability of excise benefits relating to the production facilities located at Anjar in Kutch district of Gujarat which was beingprovidedfor inthebookstilltheyearFY06-07.Thisresulted inExciseandSalesbenefitbeinglowerbyRs168.5m ii) InsuranceClaimreceiptlowerby Rs23.1mcomparedtoFY06-07
iii) ProfitsofRs.114.9mon cancellationofforwardcontractswhichareundertakenbytheCompany for hedgingitsforeigncurrencyexchangeratefluctuationrisks.
3. Expenditure a) CostofMaterials The Cost of Material at Rs. 5,035 m increased by Rs. 1,206 m in the FY 07-08. As a %age of Net Sales, the Cost of Materials increased from 39 % in FY 2007 to 41 % in the FY 07-08. Mix favored sheets business undertaken by the company resulted in an increase in the overall material consumptionwithoutcorrespondingandproportionateincreaseinsalesrealizations.. b) Manufacturing Expenses ManufacturingExpenses increased by29%andamountedtoRs.3304mforFY2008.Manufacturing expenses for towel as well as bed sheet were higher mainly due to increased packaging charges ,
48
dyes and chemical consumption, job work charges, power cost, etc. which not only increased disproportionately but also rendered positive impact of economiesofscalenugatory. c) EmployeeCost Higher volumes of business as well as improved efficiency, increased recovery of staffcostandotherfixed expenses during theyear. d) Selling,AdministrationandOtherExpenses
DaretoCommit
Market pressure compelled significant rise in selling cost. Particularly discounts, freights, advertisement and sales promotion shot up disproportionately to draw management focus for curbing the same from repeating. Besides ExcisebenefitsreceivableofRs. 43.2 m were written off duringthe year,whichwasoneofthemajoritems,thoughnotrecurring,tohittheprofits e) FinanceExpenses(Net) The Finance Expenses (Net) amounted to Rs.677 m, recording an increase of 42 % over the F.Y. 06-07.FinanceExpensesasa%agetoNetSalesincreasedmarginallydue to rateincreaseaswell as due to lower generation of sales from new capacities. The finance expenses increased due to higherutilizationofworking capitalfundswarrantedbygrowthinbusiness. f) Depreciation TheDepreciationfortheFY07-08wasRs.847mascomparedtoRs.651minFY06-07representing 7 % of Net Sales in both the years. This was due to capitalization of new capacities established during FY07-08, optimum utilization of the same will be reflected in the years ahead to lead to significantreductioninits%agetoNetSales.
3. EBIDTA The Company earned an EBIDTAof Rs. 1,935 m representing 1 6 % of Sales as against Rs. 1954 m for FY 06-07 at 20% of Net Sales. This has been due to overall lower sales realization mainly because of businessrecession in western countriesandsignificantriseininputcostaswellasconversionandother expenses,particularlyinthelasttwoquartersofFY07-08.
4. Profit aftertax The Deferredtaxwassignificantlylowerdueto lowerdeferredtaxableprofitinFY07-08comparedthatin FY06-07. Resultantly,thenetIncomeintheFY07-08wasRs.263masagainstRs.521mintheFY0607.Thisrepresents2%and5%ofthetotalrevenueinFY07-08andFY06-07respectively.
5. EarningPerShare(Basic) The Earning Per Share (Basic) stands at Rs.3.59 per shareascomparedtoRs.7.06 pershareintheFY 06-07, reflecting lower earningsduringFY07-08.
49

6. Net Sales/ReturnofNetWorth Net Salestonetworthincreasedfrom1.79timesinFY06-07 to2.22timesinFY07-08, showing volume growth of business but the same did not reflect in the bottom-line. Consequently, return on net worth reducedfrom9.6%inFY06-07to4.7%inFY07-08.
7. Inventories The inventoryleveloftheCompanyincreasedfromRs.2,366.4masat31stMarch,2007toRs.2901.9m as at 31stMarch, 2008.TheInventoryTurnoverRatio ( Net Sales / Inventory ) stands at 4.27asat31st March,2008comparedto4.10asat31stMarch,2007whichtranslatesinto85daysNetSalesforFY0708 compared to 89 days' for FY 06-07. This was mainly due to better inventory management during FY 07-08andinspiteofriseintheratioofcostofinputstosales.
As At 31st March, 2008 31st March, 2007
Inventory Turnover Ratio Inventory (Days)
4.27 85
4.10 89
8. SundryDebtors DebtorsatRs.753mdecreasedbyRs.136mduetoimprovedtimingofrecoveryfromthedebtorsduring the year. DebtorsTurnoverRatio (DTR) ( Netsales/Debtors)forFY07-08was16.47comparedto10.54 forFY06-07.ThisTranslatesintocollectionperioddecreasingfrom33daysinFY06-07to22daysinthe FY07-08.
As At
31st March,2008
31st March,2007
Debtors Turnover Ratio Collection Period (days)
16.47 22
10.94 33
ConsolidatedAccounts: During FY07-08, Net Sales at Rs. 16,463.9 m was higher by 32.7% mainly on account of acquisition of SOREMA-Tapetes E Cortinas DEBanho,S.A.,Portugal,asubsidiarycompanywith 76% equityinterest andincreasedsalesbyWelspunUSAInc.,awhollyownedsubsidiary.
50
However, EBIDTA at Rs.2031.0 m was lower by 5%inFY 07-08 as compared to Rs. 2132.74m in FY06-07. Profit BeforeTax (PBT)atRs.341.04mwaslowerby54% inFY 07-08 ascomparedto Rs.739.21minFY06-07.NetLoss after adjusting for share of Associates and Minority Interest was Rs.1.55 m forFY07-08 as against Net ProfitofRs.464.55 mforFY06-07.
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CautionaryStatement: Statements in the Management Discussion and Analysis describing Welspun's objectives, projections and estimates are forward looking statements and progressive, within the meaning of applicable security laws and regulations. Actual results may vary from those expressed or implied, depending upon economic condition, Governmentpoliciesandotherincidentalfactors.
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Welspun India Limited (Stand Alone)

Auditor's Report Balance Sheet Profit & LossAccount Schedules Cash Flow Statement Balance SheetAbstract Section 212 Statement 55 58 59 60 93 94 95
Welspun India Limited ( Consolidated )

Auditors Report Balance Sheet Profit & LossAccount Schedules Cash Flow Statement 98 99 100 101 129
54
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AUDITORSREPORT TO THE MEMBERS OF WELSPUN INDIALIMITED
1.
Wehave audited the attached Balance Sheet of Welspun IndiaLimited (the Company) as at March31, 2008 and the related Profit and Loss Account and Cash Flow Statement for the year ended on that date annexedthereto,whichwehavesignedunderreferencetothisreport. Thesefinancialstatementsarethe responsibility of the Management oftheCompany. Our responsibility is to express an opinion on these financialstatementsbasedonouraudit. We conducted our audit in accordance with the auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by Management, as well as evaluatingtheoverall financial statement presentation. We believethat our audit provides a reasonable basisforouropinion. Asrequiredby the Companies (Auditor'sReport)Order,2003,asamended bytheCompanies (Auditor's Report) (Amendment) Order, 2004 (together the 'Order') issued by the Central Government of India in termsofsub-section(4A)ofSection 227ofTheCompaniesAct,1956ofIndia(theAct)andonthebasis of suchchecksofthebooksandrecordsoftheCompanyasweconsideredappropriate andaccordingto theinformationandexplanationsgiventous,wegiveintheAnnexureastatementonthemattersspecified inparagraphs4and5ofthesaidOrder. FurthertoourcommentsintheAnnexurereferredtoinparagraph3above,wereportthat: (a) (b) (c) (d) We have obtained all the information and explanations which, to the best of our knowledge and belief,werenecessaryforthepurposesofouraudit; Inouropinion,properbooksofaccountasrequiredbylawhavebeenkeptbytheCompanysofaras appearsfromourexaminationofthosebooks; TheBalanceSheet,ProfitandLossAccountandCashFlowStatementdealtwithbythisreportarein agreementwiththebooksofaccount; In our opinion,theBalance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by thisreportcomplywiththeaccountingstandardsreferredtoinsub-section(3C)ofSection211ofthe Act; On thebasis ofwrittenrepresentationsreceivedfromtheDirectors,asonMarch31,2008,andtaken onrecord by the Board ofDirectors, noneoftheDirectorsisdisqualified as on March 31, 2008from beingappointedasadirectorintermsofclause(g)ofsub-section(1)ofSection274oftheAct; In our opinion, and to the best of ourinformation and according to the explanations given to us,the said financial statements, together with the Notes thereon and attached thereto, give in the prescribed manner, the information required by the Act, and also give, a true and fair view in conformitywiththeaccountingprinciplesgenerallyacceptedinIndia: (I) (ii) inthecaseoftheBalanceSheet,ofthestateofaffairsoftheCompanyasatMarch31,2008; in the caseoftheProfitandLossAccount,oftheprofitfortheyearendedonthatdate;and
2.
3.
4.
(e)
(f)
(iii) in the caseoftheCashFlowStatement,ofthecashflowsfortheyearendedonthatdate. Neeraj Gupta Partner Membership No. F055158 For and on behalf of Price Waterhouse & Co. CharteredAccountants Mumbai, May 30, 2008
55
Annexure to Auditors Report referred to in paragraph 3 of the Auditors Report of even date to the membersofWelspunIndiaLimitedonthefinancialstatementsfortheyearendedMarch31,2008 (i) (a) TheCompany hasmaintained proper recordsshowing full particulars, including quantitative details andsituation,offixedassets. (b) ThefixedassetsoftheCompany havebeenphysically verified bytheManagementduringtheyear, except certainfixedassets, insignificantinthe aggregate,at oneoftheCompany'sunitswhichwere verified subsequent to theyear-end. No material discrepancies between the book records andthe physicalinventoryhavebeennoticed. Inouropinion,thefrequencyofverificationisreasonable. In our opinion, and according to the information and explanations given to us, a substantial part of fixedassetshasnotbeendisposed-ofbytheCompanyduringtheyear. The inventory has been physically verified bytheManagementduring the year. In our opinion,the frequencyofverificationisreasonable. In our opinion,theproceduresforthephysicalverificationofinventoryfollowedbytheManagement are reasonableandadequateinrelationtothesizeoftheCompanyandthenatureofitsbusiness. On the basis of our examination of the inventory records, in our opinion, the Company has maintained proper records of inventory. The discrepancies noticed on physical verification of inventoryascomparedtobookrecordswerenotmaterial. TheCompanyhasnotgrantedanyloans,securedorunsecured,tocompanies,firmsorotherparties coveredintheregistermaintainedunderSection301oftheAct. TheCompanyhasnottakenanyloans,securedorunsecured,fromcompanies,firmsorotherparties coveredintheregistermaintainedunderSection301oftheAct.
(c) (ii) (a) (b) (c)
(iii) (a) (b)
(iv) In our opinion, there is anadequateinternal control system commensurate with the size oftheCompany andthenatureofitsbusinessforthepurchaseofinventory,fixedassetsandforthesaleofgoods. Further, onthebasisofourexaminationofthebooksandrecordsoftheCompany,andaccordingtotheinformation and explanations given to us,wehaveneithercomeacross nor have been informed of any instances of majorweaknessesintheaforesaidinternalcontrolsystem. (v) According to the information and explanations given to us, there are no contracts or arrangements referredtoinSection301oftheActduringtheyeartobeenteredintheregisterrequiredtobemaintained underthatSection. (vi) The Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AAoftheActandtherulesframedthereunder. (vii) Inouropinion,theCompanyhasaninternalauditsystemcommensuratewithitssizeandthenatureofits business. (viii) We have broadly reviewed the books of account maintained by the Company, in respect of products where, pursuant to the rulesmadebytheCentralGovernment ofIndia, the maintenance of cost records has been prescribedunderclause(d)ofsub-section(1)ofSection 209oftheAct,andareofopinionthat, prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of therecordswithaviewtodetermine whethertheyareaccurate orcomplete. (ix) (a) AccordingtotheinformationandexplanationsgiventousandtherecordsoftheCompanyexamined byus,inouropinion,theCompanyhasbeengenerallyregularindepositingtheundisputedstatutory dues in respect of provident fund, investor education and protection fund, employees' state insurance, income-tax, sales tax,wealthtax,servicetax,customsduty, exciseduty, cess and other materialstatutorydues asapplicablewiththeappropriateauthorities. AccordingtotheinformationandexplanationsgiventousandrecordsoftheCompanyexaminedby us,therearenoduesofincometax,servicetax,customsduty,wealthtaxandcesswhichhavenot
(b)
56
DaretoCommit
Annexure to Auditors Report referred to in paragraph 3 of the Auditors Report of even date to the membersofWelspunIndiaLimitedonthefinancialstatementsfortheyearendedMarch31,2008 beendepositedonaccountofanydispute. Theparticularsofduesofsales-taxandexcisedutyasat March31,2008whichhavenotbeendepositedonaccountofadispute,areasfollows:
Nameofthe Statute Natureofdues Amounts (Rs.in million)* Periodtow hich the amount relates Forumwherethedisputeis pending
GujaratSales Tax Act, 1969
SalesTax including penalty and interest ExciseDuty includingpenalty and interest ExciseDuty includingpenalty andinterest
0.88
2003-04
Joint Commissioner(Appeals 2), Vadodra
CentralExcise Act, 1944 CentralExcise Act, 1944
1.56
April2002 to February 2007 April1999to April2000
Commissionerof Central Excise and Custom, Daman Custom, ExciseandServiceTax Appellate Tribunal,Ahmedabad
17.80
*Netofamountspaidunderprotest
(x) (xi)
The CompanyhasnoaccumulatedlossesasatMarch31,2008andithasnotincurredanycashlossesin thefinancialyearendedonthatdateorintheimmediatelyprecedingfinancialyear. Accordingtotherecordsofthe Company examined by us andtheinformationand explanations givento us, theCompanyhasnotdefaultedin repaymentof dues toanyfinancialinstitution orbankordebenture holdersduringtheyear.
(xii) The Company has not granted any loans and advances on the basis of security by way of pledge of shares,debenturesandothersecurities. (xiii) The provisions of any special statute applicable to chit fund/ nidhi/ mutual benefitfund/societiesarenot applicabletotheCompany. (xiv) In our opinion, the Company is not a dealer or trader in shares, securities, debentures and other investments. (xv) Inouropinionandaccordingtotheinformationandexplanationsgiventous,thetermsandconditionsof theguaranteesgivenbytheCompanytobanksthathavegivenloanstocertainsubsidiarycompaniesof theCompany,arenotprejudicialtotheinterestoftheCompany. (xvi) Inouropinion,onanoverallbasis,thetermloanshavebeenappliedforthepurposeforw hich they were obtained. (xvii) OnthebasisofanoverallexaminationoftheBalanceSheetoftheCompany,inouropinion andaccordingtotheinformationandexplanationsgiventous,therearenofundsraisedonashort-termbasiswhich havebeenusedforlong-terminvestment. (xviii)TheCompanyhasnotmadeanypreferentialallotmentofsharestopartiesandcompaniescoveredinthe registermaintainedunderSection301oftheActduringtheyear. (xix) The Company issued and redeemed during the year; short-term unsecured debentures aggregating to Rs.500million,questionofcreatingsecurityorchargeinrespectofthesamedoesnotarise. (xx) The Company hasnotraisedanymoneybypublicissuesduringtheyear. (xxi) During thecourseofourexaminationofthebooksandrecordsoftheCompany,carriedoutinaccordance with thegenerallyacceptedauditingpracticesinIndia,andaccordingtotheinformationandexplanations giventous,wehaveneithercomeacrossanyinstanceoffraudonorbytheCompany,noticedorreported duringtheyear,norhavewebeeninformedofsuchcasebytheManagement. Neeraj Gupta Partner Membership No. F055158 For and on behalf of Price Waterhouse & Co. CharteredAccountants Mumbai, May 30, 2008
BALANCESHEETASAT MARCH31,2008 Asat March 31, 2008
SCHEDULES SOURCES OFFUNDS SHAREHOLDERS' FUNDS Capital Reserves and Surplus LOANFUNDS Secured Loans Unsecured Loans
Rs. million Asat March 31, 2007
1 2
780.90 4,807.29 5,588.19 15,235.71 182.72 15,418.43 1,104.00 22,110.62
810.90 4,616.89 5,427.79 13,821.08 120.93 13,942.01 961.31 20,331.11
3 4
DEFERRED TAXLIABILITY (NET)
APPLICATION OF FUNDS FIXEDASSETS Gross Block Less: Depreciation Net Block Capital Work-in-progress Incidental Expenditure Pending Capitalisation/ Allocation INVESTMENTS CURRENTASSETS, LOANS ANDADVANCES Inventories Sundry Debtors Cash and Bank Balances Loans and Advances and Other Current Assets
6A
6B 7
17,033.88 3,327.58 13,706.30 1,358.19 15,064.49 62.78 904.75
13,959.77 2,490.85 11,468.92 1,301.67 12,770.59 41.24 1,665.43
8 9 10 11
2,901.92 753.41 920.51 2,970.85 7,546.69
2,366.44 889.49 1,639.88 1,861.65 6,757.46
LESS: CURRENT LIABILITIESAND PROVISIONS Liabilities Provisions NET CURRENTASSETS NOTES TOACCOUNTS
12 1,432.07 36.02 1,468.09 6,078.60 22,110.62 19 874.74 28.87 903.61 5,853.85 20,331.11
The Schedules referred to herein form an integral part of the Balance Sheet.
This is the Balance Sheet referred to in our report of the even date. For andonbehalfoftheBoardofDirectors Neeraj Gupta Partner Membership No. F055158 For and on behalf of Price Waterhouse & Co. Chartered Accountants Mumbai, May 30, 2008
58 WELSPUN INDIALIMITED
R. R. Mandawewala Joint Managing Director
M. L. Mittal Executive Director(Finance) Mumbai, May 30, 2008
D. K. Patil Company Secretary
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PROFITANDLOSSACCOUNTFORTHEYEAR ENDEDMARCH31,2008 Yearended March 31, 2008 12,440.50 31.06 12,409.44 246.66 12,656.10 8,338.77 963.37 1,418.92 676.85 847.19 12,245.10 411.00 3.52 414.52
SCHEDULES INCOME Sales Less : Excise Duty Other Income EXPENDITURE Materials and Manufacturing Expenses Employees' Remuneration and Benefits Selling,AdministrationandOtherExpenses Finance Expenses (Net) Depreciation PROFIT BEFOREEXCEPTIONAL ITEM AND TAXATION Exceptional Item (Refer Note 25 on Schedule19) PROFIT BEFORE TAXATION Provision For Taxation - Current Tax - Less : MinimumAlternative Tax Credit Availed - Excess Provision for Tax in Earlier Years - Deferred Tax - Fringe Benefit Tax #REF! PROFIT AFTER TAXATION Profit and Loss Account Balance Brought Forward Less : Adjustment (net of deferred tax asset of Rs. Nil; Previous year : Rs. 0.76 million) in accordance with transitional provision in Accounting Standard 15 (Revised) PROFIT AVAILABLE FOR APPROPRIATION APPROPRIATIONS Transfer to Capital Redemption Reserve Transfer to Debenture Redemption Reserve Transfer from Debenture Redemption Reserve Profit and Loss Account Balance CarriedtoBalance Sheet
Rs. million Yearended March 31, 2007 9,759.42 23.81 9,735.61 379.07 10,114.68 6,398.56 804.18 958.34 478.18 650.63 9,289.89 824.79 824.79
13
14
15 16 17 18
44.50 (44.50) 142.69 9.17 262.66 1,430.29 -
88.90 (88.90) (7.50) 300.11 11.15 521.03 1,100.08 (1.50)
1,692.95
1,619.61
30.00 (29.67) 1,692.62 1,692.95
182.83 6.49 1,430.29 1,619.61
Earnings Per Share (Rs.) - (Refer Note 24 on Schedule 19) - Basic and Diluted NOTES TOACCOUNTS 19
3.59
7.06
The Schedules referredtohereinform an integral part of the Profit and LossAccount. This is the Profit and LossAccount referred to inourreport oftheevendate. For andonbehalfoftheBoardofDirectors Neeraj Gupta Partner Membership No. F055158 For and on behalf of Price Waterhouse & Co. Chartered Accountants Mumbai, May 30, 2008 B. K. Goenka Vice Chairman & Managing Director R. R. Mandawewala Joint Managing Director
59
SCHEDULESANNEXEDTOANDFORMINGPARTOFTHEBALANCESHEETASATMARCH31,2008 SCHEDULE1: CAPITAL Authorised 81,500,000 1,100,000 23,500,000 Asat March 31, 2008 815.00 110.00
Rs. million Asat March 31, 2007 815.00 110.00
Equity Shares of Rs. 10 each Redeemable Cumulative Preference Shares of Rs. 100 each Redeemable Cumulative Preference Shares of Rs. 10each
235.00 1,160.00
235.00 1,160.00
Issued, Subscribed and Paid Up 73,089,519 Equity Shares of Rs. 10 each fully paidup Nil (March 31, 2007 : 300,000) 12.5% Redeemable Cumulative Preference Shares of Rs. 100 eachfully paid up (Refer Note8(b)onSchedule 19) 500,000 0% Redeemable Cumulative Preference Shares of Rs. 100 each fully paid up (Refer Note8(a) on Schedule19)
730.90 -
730.90 30.00
50.00 780.90
50.00 810.90
SCHEDULE 2 : RESERVESANDSURPLUS Securities Premium Account As per last Balance Sheet Less : Premium on Redemptionof Preference Shares (Refer Note8(b)onSchedule19) Capital Redemption Reserve As per last Balance Sheet Add : Transferred fromProfit and Loss Account Debenture Redemption Reserve As per last Balance Sheet Less : Transferred to Profit andLossAccount Add : Transferred fromProfit and Loss Account
2,710.37 72.26 2,638.11 398.38 30.00 428.38 29.67 29.67 48.18 1,692.62 4,807.29
3,127.72 417.35 2,710.37 215.55 182.83 398.38 23.18 23.18 6.49 29.67 48.18 1,430.29 4,616.89
Capital Reserve - Forfeiture of Equity Warrants Profit andLossAccount #REF!
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SCHEDULESANNEXEDTOANDFORMINGPARTOFTHEBALANCESHEETASATMARCH31,2008 SCHEDULE3:SECUREDLOANS Debentures Term Loans(Refer Notes 9(a) and (b) onSchedule 19) - From Financial Institutions - In Rupee - In Foreign Currency - From Banks - In Rupee - In Foreign Currency Working Capital Loans from Banks (Refer Note9(c)onSchedule 19) Asat March 31, 2008 -
Rs. million Asat March 31, 2007 171.60
1,176.60 -
983.43 139.27
11,128.42 39.90 2,890.79
9,896.75 110.15 2,519.88
15,235.71
13,821.08
SCHEDULE 4 : UNSECUREDLOANS Interest Free Sales Tax Loan (Repayable in six annual installments for each disbursement till October 7, 2010) (Repayable within oneyear Rs. 0.37 million; March31,2007:Rs0.45million) Short Term Loans from Banks (Repayableondemand) 0.40 0.85
182.32 182.72
120.08 120.93
SCHEDULE 5 : DEFERRED TAX LIABILITY (NET) (Refer Note1(viii)(b) onSchedule 19) Deferred Tax Liability arisingonaccount of Timing differences in : - Depreciation Deferred Tax Asset arisingonaccountofTiming differences in: - Provision for Doubtful Debts/ Advances - Provision for Unpaid Statutory Dues under Section43B of theIncomeTaxAct,1961 - Provision for Retirement Benefits - Provision for Diminution in ValueofInvestments - Unabsorbed Depreciation as per the Income Tax Act, 1961
1,645.68
1,354.18
8.08 19.02 11.75 4.53 498.30 541.68 1,104.00
3.71 21.67 9.97 4.53 352.99 392.87 961.31
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SCHEDULESANNEXEDTOANDFORMINGPARTOFTHEBALANCESHEETASATMARCH31,2008 SCHEDULE6B : INCIDENTAL EXPENDITURE PENDING CAPITALISATION / ALLOCATION (Refer Notes 1(iii) and 16(b) on Schedule 19) Asat March 31, 2008
Opening Balance Add : Power and Fuel Freight, Forwarding and Coolie Charges Repairs and Maintenance - Others Salaries, Wages, Bonus and Allowances Contribution to Provident and Other Funds Staff and Labour Welfare Rent Rates and Taxes Printing and Stationery TravellingandConveyance Legal and Professional Charges Auditors' Remuneration - Certification and Other Matters Insurance Communication Postage and Courier Loss on Cancellation of Forward Contracts (Net) Interest on FixedLoans Interest on Working Capital Loans Discounting and Bank Charges Loan Processing Charges ExchangeLoss (Net) Miscellaneous
(A)
41.24
81.20
3.03 0.20 0.25 26.63 0.65 0.34 1.91 1.49 0.02 9.17 5.84 3.18 0.66 0.09 138.13 0.14 0.66 2.40 4.86 199.65 33.99
3.06 0.31 0.09 11.73 0.04 1.39 0.02 6.18 6.25 0.15 0.50 0.58 45.08 117.76 0.58 2.15 7.74 0.01 9.84 213.46 3.55
(B) Less : Interest on DepositAccounts - Gross (Tax Deducted at Source Rs. 7.24 million; Previous Year : Rs. 0.23 million) Interest on bonds - Gross (Tax Deducted at Source Rs. 1.21 million; Previous Year : Nil) Profit on Redemption/ Sales of Units of Mutual Funds Dividend (C) (A) + (B) - (C) Less : Transferred to : Plant and Machinery Buildings Incidental Expenditure Pending Capitalisation/Allocation
6.42
2.29 30.09 72.79 168.10
4.42 124.42 132.39 162.27
87.11 18.21 62.78
116.14 4.89 41.24
63
SCHEDULESANNEXEDTOANDFORMINGPARTOFTHEBALANCESHEETASATMARCH31,2008 SCHEDULE7: INVESTMENTS (Refer Note1(vi)onSchedule19) Non - Trade Investment in Government Securities National Saving Certificates (Lodged with District Magistrate, Valsad) Trade - Long Term (At Cost) (Unquoted) In Subsidiaries 1,500,000 Equity Shares of US $ 0.10 each, fully paid up of Welspun USAInc. (Wholly Owned Subsidiary) 5,000 Equity Shares of GBP 1 each, fully paid up of Welspun Holdings PrivateLimited, Cyprus (Wholly Owned Subsidiary) (Oftheabove1,000shares has beenpledgedwithbank for securingtheloangiventoWelspun Home Textiles UK Limited, U.K.; the wholly ownedsubsidiary of Welspun 600 Holdings PrivateLimited, Cyprus) (March 31, 2007 : Nil) Equity Shares of CHF1,000 each, CHF 200paid upof WelspunAG, Switzerland (Wholly Owned Subsidiary) (March31,2007:Nil) Equity Shares of Rs. 10 eachfully paid upof Besa Developers andInfrastructure Private Limited (Wholly Owned Subsidiary) 4.05 Asat March 31, 2008
0.01
0.01
6.89 337.06
6.89 337.06
10,000
0.10
In Others 2,750,000 9,800,000 100 3,320,000 Equity Shares of Rs. 10eachfully paidupof Welspun Zucchi Textiles Limited (March 31, 2007 : 4,900,000) Equity Shares of Rs. 10 each fully paid up of Welspun Retail Limited Equity Shares of Rs. 10 eachfully paidupofWelspun Power and Steel Limited (March 31, 2007 : 338,333) Equity Shares of Rs. 10each fully paidupof MEP Cotton PrivateLimited ShareApplication Money Pending Allotment * - Less than Rs. 10,000 (Quoted) 283,500 # (March 31, 2007 : 1,134,000) Equity Shares of Rs. 10 each fully paid up of Welspun Syntex Limited Less : ProvisionforPermanentDiminution 18.94 13.34 5.60 56.65 18.94 13.34 5.60 56.65 34.56 244.63 * 99.50 34.56 122.13 * 10.05
0.05
50.00
7,133,000
Equity Shares of Rs. 5 each fully paid u p o f Welspun Gujarat Stahl Rohren Limited # Number of shares have reduced duringtheyear pursuant t o a capital reduction scheme
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SCHEDULESANNEXEDTOANDFORMINGPARTOFTHEBALANCESHEETASATMARCH31,2008 SCHEDULE7: INVESTMENTS (Refer Note1(vi)onSchedule19) Asat March 31, 2008
Current (At Lower of Cost and Fair Value) Non Trade - (Unquoted, Unlisted) Investment In Mutual Funds Units of Rs. 10 each Nil (March31,2007:10,927)CholaLiquid Institutional Daily Dividend Reinvestment Plan 600,357 (March 31, 2007 : 414,664) DWS Installment Cash Plus Fund - Daily Dividend Plan Nil 241,114 4,437,300 23,668 Nil Nil 13,490 (March31,2007:1,671,100) ING Optimix Active Debt FoF Scheme - Dividend (March 31, 2007 : 36,744,000) LICMF Liquid Fund - Dividend Plan (March31,2007:2,068,014)LICMF Floating Rate Fund - Short TermPlan-DividendOption (March31,2007:Nil)PrincipalFloating Rate Fund - Daily Dividend Reinvestment Plan (March31,2007:12,473)PrudentialICICILiquid Institutional Plus Daily Dividend option (March31,2007:2,036)RelianceLiquidFund - Cash Plan-Growth Option-Growth Plan (March31,2007:12,735)Reliance Liquid Fund - Treasury Plan Retail Option (March 31, 2007 : 55,109) SBI Mutual Fund - Magnum Comma Fund Dividend (March31,2007:114,124)SBIMagnumMulticap Fund Dividend (March31,2007:6,039) SBI Premier Liquid Fund -Institutional - Daily Dividend (March 31, 2007 : 10,000,000) SBI Debt Fund Series (March31,2007:3,015,064)UTI Money Market Fund Daily Dividend Option Reinvestment (March31,2007:10,213,737) UTI Half Yearly FMP Dividend Plan - Reinvestment (March31,2007:32,346,220)UTIQuarterly FMP Dividend Plan - Reinvestment Investment In Mutual Funds Units of Rs. 1,000 Each (March31,2007:1,155) UTI Liquid Cash Plan Regular - Daily Income Option Reinvestment (March31,2007:13,926) UTI Liquid Cash Plan Institutional - Daily Income Option Reinvestment
6.18 2.65 45.05 0.24 0.14
0.11 4.15 16.71 403.38 22.23 0.15 0.02 0.13
Nil Nil Nil Nil Nil Nil Nil
54.26
0.58 1.20 0.05 100.00 52.99 102.14 323.27 1,027.11 1.18 14.19
Nil Nil
Investment In Bonds 217 (March 31, 2007 : Nil) Zero Coupon Redeemable Deep Discount (2007 Series-II) Punjab Infrastructure Development Bonds
61.39
904.75 Aggregate of UnquotedInvestments - At Book Value Aggregate of QuotedInvestments - At Book Value -AtMarket Value 842.50 62.25 2,740.78
1,665.43 1,603.18 62.25 746.36
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SCHEDULESANNEXEDTOANDFORMINGPARTOFTHEBALANCESHEETASATMARCH31,2008 SCHEDULE 8 : INVENTORIES (Refer Note 1(vii) on Schedule19) Raw Materials Work-in-Process Finished Goods Stores, Spares, Dyes and Chemicals Traded Goods Asat March 31, 2008 758.44 1,256.47 622.47 261.16 3.38 2,901.92
Rs. million Asat March 31, 2007 778.45 1,053.24 267.35 267.40 2,366.44
SCHEDULE9: SUNDRYDEBTORS (Refer Note10(a)onSchedule19) Unsecured Debts Outstanding for a periodexceedingsixmonths : - Considered Good - Considered Doubtful Other Debts : - Considered Good - Considered Doubtful Less : ProvisionforDoubtfulDebts
45.00 10.93 55.93 708.41 5.42 713.83 16.35 753.41
8.23 3.88 12.11 881.26 881.26 3.88 889.49
SCHEDULE10:CASHANDBANKBALANCES CashonHand Cheques on Hand Balances with Scheduled Banks -InCurrentAccounts -InFixedDepositAccounts (includes deposits aggregating Rs. 446.61 million; March31,2007: Rs. 285.63 million pledged with banks against termloans, overdraft, letters of credit and bank guaranteefacilities.) SCHEDULE11: LOANS,ADVANCESANDOTHERCURRENTASSETS (Refer Note10(b)and23onSchedule19) LOANSANDADVANCES Unsecured Loans to Subsidiary Companies - Welspun USAInc. - Welspun Holdings PrivateLimited, Cyprus - WelspunAG, Switzerland - Besa Developers and Infrastructure PrivateLimited 1.84 6.21 169.09 743.37 0.88 26.21 103.98 1,508.81
920.51
1,639.88
65.44 393.92 155.97 31.50 646.83
26.09 301.27 327.36
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SCHEDULESANNEXEDTOANDFORMINGPARTOFTHEBALANCESHEETASATMARCH31,2008 SCHEDULE11: LOANS,ADVANCESANDOTHERCURRENTASSETS (Refer Note10(b)and23onSchedule19) AdvancetoSubsidiaryCompany - Welspun Mexico S.A. de C.V, Mexico Advances Recoverable in Cash orinKindorforValuetobeReceived - Considered Good - Considered Doubtful Less : Provision for DoubtfulAdvances Asat March 31, 2008
6.44
236.12 7.42 243.54 7.42 236.12 828.21 34.39 182.40 348.00 2,282.39 621.11 38.49 7.79 21.07 688.46 2,970.85
245.37 7.03 252.40 7.03 245.37 683.92 137.90 67.93 1,462.48 384.08 9.51 5.58 399.17 1,861.65
Balances with Customs, Excise, Sales Tax and other GovernmentAuthorities Advance Tax and Tax Deducted at Source (Net of Provision of Rs. 229.90 million; March 31, 2007 : Rs. Nil) Minimum Alternative Tax Credit Entitlement Deposits OTHER CURRENTASSETS Technology Upgradation Fund Credit Receivable Interest Accrued on Loan given to Subsidiaries Interest ReceivableunderSubvention Scheme Interest Accrued on Deposits
SCHEDULE12:CURRENTLIABILITIESANDPROVISIONS CURRENT LIABILITIES Sundry Creditors - Total Outstanding Dues of Micro Enterprises and Small Enterprises (Refer Note 15 on Schedule19) - Total Outstanding Dues of Creditors otherthan Micro Enterprises and Small Enterprises Amounts due to Subsidiary Companies - Welspun USAInc. - Welspun Holdings PrivateLimited, Cyprus - Christy UK Limited Advance Received from Customers Temporary Overdraft with Scheduled Banks Interest Accrued but not Due PROVISIONS Income Tax (Net ofAdvance Tax and Tax Deducted at Sources of Rs. Nil; March 31, 2007: Rs. 185.10 million) Fringe Benefit Tax (Net ofAdvance Tax Rs. 27.82 million; March31,2007:Rs.18.6 million) Gratuity (Refer Notes 1(ix)(b) and18onSchedule 19) Leave Entitlement (Refer Note 1(ix)(c) onSchedule 19) 0.75 1,195.78 0.31 670.45
53.94 39.11 17.27 88.93 36.29 1,432.07 1.45 34.57 36.02 1,468.09
2.29 0.08 1.89 9.37 163.04 27.31 874.74 0.30 1.50 2.80 24.27 28.87 903.61
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SCHEDULESFORMINGPARTOFTHEPROFITANDLOSSACCOUNTFORTHEYEARENDEDMARCH31,2008 Rs. million YearEnded YearEnded March March SCHEDULE13: SALES 31, 2008 31, 2007 Sales - Export Sales - Local Export Benefits 10,782.13 997.46 11,779.59 660.91 12,440.50 8,701.70 697.19 9,398.89 360.53 9,759.42
SCHEDULE 1 4 : OTHERINCOME Rent (Tax Deducted at Source Rs. 2.67 million, Previous Year : Rs. 2.80 million) Dividend Insurance Claim Profit on Redemption/ SaleofUnitsinMutualFunds Profit on Sale of Bonds Liabilities Written Back as noLongerRequired Provision for Doubtful Advances Written Back Provision for Doubtful Debts Written Back Profit onCancellation of Forward Contracts Job Charges Received ExciseandSalesTaxBenefit Miscellaneous 11.18 25.83 17.05 1.23 4.97 0.53 4.89 0.94 114.92 22.23 36.55 6.34 246.66 17.60 22.94 40.13 1.51 1.68 2.01 29.77 205.05 58.38 379.07
SCHEDULE 15 : MATERIALS ANDMANUFACTURING EXPENSES Raw Materials Consumed Opening Stock Add: Purchases Less: Closing Stock #REF! -1095221504 Cost of Traded Goods Sold Increase in Stocks Opening Stock - Finished Goods - Work-in-Process Closing Stock - Finished Goods - Work-in-Process ## ##
778.45 5,488.08 6,266.53 758.44 5,508.09 84.80
761.55 4,177.42 4,938.97 778.45 4,160.52 12.32
267.35 1,053.24 1,320.59 622.47 1,256.47 1,878.94 (558.35)
196.92 779.47 976.39 267.35 1,053.24 1,320.59 (344.20)
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SCHEDULES FORMINGPARTOFTHEPROFITANDLOSSACCOUNTFORTHEYEARENDEDMARCH31,2008Rs. million YearEnded YearEnded SCHEDULE15: MATERIALSANDMANUFACTURINGEXPENSES March March 31, 2008 31, 2007 Manufacturing Expenses Stores and Spares Consumed Dyes and Chemicals Consumed Contract Labour Charges Job Work Expenses Power and Fuel Packing Charges Repairs and Maintenance: - Plant and Machinery - Factory Building 212.18 1,062.34 237.34 116.88 1,018.25 621.19 33.51 2.54 3,304.23 8,338.77 179.13 763.73 142.40 146.57 853.46 461.05 19.53 4.05 2,569.92 6,398.56
SCHEDULE16:EMPLOYEESREMUNERATIONANDBENEFITS Salaries, Wages,Allowances and Other Benefits (Refer Note18onSchedule 19) Contribution to Provident and Other Funds (Refer Note 18 on Schedule19) Managerial Remuneration (Refer Note 11 on Schedule 19) Staff and Labour Welfare 842.41 62.32 17.43 41.21 963.37 689.72 50.26 25.48 38.72 804.18
SCHEDULE 17 : SELLING, ADMINISTRATION AND OTHER EXPENSES Claims, Discounts and Rebates Brokerage and Commission Freight, Forwarding and Coolie Charges Repairs and Maintenance - Others Directors' Sitting Fees Rent Rates and Taxes Printing and Stationery Travelling and Conveyance Legal and Professional Charges Insurance Communication Postage and Courier Loss on Sale/ Discarding of Fixed Assets (Net) Provision for Doubtful Debts Provision for Doubtful Advances Loss on Cancellation/ Settlement of Forward Contracts (Net) Provision for Diminution in ValueofInvestments Debts/ Advances Writtenoff Design Development and Testing Expenses Excise Benefits Receivable Written Off Royalty Advertising and Sales Promotion Donations 213.38 55.08 464.17 10.59 0.18 59.81 6.93 10.41 91.09 40.73 56.17 12.60 22.96 6.91 13.41 5.28 5.57 11.58 43.23 2.10 223.26 5.36 71.83 66.10 256.85 7.76 0.15 15.03 11.98 7.59 91.79 45.85 54.90 14.45 21.38 28.97 71.86 5.74 0.37 13.51 6.04 104.16 7.09
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SCHEDULESFORMINGPARTOFPROFITANDLOSSACCOUNTFORTHEYEARENDEDMARCH31,2008 Rs. million YearEnded YearEnded March March SCHEDULE17:SELLING,ADMINISTRATIONANDOTHEREXPENSES 31, 2008 31, 2007 Auditors' Remuneration - As Auditors - In other capacity - As Tax Auditors - Certification and Other Matters - Out of Pocket Expenses Miscellaneous 3.90 0.60 0.22 0.09 53.31 1,418.92 3.35 0.40 0.17 0.39 50.63 958.34
SCHEDULE18:FINANCEEXPENSES(NET)
Interest on FixedLoans (net of interest subsidy of Rs. 412.33 million, Previous Year : Rs. 269.19 million) Interest on Debentures Interest onWorkingCapital Loans (net of interest subvention of Rs. 38.64 million, Previous Year : Rs. Nil) Interest to Others Discounting and Bank Charges Lease Rentals Less: Interest onFixedDeposits -Gross (Tax DeductedatSourceRs.4.59 million, Previous Year : Rs. 8.62 million) Interest on Loan given to Subsidiaries and Affiliates (Tax DeductedatSourceRs. 0.99 million, Previous Year : Rs. Nil) Interest on Bonds (Tax Deducted at Source Rs. 0.44 million, Previous Year : Rs. Nil) Interest on Others -Gross (Tax DeductedatSourceRs.0.02 million, Previous Year : Rs. 0.01 million) Cash Discount received
409.42
219.02
11.26 270.09 4.92 64.31 760.00 24.54
7.63 226.37 7.30 41.41 23.95 525.68 18.07
34.28 2.69 0.10
9.52 1.41
21.54 83.15 676.85
18.50 47.50 478.18
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SCHEDULES ANNEXED TO AND FORMING PART OF THE BALANCE SHEETASAT MARCH 31, 2008 AND PROFITAND LOSSACCOUNT FORTHEYEARENDED MARCH 31, 2008 SCHEDULE 19 : NOTES TO ACCOUNTS 1. SignificantAccountingPolicies (i) AccountingConvention The Financial Statements are prepared to comply in all material aspects with all the applicable accountingprinciplesinIndia,theapplicableaccountingstandardsnotifiedunderSection211(3C)of theCompaniesAct,1956(theAct)andtherelevantprovisionsofthe Act. FixedAssets Fixed Assets are stated at cost (net of cenvat credit, wherever applicable) less depreciation. The cost includes cost of acquisition, construction, erection, installation etc., preoperative expenses (including trial run) and borrowing costs incurred during pre-operational period. Cost of software includes licensefeesandimplementation/integrationexpenses.
(ii)
(iii) ExpenditureIncurredDuringConstructionPeriod Expenditure incurred during construction period represents expenses incurred for setting-up of manufacturing facility including preoperative expenses for trial runs and borrowing cost incurred prior to the date of commencement of commercial production. These expenses are net of sales duringtrialrunandotherincomeaccruedpriortothecommencementofcommercialproduction. (iv) BorrowingCosts Borrowing costs directly attributableto the acquisition/ construction offixed assets areapportioned tothecostofthefixedassetsuptothedateonwhichtheassetisputtouse/commissioned. (v) Depreciation (a) Depreciation on FixedAssets, other than leasehold improvements, is provided on the straightline method at the rates and in the manner prescribed under Schedule XIV to the Act. Depreciation onadditions/ deletionstofixedassetsiscalculated pro-rata from/uptothedateof suchadditions/deletions. (b) Leasehold improvementsareamortisedonstraight-linebasisovertheprimaryperiodoflease. (c) Computersoftwareisamortisedonthestraight-linemethodoveraperiodoffiveyears. (d) AssetsindividuallycostingRs.5,000orlessarefullydepreciatedintheyearofpurchase. (vi) Investments Long term investments are stated at cost less provision, if any, for permanent diminution in value. Currentinvestmentsarecarriedatthelowerofcostandfairvalue. (vii) Inventories (a) Inventoriesarevaluedatlowerofcostandnetrealisablevalue. (b) Cost of raw materials andstoresand sparesisdeterminedon weightedaveragebasis. Costof traded goods is determined on first-in-first-out basis. Cost of work-in-process and finished goods comprises of raw material, direct labour, other direct costs and related overheads but excludeinterestexpense. Netrealisablevalueistheestimateofthesellingpriceintheordinary courseofthebusiness,lesstheestimatedcostsofcompletionandestimatedsellingexpenses. (viii) AccountingforTaxesonIncome Incometaxexpensecomprisescurrenttaxanddeferredtaxchargeorcredit. (a) CurrentTaxation The current tax is determinedas the amount of tax payableinrespectoftaxableincome forthe yearasperTheIncomeTax Act,1961,ofIndia. (b) DeferredTaxation Deferredtaxresultingfromtimingdifferencesbetweenbookandtaxprofitsisaccountedfor undertheliabilitymethod,atthe current/ substantially enacted rateoftaxtotheextentthat
L
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SCHEDULES ANNEXED TO AND FORMING PART OF THE BALANCE SHEETASAT MARCH 31, 2008 AND PROFITAND LOSSACCOUNT FORTHEYEARENDED MARCH 31, 2008 thetimingdifferencesareexpectedtocrystallise. Deferred tax assets arising in situations where there are brought forward losses and unabsorbed depreciation as per the Income Tax Act, 1961, of India, are recognised only whenthere is a virtual certaintysupported byconvincingevidence that suchassetswillbe realised.
(ix) EmployeeBenefits (a) Defined Contribution Plans The Company contributes on a defined contribution basis to Employee's Provident Fund, Employee's StateInsuranceFund andEmployee'sPensionSchemetowardspostemployment benefits, all of which are administered by the respective Government authorities, and has no further obligation beyond making its contribution, which is expensed in the year to which it pertains. (b) Defined BenefitPlans TheCompanyhas a DefinedBenefitPlannamelyGratuityforallitsemployees. Theliabilityfor the defined benefit plan of Gratuity is determined on the basis of an actuarial valuation by an independentactuaryattheyearend,whichiscalculatedusingprojectedunitcreditmethod. Gratuity Fund is recognized by the incometax authorities andisadministered throughtrustees. TheEmployee'sGratuityTrusttakesgroupgratuitypolicieswithinsurancecompanies. Actuarial gains and losseswhich comprise experienceadjustment and the effect of changes in actuarialassumptionsarerecognisedintheProfitandLossAccount. (c) EmployeeLeaveEntitlement TheemployeesoftheCompanyareentitledtoleaveaspertheleavepolicyoftheCompany. The liability in respectofunutilisedleavebalancesisprovidedbasedonanactuarialvaluationcarried outbyanindependentactuaryasattheyearendandchargedtotheProfitandLossAccount. (x) ForeignCurrencyTransactions (a) Foreigncurrencytransactionsarerecordedattheexchangeratesprevailingonthedateofsuch transactions. Monetary assetsandliabilities as at the Balance Sheet datearetranslated atthe rates of exchange prevailing at the date of the Balance Sheet. Gains and losses arising on account of differences in foreign exchange rates on settlement/translation of monetary assets and liabilities are recognised in the Profit and Loss Account. Non-monetary foreign currency items are carriedatcost. (b) Inrespectofforwardcontracts,otherthanforwardcontractsinrespectoffirmcommitmentsand highlyprobableforecasttransactions,thepremiumordiscountarisingattheinceptionofforward exchange contract, is amortised as expense or income over the life of the contract. Exchange differences on such contracts are recognised in the Profit and Loss Account in the reporting periodinwhichtheexchangerateschange. Any profitorlossarisingoncancellationorrenewal ofsuchaforwardexchangecontractisrecognisedasincomeorasexpensefortheperiod. (c) Any profit or loss arising on settlement or cancellation of other derivative contracts (forward contracts in respect offirmcommitments andhighlyprobable forecast transactions, swapsand currency options) isrecognisedasincomeorexpensefortheperiod.PursuanttoTheInstituteof Chartered Accountants of India's announcement 'Accounting for Derivatives', the Company marks-to-market all such outstanding derivative contracts at the year-end and the resulting mark-to-marketlosses,ifany,arerecognisedintheProfitandLossAccount. (xi) RevenueRecognition (a) Domestic sales are recognised on dispatch to customers. Export sales are recognised on the date of cargo receipts, bill of lading or other relevant documents, in accordance with the terms and conditions for sales. Realised exchange differences on export debtors are included in sales. (b) Export benefits arising from Duty Entitlement Pass Book (DEPB) and Duty Drawback scheme
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SCHEDULES ANNEXED TO AND FORMING PART OF THE BALANCE SHEETASAT MARCH 31, 2008 AND PROFITAND LOSSACCOUNT FORTHEYEARENDED MARCH 31, 2008 arerecognisedonshipment. (c) Dividendsareaccountedforwhentherighttoreceivedividendisestablished. (xii) GovernmentGrants Government grants are accounted for when it is reasonably certain that ultimate collection will be made.CapitalgrantsrelatingtospecificassetsarereducedfromthegrossvalueoftheFixedAssets. Revenue grants, in the natureof interest subsidy under the Technology UpgradationFundScheme (TUFS)areadjustedagainst'InterestonFixedLoans'. (xiii) ImpairmentofAssets The Company assesses at each balance sheet date whether there is any indication that an asset maybeimpaired.Ifanysuchindicationexists,theCompanyestimatestherecoverableamountofthe asset. If suchrecoverableamount oftheassetorrecoverableamountofthecashgeneratingunitto which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. Thereduction is treated as animpairment loss and is recognisedin the Profit and Loss Account. IfattheBalanceSheet date there is an indication that if a previously assessed impairment loss nolongerexists, therecoverableamount isreassessedandtheassetisreflectedat therecoverableamount. (xiv) ProvisionsandContingentLiabilities The Company recognises a provision when there is a present obligation as a result of a past event that probablyrequiresanoutflowofresourcesandareliableestimate can bemade oftheamountof the obligation. Adisclosureforacontingentliabilityis made when thereisapossible obligation or a present obligation that may, but probably will not, require anoutflow of resources. Wherethere is a possible obligation or a present obligation but the likelihood of outflow of resources is remote, no provision or disclosure as specified inAccounting Standard 29 - Provisions, Contingent Liabilities andContingentAssets,issuedbyTheInstituteofCharteredAccountantsofIndiaismade. (xv) EmployeesStockOptionSchemes Stock options grantedto employees under EmployeeStock Option Schemes are accounted as per theaccountingtreatmentprescribedintheGuidanceNoteonAccountingforEmployeeShare-based PaymentsissuedbytheInstituteofCharteredAccountantsofIndia. (xvi) AccountingEstimates The preparation offinancial statementsrequires estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of financial statements and the reported amountsofrevenueandexpensesduringthereportingperiod.Differencebetweentheactualresults andtheestimatesarerecognisedintheperiodinwhichtheresultsareknown/materialised. 2. ContingentLiabilitiesnotprovidedfor: Rs. Million
Description Excise,CustomsandServiceTax Alleged excess clearance of cotton yarn in Domestic Tariff Area over and above the limit specified in para 9.9 (b) oftheEximPolicy19972002.TheCompany has deposited Rs. 0.70 millionunderprotestand filed an appeal with the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Ahmedabad against the order passed by Commissioner(Appeals)ofCentralExciseandCustoms. Allegedmanufactureandclearanceoftexturisedyarnwithoutpayment of excise duty and without entering into statutory records. Further, there wasanallegedshortageofPolyesterTexturised yarninphysical stockascomparedtothestockasperstatutoryrecords. 18.50 17.56 Asat March31, 2008 Asat March31, 2007
12.76
12.45
73
SCHEDULES ANNEXED TO AND FORMING PART OF THE BALANCE SHEETASAT MARCH 31, 2008 AND PROFITAND LOSSACCOUNT FORTHEYEARENDED MARCH 31, 2008
Rs. million Description Excise,CustomsandServiceTax Alleged excess claim of excise rebate under Central Excise Rules overandaboveavailingbenefitundernotificationNo.39/01-CE3107-2001. Pursuant to retrospective amendment made in the Finance Act 2008,theCompanyhasbecomeeligibletoclaimsuchexciserebate till07.12.2006 Alleged improper cenvat credit availed under Notification No. 214/86 CEdated25-03-1986,onfurnaceoilusedformanufacturing of goods on job work during the period April 2002 to March 2008. The Company has filed its reply against the show cause notices issued by Joint Commissioner and Commissioner of Customs and CentralExcise,Daman. Allegednon-paymentofcessoncottonconsumedduringtheperiod April 2002 to February 2007 under 'The Produce Cess Act, 1966'. The Company has filed appeals with Commissioner ofCustom and Central Excise, Daman againsttheorders passed by the Assistant CommissionerofCustomandCentralExcise,Vapi. Alleged improper abatement of service tax on payments made to Goods TransportAgency under Notification No. 32/04-ST dated 312-2004. The Company has filed its reply against the show cause noticeissuedbytheCommissioner ofCentralExciseandCustoms, Daman. Alleged service tax credit based on improper documents. The Companyhasfileditsreplyagainsttheshowcausenoticeissuedby theAssistantCommissionerofCentralExcise&Customs,Vapi. Alleged procurement of furnace oil without payment of duty by wrongly availing the exemptions contained in the Notification No. 1/95-CE 04-01-1995. The CESTAT, Ahmedabad has passed the order in favour of the Company. However, excise department has preferredanappealwiththeSupremeCourtagainstCESTATorder. Alleged procurement of furnace oil without payment of duty by wrongly availing the exemptions contained in the Notification No. 53/97-CUS03-06-1997. The CESTAT,Ahmedabad has passed the order in favour of the Company. The Department has filed civil appealagainsttheCESTATorderinSupremeCourt. StampDuty: DisputedstampdutyliabilityonDe-mergerScheme. The Company haspaidRs.1.74millionunderprotest. 72.60 2.99 63.37 Asat March31, 2008 Asat March31, 2007
1.56
1.10
29.27
0.15
14.81
11.47
4.46
4.46
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Description Asat March31, 2008 0.97 Asat March31, 2007 0.87
Rs. million
SalesTax: The Deputy Commissioner of Sales Tax has issued the assessment order for the financial year 2003-04 and raised the demand on purchase of Furnace oil during the year 2003-04 in respect of purchases made by the Company at a concessional rate of tax. The Company has filed an appeal with the Joint Commissioner of Sales Tax, Vadodra. FEMA: TheAppellateTribunalforForeignExchange,NewDelhihasissuedan orderfor contravention of the provision of section 18(2) oftheForeign Exchange Regulation Act, 1973 read with Section 49(3) and (4) of ForeignExchangeManagementAct,1999inrespectofnon-realisation of export proceeds. The Company has filed an appeal with the Delhi HighCourt. Others: Uncalled liability of 800 CHF per share, in respect of partly paid 600 equitysharesofWelspunAG,asubsidiarycompany Accumulateddividendoncumulativeredeemablepreferenceshares ClaimsagainsttheCompanynotacknowledgedasdebts Billsdiscountedinrespectofexportdebtors
0.90
0.90
19.37
17.41 2.17 1,999.32
99.07 1.57 774.51 Rs. million
Asat March31, 2008 3. (a)GuaranteesgivenbybanksonbehalfoftheCompany (B)CorporateGuarantees/UndertakingsgivenbytheCompany: Indemnity and undertaking to Bank of India, Manchester UK BranchforthetermloanofGBP7.5milliongivenbythebank toWelspunHomeTextileUKLimited,aSubsidiary Company, that the Company will execute a corporate guarantee in favour of the Bank within 90 days of events of default as mentionedintheloanagreement. Guarantee of USD 1.8million onbehalf of Welspun USAInc. (WUSA) (Subsidiary Company) to Nautica Apparel Inc. in respect of all payment obligations of WUSA under the License Agreement entered between WUSA and Nautica ApparelInc. Guarantee on behalf of Welspun Mexico SA de CV (WELMEX) (Subsidiary Company) to HSBC Mxico, S.A.., Institucin de Banca Mltiple, Grupo Financiero HSBC, Mexico (HSBC Mexico) to secure repayment of advances, credit and such other facilities extended / tobeextended by 79.14
Asat March31, 2007 118.55
597.74
638.85
72.23
78.28
300
75
Rs. million Asat March31, 2008 HSBCMexicotoWELMEX Guarantee of USD 19 million on behalf of WUSA to Verde Chihuahua Industrial S de RL de CV in respect of all payments by WUSA as a tenant under Lease agreement between WUSAand VerdeChihuahua IndustrialSdeRLde CV (c) In accordance with the EPCG Scheme, imports of capital goods are allowed to be made duty free and under Advance License Scheme, imports of raw material are allowed to be made dutyfree,subject to thecondition that the Company will fulfill,infuture,aspecifiedamountofexportobligationwithina specified time. Based on the current operating plan, the Company would fulfillitsexport obligation within the specified timeperiod. Amountofdutysavedonimportsofabovegoods againstwhichexportobligationisyettobefulfilled. (d) Estimated amount of contracts (net of advances) remaining to beexecutedoncapitalaccountandnotprovidedfor. 762.38 Asat March31, 2007
274.13
290.60
781.12
1,322.23
4.
On December 20, 2007,theCompanyacquired 76% oftheequityshareholding in SOREMA-Tapetes E Cortinas DE Banho, S.A., Portugal (SOREMA) through Welspun Holdings Private Limited, its wholly ownedsubsidiary, for considerationof Euro6,329,431.21 asspecifiedinthe SharePurchaseAgreement. Further,theCompany,throughitsWOS,hasenteredintoaPutandCallOptionAgreementtobuyremaining 24%equityshareholdinginSOREMA, 8%each;onorafterJanuary1,2011,January1,2012andJanuary 1, 2013 respectively, at a consideration to be determined based on the respective average EBITDA of SOREMAforlasttwofinancialyearspriortothesedates. On July 3, 2006, the Company had acquired 85% of the equity shareholding in CHT Holdings Limited holding company of ChristyGroup (Christy) throughconduitsof wholly ownedsubsidiaries(WOS)and throughtheseWOShadalsoenteredintoaputandcalloptionagreementtobuytheremaining15%equity shareholding in Christy. On April 2, 2008, the Company and its WOS entered into share purchase agreementswiththeholdersofthebalance15%equitysharesinChristytoacquirethesaidshareholdingby the WOS with effect from April 2, 2008.Accordingly, with effectfromApril 2, 2008, Christy has become a wholly owned subsidiary of the Company. The payment of the consideration for the 15% acquisition aggregatingGBP2.356millionistobemadeonorbeforeMay31,2009andtheobligationoftheWOSunder the share purchase agreement has been guaranteed by the Company. Pursuant to the share purchase agreements,theputandcalloptionwascancelled. During the year, the Company acquired 100% of the equity shareholding in Besa Developers and InfrastructurePrivateLimitedtoundertakeeffluentdischargepipelineprojectatVapilocation. On May 17, 2006, the Company has issued Employee Stock Options under the Employee Stock Options Scheme(theScheme)toemployeesoftheCompanyanditssubsidiarieswitharighttosubscribetoequity shares at a price ofRs.110.80 per equity share (closing market price as on May 16, 2006). The salient featuresoftheSchemeareasunder: i) Vesting:Optionstovestoveraperiodoffouryearsfromthedateoftheirgrantsasunder: -20%oftheOptionsgrantedtovestateachofthe1stand2ndAnniversariesofthedateofgrant.
5.
6.
7.
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SCHEDULES ANNEXED TO AND FORMING PART OF THE BALANCE SHEETASAT MARCH 31, 2008 AND PROFITAND LOSSACCOUNT FORTHEYEARENDED MARCH 31, 2008 -30%oftheOptionsgrantedtovestateachofthe3rdand4thAnniversariesofthedateofgrant. ii) Exercise: Options vested with an employee will be exercisable within 3 years from the date of their vesting by subscribing to the number of equity shares in the ratio of one equity share for every option, at the latest available closing market price of the equity shares, prior to the date of grant. In the event of cessation of employment due to death, resignation or otherwise the Options may lapse or be exercisableinthemannerspecificallyprovidedforintheScheme.
Summary of Stock Options st Options outstanding on 1 April, 2007 Options granted during the year Options forfeited/lapsed during the year Options exercised during the year Options outstanding on 31st March, 200 8 Options vested but not exercised on 31st March, 2008
No. of Stock Options 1,746,000 252,000 1,494,000 298,800
Weighted Average Exercise Price (Rs.) 110.80
110.80
110.80 110.80
Informationinrespectofoptionsoutstandingasat31stMarch,2008
No. of StockOptions 298,800 298,800 448,200 448,200 Weighted Average remaining life inyears 2.13 3.13 4.13 5.13 Weighted Average Exercise Price (Rs.) 110.80 110.80 110. 80 110.80
Thecompensationcostsofstock optionsgrantedtoemployeesareaccountedbytheCompanyusing the intrinsicvaluemethod.Since,onthedateofgrantofoption,quotedmarketpriceoftheunderlying equity shares of the Company was equal to the exercise price of an option, hence, no expense or liabilityarisingfromtheSchemehasbeenrecognised.
The fairvalueoftheoptionsasperthe'BlackScholes'modelisRs.63.39.HadtheCompanyadopted fair value method in respect of options granted,theemployee compensation costwould have been higher by Rs. 20.22 million, Profit After Tax lower by Rs. 20.22 million and the basic and diluted earningpersharewouldhavebeenlowerbyRe.0.28. 8 (a) 500,000 0% Redeemable Cumulative Preference Shares of Rs. 100 each fully paid up are redeemable at par in the year 2009-2010 or after repayment of all outstanding term liabilities and preference shares held by banks and financial institutions as on April 1, 2000 and interest and dividend thereon;whicheverislater.
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SCHEDULES ANNEXED TO AND FORMING PART OF THE BALANCE SHEETASAT MARCH 31, 2008 AND PROFITAND LOSSACCOUNT FORTHEYEARENDED MARCH 31, 2008 (b) During the year,theCompany hasredeemed 12.5% Redeemable Cumulative Preference Shares of Rs. 100each under onetime settlement.Consequently, a Capital Redemption ReserveofRs.30.00 millionequivalent to nominal value of Preference shares has beencreated. Premium onredemption paidbytheCompanyhasbeenadjustedagainsttheSecuritiesPremiumAccount. 9. (a) Termloansfrombanks andfinancialinstitutions includinginterest thereonare secured by way offirst charge on entire movable and immovable properties of the Company, both present and future, rankingparipassu,subjecttopriorchargeonspecificassetsasper9(b)belowandoncurrentassets as per 9(c) below against borrowing from banks for working capital finance. Certain loans are also guaranteedbypromoterdirectors. (b) In addition to 9(a) above,term loans fromBanksaggregating Rs. 47.20 million (March 31, 2007:Rs. 113.72million)andRs.4,509.10 million(March31,2007:Rs.4,481.16million)andinterestthereon, aresecuredbyexclusivechargeparipassu,interse,onspecificfixedassetsoftheCompanyandby lienonfixeddepositsoftheCompany,respectively. (c) The workingcapital loans (which includescashcredit,packing credit, anddemandloans from banks) are secured by hypothecation ofrawmaterials,finished andsemi finishedgoods, stores and spares andbookdebtsoftheCompanyandsecondchargeonentirefixedassetsoftheCompany. (d) During the year, the Company has prematurely redeemed debentures of Rs. 171.60 million under onetime settlement resulting in a gain of Rs. 3.52 million. This gain on premature redemption of debenturehasbeendisclosed as anexceptional itemintheProfitandLossAccount. Consequently, Debenture Redemption Reserve of Rs. 29.67 million has been transferred to the Profit and Loss Account. 10. (a) Sundry debtors include Rs. 179.73 million (March 31, 2007: Rs. 327.72 million) due from subsidiariesasbelow:
Rs. million Asat March31, 2008 i) Welspun USAInc. ii) Christy UK Limited iii) Christy USA LLC iv) Welspun Mexico S.A. De C.V v) Welspun AG 150.91 9.13 8.88 2.04 8.77 179.73 Asat March31, 2007 292.14 35.58 327.72
(b) Deposits include Rs. 9.20 million (March 31, 2007: Rs. 9.20 million) given against use of office premisestoaCompanyinwhichsomeoftheDirectorsareinterestedasmembers.
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11.
ManagerialRemuneration and Sitting Fees paid/ payable to directors:

Rs. million Year Ended March31, 2008 Managing / Wholetime directors (i) Salary and Allowances (ii) Perquisites (iii) Commission payabletoManaging Director and a Wholetime Director Total 8.13 0.46 8.84 17.43 7.50 0.38 17.60 25.48 Year Ended March31, 2007
Directors other than Managing / Whole time directors Sittingfees Total 0.18 17.61 0.15 25.63
Note : Provisions for leaveentitlement and post retirement benefits which are basedonactuarial valuations done on anoverall company basis areexcludedabove.
Computation of Net Profit in accordance with Section 198 of the Companies Act, 1956:
Year Ended March31, 2008 Net Profit 414.52
Rs. million Year Ended March31, 2007 824.79
Add: Managerial Remuneration and Sitting Fees DepreciationaspertheProfitandLossAccount Provisionfordoubtfuldebts/advances Lossonsale/discardingoffixedassets ProvisionfordiminutioninvalueofInvestments 17.61 847.19 18.69 6.91 1,304.92 Less: Provisionfordoubtfuldebts/advanceswrittenback Profitonredemption/saleofunitsinMutualFunds Profitonsaleofbonds GainonPrematureRedemptionofDebentures DepreciationasperSection350oftheAct Netprofit asperSection198oftheAct Maximumremunerationpayable under the Companies Act, 1956 @ 10%oftheabove Restricted to 5.83 1.23 4.97 3.52 847.19 442.18 44.22 17.43 3.69 1.51 650.63 879.93 87.99 25.48 25.63 650.63 28.97 5.74 1,535.76
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Purchased during the Year ended March31,2008 600 4,900,000 10,000 2,981,667 633 69,513,352 16,906,796 302,991 112,729,811 4,849,641 5,094,326 3,956,662 27,078 34,952,482 35,323,082 3,106,940 59,456,931 34,286,990 95,479,623 89,710,188 9,948,728 62,140,422 15,077,145 33 No. of Units Sold during the Year ended March 31,2008 11,560 69,513,352 16,721,103 302,991 112,729,811 4,849,641 5,094,326 3,956,662 1,698,178 34,952,482 35,323,082 3,106,940 57,087,645 70,789,876 95,479,623 89,710,188 9,948,728 62,140,422 15,053,477 12,506
INVESTMENTS Welspun AG, Switzerland Welspun Retail Limited BESADevelopers and Infrastructure Private Limited MEP Cotton Private Limited Chola Liquid Institutional Daily Dividend Reinvestment Plan DBS Chola Short TermFloatingRate Fund-Daily Dividend Reinvestment DWS Installment Cash Plus Fund - Daily Dividend Plan HDFCLiquidFund - Daily Dividend Reinvestment Option HSBCCash Fund - Institutional Plus - Daily Dividend Option ICICI Prudential Fund - Flexible Income - Daily Dividend Option ICICI Prudential Interval Fund - Retail Dividend Reinvestment Option INGLiquidFundInstitutional - Daily Dividend Reinvestment Option INGOptimixActiveDebtFoFScheme-Dividend JM High Liquidity Fund - SuperInstitutional Daily Dividend Reinvestment Option JM Money Manager Fund Super Plus Daily Dividend Reinvestment Option Kotak Flexi Debt Scheme - Daily Dividend Option LICMFFloating Rate Fund - Short Term Plan - Dividend Option LICMFLiquidFund- Dividend Plan Lotus IndiaLiquidFund- Institutional Daily Dividend Option Lotus India Short TermPlan -Institutional Daily Dividend Magnum Insta Cash Fund Liquid Floater Plan - Dividend Principal Cash Management Fund - Liquid Option Daily Dividend Reinvestment Plan Principal Floating Rate Fund - Daily Dividend Reinvestment Plan Prudential ICICI LiquidInstitutional Plus Daily Dividend Option
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Purchased during the Year ended March31,2008 10,037,099 755 10,000,000 5,472,872 17,504 352 29,889,099 302,396 20,843 No. of Units Sold during the Year ended March 31,2008 2,036 10,037,099 20,000,000 55,109 5,472,872 131,628 6,391 29,889,099 302,396 20,843
INVESTMENTS Reliance Liquid Fund - Cash Plan-Growth Option-Growth Plan Reliance Liquidity Fund-Daily Dividend Reinvestment Option Reliance Liquid Fund - Treasury Plan Retail Option SBI Debt Fund Series SBI Mutual Fund - Magnum Comma Fund Dividend SBI MagnumInsta Cash Fund - Daily Dividend Option SBI MagnumMulticapFund Dividend SBI Premier Liquid Fund - Institutional - Daily Dividend Tata Floater Fund - Daily Dividend Tata Liquid Super HighInvestment Fund - Daily Dividend UTI - Liquid Plus Fund Institutional Plan ( Daily Dividend Option ) - Reinvestment Option UTI Fixed Income Interval Fund - Institutional Dividend Plan Reinvestment Option UTI Half Yearly FMP Dividend Plan - Reinvestment Option UTI Quarterly FMP Dividend Plan - Reinvestment Option UTI Liquid Cash Plan Institutional Daily Income Option Reinvestment UTI Liquid Cash Plan Regular - Daily Income Option Reinvestment UTI Liquid Plus Fund - Institutional Plan Daily Dividend Option - Reinvestment UTI Money Market Fund Daily Dividend Option Reinvestment
3,019,371
3,019,371
5,510,281 309,495 1,260,312
15,724,018 32,655,715 1,274,238
1,157
359,639 22,957,903
359,639 25,972,967
13. AdditionalinformationpursuanttoPartIIofScheduleVIoftheCompaniesAct,1956. (a) Licensed Capacity Not Applicable As per the Industrial Policy declared in July 1991, as amended inApril 1993, no licences are required for the products manufactured by the Company. Installed Capacity (As certified by Management) Cotton Terry Towels Cotton Yarn Bed Sheets Not Applicable
37,074 (March 31, 2007 : 31,160) M.T. P. 28,295 (March 31, 2007 : 26,202) M.T. P. 35,700 (March 31, 2007 : 35,700) 000Mtrs
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Year ended March31, 2008 c) Raw Materials Consumed: Cotton Yarn Cotton Fabric Consumed Bed Linen Fabrics Total d) Unit MT MT MT 000 Mtrs. Qty. 19,057 29,358 846 6,573 (Rs. million) 2,711.44 1,836.47 166.26 793.92 5,508.09 Year ened March31, 2007 Qty. 15,765 21,545 2,692 4,634 (Rs. million) 1,805.29 1,308.35 508.45 538.43 4,160.52
Value of Imported and Indigenous Raw Materials and Stores, Year ended March31, 2008 % 1. Raw Material Imported Indigenous Total 2. StoresandSparesandDyesandChemicals Imported Indigenous Total 8.87 91.13 100.00 113.09 1,161.43 1,274.52 10.04 89.96 100.00 94.67 848.19 942.86 6.89 93.11 100.00 379.47 5,128.62 5,508.09 4.11 95.89 100.00 171.18 3,989.34 4,160.52 (Rs. million) Year ened March31, 2007 % (Rs. million)
Year ended March31, 2008 (Rs. million) e) Value of Imports onCIF Basis: Raw Materials Stores & Spares and Dyes & Chemicals Capital Goods Packing Material Total f) g) FOB Value Of Exports Expenditure inForeignCurrency Travelling Commission Professional Charges Claims, Discount and Rebate Freight Advertisement and Sales Promotion Interest Others Total 522.64 121.97 1,653.94 9.67 2,308.22 10,131.14 7.57 53.32 5.48 144.23 107.86 195.57 8.17 9.83 532.03
Year ended March31, 2007 (Rs. million)
155.20 161.18 2,379.20 33.80 2,729.38 8,508.30 2.08 60.38 13.55 62.10 0.00 84.01 18.34 18.70 259.16
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SCHEDULES ANNEXED TO AND FORMING PART OF THE BALANCE SHEETASAT MARCH 31, 2008 AND PROFITAND LOSSACCOUNT FORTHEYEARENDED MARCH 31, 2008 14. InterestinJointVenture (a) The Company has accounted the interest in Joint Ventures in Welspun Zucchi Textiles Limited (WZTL) and MEP Cotton Private Limited (MCPL) in accordance with Accounting Standard 13, AccountingforInvestments. (b) The Company'sshareofcontingentliabilityofWZTLand MCPLisRs.3.67million(March31,2007: Rs.13.42million)andRs.70.34million(March31,2007:Rs.Nil),respectively. (c) The Company's share of the aggregate amounts of assets and liabilities as at March 31, 2008 and incomeandexpenditureofWZTLandMCPLfortheyearendedMarch31,2008areasunder:
Rs. million Particulars WZTL March31, March31, 2008 2007 MCPL March31, March31, 2008 2007
Assets Liabilities (excluding Share capital and Reserves and Surplus) Income Expenditure (including provision for taxes) 15. DisclosureforMicroandSmallEnterprises:
89.20 34.72 140.88
93.17 37.04 124.67
649.84 539.34 431.51
68.11 7.98 -
140.55
124.26
431.01
0.01
Rs. million Particulars Year ended March31,2008 Year ended March 31, 2007
theprincipal amount andtheinterestduethereon(tobeshown separately) remaining unpaid to any supplier as at the end of eachaccountingyear; -Principal -Interestduethereon ii) the amount of interest paid by the buyer in termsof section 16 oftheMicro,SmallandMediumEnterprisesDevelopmentAct, 2006, along with the amount of the payment made to the supplier beyond the appointed day during each accounting year; -Principal -Interest iii) theamountofinterestdueandpayablefortheperiodofdelayin making payment (which have been paid but beyond the appointed day during the year) but without adding the interest specified under the Micro, Small and Medium Enterprises DevelopmentAct,2006; iv) theamountofinterestaccruedandremainingunpaidattheend ofeachaccountingyear; -TotalinterestAccrued -Interestremainingunpaid v) theamountoffurtherinterestremaining dueandpayableeven in thesucceedingyears, untilsuchdatewhentheinterestdues as above are actually paid to the small enterprise, for the purpose of disallowance as a deductible expenditure under section 23 of the Micro, Small and Medium Enterprises DevelopmentAct,2006.
* less than Rs. 1,000
i)
0.75 *
0.04 0.27
0.10 0.27
20.99 -
* *
0.27 0.27
0.27
TheaboveinformationandthatgiveninSchedule 12-CurrentLiabilitiesandProvisionsregarding microandsmallenterprises has beendetermined to theextentsuchparties havebeenidentifiedon thebasisofinformationavailablewiththeCompany.

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SCHEDULES ANNEXED TO AND FORMING PART OF THE BALANCE SHEETASAT MARCH 31, 2008 AND PROFITAND LOSSACCOUNT FORTHEYEARENDED MARCH 31, 2008 16. a) InaccordancewiththeCompany's policy givenin Note 1(x) above,net exchangegainofRs.379.21 million(PreviousYear:netexchangelossofRs.91.60million)hasbeenaccountedinProfitandLoss AccountandnetexchangelossofRs.Nil(PreviousYear:netexchangelossofRs.43.15million)has beenadjustedtothecostoffixedassets/capitalwork-in-progress. PursuanttoissuanceoftheCompanies(AccountingStandards)Rules, 2006,witheffectfromApril1, 2007; the Company has adopted the accounting policy of recognizing the foreign exchange fluctuation, in its Profit and Loss Account, in respect of liabilities in foreign currencies specific to acquisition of fixed assets from outside India. Had the earlier policy of adjusting such foreign exchange fluctuations tothecarryingcostoftherespectivefixedassetsbeingfollowed;profitbefore taxintheProfitandLossAccountwouldhavebeenhigherbyRs.23.95million.
(b)
17. DisclosureofDerivativeInstruments A Derivativeinstrumentsoutstandingattheyearend: i) ForwardExchangeand OptionContracts tohedge the foreign currency exposure for payments Rs. million tobereceivedagainstexportsandotherreceivables:
Currency Forward Exchange Contracts and Option Contracts March 31, 2008 USD (Equivalent Rs.) EURO (Equivalent Rs.) GBP (Equivalent Rs.) 114.28 ( 4,640.87) 2.00 ( 116.33) March 31, 2007 73.98 (3,343.56) 3.00 (257.33)
ii)
ForwardExchangeand OptionContracts tohedge the foreign currency exposure for payments tobemadeagainstimportsandotherpayables. Rs. million
Currency Forward Exchange Contracts and Option Contracts March 31, 2008 USD (Equivalent Rs.) EURO (Equivalent Rs.) CHF (Equivalent Rs.) JPY (Equivalent Rs.) 12.38 (496.33) 10.91 (647.26) 59.40 (23.83) March 31, 2007 4.60 (206.23) 6.19 (362.77) 3.60 (133.71) 590.70 (228.89)
B.
AsoftheBalanceSheetdate,theforeigncurrencyexposurenothedgedbyaderivativeinstrumentor otherwiseaggregatesRs.1,372.98million(March31,2007:Rs.274.16million)
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SCHEDULES ANNEXED TO AND FORMING PART OF THE BALANCE SHEETASAT MARCH 31, 2008 AND PROFITAND LOSSACCOUNT FORTHEYEARENDED MARCH 31, 2008 18. .TheCompanyhasclassifiedthevariousbenefitsprovidedtoemployeesasunder:I Defined Contribution Plans a. EmployersContribution to Provident Fund b. EmployersContribution to Employees State Insurance c. EmployersContribution to Employees Pension Scheme, 1995 During the year, the Company has recognised the following amounts in the Profit and LossAccount Rs.million 2007-08 * EmployersContribution to Provident Fund EmployersContribution to Employees State Insurance EmployersContribution to Employees Pension Scheme 25.56 7.32 29.44 2006-07 23.80 * 4.79 * 21.67 *
Included in Contribution to Provident and Other Funds (Refer Schedule 16)
II
Defined Benefit Plan Contribution to Gratuity Fund a. Major Assumptions Discount Rate Expected Rate of Return on Plan Assets Salary Escalation Rate @ The estimates for future salary increases considered takes into account the inflation, seniority, promotion and other relevant factors. 2007-08 8.50 8.00 6.00 (% p.a.) 2006-07 8.50 8.00 6.00 @
b.
Change in the Present Value of Obligation Opening Present Value of Obligation Current Service Cost Interest Cost Benefit paid Actuarial Losses on Obligations Closing Present Value of Obligation
2007-08 36.83 11.19 3.13 (6.10) 2.18 47.23
Rs. million 2006-07 23.85 9.31 2.04 (2.90) 4.53 36.83
c.
Change in Fair Value of Plan Assets Opening Fair Value of Plan Assets Expected Return on PlanAssets Actuarial gain / (loss) on Plan Assets Contributions Benefits paid Closing Fair Value of Plan Assets
2007-08 34.02 2.72 5.10 17.50 (6.10) 53.24
Rs. million 2006-07 21.60 1.73 (0.08) 13.67 (2.90) 34.02
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SCHEDULES ANNEXED TO AND FORMING PART OF THE BALANCE SHEETASAT MARCH 31, 2008 AND PROFITAND LOSSACCOUNT FORTHEYEARENDED MARCH 31, 2008 d. Reconciliation of Present Value of Defined Benefit Obligation Rs. million and the Fair Value ofAssets
AsAt March31,2008
AsAt March31,2007
Present Value of Funded Obligation Fair Value of PlanAssets Funded Status Present Value of Unfunded Obligation Assets recognised in the Balance Sheet and included under Loans, Advances and Other CurrentAssets (Refer Schedule 11) Unfunded Net Liability Recognised in the Balance Sheet disclosed under Current Liabilities and Provisions (Refer Schedule 12) e. Amount recognised in the Balance Sheet Present Value of Obligation Fair Value of PlanAssets (Assets)/ Liability recognised in the Balance Sheet and included under Loans, Advances and Other CurrentAssets (Refer Schedule 11) and under Current Liabilities and Provisions (Refer Schedule 12) respectively.
47.23 53.24 6.01
34.02 34.02 (2.81) 2.81 2.81
6.01 -
47.23 53.24 (6.01)
36.83 34.02 2.81
Rs. million f. 2007-08 Expenses Recognised in the Profit and Loss Account Current Service Cost 11.19 Interest Cost 3.13 Expected Return on PlanAssets (2.72) Net Actuarial (gain)/ Losses Recognised in the period (2.92) Total expenses Recognised in the Profit and Loss Account 8.68 Actual Return on PlanAssets 7.82 ** Included in Salary, Wages, Allowances and Other Benefits (Refer Schedule 16) 2006-07 9.31 2.04 (1.73) 4.61 14.23** 1.65
19. Borrowing Costs aggregating Rs. 145.69 million; Previous Year: Rs. 132.77 million (net of interest subsidy of Rs. 156.16 million; Previous Year: Rs. 169.52 million) attributable to the acquisition or construction of qualifying assets are capitalised during the year as part of the cost of such assets. 20. SegmentInformationfortheyearendedMarch31,2008. (i) InformationaboutPrimaryBusinessSegment The Company is exclusively engaged in the business of Home Textiles which, in the context of AccountingStandard 17onSegmentReporting,issuedbytheInstituteofCharteredAccountants of India,isconsidered to constitute a singleprimary segment. Thus, the segment revenue, segment results, total carrying amount of segment assets, total carrying amount of segment liabilities, total costincurredtoacquiresegmentassets,totalamountofchargefordepreciationduring the year are allasreflectedinthefinancialstatementsfortheyearendedMarch31,2008andasonthatdate. (ii) InformationaboutSecondaryGeographicalSegments:
India March31, March31, 2008 2007 966.40 673.38 21,581.67 19,308.63 3,167.48 3,348.93 Outside India March 31, March 31, 2008 2007 11,443.04 9,062.23 1,997.04 1,924.02 Rs. million Total March 31, March 31, 2008 2007 12,409.44 9,735.61 23,578.71 21,232.65 3,167.48 3,348.93
External Revenue Carrying Amount of SegmentAssets Capital Expenditure (excluding the Incidental Expenditure Pending Capitalisation/Allocation)
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SCHEDULES ANNEXED TO AND FORMING PART OF THE BALANCE SHEETASAT MARCH 31, 2008 AND PROFITAND LOSSACCOUNT FORTHEYEARENDED MARCH 31, 2008 (iii) Notes: (a) TheSegmentrevenueinthegeographicalsegmentsconsideredfordisclosureareasfollows: Revenue withinIndiaincludessalestocustomerslocatedwithinIndiaandearningsinIndia. RevenueoutsideIndiaincludessalestocustomerslocatedoutsideIndia,earningsoutsideIndia andexportbenefitsonsalesmadetocustomerslocatedoutsideIndia. Segment revenue, results, assets and liabilities includethe respectiveamounts identifiedtoeachof thesegmentsandamountsallocatedonareasonablebasis.
(b)
21. RelatedPartyDisclosures (i) Relationship Control (a) Subsidiary Companies Welspun USA Inc., USA (WUSA) Welspun Holdings Private Limited, Cyprus (WHPL) Welspun AG (WAG) Besa Developers and Infrastructure Private Limited (BESA) Welspun Mexico S.A. de C.V (WMEX) (Held through WAG) Welspun Home Textiles UK Limited (WHTUKL) (Held through WHPL) CHT Holdings Limited (CHTHL) (Held through WHTUKL) Christy Home Textiles Limited (CHTL) (Held through CHTHL) Christy UK Limited (CUKL) (Held through CHTL) Christy 2004 Limited (Held through CUKL) Flyspark Limited (Held through CHTL) Christy USA, LLC (Held through CHTL) Christy Europe GmbH (Held through CHTL) ERKingsley (Textiles) Limited (ERK) (Held through CHTL) SOREMA - Tapetes E Cortinas De Banho, S.A. (SOREMA) (Held through WHPL)
(b) (c) (d)
Joint Venture Companies Associate Company Enterprises over which Key Management Personnel exercise significant influence or control and with whom transactions have taken place during the year
Welspun Zucchi Textiles Limited (WZTL) MEP Cotton Private Limited (MCPL) Welspun Retail Limited (WRL) Welspun Gujarat Stahl Rohren Limited (WGSRL) Welspun Power and Steel Limited (WPSL) Welspun Syntex Limited (WSL) Welspun Trading Limited (WTL) Welspun Wintex Limited (WWL) Welspun Mercantile Limited (WML) Welspun Logistics Limited (WLL) Welspun Realty Private Limited (WRPL) Vipuna Trading Limited (VTL) Goodvalue Polyplast Limited (GVPL) Mertz Securities Limited (MSL) Refined Salts Private Limited (RSPL) Welspun Foundation for Health and Knowledge (WFHK) B.K.Goenka (BKG) R. R. Mandawewala (RRM) M. L. Mittal (MLM) Deepali Goenka (DBG)
(e)
Key Management Personnel
(f)
Relatives of Key Management Personnel
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SCHEDULES ANNEXED TO AND FORMING PART OF THE BALANCE SHEETASAT MARCH 31, 2008 AND PROFITAND LOSSACCOUNT FORTHEYEARENDED MARCH 31, 2008 22. Leases A. Where the Company is a lessor : Operating Lease The Company has given certain buildings and plant and machinery on operating lease, details of which are as under:
Rs. million Particulars Buildings GrossBlock AccumulatedDepreciation DepreciationrecognisedintheProfitandLossAccountfortheyear PlantandMachinery GrossBlock AccumulatedDepreciation DepreciationrecognisedintheProfitandLoss Accountfortheyear 42.49 26.90 6.33* 98.55 21.25 10.19 10.25 1.65 0.17 10.25 1.48 0.17 March31, 2008 March31, 2007
* Includes depreciation of Rs. 3.40 million on plant and machinery which was given on lease upto July 2007. B. Where the Company is a lessee: Operating Lease The Company has taken various residential, office premises, godowns, equipment and vehicles under operatingleaseagreementsthatarerenewableonaperiodicbasisattheoptionofboththelessorandthe lessee. Theinitialtenureofleaseisgenerallyforelevenmonthstosixtymonths. TheaggregaterentalexpensesofalltheoperatingleasesfortheyearareRs.59.81million(PreviousYear: Rs.15.03million).
23.As required by the Clause 32 of the listing agreement, the followingdisclosure is made:
Rs. million Balance as on March31, 2008 Maximum Balance as Maximum amount on March31, amount outstanding 2007 outstanding during theyear during the ended March year ended 31, 2008 March 31,2007
i.
Loans andadvances in the nature of loans to subsidiary, - Welspun USA Inc. - Welspun Holdings Private Limited, Cyprus - Welspun AG - Besa Developers and Infrastructure PrivateLimited
65.44 393.92 155.97 31.50
131.21 605.16 155.97 31.50
26.09 301.27
26.09 305.35 -
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23.As requiredbytheClause 32 of the listingagreement,thefollowing disclosureismade: Rs. million Balance as on March31, 2008 Maximum Balance as Maximum amount on March31, amount outstanding 2007 outstanding during the during theyear year ended ended March March 31,2007 31, 2008 ---
ii. Loans andadvances in the nature of loans to associates iii. Loans andadvances in the nature of loans where there is no repayment schedule, or interest below rate specified as per Section 372A of the Companies Act, 1956 - Welspun USA Inc. - Welspun Holdings Private Limited, Cyprus - Welspun AG - Besa Developers and Infrastructure PrivateLimited iv. Loans andadvances in the nature of loans to firms/ companies in which directors are interested v. Investments by theLoanee in the shares oftheCompany as on 31st March, 2008
65.44 393.92 155.97 31.50
131.21 605.16 155.97 31.50
24.
Earnings Per Share Rs. million Particulars March31, 2008 March31, 2007
Profit after Tax (A) Less:Preference Dividend(includingTax on PreferenceDividend)(B) Profits available to Equity Shareholders (C) = (A) (B)
262.66 262.66
521.03 4.71 516.32
Number of Equity Shares - Weighted Number of equity shares outstanding during the year (D) 73,089,519 73,089,519
Basic and Diluted earnings per share (C/D) (Rs.) Nominal value of an equity share (Rs.)
3.59 10
7.06 10
91
SCHEDULES ANNEXED TO AND FORMING PART OF THE BALANCE SHEETASAT MARCH 31, 2008 AND PROFITAND LOSSACCOUNT FORTHEYEARENDED MARCH 31, 2008 25. Exception Item includes gain of Rs. 3.52 million on premature redemption of debentures of Rs. 171.60 million under one time settlement.
26. Refer Annexure for additional information to Part IV of Schedule VI to the Act.
27. Prior year comparatives have been reclassified to conform with the current year's presentation, wherever applicable.
Signatures to Schedules 1 to 19 forming part of the Accounts
For andonbehalfoftheBoardofDirectors
Neeraj Gupta Partner Membership No. F055158 For and on behalf of Price Waterhouse & Co. Chartered Accountants Mumbai, May 30, 2008
92
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CASHFLOW STATEMENTFORTHEYEARENDEDMARCH31,2008
For the YearEnded March31,2008 414.52 847.19 (20.84) 6.91 (3.52) (1.23) (4.97) ( 25.83) (0.53) (5.83) 18.69 5.57 43.23 (83.15) 760.00 1,535.69 1,9 50.21 (653.30) (535.48) 526.88 (661.90) 1,288.31 88.41 1,199.90 (3,160.72) 4.69 14.79 766.88 25.83 9.35 (2,339.18) (102.26) (168.08) 2,012.08 (788.12) 432.82 (966.53) 419.91 (719.37) 1,639.88 920.51 (719.37)
Rs. million For the Year Ended March 31,2007 824.79 650.63 (47.21) 28.97 (1.51) (22.94) (3.69) 0.37 5.74 (47.50) 525.68 1,088.54 1,913.33 (1,021.83) (415.16) 90.67 (1,346.32) 567.01 95.49 471.52 (3,301.19) 39.61 34.28 (612.50) 22.94 21.12 (3,795.74) (645.23) 5,785.91 (499.80) 271.56 (758.40) 4,154.04 829.82 810.06 1,639.88 829.82
A.
CASHFLOWFROMOPERATINGACTIVITIES Net Profit Before Tax Adjustments for : Depreciation Unrealised Foreign Exchange Differences Loss on Sale of Fixed Assets Gain on Premature Redemption of Debentures Profit onRedemption/SaleofUnitsofMutualFunds Profit onSale of Bonds Dividend Liabilities Written Back as no Longer Required ProvisionforDoubtful Debts/Advances Written Back ProvisionforDoubtful debts/ Advances Debts/Advances Writtenoff Excise Benefits Receivable Written Off Provisionfordiminutionin value of Investments Interest Income and Cash Discount Received Interest and Other Expenses Operating Profit Before Working Capital Changes Adjustments for changesinworkingcapital: Trade and Other Receivables Inventories Current Liabilities and Provisions
B.
C.
CashFlow Generated from Operations Income Tax and Fringe Benefit Tax paid Net Cash Flow fromOperating Activities CASHFLOWFROMINVESTINGACTIVITIES Purchase of FixedAssets (Including Capital Work-in-progress) Sale of Fixed Assets Capital Subsidy Sale/ (Purchase) of Investments Dividend Received Interest Received Net Cash Flow usedinInvestingActivities CASHFLOWFROMFINANCINGACTIVITIES RedemptionofPreferenceShares RedemptionofDebentures Proceeds from Borrowings - Long Term Repayment of Borrowings - Long Term Proceeds/ Repayments of Other Borrowings Interest andotherFinanceExpenses Paid Net Cash Flow fromFinancing Activities (A+B+C) Cash and Cash Equivalents at the beginningoftheyear Cash and Cash Equivalents at the endoftheyear Net (Decrease)/ Increase in Cash and Cash Equivalents
NOTES: 1. The Cash Flow Statement has been prepared under the Indirect method as set out in Accounting Standard -3onCashFlowStatementsissuedbytheInstituteofCharteredAccountantsofIndia. 2. Previousyearscomparativeshavebeenreclassifiedtoconformwiththecurrentyearspresentation,whereverapplicable.
This is the Cash Flow Statement referred to in our report of the even date. For andonbehalfoftheBoardofDirectors Neeraj Gupta Partner Membership No. F055158 For and on behalf of Price Waterhouse & Co. Chartered Accountants Mumbai, May 30, 2008 B. K. Goenka Vice Chairman & Managing Director R. R. Mandawewala Joint Managing Director

AdditionalInformationpursuantto Part IVofScheduleVItotheAct Balance SheetAbstractandCompany'sGeneralBusinessProfil e ANNEXURE I Registration Details Registration No. U 9 BalanceSheet Date II
5 2
C 8
StateCode 0
3 1 Date
0 3 Month PublicIssue N I L Bonus Issue N I L
0 0 Year
CapitalRaised DuringtheYear(Amountin Rs.Thousands) Rights Issue N I L PrivatePlacement N I L
III
Positionof MobilisationandDeploymentofFunds (AmountinRs. Thousands) TotalLiabilities 8 7 1 5 Paid-upCapital 0 9 0 0 TotalAssets 7 1 5
2 SourcesofFunds
Equity Warrants N I L Secured Loans 1 5 2 3 5 7 1 0
ReservesandSurplus 8 0 7 2 9 5 Unsecured Loans 2 7 2 0
DeferredTax Liability(Net) 1 0 4 0 0 0
Application ofFunds 1 5 0
NetFixedAssets 6 4 4 9 0 Investments 7 5 0
IncidentalExpenditure Pending Capitalisation/Allocation 6 2 7 8 2 NetCurrentAssets 7 8 6 0 3
AccumulatedLosses N I L IV Performance ofCompany (AmountinRs. Thousands) Turnover 1 2 4 0 9 4 3 5 + Profit/LossBefore Tax 4 1 4 5 2 4 + -
Miscellaneous Expenditure N I L
Total Expenditure 4 1 5 7 6 Profit/Loss after Tax 6 2 6 6 9
(Pleasetick appropriate box + forPositive, - for N e gative) + Earnings Per Share (BasicandDiluted) (InRs.) 3 . 5 9
(Pleasetick appropriate box + forPositive, - for N e gative) Dividend Rate% -
GenericNamesofThreePrincipalProducts/ Services ofCompany (as permonetary terms) ItemCode No. (ITCCode) 6 6 5 3 3 2 0 0 0 4 9 4 1 5 1 2 9 1 5 1 0 0 0 0 ProductDescription C C C O O O T T T T T T O O O N N N T B Y E E A R D R N R Y S H T E O W E E T L
OnbehalfoftheBoardofDirectors B. K. Goenka Vice Chairman & Managing Director R. R. Mandawewala Joint Managing Director

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AUDITORS'REPORTTOTHEBOARDOFDIRECTORSOFWELSPUNINDIALIMITED 1. WehaveauditedtheattachedconsolidatedBalanceSheet ofWelspunIndiaLimited(theCompany)and itssubsidiaries,itsjointlycontrolledentitiesandassociatecompany;hereinafterreferredtoastheGroup (referNote1B(ii)onSchedule19totheattachedconsolidatedfinancialstatements)asatMarch31,2008, therelatedconsolidatedProfit andLossAccountandtheconsolidated Cash Flow Statement fortheyear ended on that date annexed thereto, which we have signed under reference to this report. These consolidated financial statements are the responsibility of the Company's Management. Our responsibilityistoexpressanopinionontheseconsolidatedfinancialstatementsbasedonouraudit. We conducted our audit in accordance with the auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by Management, as well as evaluatingtheoverall financial statement presentation. We believethat our audit provides a reasonable basisforouropinion. We did not auditthefinancial statements of (i) the jointly controlled entities and two subsidiaries, whose financial statements include the Company's share oftotal assets aggregating Rs. 1,223.27 million as at the balance sheet date, total revenues aggregating Rs. 699.77 million and net cash inflows aggregating Rs. 30.13 million for the year then ended; and (ii) the associate company, whose financial statements include the Company's share of net loss aggregating Rs. 146.45 million for the year then ended; all of whichareconsidered intheattached consolidatedfinancial statements. The financial statements of one of the aforesaid two subsidiaries, the jointly controlled entities and the associate company have been auditedby other auditors, whosereportshavebeen furnishedtous,andouropinion,insofarasitrelates to the amounts included in respect of the said subsidiary,thejointlycontrolled entities and the associate company, is based solely on the reports of the other auditors. The financial statements of the other aforesaidsubsidiary, which includetheCompany'sshare of total assets aggregatingRs. 31.60 millionas at the balance sheet date,total revenues aggregating Rs.Nilandnetcashinflowsaggregating Rs. 0.26 millionfortheyearthenended,havebeencertifiedbyitsdirectors,andouropinion,insofarasitrelatesto amounts included in respect of the subsidiary, is based solely on those management certified financial statements. Wereport thattheconsolidatedfinancialstatementshavebeenpreparedbytheCompany'sManagement in accordance with the requirements of Accounting Standard 21 - Consolidated Financial Statements, AccountingStandard23-AccountingforInvestmentsinAssociatesinConsolidatedFinancialStatements andAccounting Standard 27 - Financial Reporting ofInterestinJointVentures, issued by the Instituteof CharteredAccountantsofIndia. On the basis of the information and explanations given to us and on consideration of the separate audit reports on individual audited financial statements of the Company, its aforesaid subsidiaries, jointly controlled entities and the associate company, andmanagement certifiedfinancial statements in caseof one subsidiary,inouropinion,theattachedconsolidated financial statements give a true and fair view in conformitywiththeaccountingprinciplesgenerallyacceptedinIndia: (a) (b) (c) in the case of the consolidated Balance Sheet, of the state of affairs of the Group as at March 31, 2008; in the case oftheconsolidated Profit and Loss Account, oftheconsolidated results of operations of theGroupfortheyearendedonthatdate;and in thecaseoftheconsolidatedCashFlowStatement,oftheconsolidatedcashflowsoftheGroup for theyearendedonthatdate.
2.
3.
4.
5.
Neeraj Gupta Partner MembershipNo.F055158 For and on behalf of Price Waterhouse & Co. Chartered Accountants Mumbai, May 30, 2008
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CONSOLIDATED BALANCESHEETASATMARCH31,2008 SCHEDULES SOURCES OFFUNDS SHAREHOLDERS FUNDS Capital Reserves and Surplus Minority Interest LOANFUNDS Secured Loans Unsecured Loans DEFERRED TAX LIABILITY (NET) APPLICATION OF FUNDS FIXED ASSETS Gross Block Less: Depreciation Net Block Capital Work-in-progress Incidental Expenditure Pending Capitalisation/ Allocation INVESTMENTS CURRENT ASSETS, LOANS AND ADVANCES Inventories Sundry Debtors Cash and Bank Balances Loans,Advances and Other CurrentAssets LESS: CURRENTLIABILITIES AND PROVISIONS Liabilities Provisions NET CURRENT ASSETS NOTES TOACCOUNTS 19 8 9 10 11 12 2,148.98 40.37 2,189.35 6,744.65 23,912.46 3,846.65 1,384.07 1,298.64 2,404.64 8,934.00 6B 7 6A 19,556.13 4,327.48 15,228.65 1,599.33 16,827.98 65.94 273.89 3 4 5 17,048.05 303.79 17.351.84 1,085.51 23,912.46 1 2 780.90 4,500.20 5,281.10 194.01 As at March 31, 2008
Rs. million Asat March31, 2007
810.90 4,592.73 5,403.63 158.81 14,539.91 120.93 14,660.84 957.09 21,180.37
15,330.87 3,113.94 12,216.93 1,359.17 13,576.10 41.24 1,225.58 3,232.81 1,176.31 1,886.15 1,609.05 7,904.32 1,434.41 132.46 1,566.87 6,337.45 21,180.37
The Schedulesreferredto hereinform an integral part of the Consolidated Balance Sheet This is the Consolidated Balance Sheet referred to in our report of the even date. For andonbehalfoftheBoardofDirectors Neeraj Gupta Partner Membership No. F055158 For and on behalf of Price Waterhouse & Co. Chartered Accountants Mumbai, May 30, 2008 B. K. Goenka Vice Chairman & Managing Director R. R. Mandawewala Joint Managing Director
99
CONSOLIDATED PROFITAND LOSSACCOUNTFORTHEYEARENDEDMARCH31,2008 YearEnded March 31, 2008
SCHEDULES INCOME Sales Less : Excise Duty Other Income EXPENDITURE Materials and Manufacturing Expenses Employees' Remuneration and Benefits Selling,Administration and Other Expenses Finance Expenses (Net) Depreciation PROFIT BEFORE EXCEPTIONAL ITEMS ANDTAXATION Exceptional Items (Refer Note 19 on Schedule19) PROFIT BEFORE TAXATION Provision For Taxation - CurrentTax - Less : MinimumAlternative Tax Credit Availed - Excess Provision for Tax in Earlier Years - Deferred Tax - Fringe Benefit Tax #REF! PROFITAFTERTAXATIONANDBEFORESHAREOF (LOSS)/ PROFIT OF ASSOCIATE AND MINORITY INTEREST Share ofAssociate's Net (Loss)/ Profit PROFIT AFTER TAXATIONANDBEFORE SHARE OF (LOSS)/ PROFIT OF MINORITY SHAREHOLDERS Minority's Share of Profit/ (Loss) in Certain Subsidiary Companies NET PROFIT/ (LOSS) Profit and Loss Account Balance Brought Forward Less : Adjustment (net of deferred tax asset of Rs. Nil (March 31, 2007 : Rs. 0.75 million)) in accordance with transitional provision in Accounting Standard 15 (Revised) PROFIT AVAILABLE FORAPPROPRIATION APPROPRIATIONS Transfer to Capital Redemption Reserve Transfer to Debenture Redemption Reserve Transfer from Debenture Redemption Reserve Profit and LossAccount Balance Carried to Balance Sheet 13
Rs. million Year Ended March31, 2007 12,432.61 24.11 12,408.50 394.64 12,803.14 7,734.61 1,355.69 1,580.10 531.70 732.06 11,934.16 868.98 (129.77) 739.21 82.88 (88.90) (6.02) (7.50) 285.58 11.30 455.85 3.80 459.65 (4.90) 464.55 1,102.98 (1.50)
14
16,495.19 31.26 16,463.93 377.61 16,841.54 #REF! 10,783.14 1,698.58 2,328.81 781.94 951.74 16,544.21 297.33 43.71 341.04 98.70 (44.50) 54.20 128.45 9.40 148.99 (146.45) 2.54 4.09 (1.55) 1,376.71 -
15 16 17 18
1,375.16 30.00 (29.67) 1,374.83 1,375.16
1,566.03 182.83 6.49 1,376.71 1,566.03
(Loss)/ Earnings Per Share (Rs.) - (Refer Note21onSchedule19) (0.02) 6.29 - Basic and Diluted 19 NOTES TO ACCOUNTS The Schedules referred to herein formanintegralpartof the Consolidated Profit andLossAccount. This is the Consolidated Profit andLossAccount referred to in our report of the even date. For andonbehalfoftheBoardofDirectors Neeraj Gupta B. K. Goenka R. R. Mandawewala Partner Vice Chairman & Managing Director Joint Managing Director Membership No. F055158 For and on behalf of M. L. Mittal D. K. Patil Price Waterhouse & Co. Executive Director(Finance) Company Secretary Chartered Accountants Mumbai, May 30, 2008 Mumbai, May 30, 2008
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SCHEDULESANNEXEDTOANDFORMINGPARTOFTHECONSOLIDATEDBALANCESHEETASAT MARCH31,2008 Rs. million SCHEDULE1: CAPITAL Authorised 81,500,000 1,100,000 23,500,000 AsAt March 31, 2008 869.64 110.00 235.00 1,214.64 730.90 AsAt March31, 2007 815.00 110.00 235.00 1,160.00 730.90 30.00
Equity Shares of Rs. 10 each Redeemable Cumulative Preference Shares of Rs. 100 each Redeemable Cumulative Preference Shares of Rs. 10 each
Issued, SubscribedandPaidUp 73,089,519 Equity Shares of Rs. 10 eachfullypaidup Nil (March 31, 2007 : 300,000) 12.5% Redeemable Cumulative Preference Shares of Rs. 100 each fully paid up (Refer Note 8(b) on Schedule 19) 500,000 0% Redeemable Cumulative Preference Shares of Rs. 100 each fully paid up (Refer Note 8(a) on Schedule19) Less : Adjustment for 50EquityShares representing 50% of 100equity shares of WelspunIndia Limited heldbyWelspun Zucchi Textiles Limited, ajointlycontrolled entity. * Less than Rs. 1,000 SCHEDULE 2 : RESERVES AND SURPLUS Securities PremiumAccount As per last Balance Sheet Add : Additions during the year Less : Premium on RedemptionofPreference Shares (Refer Note8(b)onSchedule 19) Capital Redemption Reserve As per last Balance Sheet Add : Transferred from Profit andLossAccount Debenture Redemption Reserve As per last Balance Sheet Less : Transferred to Profit and Loss Account Add : Transferred from Profit andLossAccount Capital Reserve - Forfeiture of Equity Warrants Capital Reserve -Arising onacquisition of Subsidiaries -Arising on acquisition of interest in Joint Venture Foreign Currency Translation Reserve Profit and Loss Account [includes ShareinJoint Ventures Rs. 20.81 million (March31,2007:Rs.19.98million)]
50.00 780.90 * 780.90
50.00 810.90 * 810.90
2,710.37 2,710.37 72.26 2,638.11 398.38 30.00 428.38 29.67 29.67 48.18 0.08 0.08 10.62 1,374.83 4,500.20
3,127.72 3,127.72 417.35 2,710.37 215.55 182.83 398.38 23.18 23.18 6.49 29.67 48.18 41.40 0.08 41.48 (12.06) 1,376.71 4,592.73
101
SCHEDULESANNEXEDTOANDFORMINGPARTOF THECONSOLIDATEDBALANCESHEETASAT MARCH31,2008 Rs. million AsAt AsAt March31, March 31, SCHEDULE 3 : SECURED LOANS 2007 2008 Debentures(ReferNote 9(d) on Schedule19) Term Loans(ReferNotes9(a)and (b) on Schedule 19) - From Financial Institutions - In Rupee - In Foreign Currency - From Banks - In Rupee - In Foreign Currency Working Capital Loans from Banks (Refer Note 9(c) on Schedule19) Hire Purchase FinanceLoansfrom Banks Obligations under Finance Lease (Secured by fixedassetstaken on finance lease) InterestAccruedandDueonTermLoans 171.60
1,176.60 -
983.43 139.27
11,128.42 1,069.76 3,153.79 5.00 16,533.57 514.48 17,048.05
9,896.75 749.00 2,559.36 35.38 0.61 14,535.40 4.51 14,539.91
Share in Joint Venture
SCHEDULE 4 : UNSECURED LOANS Interest Free Sales Tax Loan(Repayablein six annualinstallmentsfor each disbursement till October 7, 2010) (Repayable withinoneyearRs.0.37million;March31, 2007 : Rs 0.45 million) Short TermLoansfrom Banks Share in Joint Venture 0.40 0.85
288.43 14.96 303.79
120.08 120.93
SCHEDULE 5 : DEFERRED TAX LIABILITY (NET) (Refer Note 1(C)(vii)(b) on Schedule 19) Deferred Tax Liability arising onaccount of Timingdifferences in : - Depreciation Deferred Tax Asset arisingonaccount of Timingdifferences in: - ProvisionforDoubtful Debts/Advances - ProvisionforUnpaidStatutory Dues under Section43Bofthe Income Tax Act, 1961 - Provision for Retirement Benefits - Provision for Diminution in Value of Investments - Deferred Rent - Unabsorbed DepreciationaspertheIncomeTaxAct,1961 Share in Joint Venture
1,626.66
1,349.83
8.15 19.02 11.75 4.53 0.28 498.30 542.03 0.88 1,085.51
3.71 21.67 9.97 4.53 0.62 352.99 393.49 0.75 957.09
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SCHEDULESANNEXEDTOANDFORMINGPARTOFTHECONSOLIDATEDBALANCESHEETASATMARCH31,2008 Rs. million SCHEDULE 6B : INCIDENTAL EXPENDITURE PENDING AsAt AsAt CAPITALISATION/ALLOCATION March31, March 31, (Refer Note 1C(ii)onSchedule 19) 2007 2008 Opening Balance Add : Power and Fuel Freight, ForwardingandCoolieCharges Repairs and Maintenance - Others Salaries, Wages, Bonus and Allowances Contribution to Provident and Other Funds Staff and Labour Welfare Rent Rates and Taxes Printing and Stationery Travelling and Conveyance Legal and Professional Charges Auditors' Remuneration - Certification and Other Matters Insurance Communication Postage and Courier Loss on Cancellation of Forward Contracts(Net) Interest on FixedLoans Interest onWorkingCapital Loans DiscountingandBankCharges Loan Processing Charges Exchange Loss (Net) Miscellaneous (B) Less : Interest onDeposit Accounts - Gross (Tax Deducted at Source Rs. 7.24 million; Previous Year : Rs. 0.23 million) Interest onbonds - Gross (Tax Deducted at Source Rs. 1.21 million; Previous Year : Nil) Profit onRedemption/ Sales of Units of Mutual Funds Dividend (C) (A) + (B) - (C) Less : Transferred t o : Plant and Machinery Buildings Incidental Expenditure Pending Capitalisation/Allocation (Excluding Share of Joint Venture) ShareinJointVenture Incidental Expenditure Pending Capitalisation/ Allocation (A) 41.24 81.20
11.06 0.20 0.25 86.82 0.65 0.34 1.91 5.50 0.02 21.21 13.87 3.18 0.66 0.09 138.13 0.14 0.66 2.40 24.92 312.01 33.99 6.42 2.29 30.09 72.79 280.46
3.06 0.31 0.09 11.73 0.04 1.39 0.02 6.18 6.25 0.15 0.50 0.58 45.08 117.76 0.58 2.15 7.74 0.01 9.84 213.46 3.55 4.42 124.42 132.39 162.27
199.47 18.21 62.78 3.16 65.94
116.14 4.89 41.24 41.24
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SCHEDULESANNEXEDTOANDFORMINGPARTOFTHECONSOLIDATEDBALANCESHEETASAT MARCH31,2008 Rs. million AsAt AsAt SCHEDULE7:INVESTMENTS March31, March 31, (Refer Note 1C(v) on Schedule 19) 2007 2008 Non - Trade Investment in Government Securities National Saving Certificates (Lodged with District Magistrate, Valsad) Trade - Long Term (At Cost) (Unquoted) In Others 9,800,000 (March31,2007:4,900,000)EquityShares of Rs. 10 eachfully paid up of Welspun Retail Limited Cost of acquisition(including goodwill of Rs. 0.02 mn) Less : Company's Share of Loss as at theyear end
0.01
0.01
244.63 148.77 95.86 *
122.13 2.32 119.81 *
100
Equity Shares of Rs. 10 each fully paidupof Welspun Power and Steel Limited * - Lessthan Rs. 10,000 (March31,2007:1,134,000) Equity Shares of Rs. 10 eachfullypaidup of Welspun Syntex Limited Less : ProvisionforPermanentDiminution
(Quoted) 283,500 #
18.94 13.34 5.60 56.65
18.94 13.34 5.60 56.65
Equity Shares of Rs. 5 each fully paid upof Welspun Gujarat Stahl Rohren Limited # Number of shares have reduced pursuant to a capital reduction scheme Current (At Lower of Cost and Fair Value) Non Trade - (Unquoted, Unlisted) Investment In Mutual Funds Units of Rs. 10 each Nil (March 31, 2007 : 10,927) Chola LiquidInstitutional Daily Dividend Reinvestment Plan 600,357 (March31,2007:414,664)DWSInstallmentCash Plus Fund - Daily Dividend Plan Nil (March 31, 2007 : 1,671,100)INGOptimixActive Debt FoF Scheme - Dividend 241,114 (March 31, 2007 : 36,744,000) LICMF Liquid Fund Dividend Plan 4,437,300 (March 31, 2007 : 2,068,014) LICMF Floating Rate Fund - Short Term Plan - Dividend Option 23,668 (March 31, 2007 : Nil) Principal Floating Rate Fund Daily Dividend Reinvestment Plan Nil (March 31, 2007 : 12,473) Prudential ICICI Liquid Institutional Plus Daily Dividend option Nil (March 31, 2007 : 2,036) RelianceLiquid Fund Cash Plan-Growth Option-Growth Plan 13,490 (March 31, 2007 : 12,735) RelianceLiquid Fund Treasury Plan Retail Option Nil (March 31, 2007 : 55,109) SBI Mutual Fund Magnum Comma Fund Dividend Nil (March 31, 2007 : 114,124) SBI Magnum Multicap Fund Dividend
7,133,000
6.18 2.65 45.05 0.24 -
0.11 4.15 16.71 403.38 22.23
0.15 0.02
0.14 -
0.13 0.58 1.20
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SCHEDULESANNEXEDTOANDFORMINGPARTOFTHECONSOLIDATEDBALANCESHEETASAT MARCH31,2008 Rs. million AsAt AsAt SCHEDULE7:INVESTMENTS March31, March 31, (Refer Note 1C(v) on Schedule 19) 2007 2008 Nil Nil Nil Nil Nil (March 31, 2007 : 6,039) SBI Premier Liquid Fund Institutional - Daily Dividend (March 31, 2007 : 10,000,000) SBI Debt Fund Series (March 31, 2007 : 3,015,064) UTI Money Market Fund Daily Dividend Option Reinvestment (March 31, 2007 : 10,213,737) UTI Half Yearly FMP Dividend Plan - Reinvestment (March 31, 2007 : 32,346,220) UTI Quarterly FMP Dividend Plan - Reinvestment InvestmentInMutualFunds Units Of Rs. 1,000 Each (March 31, 2007 : 1,155) UTI Liquid Cash Plan Regular - Daily Income Option Reinvestment (March 31, 2007 : 13,926) UTI Liquid Cash Plan Institutional - DailyIncomeOptionReinvestment Investment In Bonds (March 31, 2007 : Nil) Zero Coupon Redeemable Deep Discount (2007 Series-II) Punjab Infrastructure Development Bonds 54.26 0.05 100.00 52.99 102.14 323.27 1,027.11 1.18 14.19
Nil Nil
217
61.39
273.77 Share in Joint Venture 0.12 273.89 AggregateofUnquotedInvestments-At Book Value AggregateofQuotedInvestments -AtBook Value -AtMarketValue 211.62 62.27 2,740.78
1,224.55 1.03 1,225.58 1,163.31 62.27 746.80
SCHEDULE 8 : INVENTORIES (Refer Note1(C)(vi) onSchedule 19) Raw Materials Work-in-Process Finished Goods and Traded Goods (Refer Note 20 onSchedule19) Stores, Spares, Dyes and Chemicals 848.41 1,260.06 1,313.49 264.33 3,686.29 160.36 3,846.65 778.45 1,085.86 1,075.15 271.63 3,211.09 21.72 3,232.81
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SCHEDULESANNEXEDTOANDFORMINGPARTOFTHECONSOLIDATEDBALANCESHEETASATMARCH31,2008 Rs. million AsAt AsAt March31, March 31, SCHEDULE 9 : SUNDRY DEBTORS 2007 2008 Unsecured Debts Outstanding for a period exceeding six months : 35.39 15.47 - Considered Good 10.93 3.88 - Considered Doubtful 46.32 19.35 Other Debts : 1,178.22 1,159.50 - Considered Good 10.81 - Considered Doubtful 1,189.03 1,159.50 Less : Provision for Doubtful Debts Less : Provisionfordebtors not covered under Group Credit Insurance Arrangements Share in Joint Venture 21.74 1,213.61 9.56 1,204.05 180.02 1,384.07 SCHEDULE 10 : CASH AND BANK BALANCES CashonHand Cheques onHand Bank Balances - with Scheduled Banks - In CurrentAccounts - In Fixed Deposit Accounts (includes deposits aggregating Rs. 446.61 million; March31,2007:Rs.285.63millionpledged with banks against term loans, overdraft,lettersofcreditand bank guarantee facilities.) - with Others - In CurrentAccounts in Foreign Currency 228.97 - Joint Deposit Account (Escrow) 228.97 Less : Held in Trust 4.26 7.33 1.59 26.21 3.88 1,174.97 8.01 1,166.96 9.35 1,176.31
262.31 744.01
104.96 1,508.81
248.84
1,266.75 Share in Joint Venture 31.89 1,298.64
239.60 235.40 235.40 1,881.17 4.98 1,886.15
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SCHEDULESANNEXEDTOANDFORMINGPARTOF THECONSOLIDATEDBALANCESHEETASAT MARCH31,2008 Rs. million AsAt AsAt SCHEDULE 11 : LOANS, ADVANCES AND March31, March 31, OTHERCURRENTASSETS 2007 2008 LOANS ANDADVANCES Unsecured Advances Recoverable in Cash or in Kind or for Value to be Received - Considered Good - Considered Doubtful Less : ProvisionforDoubtfulAdvances Balances with Customs, Excise, Sales Tax and other GovernmentAuthorities Advance Tax and Tax Deducted at Source (Net of Provision for Tax) Minimum Alternative Tax Credit Entitlement Deposits OTHER CURRENT ASSETS Technology Upgradation Fund Credit Receivable Interest Receivable under Subvention Scheme InterestAccrued on Deposits
309.91 7.42 317.33 7.42 309.91 828.21 25.96 182.40 353.53 1,700.01 621.11 7.79 21.07 649.97
282.87 7.03 289.90 7.03 282.87 683.92 32.80 137.90 69.86 1,207.35 384.08 5.58 389.66
54.66 2,404.64
12.04 1,609.05
SCHEDULE 12 : CURRENTLIABILITIES ANDPROVISIONS CURRENT LIABILITIES Acceptances Sundry Creditors Advancerecevied from Customers Temporary Overdraft with Scheduled Banks InterestAccruedbutnotDue
59.06 1,905.48 17.42 88.93 36.71 2,107.60 41.38 2,148.98
53.35 1,168.95 9.37 163.04 27.36 1,422.07 12.34 1,434.41
PROVISIONS Fringe Benefit Tax (Net ofAdvance Tax) Gratuity (Refer Notes 1(C)(viii)(b) and12onSchedule 19) Leave Entitlement (Refer Note 1(C)(viii)(c) on Schedule 19) Provision for Closure Costs (Refer Notes 17 and 19(a) on Schedule 19)
1.45 34.57 1.99 38.01 2.36 40.37 2,189.35
1.50 2.81 24.26 103.37 131.94 0.52 132.46 1,566.87
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SCHEDULES FORMINGPARTOFCONSOLIDATEDPROFITANDLOSSACCOUNTFORTHEYEARENDEDMARCH31,2008 SCHEDULE 13 : SALES Sales Export Benefits AsAt March 31, 2008 15,267.96 660.91 15,928.87 566.32 16,495.19 SCHEDULE 14 : OTHER INCOME Rent (Tax Deducted at Source Rs. 2.67 million, Previous Year : Rs. 2.80 million) Dividend Insurance Claim Profit onRedemption/ Sale of Units in Mutual Funds Profit on Sale of Bonds Profit on Sale of FixedAssets Liabilities Written Back as no Longer Required ProvisionforDoubtfulAdvances Written Back Provision for Doubtful Debts Written Back Profit on Cancellation of Forward Contracts Job Charges Received Excise and Sales Tax Benefits RoyaltyIncome Miscellaneous Share in Joint Venture 11.18 25.83 17.05 1.24 4.97 79.25 0.53 4.89 0.96 114.92 22.23 36.55 9.76 41.98 371.34 6.27 377.61 SCHEDULE 15 : MATERIALS AND MANUFACTURING EXPENSES Materials Consumed (Refer Note 20 on Schedule 19) Opening Stock of Raw Material, Work-in-Process, Finished Goods and Traded Goods Add:Adjustment onacquisition of Subsidiaries Add: Purchases of Raw Material and Traded Goods Less: Closing Stock of Raw Material, Work-in-Process, Finished Goods and Traded Goods Manufacturing Expenses Stores and Spares Consumed Dyes and Chemicals Consumed Contract Labour Charges Job Work Expenses Power and Fuel Packing Charges Repairs and Maintenance: - Plant and Machinery - Factory Building Share in Joint Venture
Rs. million AsAt March31, 2007 11,947.66 360.53 12,308.19 124.42 12,432.61
17.60 22.94 40.13 1.51 1.68 2.01 29.77 205.05 7.55 65.85 394.09 0.55 394.64
2,939.46 118.28 3,057.74 7,233.59 10,291.33 3,421.96 6,869.37 241.73 1,065.57 237.34 127.29 1,043.71 631.86 35.67 4.08 3,387.25 526.52 10,783.14
1,777.93 503.90 2,281.83 5,567.32 7,849.15 2,939.46 4,909.69 224.36 795.74 142.39 146.57 915.44 470.32 24.82 5.33 2,724.97 99.95 7,734.61
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SCHEDULESFORMINGPARTOFCONSOLIDATEDPROFITANDLOSSACCOUNTFORTHEYEARENDEDMARCH31,2008 SCHEDULE 16:EMPLOYEES' REMUNERATIONANDBENEFITS Salaries, Wages,Allowances and Other Benefits Contribution to Provident and Other Funds (Refer Note12onSchedule19) Managerial Remuneration Staff andLabourWelfare YearEnded March 31, 2008 1,538.75 74.86 17.43 52.22 1,683.26 15.32 1,698.58 SCHEDULE 17 : SELLING, ADMINISTRATIONANDOTHEREXPENSES Claims, Discounts and Rebates Brokerage and Commission Freight, Forwarding and Coolie Charges Repairs and Maintenance - Others Directors' Sitting Fees Rent Rates and Taxes Printing and Stationery Travelling and Conveyance Legal and Professional Charges Insurance Communication PostageandCourier Loss onSale/ Discarding of Fixed Assets (Net) Provision for Doubtful Debts Provision for DoubtfulAdvances Loss onCancellation/ Settlement of Forward Contracts (Net) Provision for Diminution in Value of Investments Debts/Advances Written off Design Development and Testing Expenses Excise Benefits Receivable Written Off Royalty AdvertisingandSalesPromotion Donations Auditors' Remuneration - As Auditors - In other capacity - As Tax Auditors - CertificationandOtherMatters - Out of Pocket Expenses Miscellaneous 401.05 255.22 568.61 29.18 0.25 166.87 20.29 13.11 136.48 83.18 83.11 26.56 28.33 20.28 5.28 15.62 20.59 43.23 116.02 187.54 6.90 11.25 4.24 0.22 0.09 78.01 2,321.51 7.30 2,328.81
Rs. million Year Ended March31, 2007 1,200.02 76.88 25.48 45.39 1,347.77 7.92 1,355.69
183.19 217.80 338.98 16.30 0.15 105.96 31.31 9.16 116.82 72.63 73.60 20.69 23.33 28.97 71.86 5.74 0.37 19.24 94.52 59.04 7.73 6.54 2.39 0.17 0.39 63.00 1,569.88 10.22 1,580.10
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SCHEDULES FORMINGPARTOFCONSOLIDATEDPROFITANDLOSSACCOUNTFORTHEYEARENDEDMARCH31,2008 Rs. million Year Ended YearEnded SCHEDULE 18:FINANCEEXPENSES (NET) March31, March 31, 2007 2008 Interest on Fixed Loans (net of interest subsidy of Rs. 412.33 million, Previous Year : Rs. 269.19 million) Interest on Debentures Interest onWorkingCapital Loans (net of interest subvention of Rs. 38.64 million, Previous Year : Rs. Nil) InteresttoOthers DiscountingandBankCharges Lease Rentals Less: Interest on Fixed Deposits - Gross (Tax DeductedatSource Rs. 4.59 million, Previous Year : Rs. 4.09 million) Interest onBonds(Tax Deducted at Source Rs. 0.44 million, Previous Year : Rs. Nil) Interest on Others -Gross (Tax DeductedatSource Rs. 0.02 million, Previous Year : Rs. 0.06 million) Cash Discount received 451.91 251.64
11.26 282.91 3.88 73.06 1.21 824.23 31.74 2.69 0.75 21.54 767.51 14.43 781.94
7.63 231.03 7.30 45.92 26.97 570.49 20.08 1.97 18.50 529.94 1.76 531.70
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SCHEDULES ANNEXED TO AND FORMING PART OF THE CONSOLIDATED BALANCE SHEET AS AT MARCH 31, 2008 AND CONSOLIDATEDPROFIT AND LOSS ACCOUNT FORTHEYEAR ENDED MARCH 31, 2008 SCHEDULE19:NOTESTOACCOUNTS 1. SignificantAccountingPolicies A. BasisofAccounting Theconsolidatedfinancial statements are prepared under historical cost conventionin accordance with generally accepted accounting principles applicable in India and the Accounting Standards issuedbytheInstituteofCharteredAccountantsofIndia. B. PrinciplesofConsolidation (I) The consolidated financial statements relate to Welspun India Limited (the Company), its Subsidiary Companies, Joint Venture Companies and Associate Company. The consolidated financialstatementshavebeenpreparedonthefollowingbasis: (a) The financial statements of the Company and its Subsidiary Companies have been combinedonaline-by-linebasisbyaddingtogetherthebookvaluesoflikeitemsofassets, liabilities, income and expenses, after fully eliminating intra-group balances, intra-group transactionsandresultingunrealisedprofitsorlossesonintra-grouptransactions. (b) The difference between the cost of investment in the subsidiaries over the Company's portion of equity ofthesubsidiary is recognized in the financial statements as Goodwill or CapitalReserve. (c) MinorityInterestinthenetassetsofconsolidatedsubsidiariesconsistof: the amount of equity attributable to minorities at the date on which investment in a subsidiaryismadeand the minorities' share of movements in equity since the date the parent subsidiary relationshipcomesintoexistence
(d) Intheconsolidatedfinancialstatements,theCompanyhasreporteditsinterestintheJoint Venture Companies, using proportionate consolidation method whereby the Company's shareofeachoftheassets,liabilities,incomeandexpensesofthejointlycontrolledentities is reported as separate line items, after eliminating proportionate unrealised profits or lossesattributabletotheinterestoftheCompany. (e) Investment in Associateisaccountedforusing theequity method whereby theinvestment is initially recorded at cost, identifying any goodwill/ capital reserve arising at the time of acquisition. The carrying amount of the investment is adjusted thereafter for the post acquisition change in the investor's share of net assets of the investee. The consolidated statement of profit and loss reflects the investor's share of the results of operations ofthe investee. (f) The consolidated financial statements have been prepared using uniform accounting policies for liketransactionsandothereventsin similar circumstances andarepreparedto theextentpossible,inthesamemannerastheCompany'sseparatefinancialstatements.
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SCHEDULES ANNEXED TO AND FORMING PART OF THE CONSOLIDATED BALANCE SHEET AS AT MARCH 31, 2008 AND CONSOLIDATEDPROFIT AND LOSS ACCOUNT FORTHEYEAR ENDED MARCH 31, 2008 (ii) The Subsidiary Companies, Joint VentureCompaniesandAssociateCompanyconsideredin theconsolidatedfinancialstatementsare:
Relationship Country of Incorporation U.S.A. Cyprus Switzerland Mexico U.K. U.K. U.K. U.K. U.K. U.K. U.S.A. Germany U.K. % Voting power held as at March 31, 2008 100 100 100 100 100 85 85 85 85 85 85 85 85
Name oftheCompany
Welspun USA Inc. (WUSA) Welspun Holdings Private Limited (WHPL) Welspun AG (WAG) Welspun Mexico S.A. de C.V (WMEX) (Held through WAG) Welspun Home Textiles UK Limited (WHTUKL) (Held through WHPL) CHT Holdings Limited (CHTHL) (Held through WHTUKL) Christy Home Textiles Limited (CHTL) (Held through CHTHL) Christy UK Limited(CUKL) (Held through CHTL) Christy 2004Limited (Held through CUKL) Flyspark Limited (Held through CHTL) Christy USA, LLC (Held through CHTL) Christy Europe GmbH (Held through CHTL) ERKingsley ( Textiles) Limited (Held through CHTL) SOREMA- Tapetes E Cortinas De Banho, S.A.(SOREMA) (Held through WHPL) Besa Developers andInfrastructure Private Limited (BESA) Welspun Zucchi Textiles Limited MEP Cotton Private Limited Welspun Retail Limited
Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary
Subsidiary Subsidiary Joint Venture Joint Venture Associate
Portugal India India India India
76 100 50 50 49
C.
SignificantAccountingPolicies (i) FixedAssets Fixed Assets are stated at cost (net of cenvat credit, wherever applicable) less depreciation. The cost includes cost of acquisition, construction, erection, installation etc., preoperative expenses (including trialrun)andborrowingcostsincurredduringpre-operationalperiod. Costofsoftwareincludeslicensefeesandimplementation/integrationexpenses. Expenditure IncurredDuringConstructionPeriod Expenditure incurred during construction period represents expenses incurred for setting-up of manufacturing facility including preoperative expenses for trial runs and borrowing cost incurred priortothedateofcommencement of commercial production. These expenses are net of sales during trial run and other income accrued prior to the commencement of commercialproduction.
(ii)
(iii) BorrowingCosts Borrowing costs directly attributable to the acquisition / construction of fixed assets are
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SCHEDULES ANNEXED TO AND FORMING PART OF THE CONSOLIDATED BALANCE SHEET AS AT MARCH 31, 2008 AND CONSOLIDATEDPROFIT AND LOSS ACCOUNT FORTHEYEAR ENDED MARCH 31, 2008 apportioned to the cost of the fixed assets up to the date on which the asset is put to use/commissioned. (iv) DepreciationandAmortization (a) Depreciation on Fixed Assets is providedon thestraight-linemethod so astowriteoffthe cost of fixed assets over estimated usefullives of the assets. Depreciation on additions/ deletions to fixed assets is calculated pro-rata from/up to the date of such additions/ deletions exceptincaseofasubsidiarycompany,wherethedepreciation iscalculated at 50% of the rate arrived based on the useful lives of such assets in the year of additions/ deletions. (b) Computer software is amortized on the straight-line method over a period of three to five years. (c) LeaseholdLandisamortizedovertheperiodofleaseincaseofajointlycontrolledentity. (d) Amortizationofleasehold improvementsiscomputed onthestraightline methodoverthe term of the related lease including extensions which are reasonably expected to occur, whichisnotinexcessoftheestimatedusefullivesofsuchimprovements. (e) Goodwill arising on consolidation of a certain subsidiary sub-group is amortized on a straight line basis over itsestimated useful economic lifeof20years.Further, goodwill on consolidationistestedforimpairmentonanannualbasis. (f) DevelopmentExpenditureisamortizedonastraightlinebasisoveraperiodof3years.
(v)
Investments (a) Longterminvestmentsarestatedatcostlessprovision,ifany,forpermanentdiminutionin value. Currentinvestmentsarecarriedatthelowerofcostandfairvalue. (b) Investment in Associate is accounted for using the equity method (Refer note 1(B)(i) above).
(vi) Inventories (a) Inventoriesarevaluedatlowerofcostandnetrealisablevalue. (B) Cost of raw materials and stores and spares is determined on weighted average basis except i n case of jointly controlled entities, where the same is determined on first-in-firstout basis. Cost of traded goods is determined on first-in-first-out basis. Cost ofwork-inprocess andfinishedgoodscomprisesofrawmaterial,directlabour,otherdirectcostsand relatedoverheadsbutexcludeinterestexpense. Netrealisablevalueistheestimateofthe sellingprice intheordinarycourse of thebusiness,lesstheestimated costs of completion andestimatedsellingexpenses. (vii) AccountingforTaxesonIncome Incometaxexpensecomprisescurrenttaxanddeferredtaxchargeorcredit. (a) CurrentTaxation Currenttaxisdeterminedas theamount oftaxpayableinrespectoftaxableincomeforthe year. (b) DeferredTaxation Deferredtaxresultingfromtimingdifferencesbetweenbookandtaxprofitsisaccounted for under the liability method, at the current/ substantially enacted rate of tax to the extentthatthetimingdifferencesareexpectedtocrystallise. ?Deferred tax assets arising in situations where there are broughtforward losses and unabsorbed depreciation, are recognised only when there is a virtual certainty
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SCHEDULES ANNEXED TO AND FORMING PART OF THE CONSOLIDATED BALANCE SHEET AS AT MARCH 31, 2008 AND CONSOLIDATEDPROFIT AND LOSS ACCOUNT FORTHEYEAR ENDED MARCH 31, 2008 supportedbyconvincingevidencethatsuchassetswillberealised. (viii) EmployeeBenefits (a) Defined Contribution Plans Contributions made on a defined contribution basistowards post employment benefits to Employee's Provident Fund, Employee's State Insurance Fund, Employee's Pension Scheme andvarious other social security funds generally administered by the respective Government authorities in respect of which there is no further obligation beyond making thecontributionareexpensedintheyeartowhichitpertains. (b) Defined BenefitPlans The liability for the defined benefit plan of Gratuity of the Company, jointly controlled entities and associate is determined on the basis of an actuarial valuation by an independentactuaryattheyearend,whichiscalculatedusingprojectedunitcreditmethod asperAccountingStandard15(revised2005) EmployeeBenefits('AS15'). (c) EmployeeLeaveEntitlement The employees of the Company, jointly controlled entities and associate are entitled to leave as per the applicable leave policies of their employers. The liability in respect of unutilised leave balances is provided based on an actuarial valuation carried out by an independent actuary as attheyearendandchargedtotheProfitandLossAccountasper AccountingStandard15(revised2005) EmployeeBenefits('AS15'). (ix) ForeignCurrencyTransactions (a) In respect of the Company, it's integral foreign operations, jointly controlled entities and associate, foreigncurrency transactions are recordedattheexchangerates prevailing on thedateofsuchtransactions. Monetary assets andliabilitiesasattheBalanceSheetdate aretranslatedatthe rates of exchange prevailing atthedateoftheBalanceSheet. Gains and losses arising on account of differences in foreign exchange rates on settlement/ translationofmonetaryassetsandliabilitiesarerecognisedintheProfitandLossAccount. Non-monetaryforeigncurrencyitemsarecarriedatcost. (b) In respect of forward contracts, other than forward contracts in respect of firm commitments and highly probable forecast transactions, the premium or discount arising at the inceptionof forwardexchangecontract,isamortisedasexpenseorincomeoverthe life of the contract. Exchange differences onsuchcontracts are recognised in the Profit andLossAccountinthereportingperiodinwhichtheexchangerateschange. Any profitor loss arisingoncancellation orrenewal of suchaforward exchangecontract is recognised asincomeorasexpensefortheperiod. (c) Anyprofitorlossarisingonsettlementorcancellationofotherderivativecontracts(forward contracts in respectoffirmcommitmentsandhighlyprobableforecasttransactions,swaps and currency options) is recognised as income or expense for the period. The Company marks-to-marketallsuchoutstandingderivativecontractsattheyear-endandtheresulting mark-to-marketlosses,ifany,arerecognisedintheProfitandLossAccount. (d) In respect of non-integral operations, assets and liabilities are translated using the exchangeratesin effect atthebalancesheetdate,forrevenue,costsandexpensesusing the average exchange rates prevailing during the reporting periods and for share capital, using the exchange rate at the date of transaction. The resultant translation exchange gain/ loss has been disclosed as Foreign Currency Translation Reserve under Reserves andSurplus. (x) RevenueRecognition (a) Domesticsalesarerecognisedondispatchtocustomers. Exportsalesarerecognisedon thedateofcargoreceipts,billofladingorotherrelevantdocuments,inaccordancewiththe terms and conditions for sales. Realised exchange differences on export debtors are includedinsales. (b) Export benefits arising from Duty Entitlement Pass Book (DEPB) and Duty Drawback schemearerecognisedonshipment.
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SCHEDULES ANNEXED TO AND FORMING PART OF THE CONSOLIDATED BALANCE SHEET AS AT MARCH 31, 2008 AND CONSOLIDATEDPROFIT AND LOSS ACCOUNT FORTHEYEAR ENDED MARCH 31, 2008 (c) Dividendsareaccountedforwhentherighttoreceivedividendisestablished. (xi) GovernmentGrants Government grants are accounted forwhenitisreasonably certain that ultimatecollectionwill be made. Capital grants relating to specific assets are reduced from the gross value of the Fixed Assets. Revenue grants, in the nature of interest subsidy under the Technology Upgradation FundScheme(TUFS)areadjustedagainst'InterestonFixedLoans'. (xii) ImpairmentofAssets Ateachbalancesheetdateanassessmentismadeastowhetherthereisanyindicationthatan asset may be impaired. If any such indication exists, the recoverable amount of the asset is estimated. If such recoverable amount of the asset or recoverable amount of the cash generatingunittowhichtheassetbelongsislessthanitscarryingamount,thecarryingamount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the Profit and LossAccount. If attheBalance Sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessedandtheassetisreflectedattherecoverableamount. (xiii) Provisionsand ContingentLiabilities A provision is recognised when there is a present obligation as a result of a past event that probablyrequiresanoutflowofresourcesandareliableestimatecanbemadeoftheamountof theobligation. Adisclosureforacontingentliabilityismadewhenthereisapossibleobligation or a present obligationthat may, but probably will not, require anoutflow of resources. Where thereisapossibleobligationorapresentobligationbutthelikelihoodofoutflowofresourcesis remote, no provision or disclosure as specified in Accounting Standard 29 - Provisions, ContingentLiabilitiesandContingentAssets,issuedbytheInstituteofCharteredAccountants ofIndiaismade. (xiv) EmployeesStockOptionSchemes Stock optionsgrantedtoemployeesunderEmployeeStockOptionSchemesareaccountedas per the accounting treatment prescribed in the Guidance Note on Accounting for Employee Share-basedPaymentsissuedbytheInstituteofCharteredAccountantsofIndia. (xv) (i) AccountingEstimates The preparation of financial statements requires estimates and assumptions to be made that affectthereportedamountsofassetsand liabilities onthedateoffinancialstatementsandthe reported amounts of revenue and expenses during the reporting period. Difference between theactualresultsandtheestimatesarerecognisedintheperiodinwhichtheresultsareknown/ materialised.
2. Contingent Liabilities not provided for : Description Asat March31, 2008 18.50 Rs. million Asat March31, 2007 17.56
Excise,CustomsandServiceTax Alleged excess clearance of cotton yarn in Domestic Tariff Area over and above the limit specified in para 9.9 (b) of the Exim Policy 19972002. The Company has deposited Rs.0.70millionunder protest and filed an appeal with the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Ahmedabad against the order passed by Commissioner(Appeals)ofCentralExciseandCustoms. Allegedmanufactureand clearance oftexturisedyarn withoutpayment of excise duty and without entering into statutory records. Further, there was anallegedshortageof Polyester Texturised yarn in physical stockascomparedtothestockasperstatutoryrecords.
12.76
12.45
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SCHEDULES ANNEXED TO AND FORMING PART OF THE CONSOLIDATED BALANCE SHEET AS AT MARCH 31, 2008 AND CONSOLIDATEDPROFIT AND LOSS ACCOUNT FORTHEYEAR ENDED MARCH 31, 2008 Rs. million
Description Asat March31, 2008 Asat March31, 2007
Alleged excess claim of excise rebateunderCentralExciseRulesover andaboveavailingbenefitundernotificationNo.39/01-CE31-07-2001. Pursuant to retrospective amendment made in the Finance Act 2008, the Company has become eligible to claim such excise rebate till 07.12.2006 Alleged improper cenvat credit availed under Notification No. 214/86CE dated 25-03-1986, on furnace oil used for manufacturing of goods on jobworkduringtheperiodApril2002toMarch2008. The Company has filed its reply against the show cause notices issued by Joint Commissioner and Commissioner of Customs and Central Excise, Daman. Alleged non-payment of cess on cotton consumed during the period April 2002toFebruary2007under'TheProduceCessAct,1966'. The Company has filedappealswithCommissioner of CustomandCentral Excise, Daman against the orders passed by the Assistant CommissionerofCustomandCentralExcise,Vapi. AllegedimproperabatementofservicetaxonpaymentsmadetoGoods Transport Agency under Notification No. 32/04-ST dated 3-12-2004. TheCompanyhasfileditsreplyagainsttheshowcausenoticeissuedby theCommissionerofCentralExciseandCustoms, Daman. Allegedservicetaxcreditbasedonimproperdocuments.TheCompany hasfileditsreplyagainsttheshowcausenoticeissuedbytheAssistant CommissionerofCentralExcise&Customs,Vapi. Allegedprocurement of furnace oilwithout payment of duty by wrongly availing the exemptions contained in the Notification No. 1/95-CE 0401-1995. The CESTAT, Ahmedabad has passed the orderinfavourof the Company. However, excise department has preferred an appeal withtheSupremeCourtagainstCESTATorder. Allegedprocurement of furnace oilwithout payment of duty by wrongly availingtheexemptionscontainedintheNotificationNo.53/97-CUS0306-1997. The CESTAT, Ahmedabad has passed the orderinfavourof the Company. The Department has filed civil appeal against the CESTATorderinSupremeCourt. StampDuty: 4.46 DisputedstampdutyliabilityonDe-mergerScheme. TheCompanyhas paidRs.1.74millionunderprotest. SalesTax: The Deputy Commissioner of Sales Tax has issued the assessment orderforthefinancialyear2003-04andraisedthedemandonpurchase of Furnaceoilduringtheyear 2003-04in respectofpurchasesmadeby the Company at a concessional rate of tax. The Company has filed an appealwiththeJointCommissionerofSalesTax,Vadodra. FEMA: TheAppellate TribunalforForeign Exchange,New Delhihasissuedan order for contravention of the provision of section 18(2) of the Foreign 0.90 0.90 0.97 0.87 4.46 72.60 2.99 63.37
1.56
1.10
29.27
0.15
14.81
11.47
117
SCHEDULES ANNEXED TO AND FORMING PART OF THE CONSOLIDATED BALANCE SHEET AS AT MARCH 31, 2008 AND CONSOLIDATEDPROFIT AND LOSS ACCOUNT FORTHEYEAR ENDED MARCH 31, 2008 Rs. million
Description Asat March31, 2008 Asat March31, 2007
Exchange Regulation Act, 1973 read with Section 49(3) and (4) of ForeignExchange ManagementAct,1999 inrespectofnon-realisation of export proceeds. The Company has filed an appeal with the Delhi HighCourt. Others: Uncalled liability of 800 CHF per share, in respect of partly paid 600 equitysharesofWelspunAG,asubsidiarycompany Accumulateddividendoncumulativeredeemablepreferenceshares ClaimsagainsttheCompanynotacknowledgedasdebts Bills discounted in respect of export debtors[including the Company's shareofRs.74.01million(March31,2007:Rs.13.42million)injointly controlledentities]. 19.37 17.41 2.17 1,856.12 99.07 1.57 787.93
Asat March31, 2008
Rs. million Asat March31, 2007
3.
(a)
Guarantees given by banks on behalf of the Company and it's subsidiaries[includingtheCompany's share of Rs. 0.24 million (March 31, 2007 : Rs. 0.24 million)injointly controlled entityand Rs.0.33million(March31,2007:Rs.0.05million)inassociate]. In accordance with the EPCGScheme, imports of capital goods are allowed to be made duty free and under Advance License Scheme,importsofrawmaterialareallowedtobemadedutyfree, subject to the condition that the Company will fulfill, in future, a specified amount of export obligation within a specified time. Based o n t h e currentoperatingplan,theCompanywouldfulfillits exportobligationwithinthespecifiedtimeperiod. Amountofduty savedonimportsofabovegoodsagainstwhichexportobligation is yet to be fulfilled [including the Company's share of Rs. 28.84 million (March 31, 2007 : Rs. 23.29 million) in jointly controlled entities]. Estimatedamount ofcontracts(netofadvances)remainingtobe executed on capital account and not provided for [including the Company'sshareofRs.33.78million(March31,2007:Rs.48.79 million) in jointly controlledentityand Rs. 0.94 million (March 31, 2007:Rs.1.45million)inassociate].
285.81
118.84
(b)
302.97
313.89
(c)
876.61
1,372.47
4.
On December 20, 2007,theCompanyacquired 76% of the equity shareholding in SOREMA Tapetes E Cortinas DE Banho, S.A., Portugal (SOREMA) through its wholly owned subsidiary (WOS) for consideration of Euro 6,329,431.21 as specified in the Share Purchase Agreement. Further, the Company, through its WOS, has entered into a Put and Call Option Agreement to buy remaining 24% equity shareholding inSOREMA, 8% each; on or after January 1, 2011, January 1, 2012 and January 1, 2013 respectively, at a consideration to be determined based on the respective average EBITDA of SOREMAforlasttwofinancialyearspriortothesedates.
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SCHEDULES ANNEXED TO AND FORMING PART OF THE CONSOLIDATED BALANCE SHEET AS AT MARCH 31, 2008 AND CONSOLIDATEDPROFIT AND LOSS ACCOUNT FORTHEYEAR ENDED MARCH 31, 2008 The Consolidated FinancialStatements include net assets aggregating Rs. 142.31 million and net profit aggregatingRs.10.88millionpertainingtoSOREMA. 5. OnJuly3,2006,theCompanyhadacquired85%oftheequityshareholdinginCHTHoldingsLimited holding companyofChristyGroup(Christy)throughconduitsofwhollyownedsubsidiaries(WOS)andthrough these WOS had also entered into a put and call option agreement to buy the remaining 15% equity shareholding in Christy. On April 2, 2008, the Company and its WOS entered into share purchase agreementswiththeholdersofthebalance15%equitysharesinChristytoacquirethesaidshareholdingby theWOSwitheffectfromApril2,2008.Accordingly, witheffectfromApril2,2008,Christy has becomea wholly owned subsidiary of the Company. The payment of the consideration for the 15% acquisition aggregatingGBP2.356millionistobemadeonorbeforeMay31,2009andtheobligationoftheWOSunder the share purchase agreement has been guaranteed by the Company. Pursuant to the share purchase agreements,theputandcalloptionwascancelled. The Consolidated FinancialStatements include net assets aggregating Rs. 1,035.24 million (March 31, 2007:Rs.1,049.35million)andnetprofitfortheyearendedMarch31,2008andnetlossfortheyearended March31,2007aggregatingRs.13.01millionandRs.27.76millionrespectivelypertainingtoCHTHoldings Limited. 6. During the year, the Company acquired 100% of the equity shareholding in Besa Developers and InfrastructurePrivateLimitedtoundertakeeffluentdischargepipelineprojectatVapilocation. The Consolidated Financial Statements include net assets aggregating Rs. 0.10 million and net profit aggregatingRs.NilpertainingtoBesa. 7. OnMay17,2006,theCompany has issued EmployeeStockOptions under theEmployee Stock Options Scheme (the Scheme) to employees of the Company and its subsidiaries with a right to subscribe to equity shares at a price of Rs. 110.80 per equity share (closing market price as on May 16, 2006). The salientfeaturesoftheSchemeareasunder: i)Vesting:Optionstovestoveraperiodoffouryearsfromthedateoftheirgrantsasunder: -20%oftheOptionsgrantedtovestateachofthe1stand2ndAnniversariesofthedateofgrant. -30%oftheOptionsgrantedtovestateachofthe3rdand4thAnniversariesofthedateofgrant. ii) Exercise:Optionsvestedwithanemployeewillbeexercisablewithin3yearsfromthedateoftheir vestingbysubscribingtothenumberofequitysharesintheratioofoneequityshareforeveryoption, atthelatestavailableclosingmarketpriceoftheequityshares,priortothedateofgrant. Intheevent of cessation of employment due to death, resignation or otherwise the Options may lapse or be exercisableinthemannerspecificallyprovidedforintheScheme.
Summary of Stock Options Options outstanding on 1 April, 2007 Options granted during the year Options forfeited/lapsed during the year Options exercised during the year Options outstanding on 31st March, 2008 Options vested but not exercised on 31st March, 2008
st
No. of Stock Options 1,746, 000 252,000 1,494,000 29 8,800
Weighted Average Exercise Price (Rs.) 110.80 110.80 110.80 110.80
Informationinrespectofoptions outstandingasat31stMarch, 2008 Weighted Average Weighted Average No. of Stock Options remaining life in years Exercise Price (Rs.) 298,800 2.13 110.80 298,800 448,200 448,200 3.13 4.13 5.13 110.80 110.80 110.80
SCHEDULES ANNEXED TO AND FORMING PART OF THE CONSOLIDATED BALANCE SHEET AS AT MARCH 31, 2008 AND CONSOLIDATEDPROFIT AND LOSS ACCOUNT FORTHEYEAR ENDED MARCH 31, 2008 The compensation costs of stock options granted to employees are accounted by the Company using the intrinsic value method. Since, on the date of grant of option, quoted market price of the underlying equity shares of the Company was equal to the exercise price of an option, hence, no expenseorliabilityarisingfromtheSchemehasbeenrecognised. The fairvalueoftheoptionsasperthe'BlackScholes'modelcomestoRs.63.39.HadtheCompany adopted fair value method in respect of options granted, the employee compensation cost would have been higher by Rs. 20.22 million, ProfitAfterTax and Before Share of Loss of Associate and Minority Interest lower byRs.20.22millionandthebasicanddilutedlosspersharewouldhavebeen higherbyRe.0.28.
8.
(a)
500,000 0% Redeemable Cumulative Preference Shares of Rs. 100 each fully paid up are redeemable at par in the year 2009-2010 or after repayment of all outstanding term liabilities and preference shares held by banks and financial institutions as on April 1, 2000 and interest and dividend thereonwhicheverislater. During theyear,theCompanyhasredeemed12.5%RedeemableCumulativePreferenceSharesof Rs. 100eachunder onetimesettlement. Consequently,a Capital Redemption Reserve ofRs.30.00 millionequivalenttonominalvalueofPreferenceshareshasbeencreated.Premiumonredemption paidbytheCompanyhasbeenadjustedagainsttheSecuritiesPremiumAccount. Termloansfrombanksandfinancialinstitutionsincludinginterestthereonaresecuredbywayoffirst charge on entire movable and immovable properties of the Company, both present and future, rankingparipassu,subjecttopriorchargeonspecificassetsasper9(b)belowandoncurrentassets as per 9(c) below against borrowing from banks for working capital finance. Certain loans are also guaranteedbypromoter directors. Certaintermloansofasubsidiaryarealsocollaterallysecuredby shares ownedbygroupcompanies.Further,certaintermloansofasubsidiaryaresecuredbywayof chargeonit'splantandequipments.
(b)
9.
(a)
(b) Inadditionto9(a)above,termloansfromBanksaggregatingRs.47.20million(March31,2007:Rs. 113.72 million) andRs.4,509.10 million(March31, 2007: Rs.4,481.16million)andinterestthereon, aresecuredbyexclusivechargeparipassu,interse,onspecificfixedassetsoftheCompany andby lienonfixeddepositsoftheCompany,respectively. (c) Theworkingcapitalloans(whichincludescashcredit,packingcredit,anddemandloansfrombanks) aresecuredbyhypothecation ofrawmaterials,finishedandsemifinished goods,storesand spares and book debts of the Company and second charge on entire fixed assets of the Company. The workingcapitalloansofthesubsidiariesaresecuredby hypothecation of inventory, book debtsand fixedassetsoftherespectivesubsidiaries. During the year, the Company has prematurely redeemed debentures of Rs. 171.60 million under onetime settlement resulting in a gain of Rs. 3.52 million. This gain on premature redemption of debenturehasbeendisclosedasanexceptionalitemintheProfitandLossAccount. Consequently, Debenture Redemption Reserve of Rs. 29.67 million has been transferred to the Profit and Loss Account. In accordance with the Company's policy given in Note 1(C)(ix) above, net exchange gain of Rs. 383.42 million(PreviousYear:netexchangelossofRs.85.41million)whichincludestheCompany's shareofnetexchangegainofRs.5.82million(PreviousYear:netexchange loss of Rs. 1.29million) in jointlycontrolledentities,hasbeenaccountedinProfitandLossAccountandnetexchangelossof Rs.Nil(PreviousYear:netexchangegainofRs.43.15million)hasbeenadjustedtothecostoffixed assets/capitalwork-in-progress . PursuanttoissuanceoftheCompanies(AccountingStandards)Rules, 2006,with effectfrom April1, 2007, the Company has adopted the accounting policy of recognizing the foreign exchange fluctuation, in its Profit and Loss Account, in respect of liabilities in foreign currencies specific to acquisition of fixed assets from outside India. Had the earlier policy of adjusting such foreign exchange fluctuations tothecarryingcostoftherespectivefixedassetsbeingfollowed;profitbefore taxintheProfitandLossAccountwouldhavebeenhigherbyRs.23.95million.
(d)
10. (a)
(b)
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SCHEDULES ANNEXED TO AND FORMING PART OF THE CONSOLIDATED BALANCE SHEET AS AT MARCH 31, 2008 AND CONSOLIDATEDPROFIT AND LOSS ACCOUNT FORTHEYEAR ENDED MARCH 31, 2008 11. BorrowingCostsaggregatingRs.152.35million;PreviousYear:Rs.132.77million(netofinterestsubsidy of Rs. 156.16 million;PreviousYear: Rs. 169.52 million)attributable to the acquisition or construction of qualifying assets are capitalised during the year as part of the cost of such assets which includes the Company'sshareofRs.5.82million(PreviousYear:Rs.Nil)injointlycontrolledentity.
12. The Companyhasclassifiedthevariousbenefitsprovidedtoemployeesasunder:I DefinedContributionPlans a. b. c. d. e. Employers'ContributiontoProvidentFund Employers'ContributiontoEmployee'sStateInsurance Employers'ContributiontoEmployeesPensionScheme,1995 Employers'Contributionto401(k)RetirementPlan OtherSocialSecurityFunds Rs. million 2006-07
Duringtheyear,theCompanyanditssubsidiarieshaverecognised thefollowingamountsintheProfit andLossAccount:
2007-08
Employers' Contribution to Provident Fund Employers' Contribution to Employee's State Insurance Employers' Contribution to Employee's Pension Schemes Other Social Security Funds
25.56 7.32 29.45 12.54 0.95
23.80* 4.79* 32.58* 1.48* 0.69
The Company's share of expenses recognised in the Profit and Loss Account in jointly controlled entities.
*Included in Contribution to Provident and Other Funds (Refer Schedule 16) II Defined Benefit Plan Contribution to Gratuity Fund a. MajorAssumptions Discount Rate Expected Rate of Return on PlanAssets Salary Escalation Rate 2007-08 8.50 8.00 6.00 (% p.a.) 2006-07 8.50 8.00 6.00@
@ The estimates for future salary increases considered takes into account the inflation, seniority, promotion and other relevant factors.
b.
Change in the Present Value of Obligation Opening Present Value of Obligation Current Service Cost Interest Cost Past Service Cost Curtailment cost (Credit) Settlement cost (Credit) Benefit paid Actuarial Losses on Obligations Closing Present Value of Obligation
2007-08 36.83 11.19 3.13 Nil Nil (6.10) 2.18 47.23
Rs. million 2006-07 23.85 9.31 2.04 Nil Nil (2.90) 4.53 36.83
121
SCHEDULES ANNEXED TO AND FORMING PART OF THE CONSOLIDATED BALANCE SHEET AS AT MARCH 31, 2008 AND CONSOLIDATEDPROFIT AND LOSS ACCOUNT FORTHEYEAR ENDED MARCH 31, 2008 c. Change in Fair Value of PlanAssets Opening Fair Value of PlanAssets Expected Return on PlanAssets Actuarial gain / (loss) on PlanAssets Contributions Benefits paid Closing Fair Value of PlanAssets 2007-08 34.02 2.72 5.10 17.50 (6.10) 53.24 Rs. million 2006-07 21.60 1.73 (0.08) 13.67 (2.90) 34.02
Rs. million d. Reconciliation of Present Value of Defined Benefit Obligation and the Fair Value of Assets Present Value of Funded Obligation Fair Value of Plan Assets Funded Status Present Value of Unfunded Obligation Assets recognised in the balance Sheet and included under Loans,Advances and Other Current Assets (Refer Schedule 11) Unfunded Net Liability Recognised in the Balance Sheet disclosed under Current Liabilities and Provisions (Refer Schedule 12) Amount recognised in the Balance Sheet Present Value of Obligation Fair Value of Plan Assets (Assets)/ Liability recognised in the Balance Sheet and included under Loans, Advances and Other Current Assets (Refer Schedule 11) and under Current Liabilities and Provisions (Refer Schedule 12) respectively.
AsAt AsAt March31,2008 March31,2007
47.23 53.24 6.01 6.01
34.02 34.02 (2.81) 2.81
2.81
e.
47.23 53.24 (6.01)
36.83 34.02 2.81
f.
Expenses Recognised in the Profit and Loss Account Current Service Cost Interest Cost Expected Return on PlanAssets Net Actuarial (gain) / Losses Recognised in the period Total expenses Recognised in the Profit and LossAccount Actual Return on PlanAssets ** Included in Salary, Wages, Allowances and Other Benefits (Refer Schedule 16)
2007-08 11.19 3.13 (2.72) (2.92) 8.68 7.82
Rs. million 2006-07 9.31 2.04 (1.73) 4.61 14.23** 1.65
The Company's share of expenses recognised in the Profit and Loss Account in jointly controlled entities. The Company's share of (Assets)/ Liability recognised in the Balance Sheet in jointly controlled entities.
0.34 0.66
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SCHEDULES ANNEXED TO AND FORMING PART OF THE CONSOLIDATED BALANCE SHEET AS AT MARCH 31, 2008 AND CONSOLIDATEDPROFIT AND LOSS ACCOUNT FORTHEYEAR ENDED MARCH 31, 2008 13. SegmentInformationfortheyearendedMarch31,2008 (i) InformationaboutPrimaryBusinessSegment The companies forming part of consolidated financial statements are exclusively engaged in the business ofHomeTextiles. This, in the context ofAccounting Standard 17 on Segment Reporting, issuedbytheInstituteofCharteredAccountantsofIndia,isconsideredtoconstituteasingleprimary segment. Thus, the segment revenue, segment results, total carrying amount of segment assets, total carrying amount of segment liabilities, total cost incurred to acquire segment assets, total amount of charge for depreciation during the year are all asreflected inthefinancialstatements for theyearendedMarch31,2008andasonthatdate. Rs. million
India Outside India InformationaboutSecondaryGeographicalSegments: March 31, 2008 External Revenue Carrying Amount of SegmentAssets Capital Expenditure (excluding the Incidental Expenditure Pending Capitalisation/Allocation) 1,075.35 22,141.93 3,310.86 March 31, 2007 678.52 19,428.55 3,414.26 March 31, 2008 15,388.58 3,959.88 465.63 March 31, 2007 11,729.98 3,318.69 25.94 March 31, 2008 16,463.93 26,101.81 3,776.49 Total March 31, 2007 12,408.50 22,747.24 3,440.20
(ii)
(iii) Notes: (a) The Segment revenue in the geographical segments considered for disclosure are as follows: Revenue within India includes sales to customers located within India and earnings in India. RevenueoutsideIndiaincludessalestocustomerslocatedoutsideIndia,earningsoutsideIndia andexportbenefitsonsalesmadetocustomerslocatedoutsideIndia. Segment revenue, results, assets and liabilities includetherespective amounts identifiedtoeach of thesegmentsandamountsallocatedonareasonablebasis.
(b)
14. RelatedPartyDisclosures (i) Relationship Control (a) Joint Venture Companies
(b) AssociateCompany (c) Enterprises over which Key Management Personnel exercise significant influence or control
(d) Key Management Personnel
(e) Relatives of Key Management Personnel
Welspun Zucchi Textiles Limited (WZTL) (Extent of holding - 50%) MEP Cotton Private Limited (MCPL) (Extent of holding - 50%) Welspun RetailLimited(WRL)(Extentofholding49%) Welspun Gujarat Stahl Rohren Limited (WGSRL) Welspun Power and Steel Limited (WPSL) Welspun Syntex Limited (WSL) Welspun Trading Limited (WTL) Welspun Wintex Limited (WWL) Welspun Mercantile Limited (WML) Vipuna Trading Limited (VTL) Goodvalue Polyplast Limited (GVPL) Mertz Securities Limited (MSL) Refined Salts Private Limited (RSPL) Welspun Logistics Limited (WLL) Welspun Realty Private Limited (WRPL) Welspun Foundation for Health and Knowledge (WFHK) B.K.Goenka (BKG) R. R. Mandawewala (RRM) M. L. Mittal (MLM) Deepali Goenka (DBG)
SCHEDULESANNEXEDTOANDFORMINGPARTOFTHECONSOLIDATEDBALANCE SHEETASAT MARCH31,2008ANDCONSOLIDATEDPROFITANDLOSSACCOUNT FORTHEYEARENDEDMARCH31,2008 14. (ii) Following arethetransactionswithrelated parties mentioned in(i)above andtheyear-end balances
PARTICULARS
Transactionsduringtheyear
WZTL
MCPL
WRL
WGSRL WPSL
WSL
WTL
WRPL
WLL
VTL
GVPL
MSL
RSPL
WFHK
BKG
RRM
MLM
Rs.Million DBG
Loans,Advancesand Depositsgiven Repaymentof Loans.Advancesanddeposit Given DepositsReceived PurchaseofGoods JobworkExpenses PurchaseofServices/ Expensesincurred SaleofGoods/DEPB Licenses JobChargesReceived SaleofServices/Expenses incurred SaleofFixedAssets PurchaseofFixedAssets/ CapitalGoods Interestincome Claims,Discount andRebate Remunerationand Commission DividendReceived Donation ShareApplicationMoneyPaid Investment madeduringthe year(includingshare applicationmoneypaidduring previousyear) Provisionfordiminutionin valueininvestment ClosingBalance Loans,Advancesand Depositsgiven(Including InterestAccruedonLoan) Debtors(NetofBills DiscountedwithBanks) Creditors Investments ShareApplicationMoney PendingAllotment
20.00 -
220.00 100.00 2.01 (1.64) 412.61 (170.75) 12.28 6.67
(5.50) -
250.00 -
23.40 -
12.00 1.42
9.00 0.52
6.00 3.27
11.50 2.10 (1.60) -
7.42
6.74
3.27
2.51 (2.34) -
1.86 16.18 (0.52) (0.44) 0.21 15.48 (52.36) 0.68 (2.09) 3.89 (3.62) 0.45 2.78 20.00 0.05 (50.00)
12.40 71.73 77.82 12.83 (0.70) (23.89) (0.60) 1.12 (7.53) 13.42 (4.48) 51.20 26.61 9.55 0.72 (1.58) 0.59
(0.91) (0.80) (0.80) -
(5.58) (1.15) 4.82 1.51
(4.66) (21.31) 0.23 (2.51) 0.11 4.37 65.91 -
(6.43) (0.34) (6.14) 20.29 (5.74)
35.78 111.54 (13.55) (89.87) 7.13 -
(11.81) (11.02) (2.65) -
89.45 122.5* (10.05) -
254.40
11.10 0.16 -
(0.22) 0.57 5.60 (5.60) -
250.00 -
23.40 -
15.00
9.20 (9.20) -
11.50 -
4.42 (8.80) -
(12.00) (9.00) (9.00) 0.42 -
(4.81) 10.00 (10.00) 34.56 99.50 (34.56) (10.05) 0.05 (50.00)
(37.19) 11.51 (1.21) 244.63 56.65 (122.13) (56.65) -
4.42 (8.80) -
Notes : Previous Year figures are given in brackets. * LoanofRs.120milliongiventoWRLhasbeenconvertedintoInvestments.
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SCHEDULES ANNEXED TO AND FORMING PART OF THE CONSOLIDATED BALANCE SHEET AS AT MARCH 31, 2008AND CONSOLIDATED PROFIT AND LOSS ACCOUNTFORTHEYEAR ENDED MARCH 31, 2008 15. Leases A. As lessor : Operating Lease Certain buildings and plant and machinery have been given on operating lease, details of whichareasunder: Rs. Million Rs. million Particulars March 31, 2008 March 31, 2007
Buildings Gross Block Accumulated Depreciation Depreciationrecognised i n t h e Profit andLossAccountforthe year Plant and Machinery Gross Block Accumulated Depreciation Depreciationrecognisedinthe Profit andLossAccountforthe year * 42.49 26.90 6.33* 98.55 21.25 10.19 10.25 1.65 0.17 10.25 1.48 0.17
Includes depreciation of Rs. 3.40 million on plant and machinery which was givenonleaseupto July2007
B. Aslessee: (i) FinanceLease FutureobligationtowardsleaserentalsundertheleaseagreementsasonMarch31,2008 is Rs.25.71million(March31,2007Rs.36.74million.) Rs. Million

Description Not later than 1 year MLP Plant and Machinery 13.76 (31.32) PV 12.74 (30.04) Later than 1 year and not later than 5 years MLP 11.95 (5.42) PV 10.25 (5.34) Later than 5 years MLP PV Total MLP PV
25.71 22.99 (36.74) (35.38)
Previous Yearfigures are given in brackets.
MLP : Minimum Lease Payments PV : Present Value (ii) Operating Lease The Company,someofitssubsidiariesandoneofit'sjointlycontrolledentitieshavetaken various residential, office premises, godowns and vehicles under operating lease agreementsthatarerenewableonaperiodicbasisattheoptionofboththelessorandthe lessee.Theinitialtenureofleaseisgenerallyforelevenmonthstosixtymonths. The minimum rental payments under the operating leases under non-cancellable lease termasatMarch31,2008areasunder: Rs. Million Not later than Later than 1 year and Later than 5 years 1 year not later than 5 years 86.98* (104.89) 489.34** (296.83) 229.13 (117.12)
Previous Yearfigures are given in brackets.
* Including the Company's share of Rs. 0.11 million (March 31, 2007 : Rs. Nil) in jointly controlled entity
SCHEDULES ANNEXED TO AND FORMING PART OF THE CONSOLIDATED BALANCE SHEET AS AT MARCH 31, 2008 AND CONSOLIDATEDPROFIT AND LOSS ACCOUNT FORTHEYEAR ENDED MARCH 31, 2008 ** Including the Company's share of Rs. 0.01 million (March 31, 2007 : Rs. Nil) in jointly controlled entity The aggregate rental expenses of all the operating leases for the year are Rs. 167.43 million (Previous Year: Rs. 105.96 million) which includes the Company's share of Rs. 0.56 million (Previous Year: Rs. Nil) in jointly controlled entity. 16. A subsidiary of the Company has four separate trademark licensing agreements, under which it could utilize certain names on towels. The future minimum annual royalties, image fund fees and merchandise coordinator fees obligations as at March 31, 2008 were as follows: Rs. Million
Year ended March 31 2009 2010 2011 Royalty 18.31 18.70 9.68 Image Fund and Merchandise Coordinator Fees 1.72 1.37 Total 20.03 20.07 9.68
17. Provisions for Closure Costs The provision relates to the closure of the production facilities of a subsidiary. Also refer note 19(a) below.
Rs. Million Opening Balance Add: Additional provision made Less:Amounts Utilised Less: Provision Reversed Closing Balance 103. 37 61.19 40.19 1.99
18. Disclosure of Interest in Joint Ventures

Asat March 31, 2008 I ASSETS 1. Fixed Assets 2. Incidental Expenditure Pending Capitalisation/Allocation 3. Investments 4. Current Assets, Loans andAdvances a) Inventories b) Sundry Debtors c) Cash and Bank Balances d) Loans,Advances and Other Current Assets LIABILITIES 1. ShareholdersFunds Reserves and Surplus (excluding Share Premium) 2. SecuredLoans 3. Unsecured Loans 4. Deferred Tax Liability Net 5. Current Liabilities and Provisions a) Liabilities b) Provisions
Rs. Million Asat March 31, 2007
308.83 3.16 0.12 160.36 180.02 31.89 54.66
83.34 1.03 21.72 9.35 4.98 12.04
II
20.81 514.48 14.96 0.88 41.38 2.36
19.98 4.51 0.75 12.34 0.52
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SCHEDULES ANNEXED TO AND FORMING PART OF THE CONSOLIDATED BALANCE SHEET AS AT MARCH 31, 2008 AND CONSOLIDATEDPROFIT AND LOSS ACCOUNT FORTHEYEAR ENDED MARCH 31, 2008
Fortheyearended March 31, 2008
Rs. Million
Fortheyear ended March 31, 2007
III
INCOME 1. Sales (net of excise duty) 2. Other Income
566.12 6.27 572.39 526.52 15.32 7.30 14.43 6.69 570.26 2.13 1.30 0.83 74.01
124.12 0.55 124.67 99.95 7.92 10.22 1.76 3.85 123.70 0.97 1.43 (0.46) 13.42
IV
EXPENDITURE 1. Materials and Manufacturing Expenses 2. Employees Remuneration and Benefit 3. Selling, Administration and Other Expenses 4. Finance Expenses (Net) 5. Depreciation Profit before taxation Provisionfortaxation (including deferred taxation) Profit/ (Loss) after taxation
OTHER MATTERS Contingent Liabilities
19. Exceptional Items Exceptional Items include the following (a) During the previous year, the Management of Christy had announced outsourcing of its manufacturing processes relating to dyeing and 'making-up' to Welspun India Limited. This has resulted in closure of the production facilities of Christy during the current year. As at March 31, 2007, provisions for redundancies, factory run down expenses and other associated costs aggregating Rs. 103.37 million expected to be incurred in order to terminate the manufacturing operations were held and disclosed in Schedule 12under the head 'Provisions'. During the current year, the Company has incurred redundancies, factory run down expenses and other associated costs aggregating Rs. 61.19 million and has retained provision of Rs. 1.99 million as at March 31, 2008 for expenditure to be incurred in the future. The balance provision aggregating Rs. 40.19 million has been written back and disclosed as exceptional items in the Profit and Loss Account. Gain aggregating Rs. 3.52 million on premature redemption of debentures under one time settlement.
(b)
20. Certain Subsidiary Companies' accounting systems do not track purchases/ consumption of raw materials and purchases of traded goods separately. Hence, for the purposes of presentation in Schedule 15, opening stock of raw materials, work in process, finished goods and traded goods are grouped together, purchase of raw materials and traded goods are grouped together and closing stock of raw materials, work in process, finished goods and traded goods are grouped together. Similarly, inventories of finished goods and traded goods are grouped together under Schedule 8.
127
SCHEDULES ANNEXED TO AND FORMING PART OF THE CONSOLIDATED BALANCE SHEET AS AT MARCH 31, 2008 AND CONSOLIDATEDPROFIT AND LOSS ACCOUNT FORTHEYEAR ENDED MARCH 31, 2008 21. (Loss)/ Earnings Per Share
Particulars March 31, 2008 Rs. million March 31, 2007
Profit / (Loss) after Tax (A) Less : Preference Dividend (including Tax on Preference Dividend) (B) Profits / (Losses)available to Equity Shareholders (C) = (A) (B) Number of Equity Shares - Weighted Number of equity shares outstanding during the year (D) Basic and Diluted earnings / (loss) per share (C/D) (Rs.) Nominal value of an equity share (Rs.)
(1.55) (1.55) 73,089,519 (0.02) 10
464.55 4.71 459.84 73,089,519 6.29 10
22. The current year's figures include the effect of consolidating SOREMA Tapetes E Cortinas De Banho, S.A., Besa Developers and Infrastructure Private Limited, Welspun AG and it's subsidiary. These investments were made by the Company during the year ended March 31, 2008. Hence, the current year's figures are not comparable with the previous year's figures. Previous year's figures have been reclassifiedtoconformwiththecurrentyear'spresentation,whereverapplicable.
Signatures to Schedules 1 to 19 forming part of the Accounts For andonbehalfoftheBoardofDirectors
Neeraj Gupta Partner Membership No. F055158 For and on behalf of Price Waterhouse & Co. Chartered Accountants Mumbai, May 30, 2008
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CONSOLIDATEDCASHFLOWSTATEMENTFORTHEYEARENDEDMARCH31,2008 For the Year Ended March 31, 2008 A CASH FLOW FROM OPERATING ACTIVITIES Net Profit Before Tax Adjustments for : Depreciation Exceptional Items (Refer note 19 on Schedule 19) Unrealised Foreign Exchange Differences Loss/ (Profit) on SaleofFixedAssets Profit on Redemption/Sale of Units of Mutual Funds Profit on Sale of Bonds Dividend ProvisionforDoubtful Debts/Advances Written Back Provision for Doubtful debts/Advances Debts/Advances Written off Excise Benefits Receivable Written Off Provision for diminution in value ofInvestments InterestIncome and Cash Discount Received Finance Expenses Operating Profit Before Working Capital Changes Adjustments for changes in working capital : TradeandOtherReceivables Inventories Current Liabilities and Provisions Cash Flow Generated from Operations Income Tax and Fringe Benefit Tax paid Net CashFlow from Operating Activities B CASH FLOW FROMINVESTINGACTIVITIES Purchase of FixedAssets(IncludingCapital Work-in-progress) Sale of Fixed Assets Capital Subsidy (Purchase)/ SaleofInvestments(Net) Dividend Received Interest Received Net CashFlow used in Investing Activities
Rs. million For the Year Ended March 31, 2007
341.04 951.74 (43.71) (27.73) (79.25) (1.24) (4.97) (25.83) (5.85) 25.56 15.62 43.23 (56.72) 838.66 1,629.51 1,970.55
739.21 732.06 129.77 (47.21) 28.97 (1.51) (22.94) (3.69) 0.37 5.74 (40.55) 572.25 1,353.26 2,092.47
(597.70) (495.56) 464.83 (628.43) 1,342.12 (101.31) 1,240.81
(511.90) (725.93) 83.80 (1,154.03) 938.44 (121.22) 817.22
(3,776.35) 160.20 14.79 222.14 25.83 19.69 (3,333.70)
(3,385.69) 39.61 34.28 (1,102.62) 22.94 21.61 (4,369.87)
129
CONSOLIDATEDCASHFLOWSTATEMENTFORTHEYEARENDEDMARCH31,2008 For the Year Ended March 31, 2008 C CASH FLOW FROMFINANCINGACTIVITIES Redemption of Preference Shares Redemption of Debentures Proceeds/ (Repayments) of Borrowings - Long Term Proceeds/ (Repayments) of Other Borrowings Finance Expenses Paid Net CashFlow from Financing Activities (A+B+C) Cash and Cash Equivalents atthebeginning of the year Cash and Cash Equivalentstakenoverfrom erstwhile SOREMA Tapetes E Cortinas De Banho, S.A.,asubsidiary Company CashandCashEquivalents taken over from erstwhile CHT Holdings Limited as Subsidiary Company Cash and Cash Equivalents taken over from erstwhile MEP Cotton Private LimitedasJointVenture Cash and Cash Equivalents at theendoftheyear NetIncrease in CashandCashEquivalents
Rs. million For the Year Ended March 31, 2007
(102.26) (168.08) 1,499.16 1,277.42 (1,045.41) 1,460.83 (632.06) 1,886.15 44.55 1,298.64 (632.06)
(645.23) 5,924.95 (20.37) (804.31) 4,455.04 902.40 830.01 153.69 0.06 1,886.15 902.39
NOTES : 1. The Consolidated Cash Flow Statement has beenpreparedunder the "Indirect method"assetoutin Accounting Standard - 3 on Cash FlowStatements issuedbytheInstitute of CharteredAccountants of India. 2. Previousyear's comparatives havebeenreclassifiedto conform withthecurrentyear's presentation, wherever applicable.
This is the Cash FlowStatement referred to in ourreport of even date. For and onbehalf of the Board of Directors Neeraj Gupta Partner Membership No. F055158 For and onbehalf of Price Waterhouse & Co. Chartered Accountants B. K. Goenka Vice ChairmanandManaging Director R. R. Mandawewala Joint Managing Director
M. L. Mittal Executive Director (Finance) Mumbai, May 30, 2008
Mumbai, May 30, 2008
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WELSPUN INDIA LIMITED

23rd ANNUAL REPORT 2007-2008

Fixed Assets 17,034 (Gross Block)

*US $ 1 : Rs. 40.075 As of 31.03.2008

WELSPUN City entrance,Anjar.

Forward looking statement

23rd ANNUALREPORT 2007-2008

Share Transfer Committee

Registered Office and Works

Stock exchanges where the company s securities are listed

23rd ANNUALREPORT 2007-2008

My dear fellow Investors,

These awards andrecognitionscertainlygiveusalotofmotivationandmomentumintoday'schallenging environmentwhichIwouldliketoelaboratefurther.

B. K. Goenka Vice Chairman & Managing Director

B. K. Goenka Vice Chairman & Managing Director

23rd ANNUALREPORT 2007-2008

MANAGEMENT DISCUSSION AND ANALYSIS

Upholstery Rs 1000Cr.11% Bed Rs5000Cr. 53%

Curtains Rs1000Cr. 11%

GlobalTextilesTrade TheincreasingacceptanceofIndiantextileproductsin the U.S.andEuropeanUnion aregoodsignsfor further growthofexportsinthissector. OtherregionsthattheIndianexporterscantargetaretheMiddleEastAsianandSouth-EastAsianCountries.

23rd ANNUALREPORT 2007-2008

MANAGEMENT DISCUSSION AND ANALYSIS

505 500 390

280 300 300

200 100 2005

MANAGEMENT DISCUSSION AND ANALYSIS

*16,500 MTPA 5 m Mts **21,327 MTPA 0.72 m Mtrs

SOREMA TapetesECortinasDEBanho,S.A.,,anothersubsidiaryofWelspunthatwasacquiredduring theyear,hasafacilitytomanufacture910MTPA of BathRugsinPortugal.

23rd ANNUALREPORT 2007-2008

MANAGEMENT DISCUSSION AND ANALYSIS

Consumer Research Product Development

23rd ANNUALREPORT 2007-2008

MANAGEMENT DISCUSSION AND ANALYSIS

globally and further aims tobecomethepreferred partner inhometextilesforglobalinitiativewithitsbusinessmodel asunder:

MANAGEMENT DISCUSSION AND ANALYSIS

FY 07-08 12,409 247 5,035 3,304 963

% 100% 41% 27% 7.8% 11% 16% 5% 7% 1% 2% -

% 100% 39% 26% 8.3% 10% 20% 5% 7% 3% 5% -

and 1419 1,935 677 847 152 263 3.9

MANAGEMENT DISCUSSION AND ANALYSIS

Sales & Services

iii) ProfitsofRs.114.9mon cancellationofforwardcontractswhichareundertakenbytheCompany for hedgingitsforeigncurrencyexchangeratefluctuationrisks.

4. Profit aftertax The Deferredtaxwassignificantlylowerdueto lowerdeferredtaxableprofitinFY07-08comparedthatin FY06-07. Resultantly,thenetIncomeintheFY07-08wasRs.263masagainstRs.521mintheFY0607.Thisrepresents2%and5%ofthetotalrevenueinFY07-08andFY06-07respectively.

23rd ANNUALREPORT 2007-2008

MANAGEMENT DISCUSSION AND ANALYSIS

Inventory Turnover Ratio Inventory (Days)

8. SundryDebtors DebtorsatRs.753mdecreasedbyRs.136mduetoimprovedtimingofrecoveryfromthedebtorsduring the year. DebtorsTurnoverRatio (DTR) ( Netsales/Debtors)forFY07-08was16.47comparedto10.54 forFY06-07.ThisTranslatesintocollectionperioddecreasingfrom33daysinFY06-07to22daysinthe FY07-08.

Debtors Turnover Ratio Collection Period (days)

23rd ANNUALREPORT 2007-2008

Welspun India Limited (Stand Alone)

Welspun India Limited ( Consolidated )

AUDITORSREPORT TO THE MEMBERS OF WELSPUN INDIALIMITED

23rd ANNUALREPORT 2007-2008

(c) (ii) (a) (b) (c)

(iii) (a) (b)

GujaratSales Tax Act, 1969

Joint Commissioner(Appeals 2), Vadodra

CentralExcise Act, 1944 CentralExcise Act, 1944