T T Ltd., the vertically integrated $100 million plus group, has signed a $10 million MoU with one of the largest Chinese textile players for sale of 100 per cent cotton yarn in the coming year. The agreement was signed at the India-China Business Matching Making Symposium sponsored by the respective Commerce Ministry of India and China and organised by the Confederation of Indian Industry (CII). The MoU was signed by the company Chairman, Dr. R.C. Jain and its Chinese business partner.
The T T Ltd. Managing Director, Mr. Sanjay Kumar Jain, said that the agreement is a very important step in building much deeper relationship with the Chinese counterpart. The company is already doing good business with China, and the MoU would go a long way in furthering the company’s target of expanding market share in China.
He said this is the only MoU signed by an Indian company in this field, and this reflects the strength of the brand T T fibre and yarn in the Chinese market. Its business is not limited to this one company. In fact, it is doing regular business with many other Chinese firms too. The company is targeting a $40 million business in China, i.e., 50 per cent growth over last year.
The company sells its products to over 62 countries spanning five continents. However since last year China is turning out to be the largest market for it.
Mr. Sanjay also recently made a presentation in Hangzhou, China, on Indian textiles in order to promote Indian yarn there. He sees great potential for Indian cotton textiles in China due to the competitive advantage India has in the field of cotton. China is very strong in man-made fibres. However in cotton it is slowly losing its competitive advantage due to a fall in cotton crop, higher expectations of farmers, strong labour wage inflation, etc.
T T Ltd.’s profit zooms
Riding on the weak rupee, new capacities and good overseas demand, T T Ltd. registered an increase of 118 per cent in net profit and 55 per cent in sales in the first half of 2013-14. The turnover for the first half is Rs. 351.44 crores and PAT Rs. 6.51 crores. EPS is Rs. 3.03 (annualised Rs. 6.06). The Q2 turnover is Rs. 208.18 crores and PAT Rs. 4.34 crores.
Mr. Sanjay Kumar Jain said normally the first half of the year isn’t very good as cotton prices were high due to end season, and further overseas demand is slow. However this year the weaker rupee and strong yarn demand from China helped the company show strong growth in sales and profits. Further, the new spinning project at Rajula, Gujarat, has started full commercial production and, in the next quarter, is expected to contribute handsomely in terms of both profit and turnover. The interest cost of this project is nominal due to the 11 per cent interest subsidy coming under TUFS and the Gujarat Government textile policy. With adequate wind power generation in Tamil Nadu and power purchase from IEX in Gujarat, the power cost has been reasonably low.
This year overall consumer demand has been slow in the country. Despite this, the value-added garments segment of the business has done well, showing a 20 per cent increase, thanks to the strong product and brand leveraging by the company. The good monsoon and the expected chilly winter would hopefully lead to an upturn in consumer demand, from which the company expects to further benefit in the remaining part of the year. Exports of garments are also gaining momentum and are expected to contribute to the bottomline in the coming months.
Overall, T T Ltd. is very bullish on the textile industry. The Q2 performance has been better than expected, and the company expects the same trend to continue. The second half of the year is normally better than the first, as the new cotton crop comes and general demand for yarn and fabric is good from overseas customers. Apart from the general trend, this year is expected to be better due to the all-time high cotton crop in India, the weak currency and the growth pick-up in the US and Europe.