Chiripal Group, Gujarat based vertically integrated group of textile manufacturing companies as part of its business diversification strategy plans to set up a Rs. 500-crore terry towel facility in Ahmedabad installing 80 airjet looms with an initial towel manufacturing capacity of 10,696 tonnes per annum with room to double the capacity in Ahmedabad district with an initial capacity of 10,696 tonnes per annum.

The unit will also have a spinning capacity of 24,408 spindles and 960 rotors which will help the company increase its turnover to Rs.1,100 crore by the end of fiscal 2016-17.

To meet its in-house requirements of textile verticals, Chirpal Industries is also setting up 48,960 spindles for the manufacturing of cotton yarn with an investment of Rs. 306 crore. The new facility will come up at Dholi Integrated Spinning Park near Ahmedabad for which the company has acquired 30 acres.

The wholly-owned subsidiary, Nandan Terry Pvt Ltd, will begin commercial production from December this year, a top company official said.

According to insiders, the towel manufacturing unit Nandan Terry Pvt Ltd will soon be brought under the denim unit of the Group named Nandan Denim Ltd, thereby making it a diversified textile company. However, process for the same has not yet started. Nandan Denim is listed on stock exchanges with shares trading around Rs. 154.

With its eyes set on the overseas market, the company has chalked out a strategy to market terry towels in USA, Germany, UK, Italy, France, Romania, Australia, New Zealand and Canada, besides other regions.

However, India's exports to these markets have been on the decline since 2013-14 from Rs. 950 crore to about Rs. 727 crore in 2014-15 and Rs. 590 crore in 2015-16 (till February 2016), DGFT data showed.

The company believes to reverse the trend by penetrating into new markets like Latin America and Africa with a right mix of product and competitive pricing.

Vishal Chiripal, director, Chiripal Industries said that they have planned a total investment of Rs. 503 crore, of which 70 percent will be debt portion. The financial closure has been achieved and they expect commercial production to start from December this year.

About 95 percent of the production will be exported. Once commissioned, they expect to achieve a turnover of Rs. 400 crore from this plant in the first year of operations. The company has a total turnover of Rs. 850 crore.