Main focus on value-added yarns, Home Textiles
Sutlej Textiles and Industries Ltd. (STIL), is a leading manufacturer and exporter of value added dyed yarns (synthetic & cotton mélange) with large presence in home textiles. Sutlej Textiles has two robust businesses – manufacture of specialised value-added dyed yarns and home textiles. The combination of the two is expected to accelerate revenues, enhance margins and reinforce sustainability across business cycles.
Mr. C.S. Nopany, Chairman, Sutlej Textiles and Industries, said: “We have set our sights one merging as a front-runner in global textiles by providing end-to-end solutions – from yarns to home textiles. We aim to create maximum value for our customers so as to emerge as their partners-of-choice”.
A flagship company of the multi-business conglomerate promoted by the late Dr. K.K. Birla, Sutlej is one of India’s largest spun dyed yarn manufacturer. Under the leadership of Mr. Nopany, a Chartered Accountant and Master of Science in Industrial Administration from Carnegie Mellon University, the company has focused on value-added yarns and home textiles. Over the years, it has also successfully carved out a niche for itself and is holding leadership position in the dyed yarn and cotton mélange yarn segment. The company has four manufacturing units, one each in Jammu and Kashmir, Himachal Pradesh, Rajasthan and Gujarat.
STIL has a strong global clientele and exports to more than 55 countries. It has presence across major developed and emerging economies like Australia, Argentina, Bangladesh, Bahrain, Belgium, Brazil, Canada, China, Chile, Cuba, Egypt, France, Germany, Hong Kong, Italy, Morocco, New Zealand, Peru, Philippines, Poland, Portugal, Russia, Saudi Arabia, Sri Lanka, Turkey, the US, the UAE, and the UK.
Sutlej clocked a turnover of Rs. 2,302.30 crores during 2015-16 and a profit of Rs. 143.36 crores. The company currently has manufacturing capacity of 377,688 spindles and 6 million meters of fabric capacity. It has invested Rs. 1,274 crores during 2005-16, adding 222,232 spindles. Nearly 54 per cent of the spindles are less than a decade old.
Strategic direction
Over the last few years, Sutlej resolved to escape the cyclical trap of its business. The company began focusing on a long-term strategy whereby any decline in sectoral fortunes would have at worst a minimal impact on its revenue and profits whereas a sectoral rebound would immediately translate into an improved topline and bottomline.
The core of this counter-cyclical strategy was that the company would maximise production of value-added yarn varieties, accelerate capacity creation at the lowest cost in the shortest time, strengthen cost leadership, and enhance capacity of fast-growing synergistic businesses (home textiles).
This strategic direction has already been validated. In 2015-16, Sutlej reported increased revenues and profits even while it was engaged in aggressive reinvestment with the objective to enhance capacity and sustain profit growth. Mr. Nopany believes that as the import of this strategy unfolds, revenues, profits and margins will strengthen, taking the company to the next orbit of scale, growth and sustainability.
Capacity expansion
Work on the expansion project for adding 35,280 spindles at the Bhawanimandi facility at a project cost of Rs. 270 crores is progressing as per schedule. The project is likely to commence commercial production in Q4 FY 2017. The process of trial run on the first 9,000 spindles commenced on August 5 last. This project is being funded by a mix of internal accruals and term loans sanctioned under TUFS. This is a dedicated capacity focused towards producing value added cotton blended dyed and mélange yarn.
From a manufacturing capacity of 253,000 spindles in 2011-12, Sutlej today has capacity of 377,688 spindles. The capacity in homes textiles increased from 2.5 million meters to 6 million meters during the same period. With all the planned expansion in place, the company will have a capacity of 9.6 million meters of fabric annually.
Sutlej created products around emerging lifestyle-driven consumer preferences. The company is focused on niche products like cotton blended and cotton mélange dyed yarns as well as contemporary home textile designs. In doing so, it helped grow the market for niche products as opposed to merely addressing the existing demand.
Value-added cotton mélange and cotton-blended dyed yarns accounted for 39 per cent of the company’s 2015-16 yarn revenues. The company modified the product mix of the recently acquired Birla Textile Mills towards value-added yarn varieties which will become increasingly evident from 2016-17 onwards.
Home Textiles Division expansion on track
Sutlej’s expansion project to increase installed capacity to 9.6 million metres p.a. is progressing as per schedule and likely to complete by Q4 FY 2017. Out of the 54 looms to be installed, the company has installed 36 looms and has placed order for 18 looms. The present installed capacity has reached to 8.4 million metres p.a. The total project cost of Rs. 88.5 crore is being funded by mix of internal accruals and term loans sanctioned under TUFS. Increased presence in the home textile segment will result in further strengthening of company’s end to end operations – Yarn to Home Textile.
Modernization
Sutlej has invested around Rs. 17 crores during the quarter towards technology upgradation, debottlenecking, etc. This will result in improvement in efficiency and sustaining plant utilization. The company has acquired 13 acres of freehold land near Birla Textile Mills, Baddi at a cost of around Rs. 14 crores. Sutlej intends to invest nearly Rs. 67 crores during the year towards technology upgradation and debottlenecking, etc.
STIL has been the recipient of numerous prestigious Awards like Niryat Shree – Gold Trophy Award for its export performance in spun yarn, Gold Trophy from SRTEPC for best performance in export of fabrics to focused Latin American countries and the Silver Trophy from SRTEPC for the second best export performance in the spun yarn category.
Yarn segment
Sutlej has extended from being a grey yarn manufacturer to a ‘one-stop shop’ for every kind of yarn on offer – from natural to man-made – across blends (grey, dyed and mixture) and count ranges (6-50). Sutlej possesses one of the largest product portfolios of spun-dyed and cotton-blended and cotton mélange dyed yarns with a presence across 46 countries.
Sutlej is one of the largest Indian producers and exporters of value-added synthetic and cotton-blended dyed, cotton mélange spun and synthetic dyed yarns.
The company’s engagement in this space extends beyond scale; it has a passionate involvement in the development of blends and shades that can potentially enhance consumer convenience and marketplace excitement. Over the years, the company prudently invested in sectoral and product research.
Sutlej progressively widened its presence across the yarn value chain (cotton to polyester to viscose to acrylic to modal to lycra to teflon to linen) and strengthened its ability to manufacture multi-fibre (synthetic and natural) yarn across diverse blends (grey, dyed and mixed) and counts (6-50). As a result, the company has progressively emerged as a one-stop specialised yarn solutions provider for some of the most demanding market facing companies within India and the world.
The company manufactures specialised yarns across three units – Rajasthan Textile Mills in Bhawanimandi (Rajasthan), Birla Textile Mills in Baddi (Himachal Pradesh) and Chenab Textile Mills in Kathua (Jammu and Kashmir). These units possess advantages in specific product competence, raw material availability, customer dedication and availability of technical professionals.
Over the years, the company invested periodically in capacity addition, enhancing aggregate spindleage from 155,456 in 2005 to 377,688 in 2016. Each of the company’s plants enjoys adequate economies of scale and capacity to service customer needs (forecast and unexpected). Besides, these units are among the most contemporary; around 54% of the company’s spindleage was less than 10 years old as on March 31, 2016, translating into high product quality and operating efficiencies.
Sutlej provides customers with a single point solution. This solution comprises the ability to manufacture the complete range of specialised yarns. For instance, the company is among a handful in India with a demonstrated competence in the manufacture of specialty yarns (lycra, coolmax, modal and tencel yarns, among others). Besides, it is also the largest among five Indian producers of modal yarn (licensed from Lenzing, Austria).
Over the years, Sutlej has progressively evolved its product mix. The company increased the spindleage of cotton blended and cotton mélange dyed yarns – from 23% in its yarns mix in 2011-12 to 29% in 2015-16. This increasing cotton blended and cotton mélange dyed yarn proportion translated into increased divisional profitability and competitiveness.
Quality
Sutlej is not merely a yarn manufacturer; it is widely respected for its ability to provide world-class service (quality, timely delivery, superior price-value, yarn mix) that positions it as a dependable extension of the customer’s personality. The company’s manufacturing units are world-class not merely for sophisticated manufacturing infrastructure. They have confidence-enhancing certifications (IS/ISO 9001:2008) and quality-testing equipment (HVI spectrum, AFIS Pro UT- 5, Tensojet and Classimat, among others). The result is that Uster Technologies AG, Switzerland, provided Sutlej the coveted permission to use the ‘Usterised’ trademark following a detailed appraisal of its quality assurance systems.
Home textiles
Over the last few years, Sutlej has evolved from specialised yarn manufacturing to home textiles. The company entered this vertical in 2006, leveraging its understanding of the textile industry. The entry into this business space was validated on the grounds that this would account for a larger share of the existing customer’s wallet, graduate the company from its complete dependence on yarns and enhance margins.
In line with this potential, the company invested in cutting-edge manufacturing equipment, state-of-the-art German software, full-fledged testing laboratory, wide product range (furnishing fabrics and made-ups) and contemporary designs (based on enduring associations with reputed European studios).
