2007-08 - Aditya Birla Nuvo, Ltd

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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)
MANAGEMENT’S DISCUSSION AND ANALYSIS2007, taking the peak capacity to 15.4 million pieces. Full service provider business started during the year inIndia, UK and US also contributed to revenue growth. However, the profitability of business was impacteddue to US Dollar weakening and stabilisation of the newly added capacity.Business OutlookThe branded garments business has a positive outlook. Indian premium apparel market is set to witnessrapid growth, driven by rising consumer demand and availability of high quality retail space. However, theentry of large number of strong international apparel and retail brands may pose a strong challenge.The branded garments business has a well-defined strategy and growth plan to maintain leadership andincrease market share. The business is working to fortify its existing dominance in premium formal wearspace, besides creating a significant presence in faster growing casual wear market and catering to women’swear and kid’s wear segments. The business will aggressively pursue retailing of Lifestyle and Popular brandsby expanding its reach through exclusive brand outlets, besides opening up of large format family stores forPeter England and Men’s exclusive lifestyle showrooms for fashion and international brands. The business isalso laying thrust on cost efficiencies by efficient management of discounting, supply chain and outsourcing.The emphasis of contract exports business is on enhancing profitability of the business through improvedproduction efficiency and capacity utilisation for cost optimisation besides reducing dependence on USDbusiness.IT SERVICES (PSI DATA SYSTEMS LIMITED)Rs. Crores2007-08 2006-07 Change (%)Revenues 101.1 93.6 8%PBIT 6.5 4.9 33%PAT 2.5 1.5 66%Capital Employed 31.6 29.1 9%ROACE (%) 21% 19% —Nuvo’s Investment 115.3 115.3 —Performance ReviewPSI Data Systems Limited generated revenues of Rs. 101.1 Crores and reported a net profit of Rs. 2.5 Crores.The growth in revenues and profitability could have been higher but for the impact of the weakening of theUS Dollar.The business has been successful in increasing the proportion of high margin offshore business to 60% ascompared to 51% in the previous year. 18 new clients were added during the year. Its manpower utilizationfor the full year is in the range of 80%, in line with the industry.Business OutlookThe overall outlook for the business is positive though it faces the challenge of appreciation in Indian Rupee,economic uncertainty and unravelling in the financial services markets. PSI Data Systems has continued tostrengthen its market presence, and is poised to grow steadily. Its domain depth and technology expertise ishelping it build long term relationships in its key verticals, i.e., financial services and high tech.(21)
Page 2 and 3: Mr. G. D. Birla and Mr. Aditya Birl
Page 4 and 5: THE CHAIRMAN’S LETTER TO SHAREHOL
Page 7 and 8: THE CHAIRMAN’S LETTER TO SHAREHOL
Page 9 and 10: ADITYA BIRLA NUVO LIMITEDBOARD OF D
Page 11 and 12: FINANCIAL HIGHLIGHTS - STANDALONERs
Page 13 and 14: MANAGEMENT’S DISCUSSION AND ANALY
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Page 45 and 46: SOCIAL REPORTMaking a difference -
Page 47 and 48: ENVIRONMENT REPORTElements for the
Page 49 and 50: SHAREHOLDER INFORMATION6c. Domestic
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Page 59 and 60: DIRECTORS’ REPORT TO THE SHAREHOL
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ANNEXURE ‘B’ TO DIRECTORS’ RE
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ANNEXURE ‘B’ TO DIRECTORS’ RE
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AUDITORS’ REPORT TO THE MEMBERSAn
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AUDITORS’ REPORT TO THE MEMBERS(x
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PROFIT & LOSS ACCOUNT FOR THE YEAR
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SCHEDULESSCHEDULE 2RESERVES & SURPL
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SCHEDULESRs. CroresAs atAs atFace V
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SCHEDULESSCHEDULE 7INVENTORIESAs at
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SCHEDULESRs. CroresYear EndedYear E
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SCHEDULESSCHEDULE 19SIGNIFICANT ACC
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SCHEDULESSCHEDULE 19 (Contd.)SIGNIF
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SEGMENT DISCLOSURES FOR THE YEAR EN
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CASH FLOW STATEMENT FOR THE YEAR EN
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AUDITORS’ REPORT ON THE CONSOLIDA
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CONSOLIDATED PROFIT & LOSS ACCOUNT
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SCHEDULES FORMING PART OF CONSOLIDA
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SEGMENT DISCLOSURES FOR THE YEAR EN
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CONSOLIDATED CASH FLOW STATEMENT AS
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ANNEXURE ‘1’ OF STATEMENT PURSU
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STATEMENT PURSUANT TO SECTION 212(8
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ANNEXURE ‘A’ OF STATEMENT U/S 2
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ANNEXURE ‘A’ OF STATEMENT U/S 2
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ADITYA BIRLA NUVO LIMITEDRegistered
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2007-08 - Aditya Birla Nuvo, Ltd

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