Century Enka Ltd. (CEL), a prominent player in India’s synthetic yarn sector, demonstrated resilience and strategic foresight in the fiscal year 2023-24. With two state-of-the-art manufacturing facilities in Pune, Maharashtra, and Bharuch, Gujarat, the company continues to solidify its position as a leading producer of Nylon Filament Yarn (NFY) and Nylon Tyre Cord Fabric (NTCF) in India, holding approximately 25% and 23% of the domestic market share, respectively. Despite facing intense competition from China and evolving market dynamics, Century Enka has achieved noteworthy financial results while laying the groundwork for future growth.
Century Enka’s financial performance in FY 2023-24 reflects its strong fundamentals and ability to adapt to changing market conditions. The company reported a net profit of Rs. 428 million and a revenue of Rs. 17,442 million, showcasing its determination to overcome challenges and meet its targets for the coming year.
Strategic Expansion Initiatives
In FY24, Century Enka made significant strides in expanding its capabilities. The commencement of operations at the Pune dipping plant, which eliminates the need to transport NTCF from Pune to Bharuch, is expected to reduce transportation costs and emissions. Additionally, the company has commissioned spinning capacities for Polyester High Modulus Low Shrinkage (HMLS) yarn and is preparing to seek approval for Polyester Tyre Cord Fabric (PTCF). These initiatives reflect Century Enka’s proactive approach to meeting industry needs and capitalizing on emerging market opportunities.
NTCF and NYF Growth Opportunities
Century Enka’s NTCF is integral to the reinforcement of Bias/Cross-ply tyres, widely used in trucks, buses, two-three wheelers, and off-the-road (OTR) vehicles, including those in mining, forestry, and agriculture. The company has seen significant improvements in NTCF exports and robust domestic demand, particularly from the two-wheeler segment. Century Enka continues to tailor NTCF products in close collaboration with clients, ensuring they meet specific performance criteria.
The Indian Tyre Industry is currently on a growth trajectory, propelled by momentum in the automotive sector and the increasing international presence of Indian tyre brands, particularly in Europe and the US. However, global geopolitical volatility has introduced some headwinds, slowing growth. Domestically, infrastructure expansion and government incentives for electric vehicles (EVs) are expected to further drive industry demand. Additionally, modernization and economic growth have opened promising avenues in the OTR and Farm sectors. Increasing exports of automobiles, especially two-wheelers, further bolster the demand outlook for tyres.
Despite the shift towards radial tyres in Medium and Heavy Commercial Vehicles (MHCVs), driven by improved road infrastructure and growing consumer awareness, the demand for Bias tyres remains strong, especially in Light Commercial Vehicles (LCVs) and two-wheelers. Century Enka’s strategic emphasis on sustainability is also noteworthy, as it increasingly integrates material recycling and the 3Rs (Reduce, Reuse, Recycle) model into its NTCF production processes.
Century Enka’s NFY, used across diverse applications such as fish twines, conveyor belts, and activewear, faced challenges in 2023-24 due to lower rural demand. In response, the company is expanding its NFY product range to align with the growing activewear market, focusing on value-added products and cost efficiency. The shift to a one-step manufacturing process has reduced production costs while enhancing product quality.
The Indian NFY industry is poised for moderate growth of 6-7% in the medium term, driven by factors such as the expanding textile industry, import substitution for technical textiles and Defense fabrics, and rising demand for ethnic wear and sportswear. The Indian government’s Make in India campaign, promoting domestic manufacturing, is also expected to boost NFY demand. The fastest-growing segment within this market is Draw Textured Yarn (DTY), valued for its versatility and durability across applications ranging from sportswear to home furnishings.
Sustainability and Innovation
Century Enka’s commitment to sustainability is evident in its operations. The company has invested in renewable energy sources, including a 1 Mwh rooftop solar installation and a 10.5 MW wind-solar hybrid facility at its Bharuch plant. By integrating advanced technologies and adopting environmentally sustainable practices, Century Enka strives to maintain its leadership position in the domestic textile sector while minimizing its environmental impact.
Outlook for the Future
With easing inflation and expectations of a normal monsoon, rural demand is anticipated to rise, benefiting both NTCF and NFY segments. Century Enka’s strategic investments in expanding capacities, diversifying into PTCF, and modernizing its plants position the company for continued success. The company’s focus on delivering superior results through innovation, sustainability, and a commitment to excellence ensures that it remains a leader in the Indian synthetic yarn industry.
Century Enka Ltd. has navigated a challenging market environment in 2023-24 with resilience and strategic vision. By leveraging its strengths, embracing innovation, and prioritizing sustainability, the company is well-positioned to capitalize on emerging opportunities and deliver long-term value to its stakeholders. As it moves forward, Century Enka’s dedication to growth, environmental responsibility, and technological advancement will continue to drive its success in the years to come.
