Price correction hits Vardhman

With a turnover of $700 million, the leading textile conglomerate Vardhman has earmarked

about Rs 1,350 crores for domestic expansion. About Rs 200 crores have already been spent last year and the remaining Rs 1,150 crores will be spent between this and next year. The incremental capital required for the expansion would be funded through its internal accruals and incremental debt under TUF. There is no other plan for raising equity.

Spanning over 24 manufacturing facilities in five states across India, the Group’s business portfolio includes yarn, greige and processed fabric, sewing thread, acrylic fiber and alloy steel. According to Sachit Jain, ED, Vardhman Textiles last year the Group had an EBITDA (earnings before interest, tax, depreciation and amortization) margin of 26 per cent, but this is not a sustainable EBITDA margin. So, it’s expecting a drop in margins this year. Moreover, the correction in global yarn and cotton prices means margins will drop even further from what was anticipated earlier.

The Group’s manufacturing facilities include over 8,00,000 spindles, 65 tons per day yarn and fiber dyeing, 900 shuttleless looms, 90 million meters per annum processed fabric, 33 tons per day sewing thread, 18000 metric tons per annum acrylic fiber and 100,000 tons per annum special and alloy steel. With an enviable position in the textile industry, Vardhman is efficiently using resources to innovate, diversify, integrate and build its diverse operations into a dynamic modern enterprise.