Dear Stakeholders,

Rajasthan's economy since the time immemorial has been described by two words “Jamana” and “Akal”. Being agriculture based economy, whenever rainfall was below normal, Akal (drought) used to strangle the economy and public looked at bottom of the barrel. In contrast when Sawan-Bhadon were kind and harvest was bountiful, it was Jamana (joy) in every household.

RSWM’s home is Rajasthan. The financial year 2008-09 was Akal, which can be compared with Chappaniyan Akal of Samvat 1956 (i.e. 1900 as per English calendar) - the worst in living memories. After the Akal of 2008-09, the financial year 2009-10 has been a true Jamana. All segments of the Textile Industry, particularly spinning and weaving, performed very well throughout the country. The strong domestic demand more than compensated any slowdown in international markets.

The shock of 2008 continued but as mentioned in last year, the turnaround had started and it picked up momentum in the second half of the financial year. It was a year of hyper inflation, so along with all commodities, the prices of every type of raw material for the Company went on galloping northward. As a result, the material costs increased by 12% to Rs.871 crore in FY 2009-10 from Rs.775 crore in FY 2008-09. But markets showed brilliant resilience, and as part of inflation the increase in costs were largely absorbed by the market. As a result, the input material costs as a percentage of turnover decreased to 56.7% in FY2009-10 from 59.5% in FY2008-09.

Like unpredictable Monsoon, improvements in the markets and bounty were unforeseen. The markets became Jamana so the Company ended the financial year with improved results. The Company registered an increase of 18.1% in its gross turnover to Rs.1,538 crore in FY2009-10 from Rs.1,302 crore in FY2008-09.  This increase in turnover has been primarily on account of increase in yarn production to 85,784 MT against 79,989 MT in previous year; increase in fabric production to 2.30 crores  meters from 2.00  crore meters and improved average realization because of revival in demand, specially from the Western markets. All wings of the Company operated at full capacity.  The exports, which had declined to around 30% of our overall turnover on an annual basis in FY 2008-09, moved upwards and accounted for nearly 37% of our turnover in FY 2009-10. The exports turnover increased by 45% to Rs.567 crore in FY 2009-10 from Rs.392 crore in FY 2008-09.

On the profitability front, with increased realizations and cost of inputs under control, the operating profits (PBIDT) increased to Rs.194 crore in FY 2009-10 from Rs.77 crore in FY 2008-09. The financial expenses dropped to Rs.57 crore in FY 2009-10 from Rs.68 crore in FY 2008-09 mainly on account of reduction in term loans and  better  management of working capital facilities. Consequently, the cash profits (PBDT)  was Rs.137 crore.  The  PAT was Rs.36 crore in FY 2009-10 as compared to loss of Rs.64 crore in FY 2008-09.

With the outlook for the Indian textile industry likely to be bullish on account of revival of markets in general, the Company is adding 35,000 spindles in the current financial year. The additional spindles are expected to be operational in second half of the financial year.

Looking to present market situation and with the Denim business also improving, the outlook of the current financial year looks to be better.

With Best wishes