Financial Daily from THE HINDU group of publications
Saturday, Apr 24, 2004
Rajasthan Spinning mulls foray into readymade garments
New Delhi , April 23
THE Rs 450-crore Rajasthan Spinning & Weaving Mills Ltd (RSWM), a LNJ Bhilwara Group company, is gearing up to take best advantage of the opportunities that would emerge in a post-multifibre arrangement (MFA) regime from January 1, 2005.
The company sees `large opportunity' for export of yarns to the US in a textile world without any quotas. RSWM is also looking at forward integration and is likely to make a foray into readymade garments, both for domestic and export markets.
"We have now internally restructured ourselves into a more product focused and market oriented company to take advantage of the external changes like elimination of quotas," Mr Riju Jhunjhunwala, Joint Managing Director, RSWM, told Business Line.
He said that RSWM would definitely leverage on the success of `Mayur' to get an entry into readymade garments.
On the internal restructuring, Mr Jhunjhunwala said that the company has now organised itself into three strategic business units (SBUs) - grey yarn, dyed yarn and fabric.
"Instead of having five parallel organisations (for the five plants) with each deciding for itself, we now have three SBUs and a common commercial department for centralised purchases and finance related functions. This has given us the economies of scale and also reduced the overheads by nearly 10 per cent," he said.
Asked about the impact of the appreciating rupee on the company's exports, Mr Jhunjhunwala said that the company has been converting its rupee loans into dollar-denominated liabilities.
"This is going to give us a natural hedge for our exports. About 70 per cent of our exports are billed in dollars. Simultaneously, we are also pushing more invoices to euro currency," he said.
RSWM is likely to close fiscal 2003-04 with an export turnover of about Rs 220 crore.
On the profit margins for the company, he held that whatever margins have been established for the industry would continue to stay. "It will not go down or go up. We can achieve more only through our internal efficiencies," Mr Jhunjhunwala said.
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