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GHCL Ltd, a manufacturer of inorganic chemicals and textile, plans to investment Rs 1050 crores over the next 2-3 years for expansion of soda ash and textile capacity. While the company will spend Rs 950 crores in a two-phase soda ash expansion project at Sutrapada plant in Saurashtra (Gujarat), it will utilise Rs 100 crores in the next two years for expansion of its textile business. Of the total Rs 2400 crores top line recorded by the company last year, inorganic chemicals contributed 60 percent and 40 percent was accounted for by textile business.
"We have expansion plans in soda ash and textile division in the next three years,” said R S Jalan, managing director, GHCL Ltd, during a conference call on August 3, 2015.
In the first phase, GHCL Ltd, which at present has 8.5 lakh tonnes soda ash production capacity, will raise the soda ash capacity by 100,000 tonnes by FY17 with an estimated investment of Rs 375 crores. In the next phase, which is likely to be completed by FY19, GHCL plans to invest Rs 575 crores to increase soda ash capacity by another 150,000 tonnes.
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Soda ash (chemically known as sodium carbonate) is one of the commodity chemicals used most commonly in glass, detergents and food processing industries. Tata Chemicals, GHCL and Nirma are the major players in the Indian soda ash industry, along with two other small players - DCW and TAC. Imports also contribute around 23% of the total demand of soda ash which is primarily being catered for South and East of India. GHCL has about 24 percent market share in domestic soda ash industry, which has a capacity of around 3.1 million tonne (compared to global soda ash capacity of 67 million tonnes).
While capacity utilisation in soda ash industry is around 80 percent, GHCL claims to be working at an utilisation of 87 percent. “We have our own captive lignite mines and briquetting plant which gives us a major cost advantage. We produce dense soda ash which is normally used for the glass industry and light soda ash which is normally used for the detergent. Overall, we believe that the soda ash industry will grow at the rate of around 5 percent over the next 3 years,” said Jalan.
GHCL has an integrated textile division. Its spinning facility - located near Madurai (Tamil Nadu) with a total installed capacity of 175,000 spindles and 3320 rotor - produce cotton and blended yarn. GHCL’s home textile plant is located in Vapi (Gujarat) with 162 air jet looms and 36 million metres (MM) of processing capacity. Out of the total textile business production, 68 percent is exported to US and 18 percent to Canada.
Speaking about the expansion plans for textile business, Jalan said, “We foresee a good demand in the business in coming years and see a huge demand coming from our existing clients and new clients. We expect improvement in both top line and margin going forward. We target to invest Rs 100 crores over next two years in this business.”
In next 2 years, GHCL plans to spend about Rs 100 crores in expansion - out of which around Rs 50 crore will be invested in the home textile and the balance will be in the spinning business. In spinning business, the company will invest in the wind power which will be used for the spinning to reduce the power costs.
Meanwhile, for first quarter ended June 30, 2015 (on a stand-alone basis), GHCL's revenue has increased from Rs 562 crores last year to Rs 588 crores registering a growth of around 5 percent. In the inorganic chemical segment, revenue has grown from Rs 343 crores to Rs 347 crores during the quarter. GHCL's textile segment has contributed with Rs 240 crores in the Q1 of FY2016 (compared to Rs 217 crores in Q1 FY15).
