Textile 02-12-2021 Hits: 3336

RSWM to invest ₹350 crore for capex

Textile 02-12-2021 Hits: 3336

02 December 2021, Mumbai:

RSWM, one of India’s largest manufacturers and exporters of synthetic and blended spun yarn, is investing close to ₹350 crore across four plants, covering its prime verticals of denim and yarns.

Around ₹300 crore of the proposed investments are being made this fiscal and 80 per cent of it will be financed through bank loans. The remaining is via internal accrual.

According to Brij Mohan Sharma, Joint Managing Director, RSWM, the capex will be fully operational by FY23. Investments are expected to have a positive impact on the top-line by around ₹575 crore.

MAKE IN INDIA - RSWM Limited - The Textile Magazine

Capacity expansion

The additions to RSWM’s denim-making facility at Rajasthan have already been brought on-stream in September, thereby adding around 7,00,000 metre per month to its already existing 21,00,000 metre per month capacity.

Setting up of an additional 18,000 cotton spindles for the captive use in denim-making and another 30,000 spindles for speciality cotton mélange yarn manufacturing – both in Rajasthan – are expected to be complete around January 2022 and around April 2022, respectively.

Expansion of knitting plant

Part of the capex goes towards expansion of RSWM’s knits plant (also in Rajasthan) to 420 tonnes per month that will cater to the current demand for athleisure apparels.

RSWM’s capacity at present is 300 tonne per month. Plans are afoot to increase it to 1,000 tonnes over the next 18-24 months keeping in mind the rising demand for athleisure offerings. The segment has seen a nearly 30 per cent growth with branded apparel players expanding their portfolio in categories like track pants, active-wear and so on.

“Talks are on to look at underwriting a part of the investment in the vertical by international players,” Sharma said. Earlier this year, RSWM sold off the Mayur Fabrics and PV Suiting Global distribution network to Donear Group.

Positive sentiments

For H1 FY22, RSWM reported a PAT of ₹80 crore. It had reported a loss of ₹83 crore in the year-ago-period. Turnover for the first half of FY22 stood at ₹1,695 crore.

Also see: Industry body PHDCCI pitches for lowering of GST on textiles

“We continue to see the rallying effect of the positive sentiments and market recovery on the business in FY22. The yarn business witnessed a sudden surge in demand in H2 FY21 and the order book is well placed till mid of February 2022. With ease in restrictions, the denim business is witnessing better demand and traction,” Sharma told BusinessLine.

According to Sharma, order books are to the tune of ₹250 crore a month, going by the current run rates, for the months beginning October to January. This means RSWM will be using up its full capacity for these months.

Limited Omicron impact

Nearly 30 per cent of RSWM’s total sales volume comes from exports across 78-odd nations. However, international operations and exports are yet to see an impact from the emerging Omicron Covid variant.

“I can tell you the first wave of Covid infections were the worst in terms of effect on business. The second wave did not have that severe an impact on businesses. But, it is is still early to comment on Omicron and its impact on businesses. But as of now the impact is nil. We need to watch out,” Sharma added.

Debt reduction

RSWM is also looking at a debt reduction to the tune of ₹200 crore for FY22. RSWM long-term debts are to the tune of ₹450 crore which, according to Sharma, is “the lowest in the last 10 years”.

Also see: Domestic garment industry slowly limping back to normalcy

Working capital requirements are around ₹350 crore and “nearly ₹150 crore worth of drawing power from banks” remain unutilised.

“We are looking at pre-payment of long-term loans which will help us in reducing finance costs. Moreover, we do not see any significant impact on our debt-equity ratio, despite the capex. Our liquidity is also improving,” Sharma said.

BUSINESS LINE (The news article has not been edited by DFU Publications staff)

RSWM Limited | LinkedIn

Dear Reader, we at DFU Publications are committed to providing the latest news updates on trade development and insights, to keep our readers informed. Stay tuned. Subscribe to our newsletter.

DAILY NEWS: