SEL Manufacturi
ng Company Ltd., a Ludhiana-based integrated textile conglomerate having presence in yarns, knitted fabrics, terry towel, readymade garments and captive power generation, has witnessed a 35.01 per cent jump in its turnover to Rs. 2,330.83 crores during the financial year ended March 31, 2012, as compared to Rs. 1,726.42 crores in the last fiscal. SEL’s consolidated EBIDTA has risen to Rs. 392.75 crores (Rs. 315.17 crores), registering an increase of 24.62 per cent. Net profit was, however, lower at Rs. 82.81 crores (Rs. 112.48 crores).
While the increase in EBIDTA is attributable to operational efficiencies, the full contribution of the ongoing expansion thereof is yet to be captured in the financial results. The decrease in net profit is attributable to higher depreciation and financial cost, resulting from high capex and expansion drives.
Yarn prices had an uncertain and declining trend. Further, the Government policy with regard to cotton and yarn exports also added to the woes of the textile sector.
The early part of the current fiscal was marked by a high volatility in cotton prices. Spiralling raw material prices was followed by a steep fall in cotton prices by the end of the last season. Indian textile companies, which were carrying stocks of high-cost cotton had to face a very tough situation as yarn prices had fallen steeply. This unprecedented trend in cotton prices, high inventory carrying costs and devaluation of stocks were quite challenging for the textile sector. Erosion in profitability in the first half of 2011-12 was just unavoidable.
On the expansion front, the year witnessed dynamic growth of the SEL Group. It commissioned India’s largest spinning unit at a single location at Mehatwara village in Sehore district of Madhya Pradesh in April 2011. Out of the total capacity of 400,000 spindles, nearly 150,000 spindles are already operational, and the unit is targeted to be fully operational by the year end.
During the year, SEL also laid the foundation for its state-of-the-art greenfield mega integrated textile park being set up by SEL Textiles Ltd., a subsidiary company, at Panjava village in Muktsar district of Punjab at an investment of about Rs. 1,500 crores. This project has capacities of 188,160 spindles in ring spinning, 40 million metres per annum in denim fabric and 8 million pieces of denim garments per annum. Civil work for the said project has already started. With this venture, the group will enter the world of denims.
The year also witnessed expansion in the capacities of SEL’s spinning units at Neemrana in Rajasthan and at Hansi in Hissar by addition of nearly 60,000 spindles. In terry towel manufacturing, the capacity has been increased from 45 tonnes to 100 tonnes per day.
Further, SEL Manufacturing commissioned its 12 mw power plant located at Hussainpur village in Shaheed Bhagat Singh Nagar district of Punjab. With this, the group’s capacity of captive power generation increased to 22 mw watt. The expansion was part-financed with equity, debt and internal accruals.
The company is emerging as a leading textile manufacturer over the last few years. From the setting up of its first spinning unit in 2005 and its first loom in 2008, the company is building up its capacities with ultra-modern technologies.
With the resourceful utilization of technology and human capital, driven by systems and forward-looking approach, the group is carving out a niche for itself not only in the Indian but the global textile industry.