Filatex India, one of the leading polyester yarn producers, plans to invest Rs 420 crore in a capacity expansion and cost saving project at its Dahej plant in Gujarat.
The company will increase polyester yarn production to 3.90 lakh tonnes per annum from 3.28 lt with an investment of Rs 275 crore, and set up a 31.40 MW captive power plant with an investment of Rs 145 crore.
Last year, the company enhanced its capacity from 2.37 lt to the current level of 3.28 lt. It would emerge the fourth largest polyester yarn producer after completion of the proposed expansion, which is expected to generate revenue of Rs 600 crore.
Madhu Sudhan Bhageria, Chairman and Managing Director, Filatex India, said the company has already placed orders for machinery and the project will be completed by the next fiscal.
The cost of power, which is the highest input cost in polyester production, should come down substantially with the commissioning of a captive power plant by FY’21, he added.
The current Ebidta margins should increase to 12 per cent from 9 per cent once the new power plant is commissioned, he said.
Filatex plans to venture into fabric manufacture in FY’21 with an investment of Rs 200 crore, with a focus to manufacture fabric that is currently imported into the country.
“The demand for polyester is driven by athlesiure (a trend in fashion to use sports wear at workplaces, schools and social events), sports and yoga wear across the world,” said Bhageria.
Moreover, the fall in global cotton cultivation is also pushing up demand for man-made polyester. The company generates 20 per cent of revenue by exporting to over 40 countries including Brazil, Bangladesh and Eygpt.