ANNUAL REPORT 2000-2001
THE INDIAN CARD CLOTHING COMPANY LIMITED
Chairman's Statement
I have great pleasure in welcoming you to this 47th Annual General Meeting
of your Company
Period under Review:
The downturn in the domestic and global textile industry that I have been
mentioning for the last 3 years continued to have a restraining influence
on your Company's performance for the period under review.
Sales of card clothing products increased by a scant 2% to Rs. 37.05 crores
during the year (vs. an increase of 4% in the previous fiscal year).
Gross profit from operations increased by 50% to Rs 4.71 crores entirely
due to lower write-offs of bad debts for the period under review. Gross
profit from card clothing operations remained steady from the previous
year.
Gross margins were stable as a better product mix was mitigated by higher
costs.
Notwithstanding the global downturn in the textile industry it is important
to note the significant jump in exports during the period under review.
Exports of card clothing increased by 75% to Rs.7.36 crores. the highest
ever level in your Company's history.
Unit volume growth declined marginally by 0.3% inspite of the export boost
due to the continued closure of a large number of domestic textile mills.
New products introduced in the last 3 years. a key measure of product
innovation. has increased to 15.24% of sales (vs 11.58% previous year).
Although Garnett Wire Limited your Company s manufacturing subsidiary in
the UK, increased its turnover by only 1% to around Pound Sterling 1
million, its profits improved by 45% from the previous year. It also
declared a higher dividend of 11.43% (vs 10% in the previous year.
ICC Investment & Finance Consultants Limited a wholly owned subsidiary of
your Company reported a lower Profit After Tax of Rs. 8.13(previous year
Rs. 16.47 L) in line with a decline in the capital markets during the year
under review. It's net asset value fell to Rs. 13.59 (Rs. 16.40 previous
year end) a decline of 17% as compared with a decline of 28% in the BSE
SENSEX over the same period. In line with previous year's policy it did not
declare any dividend. Over the last 3 years the Net Asset Value has
increased by 51% as opposed to the BSE SENSEX which has declined by 7.4%.
ICC International Agencies Limited (formerly known as TexmaticC India
Limited) is now a wholly owned subsidiary of your Company. Your Company
purchased the remaining shares after obtaining the necessary regulatory
approvals. ICC International Agencies Limited reported a profit after tax
of Rs. 5.78 lacs (previous year loss of Rs. 36.62 lacs). No dividend was
declared due to the carry forward loss.
Current Prospects:
Reviewing the current year to date. sales of card clothing have shown a
decline of 18% compared to last year-s corresponding level. While the last
2 months have shown a slight up tick sequentially from the first quarter,
it is still too early to proclaim that the worst is over and as yet there
are no definitive signs of improvement.
Management continues to feel that conditions in the textile industry infact
will remain challenging this year and perhaps for the next few years
To meet these challenging circumstances management has enacted a series of
steps in co-operation with its employees to:
[1] cut costs
[2] manage inventory more efficiently;
[3] re-deploy under-utilized resources; and
[4] Seek out new competitive spaces and new geographic markets for the
Company's products.
This year for example your Company has introduced a new Top for the
Synthetic market. which has been received well. The Synthetic market had
heretofore been eluding your Company for some time.
Future Prospects:
It is the strong belief of management, shaped by the events of the last 3
years. that a sustained growth in sales and profits requires a far reaching
transformation within the Company. It is unlikely that the external
environment will improve drastically. In addition. the competitive
situation is worsening as card clothing manufacturers fight for a shrinking
market. This has been recognized since the 1998 fiscal year and although
progress has been slow and patchy the following ongoing initiatives have
been undertaken
Firstly. product innovation, where several new products have been
introduced in the last 3 years including new wires (Tenace. Stylus. Aero-
Dofferwires) and new products for the card room (Accura XBZ-E. Web Catcher.
ICC Card Booster). Your Company is continuing to work on several new
products (both wires and card room accessories) one of which should be
rolled out commenercially in the early part of the 4th quarter.
Secondly, by improving your Company's reach further in the export markets.
Lastly. through better management of working capital and reducing the cost
structure of the Company through the implementation of an ERP system with
the goal of automating operations.
While the tasks are being tackled vigorously and methodically. shareholders
should be cognisant that the time frame will be longer than initially
envisaged and that there are no quick and easy solutions or short cuts.
General
In closing, I would like to express my sincere thanks to all employees of
the Company for their efforts to bring about improvements in the quality of
the Company's products.
I thank all our customers for their confidence and support in us which. I
am sure. will continue to contribute towards progress and prosperity of
your Company in the future.
Thank you.
Pune K K TRIVEDI
September 6, 2001 Chairman