The Hindu Business Line : Indian Rayon to focus on linen, worsted yarns

FOR Indian Rayon and Industries Ltd, its viscose filament yarn, carbon black, garment and textiles businesses will power its growth in the years ahead.

These segments contributed almost equally to Indian Rayon's 2003-2004 revenues, though VFY and Carbon Black businesses will continue to be its main revenue contributors, according to its annual report 2003-2004.

Despite a tougher environment for its textiles, higher input costs, lower realisations, and an appreciating rupee, the company intends to continue its thrust on niche fabrics such as linen and value-added worsted yarns. However, it has seen strong growth in flax yarn and linen fabric under the Linen Club brand.

In its long-term outlook for the VFY Division, domestic demand is projected to grow with favourable fashion trends, new applications of VFY and demand for VFY based products picking up. The export market, it says, has potential for high quality and value-added yarns.

However, in the short-term high inventory levels in the industry have led to pricing pressures and the lowering of effective customs duty will increase competition from cheaper Chinese imports.

Some of the challenges facing the company are raising quality levels, developing new applications for VFY, providing superior customer service and "earning premium with a strong RAY ONE brand in the market". The efforts are intended to it focus on the high-end market and improve realisations.

Its CSY capacity expansion will be complete in September 2004, and capex initiatives worth Rs 34 crore have been taken to set up facilities for coloured yarns for exports market.

Strategic initiatives in garments also paid off and increased its share in operating profits to 11 per cent from 4 per cent.

It plans to grow its branded apparel segment nationally by retail mall expansion, despite stiff competition.

The garments business will focus on growing volumes in the popular and premium segments; reinforcing the Peter England brand; raising its retail space to 2.5 lakh sq ft; and maintaining tight control over dormancy, discounting and advertising costs to boost the bottom line.

It is investing Rs 20 crore to produce shirts and trousers in associate companies. It is also examining global sourcing alternatives and benefits through exports.

The buoyancy in the auto and tyre market has fuelled the carbon black business, and it has increased production to 1.6 lakh metric tonnes per annum.

Its brownfield expansion has resulted in a 33 per cent increase in production capacity and will address domestic demand and exports.

The economies of scale will yield operational efficiencies and a more competitive cost structure.

The locational advantage of the Chennai plant and export seeding efforts this year will fuel the Division's fortunes. Efforts are on to make specialty products from the pilot plant, which will subsequently be taken on a larger scale. The company will focus on optimising the input material cost proactively.

The company is banking on good business prospects from its ITes/BPO business. Its revenues increased and it is likely to benefit from expanded capacity, quality delivery and customer building.

Raising employee productivity and improving operating efficiencies has also been pegged as a priority.