Alok Industries

The financial year that has gone by was probably the most turbulent in
 recent memory. 2008-09
 
 started with economies witnessing the most concerted and synchronised
 price rise for all asset categories in more than a century: the prices
 of agricultural products, minerals and metals, oil, commodities and
 foodstuffs were all headed north. After more than a decade, India
 witnessed double digit inflation. And oil prices were hovering around
 the US $ 147 mark, with pundits predicting that it would breach the US$
 200 barrier.
 
 Then came the crash. It started as a housing problem in the US, morphed
 into a sub-prime crisis and then, triggered by the bankruptcy of Lehman
 Brothers on 14 September 2008, became a full- fledged financial
 meltdown.  Liquidity was sucked out; banks were closed down and its
 effects spread to every continent. Banks and financial institutions
 became wary of lending and funds for expansion or indeed sustenance
 became hard to access. India was no exception. In the last Annual
 Report, I had said that Indias growth is being pegged at 8% for
 2008-09 – the final estimates came in at 6.8%. The global and Indian
 textile industry was also adversely impacted in this financial
 slowdown: exports shrunk, units were shut down or reducing production
 and cost cutting measures became the order of the day.
 
 In the middle of this challenging economic environment, your Company
 closed the financial year ended 31 March 2009 on a decent note,
 maintained its exports level and started the new financial year with a
 healthy order book. Let me share some key numbers, the details of which
 are available in the accompanying Management Discussion & Analysis.
 
 Net sales increased by 37.16% to Rs. 2,976.93 crore. The Apparel
 Fabrics division reflected growth of 83.65%, driven mainly by domestic
 demand.  Nearly all other divisions also grew by double digits over
 their previous years performances.
 
 - Export income was at Rs.  1,054.50 crore for the year ended 31 March
 2009; which constituted 35.42% of sales and were maintained at the
 previous years levels.  In fact, manufactured exports (i.e.  not
 including exports of cotton) actually grew by 32.93% over its previous
 years levels to reach Rs.  1,004.89 crore - the first time in the
 history of your Company when manufactured exports have crossed the Rs.
 1,000 crore -mark.
 
 - Earnings before interest, taxation, depreciation and amortisation
 (EBITDA) increased from Rs.  591.38 crore to Rs.  822.61 crore - a
 year-on-year growth of 39.10%.
 
 - Profit before taxes (PBT) reached Rs. 284.99 crore (2007-08: Rs.
 297.59 crore).
 
 - Profit after tax (PAT) reached Rs. 188.37 crore in 2008-09 (Rs.
 198.66 crore in 2007-08).
 
 - The book value per share for your Company as on 31 March 2009 stood
 at Rs. 89.10, compared to Rs. 76.47 as on 31 March 2008.
 
 - Earnings per share (EPS) wwwww Rs. 8.81.  These are not numbers that
 have been achieved by chance or by good fortune.  They are a result of
 years of planning and execution, coupled with the power of our
 conviction.  We have always believed that scale, technology,
 integration, quality, product range and diversification wll be and
 remain the keys to your Companys success, whatever be the challenges
 that it faces.  Let me elaborate a bit on them.
 
 Even before the Multi Fibre Agreement (MFA) regime was lifted, your
 Company was of the view that in order to grow, size and integration
 would matter. We believed that cutting edge technology will be a key
 enabler in producing quality textile offerings that would be
 appreciated by the global customer and would provide your Company with
 significant advantages.  Your Company, therefore, had embarked on a
 series of capacity expansions, keeping in mind two objectives: (a) to
 create global scales of operations and efficiencies; (b) to be present
 in all elements of the textile value chain.  Over the past few years,
 your Company has commissioned state-of-the-art plants at its
 manufacturing locations, along with world class infrastructure in terms
 of design and product development capabilities, laboratories, captive
 power plants and waste treatment and recycling units. These initiatives
 have made your Company what it is today: among Indias largest
 integrated textile solutions companies.
 
 We believe that your Companys range of products has been and will be
 one of its most distinguishing features. Your Companys integrated
 operations make it present across the entire textile value chain; from
 cotton and polyester yarn to apparel fabrics, home textiles and
 garments. Your Company, in effect, caters to practically the entire
 wish list of the customer; not just for small quantities, but in
 global size and scale. The integration has also made your Company cost
 and time efficient. Global retailers are now looking for vendors who
 can supply them with large volumes of high quality products within a
 short time-frame; they prefer to buy from a few large vendors rather
 than multiple small ones. This buying consolidation has meant that
 your Company, which offers large volumes of products across the textile
 spectrum at competitive prices, has an inherent advantage and
 acceptability in global markets.
 
 But size, scale and range of products are not enough. We believe that
 the quality of our product offerings is and will continue to remain a
 key enabler in your Companys growth path. To ensure this, we have,
 over time, committed your Company to produce the best quality of
 textile products. Your Company is, among others, certified for OEKO –
 Tex Standard 100, GOTS / EKO for sustainable textiles, fair trade
 standards (FLO), ECO CERT and SKAL for its fair trade and organic
 cotton products.
 
 Moreover, I am proud to inform you that your Company, has, during the
 year, received the IMS (Integrated Management Systems) Certification
 encompassing ISO 9001:2000 , ISO 14001:2004, OHSAS 18001:2007 and SA
 8000:2008 at your Companys units viz., Silvassa, Vapi, Navi Mumbai and
 HO. I am given to understand that your Company is the only textile
 enterprise in India to have received this certification.
 
 Presence across the product spectrum is one part; we believe that
 presence across multiple geographies is also a key to success and a
 major risk mitigator. Today, your Company exports to over seventy
 countries across the Americas, Europe,
 
 Asia and Asia Pacific, Africa and the Middle East.  As stated earlier,
 your Company crossed Rs.  1,000 crore in manufactured exports for the
 first time in 2008-09; I believe that this upward growth will continue
 into the future.
 
 Your Company believes that long-term growth can come about only if it
 is sustainable and further, sustainable growth is non-negotiable. To
 us, sustainable growth means not only growing shareholder wealth, but
 growing stakeholder wealth. Our stakeholders encompass our customers,
 our business partners, our employees, our society at large and the
 environment in which we operate.
 
 Your Company is deeply committed to sustainable growth and the
 initiatives in sustainable development are holistic, based on the
 simultaneous pursuit of the triple bottom line – social equity,
 environmental quality and economic prosperity. This translates into
 abiding commitment for the three Ps: People, Planet and Profits.
 
 In its pursuit of social equity, your Company is committed to provide a
 safe and healthy working environment for its employees, training its
 people in best manufacturing and safety practices and involving itself
 in community education initiatives.
 
 Your Company has undertaken a number of sustainable measures that
 ensure that environmental resources are not depleted; these include the
 quality of raw material resources that your Company uses, recycling
 waste materials and minimising manufacturing practices that adversely
 impact climate change. Moreover, your Companys initiatives in organic
 cotton help towards making cotton cultivation more
 environment-friendly.
 
 On the economic prosperity front, your Company has focused on three
 segments: local employment, women empowerment and infrastructure
 development. Your Company helps to raise the quality of life in
 communities where it operates and be an employer of choice. In Silvassa
 and Vapi, your Companys presence and investments have contributed to
 the local economic health and have created significant employment
 opportunities. Recognising that women empowerment can contribute to
 social development and local wealth creation, your Company has trained
 local tribal women for its plants. A large part of infrastructural
 development, especially in Silvassa, can be ascribed, though not
 attributed, to your Companys presence. We have also directly
 contributed to infrastructural development by initiating a slew of
 measures relating to healthcare, education, meals for schoolchildren
 and facilitating potable water to surrounding villages.
 
 You can read about your Companys initiatives on sustainability in
 greater detail in a separate section that accompanies the Management
 Discussion & Analysis.
 
 We believe that our initiatives in creating sustainable manufacturing
 excellence, quality products and stakeholder wealth have been
 recognised, appreciated and supported by our shareholder community and
 by our financial partners.  During the year, your Company came out with
 a Rights Issue of 40.87 shares of face value of Rs. 10.00, each with a
 premium of Re. 1.00, which were offered in the ratio of 83 shares for
 every 40 shares; the issue value aggregated to Rs. 449.60 crore. The
 Issue, which opened on 31 March 2009 and closed on 22 April 2009, was
 oversubscribed 1.15 times.
 
 Looking to the near-term future, the macroeconomic indicators are
 starting to show positive trends. We seem to be witnessing the first
 signs of recovery from the global downturn, especially in Asian
 economies; a stronger growth is forecasted for 2010; and your Company
 is well-positioned to leverage this to the maximum. Therefore, I am
 confident that your Company will continue to grow and generate greater
 stakeholder value in the coming years.
 
 Let me thank all our business partners, financial institutions and
 customers for their belief in us and our strategies. To Team Alok, my
 sincere compliments for the efforts that they have put in during a year
 that challenged the world. And to you for your support as a
 shareholder.
 
 Yours sincerely,
 Ashok B. Jiwrajka
 Executive Chairman