Welspun India Ltd. (WIL), a part of the $3.5 billion Welspun Group, has announced growth of 26 per cent in revenues to Rs. 25,910 million for FY 2012 largely on account of higher realization in line with the increase in raw material prices. Sales volumes in terry towels witnessed 7.1 per cent growth to 39,113 MT and yarns by 5.5 per cent to 33,416 MT.
WIL is one of the top three home textile manufacturers in the world and the largest home textile company is Asia. With a distribution network in 32 countries and manufacturing facilities in India, it is the largest exporter of home textile products from India. Supplier to 14 of top 30 global retailers, the company has marquee clients like Wal-Mart, J C Penny and Macy’s, to name a few.
The Welspun Group has factored the customer need to bring the Textile Business under a single umbrella and is merging WGBL (marketing operations) with WIL (manufacturing operations). Post this merger, both the manufacturing and marketing business will be consolidated under WIL, thereby creating Textile Business that will come under a single umbrella. This will recreate unified stronger entity with a simplified structure. It will also help lower the administrative and other costs.
WIL will have a strong marketing arm and a continued partner under single listed entity which is completely integrated from manufacturing to marketing. This consolidation of marketing / branding and allied services would ensure better utilization of available and future resources, value unlocking and enhancing stakeholder value going forward.
In a three-step process, firstly WGBL will merge into WIL which will issue fresh equity shares to equity shareholders of WGBL, i.e., the shareholder of one equity share in WGBL will be given one share of WIL. Second, marketing business of WGBL will be hived off from WIL via slump sale to its subsidiary, Welspun Retail Ltd. (WRL), which is currently a subsidiary of WGBL. In consideration, WRL will issue new preference shares to WIL. Finally, Welspun Retail will be renamed as Welspun Global Brands Ltd. to retain its marketing identity. This will bring the entire manufacturing and marketing business under a single company.
With the challenging global business environment, this restructuring will enable the textiles business to provide superior delivery to customers and an opportunity to grow its market share. The recent difficult international business environment has impacted the international marketing operations and weak consumer sentiments have particularly affected the demand and retail operations. Domestic and International retail markets slowed down due to tough economic conditions, and many high-cost manufacturing locations witnessed closure of units. Marketing and retail business witnessed high cost and low margins, resulting in losses across geographies.
Marketing set-up under WIL, WRL, WGBL in the US, the UK, Portugal and Mexico, incurred losses and both the companies have provided for losses to the tune of Rs. 1,701 million during this year. Post this restructuring, the domestic and international operations have been pruned to enable WIL to grow profitably.
Speaking on the occasion, Mr. Rajesh Mandawewala, Managing Director, Welspun India Ltd., said: “After a sluggish start, the textile industry in India is showing an upward trend, and we being one of the leading home textiles players in the world have done exceptionally well. During FY 2011-12, we took various steps to consolidate our manufacturing operations and are merging WGBL into WIL to ensure that we can provide superior quality product and services seamlessly to our customers. Focus on innovation shall continue to provide us an edge to be preferred partner to our customers and thereby continue to grow our market share.”