Aarvee Denims plans garments focus

Garments account for only 10 per cent of the company's production capacity at present

Aarvee Denims and Export (ADEL), one of the largest denim manufacturers in the country, plans to expand into the garments business in a big way.

"Being one of the largest manufacturers of denims in the country, we plan to consolidate our position in the garments business. At present, garments account for only around 10 per cent of our production capacity. This could be enhanced depending upon the demand from the international and domestic market in the post quota regime of the World Trade Organisation," Vinod P Arora, chairman and managing director, Aarvee Denims and Export, said.

India manufactures close to 10 per cent of the world's trouser fabric, but it has a negligible share in ready-to-wear garments like trousers.

The company is already in process of enhancing its weaving capacity by 14 million metres and spinning capacity by 3100 metric tonne with an investment of over Rs 40 crore.

The company has installed production capacity of 20 million metres for weaving at its Narol plant and a spinning capacity of over 17,000 metric tonne at its Bavla plant.

Apart from utilising these plants to maximum capacity, Aarvee gets 10 million metres of weaving done on contract basis. With the increased capacities the company eyes to double its exports in the next financial year.

Financial returns in garments business is estimated to be around 25 per cent. The denim fabric business is growing at the constant rate of six per cent.

Overall growth in this sector is due to the constant and steady growth of garment sector at the rate of 25 per cent per annum.

The commercial production of the expanded capacity is expected to start by April 2005. The company has last expanded its capacity on September last year by adding capacity of over eight million metres for weaving by investing over Rs 30 crore.

With increased capacity in September last year, the company's total denim sales stood at Rs 170 crore, a growth of 30 per cent over previous year and with the new capacity expansion the company eyes to achieve a turn over of around Rs 250 crore at the end of the current financial years, a turnover of about Rs 320 crores in the next financial year.

About 30 per cent of the company's revenue is generated through exports. The exports revenue in the coming years could go up to over 50 per cent.