Vardhman Textiles Ltd. - ZENMoney

Company Profile: Vardhman Textiles Limited (VTL), established in 1973, is engaged in manufacturing of fiber, yarn, sewing thread and fabrics. VTL operates in five segments: yarn, sewing thread, fibre, garments and fabric. The yarn segment (60% of revenues) comprises production of various types of yarns (from cotton, manmade fibres and blends thereof) and yarn processing activities. The Company's manufacturing facilities include over 0.96 mln spindles including 4488 rotors. VTL and its subsidiaries have 20 manufacturing facilities across India. It offers a range of specialized greige and dyed yarns in cotton, polyester, acrylic and varieties of blends. It also offers products like Organic Cotton, Melange, Lycra, Ultra yarns (contamination controlled), gassed mercerized, super fine yarns and fancy yarns for hand knitting. VTL has forged global alliances with leading textile companies such as American & Efird (A&E) Inc USA, Marubeni & Toho Rayon, Japan and Nisshinbo, Japan.

Strengths:

- VTL has a strong position in the Indian textile sector and is the leading manufacturer & exporter of cotton yarn.

- Company has strong technical tie-ups with well recognized global corporates from Japan and South Korea.

Concerns:

- Growing wage and power costs along with non -availability of skilled manpower are affecting the margins of the company.

- Any significant adverse change in China's Cotton Reserve Policy can affect the export orders of Indian Cotton Spinning Yarn companies.

Outlook: VTL, which operates across the entire value chain from fiber to fabrics is expected to benefit from the revival in the textile industry. Also, company's continuous expansion of spinning capacities to meet the increasing demand will place it in better position in coming years. Company has series of expansion plans (estimated capex plans of Rs.950 Cr for FY14) which are expected to commence in the current financial year and are expected to augur well for it's growth. Though high debt and inventory levels are a concern; company's diverse range of products, improving efficiencies, modernization of manfacturing processes and rationalization of costs along with Govt's support to the sector and current weakness in Rupee are expected to support company's growth.

Source : Equity Bulls

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