Sutlej Textiles to invest Rs 300 cr on expansion

Mumbai-based Sutlej Textiles and Industries, a part of K K Birla Group, is all set to infuse Rs 300 crore in its expansion plans in the next two years.

Though there is no greenfield expansion, the textile firm is on the way of consolidating its capacities at its existing facilities.

"We are focussing on increasing our existing capacities with an eye on improving our export figures," said K C Agarwal, joint executive president, Sutlej Textiles and Industries.

The fund has been raised from internal accruals and Technology Upgradation Fund Scheme (TUFS). Rs 250 crore will cater to expansion in the spinning sector and Rs 50 crore will go for the garment and home textiles segment. The Rs 600 crore company, which has a presence in yarn, fabric, garment processing and in home textiles furnishing, is expanding the spindle capacity of its plants in Kathua (Kashmir) and Bhawanimandi (Rajasthan). It is adding 30,000 spindles at each of the two plants taking the total number to 2,23,104 from the existing 1,63,104. The expansion will be completed by October 2007.

Simultaneously, it has plans to stretch up its home textiles production. "We are looking forward to double our home textiles production from the existing 1,50,000 meters per month by the first quarter of FY09," Agarwal added. In the garment section too, Sutlej is going for jackets production with a capacity of 30,000 pieces a month. Presently, it produces 1,25,000 trousers a month in its Bhilad unit in Gujarat.

Apart from this, company is planning to bring itself in direct contact with retailers. "We are going for a made-ups plant in Gujarat. So far our fabric were used by our clients for made ups, but now with this business we will put ourselves closer to the retailers," he said.

Sutlej is also collaborating with US textile firm Dan River. "We will be supplying the home textiles materials to Dan River for its projects with institutions in US," he said.

With these plans, the company is targeting an annual turnover of Rs 700 crore in the current financial year. From the expansion in the country's plants alone, it is expecting an addition of Rs 70-80 crore in its turnover, once they are completed.

Against last year's net profit of Rs 20.67 crore, "the first six months of FY08 has registered Rs 15 crore as net profit on the back of product-mix changes and value added products, and we expect there will be a 20 per cent increase in overall growth," Agarwal said.

In the meantime, company has tied up with German global enterprise software solutions vendor SAP in order to connect its all plants with Enterprise Resource Planning (ERP). "ERP solutions will help us utilise our resources and also will give us a leverage and provide better mobilisation of our resources. Our all five plants will get connected through ERP in the next one year," he said. Company's exports consititute 25 per cent (Rs 150 crore) of the total turnover, which is expected to touch 35-45 per cent by March 2007.

In line with capturing export markets, company is in talks with two German textile firms for marketing strategy.

"Such an alliance will cater to each other's marketing needs. The company will go with only one German firm which is to be finalised by December," Agarwal said. On the acquisition front, Agarwal ruled out any possibilities of taking over the small textile units, rather he said, "We are targeting something big to increase our topline as well as bottomline growth".

He added that if things go accordingly, by 2010, turnover of Rs 1,000 crore will not be unreachable.