Himatsingka Seide plans new plant

Flush with cash and the success of its efforts to brand its own stores in the country, Himatsingka Seide Limited, Bangalore-headquartered maker of high-end fabric for upholstery, is ready to expand. The company plans to make bed linen which may be sold under a new brand, though "We haven't decided on that yet,"" says Dinesh Himatsingka, MD.

A Rs 175 crore to Rs 200 crore factory is scheduled to be built in the special economic zone in Hassan, where the millions of litres of water the factory will need everyday is available from the Hemavati river. That much water is not available in Doddaballapur where the existing plant uses ground water, he says.

Mostly a supplier of high quality silk and silk-blended fabric for upholstery to upmarket customers abroad, HSL dreams of capturing the whole value chain, managing director, Dinesh Himatsingka told Business Standard.

For now, capacity will be expanded by a quarter at the existing factory in Doddaballapur, an hour's drive from Bangalore city, to cater to increasing demand for the fabric from customers willing to fly down to the factory to beat competition, he says.

What HSL wants to do with the bed linen project is "exploit our strong financials", says Himatsingka.

In the year to march 2004, the company earned total income of Rs 149 crore, growing 15 per cent over the previous year, and net profits of Rs 50 crore, 26 per cent up on profits of fiscal 2003. This year's numbers are expected to be even better.

The company has some Rs 150 crore in cash and cash equivalents and with the "zero debt" status, raising money for expansions was not difficult, he says.

The new plant will make high quality fabric expected fetch up to twice the price of existing premium bed linen brands, at the retail end. The fabric will be brought to the Doddaballapur factory, for "making up" i.e., converting it into finished products. The Hassan plant will produce some 50,000 metres of fabric a day, he says.

The bed linen will be supplied to retailers abroad and also sold through HSL's new Atmosphere outlets, which it set up to sell its silk upholstery fabric.

That is the other part of the new project: The retail outlets, some 10 of them now in the country, are the baby of Himatsingka's son, Srikant, who joined the family business after his MBA from Stern University, New York.

Srikant will also manage the bed linen factory when it is ready in about 18 months, says his father.