With 4,68,152 spindles in operation across four manufacturing facilities in Rajasthan and one in Tamil Nadu, RSWM generates 322 tonnes a day of polyester viscose-blended yarn, making it one of the leading Indian players in this space. The company has one of the widest yarn ranges of fibre blends, counts and shades with a special focus on value-added variants. Its specialty range comprises yarns made from a different unorthodox fibres.
RSWM’s key domestic customers include Raymond Ltd., Siyaram Silk Mills Ltd., Welspun India Ltd., Alok Industries Ltd. and Arviva Industries Ltd. Its yarns also find acceptance across 78 countries, exports contributing 40.19 per cent of the yarn business. RSWM’s melange yarns, spun at the Mandpam plant, generate a 50 per cent premium over grey yarns even as they are quantitatively smaller than the other segments.
RSWM’s fabrics are manufactured at its integrated plant in Mordi (Rajasthan). The unit comprises 154 state-of-the-art looms sourced from global textile machinery brands. It also houses the entire range of fabric processing and finishing equipment, making it possible to process fabrics and provide world-class finishes, all under one roof. Its product range, marketed under the ‘Mayur’ brand, comprises fabrics for formal and semiformal wear, covering unique blends of polyester and viscose in different yarn counts, shades and finishes.
The company’s denim unit has 86 high-speed looms generating 18 million metres complemented by an annual 16.2 million metre fabric processing capacity.
Revenue from operations
RSWM’s net revenue increased by 4.70 per cent from Rs. 2,870.25 crores in 2013-14 to Rs. 3,003.36 crores in 2014-15. This increase was largely due to growing yarn and denim sales which cushioned the decline in sales volumes of fabrics. The domestic turnover of the company products also registered an increase at Rs. 1,989.37 crores in 2014-15 as against Rs. 1961.76 crores in the previous year, whereas its export turnover increased to Rs. 1,024.94 crores from Rs. 922.56 crores.
Here are some observations made by Mr. Riju Jhunjhunwala, RSWM Managing Director, related to the company working strategy and its future expansion in his recent interaction with The Textile Magazine.
Question: Were you pleased with the company’s performance in 2014-15?
Answer: Even as we reported only marginal topline growth, we were satisfied with the company’s performance in view of the operating landscape. Despite various sectoral challenges forcing a number of our peers to report declines, I am pleased to state that we maintained a number of operating benchmarks achieved during the previous year.
The result is that even as yarn and fibre realisations declined an average at five per cent, our EBIDTA and net margins could stay at 12.52 per cent and 2.82 per cent respectively (13.48 per cent and 3.43 per cent respectively in 2013-14).
The EBIDTA margin declined only marginally, but net profit drop was a shade higher. This was a result of higher depreciation of Rs. 25 crores provided as per the Companies Act, 2013, and gains realised from efficient working capital management. I am happy to state that in a stressed economy where receivables were under strain, we reported a 10 per cent decline in interest costs, achieved a 49 bps reduction in our average borrowing costs and succeeded in repaying Rs. 146 crores of debt.
Q: What initiatives are likely to strengthen the company’s performance in 2015-16?
A: We commissioned two projects in 2014-15 – 50 looms in the fabric division and a ‘green’ fibre unit. The third project – 25,344 spindles for the manufacture of mélange yarns – was commissioned in the first quarter of 2015-16. The capacity expansions are expected to drive topline growth, and the ‘green’ fibre project will minimise operating costs. Besides, we merged Cheslind with the company, adding 64,512 spindles to our yarn manufacturing capacity.
Q: How does Cheslind fit into the RSWM scheme of things?
A: Cheslind was a LNJ Bhilwara Group company which was undergoing a Corporate Debt Restructuring (CDR) scheme. The company needed investments for enhancing equipment effectiveness, which would not have been possible as long as it remained within the purview of the CDR scheme. The merger with RSWM helped Cheslind overcome the problem, making it possible to infuse low-cost funds for modernising equipment and automating processes. Besides, the merger enhanced Cheslind’s flexibility in manufacturing coarse and fine yarn counts, unveiling newer marketing opportunities. We are hopeful that the merger will generate a positive bottomline in the current financial year.
Q: What is the company’s blueprint for 2015-16?
A: In one word, consolidation. The management has outlined a two-pronged approach – financial and non-financial. The financial initiatives will focus on debottlenecking the existing production lines and automating processes, while the non-financial initiatives will comprise employee motivation and skill development. The company which is making significant IT investments will invest Rs. 20 crores in installing an ERP solution to integrate operations, plant and corporate, and the project is expected to go live in 2016-17, leading to faster decisionmaking.
Q: How does the company intend to grow shareholder value in 2015-16?
A: At RSWM, consolidation is about deriving the most from the existing assets. This involves monitoring, analysing and improving the productivity of every process with the singular goal of enhancing business profitability. We have already explained how we intend to enhance revenues and profits during the current financial year which, we hope, will translate into a corresponding increase in the shareholder value.