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Corporate Report

Published on: Jan. 24, 2022, 11:45 a.m.
Sangam India on an expansion drive
  • The company produces 35 million metres of PV fabric and 48 million metres of denim fabric annually

By Lancelot Joseph. Executive Editor, Business India

After China and the EU, India was the world’s third-largest exporter of textiles in the world in 2020 as it has the highest acreage for cotton compared with the other major nations, with 13.4 million hectares in cotton. 

Global brands and retailers have started expanding their manufacturing horizon outside China as during the pandemic, many countries across the globe realised the consequences of over-reliance on a single source in the manufacturing sector and India stands out as an attractive option in terms of labour costs, ease of doing business and skilled workforce, along with incentives provided by the Government of India, such as the production-linked incentive (PLI) scheme for synthetic or man-made fibres (MMF) to propel exports and increase production to cater to additional demand.

With this as a backdrop, Sangam India Ltd (SIL), a producer of polyester viscose (PV) dyed yarn and seamless apparel, has announced an expansion plan of Rs137.25 crore in its manufacturing facility. “This expansion plan will witness infrastructure development at SIL’s manufacturing facility in Bhilwara, Rajasthan. The move is aimed at increasing the capacity of its cotton yarn business by 47 per cent and knitted fabric business by 28 per cent,” explains S.N. Modani, group MD and CEO at SIL.

Modani holds a PhD in ‘strategic management practices for a sustainable future’, along with a Master’s in Science (MSc), and a BSc (honours) in Chemistry, as well as an MBA qualification along with a Post-Graduate Diploma in Cement Technology from NCBM, Faridabad. He has rich experience in the textile industry. Modani’s stints include association with some of India’s leading industry bodies. He has been a Committee Member (Leaders Forum) of the Federation of Indian Chambers of Commerce & Industry (FICCI) and a Member of the HRD Committee of FICCI. 

The expansion funds will be strategically phased out over FY21-22. The planned manufacturing expansion is expected to witness an increase in revenue potential by 15 per cent from FY22-23. The total cost of the expansion project is funded partly by term loans of R102 crore and the balance R35.25 crore through internal accruals. The expansion programme will result in the installation of 32,832 spindles and six knitting machines for the manufacturing of cotton yarn and knitted fabric. 

“Despite the two unprecedented and challenging years of the pandemic, we are considerably satisfied with the performance,” adds Modani. SIL’s FY21 revenue stood at Rs1,791.45 crore, down from Rs1,882.64 crore, while the profits slid from Rs15.31 crore (FY19) to Rs5.38 crore (FY21). But for the six months ended September 2021, its turnover is Rs634.92 crore and the net profit has bounced back to Rs29.80 crore.

Infra expansion

“Going forward with the machinery capacity development, we plan to achieve an approximate increase of 15 per cent in our overall business. After we have set foot in this phase of our infra-expansion, SIL is aiming to strategically leverage the D2C market and the digitised textile space to further elevate our reach and supply in India and overseas,” says Modani.

For starters, SIL, headquartered in Bhilwara, Rajasthan was established in 1984 and started with only eight weaving machines. It now has PV dyed yarn, cotton and OE yarn and has moved into ready-to-stitch fabric. SIL has a presence in over 50 countries. The NSE & BSE listed company produces 35 million metres of PV fabric and 48 million metres of denim fabric annually. This magnitude of production is possible with a highly organised production base equipped with more than 2,36,000 spindles and 3,000 rotors. 

  • Modani: rich experience

    Modani: rich experience

“The group has also introduced a seamless garment manufacturing facility with 52 seamless knitting machines that have the capacity to produce 5.4 million pieces per annum” adds Modani pointing out that the Sangam group has celebrated many such milestones in its journey so far. 

Some of them include backward integration to spinning in 1995 with 17,280 spindles of PV dyed yarn, with a further increase to 11,520 spindles in 1998. In 2003, the company built a 10.0 MW coal-based captive powerplant by adding 35,232 spindles. In 2009, it installed 1.13 lakh spindles, 130 weaving machines, 12 knitting machines and captive thermal power plants of 6 and 15 MW.  

The company’s major expansion kick-started in 2014, as the group saw an increase in denim capacity to 35 million metres per annum and installation of state-of-the-art seamless garment machines with capacities of 3.6 lakh pieces per annum, 

The next big step was venturing into the B2C market space with the launch of C9 Airwear, a casual wear and active wear apparel brand for women, in 2015. C9 Airwear is available across 1,000 multi-brand outlets in India and all major digital retail portals such as Myntra, Amazon, Nykaa, Flipkart, etc. The group’s flagship brand, Sangam Suitings, operates through a distribution channel and has a pan India network of 10,000 retailers.

SIL, in the past 36 years, has expanded its business verticals across more than 50 countries. In the last five years, it has shipped over 100 million metres of denim and suiting fabric to 35 countries. This clearly captures the response from the international markets despite the pandemic and the uncertain situation. 

“Exports play a very important role in SIL’s balance sheet, with over 31 per cent of revenues being generated from the international market. We are expecting good growth in exports in the current financial year. We currently export our products to over 40 countries around the world,” says Anurag Soni, director and CFO at SIL.

“As a brand, we believe in not only marking our presence in the industry but also creating a huge impact on society. Various initiatives are undertaken by our charitable trust such as holding blood donation camps and distributing medicine to the poor from time to time, giving scholarships to meritorious students from underprivileged sections of society, planting one lakh trees each year to create a clean and healthy environment, infrastructural development of parks in Bhilwara, and financial aid to widows on a monthly basis to reduce their hardship. We have opened a training centre, as permitted by the Government of India and Government of Rajasthan under the Apprenticeship Act, which is the first and only in the private sector of the state, where approximately 500 workers are being trained in various textile trades and are being provided with employment,” says Modani.

  • Soni: good growth in exports

    Soni: good growth in exports

Talking about the PLI scheme announced by the Government of India in the textile industry amounting to Rs10,863 crore: “It will definitely help the man-made fibre-based fabric, technical textiles and of course the apparel verticals of the textile sector. India has had a high-value addition in the spinning segment but less capacities in garments and technical textile, which need to be increased,” adds Soni.

PLI boost

Nevertheless, this production-linked incentive will definitely give a boost to the Indian economy as well as the industry, as investments are expected to reach Rs19,000 crore. “This scheme is all set to be laid out, and in my opinion, Bhilwara being the centre of textiles and man-made suiting, will benefit the man-made segment of the industry,” believes Modani. He is of the opinion that all players should seek its benefits to achieve greater exports and of course, enhance the domestic market.

“Covid has taught us to be more flexible and adaptable in our day-to-day work. We have diversified our markets to ensure there is not a huge dependency on any one market, be it export or domestic. Also, we have scrutinised all overhead costs and tried to minimise the same to maintain a lean and effective system to compete in the most challenging of circumstances,” adds Modani.

Looking at the current digital boom, SIL is also optimistically looking forward to adapting to different means of technology like computerised machines with respect to knitting, pleating, digital and laser printing. 

“Not only business expansions but upskilling our existing employees will also play an important role in maintaining our economic balance which will eventually reflect in high returns with low investments,” sums up Modani.

Lastly, India is the largest producer of cotton and the second largest manufacturer of polyester yarn in the world. The country’s textile and apparel market was estimated to be worth Rs8,153 billion during fiscal 2021 and is projected to grow at a CAGR of 11-13 per cent from fiscal 2022 till fiscal 2026 and reach a value of Rs15,300-Rs15,400 billion. During this period, exports are expected to grow at a CAGR of 9-11 per cent and the domestic industry will grow at the slightly higher pace of 13-15 per cent. This will benefit companies like SIL.

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