Textile industry in restructuring mode

India's textile industry is on a restructuring spree. During the past one month, four companies "" the Secunderabad-based Suryalakshmi Cotton Mills, Mahavir Spinning Mills of Ludhiana, Vardhaman Spinning and the country's largest cotton textiles maker and exporter Arvind Mills "" have announced that they are restructuring.

Suryalakshmi Cotton Mills, on Friday, announced its decision to demerge its yarn manufacturing unit at Mahabubnagar (including the dyeing plant) and vest it with a newly incorporated firm, Rajvir Industries Ltd. Suryalakshmi will continue with denim operations, including the yarn division.

A fortnight ago, the Mahavir Spinning Mills had announced that it would merge the textiles business of Vardhman Spinning with itself. Vardhaman Spinning will continue with its other businesses.

Arvind Mills Ltd announced nearly a month ago that it wants to shift its denim and garments manufacturing facilities from Mauritius to India. The company, through its subsidiary firms, has 8 million metres of denim manufacturing capacity and a 2 million jeans plant at Mauritius. The total investment in the project is the tune of Rs 40 crore.

With the proposed shift, the company's denim manufacturing capacity will go up to 105 million meters in India by December 2004.

Analysts said the restructuring activities were aimed at sharpening the strength of the companies. An analyst said:" The reason for the initiatives are different. For example, the Vardhaman group, the promoters of Mahavir and Vardhaman, wants to put the textiles companies under one roof, while Arvind wants to shift its denim production units as the quota-free access of Mauritius to the European Union will no longer be there after the proposed abolition of the quota regime. But the objective of these initiatives is the same: to augment the strength of the companies."

Suryalakshmi Cotton announced today that the move to separate the yarn and denim businesses was aimed at enhancing its market share in the denim business and strengthening its presence in the yarn segment.

"It was felt that achievement of such ambitious growth targets would call for forging new strategic relationships, attracting external equity and having access to technological excellence," the company added.

The restructuring in the industry is prompted by the opportunities being thrown up with the dismantling of the quota regime from January, 2005.

In the first phase of restructuring, textile companies lined up investments of Rs 8,623 crore as on April 30, according to Centre for Monitoring Indian Economy.