Welspun India focus to strengthen leader position in home textile category

Welspun India, a part of the USD 3 billion Welspun Group, one of the top three home textile manufacturers in the world and the largest home textile company in Asia. With the 170,000 spindles and 140 looms part of the plan producing bed-sheets, towels and other made-ups have started commercial operations effective September, 2014.

The company’s expansion project is half-way through with capex of Rs 1,200 crore completed by the end of the quarter. The remaining capex of around Rs 1,300 crore is expected to be completed over the next two years.

Group chairman B K Goenka speaking about the quarterly performance said that they have completed half of their major capex plans, thus enabling larger in-house production of yarns and fabrics.

Post this capex, the company’s captive supply of yarn and greige fabric is expected to reach 75 percent from the current levels of 30-35 percent, thus reducing its dependence on external suppliers.

Apart from ensuring quality and availability of key intermediate products, the backward integration will also contribute to improve the profitability of WIL significantly.

Welspun’s focus for the coming year will be on improving profitability; the effort underway towards backward integration is a step in that direction. They will continue their focus on innovation, strengthening customer relationships and improving supply chain efficiency which will help them consolidate leadership position in the home textile category, in terms of scale and quality on account of lower dependence on outside suppliers.

Welspun’s distribution network is spread in 32 countries and manufacturing facilities in India, it is the largest exporter of home textile products from the country.

In the July-September quarter, the company posted a profit of Rs 129.87 crore as against a loss of Rs 189.04 crore in the same period last year, which was due to changes in depreciation policy from straight line method to reducing balance method and has taken an additional one-time depreciation of Rs 463.1 crore.

Had it not been for this, the company would have reported a net profit of Rs 116.6 crore in Q2 of FY14, which in turn would have led to an 11 percent growth in net profit on a y-o-y basis in the Q2 of FY15.

Revenue increased 22 percent to Rs 1,413.5 crore, while the finance cost increased 23 percent at Rs 73.1 crore and depreciation cost jumped 50 percent to Rs 71.7 crore.

In the current scenario, the global textile market is on an uptrend with opportunities in developing economies. Closer home, the Indian market is growing in importance as a result of the increasing demand for textile products in the country. There is also a favorable shift in manufacturing conditions from China to India mainly because of surplus cotton, cheap labour & demographics, and lastly favourable Government policies in India