Bombay Rayon to set up captive yarn capacities
Bombay Rayon Fashions, the Rs 1,300-crore Mumbai-based textile apparel exporter, is focusing on garments to improve its operating margins and setting up captive yarn capacities to reduce its dependence on suppliers.
By Mithun Roy, ET Bureau |
MUMBAI : Bombay Rayon Fashions, the Rs 1,300-crore Mumbai-based textile apparel exporter, is gradually changing its revenue mix, with more earnings from garments. The company is focusing on garments to improve its operating margins and setting up captive yarn capacities to reduce its dependence on suppliers.
���We have decided to reduce our dependence on outsourced yarn. We will focus more on garments and rely on captive capacities. This will reduce the risk of higher raw material costs,��� executive director (finance), AR Mundra, told ET.
���We have already started production at two of our garment plants at Osmanabad and Ichalkaranji in Maharashtra. Things are on track and funds have been tied up,��� he said.
Currently, the company outsources a major part of its cotton yarn requirement and will continue to do so till the new facility at Tarapur is ready. ���The revenue contribution from garments is likely to increase to 58% and margins are likely to expand from 21.3% to 27.8% by FY2010,��� according to Jonas Bhutta, an analyst with the brokerage, Prabhudas Lilladher.
The company���s garment sales stood at 51% of total revenue as against 37% in Q1FY08. After the abolition of quotas, the company has leveraged its strengths in fabric manufacturing to scale up its garment business. Understandably, there has been a greater emphasis on fabric and fashion.
The greenfield units at Tarapur, Islampur, Latur and Nanded would raise the company���s daily fabric processing capacity by 500,000 metres and garment capacity by 100,000 units. This, the company feels, would create 32,000 direct jobs.
The project has been positioned as an employment generation opportunity in rural Maharashtra, and may receive central and state government incentives on interest, labour, water, power and steam.
Bombay Rayon has a strong client list, including DKNY, Guess, Next and Zaara. In July 2007, it acquired Leela Scottish Lace (LSL), which has clients like Banana Republic, Gap and Wal-mart.
Currently, the company operates from its mills near Mumbai and in Karnataka and has fabric processing capacity of 1,50,000 meters a day and garment capacity of 1,00,000 garments a day in Karnataka. In the past three years, the textiles sector, including the clothing industry, drew investments of Rs 64478 cr.
���We have decided to reduce our dependence on outsourced yarn. We will focus more on garments and rely on captive capacities. This will reduce the risk of higher raw material costs,��� executive director (finance), AR Mundra, told ET.
���We have already started production at two of our garment plants at Osmanabad and Ichalkaranji in Maharashtra. Things are on track and funds have been tied up,��� he said.
Currently, the company outsources a major part of its cotton yarn requirement and will continue to do so till the new facility at Tarapur is ready. ���The revenue contribution from garments is likely to increase to 58% and margins are likely to expand from 21.3% to 27.8% by FY2010,��� according to Jonas Bhutta, an analyst with the brokerage, Prabhudas Lilladher.
The company���s garment sales stood at 51% of total revenue as against 37% in Q1FY08. After the abolition of quotas, the company has leveraged its strengths in fabric manufacturing to scale up its garment business. Understandably, there has been a greater emphasis on fabric and fashion.
The greenfield units at Tarapur, Islampur, Latur and Nanded would raise the company���s daily fabric processing capacity by 500,000 metres and garment capacity by 100,000 units. This, the company feels, would create 32,000 direct jobs.
ADVERTISEMENT
The project has been positioned as an employment generation opportunity in rural Maharashtra, and may receive central and state government incentives on interest, labour, water, power and steam.
Bombay Rayon has a strong client list, including DKNY, Guess, Next and Zaara. In July 2007, it acquired Leela Scottish Lace (LSL), which has clients like Banana Republic, Gap and Wal-mart.
Currently, the company operates from its mills near Mumbai and in Karnataka and has fabric processing capacity of 1,50,000 meters a day and garment capacity of 1,00,000 garments a day in Karnataka. In the past three years, the textiles sector, including the clothing industry, drew investments of Rs 64478 cr.
Download
The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.
The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.
Download
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
ADVERTISEMENT
