Welspun India is planning a Rs 15,000-crore capex on home textiles and renewable energy over 3 years and has recently commissioned 170,000 spindle spinning facility in Anjar, Gujarat.
Will use yarns from new spinning mill for our products
Rajesh Mandawewala
MD
Welspun India
Welspun India has been in the limelight of late. The stock has gained 388 percent this year. The company is planning a Rs 15,000-crore capex on home textiles and renewable energy over 3 years and has recently commissioned 170,000 spindle spinning facility in Anjar, Gujarat, which is fully automated.
In an interview to CNBC-TV18, Rajesh Mandawewala, MD of Welspun India, said the company will use yarns from new spinning mill for its products and is eyeing to achieve 70 percent of vertical integration with the new facility.
Below is the transcript of Rajesh Mandawewala's interview with Sumaira Abidi & Reema Tendulkar on CNBC-TV18.
Reema: Very recently the company commissioned a spinning facility in Gujarat. It is close to about 170,000 spinning spindles. Can you tell us what this means to the company's financials, how much would the capacity go up in revenues, in margins?
A: This spinning facility is the largest under one roof spinning facility in the country. We will make all the yarns in this spinning facility and use it for our finished products like towels, bed sheets, rugs, carpets and all other home textile products that we do.
There is another very important unique thing about this facility that this is a fully automated spinning facility. It is one of its kind in India particularly within the cotton spinning industry. So, right through starting from let us say where the cotton takes shape to the packing, everything is fully integrated and automated. So, this is the unique thing about this spinning facility.
Sumaira: Given the size of this facility that you have would it suffice your entire requirements or would you at some point in the future look at more?
A: Even with this facility we will achieve only 70 percent of vertical integration which means that we will still be in the market to buy 30 percent of our yarn requirements. We are pretty happy with this; we don't see the company investing into more yarn capacities in the future.
We are a home textile company and the reason why we vertically integrate is to bring supply chain security. Also, it gives us an ability to innovate product faster because if you are in the full value chain you are able to innovate faster, you can improve your response time to your clients. However, having said that beyond this we will not increase, so, there will be no more investments in the spinning area in the future.
Welspun India stock price
On December 09, 2014, at 14:13 hrs Welspun India was quoting at Rs 355.00, down Rs 9.35, or 2.57 percent. The 52-week high of the share was Rs 407.15 and the 52-week low was Rs 65.60.
The company's trailing 12-month (TTM) EPS was at Rs 44.12 per share as per the quarter ended September 2014. The stock's price-to-earnings (P/E) ratio was 8.05. The latest book value of the company is Rs 104.48 per share. At current value, the price-to-book value of the company is 3.40.
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