US firm's closure boon for terry towel firms

Domestic terry towel makers are looking to fill in the vacuum created in the US market following the closure of Pillowtex Corporation and a financial crisis at Westpoint Stevens, which only few days back got a reprieve from the US bankruptcy court.

The US is the world's largest market for terry towels, accounting for around 50 per cent of the industry's sales in value and 30-33 per cent in volumes.

Retail stores in the US, which far was buying majority of terry towels either from Pillowtex or Westpoint, are now looking for a steady supply from Asian countries.

A spokesperson of Abhishek Industries Limited (AIL), which clocked Rs 550 crore business from terry towels in 2003, said, "With the closure of Pillowtex and disrupted supply from Westpoint, retail chains such as Walmart and J C Penny, are asking us for an increased supply of terry towels and we are adding more capacity. Even retail chain stores under the Target brand, one of the significant retail entities after Walmart, has been asking for higher quantity of towels."

Swapan Nath, director of Welspun India, one of the largest Indian terry towel manufacturers which earns 93 per cent of its revenue from exports, said, "With Pillowtex, the largest manufacturer of terry towels in the US, finally closing shop and Westpoint, the second largest manufacturer, seeking intervention of a bankruptcy court, we have started getting increased business proposals from US retail stores. Even as US has a choice of buying terry towels from China, Pakistan or Turkey, Indian towel manufacturers have an edge because of innovation, design and also quality of yarn used in towels."

Pillowtex had a capacity of manufacturing 40,000 metric tonne per annum (MTPA) of terry towel, while Westpoint's capacity was 30,000 MTPA.

Excited with an expanded export market and subsequently bigger business opportunity in the US, Welspun is installing a 12,500 MTPA capacity plant at Anjar in Kutch, which would add to its existing 12,500 MTPA capacity at Morai village in Valsad district of Gujarat.

The expansion, which includes setting up one lakh metres/day sheeting facility, would cost Welspun Rs 570 crore and the new plant would be commissioned during the first quarter of 2005-06. Sixty-five per cent of Welspun's total terry towel exports come from US.

AIL, which has a capacity of 8733 MTPA, would be the largest terry towel manufacturer in India with a total of 28733 MTPA capacity with the additional capacity facility to be commissioned by March, 2005. The company is adding 20,733 MTPA of capacity at its Punjab plant.

A part of the Trident group, AIL believes that Indian terry towel manufacturers have no threat from China as far as the US market is concerned.

"Around 95 percent of our products are being exported to the US and Europe and with closure of these two major US manufacturers, we expect retail stores in the US to sell 100 per cent Indian towels," the spokesperson added.

A source close to Chennai-based Subbu Mills also said that the company has reasons to cheer as Pillowtex and Westpoint would no more remain major players in the US market.