Welspun lines up spread, technology upgradation

Welspun India, flagship of the Rs 2000 crore Welspun group, has lined up capacity expansion for terry towels, a new facility for sheets, mergers and upgradation in technology to take on challenges in the post-quota regime.

The World Trade Organisation regulated agreement, that comes into effect from January 1, 2005, will allow producers to export as much as they can, with all quotas removed.

Besides its existing towel and spinning unit at Vapi, Gujarat, Welspun is setting up a Rs 575-crore unit at Anjar, Kutch. For the expansion plans, the company will raise Rs 325 crore as a term loan, Rs 110 crore as equity and the balance will be funded through internal accruals.

"The end of quotas offers a host of opportunities for the textile industry in India. The advantages that Indian units possesses such as abundant availability of cotton, labour expertise, government support, will certainly boost exports. As far as Welspun is concerned, we are sizing this advantage by expanding our facilities," Rajesh Mandawewala, executive director, Welspun India said.

The new facility at Anjar will have terry towel capacity of 13,000 metric tonne per annum, cotton spinning capacity of 25,000 spindles and sheeting capacity of 35 million square metres per annum. The expansion programme is on schedule and full commercial production is likely to commence by the first quarter of 2005-2006.

The company has an existing capacity of 12,800 metric tonnes per annum. After the expansion, the towel capacity would get enhanced to 24,000 metric tonnes per annum.

"Welspun is ready to make the most of the opportunities that will come in the post quota regime. Welspun has abundant labour, cost effective power and access to cheaper loans due to our high standing in the international and domestic markets. The new unit will cater primarily to the export market. Besides enjoying fiscal incentives, its close proximity to the port will be an additional advantage," said Mandawewala.

Welspun is India's largest manufacturer and exporter of terry towels. It accounts for a quarter of all home textile exports from India. It the fifth largest producer of towels in the world and the largest in Asia.

The company exports more than 90 per cent of its towels to more than 34 countries. It exports more than 68 per cent of its production to the US, 23 per cent to Europe and the balance to Middle East, Australia, Mauritius.

Currently, over 90 per cent of the company's revenue is generated through exports. Welspun has targeted a turnover of over Rs 2000 crore in the home textile segment in the next five years.

The company's board have approved merger with Gofame Cotspin Industries (GCIL). The company has already tied up with the Nautica brand to capture high-end markets of Canada and US through its wholly owned subsidiary Welspun USA.

The company's turnover exceeds Rs 400 crore at present and this is expected to exceed Rs 750 crore by 2005-2006 and Rs 1000 crore by 2006-2007.

The present facility at village Morai, Vapi, Gujarat is operating at 100 per cent capacity. Welspun is also planning to convert its oil furnace based captive power plant (CPP) into gas based captive power plant, to save on its operational cost.