Small textile cos weave big hopes

Chennai, April 26 | Updated: Apr 27 2005, 05:30am hrs
The textile sector, which used to guard its small-scale turf zealously till the other day, is slowly waking up to the realities of the free market. Ironically, it seems, it wants to shed its once-coveted small image.

A slew of textile firms, mostly of small and medium size, have finally come to terms with the changing times. They are in the process of firming up plans to scale up their size to survive in the dog-eat-dog world of free trade.

While many of these firms are planning to climb the value chain by diversifying into newer areas, some already-established players are seeing opportunities in acquiring sick but viable units to grow in size.

For instance, Hanil Era Textiles Ltd (HETL), a pure play yarn maker with a 100% export thrust, is now diversifying into areas such as fabric and textiles. The company has recently enhanced its weaving capacity to 108 looms from the earlier 72 looms. It is also adding a processing and dyeing capacity to move up the value chain.

The total project cost, to be implemented in three stages, is close to Rs 80 crore. The company is financing the project by a mix of debt and internal accruals.

Similarly, the Combatore-based Ambika Textiles is raising close to Rs 20 crore to invest in capacity expansion and modernisation. The Gujarat-based Super Spinning Mills is treading the acquisition route to enhance its capacity and reach. It has recently taken over two textile firms in Coimbatore and is planning to pump in fresh money into these entities to revive them.

Also, the Coimbatore-based Adimoolam Naidu group, which owns the Augustland Knitwear, is diversifying into yarn and fabrics by taking over the Palakkad-based ailing integrated knitwear complex Teaktex, which was incidentally slapped with a winding up notice by BIFR

The takeover gives the new promoters access to the entire textile value chain from yarn dyeing, singeing, mercerising, bleaching, fabric dyeing, printing, tubular compacting to open width finishing. TPCL has a capacity to process 20,000 kg of cotton fabrics per day.

Further, the New Delhi-based Seasons Textiles is planning to raise fresh capital through a preferential float to enhance its capacity and modernise its plants. The company board has recently sought permission of the stakeholders for going ahead with the plans.

According to industry sources, a lot of similar activities are happening in the textile cluster of Tirupur, Coimbatore and elsewhere. "Some are going for fresh capacity while some others are planning to pool their resources to enhance size and reap the scale economies.A shakeout is imminent," they feel adding, "Some others see opportunity in acquisitions as it gives them capacity on a going basis."