By K. Gopalakrishnan & Rajeswari Prasad
Indian manufacturers line up investment & expansion plans
The current year and beyond promises to be an excellent period of growth for the Indian textile industry. The new government under the leadership of Mr. Narendra Modi has given the much-needed encouragement and confidence to the business community to further invest, expand and grow. In our recent interaction with industry leaders, a sense of optimism and confidence was evident. As I pen this article, the Sensex is at an all-time high of 29,300 points. What better indication is needed of growing business confidence.
The Government will announce a new textile policy with an ambitious target of achieving 20 per cent share of the global textile trade and helping the domestic industry attain a size of $650 billion by 2024-25 by focussing on investments, skill development and labour law reforms. The policy blueprint, termed as the ‘Vision, Strategy and Action Plan’ for the textiles and apparel industry, lays thrust upon diversification of exports through new products and markets along with increasing value addition and promoting innovation and R&D activities.
The industry is expected to attract investment of about $120 billion by 2024-25 and create about 35 million additional jobs in the process. Exports are also expected to rise from the current $39 billion to $300 billion by 2024-25. The action plan notes that attracting the required investment entails ready availability of developed land with adequate infrastructure, skilled manpower and easy connectivity to ports, along with creation of new mega textile parks, lowering the cost of production and logistics, encouraging new entrants through start-ups, as well as FDI.
With the textile industry growth, the textile machinery industry size is also expected to double to Rs. 45,000 crores in the next seven years from the present Rs. 22,000 crores on the back of new projects and emphasis on setting up textile parks. “The growth in the sector and upcoming new projects, along with the Government initiative to set up textile parks, may boost the textile machinery industry. The market size of the sector is set to double to Rs. 45,000 crores in the next 7 years from the present Rs. 22,000 crores,” India ITME Society Chairman Sanjiv Lathia said.
The CITI Chairman, Mr. Prem Malik, takes a more cautious view of the emerging scenario. He feels that the Indian textile industry has the potential to cross a turnover of $350 billion by 2025 if it diversifies into new product categories like man-made fibres (MMF). Stating that the industry generated an annual revenue of around $100 billion at present with exports alone contributing nearly $60 billion, he said that, in contrast, the domestic market of China alone was pegged at $300 billion.
Seeing the future potential, Indian textile companies have already lined up investments for future capacity expansion. Companies like Trident, Welspun, Chiripal Group, KPR Mills, RSWM, Arvind, Raymonds and Mafatlals have announced siginificant investments in areas like home textiles, denim and garmenting.
A recent report by Wazir Advisors and PCI Xylenes and Polyesters says that China’s explosive growth in the last decade has completely rewritten the rules of the game. However, it is facing serious challenges as its costs rise which is finally allowing space for others such as India and South-East Asia to grow their textile and apparel industries again. India sits on the brink of a growth story that could become equally as impressive as China’s.
India has become a dream market for most marketers across many product segments. In textiles and apparel specifically, domestic consumption has grown at over 13 per cent per annum over the last five years and has reached well over $60 billion, fuelled by the demographic advantages of India’s population, increasing urbanisation, growing disposable income and more marked penetration of organized retail. India’s export of textiles and apparel has also grown at over 11 per cent in the last five years and presently stands at $40 billion – a success but a long way from where China’s industry stands today (just 10 per cent), and nowhere near its potential.
Traditionally Indian textile and apparel manufacturing industries have been cotton focused. Even today, cotton has more than a 60 per cent share compared to 40 per cent share globally. But this scenario is changing fast. Manufacturers, as well as brands, are increasingly looking towards other fibre options, mainly polyester. With the increase in the ‘Value Retailing’ format in the domestic market and increased demand for synthetic fibre-based products from global brands and retailers, demand for polyester is set to grow.
However, India’s downstream industry in textiles and apparels is not well developed, resulting in a weak link in the value chain. Investment is therefore required from international groups, as well as local Indian companies, to adjust the scale, efficiency and sophistication of India’s textile system to match future demand growth.
India’s textile industry is now going through a consolidation phase. There are now 30 companies with a turnover of more than $200 million, and many of them are growing in double digits. There are another 100 companies which are seen as stars of the future. We believe that it is these companies that could attract a host of leading edge, international textile and apparel companies into successful joint ventures. A more experienced and commercially enhanced system can be created which can then readily compete against China and other Asian nations and drive India’s textile industry forward to reach new heights.
The emergence of India as the second largest textile exporter in 2013 has encouraged textile players in the country to widen their production base extensively. In this edition, we have put together some of the major investment and expansion programs by Indian textile companies, some of which have been completed, some in progress and many lined-up for the future.
Chiripal Group to invest Rs. 3,640 crores The Chiripal Group signed a memorandum of understanding (MoU) with the Gujarat Government at the Vibrant Gujarat Summit 2015 in Gandhinagar, committing investments to the tune of Rs. 3,640 crores over the next two years. Nandam Denim, part of the Chiripal Group and the second largest denim manufacturer in India, will invest Rs. 612 crores in its Textile Park in Bidaj. The group will be investing around Rs. 1,306 crores to expand its spinning and weaving activities under Chiripal Industries Ltd. and Shanti Exports Private Ltd. The group is expanding polypropylene (PP) capacity and is coming up with polyester chips manufacturing, packaging film coating and converting and manufacturing of BOPET at a cost of Rs. 1,172 crores. The Chiripal Group is also planning to set up a knitting plant, and alongside manufacturing of terry towels will also be undertaken at an investment of around Rs. 400 crores at Dholi village in Dholkataluka of Ahmedabad. A spinning park known as Dholi Integrated Spinning Park Ltd. at Dholi has been planned at an investment of Rs. 150 crores, which will house 11 spinning units and five weaving plants. |
KPR Mills’ focus on garmenting
In order to meet the growing garment export demand, KPR Mills has initiated expansion plans in its garment business. The company has announced an annual capacity addition of 10 million pieces at its existing garment facility to make it 40 million pieces (single shift).  Besides expanding capacity at its existing facility, it has added up a new unit at Thekkalur, near Tirupur, with an annual capacity of 12 million pieces. The new facility which is expected to be operational in the fourth quarter of FY15 would result in creation of direct employment for about 1,200 persons. All these capacity additions are projected to enhance the overall garment operation of KPR by over 50 per cent in two years. KPR has also announced revival of operations at its state-of-the-art processing unit now backed by an ETP with a capacity to process 9,000 MT of fabrics per annum. KPR has a cumulative capacity of 3,53,088 spindles to produce 90,000 MT of yarn per annum, a knitting facility to produce 21,000 MT of fabrics per annum, a garmenting facility to turn out 63 million pieces of ready-made knitted apparel per annum (operating double shift), a state-of-the-art processing facility to process 9,000 MT per annum and 66 wind mills with aggregate power generation of 61.92 MW that meets 75 per cent of the company’s power requirement through green energy. Sensing the prospects for value-added yarn the company has already expanded its compact yarn capacity and has established a melange yarn unit at its Karumathampatti plant with a capacity of 16,128 spindles. Expansion and modernisation of the Sathyamangalam spinning plant has already been completed. The company performed exceedingly well in FY 2014 by clocking a turnover of Rs. 1,960 crores compared to Rs. 1,493 crores the previous year. Net profit was Rs. 130 crores (Rs. 100 crores). |
Welspun expansion programme
Textile companies all over are making a comeback in the home textile category with premium products to build better margins in a segment that is still fragmented and unorganized. The trend of premiumisation has started gaining hold in the home textile segment.  Welspun recently unveiled its new spinning facility of 1,70,000 spindles, the largest under one roof, at Anjar in Gujarat. The new facility at Welspun City, a 2,500-acre township is part of a Rs. 2,500-crore expansion plan aimed at growing its textiles business. The expansion of the Anjar plant is a major milestone, according to the company, representing its long-term commitment to the Indian economy and the Government’s ‘Make in India’ vision. The new facility will double spinning capacity to over 3,00,000 spindles, thereby fulfilling nearly 70 per cent of the internal yarn requirements of the manufacturer. Further, it will pave way for improvements in the company’s supply chain with lesser dependency on external sourcing. Post the new facility, Welspun India envisages greater emphasis on better quality and increased profitability which, in turn, will help consolidate its leadership position in the global home textiles industry. The 1,70,000 spindles and 140 looms, which are part of its expansion plans, would produce bed-sheets, towels and other made-ups. The remaining capex of around Rs. 1,300 crores is expected to be completed over the next two years, say company sources. Welspun India officially disclosed a revenue of Rs. 14,135 million in Q2 FY14, which was Rs. 11,589 million in the same period the previous year. It recorded a 22 per cent growth Y-o-Y driven by strong volume growth. The Indian home textile industry continues to consolidate its position as the leader in cotton home textiles. Backed by its scale, technology and integrated presence, the industry is expected to continue expanding its global market share. |
Mafatlal Industries hiking denim capacity Mafatlal Industries Ltd. (MIL) announced in mid-2014 that it has planned an additional investment of Rs. 200 crores in its Nadiad and Navsari units over the next three years. It is known that the company has already invested Rs. 100 crores in modernisation of these two plants in Gujarat. The move will help improve its product quality and increase volumes. The flagship of the diversified Arvind Mafatlal Group increased its denim production capacity from 20 million metres to 25 million metres. The company has plans to further raise it to 30 million metres by 2015 at its Navsari unit. The overall Indian production of denim fabrics is approximately 800 million metres per annum. Of this, exports stand at around 200 million metres. The Indian denim fabrics market is growing at a rate of about 8 to 12 per cent, compounded per annum. Over the last couple of years, the company has completely modernized its processing facilities that include the latest CBR and mercerizing machines from Goller. A new capex is underway to increase its annual capacity from the existing 24 million metres to 40 million metres from its two units. The all-new Gollercombi range and Gollermercerizer installed at the Nadiad plant will enable the company to increase its monthly capacity of two million metres to three million metres. The Perfecta mercerizer and the Effecta washing range are some of Goller’s well-known models. MIL registered a total revenue of Rs. 935.49 crores on account of higher production levels during 2013-14 as against Rs. 840.38 crores in 2012-13, signifying a growth of 11.32 per cent. Its profit after tax for the period amounted to Rs. 23.93 crores. |
RSWM’s Lakshya 2016
Considered as the most challenging period, from 2007-08 to 2013-14, RSWM invested Rs. 1,187 crores in capacity creation and modernisation of its plants. In the yarn division, its capacity increased from 1,50,428 spindles in 2003-04 to 3,43,856 spindles and 3,120 rotors in 2013-14, an average 19,343 spindles and 312 rotors added every year over the decade, with nearly 44 per cent of the spindlage being less than 10 years. The company commissioned its modern SJ-11 unit housing 51,840 units (15 per cent of its total spinning capacity), which went fully on stream during 2013-14.  In the fabric business, the weaving capacity was increased from 69 looms in 2003-04 to 104 looms. All looms are completely automated. A total of 14,232 spindles and 960 rotors were added to its denim division in the past five years, which resulted in enhanced output and efficiency. As a result, the company reinforced its scale to emerge among the largest Indian producers of synthetic yarn with an estimated market share (organised) of 7.5 per cent and its position as India’s largest producer of value-added melange yarn. In order to expand its capacity and widen its capabilities, the company is investing Rs. 40 crores in 50 looms to increase fabric production from nine lakh metres per month to 16 lakh metres per month, making it possible to enter the 100 per cent cotton and polyester-cotton fabric ranges, starting from 2014-15. It is investing Rs. 184 crores in expanding its mélange yarn capacity to enhance value-addition. Also an investment of Rs. 75 crores has been planned for a green fibre facility, which will replace about 25 per cent of its polyester fibre being procured, thereby reducing its costs. The above-mentioned expansion programme has started and is likely to be completed during the current financial year. This, in turn, would enable RSWM to achieve its targets set in pursuant of the ‘Lakshya 2016’ programme with an estimated turnover of Rs. 4,500 crores, involving a capex of Rs. 1,500 crores in stages to be achieved by 2016. RSWM recorded an increase of 16.72 per cent in its gross turnover from Rs. 2,471.04 crores in 2012-13 to Rs. 2884.32 crores in 2013-14. Its exports were estimated at Rs. 922.56 crores in 2013-14 as against Rs. 720.19 crores the year before, and its domestic turnover Rs. 1,961.76 crores as against Rs. 1750.85 crores in 2012-13. |
SINTEX Group’s Rs. 5,000-crore capex Sintex Industries, a dominant leader in the plastics and textiles segment, is setting up a spinning unit in Gujarat with three lakh spindles at a cost of Rs. 1,800 crores. According to company sources, this capacity will be ramped up to one million spindles with a total capex of over Rs. 5,000 crores over the next five years. Work on the new spinning plant has already begun. Production is expected to commence from 2015-16. The unit will provide direct employment to 500 persons and indirect employment to 1,200 persons. In 2013-14, the textile business of Sintex recorded a strong rebound supported by strong business volumes. Its revenue grew 15.72 per cent from Rs. 471.71 crores to Rs. 545.86 crores. This was achieved primarily due to the shift in focus from international markets to domestic customers which strengthened business volumes. The company launched high-value fabrics for the metros and Tier-I cities through its retail distribution chain. It came out with products like 2 Ply Ghiza mixing, linen and lycras (more in bottoms) in the same year. Sintex entered into a collaboration with Ricardo Rami Studio, in Milan, facilitating creation of a design collection and marketing the same to global fashion labels which, in turn, would strengthen the company’s global presence in the coming years. |
Sutlej Textiles plant expansion
Sutlej Textiles and Industries Ltd. (STIL) announced recently its plan to expand operations at one of its units, Damanganga Home Textiles, Daheli, in Gujarat, at a cost of Rs. 88.50 crores. The project which would be implemented in FY 2015-16 would result in increasing the capacity in the existing facility to 9.6 million metres from 2.5 million metres per annum. The company decision to expand its operations in the home textile division will ensure further strengthening of its end-to-end operations, yarns to home textiles. It has also been decided to close the operations of Damanganga Fabrics, Daheli, in view of its uneconomic working.  Sutlej is a leading producer of spun-dyed yarns in India. It enhanced its spun-dyed yarn capacity by 110 per cent over the decade leading to an average daily yarn production of over 199 tonnes. The company started commercial production of its expansion project of 31,104 spindles to manufacture value-added cotton melange and cotton-blended dyed yarn at its unit, Chenab Textile Mills, Kathua (J&K), from November 1, 2014. Post this expansion, the company’s total yarn spinning capacity stands at 2,92,840 spindles, of which 96,720 spindles are utilized to make cotton melange and cotton-blended dyed yarn. The rest of the spindles are utilized for producing synthetic dyed yarns. The capacity expansion will enable the company to further strengthen its position as a leading player in this niche segment. In addition, the company is investing towards modernizing-cum-balancing with a view to reducing the cost and increasing the production of value-added yarns. Sutlej has additionally invested Rs. 25 crores in September last out of Rs. 80 crores earmarked for FY 2015 towards technology upgradation, debottlenecking, etc., which will lead to higher efficiency and cost reduction. As a result, the company has emerged as a one-stop shop for all types of spun yarns. It has invested Rs. 830 crores in cutting-edge technology across 10 years. Nearly 69 per cent of its spindleage is less than a decade old. Yarn exports accounted for 22.62 per cent of the company’s revenues in 2013-14. It exports yarn to around 45 countries across the globe. Its Chenab Mills has an installed capacity of 1,71,288 spindles and the Rajasthan unit can produce nearly 90,448 spindles. Sutlej registered a revenue of Rs. 459 crores as against Rs. 492 crores during Q2 FY14, while on a half-yearly basis the company’s revenue stood at Rs. 951 crores compared to Rs. 935 crores the same period in the previous year. PAT for the quarter stood at Rs. 30 crores (Rs. 43 crores), while on a half-yearly basis PAT stood at Rs. 66 crores (Rs. 71 crores). |
Trident’s massive investments in home textiles With this expansion, the installed capacity of the company has increased to 688 looms, capable of producing 90,000 TPA of terry towels, making it the largest manufacturer of terry towels in the world. The inauguration of this plant marks the completion of the first phase of the composite textile project undertaken by the company in Budhni. Further, Trident laid the foundation for the second phase of its composite textile project comprising two spinning units, a bed linen unit and a captive power plant. This project will have 500 looms capable of producing 3.6 million metres of bed linen per month, 1.85 lakh yarn spindles and 60 MW of captive power. While the captive power plant will be commissioned in September 2016, the bed linen and spinning units are expected to be operational by September 2015 and will contribute nearly Rs. 1,200 crores to the company’s annual revenue. After unveiling the world’s largest terry towel plant, the Trident Group aims to surpass the bounds of being the world’s largest integrated home textile manufacturer and continues to expand and modernize its capacities making it comparable with global standards. The company already has its yarn manufacturing facilities at Sanghera in Punjab and Budhni in M.P. with a total of 3.66 lakh spindles and 3,584 rotors. The newly-commissioned plant at Budhni would further add 1,920 rotors to its existing capacity. With an investment of Rs. 60 crores for this expansion project, Trident has stepped forward towards the self-reliant manufacturing process. Trident also commissioned an open-end yarn spinning expansion project in July 2014, with a capacity of nearly 10,000 TPA of cotton open-end yarn for meeting the yarn requirement for its terry towel unit in Budhni. The company will make a total investment of Rs. 2,400 crores for its composite textile project and will engage over 25,000 families across all its business verticals. The project is completely vertically integrated, from cotton-to terry towel and from cotton to bed linen. Keeping pace with the technology, Trident has partnered with global suppliers like Karl Mayer, Toyota, Staubli, Benninger, Anglada, Muratec, LMW, Trutzschler, Oerlikon, Savio, etc., for its expansion and diversification plans. |
Vardhman plan of action The Ludhiana-based Vardhman Textiles invested Rs. 809 crores in yarn and fabric capacity expansion and modernisation in 2013-14. The company added 1,20,864 spindles in 2013-14, thus increasing its total spindlage to 933,331. It further added 230 looms in 2013-14, taking the cumulative count to 1,320 looms. Vardhman registered a total turnover of Rs. 5,171.31 crores in 2013-14 as compared to Rs. 4,159.71 crores, showing an increase of 24.32 per cent over the previous financial year. Its exports increased by 25.53 per cent, from Rs. 1,599.59 crores to Rs. 2,007.91 crores. Vardhman Textiles is also planning to set up two major weaving and fabric units in Himachal Pradesh’s Baddi town at an investment of Rs. 560 crores. Auro Textiles and Mahavir Spinning Mills, both subsidiaries of Vardhman Textiles, have planned to invest Rs. 22,858 lakhs and Rs. 33,028 lakhs respectively and would have an employment potential of 392 and 860 people in the new units. Official sources say the project will be completed in 18 months. This will add 250 looms to the weaving capacity, which, in turn, will help consolidate the overall fabric business of the company. |