Rajapalayam Mills Ltd, part of the Ramco Group, is investing ₹400 crore to expand its fabric division’s capacity in view of the favourable order outlook.
The company, a leading manufacturer of cotton yarn and fabrics, has been receiving many enquiries from leading brands worldwide for the supply of processing fabric. The special value-added fabric produced from its Jacquard looms has been well received in export markets.
“Since the demand for our quality fabric is very much encouraging, the company is expanding its fabric division by adding 166 looms and to establish a new unit with a capacity to process 50,000 metres of fabric per day at Rajapalayam. Also, it will install 110 KVA/11 KVA own substation inside its Rajapalayam premises to strengthen its electricity infrastructure,” the company said in its annual report for FY22.
With an ₹400 crore outlay, the capex proposals will be funded from the internal accruals/equity instruments and term loans from banks.
New fabric unit
Meanwhile, the fabric unit commissioned during FY2 is successfully running with the capacity of 146 looms. In FY22, it has produced 79 lakh metres of fabric as compared to 39 lakhs metres). It sold 91 lakhs metres of fabrics as against 41 lakh metres in FY21, registering a growth of 122 per cent. The total revenue generated by the fabric unit for FY22 was ₹122 crore (₹39 crore in FY21), and the exports stood at ₹31 crore (₹11.5 crore in FY21).
Financial performance
The company’s FY22 l revenuewas at ₹705 crore, up from ₹429 crore in FY21. Its sale of yarn grew to ₹550 crore in FY22 as compared to ₹363 crore in FY21.
For the first quarter of this fiscal, its total revenue grew to ₹204 crore against ₹134 crore in the year-ago quarter, while profit after tax rose to ₹18 crore compared to ₹5 crore
“Retail sales of textile products across the globe are witnessing a robust trend. Due to the effects of pent-up demand and increased spending by the consumers, the global demand for cotton yarn, fabric and garments are on a rising trend. India is becoming a strong alternative sourcing base to China for textile products. The recent trade agreements entered into between India and other countries like UAE and Australia will further boost the demand for Indian textile products in the export market in the forthcoming years,” it said.
The company has reshaped itself to a better position by strengthening its product lines with more value-added customised yarn counts such as mercerised yarn, melange yarn, core yarn etc., to take full advantage of the current market trend.