The Hindu Business Line : Textile firms going in for vertical integration

INDIAN textile firms are increasingly going in for vertical integration across the entire value chain, mainly to tackle the post-quota abolition induced squeeze on margins.

Delhi-based Ginni Filaments, K.K. Birla group company Sutlej Industries Ltd, knitwear firm TT Ltd, and Hyderabad-based yarn manufacturer Visaka Industries are among those that have announced plans to diversify into value-added businesses to target a higher realisation and compete better in the export market.

For instance, Ginni Filaments, which has been producing yarns and grey fabrics for the last 14 years, is planning to get into the garment business and plans to set up a new facility for producing garments. With the post-quota international textile market imposing a squeeze on margins of exporters, Sutlej Industries Ltd plans to invest Rs 62 crore to diversify into garment and home textiles product segments. The diversification, according to a company official, is expected to help expand the company's presence in the textile chain.

Delhi-based TT Ltd is consolidating and expanding on the complete value chain — from fibre to garments.

Visaka Industries is diversifying into garment and textiles with an investment of Rs 200 crore and is setting up a garment manufacturing unit at Chennai, a cotton yarn plant at Pune and a weaving unit at Nagpur.

The company's garment manufacturing unit, to be commissioned in November at the Mahindra Special Economic Zone near Chennai, would have a production capacity of over four million pieces per year.

According to Ginni Filament's Managing Director, Mr Shishir Jaipuria, the foray into garmenting was planned to move up the value chain, so that economies of scale can be achieved.

"We have already established our name in supplying high quality yarns and grey fabrics in the European market, especially to Italy. It only makes sense to go in for further value-added products such as garments and leverage on our established name in these export markets," he said.

In major export clusters too, textile players are moving up the value chain to achieve economies of scale and tighten the string on margins.

In Karur, for instance, a number of firms are going in for vertical integration, with several exporters setting up fully integrated facilities in processing, weaving and stitching.

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