2007-08 - Aditya Birla Nuvo, Ltd

MANAGEMENT’S DISCUSSION AND ANALYSISconstantly enriching the product mix and introducing new product categories and accessories with globalbenchmarks. The Peter England brand continued to expand its reach. Esprit brand, for which the business hasdistribution rights in India, has become the largest and the most successful international brand in India.Branded GarmentsRs. Crores2007-08 2006-07 Change (%)Sales Volumes (Lacs Pieces) 106.9 97.5 10%Net Turnover 825.7 670.8 23%Operating Profit before Advertisement 115.5 126.5 –9%Advertisement Expenses 48.4 45.1 7%Operating Profit 67.1 81.4 –18%Capital Employed 471.2 331.2 42%Note:Garments’ Contract export business has been transferred to wholly owned subsidiary w.e.f. July 1, 2006. Contractexport performance has been excluded wherever necessary to make the performance comparable.The focus of the Branded Garments business was to expand the customer reach by increasing the controlledretail space. During the year, 115 new exclusive brand outlets (EBOs) were opened to reach 253 EBOs covering5.1 Lacs square feet of retail space. The business launched two new sub-brands – Peter England Elite andLouis Philippe Young — to enrich brand value and cater to all customer profiles.The net turnover of the branded garments business grew by 23% at Rs. 825.7 Crores as against Rs. 670.8Crores in the previous year. The operating profit was lower by 18% at Rs. 67.1 Crores vis-à-vis Rs. 81.4 Crores inthe previous year. The business has made investments in opening up of new stores, full benefit of which willaccrue in coming years. High lease rentals have also put pressure on margins.To bolster presence in the high end Apparel Retailing business, Nuvo has devised two new formats –MensLifestyle Stores and Peter England People. The plan is to open 3 large format Men’s exclusive lifestylestores for fashion and international brands under first format and 10 large format family stores for PeterEngland under second format in the Financial Year 2008-09.Contract Exports (Madura Garments Export Limited)Rs. Crores2007-08 2006-07 Change (%)Sales Volumes (Lacs Pieces) 68.3 45.6 50%Net Turnover 209.1 172.8 21%PBT (21.8) (0.5) —Capital Employed 187.8 125.9 49%Nuvo’s investment 26.2 26.2 —In the contract exports business at Madura Garments Export Limited, a wholly owned subsidiary of yourCompany, volumes increased by 50% to 68.3 Lacs pieces from 45.6 Lacs pieces and revenues grew by 21% toRs. 209.1 Crores. A new manufacturing capacity of 8.4 million pieces per annum was commissioned in August(20)