Sangam, the flagship company of Sangam Group, is a leading manufacturer of PV yarn in India. Promoted as a fabric manufacturing unit by Mr. R.P. Soni and Mr. S.N. Modani, Sangam India, has successfully evolved from a yarn player to currently an integrated branded garments company having presence across India – through both through offline and online channels. The process began in 1995, with a strategic decision to backward integrate and foray into manufacturing of PV dyed yarn. In the following years, the company continued to expand its capacities and also forayed into branded garment manufacturing fold – ‘Sangam Suitings’ (synthetic blended fabric) and ‘Sangam Denim’ (denim segments). The company’s client base includes Raymond, RSWM, Banswara Syntex, Donear, Siyaram and Grasim. It has a network of more than 100 dealers and 1,000 retailers across India. Sangam’s manufacturing facilities are located in Bhilwara, Rajasthan. As of FY 2015-16, the company has a spinning capacity of 225,168 spindles and 3,128 rotors; weaving capacity of 483 looms; and processing capacity of 54 mn meters.
Sangam Group has kicked off a capacity expansion program. The company is investing Rs. 198 crore in the capacity expansion for installation of 26,736 spindles at new site Soniyana, Chittorgarh, 74 weaving machines at existing site Atun, Bhilwara and one indigo denim fabric processing line at its existing manufacturing facility in Biliya Kalan, Bhilwara. As of March 31, 2016, Sangam had completed installation of 13,296 spindles, 46 nos of weaving machines and the indigo denim fabric processing line. The remaining installations under the expansion initiative are expected to be completed by November 2016.
Sangam denim vertical continues to perform well on account of wide range, innovative finishes and value for money product for men and women. The revenues from denim segment currently comprises of 21%, largely owing to wide and deep distribution strategy for the product coupled with superior value for money, to attract the customers. Similarly, the company continued to improve its suitings division too.
Besides strengthening its product portfolios, Sangam continued to focus on limiting the controllable costs, thereby emerging as a high efficiency and affordable player in all its segments of presence. At the same time, the company continued to focus on quality conscious segments like seamless garments, thereby improving its realizations. In 2015-16, Sangam registered a 2.4% increase in net revenues, from Rs. 1468.66 crore in 2014-15 to Rs. 1504.40 crore in 2015-16.
Not Resting on Past Laurels
The company has always stayed focused on the next frontier. The top management has understood that financial profitability is a subset of superior products, loyal customer base, consistent updation and quality. The company has always expanded its product footprints from blended fabrics to yarn (PV/Cotton) to denim to suitings to active wear; expanding its customer base in the process. The company’s unflinching commitment to quality, along with the sustained investments in capacity coupled with a strict culture of cost control has enabled Sangam to remain a competitive player.
According to the top management of the company, its expertise has been developed over time and a result of a culture of product innovation- be it the unique processes or wide range of blended denims or a whole arena of product variations in a traditionally dormant industry subset of yarns.
C9 – An Exciting Initiative
Sangam forayed in the women’s innerwear garments segment, which is a ‘180-200 bn market. Dominated by a few pan-India organised players, this segment is driven by value- added premium products and, therefore, enjoys better pricing and margins. While this industry offers large growth potential, being a new entrant posed both a challenge and an opportunity for the company going forward.
Commenced in 3QFY16, the company sells seamless garments through its ‘C9’ brand. It offers products in active wear, intimate wear; yoga wear and shape wear, mainly for women. The company uses imported machines from Italy and has started commercial production. The company’s products are available through its online website – www.c9fashion.com. The company has commissioned the seamless garment facility of 3.6 mn pieces/annum, and launched a range of products under its “C9” brand.
The company plans to leverage its distribution network to market products. It plans to open ~1,000 multi brand outlets (MBOs) along with 10-15 exclusive brand outlets (EBOs) by the end of FY17 and the company has floated a 100% subsidiary for the same – Sangam Lifestyle Ventures Ltd. – in June 2016.
It simultaneously opened its first EBO in Mumbai. Sangam will also sell its C9 range through other branded players. In addition, it is partnering with online players such as Flipkart, Amazon, EBay, Snapdeal, PayTm, Fashionara, Belletouch and others. Since this business has a better margin and RoCE profile, venturing into this business is a step in the right direction by the company.
Yarn Division
Sangam (India) is the largest player in the Indian PV yarn market, commanding a share of about 25%, and is amongst the largest producer of blended dyed yarn in the country in a single location. Being the market leader, it is the price leader in certain counts such as 2/15s and 2/18s. Sangam specializes in PV-dyed & grey yarn, cotton spun & open ended yarn and texturised yarn
At its plant at Biliya Kalan, Sangam has capacity of 96864 spindles and 3 texturising machines. In Sareri the company has installed capacity of 115008 spindles, 3128 open end rotors and 22 knitting machines and at Soniyanaits has 13296 spindles. Yarn contributes to 55% to the company’s total revenue.
The foundation of the company’s operations – the company’s yarn division, offers expertise and infrastructure to produce multiple varieties of yarn including cotton, PV and blended.
Sangam’s core focus has been PV yarns traditionally – however the company also produces cotton yarn to fuel its denim operations. Presence in multiple varieties enables company to mitigate any risks emanating from changing tastes, fashion and preferences of the customers in its major markets.
With the company’s presence in three major segments – denims, seamless garments and blended suiting fabrics – the yarn division becomes the epicentre of operations and growth. The company consumes 30% of its produced yarns in-house. While the denim segment is supplied with the cotton and blended yarns; the seamless garments and blended fabrics primarily demand PV yarns.
Fabrics Division
Sangam manufactures P/V fabrics at its plant in Atun, Bhilwara, Rajasthan. The company produces PV fabrics and processed fabrics with a capacity of 24 mn meters P.A and 53 mn meters P.A respectively contributes to 22% to the total revenues of the company.
The company has refocused on its fabrics business since the past two years owing to higher demand and newer distribution platforms spurring consumer spends. The company offers wide range of woven PV fabrics, used for Suitings and bottomwear.
Denim Division
Denim fabric is produced at Biliya Kalan. Sangam has capacity of 40 mn meters P.A contributing to 21% to total revenues. The company forayed into production of denim fabric in 2007 and graduated to being a branded denim manufacturer by 2012. Ever since its inception, denim segment has continued to offer high growth owing to the varieties of finishes, the designs, the quality far better than value for money, and an exhaustive distribution network. Being a strategic fit to company’s existing businesses – of Cotton & PV yarns as well as fabric processing capabilities, the denim segment will continue to be a key segment of expansion for the company. Today, Sangam ranks among the top seven denim manufacturers in the country. To improve its product mix, the company is focusing on introducing premium products in the denim segment aiming mainly at the export markets.
The company has expanded its denim fabric capacity to 40mmpa (mn meter per annum) from 32 mmpa, to manufacture premium products. The company has exported about 25% of denim fabric production in FY16.
Proven Business Model
Sangam’s business model is fully integrated – from yarn to branded garments – thereby offering better insulation against market uncertainties. The company has demonstrated capability to uphold and offer quality, quantity, variety and affordability to the consumers through its products. The company’s sustained investments in capacity and capability build-up has led to its earning a trusted partner status among its buyers. This ability to offer integrated products of high quality as well as trust and acceptance with the buyers have led the company foray into and expand its footprints in two novel segments (denim and seamless garments) in a short span.
The company has developed a greater degree of production flexibility thereby establishing its reputation in both commodity as well as value-added product segments. The company offers a wide variety of yarns – from cotton to PV to textured. At the same time, the company has indigenously developed ability to deliver large quantities with virtually any shade of colour (5,000 shades) and counts (6-50 counts of yarns). It offers single ply, double ply, grindle, roving grindle, core spun, slub and other fancy yarns, making it a one-stop shop for fabric manufacturers.
Quality and R&D
Sangam’s units are equipped with world-class and advanced quality testing equipment like Uster tester, evenness tester and hairiness tester. All these testing equipment ensure that the yarn produced is free of neps and other faults like low strength, colour-fading, low strength, unevenness in colour, etc. Owing to its ability to offer consistent quality, the company’s yarns command a premium at key markets. The company employs strict quality checks across its units including colour fastness test, light fastness test, rubbing fastness test, pilling test, residual shrinkage test, checking of cloth construction parameters and the comparison of the finished fabric with the customer’s specifications. All its units are ISO 9001:2000 certified.
Sangam is known for its strong R&D focus. Its research teams are constantly trying to develop new and value added products, as well introduce colour shades to suit its customers. The company’s units are equipped with world class labs, advanced equipment and qualified professionals to ensure fast turnaround of new products.