Arvind Mills Ltd.

: Enterprise Systems in Fashion

Arvind Mills Limited (AML) -the flagship company of the Lalbhai group headquarter in Ahmedabad, India manufactures and exports denim (over 150 varieties) and shirtings for the past 100 years. Through its subsidiaries, it also manufactures and markets Arrow shirts and Flying Machine, Lee, Newport and Ruf and Tuf casual-wear for the domestic market and has a vision to expend in fashion industry globally through R&D and strategic acquisition. The company has a tie-up with Alamac Knits Fabrics Inc., USA, to manufacture knits. In 1997, Bipin B Lal graduated from Stanford business school and joined as CFO in AML and was to encounter with many challenges. Most of the units were either sick or facing liquidation or outdated in terms of technology and business practices.
Arvind Polycot Limited This company, formerly known as Saraspur Mills Ltd, was on the verge of liquidation following the textile industry recession during the late 1980s. In 1990, Arvind took it over, gave it a new name and a revamped product line and turned it around. The Ahmedabad-based unit makes cotton and blended fabrics for the Indian, as well as, export markets. The company is in the process of setting up a facility to manufacture bottom weight fabrics. Arvind Polycot is an associate company of The Arvind Mills Limited. Arvind Intex Limited Ahmedabad-based Arvind Intex was a sick unit - The Nagri Mills Ltd - that Arvind took over in 1991-92, and rehabilitated since. The company produces cotton yarn for the Indian and international markets, and recently commissioned a completely modernised spinning unit to produce ring spun yarn for the Indian market. Arvind Intex is an associate company of The Arvind Mills Limited. Arvind Cotspin Limited Arvind Cotspin, located in Kolhapur, Maharahtra, is one of India's largest 100% exportoriented spinning mills. The company manufactures 100% cotton yarn and double yarn in a wide range of counts and varieties. It intends to expand into gabardines. Arvind Cotspin is an associate company of The Arvind Mills Limited. Arvind Worldwide Inc, USA Arvind Worldwide, based in New York, is the sole agent for Arvind and helps in the marketing of denim, shirtings and yarn. Arvind Worldwide is a wholly owned subs idiary of The Arvind Mills Limited. Arvind Worldwide (M) Inc., Mauritius Arvind Worldwide (M), incorporated at Mauritius, has branch offices in London, Hong Kong and Dubai, which acts as agents for Arvind and help in the marketing of denim, shirtings,

Case written by Prof. M P Jaiswal, Management Development Institute, Gurgaon as the basis for class room discussion only and not for any administrative efficiency. 1

garments and yarn. Arvind Worldwide (M) is a wholly owned subsidiary of The Arvind Mills Limited. Arvind Overseas (Mauritius) Ltd., Mauritius Arvind Overseas (Mauritius) is the renamed, re -vamped Shape Fabrics Ltd. - an existing denim-making unit, which ha d stopped operations after making losses. Arvind Overseas (M) Ltd. is a wholly owned subsidiary of The Arvind Mills Limited.

The need and objectives of ERP Project

The management felt that the existing management information systems were inadequate to meet the emerging demands of business and felt a need to go for the best information system available in the market. We see IT not as a TECHNOLOGY solution, but as a BU SINESS solution. This is the mission of the company while upgrading their information system technology with the implementation of Enterprise Resource P lanning (ERP) system. The objective was to build information system that would link up the organisation with the management as well as the information technology adopted by the group. This system was supposed to help them operate real time coming out with innovative business solutions that would help the company face the competitive environment and new business challenges. One more critical reason for the company going whole hog in implementing the ERP system was that they wanted the state of the art system to be installed so that it would give them a leverage with their national and international clients. They also wanted their customers, both national as well as international, to find the system convenient and comfortable to work with. They have vision to expend their business from that of manufacturing to fashion retail and plan to acquire many retail brand in future.

Critical Business Factors

The critical business factors which lead Arvind Mills to the adoption of the ERP package can be listed as below: 1. The inefficiency of the existing market information systems:-

The existing market information systems were inefficient to handle the day to day increasing workload of the firm. This was mainly because that most of the legacy systems (existing systems) were Island systems and had very little or no interface between them. Also the legacy systems were developed by in -house software engineers; whose retirement from the firm has resulted in inefficient handling of the systems. Also another major drawback of the legacy systems was that modifications/updates were not possible to them, whereas most of the ERP packages offered high flexibility in modifications and adding of updates. 2. The modernization of the production process demanded the need of an ultra modern market information system:-

During 1997 Arvind Mills underwent major modifications in the production process and set up an ultra modern plant in Santej. So the management felt that as they are having the most advanced production technology in the world, their management information system should also be of state of art technology. 3. Difficulty in integrating various Island systems:-

The Arvind mills management found it extremely difficult to integrate the existing in -house developed information systems. Most of these systems were suitable to the particular business function it was made for and could not interface well with other systems.

4.

The requirement of a better CRM:-

Cus tomer Relationship Management (CRM) is gaining importance day by day and has become essential for the survival of any business. The textile market is becoming more and more competitive day by day, which necessitated the need of better Customer Relations Ma nagement. This will help the firm to more efficiently cater to the needs of the customer and thus retain them. The most important feature in this case is the traceability factor. The customer at any point of time can log into the system and find out where his order is? What is the status of the order at present and how long it would take to process and likewise. 5. Competitive Advantages :-

The adoption of a state of art Information system would give Arvind mills a competitive edge over their competitors. The marketing manager can confidently take orders as he can just login to the system and find out the different order status and can tell the customer when he can deliver the order. 6. The Advantages of a better SCM:-

The package facilitated an efficient Supply Chain Management (SCM) environment, which would help in coordinating supply with production and avoid extra inventory build up in the raw material stores. Also the package supported efficient implementation of other operations management techniques like JIT (Just in Time), logistics management, production scheduling etc. 7. A better Production Planning process:-

The production planning in Arvind Mills was an extremely tedious job as most of the production was MTO (Made to Order). Coordinating the production process and stream lining the production function with other departments could be handled more efficiently by an ERP package like SAPR/3.Also the package helped in defining the capacity limits to utilize the capacity to the maximum. 8. Tamper Proof :-

As the system requires data inputs at all the stages and identifies orders through primary keys over different functionalities, the system is absolutely tamperproof. Each and every bale opened should be reported and reentry in the database requires to be done in a very difficult method (only through the knowledge of the concerned supervisor. This all the more makes the system tamperproof.

The Selection of the Consultant

After the idea of upgrading to a better ERP package was thought about, the management went for a search of a well known and well experienced consultancy. After evaluating the different consultancies based on their track record, experience in successful ERP implementation, Price Water House Corporation (PWHC) was selected.

Why SAPR/3 was selected?

Once the management felt the need for a State of art Information system, they searched for the best ERP package available in the market with the market that suited their business requirement. One other thing that weighed heavily on them while selecting the package was that implementing a world-renowned package will bring more advantages in terms of functionality and recognition in the global industry. The different packages considered
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include SAPR/3, PEOPLE SOFT, ORACLE, and RAMCO etc. These packages were evaluated on basis of certain criteria. After evaluating the different options based on the criteria; and suitability to the Arvind Mills conditions, SAP R/3 was selected. SAP R/3 was preferred over others mainly because of the following reasons: Suitability to the business environment of Arvind Mills. Across the board functionalitys Global presence of the company (Software provider) More suitable for processing industry than other software packages:-One of the major problems faced by Arvind Mills was capacity planning at the Loom shed. Nor the legacy systems or the other packages could efficiently carry out the capacity planning process. Successful Track Record: - SAP is one of the earliest available ERP packages and has proven its consistency and efficiency over the years. The largest sold ERP package and proven in the Market Strong in BPR and Best Business Practices Mark of quality for the Customers.

The step wise implementation of SAP R/3 in Arvind Mills Ltd

The following functionalities of Arvind Mills were chosen to be implemented from SAP R/3 in four phases, over a period of 4 years from 1997 to 2001. Finance And Control Production Planning Plant maintenance Materials management Sales and Distribution Quality Management Warehouse management Customer relationship management Supply chain management Advanced planner and optimizer Phase I: Time period-1997 Oct to 1998 April. The first phase included configuring of SAP R/3 for finance and control, production planning, materia ls management, plant maintenance, sales and distribution, quality management. Four months later, AML found that little progress had been made in the implementation process despite substantial investments on hardware, software, and consultants. Even AS IS process definition could not be sign off due to lack of availability of dedicated core team from business functions of AML. Majority of work was done by IS team of AML and consultant. It as emphasized by consultant as well as by IS tem of AML that SAP standard functions to be adopted without any customization which created confusion amongst the functional team of AML and hence no sign off by them. In the words of a senior manager, The implementation was clearly spinning out of control. Consultants employed by PWHC were technical specialists, and had little knowledge of the business domain. Apart production planning and quality management of SAP R/3 did not have solution specific to textile industry and hence created confusion as what to do. The implementation methodology deployed by PWHC seemed to be failing, because although it allowed a quick canned implementation, it was not flexible enough to meet AMLs extensive customization needs, did not support process improvements, and alienated functional user groups from system implementation. To get the project back into track and give it leadership and direction, in September 1998, AML hired Anuj Prasad as its new CIO. Anuj brought in valuable project management experience in R/3 from his previous employer. Although from his prior SAP R/3 implementation experience knew that SAP implementation requires structured project management methodology and hence propagated the use of ASAP methodology. The
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project made some progress but the major issues remains unresolved. The project plan of this phase got extended for another 5 months. The project manager of AML pointed out that due to problems with the implementation partner understanding and product weakness, the project did not progress well. HE said we learned from these mistakes, and we would to do a better job with remaining Phases. Phase II: Time period 1998 October to 1999 February. The second phase included configuring of SAP for marketing and customer service and relationship management functions. However, the second phase was much more challenging than the first phase, given the non-standard and inherently complex nature of Arvind Mills sales and service processes. For instance, customer rebate percentages varied across customers, customer-product combinations, and customer-product-order volume combinations. Additionally, the same customer sometimes had multiple accounts with Arvind Mills and had a different rebate percentage negotiated for each account. Also SAP CRM solution was not mature and had many gapes. PWHC was replaced with a new consulting firm, Accenture Business Consulting, to assist Arvind Mills with the second, third and forth phases of SAP implementation. Bipin explained his experience of SAP implementation in phase II: Accenture was very knowledgeable in the technical and configurational aspect of SAP implementation, but change management was still a dark area. Unlike Phase I, we were clearly targeting process redesign and enhancement in Phases II, and Accenture brought in best practices by virtue of their extensive experience with process changes in manufacturing organizations. Accenture wa quite comfortable in deploying ASAP implementation methodology. Since Phase I was somewhat of a disaster, we wanted to make sure that we did everything right in Phases II III and IV and not skimp on resources. SAP CRM implementation requires data and process design from customer side and that was it self a challenge. Apart there was contractual problem with Accenture as they wanted to replace the configuration done in Phase I. The option was to get the money recovered from PWHC as they messed up Phase I and hence to replace with Accenture. Bipin became the most worried person as he had to encounter new challenges of SAP implementation apart from the usual business problem. As part of the change management, five training rooms were equipped with computers running the client version of the R/3 software to train users on the redesigned processes and the new R/3 environment. The steering committee was formed to oversee and coordinate the change management process. Reporting directly to the senior vice president level, this committee was given the mandate and resources to plan and implement any change strategies that they would consider beneficial. An expe rt of change management commented on the above program:Traditional system training does not work very well for SAP implementation because this is not only a technology change but also a change in work process, culture, and habits, and these are very difficult things to change. You are talking about changing attitudes and job roles that have been ingrained in employees minds for years and in some cases, decades. System training will overwhelm less sophisticated users and they will think, O my God, I have no clue what this computer thing is all about, I dont know what to do if the screen freezes, I dont know how to handle exceptions, Im sure to fail. Training should not focus on how they should use the system, but on how they should do their own job using the system. (Taken from public source reference) Phase III: Time period: May 1999 To August 1999. The third phase included commissioning of SAP for supply chain management functions of Arvind Mills. Though SAP provided a sales and operational planning (SOP) module with their R/3 package, Arvind Mills R/3 project management team believed that this module lacked the intelligence required to generate an optimal production plan from continuously changing supply and demand data, even when all data were available in a common database. The R/3 system was originally designed as a data repository, not an analysis tool to solve complex supply
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chain problems or provide simulation capabilities5. Subsequently, in 1999, when SAP added a new Advanced Planner and Optimizer (APO) module to help with data analysis, AML realized that the combination of R/3s SOP and APO modules would be the answer to their unique SOP needs. However, it was realized that implementation of SOP and APO requires extensive planning data to be migrated in SAP information ware house systems which was originally for plan phase IV. In other words, phase III can be implemented only after implementing phase IV. Phase IV: Time period: September 1999-2001. The fourth phase focused mainly on translating the information collection (data generated) into decision making. The data ware house and data mining tools are used for the same. However these tools are effective only when the entire historical error free data are available in the digital form. Apart it also requires external market research data to be available. The text as well as non text data such as document, files, drawing, engineering were also to be digitized and this call for another project with altogether different software systems. This was never visualized in the project and hence this phase was a complete blank. As an outcome of this phase a new project on Knowledge Management Systems (KMS) got created. In the selection of the consultants -Should instead of directly consulting a software consultant Arvind Mills should have consulted a an independent management consultant which will be in a better position to judge the business needs of the industry and then suggest the best option that the company could take with regards to the desired package as well the vendor the company should choose. This will also remove the biases as this is an independent consultant with no motive for a sales pitch. In the beginning feasibility analysis covering various aspects such as detailed project management, change management, cost benefit analysis, business process analysis, organization readiness, etc. should have been carried out with the help of an independent management consultant. The project should have been steered by the top management with strong internal core team from various business units

Where the Company went wrong?

The implementation should have been focused on adoption of best business practices, process reengineering and restructuring. The training strategy for employee should have been on new work practices through SAP rather than on SAP. The ERP systems such as SAP caters the need of standard business functions such as finance, MM, Sales, HR, Maintenance, production planning, QM, etc. and often does not fit into core production scheduling, product design, PLM, operations etc. There are other industry specific solutions such as Manufacturing Execution Systems (MES), Product/Project Life Cycle Management (PLM) which are to be implemented along with ERP solutions. Though the top management had made a successful transition to the new organisational structure, problems still persist when it comes to the change in lower management and operator level. This all indicates a lacuna in the entire process of training and managing the change process. Right now the senior management of the company feel that they have not achieved such a significantly high benefits that they had expected prior to the implementation of SAP. On the
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various interviews we had with the management and the department hea ds we found out that the major area of concern is in the production department. With the implementation of SAP they had put in systems that necessitated standard costing procedures for the textile production. The issue here was more of that relating to the human resources management. The operators in the production line were not enthused nor or willing to key in the data required to be entered in the system so that it can help out in getting better information about the process as well as the costing. As me ntioned earlier the human resource issues are very critical to any radical change in the processes of the organisation. This indicates a lax on part of the team to properly take stock of all critical angles of the change issues. Management is now seriously considering of getting the entire implementation audited by a proven independent management consultant and seeks professional guidance on either re-implementing the systems or repairing the faults?

Effectiveness of the overall performance of the ERP Project

Plant maintenance module helped in automatically updating the required material in the plant as and when required. It also has an automatic stock and process update which helps the supervisor to do his tasks. Materials management (MM) benefits the entire process by keeping track of all the goods required by the various processes of textile manufacture. Quality management keeps track of all the testing done on the product that will be available in the database. This is a major advantage as the complaints if any from the customers can be tracked back to the source of the product, the materials that went into it as well as the persons involved in the process. It can also help in verifying the claims made by the customers regarding the complaints and is proving to be quite handy. Warehouse module helps by predefining the destination of all the rolls of textile in the huge company warehouse thus making it convenient for marking the lot. This also helps while shipment of the lot. The tagging ensures that prope r tracking of the product is done. Sales & distribution module has become one of the leading performers in the entire package. The main benefits have been in making life a lot easier for the marketing manager who can now keep track of the entire process of manufacturing. On request of the customer, the manager can, at the tap of his hand get information regarding the production facility status and thus conveys the exact date of delivery. This will also enable the mangers to perform according the workload on the plant while getting orders. It also ensures reliability on part of the plant. The major advantage the customers get is that they can keep track of their order instantly. There has also been a reduction in the number of employees in non-core areas lik e software development. The legacy systems in place since a long time had forced a heavy expenditure in the maintenance of excess workers in the systems department. Centralizing of the entire system has reduced the workforce required in various non-core activities. With regards to strategic positioning, the company has an advantage as it can ensure that its internal customers do work in a more efficient way. They are also made responsible for achieving results. Redefining the way the managers handle the wor k can create new benchmarks. They have access to the whole lot of information that can be put to use by the better management of resources and time. Implementation of various processes like data warehousing and business intelligence systems are going to pr ove even more helpful in making the organisation more proactive. The main strategic advantage that the company derives with regards to its external customer is that they will have better assurance about the availability of the product as well as the continued reliability on the system top find out where exactly there product is in the entire manufacturing process. This makes it more convenient and dependable for the customers. This will ensure more satisfied customers that can be translated into more busin ess. International clients need sourcing from players of global standards in reliability. The implementation of SAP R/3 will definitely make the international customers prefer Arvind Mills to other players in the sector who have no implemented state of the art technology that makes them more dependable.

Why Business Process Reengineering ?

Business processes are simply a set of activities that transform a set of inputs into a set of outputs (goods or services) for another person or process using people and tools

Improving business processes is paramount for businesses to stay competitive in today's marketplace. Over the last 10 to 15 years companies have been forced to improve their business processes because we, as customers, are demanding better and be tter products and services. And if we do not receive what we want from one supplier, we have many others to choose from (hence the competitive issue for businesses). Many companies began business process improvement with a continuous improvement model. This model attempts to understand and measure the current process, and make performance improvements accordingly. You begin by documenting what you do today, establish some way to measure the process based on what your customers want, do the process, measure the results, and then identify improvement opportunities based on the data you collected. You then implement process improvements, and measure the performance of the new process. This loop repeats over and over again, and is called continuous process improvement. You might also hear it called business process improvement, functional process improvement, etc. This method for improving business processes is effective to obtain gradual, incremental improvement. However, over the last 10 years several factors have accelerated the need to improve business processes. The most obvious is technolo gy. New technologies (like the Internet/ERP packages) are rapidly bringing new capabilities to businesses, thereby raising the competitive bar and the need to improve business processes dramatically. Another apparent trend is the opening of world markets and increased free trade. Such changes bring more companies into the marketplace, and competing becomes harder and harder. In today's marketplace, major changes are required to just stay even. It has become a matter of survival for most companies. As a result, companies have sought out methods for faster business process improvement. Moreover, companies want breakthrough performance changes, not just incremental changes, and they want it now. Because the rate of change has increased for everyone, few busin esses can afford a slow change process. One approach for rapid change and dramatic improvement that has emerged is ERP enabled Business Process Reengineering.

What is Business Process Re -engineering?

Reengineering consists of restructuring all the processes in the business so that they become efficient, transparent and integrated with other processes in the system seamlessly. In turn, this requires that every process in the existing system be first scrutinized to assess its performance and to delineate its cross -functional role before it is eliminated, modified or replaced by a new process. For such analysis, versatile and efficient tools and simulation techniques are critical.
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Reengineering does not claim to substitute for either a sound business strategy, product or technology. It is only a mechanism for radically improving the performance of the business processes for the vendors, customers and products. But by centering the whole concept on processes, reengineering is inextricably linked to technologie s; not just to information technology that provides the necessary tools for the transformation, but also to other technologies that are necessary to the processes. The role of human operators is radically altered in reengineering. Instead of specialized skills, a broad range of competence is called for. A keyword in reengineering is flexibility, and this applies to humans as well. Functionally based vertical hierarchies are replaced by horizontal structures where the position-based power is replaced by participation-based authority. This shift provides the scope for extensive delegation of power and responsibility in reengineering; this is one of the reasons for the present shift towards coming forward with programs and incentives for worker retraining, called re-skilling.

What is Change Management ?

If we are going to change the processes, improve them, fix them, the workforce should be happy. Right? Well, there is a problem. The workforce is people and reengineering the processes means change and people have a lot of problems with change. Any reengineering project that does not factor in the difficulties people have with change and address the change issues in a systematic, structured way is doomed to fail. While the new way of working may be much better, workers don't see that there is that much wrong with the current way of working. They may see the way to make things better as just adjusting and manipulating what they do today, not the drastic and wrenching changes in the plan. Defining the future state and showing the dangers in the current state are not enough, however. Even the most committed workers will find it difficult to go through the change required in a reengineering effort. Therefore, it is critical to build into the implementation plan attention to the three change elements that have surfaced in this discussion: communication, education/training, and rewards/reinforcements. Companies and people have no choice: they must change to survive. They do have a choice, however, in how they change. Deciding to manage change by applying an organized, structured methodology is the clear choice of successful companies. When they do this, changes are implemented faster, cheaper, and with a minimum of pain and disruption to people. Since every company is struggling to make changes, those that can do it successfully have a strong edge over their competitors who struggle and often fail. Change management is a key factor in making the changes from ERP Enabled business process reengineering successful.

Fig 1: Arvind Mills Organizational Chart:

Board of Directors
Divisions Functions
Finance & Accounts

Denim
Marketing Manufacturing

Shirtings
CEO

Knits
President

BottomWeights

Marketing QA & Logistics Weaving

Spinning

Garmenting

Operations Marketing

Systems & SAP

Engineering

Marketing

Yarn

Materials & Stores

Design

PPC

Engineering Intex Cotspin

Cotton Purchase

Processing

QA

Design

Casual

Naroda Unit 1

Fabric Operations

Voiles

Human Resources / Employee Relations Legal/Taxation & Secretarial

Ankur Textiles

Central Utilities

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Fig 2: The ASAP implementation methodology for SAP project with key activities in each stages.

Final Preparation Business Blueprint

Define Organization Hierarchy Define Business Blueprint Develop and Implement Communications Plan Project Checkpoint Perform Conversions Train End Users Implement Org Transition Plan Assess Change Readiness Site Support Planning Cut-over Project Checkpoint

Stage 2

Stage 4

Stage 1

Stage 3

Stage 5

Project Preparation
Detail Project Scoping Project Kickoff Sizing Assessment Project Team Training

Realization
Baseline Configuration Final Configuration Final Integration Test Create End User Training Material Conduct Org/Job Impact Analysis Develop Org Transition Plan Develop Custom Code Project Checkpoint

Go-Live & Support Go Live Production Support Conduct Hand-over Project Checkpoint

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Fig 3: ERP Enabled Integrated Enterprise.

Finance Projects HR

Central Database MM

Maintenance

Assets

Fig 4: ERP Enabled Business Performance Management

Scorecard

Analysis Reporting Information Warehouse

Data

Transformation Services

ERP Applications

Other data systems

External data

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Table: List OF BEST BUSINESS PRACTICES of SAP ERP SYSTEMS LIST OF BEST PRACTICES/ PROCESSES FINANCE ACCOUNTING & CONTROLLING
Activity Based Costing Cost Centre based accounting Profit Centre based Accounting Adoption of SBU Concept Treasury & Risk Management Compliance with IFRS Cash Management & Forecasting Cost element accounting Funds Management MAINTENANCE MANAGEMENT Preventive Maintenance Condition based Maintenance Dynamic scheduling of maintenance jobs Root Cause Analysis PRODUCTION PLANNING & CONTROL MRP II and Capacity Requirement planning Finite and Infinite Capacity planning

MATERIALS MANAGEMENT
Kanban system ABC classification of Inventory MRP based inventory planning Vendor rating Vendor performance evaluation Online Bid evaluation Automatic generation of Purchase Order Uniform Codification of materials PROJECT MANAGEMENT PERT chart analysis Critical Path Analysis Cost Centre based project management Project based budgeting and accounting HUMAN RESOURCES MANAGEMENT Centralized payroll Competency based mapping Performance based appraisal
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Table 2. Financial highlight 10 Years Financial Highlights 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 A. Operating Results : Sales Other Income Total Income Net Profit After Tax 42092 1158 43250 4105 49470 431 49901 4836 60197 1040 61237 5880 68148 2940 71086 7179 85011 1484 86495 7630 96060 101973 99822 108958 1761 1248 1631 2289 97821 403221 101453 111247 7892 8007 4567 5179 (Rs. Lacs) 2000-01 117688 2951 120639 6250

B. Financial Position: Fixed Assets (Net) Current Assets (Net) Others TOTAL ASSETS Share Capital Reserves and Surplus Shareholders Funds Loan Funds TOTAL CAPITAL EMPLOYED

4760 4667 238 9665 5030 4602 9632 33 9665

4587 4784 2195 11566 5030 6420 11450 116 11566

4652 6814 8166 19632 12319 7153 19472 160 19632

14402 5788 3069 23259 13599 9500 23099 160 23259

15173 4913 4368 24454 13599 10602 24201 253 24454

16041 8489 1689 26219 13599 12218 25817 402 26219

19446 8317 2051 29814 13599 15737 29336 478 29814

22617 5847 1423 29887 13599 15775 29374 513 29887

21558 8031 1108 30697 13599 16426 30025 672 30697

20083 375 5508 25216 13599 10312 23911 1305 25216

Table 3. P&L Account (1998-01) Profit and Loss Account

Period ended No. of months Gross Sales Excise Duty Net sales Other income Total income Raw materials Stock adjustment (Inc)/ Dec Purchase of finished goods Cost of material Employee cost Power & fuel Advertising/ promotion/ public Freight & forwarding Other expenses Cost of sales PBIDT Depreciation PBT Provision for taxation Adjusted PAT Mar -98 12 9,890.70 -492.4 9,398.30 160.2 9,558.60 2,296.40 -213 3,225.60 5,309.00 371 52 1,753.90 244.1 408.7 8,138.60 1,419.90 148.8 1,270.10 469.4 800.7 Mar-99 12 9,982.20 -429 9,553.20 163.1 9,716.30 2,166.10 293.1 3,163.50 5,622.60 402.3 50.2 1,626.20 237.4 838.9 8,777.50 938.8 183.5 753.8 297.1 456.7 Mar-00 12 11,134.80 -475.2 10,659.60 228.9 10,888.50 1,971.70 31.7 4,334.60 6,338.00 460.6 60.5 1,939.80 201.6 786.2 9,786.70 1,101.80 200.7 899 381.1 517.9

(Rs. Millions)
Mar -01 12 11,991.20 -542.3 11,448.80 295.1 11,744.00 2,101.20 -161.4 4,725.10 6,664.90 539.4 65.8 2,139.50 221 850.2 10,481.00 1,263.00 202.2 1,058.00 433 625

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Table 4. Ratios
Period ended No. of months Mar-98 12 Mar-99 12 Mar-00 12 1-Mar 12

Turnover ratios (x)

Net sales to total assets Net sales to fixed assets Net sales to working capital Net sales to inventory Gross sales to debtors Current ratio Debt equity ratio Interest cover Networth (post tax) Capital employed (pre tax) Net earnings (EPS) Cash earnings (CPS) Dividend payout Book value (NAV) Net fixed assets Working capital As % of net sales Gross sales Excise duty Net sales Other income Total income Cost of material Employee costs Selling expense Other expenses Cost of sales Profitability ratios (%) PBIDT excl. other income PBIDT PBDT Profit before tax Profit after tax Growth ratios (% yoy) Net sales PBIDT PBT PAT 3.2 4.8 11.3 7.8 14.7 3.2 4.2 16.3 12.1 19.2 1.2 0 585.7 15.5 25.3 3.4 4.7 3.3 21.6 76.5 19.8 104.5 -4.5 100 1.7 101.7 58.9 4.2 19.5 8.8 91.9 3.5 4.9 13.3 14.3 25.5 1.3 0 520.7 17.2 29.4 3.8 5.3 3.3 22.1 70.2 26.2 104.5 -4.5 100 2.1 102.1 59.5 4.3 20.1 7.4 91.8 4.5 5.7 -304.9 13.2 26.5 1 0.1 446.9 26.1 42.1 4.6 6.1 9.1 17.6 79.6 -1.5 104.7 -4.7 100 2.6 102.6 58.2 4.7 20.6 7.4 91.5

Liquidity ratios (x)

1.4 0 1,389.40

Return on (%)
27.3 42.6

Per share (Rs)

5.9 7 3.3 21.6

Asset composition (%)

67.4 28.8 105.2 -5.2 100 1.7 101.7 56.5 3.9 21.3 4.3 86.6

13.4 15.1 15.1 13.5 8.5 5.2 -9.8 -11.8 1.5

8.1 9.8 9.8 7.9 4.8 1.6 -33.9 -40.7 -43

8.2 10.3 10.3 8.4 4.9 11.6 17.4 19.3 13.4

8.5 11 11 9.2 5.5 7.4 14.6 17.7 20.7

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Analysis of financial highlights Operating Results:

Net Fixed Assets Vs. Net Current Assets

25000 20000

) s c a L 15000 . s R ( e 10000 u l a V
5000

Fixed Assets (Net) Current Assets (Net)

0 2 9 1 9 9 1 3 9 2 9 9 1 4 9 3 9 9 1 5 9 4 9 9 1 6 9 5 9 9 1 7 9 6 9 9 1 8 9 7 9 9 1 9 9 8 9 9 1 0 0 9 9 9 1 1 0 0 0 0 2

Years

Net Sales to Total Assets

140000

Value (Rs. lacs)

120000 100000 80000 60000 40000 20000 0 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 Sales TOTAL ASSETS

Year

16