WIL Annual Report FY 2007-08.pdf

7/28/2019 WIL Annual Report FY 2007-08.pdf

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WELSPUN INDIA LIMITED

Dare to Commit


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% - Percentage of growth *US $ 1 : Rs. 40.075As of 31.03.2008

Rs.13

,960M

n

US$4

25Mn

*

07-08

05-06

06-07

Fixed Assets(Gross Block)

10,655

13,960

17,034

15%

57%

Net Worth

Rs.5,4

28Mn

US$1

39Mn

*

07-08

05-06

06-07

5,5085,428

5,588

31%

69%

Rs.10

,782M

n

US$2

69Mn

*

07-08

05-06

06-07

Exports

5,500

8,702

10,782

21%

65%

Rs.12

,409M

n

US$3

10Mn

*

07-08

05-06

06-07

6,530

9,736

12,409

46%

76%

Revenue


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Sustainability literary means: A characteristic of a process or state that can bemaintained at a certainlevel indefinitely.

At Welspun, we strongly believe that our business in all sense of the term isSustainable. We manufacture products which not only stand the test of time, but alsoenhance them in each and every step. We leave no stone unturned to increasestakeholders' wealth through ethical practices while sustaining our environment andcontributing back tothesocietywelivein.

This is evitable in the position we are in today as one of the largest Home TextileCompanies intheWorld.

Welcome to the'WorldofWelspun'

WELSPUN City entrance,Anjar.


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WELSPUN INDIALIMITED2

Vision Statement


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23rd ANNUALREPORT 2007-2008 3

Corporate Information 04

Vice Chairman and Managing Director's Statement 08

Director's Report 12

Corporate Governance Report 26

Practicing Company Secretary's Certificate 33

Management s Discussion and Analysis 36

Financials 54

Contents

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'ant icipate','esti mate','expects','proj ects','intends','pl ans','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,actualresultscouldvarymateriallyfromthoseanticipated,estimatedorprojected.Readersshouldbearthisinmind.We

undertakenoobligationtopublicityupdateanyforward-lookingstatements,whetherasaresultofnewinformation,

futureeventsorotherwise.

Da r e to Co m m i t


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Board o f Directors

Corporate Information

Shri. D. K. Patil

Price Waterhouse & Co

Shri. DadiB. Engineer

Shri. Arun Todarwal

Smt. Bala Deshpande

Shri. A. K. Dasgupta

Company Secretary Audit Committee

Auditors

Shri.G.R.Goenka

(Chairman)

Shri. B. K.Goenka

Vice Chair man& Managing Director

Shri. Dadi B.Engineer

(Director)


(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)


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5


Shri. B.K.Goenka

Shri. R.R.Mandawewala

Shri.M.L.Mittal


Smt. Bala Deshpande

Shri. Arun Todarwal

Remuneration Committee Share Transfer Committee

Survey no.76,VillageMor ai,

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: (0 28 36 ) , Fa x: (0 28 36 ) 2

,

573428/9 47070

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

Registered Office and Works Bankers

Bombay Stock Exchange Ltd

PhirozeJeejeebhoyTowers,

Dalal Street, Fort

Mumbai - 4000 01

The National Stock Exchange ofIn diaL tdExchange Plaza, Bandra Kurla Complex,

Bandra (E),Mumbai -400 051

Trade World, 'B'-wing, 9th Floor,

KamalaMills Compound,

Senapati BapatMarg,LowerParel,

Mumbai 400013,IND IA

Tel: 022-66136000/ 2490 8000

Fax: 022-24908020Website:http://www.welspun.com

Corporate OfficeStock exchanges where the company s

are listedsecurities

23rd ANNUALREPORT 2007-2008



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My dear fellow Investors,

Sinceourlastcommunication,ourcompanyreceivedanumberofawardsandrecognitions.Iwishtostart

mymessage to youwiththeseachievements.JCPenny,oneofthelargestretailersintheworldbestowed

uswiththe'SupplieroftheYear'AwardinQualityataglitteringceremonyheldatNewYork.Thisawardfor

Quality furtherendorses thequalityparameters of Welspunandreinstat esour special efforttosu pply all

our productswithvirtually'zero-defect'.

Incontinuation with this award, Dun & Bradstreet (D&B),Worlds largestandm ostr ecog nize d 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,t hemost-readnew spaper 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

happeninginU Sand par tso fEu rope .The rec ent 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,theascendingoi lpricesati tsall-ti me-highhave

affectedenergy costsdearly. Similarlythe recentincreaseinlaborcostsisalso 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.Vice Chairman &

GoenkaManaging Director



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9

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.

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, productplacement 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 onhumanresouc e.

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,

B. K. Goenka

Vice Chairman & Managing Director




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MANAGEMENT DISCUSSION AND ANALYSIS

Rajesh R. Mandawewala,Joint Managing Director

Readersarecautionedthatthisdiscussionandanalysiscontainsforward-lookingstatements that involverisks and uncertainties.

When used in this discussion, the words anticipate, believe, estimate, intend, will, and expected and other similar

expressionsastheyrelatetotheCompanyoritsbusinessareintendedtoidentifysuc hforward-lookingstatements. TheCompanyundertakesnoobligationtopubliclyupdateorreviseanyforward-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 nottoplaceunduerelianceonthese forward-

looking statements as these are relevant at a particular point of time & adequate restrain should be applied in their use for any

decisionmakingorformationofanopinion.ThefollowingdiscussionandanalysisshouldbereadinconjunctionwiththeCompany'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.

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 theweaving 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 thisindust rywhichis expectedtotouc haroundUS$700bn

by2010. India'scurrentshareoftheglobaltextilesandapparelmarketisonlyUS$19bn.Indiatherefore

stands to benefit immensely from this growth as international brands andbuyersincreasingly look tolow

cost producingnationstoenhanceandbroadentheirsourcingbase.

A.INDUSTRYSTRUCTUREANDDEVELOPMENTS


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SEGMENTANALYSISANDREVIEW:

GlobalTextilesTrade

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

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.

TheincreasingacceptanceofIndiantextileproductsi n the U.S.andEuropeanUnion aregood sign sfor

further growthofexportsinthissector. OtherregionsthattheIndianexporterscantargetaretheMiddle-

EastAsianandSouth-EastAsianCountries.

The elimination of quota restrictionhas pav ed the way for themostcompetitive developing countries to

generatestrongerclustersoftextileexpertise,enablingthemtohandleallstagesoftheproductionchain,

from growingnaturalfiberstoproduc ingfinished 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, sourcingorret aildi stri bution.

To pursuetheseavenues,nationalsuppliersneedtoplacegreateremphasisoneducationandtrainingof

services-related skills and to encourage the establishment of joint structures where domesticsuppliers

IndianHomeFurnishingMarketSizeBreakup

Source:TechnopakAnalysis

Bath

Rs1200Cr.13%

Curtains

Rs1000Cr.

11%

Upholstery Rs

1000Cr.11%

Kitchen

Rs300Cr.

3%

Bed

Rs5000Cr.

53%

Others,

9%

Rs800Cr.


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cansharemarketknowledgeandoffermoreintegratedsolutionswithprospectivebuyers

India,China&PakistanaredominantparticipantsintheHomeTextilewiththeirimportsintoUSA, they:

Accountfor 65%sha reinTowels;

Accountfor81%shareinSheets;

Accountfor79%shareinComforters;

Accountfor84%shareinPillows/Pads/OtherBedProducts;

Textiles and apparels is a US$ 49bn industry in India of which 61% is accounted for by the domestic

market and39%bytheexportmarket.Segmentedbyproductcategory,textilesaccountforthedominant

shareof5 9%of thei ndus try .Th eDom estic 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) ,itsfast growingeconomy andrisinghous eholdincomelevel s andover30%

growthintheorganizedsector.Goingforward,theorganizedtextileandapparelsegmentwillcontinueto

rise as the number of urban household in the high and middle segments are growing and disposable

incomeoftheyoungerpopula tion increasing rapidly. Increaseinthen umberofnew urbanh ouseh olds,

higher spending on home furnishing by Indian consumers and growth in organized retail will fuel the

growthinhometextilesmarketinIndia.

Source:OTEXA(OfficeofTEXtiles&Apparels)

WorldTextile&ApparelTradeFutureProjections

Source:WTO

THEINDIANTEXTILEINDUSTRY

200

260300

280

390

505

100

300

500

700

900

2005 2010 2015

Textile Apparel


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SWOTAnalysisofIndianTextileIndustry

STRENGTHS

WEAKNESSES

OPPORTUNITIES

Second largesttextileproducerint heworld. Longand

deep rooted textile tradition and highest net forex

earner forthecountry.

Integrated industry across the entire chain from fibre to

garments/hometextilesi.e.concepttoconsumer

A b u n d a n t s k i l l e d a n d t e c h n i c a l l a b o u r f o r c e , w h i c h a r e e s p e c i a l l y

suitedforapparels/MadeUpsmanufacturing.

Largeandgrowingdomesticmarkettoimpartstabilitytoexportthrust

StrongCotton base - India-the3rdLargestCottonProducerintheWorldwiththelargestareaunder

cottoncultivation aclearcompetitiveedgeHuge Domestic demand Large Consuming Class increasingpercapit aconsumpti onandgrowt hin

residentialreal estate

Flexibilityinproduction ofsmallorder lots

Cost of Capital near bottom end of the curve. TUF benefits (reimbursements for exports oriented

projects)makeitinternationallythelowest

Small size and technological outdated plants result in lack of economics of scale, low productivityandweakqualitycontrol

Poor work practices resulting inhigher labor costcomponent inmany stapl egarme nt,i nspit eoflow

labor costs

Withtheexceptionofspinning,othersectorsarefragmented

Rigidgovernmentlaborlawsandpolicieslackreforms

Hightransaction&powercost

Low InvestmentinBrandBuilding

PoorEthicalStandards

Low logistics&infrastructuresupport

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

Shift in domestic market towards readymade garments. Per capita domestic textile consumption

offersroomforgrowthwithincreasingdisposableincomes

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 tariffshavenotincreasedapparelimportsintothecountry

Developedcountriesadoptingnon-tariffbarriersintheformofanti-dumpingdutiesandregionaltrade

agreements(thoughtheirlegalityisquestionable)

Theenvironmentalissues

Lackofgoodphysicalinfrastructure

LabourlawsinIndia

Lackofscalabilityoftalent

ITenvironment

Consolidationintheglobalretailindustryfacilitatingglobalsourcing

Increasing operationalcosts

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. Welspunhasaddit ionally 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. TodayWels punisa US$400 millio n

Companywithmanufacturing facilit iesinInd ia,UK,M exicoandPo rtugal,w hichisex pectedto becomea

$1billionCompanybytheyear2010.

THREATS,RISKSANDCONCERNS:

THEWELSPUNADVANTAGE


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ScalableVolumesthroughCapacityAdditions

InSubsidiarycompanies:

Post expansions in Terry Towel and Bed Linen and

backward Integration like Spinning etc., Welspun be one

oftheleadinghometex tilesplayers with a market share of26% 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:

*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 and

hencetheinstalledcapacityasat31.3.08is28,295MTPA.

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.420mhas 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.

IntheCompany:

Expansion(Phase II)

ExpectedCommissioning

Date(Phase II)

TotalCapacities

(after fullcommissioning

of Phase II) )

Segments Pre-Phase IICapacities

(includingPhase I

expansion) Capacities Status :as at

31.03.2008Terry Towels *24, 500

MTPA*16,500

MTPA*12574 MTPA

CommissionedQ2 FY 09 41,000 MTPA

Bed Lenin 35.7 m Mts 5 m Mts To beCommissioned

Q2 FY 09 40.7 m Mts

Spinning(InternalConsumption) &Utilities

**26,202MTPA

**21,327MTPA

**2093 MTPACommissioned

Q1 FY 09 47,529 MTPA

Decorative

Bedding

Nil 0.72 m Mtrs To be

Commissioned

Q1 FY 09 0.72m mtrs


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EconomiesofScale

FinancialPrudence

ProvenQuality

IntegratedManufacturing

CustomerRelations

Welspun operates at a world scale level, contributing to more than 25% of the total Indian towel exportacross the globe, with around 34% inTowels and around 21% in Sheeting & Bed Products to the US in

2007. With capacity expansion in 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.

Over thelastfew years,t hrough prudentfinancialmanagementanddebtstructuring,Welspunhasbeen

successfulinreducingtheaveragecostofdebtyearonyearbasisbybeingabletoborrowcosteffectively.

Welspunenjoysamongstthebestcreditsupportfromitslenders.Bybeingabletofinanceitsgrowthatthe

most optimal rates of interest, for capacity expansions and inorganic growth through mergers and

acquisitions,theWelspunisatparwithitsglobalcompetitorsintermsofitscostoffunds.

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.

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 andBedLinenandbackw ardIntegrat ionlikeSpinnin getc.itwi llbeoneof

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.

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.

As Innovation is the key to the textile industry, Welspun is allocating more resources to innovate on its

widerangeofproducts.

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

NewProductsandDesigns

Service

Packaging

Delivery

ProductDevelopment

Design

SalesAnalytics

Innovation

PRODUCT

ConsumerResearch

Service

Packaging

Delivery

ProductDevelopment

Design

SalesAnalytics

Innovation

PRODUCT

ConsumerResearch


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MANAGEMENT DISCUSSION AND ANALYSISMANAGEMENT DISCUSSION AND ANALYSIS

Brand Strategies

B.MERGER&ACQUISITIONS

C.OUTLOOK

Supported by a distribution network spread across all major markets, the Welspun exports more than90%ofitstotalproductiontoover34countriesandcatersto14outofthetop20retailersintheworld.wide

product ranges within exclusive designer brands (including licensee - where the newest acquisition is

Umbra) in addition to Nautica. Nauticahasadditional ly 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.

On20th December2007,Welspun acquired76%inte rest inbat h 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 2 April 08) in

U.K.'s leading Brand, ChristyUK.,w hichsuppliestowelstosomeofthebestst oresinU.K.viz.Self ridges,

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,brandmanagementwit hinnovativeproduct

designskill setsandalsothetransferoftechnology/productdevelopmentskillstomanufacture/manage

premiumendproducts.IthasgivenWIL,leverageonexperiencedpoolofprofessionalswellversedwith

skillsofdevelopinginnovativeproductsandmanagingbrandsindevelopedeconomies.

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

nd


19/101



globally and further aims tobec omethepref erred partner

inhometextilesforglobalinitiativewithitsbusinessmodel

asunder:

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.

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.TheIntegratedoperationsandlargevolumesenableWelspuntokeepcostsundercontrolandmeettightdeliveryschedules

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.

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 Wal-

Mart 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

RawMaterialsandOtherInputs

RisingEnvironmentalDeterioration:

The BusinessModelofWelspun

D.OPPORTUNITIES

E.RISKSANDCONCERNS

Front-EndConsumerResearchProductInnovation

DesignTrendsBrandManagementMarketIntelligence

Middle-EndProductDevelopment

DistributionExtendedSupplyChain

QualityControl

Back-EndManufacturing

OutsourcingContemporaryIntegratedInfrastructure

Front-EndConsumerResearchProductInnovation

DesignTrendsBrandManagementMarketIntelligence

Middle-EndProductDevelopment

DistributionExtendedSupplyChain

QualityControl

Back-EndManufacturing

OutsourcingContemporaryIntegratedInfrastructure


20/101



takingenvironmental protection tonewlevels,adheringt oWal-Mart'sSt andardsforsupplies aswell

as for the quality of goods manufactured. This award appreciates the efforts put in by Welspun to

ensurenotonlythesafetyatourplantsbutalsoenvironmentalprotectionatlarge.

Welspunhasbothrupeean d foreigncurrencyborrowings with floating rates of interest. Any upward

revisionofInterestratesintheIndianmarketwouldimplyahigherfinancialburdenonWelspun.

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.

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.

TheInterestrateRisk:

Discrimination

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


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G . H U MA N R ES OU RC ES A N D I N DU S TR I AL

RELATIONS:

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT

TOOPERATIONALPERFORMANCE

Highlights:

a) Net Sales

1. Income

Material developments andotherinformationpertaining to

Human Resources have been provided in the Directors'ReportforFY07-08.

Sales interms ofamount increased by 27.5% in FY07-08o n account of higher volumes andincreased

per tonnerealizationintowels.

Capacityutilisationincreasedasunder:

The Company achieved Net Sales ofRs. 12,409 m in the FY07-08, registering an increase o f 2 7 %

Resultsofoperations

Thefollowingparagraphswilldiscussthetablegivenbelow:

Particulars FY 07-08 % FY 06-07 % YoY change (%)Sales ( net of excise duty)(NetSales) 12,409 100% 9,736 100% 27%

Other Income 247 - 379 - -35%

Cost of Materials 5,035 41% 3,829 39% 31%

Manufacturing Expenses 3,304 27% 2,570 26% 29%

Employee Cost 963 7.8% 804 8.3% 20%Selling, Administration andOther Expenses 1419 11% 958 10% 48%

EBIDTA 1,935 16% 1,954 20% -1%

Financial Expenses 677 5% 478 5% 42%

Depreciation 847 7% 651 7% 30%

Taxes 152 1% 304 3% -50%

Net Income 263 2% 521 5% -50%Earning Per Share (Basic andDiluted) (Rs.) 3.9 - 7.1 - -49%

F.Y. 06 -07 F.Y.07- 08

Product

Particulars

Unit InstalledCapacity

ActualProduction

CapacityUtilisation

InstalledCapacity

ActualProduction

CapacityUtilisation

TerryTowel

MTPA 31,160 24,552 78.79% 37,074 29,822 80.43%

Bed LinenProducts

Mtrs 35.7m 17.5 m 48.94% 35.7m 28.4 m 79.50%

(Rs. Million)


22/101



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.

Theincomefromother sources dropped from Rs. 379. 0mto Rs. 246. 6min FY07 -08m ainl ydue to

thecumulativeeffectsofthefollowingincomes/losses:

i) Non- availability of excise benefits relating to the production facilities located at Anjar in Kutch

district of Gujarat which was beingprovidedfor inthebo oksti llthey earFY0 6-07.T hisres ulted

inExciseandSalesbenefitbeinglowerbyRs168.5m

ii) InsuranceClaimreceiptlowerby Rs23.1mcomparedtoFY06-07

iii) ProfitsofRs.114.9mon cancellationofforwardcontractswhichareundertakenbytheCompany

for hedgingitsforeigncurrencyexchangeratefluctuationrisks.

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..

ManufacturingExpenses increased by29%andamountedtoRs.3304mforFY2008.Manufacturing

expenses for towel as well as bed sheet were higher mainly due to increased packaging charges ,

SalesGraph

b) Otherincome

a) CostofMaterials

b) Manufacturing Expenses

3. Expenditure

3,010 3,3804,531

6,530

9,736

12,409

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

Year

Sales & Services

1 2 %

16%

3 4 %

4 4 %

4 9 %

4 4 %

49 %

2 7 %


23/101



dyes and chemical consumption, job work charges,

power cost, etc. which not only increased

disproportionately but also rendered positive impact

of economiesofscalenugatory.

Higher volumes of business as well as improved efficiency,

increased recovery of staffcosta ndothe rfix ed expenses during

theyear.

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 Excisebenefit sreceiv ableo fRs. 43.2 m were written off

duringthe year,whichwasoneofthemajorit ems,thoughnotrecurring,tohit theprofits

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.

TheDepreciationfortheFY07-08wasRs.847mascomparedtoRs.651minFY06-07representing

7 % of Net Sales in both the years. This was due to capitalization of new capacities establishedduring FY07-08, optimum utilization of the same will be reflected in the years ahead to lead to

significantreductioninits%agetoNetSales.

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 countriesandsignif icantriseininput costaswellasc onversionandother

expenses,particularlyinthelasttwoquartersofFY07-08.

The Deferredtaxwassignificantlylowerdueto lowerdeferredtaxableprof itinFY07-08comparedthatin

FY06-07. Resultantly,thenetIncom eintheFY 07-08wa sRs.26 3masagain stRs. 521mint heFY06-

07.Thisrepresents2%and5%ofthetotalrevenueinFY07-08andFY06-07respectively.

The Earning Per Share (Basic) stands at Rs.3.59 per shareascomparedt oRs.7. 06 pers har ein th eFY

06-07, reflecting lower earningsduringFY07-08.

c) EmployeeCost

d) Selling,AdministrationandOtherExpenses

e) FinanceExpenses(Net)

f) Depreciation

3. EBIDTA

4. Profit aftertax

5. EarningPerShare(Basic)


24/101



6. Net Sales/ReturnofNetWorth

7. Inventories

8. SundryDebtors

ConsolidatedAccounts:

Net Salestonetworthincreasedfrom1.79timesinFY06-07 to2.22times inFY07-08, showing volumegrowth of business but the same did not reflect in the bottom-line. Consequently, return on net worth

reducedfrom9.6%inFY06-07to4.7%inFY07-08.

The inventoryleveloftheCompanyincreasedfromRs.2,366.4masat31stMarch,2007toRs.2901.9m

as at 31stMarch, 2008.TheInventoryTurnoverRatio ( Net Sales / Inventory ) stands at 4.27a sa t3 1s t

March,2008comparedto4.10asat31stMarch,2007whichtranslatesinto85daysNetSalesforFY07-

08 compared to 89 days' for FY 06-07. This was mainly due to better inventory management during FY

07-08andinspiteofriseintheratioofcostofinputstosales.

DebtorsatRs.753mdecreasedbyRs.136mduetoimprovedtimingofrecoveryfromthedebtorsduring

the year. DebtorsTurnoverRatio (DTR) ( Netsales/Debt ors)forFY07-08was16. 47comparedto10. 54

forFY06-07.ThisTranslatesintocollectionperioddecreasingfrom33daysinFY06-07to22daysinthe

FY07-08.

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,asubsidiary companywith 76% equityinterest

andincreasedsalesbyWelspunUSAInc.,awhollyownedsubsidiary.

As At 31 March, 2008st 31 March, 2007st

Inventory Turnover Ratio 4.27 4.10

Inventory (Days) 85 89

As At 31 March,2008st 31 March,2007st

Debtors Turnover Ratio 16.47 10.94

Collection Period (days) 22 33


25/101



However, EBIDTA at Rs.2031.0 m was lower by 5%in FY

07-08 as compared to Rs. 2132.74m in FY06-07. Profit

BeforeTax (PBT)atR s.341 .04mw aslow erby 54%

Rs.739.21minFY06-07.NetLoss

after adjusting for share of Associates and Minority Interest

was Rs. 1. 55 m as against Net Profit of Rs .4 64 .5 5

mforFY06-07.

inFY

07-08 ascomparedto

forFY07-08

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 andregulations. Actual results may vary from those expressed or implied, depending upon economic condition,

Governmentpoliciesandotherincidentalfactors.

CautionaryStatement:


26/101


Welspun India Limited (Stand Alone)

Auditor's Report

Balance Sheet

Profit & LossAccount

Schedules

Cash Flow Statement

Balance SheetAbstract

Section 212 Statement

Welspun India Limited ( Consolidated )

Auditors Report

Balance Sheet

Profit & LossAccount

55

58

59

60

93

94

95

98

99

100

101

Cash Flow Statement 129

Schedules


27/101


DaretoCommit

55

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 dateannexedthereto,whichwehavesignedunderreferencetothisreport. Thesefinancialstatementsarethe

responsibility of the Management oftheCompany. Our responsibility is to express an opinion on thesefinancialstatementsbasedonouraudit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Thosestandards require that we plan and perform the audit to obtain reasonable assurance about whetherth efinancial 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 includesassessing the accounting principles used and significant estimates made by Management, as well asevaluatingtheoverall financial statement presentation. We believethat our audit provides a reasonablebasisforouropinion.

3. Asrequiredby the Companies (Auditor'sReport)Order,2003, asamended bytheCompanies (Auditor'sReport) (Amendment) Order, 2004 (together the 'Order') issued by the Central Government of India in

termsofsub-section(4A)ofSection 227ofTheCompaniesAct,1956ofIndia(theAct)andonthebasisof suchchecksofthebook sandrecordsofth eCompanyasweconsidere dappropriate andaccordingtotheinformationandexplanationsgiventous,wegiveintheAnnexureastatementonthemattersspecifiedinparagraphs4and5ofthesaidOrder.

4. FurthertoourcommentsintheAnnexurereferredtoinparagraph3above,wereportthat:

(a) We have obtained all the information and explanations which, to the best of our knowledge andbelief,werenecessaryforthepurposesofouraudit;

(b) Inouropinion,properbooksofaccountasrequiredbylawhavebeenkeptbytheCompanysofarasappearsfromourexaminationofthosebooks;

(c) TheBalanceSheet,ProfitandLossAccountandCashFlowStatementdealtwithbythisreportareinagreementwiththebooksofaccount;

(d) In our opinion,theBa lance Sheet, Profit and Loss Account and Cash Flow Statement dealt with bythisreportcomplywiththeaccountingstandardsreferredtoinsub-section(3C)ofSection211ofthe

Act;

(e) On theba sis ofwrittenrepresentationsreceivedfromtheDirectors,asonMarch31,2008,andtakenonrecord by the Board ofDirectors, noneoftheDirectorsisdisqualif ied as on March 31, 2008frombeingappointedasadirectorintermsofclause(g)ofsub-section(1)ofSection274oftheAct;

(f) In our opinion, and to the best of ourinformation and according to the explanations given to us,thesaid financial statements, together with the Notes thereon and attached thereto, give in theprescribed manner, the information required by the Act, and also give, a true and fair view inconformitywiththeaccountingprinciplesgenerallyacceptedinIndia:

(I) inthecaseoftheBalanceSheet,ofthestateofaffairsoftheCompanyasatMarch31,2008;

(ii) in the caseoftheProfitandLossAccount,oftheprofitfortheyearendedonthatdate;and

(iii) in the caseoftheCashFlowStatement,ofthecashfl owsfortheyearendedonthat date.

PartnerMembership No. F055158For and on behalf of

CharteredAccountantsMumbai,

Neeraj Gupta

Price Waterhouse & Co.

May 30, 2008


28/101


(i) (a) TheCompany hasmaintained proper recordsshowing full particulars, including quantitative detailsandsituation,offixedassets.

(b) Thefixedasset softheCom pany havebeenphysically verified bytheManagementduringtheyear,except certainfixedassets, insignificantinthe aggregate,at oneoftheCompany'sunitswhichwe reverified subsequent to theyear-end. No material discrepancies between the book records andt hephysicalinventoryhavebeennoticed. Inouropinion,thefrequencyofverificationisreasonable.

(c) In our opinion, and according to the information and explanations given to us, a substantial part of

fixedassetshasnotbeendisposed-ofbytheCompanyduringtheyear.

(ii) (a) The inventory has been physically verified bytheManagementduring the year. In our opinion,the

frequencyofverificationisreasonable.

(b) In our opinion,theproceduresforthephysicalverificationofinventoryfollowedbytheManagementare reasonableandadequateinrelationtothesizeoft heCompanyandthenatureofitsbusiness.

(c) On the basis of our examination of the inventory records, in our opinion, the Company hasmaintained proper records of inventory. The discrepancies noticed on physical verification of

inventoryascomparedtobookrecordswerenotmaterial.

(iii) (a) TheCompanyhasnotgrantedanyloans,securedorunsecured,tocompanies,firmsorotherpartiescoveredintheregistermaintainedunderSection301oftheAct.

(b) TheCompanyhasnottakenanyloans,securedorunsecured,fromcompanies,firmsorotherpartiescoveredintheregistermaintainedunderSection301oftheAct.

(iv) In our opinion, there is anadequateinternal control system commensurate with the size oftheCompanyandthenatureofitsbusinessforthepurchaseofinventory,fixedassetsandforthesaleofgoods. Further,

onthebasisofourexaminationofthebooksandrecordsoftheCompany,andaccordingtotheinformationand explanations given to us,weh avenei therco meacro ss nor have been informed of any instances of

majorweaknessesintheaforesaidinternalcontrolsystem.

(v) According to the information and explanations given to us, there are no contracts or arrangementsreferredtoinSection301oftheActduringtheyeartobeenteredintheregisterrequiredtobemaintainedunderthatSection.

(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 productswhere, pursuant to the rulesmade bytheCentralGovernm ent ofI ndia, the maintenance of cost recordshas been prescribedunderclause( d)ofsub- section( 1)ofSect ion 209ofth eAct,and areofopi nionthat ,

prima facie, the prescribed accounts and records have been made and maintained. We have not,however, made a detailed examination of therecordsw ithavi ewtodete rmine whethertheyarea ccurate

orcomplete.

(ix) (a) AccordingtotheinformationandexplanationsgiventousandtherecordsoftheCompanyexaminedbyus,inouropinion,theCompanyhasbeengenerallyregularindepositingtheundisputedstatutorydues in respect of provident fund, investor education and protection fund, employees' state

insurance, income-tax, sales tax,wealt htax, servi cetax,customsduty, exciseduty, cess and othermaterialstatutorydues asapplicablewiththeappropriateauthorities.

(b) AccordingtotheinformationandexplanationsgiventousandrecordsoftheCompanyexaminedbyus,therearenoduesofincometax,servicetax,customsduty,wealthtaxandcesswhichhavenot

Annexure to Auditors Report referred to in paragraph 3 of the Auditors Report of even date to the

membersofWelspunIndiaLimitedonthefinancialstatementsfortheyearendedMarch31,2008


29/101

DaretoCommit

57

beendepositedonaccountofanydispute. Theparticularsofduesofsales-taxandexcisedutyasat

March31,2008whichhavenotbeendepositedonaccountofadispute,areasfollows:

(x) The CompanyhasnoaccumulatedlossesasatMarch31,2008andithasnotincurredanycashlossesinthefinancialyearendedonthatdateorintheimmediatelyprecedingfinancialyear.

(xi) Accordingtother ecordsofthe Company examined by us andtheinformationand explanations givent ous, theCompanyhasnotdefaulted in repaymentof dues toanyfinancialinstitution orbankordebenture

holdersduringtheyear.

(xii) The Company has not granted any loans and advances on the basis of security by way of pledge ofshares,debenturesandothersecurities.

(xiii) The provisions of any special statute applicable to chit fund/ nidhi/ mutual benefitfund/ societiesarenotapplicabletotheCompany.

(xiv) In our opinion, the Company is not a dealer or trader in shares, securities, debentures and other

investments.

(xv) Inouropinionandaccordingtotheinform ationandexplanationsgiventous,thetermsandcondit ionsof

theguaranteesgivenbytheCompanytobanksthathavegivenloanstocertainsubsidiarycompaniesoftheCompany,arenotprejudicialtotheinterestoftheCompany.

(xvi) Inouropinion,onanoverallbasis,thetermloanshavebeenappliedforthepurposeforwhich they wereobtained.

(xvii) OnthebasisofanoverallexaminationoftheBalanceSheetoftheCompany,inouropinion andaccord-

ingtotheinformationandexplanationsgiventous,therearenofundsraisedonashort-termbasiswhichhavebeenusedforlong-terminvestment.

(xviii)TheCompanyhasnotmadeanypreferentialallotmentofsharestopartiesandcompaniescoveredintheregistermaintainedunderSection301oftheActduringtheyear.

(xix) The Company issued and redeemed during the year; short-term unsecured debentures aggregating toRs.500million,questionofcreatingsecurityorchargeinrespectofthesamedoesnotarise.

(xx) The Company hasnotraisedanymoneybypublicissuesduringtheyear.

(xxi) During thecourseofourexaminationofthebooksandrecordsoftheCompany,carriedoutinaccordance

with thegenerallyacceptedauditingpracticesinIndia,andaccordingtotheinformationandexplanationsgiventous,wehaveneithercomeacrossanyinstanceoffraudonorbytheCompany,noticedorreportedduringtheyear,norhavewebeeninformedofsuchcasebytheManagement.

PartnerMembership No. F055158

For and on behalf of

CharteredAccountants

Mumbai,

Neeraj Gupta


May 30, 2008

Annexure to Auditors Report referred to in paragraph 3 of the Auditors Report of even date to the

membersofWelspunIndiaLimitedonthefinancialstatementsfortheyearendedMarch31,2008

*Netofamountspaidunderprotest

NameoftheStatute Natureofdues

Amounts

(Rs.inmillion)*

Per iod towhich

the amountrelates

Forumwherethedisputeispending

GujaratSalesTax Act, 1969

SalesTaxincluding penalty

and interest0.88 2003-04

Joint Commissioner(Appeals -2), Vadodra

CentralExciseAct, 1944

ExciseDutyincludingpenalty

and interest1.56

April2002 toFebruary 2007

Commissionerof Central Exciseand Custom, Daman

CentralExciseAct, 1944

ExciseDutyincludingpenalty

andinterest17.80

April1999toApril2 000

Custom, ExciseandServiceTaxAppellate Tribunal,Ahmedabad



30/101


SCHEDULES

As atMarch

31, 2007

Asat

March

31, 2008

BALANCESHEETASAT MARCH31,200 8Rs. million

This is the Balance Sheet referred to in our report of the even date.

For andonbehalfoftheBoardofDirectors

M. L. Mittal

Executive Director(Finance)

Mumbai, May 30, 2008

B. K. Goenka


D. K. Patil

Company Secretary

R. R. Mandawewala

Joint Managing Director


Chartered Accountants

Mumbai, May 30, 2008

Neeraj Gupta

Partner

Membership No. F055158


SOURCES OFFUND SSOURCES OFFUND S

APPLICATION OF FUNDS

NOTES TOACCOUNTS

SHAREHOLDERS' FUNDS

Capital 1

Reserves and Surplus 2 4,

5,

LOANFUNDS

Secured Loans 3 1

Unsecured Loans 4 1

1

FIXEDASSETS

Gross Block 6A

Less: Depreciation

Net Block 1

Capital Work-in-progress 1,3

1

Incidental Expenditure Pending Capitalisation/ Allocation 6B

INVESTMENTS 7

CURRENTASSETS, LOANS ANDADVANCES

Inventories 8

Sundry Debtors 9

Cash and Bank Balances 10

Loans and Advances and Other Current Assets 11

LESS: CURRENT LIABILITIESAND PROVISIONS 12

Liabilities

Provisions

NET CURRENTASSETS

19

780.90 810.90

807.29 4,616.89

588.19 5,427.79

5,235.71 13,821.08

82.72 120.93

5,418.43 13,942.01

DEFERRED TAXLIABILITY (NET) 5 1,104.00 961.31

17,033.88 13,959.77

3,327.58 2,490.85

3,706.30 11,468.92

58.19 1,301.67

5,064.49 12,770.59

62.78 41.24

904.75 1,665.43

2,901.92 2,366.44

753.41 889.49

920.51 1,639.88

2,970.85 1,861.65

7,546.69 6,757.46

1,432.07 874.74

36.02 28.87

1,468.09 903.61

6,078.60 5,853.85

22,110.62 20,331.11

22,110.62 20,331.11

The Schedules referred to herein form an integral part of the Balance Sheet.


31/101

DaretoCommit

59

PROFITANDLOSSACCOUNTFORTHEYEAR ENDEDMARCH31,2008Rs. million

YearendedMarch

31, 2007

Year ende d

March

31, 2008SCHEDULES

9,759.4223.81

9,735.61379.07

10,114.68

6,398.56804.18958.34478.18650.63

9,289.89

824.79

-824.79

88.90(88.90)

-(7.50)

300.1111.15

521.03

1,100.08

(1.50)

1,619.61

182.836.49

-1,430.291,619.61

7.06

12,440.5031.06

12,409.44246.66

12,656.10

8,338.77963.37

1,418.92676.85847.19

12,245.10

411.00

3.52414.52

44.50(44.50)

--

142.699.17

262.66

1,430.29

-

1,692.95

30.00-

(29.67)1,692.621,692.95

3.59

13

14

15

1617

18

19

INCOME

SalesLess : Excise Duty

Other Income

EXPENDITUREMaterials and Manufacturing ExpensesEmployees' Remuneration and BenefitsSelling,AdministrationandOtherExpensesFinance 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

PROFIT AVAILABLE FOR APPROPRIATION

APPROPRIATIONSTransfer to Capital Redemption ReserveTransfer to Debenture Redemption ReserveTransfer from Debenture Redemption ReserveProfit and Loss Account Balance CarriedtoBalance Sheet

Earnings Per Share (Rs.) - (Refer Note 24 on Schedule 19)- Basic and Diluted

NOTES TOACCOUNTS

The Schedules referredtoh ere in fo rm an integral part of the Profit and LossAccount.

Less : Adjustment (net of deferred tax asset of Rs. Nil; Previousyear : Rs. 0.76 in accordance with transitional provisionmillion)in Accounting Standard 15 (Revised)

This is the Profit and LossAccount referred to inourreport oftheevendate.

For andonbehalfoftheBoardofDirectors

M. L. MittalExecutive Director(Finance)

Price Waterhouse & Co.Chartered Accountants

Mumbai, May 30, 2008 Mumbai, May 30, 2008

Neeraj Gupta

Partner

B. K. Goenka


D. K. PatilCompany Secretary

R. R. Mandawewala

Joint Managing Director

Membership No. F055158




32/101


SCHEDULE1: CAPITAL

SCHEDULESANNEXEDTOANDFORMINGPARTOFTHEBALANCESHEETASATMARCH31,2008 Rs. million

As atMarch

31, 2007

Asat

March

31, 2008

Authorised

81,500,000 Equity Shares of Rs. 10 each1,100,000 Redeemable Cumulative

Preference Shares of Rs. 100 each

23,500,000 Redeemable Cumulative

Preference Shares of Rs. 10ea ch

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)on Sched ule 19)

500,000 0% Redeemable Cumulative

Preference Shares of Rs. 100

each fully paid up (Refer Note8(a ) on Schedule19)

815.00110.00

235.00

1,160.00

730.90

-

50.00

780.90

815.00110.00

235.00

1,160.00

730.90

30.00

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


Add : Transferred fromPr ofi t and Loss Account

Debenture Redemption Reserve


Less : Transferred to Profit andLossAccount

Add : Transferred fromPr ofi t and Loss Account

Capital Reserve - Forfeiture of Equity Warrants

Profit andLossAccount

3,127.72

417.35

2,710.37

215.55

182.83

398.38

23.18

-

23.18

6.4929.67

48.18

1,430.29

4,616.89

2,710.37

72.26

2,638.11

398.38

30.00

428.38

29.67

29.67

-

--

48.18

1,692.62

#REF! 4,807.29


33/101


As atMarch

31, 2007

Asat

March

31, 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) onSch edule 19)

SCHEDULE 4 : UNSECUREDLOANS

Short Term Loans from Banks

(Repayableondemand)

SCHEDULE 5 : DEFERRED TAX LIABILITY (NET)

(Refer Note1(viii)(b) onSchedule 19)

Deferred Tax Liability arisingonaccount of Timing differences in :

- Depreciation

Deferred Tax Asset arisingona cco untofT imi ng 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

Interest Free Sales Tax Loan(Repayable in six annual installmentsfor each disbursement till October 7, 2010)(Repayable within oneyear Rs. 0.37 million;March31,2007:Rs0.45million)

171.60

983.43

139.27

9,896.75

110.15

2,519.88

13,821.08

0.85

120.08

120.93

1,354.18

3.71

21.67

9.97

4.53

352.99

392.87

961.31

-

1,176.60

-

11,128.42

39.90

2,890.79

15,235.71

0.40

182.32

182.72

1,645.68

8.08

19.02

11.75

4.53

498.30

541.68

1,104.00

DaretoCommit



34/101



35/101


SCHEDULE6B : INCIDENTAL EXPENDITURE PENDINGCAPITALISATION / ALLOCATION

As atMarch

31, 2007

Asat

March

31, 2008

Opening Balance 81.20

Add :

Power and Fuel 3.06

Freight, Forwarding and Coolie Charges 0.31

Repairs and Maintenance

- Others 0.09

Salaries, Wages, Bonus and Allowances 11.73

Contribution to Provident and Other Funds -

Staff and Labour Welfare 0.04

Rent -

-

Rates and Taxes 1.39

Printing and Stationery 0.02TravellingandConveyance 6.18

Legal and Professional Charges 6.25

Auditors' Remuneration

- Certification and Other Matters 0.15

Insurance 0.50

Communication 0.58

Postage and Courier

Loss on Cancellation of Forward Contracts (Net) 45.08

Interest on FixedLoans 117.76

Interest on Working Capital Loans 0.58

Discounting and Bank Charges 2.15

Loan Processing Charges 7.74

ExchangeLoss (Net) 0.01Miscellaneous 9.84

(B) 213.46

Less :

Interest on DepositAccounts - Gross 3.55

(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 4.42

Dividend 124.42

(C) 132.39

(A) + (B) - (C) 162.27

Less : Transferred to :

Plant and Machinery 116.14

Buildings 4.89

Incidental Expenditure Pending Capitalisation/Allocation 41.24

41.24

3.03

0.20

0.25

26.63

0.65

0.34

1.91

1.49

0.029.17

5.84

-

3.18

0.66

0.09

-

138.13

0.14

0.66

2.40

-4.86

199.65

33.99

6.42

2.29

30.09

72.79

168.10

87.11

18.21

62.78

(A)

DaretoCommit


(Refer Notes 1(iii) and 16(b) on Schedule 19)


36/101

SCHEDULE7: INVESTMENTS

(Refer Note1(vi)onSchedule19)


As atMarch

31, 2007

Asat

March

31, 2008

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

(Wholly Owned Subsidiary)Welspun USAInc.

5,000 Equity Shares of GBP 1 each, fully paid up of

Welspun Holdings PrivateLimited, Cyprus(Wholly Owned Subsidiary)

(Oftheabove1,000shares has beenpledgedwithbank

for securingthel oangi vent oWel spun Home Textiles UK

Limited, U.K.; the wholly ownedsubsidiary of Welspun

Holdings PrivateLimited, Cyprus)

600 (March 31, 2007 : Nil) Equity Shares of CHF1,0 00 each,

CHF 200paid upof WelspunAG, Switzerland

(Wholly Owned Subsidiary)

10,000 (March3 1, 20 07 :N il ) Equity Shares of Rs. 10 eachfully

paid upof Besa Developers andInfrastructure PrivateLimited (Wholly Owned Subsidiary)

In Others

2,750,000 Equity Shares of Rs. 10eachf ully paidu po f

Welspun Zucchi Textiles Limited

9,800,000 (March 31, 2007 : 4,900,000) Equity Shares of Rs. 10of Welspun Retail Limitedeach fully paid up

100 Equity Shares of Rs. 10 eachfully paidupofWel spunPower and Steel Limited

3,320,000 (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

Welspun Syntex Limitedeach fully paid up ofLess : ProvisionforPermanentDiminution

7,133,000 Equity Shares of Rs. 5 each fully paidu p o f

Welspun Gujarat Stahl Rohren Limited# Number of shares have reduced duringtheyearpursuant t o a capital reduction scheme

0.01

6.89

337.06

4.05

0.10

34.56

244.63

*

99.50

0.05

18.94

13.34

5.60

56.65

0.01

6.89

337.06

-

-

34.56

122.13

*

10.05

50.00

18.94

13.34

5.60

56.65



37/101

Current (At Lower of Cost and Fair Value)Non Trade - (Unquoted, Unlisted)

Investment In Mutual Funds Units of Rs. 10 each

Nil (March31, 2007: 10,9 27)C hola Liqu id InstitutionalDaily Dividend Reinvestment Plan

600,357 (March 31, 2007 : 414,664) DWS InstallmentCash Plus Fund - Daily Dividend Plan

Nil (March31,2007:1,671,100) ING Optimix ActiveDebt FoF Scheme - Dividend

241,114 (March 31, 2007 : 36,744,000) LICMF LiquidFund - Dividend Plan

4,437,300 (March31,2 007:2, 068,0 14)LI CMF Floating RateFund - Short TermPlan-DividendOption

23,668 (March31,2007:Nil)PrincipalFloating Rate Fund- Daily Dividend Reinvestment Plan

Nil (March31,2007:12,473)PrudentialICICILiquidInstitutional Plus Daily Dividend option

Nil (March31,2007:2,036)RelianceLiquidFund- Cash Plan-Growth Option-Growth Plan

13,490 (March31,2007: 12,73 5)Rel iance Liquid Fund- Treasury Plan Retail Option

Nil (March 31, 2007 : 55,109) SBI Mutual Fund - MagnumComma Fund Dividend

Nil (March31,2007:114,124)SBIMagnumMulticapFund Dividend

Nil (March31,2007:6,039) SBI Premier Liquid Fund-Institutional - Daily Dividend

Nil (March 31, 2007 : 10,000,000) SBI Debt Fund Series

Nil (March31,2007 :3, 015, 064) UTI Money MarketFund Daily Dividend Option Reinvestment

Nil (March31,2007:10,213,737) UTI Half Yearly FMPDividend Plan - Reinvestment

Nil (March31,2007:32,346,220)UTIQuarterlyFMP Dividend Plan - Reinvestment

Investment In Mutual Funds Units of Rs. 1,000 Each

Nil (March31,2 007 :1, 155 ) UTI Liquid Cash Plan Regular- Daily Income Option Reinvestment

Nil (March31,20 07: 13, 926 ) UTI Liquid Cash Plan- Daily Income Option ReinvestmentInstitutional

Investment In Bonds

217 (March 31, 2007 : Nil) Zero Coupon Redeemable Deep

Discount (2007 Series-II) Punjab InfrastructureDevelopment Bonds

Aggregate of UnquotedInvestments - At Book Value

Aggregate of QuotedInvestments - At Book Value-AtMarket Value

SCHEDULE7: INVESTMENTS

(Refer Note1(vi)onSchedule19)


As atMarch

31, 2007

Asat

March

31, 2008

-

6.18

-

2.65

45.05

0.24

-

-

0.14

-

-

-

-

-

-

-

54.26

-

-

61.39

904.75

842.50

62.252,740.78

0.11

4.15

16.71

403.38

22.23

-

0.15

0.02

0.13

0.58

1.20

0.05

100.00

52.99

102.14

323.27

1,027.11

1.18

14.19

-

1,665.43

1,603.18

62.25746.36

DaretoCommit



38/101

SCHEDULE10:CASHANDBANKBALANCES

SCHEDULE11: LOANS,ADVANCESANDOTHERCURRENTASSETS(Refer Note10(b)and23onSchedule19)


As atMarch

31, 2007

Asat

March

31, 2008

SCHEDULE 8 : INVENTORIES

(Refer Note 1(vii) on Schedule19)

SCHEDULE9: SUNDRYDEBTORS

(Refer Note10(a)onSchedule19)

Raw Materials 758.44 778.45

Work-in-Process 1,256.47 1,053.24

Finished Goods 622.47 267.35

Stores, Spares, Dyes and Chemicals 261.16 267.40

Traded Goods 3.38 -

2,901.92 2,366.44

Unsecured

Debts Outstanding for a periodexceedin gsixm onths :

- Considered Good 45.00 8.23

- Considered Doubtful 10.93 3.88

55.93 12.11

Other Debts :

- Considered Good 708.41 881.26

- Considered Doubtful 5.42 -

713.83 881.26

Less : ProvisionforDoubtfulDebts 16.35 3.88

753.41 889.49

CashonHand 1.84 0.88

Cheques on Hand 6.21 26.21

Balances with Scheduled Banks

-InCurrentAccounts 169.09 103.98

-InFixedDepositAccounts 743.37 1,508.81

920.51 1,639.88

LOANSANDADVANCES

Unsecured

Loans to Subsidiary Companies

- Welspun USAInc. 65.44 26.09

- Welspun Holdings PrivateLimited, Cyprus 393.92 301.27

- WelspunAG, Switzerland 155.97 -

- Besa Developers and Infrastructure PrivateLimited 31.50 -

646.83 327.36

(includes deposits aggregating Rs. 446.61 million;

banksagainst termloans, overdraft, letters of credit andbank guaranteefacilities.)

March31,2007: Rs. 285.63 million pledged with



39/101

SCHEDULE12:CURRENTLIABILITIESANDPROVISIONS


(Refer Note10(b)and23o nSchedule19)

As atMarch

31, 2007

Asat

March

31, 2008

-

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

0.31

670.45

2.29

0.08

1.89

9.37

163.04

27.31

874.74

0.30

1.50

2.8024.27

28.87

903.61

AdvancetoSubsidiaryCompany 6.44

Advances Recoverable in Cash ori nK in do rf or Va lu et ob eR ec ei ve d

- Considered Good 236.12

- Considered Doubtful 7.42

243.54

Less : Provision for DoubtfulAdvances 7.42

236.12

Balances with Customs, Excise, Sales Tax and otherGovernmentAuthorities

828.21

Advance Tax and Tax Deducted at Source

(Net of Provision of Rs. 229.90 million; March 31, 2007 : Rs. Nil)

34.39

Minimum Alternative Tax Credit Entitlement 182.40

Deposits 348.00

2,282.39OTHER CURRENTASSETS

Technology Upgradation Fund Credit Receivable 621.11

Interest Accrued on Loan given to Subsidiaries 38.49

Interest ReceivableunderSubvention Scheme 7.79

Interest Accrued on Deposits 21.07

688.46

2,970.85

- Welspun Mexico S.A. de C.V, Mexico

CURRENT LIABILITIES

Sundry Creditors

- Total Outstanding Dues of Micro Enterprises and Small Enterprises(Refer Note 15 on Schedule19)

0.75

- Total Outstanding Dues of Creditors otherthan Micro Enterprisesand Small Enterprises

1,195.78

Amounts due to Subsidiary Companies

- Welspun USAInc. 53.94

- Welspun Holdings PrivateLimited, Cyprus -

- Christy UK Limited 39.11

Advance Received from Customers 17.27

Temporary Overdraft with Scheduled Banks 88.93

Interest Accrued but not Due 36.29

1,432.07

PROVISIONS

Income Tax (Net ofAdvance Tax and Tax Deducted at Sources of -

March 31, 2007: Rs. 185.10 million)Rs. Nil;

Fringe Benefit Tax (Net ofAdvance Tax Rs. 27.82 million;March31,20 07: Rs. 18. 6 million)

1.45

Gratuity (Refer Notes 1(ix)(b) and18onSchedul e 19) -Leave Entitlement (Refer Note 1(ix)(c) o nSchedule 19) 34.57

36.02

1,468.09

DaretoCommit


SCHEDULE11: LOANS,ADVANCESANDOTHERCURRENTASSETS


40/101

SCHEDULESFORMINGPARTOFTHEPROFITANDLOSSACCOUNTFORTHEYEARENDEDMARCH31,2008Rs. million

SCHEDULE13: SALES

YearEndedMarch

31, 2007

YearEnded

March

31, 2008

8,701.70

697.199,398.89

360.53

9,759.42

17.60

22.94

40.13

1.51

--

1.68

2.01

-

29.77

205.05

58.38

379.07

761.55

4,177.42

4,938.97

778.45

4,160.52

12.32

(344.20)

196.92

779.47

976.39

267.35

1,053.24

1,320.59

Sales - Export 10,782.13

Sales - Local 997.4611,779.59

Export Benefits 660.91

12,440.50

SCHEDULE 1 4 : OTHERINCOME

Rent (Tax Deducted at Source Rs. 2.67 million,

Previous Year : Rs. 2.80 million)

11.18

Dividend 25.83

Insurance Claim 17.05

Profit on Redemption/ SaleofUnitsinMutualFunds 1.23

Profit on Sale of Bonds 4.97Liabilities Written Back as noLongerRequired 0.53

Provision for Doubtful Advances Written Back 4.89

Provision for Doubtful Debts Written Back 0.94

Profit onCancellation of Forward Contracts 114.92

Job Charges Received 22.23

ExciseandSalesTaxBenefit 36.55

Miscellaneous 6.34

246.66

SCHEDULE 15 : MATERIALS ANDMANUFACTURING EXPENSES

Raw Materials ConsumedOpening Stock 778.45

Add: Purchases 5,488.08

6,266.53

Less: Closing Stock 758.44

#REF! 5,508.09-1095221504

Cost of Traded Goods Sold 84.80

(558.35)

Increase in Stocks

Opening Stock

- Finished Goods 267.35

- Work-in-Process 1,053.24

1,320.59Closing Stock

- Finished Goods 622.47

- Work-in-Process 1,256.47

## 1,878.94

##



41/101

DaretoCommit

69

SCHEDULESFORMINGPARTOFTHEPROFITANDLOSSACCOUNTFORTHEYEARENDEDMARCH31,2008Rs. million

SCHEDULE15: MATERIALSANDMANUFACTURINGEXPENSES

SCHEDULE16:EMPLOYEESREMUNERATIONANDBENEFITS

YearEndedMarch

31, 2007

YearEnded

March

31, 2008

179.13763.73

142.40

146.57

853.46

461.05

19.53

4.05

2,569.92

6,398.56

Manufacturing Expenses

Stores and Spares Consumed 212.18Dyes and Chemicals Consumed 1,062.34

Contract Labour Charges 237.34

Job Work Expenses 116.88

Power and Fuel 1,018.25

Packing Charges 621.19

Repairs and Maintenance:

- Plant and Machinery 33.51

- Factory Building 2.54

3,304.23

8,338.77

Salaries, Wages,Allowances and Other Benefits(Refer Note18on Sche dule 19)

Contribution to Provident and Other Funds(Refer Note 18 on Schedule19)

Managerial Remuneration (Refer Note 11 on Schedule 19)

Staff and Labour Welfare

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

InsuranceCommunication

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 PromotionDonations

842.41 689.72

62.32 50.26

17.43 25.48

41.21 38.72

963.37 804.18

213.38 71.83

55.08 66.10

464.17 256.85

10.59 7.76

0.18 0.15

59.81 15.03

6.93 11.98

10.41 7.59

91.09 91.79

40.73 45.85

56.17 54.9012.60 14.45

22.96 21.38

6.91 28.97

13.41 -

5.28 -

- 71.86

- 5.74

5.57 0.37

11.58 13.51

43.23 -

2.10 6.04

223.26 104.165.36 7.09



42/101


SCHEDULE18:FINANCEEXPENSES(NET)

Auditors' Remuneration

- As Auditors- In other capacity - As Tax Auditors

- Certification and Other Matters

- Out of Pocket Expenses

Miscellaneous

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 onFi xedDeposits -Gross

(Tax DeductedatSourceRs.4.59 million, PreviousYear : 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

SCHEDULESFORMINGPARTOFPROFITANDLOSSACCOUNTFORTHEYEARENDEDMARCH31,2008 Rs. million

SCHEDULE17:SELLING,ADMINISTRATIONANDOTHEREXPENSES

YearEndedMarch

31, 2007

YearEnded

March

31, 2008

3.90 3.350.60 0.40

0.22 0.17

0.09 0.39

53.31 50.63

1,418.92 958.34

409.42 219.02

11.26 7.63

270.09 226.37

4.92 7.30

64.31 41.41

- 23.95

760.00 525.68

24.54 18.07

34.28 9.52

2.69 -

0.10 1.41

21.54 18.50

83.15 47.50

676.85 478.18


43/101

DaretoCommit

71

1. SignificantAccountingPolicies

(i) AccountingConvention

(ii) FixedAssets

(iii) ExpenditureIncurredDuringConstructionPeriod

(iv) BorrowingCosts

(v) Depreciation

(vi) Investments

(vii) Inventories

(viii) AccountingforTaxesonIncome

The Financial Statements are prepared to comply in all material aspects with all the applicableaccountingprinciplesinIndia,theapplicableaccountingstandardsnotifiedunderSection211(3C)oftheCompaniesAct,1956(theAct)andtherelevantprovisionsofthe Act.

Fixed Assets are stated at cost (net of cenvat credit, wherever applicable) less depreciation. Thecost includes cost of acquisition, construction, erection, installation etc., preoperative expenses(including trial run) and borrowing costs incurred during pre-operational period. Cost of softwareincludes licensefeesandimplementation/integrationexpenses.

Expenditure incurred during construction period represents expenses incurred for setting-up of

manufacturing facility including preoperative expenses for trial runs and borrowing cost incurredprior to the date of commencement of commercial production. These expenses are net of salesduringtrialrunandotherincomeaccruedpriortothecommencementofcommercialproduction.

Borrowing costs directly attributableto the acquisition/ construction offixed assets areapportionedtothecostofthefixedassetsuptothedateonwhichtheassetisputtouse/commissioned.

(a) Depreciation on FixedAssets, other than leasehold improvements, is provided on the straight-line method at the rates and in the manner prescribed under Schedule XIV to the Act.Depreciation onadditions/ deletionstofixedassetsiscalcul ated pro-rata from/up tothedateofsuchadditions/deletions.

(b) Leasehold improvementsareamortisedonstraight-l inebasisovertheprimaryperiodoflease.

(c) Computersoftwareisamortisedonthestraight-linemethodoveraperiodoffiveyears.

(d) AssetsindividuallycostingRs.5,000orlessarefullydepreciatedintheyearofpurchase.

Long term investments are stated at cost less provision, if any, for permanent diminution in value.Currentinvestmentsarecarriedatthelowerofcostandfairvalue.

(a) Inventoriesarevaluedatlowerofcostandnetrealisablevalue.

(b) Cost of raw materials andstoresand sparesisdeterminedon weightedaveragebasis. Costoftraded goods is determined on first-in-first-out basis. Cost of work-in-process and finishedgoods comprises of raw material, direct labour, other direct costs and related overheads butexcludeinterestexpense. Netrealisablevalueistheesti mateofthesellingpriceint heordinarycourseofthebusiness,lesstheestimatedcostsofcompletionandestimatedsellingexpenses.

Incometaxexpensecomprisescurrenttaxanddeferredtaxchargeorcredit.

(a) CurrentTaxationThe current tax is determinedas the amount of tax payableinrespectoftaxableincome fort heyearasperTheIncomeTax Act,1961,ofIndia.

(b) DeferredTaxationDeferredtaxresultingfromtimingdifferencesbetweenbookandtaxprofitsisaccountedforundertheliab ilitymet hod,atthe current/ substantially enacted rateof taxto theext enttha t

L

SCHEDULES ANNEXED TO AND FORMING PART OF THE BALANCE S HEE TAS AT MARCH 31, 2008

AND PROFITAND LOSSACCOUNT FORTH EYE ARE NDE D MARCH 31, 2008

SCHEDULE 19 : NOTES TO ACCOU

Documents

WIL Annual Report FY 2007-08.pdf