Post-pandemic surge in the export business coupled with a recovery in domestic demand has put on track the expansion and fund raising plans for India’s second largest denim maker, Jindal Worldwide Ltd.

A de-risk strategy adopted by the international buyers against Chinese supplies has propelled exports from India, where as a growing ‘work-from-home’ culture has fuelled local denim and casualwear demand, informed a top company official.

Capacity expansion

Speaking to BusinessLine , Gaurav Davda, Head of Corporate Finance & Strategic Initiatives, Jindal Worldwide Ltd, informed that the company planning to expand denim capacity from 140 million metres per annum (MMPA) currently to 160 mmpa within next six months and further up to 180-200 mmpa over the next two years.

“Our total capex plan is between ₹150 crore and ₹200 crore for all these expansions including spinning capacity and augment denim capacity, premium shirting etc. The fund raising will be through a mix of sources including our retained earnings, from lenders and through public equity. Since past 20 years of listing, we haven’t done any public fund raising so far. Now that we have reached a sizeable number on business side, we can think of it. However, there is no timeline fixed, but we will talk to bankers and market participants,” said Davda.

The company has seen a rapid recovery from Covid-effect. “We are currently running at about 90 per cent capacity utilisation for denim. Three years back our export revenues were nil. Gradually we increased our exports. But in the past six months we have seen export inquiries rising dramatically. Today about 15 per cent of our total sales are from exports,” said Davda.

Its sales bounced back from a washed-out April-June quarter from ₹56 crore to ₹414 crore in September 2020. After a loss of ₹14.9 crore in the first quarter, it turned to black with profits of ₹17.6 crore. However, Davda admits that the fiscal will end lower than last year’s turnover of ₹2,205 crore.

But what fuelled company’s growth in the exports? Davda explained that the international buyers’ strategy of China +(plus) one has borne fruits for textile players in India.

“Our brand partners came to us for wider varieties of denim, product development across the range. The overseas buyers are trying to look for a sustainable addition to China, if not a complete replacement. So we are laying big thrust on exports,” he said, adding that margins in export markets are also better than earlier.

Agents appointed

JWW has appointed agents across geographies in the US and other parts of Asia catering to global brands such as M&S, H&M, Carrefour, JCPenny, Provogue, US Polo Assn, Pepe Jeans, Spyker, Mufti and Future Group.

Meanwhile, domestic market is also providing big push for the company’s sales. While a spurt in denim and casual wear demand in metros is attributed to work-from-home, there is a sharp surge in demand in the tier-2,3 and 4 towns. “They were not as badly impacted due to Covid as bigger cities. Also, because of good monsoon and good earnings, their consumption demand has grown with improved purchasing power,” he said.