Hindoostan Mills Limited - BSE

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Business capacities and production Share Price Performance Business Capacity Annual Cloth 13,000,000 meters Calendar Bowls 400 nos. Yarn 2880 metric tonnes Production Annual Cloth 12,799,000 meters Calendar Bowls 351 nos. Yarn 2669 metric tonnes figures for FY11 Top Public Shareholders with >1% shareholding Sl. No. Name of the Shareholder Initiative of the BSE Investors’ Protection Fund No. of Shares held (thousands) Hindoostan Mills Limited Shares as % of Total No. of Shares 1 CZAR Realty Pvt Ltd 35.3 2.1 2 Harsha Hitesh Jhaveri 20.0 1.2 3 Hiren Naresh Kara 65.4 3.9 4 Hitesh Ramji Jhaveri 22.7 1.4 5 Naresh Ranjitsinh Kara 32.2 1.9 6 National Insurance Company Ltd 30.0 1.8 7 Yogesh Uttamlal Mehta 20.2 1.2 Total 225.9 13.6 Change in Shareholding Pattern (%) Year Promoters DII FII Others Jun-12 51.6% 1.9% - 46.5% Mar-12 51.6% 1.9% - 46.5% Dec-11 51.6% 1.9% - 46.5% Sep-11 51.6% 1.9% - 46.5% Mar-11 63.8% 4.3% - 32.0% Mar-10 69.1% 3.6% - 27.3% Mar-09 69.1% 3.6% - 27.3% Mar-08 69.1% 3.6% - 27.3% 10% 0% -10% -20% -30% -40% -23% *2 yr = October 2010 to September 2012 Shareholding Pattern (%) 46.51% -32% 1.93% 4% 2 YR 1 YR HML BSE Small Cap 51.56% Promoters DII FII Others 1% Page 2 of 6
Debt free company Shift in consumer preferences Increased competition in exports Volatility in raw material prices and availability Key contributor to economy Fragmented industry structure Roll manufacturing business Government intervention Key strengths Hindoostan Mills Limited Due to the prevailing high interest rate environment, most of the debt-laden textile companies have faced downward pressure on their margins due to increased interest expenses. However, HML has not availed of any loans from banks in the last few years. The debt-free status has been one of the key strengths of the company vis-à-vis its peers and is expected to facilitate its recovery process. Key concerns While cotton fabric constituted 60% of the total textile production in the mid-90s, the share has steadily come down over the last 15 years and by 2008-09, the share of cotton fabrics had decreased to 48%. This is attributable to a shift in consumer preferences and growing demand for non-cotton fabrics such as polyester, silk, wool and khadi. Textile exports from neighboring countries like China, Pakistan and Bangladesh have stared posing a severe threat to Indian textile companies. The availability of low-cost labour in these countries has negated the cost-advantage for Indian exporters, thereby resulting in intense competition for access to the international markets. The company uses cotton as one of its primary raw materials. Due to lack of local availability, cotton prices have been extremely volatile in the last two years and reached a peak price of Rs.65000 per candy (356 kg) towards the end of FY11 (up from the average range of Rs.30000-40000). Any further adverse movements in rates would further suppress the operating profits. Further, there is also a limited availability of fine count cotton hard waste (a waste product of spinning mills and a major raw material for the roll manufacturing division), which may constrain the roll manufacturing/calendar bowl business of the company. Industry overview The Indian textile industry plays a major role in the economy and contributes 3% to the GDP and 14% to the overall industrial production in the country. The industry is also one of the largest exporters and India has set an export target of $40.5 bn (Rs.2106 bn) for the fiscal year 2012-13. The industry, which produced around 60,996 million sq meters of fabric in FY11, is dominated by unorganized small scale units. The segment is highly fragmented and there are more than 77,000 textile fabric manufacturers in the country. Due to high barriers of entry and lack of technical know-how, the roll manufacturing business in India continues to remain a niche segment. However, the end-users (unorganized small scale fabric manufacturers) are extremely price sensitive, which makes it difficult for companies to charge a high premium on their products. Government policy The textile industry is highly regulated with excess government intervention in export policies of cotton (and other related products) with regards to pricing, quotas, and other limitations/restrictions. Uncertainty and policy delays by the government therefore have a huge impact on the strategic plans of the entire industry. With the removal of trade barriers under the WTO, both the domestic and international competition in textile products like cotton yarn and fabric have increased manifold. In order to ensure that the local textile players are able to match international standards, the Government had launched the Technology Upgradation Fund Scheme (TUFS) to Technology Upgradation Fund (TUF) provide capital at subsidized interest rates and longer repayment periods to textile companies in order to become more cost effective and quality oriented. While the scheme was due to expire in March 2012, the Government has expresses its intent to include the TUFS under its 12 Page 3 of 6 Initiative of the BSE Investors’ Protection Fund th five-year plan (2012-2017).
Page 1: 28 September 2012 CMP: Rs.360 Indus
Page 5 and 6: 4,000.0 3,500.0 3,000.0 2,500.0 2,0

Hindoostan Mills Limited - BSE

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