Exporting yarns and fabrics to nearly 80 nations
RSWM Ltd., the flagship company of the Rs. 6,200-crore business conglomerate, LNJ Bhilwara Group, established in 1961, is one of the largest textile manufacturers in the country. Primarily producing the high quality yarns like synthetic, blended, mélange, cotton, specialty and value-added yarns for suitings, shirtings, hosiery, carpet, denim, technical textiles and industrial applications, RSWM exports its range of yarns and fabrics to nearly 80 countries worldwide. The company clocked a turnover of Rs. 2,954 crores.
The company has been regularly investing in modernisation and expansion of all its business verticals, and in the last five years it invested Rs. 885 crores for the purpose. While capacity enhancement has facilitated cost-competitiveness, technology upgradation has ensured superior product quality. As capacities have increased, the company has made significant investments towards creating markets for the additional volumes. It has widened its presence in India to cater to all textile hubs and expanded its global footprint across key geographies.
Yarn
RSWM is one of India’s leading manufacturers of synthetic yarns, offering one of the widest ranges across fibre blends, counts and shades with its growing focus on value-added variants. The team’s unique expertise in customising blends, shades and batch sizes makes it possible to transform one-off transactions into enduring relationships. RSWM has 408,368 spindles with a production capacity of 1,22,850 tonnes and exports of 42,553 tonnes.
The company’s prominent Indian customers comprised downstream fabric manufacturers like Raymond Ltd., Siyaram Silk Mills Ltd., Welspun India Ltd. and Alok Industries Ltd. The company yarns find acceptance across 78 countries. Value-added yarns will be the focus in the coming years. The team will strengthen the value-added yarn product basket. The company plans significant investments towards growing awareness of the EDGE brand, driving revenues and profits.
Melange yarn
RSWM started Melange yarn production in 1994. The company has 75,072 spindles producing 13,529 tonnes of mélange yarn. Mélange yarns are high-value yarns combining two or more fibres, generating a premium of more than 50 per cent over grey yarns. Largely considered as fancy yarns, they are used in the manufacture of casual wear, sportswear, shirts, business suits, socks, bed linen, towels, decorative fabrics and other home furnishing products.
RSWM’s Kanya Kheri unit comprising 25,920 spindles, which commenced operations in June 2015, is producing 414 tonnes of yarn each month. The company markets products among downstream textile players in India and 26 other countries. The company enjoys relationships with reputed international brands like Decathlon, REMEIAG, H&M and C&A, among others. The company has customised mélange yarns around emerging weaving applications.
RSWM expects to generate the full benefits of its recently-commissioned mélange yarn expansion in 2016-17. The team will develop high-value mélange yarn variants to enhance profitability and strengthen value at the hands of prominent weaving companies.
Fabrics
RSWM’s wide fabric range (formal and semi-formal wear), covering unique blends of polyester and viscose in different yarn counts, shades and finishes, are marketed under the Mayur brand manufactured at its integrated plant at Mordi in Rajasthan. The company has 154 looms with a capacity to process 24 million meters. The company design team, comprising 10 experts and dedicated equipment for bulk sample yardage and design blankets, enhance product innovation.
RSWM has recently introduced a premium product line to rejuvenate product offerings and added segments like terry rayon fabric and terry wool. The company has set an ambitious goal of trebling revenues over the next three years by enhancing its domestic presence and focusing on key global markets.
Denim
RSWM is a prominent integrated denim fabric manufacturer enjoying enduring ties with key clients. In the denim division the company has capacity of 21,264 spindles, 680 rotors and 86 looms. The company has processing capacity of 17 million metres. RSWM’s globally-certified, state-of-the-art denim manufacturing plant in Mordi weaves 16.85 million metres and markets it among leading international brands.
RSWM’s value-added product range comprises denim-out-of-denim (recycled denim), work-wear like anti-bacterial hydrophobic, hydrophilic, anti-odour and fire-retardant, organic cotton fabric, power stretch, plasma denim, rich blended denims (cotton with linen, cotton with Kashmir wool, cotton with hemp, cotton with viscose and 100% Tencel), among others. The company’s garments department develops denim samples for customers that hasten product approvals from global brands.
RSWM’s key customers comprise prominent brands namely, Levi’s, H&M, Zara, Warner, Carrefour, New Yorker, Lules, Marlboro, Diesel, Jack n Jones, Polo, Flori din, Mavi, Gap, TCP, Lee, Wrangler, Tesco, Grolls, Swiss Rail, Ann Taylor, Pepe, Spykar, Killer, Mufti, Pantaloons and Gini & Jony. The company has also installed shuttle looms for developing vintage denim which enjoys strong demand in Europe and Latin America.
RSWM has also developed eight product variants, including quilted denims and reverse jacquards. The company invested Rs. 43 crores to raise its weaving capacity to 25 million metres per annum in the first quarter of the current year.
Mr. Ravi Jhunjhunwala, Chairman, RSWM
At RSWM, we have selected to transform our business model with the objective to shrink our industry cyclicality curve.
We believe that we are the bottom-end of a long J curve. The company will accelerate its value addition, foraying into niches that are relatively untapped, shield ourselves from commodity influences and increasingly market to clients that demand quality over cost considerations.
There is a benchmark relationship between cotton and man-made fibre prices globally, which in turn influences fibre consumption. On the one hand, the cotton crops in China, Pakistan and India appear to have been affected by pest attacks leading to considerable increase in cotton prices. On the other, free-falling crude prices have reduced the price of man-made fibres, indicating a consumption preference for this lower-priced alternative. Going forward, climatic vagaries could push cotton prices further up, strengthening the demand for blended fabrics. India may start consuming more polyester than cotton within the next five years, widening the market for polyester fibres.
The Indian spinning industry should witness consolidation. With raw cotton prices moving northward and yarn prices not moving in tandem, a number of recently-commissioned spinning capacities (taking advantage of the Government’s low-cost funds pipeline) could become unviable. Although this could firm yarn prices in the short term, over the medium-term, this reality could provide an opportunity to acquire quality-stressed assets. Having de-leveraged our financial statements ably, we are hopeful of capitalising on such opportunities.
At RSWM, we intend to combine experience with energy, conventional excellence with contemporary technology and innovation with knowledge, with the objective of rapidly transforming our business.
The year 2015-16 will be remembered as an inflection point for our business. This was perhaps one of the most extended slowdowns we have encountered in the sector. This slowdown was marked by a steady decline in realisations on the one hand and sluggish offtake on the other.
The fact that RSWM has even succeeded in strengthening profits and profitability should be seen as an achievement, indicating that there was something fundamentally different in the way we selected to work, which contributed to our superior performance. The company outperformed its sectoral growth average due to its continued focus on the domestic market even as the global textile markets remained challenging.
RSWM focused on products (mélange yarn) that addressed brand-enhancing downstream segments, particularly fashion apparel where consumers were willing to pay higher. The company enhanced efficiencies from within when it became increasingly evident that it would not be possible to pass cost increases to customers.
The opportunities
Textile opportunity: As Indian disposable incomes increase, domestic textile prospects will only get better, reflected in a faster growth of value-added product segments.
Fibre opportunity: The fibre consumption pattern in India’s textile industry is expected to shift from natural fibres to man-made fibres, strengthening our prospects.
Denim opportunity: India’s denim market is under-penetrated. The per capita jeans consumption is 0.3 pairs per year, significantly lower than two to three pairs in developed countries.
Currently, the value share of the denim market is skewed in favour of metro cities, accounting for nearly half the country’s consumption. But as the country’s non-metro population grows and aspirations build, denim consumption could increase exponentially.
e-commerce opportunity: e-commerce has played a defining role in strengthening aspirations and product availability. Electronics and apparel already are the biggest e-commerce categories and India is expected to generate $100 billion online retail revenues by 2020, of which $35 billion will be through fashion. The result is that online apparel sales are set to quadruple in the next few years, catalyzing fabric and yarn demand.
Our strategy
Even as the textile and denim spaces provide significant promise, year-on-year growth can be sustainably derived only from tactical value-addition and product differentiation initiatives.
Yarn business: We created a non-financial annual business plan with the objective of strengthening our intangible parameters leading to sectoral leadership. This plan focuses on the three pillars of market leadership, operating excellence and people development. We hope to establish market leadership through continuous innovation; our value-added yarns are marketed worldwide under the EDGE brand. We launched a novel ‘3-7-25’ programme centered around product development to significantly shrink the product development cycle.
From an operational perspective, we are embarking on a modernization programme. We are strengthening our asset bank with cutting-edge technology from prominent global textile machinery manufacturers.
This investment will enhance product quality and optimise manufacturing costs. Besides, we are infusing young blood in key leadership positions to enhance energy and bring in a fresh mindset.
Denim business: We are implementing a sizeable denim capacity increase from 17 million metres per annum to 25 million metres per annum. Our proactive investment will empower production of high-value fashion denim (through our existing rope-dyeing technology) and high-volume standard denim (through the inducted sheet dyeing technology).
Fabric business: We intend to enhance awareness of our ‘Mayur’ fabric brand through the engagement of film celebrities like Nawazuddin Siddiqui, coupled with strategic promotional initiatives. Besides, we institutionalised business-critical processes to achieve business goals.
Business intelligence: We created a business intelligence cell to map and analyse trends (global and domestic) in the textile sector (fibre, yarn, fabric and garments) to prepare proactively.
IT platform: We are investing in an organisation-wide ERP – M3 (textile sector-customised) platform by end-2016 to facilitate superior data management, bolster security and ensure availability of accurate real-time information for informed decision-making.