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Talking Point | May 2015

Sutlej is expanding presence in home textiles

Incorporated in June 2005, Sutlej Textiles Industries was created out of a corporate restructuring exercise in which the Textiles Division of Sutlej Industries Ltd (SIL) and DamanGanga Processors Ltd were demerged. Sutlej Textiles excels in all stages of textiles productions. Its versatile production facilities are vertically integrated ´ from spinning and home textile.

SK Khandelia, President of Sutlej Textiles, spoke to the Editor of ITJ about the performance of the company in FY2015 as compared to previous year, details of the projects completed in the last few years, and benefits of the acquisition of Birla Textile Mills. Excerpts...

Editor: How has been FY 2015 for Sutlej in terms of performance compared to previous years?
SK Khandelia (SK):
FY15 has been relatively soft year for the industry in general and for us as well. The rapid growth rate attained in the past few years has somewhat subsided owing mainly to sharp decline in the prices of raw materials namely cotton and polyester. This has resulted in elongating the order confirmation process, with most clients preferring to be in wait and watch mode in anticipation of further correction of the prices. Further, the change in China´s cotton procuring policy has also had an adverse effect on the overall demand environment. As such, when viewed in the context of the above stated factors, our performance has been fairly stable, primarily owing to our diversified and improved product portfolio.

Editor: Give us some details on the projects completed in the last few years and how it has a bearing on its performance.
SK:
The company has primarily been focusing on consolidating its operations and getting its balance sheet in shape. Our balance sheet was a bit over-stretched till a few years back and I am glad to inform you that we achieved what we had targeted for, our balance sheet position at present is extremely healthy, debt is at a comfortable level and we are now well positioned to grow our capacities. Our improved credit rating is a testament of the same. Just to show the progress we have made, our debt ´equity ratio around four years back was in the region of 4:1, we have been successful in lowering it to 1:1 or sub 1 at present.

We recently completed capacity addition programme at our Chenab Textile Mills (J&K) wherein we added 31,104 spindles dedicated exclusively towards manufacturing cotton mélange and cotton blended dyed yarn. We are hopeful that this project will significantly contribute to the company´s profitability going forward. Further, we are also undertaking capacity expansion for our home textiles division which will see the segment´s capacity expand from 2.5 million metre p.a. to 9.6 million metre p.a. Also, the company´s Board recently approved acquisition of of Birla Textile Mlls (BTM) a Unit of Chambal Fertilisers and Chemicals Ltd, with capacities of 83,376 spindles. The transaction´s effective date is April 1, 2015 and is subject to shareholders and other statutory approvals. We are hopeful that these steps will significantly contribute to the company´s profitability going forward.

Editor: The company´s board recently approved purchase of Birla Textile Mills, can you throw some light as to the rationale and the likely benefits of the acquisition to your business?
SK:
The company´s board approved the purchase of Birla Textile Mills (BTM) as a going concern on a slump sale basis, subject to the approval of shareholders and other statutory clearances. BTM is a unit of Chambal fertilizers and Chemicals Ltd, and is located at Baddi (Himachal Pradesh). The unit has 83,376 spindles and manufactures cotton, s

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