Vardhman Report

7/28/2019 Vardhman Report

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EXECUTIVE SUMMARY

Vardhman, a household name in Northern India, has carved out a niche for itself in textile

industry. The Vardhman group was setup in 1962 by late Lala Rattan Chand Oswal, father of

present Chairman cum Managing Director, Sh. S.P. Oswal. Vardhman aims to be world class

textile organization producing diverse range of products for the global textile market. Vardhman

seeks to achieve customer delight through excellence in manufacturing and customer service

based on creative combination of state-of-the-art technology and human resources.

Vardhman deals with Fabrics, Sewing Thread, Fibre and Alloy Steel. It became India's first

textile company to be awarded ICO9002/ ISO 14002 Certification and has received many other

awards since the beginning. It lays a lot of emphasis on building and sustaining an excellent

organizational climate based on human performance and works for the betterment of its humanresource. It has adopted international accounting standards for the presentation of the financial

statements and has a centralized accounting system. The company works on its technological

upgradation and always works on expanding its base.

The company believes in its corporate social responsibility and takes full pride in fulfilling them

through various means. It is affected tremendously by the political, economic, social and

technological environment. The company has high gross profit margin ratio and can make profits

while controlling its costs. Also it has greater assets than liabilities and is performing well. Even

during the times of recession the company kept on providing superior quality goods and has been

able to survive

1. ORGANISATIONAL PROFILE

Vardhman Group is a leading textile conglomerate in India having a turnover of $700 mn.Spanning over 24 manufacturing facilities in five states across India, the Group business portfolio includes Yarn, Greige and Processed Fabric, Sewing Thread, Acrylic Fibre and AlloySteel.Vardhman Group manufacturing facilities include over 8,00,000 spindles, 65 tons per day yarnand fibre dyeing, 900 shuttleless looms, 90 mn meters per annum processed fabric, 33 tons per day sewing thread, 18000 metric tons per annum acrylic fibre and 100,000 tons per annumspecial and alloy steel.



Vardhman has evolved through history from a small beginning in 1965 into a modern textilemajor under the dynamic leadership of its chairman, S.P.Oswal. His vision and insight has givenVardhman an enviable position in the textile industry. Under his leadership, Vardhman isefficiently using resources to innovate, diversify, integrate and build its diverse operations into adynamic modern enterprise.

http://www.vardhman.com/about_vardhman.asp

1.1 HISTORY

The industrial city of Ludhiana, located in the fertile Malwa region of Central Punjab isotherwise known as the "Manchester of India". Within the precincts of this city is located theCorporate headquarters of the Vardhman Group, a household name in Northern India. TheVardhman Group, born in 1965, under the entrepreneurship of Late Lala Rattan Chand Oswalhas today blossomed into one of the largest Textile Business houses in India.At its inception, Vardhman had an installed capacity of 14,000 spindles, today; its capacity has

increased multifold to over 8 lacs spindles. In 1982 the Group entered the sewing thread marketin the country which was a forward integration of the business. Today Vardhman Threads is thesecond largest producer of sewing thread in India. In 1990, it undertook yet another diversification - this time into the weaving business. The grey fabric weaving unit at Baddi (HP),commissioned in 1990 with a capacity of 20,000 meters per day, has already made its mark as aquality producer of Grey poplin, sheeting, shirting in the domestic as well as foreign market.This was followed by entry into fabric processing by setting up Auro Textiles at Baddi andVardhman Fabric at Budhni,Madhya Pradesh. Today the group has 900 shuttleless looms and has processing capacity of 90mn meters fabrics/annum.In the year 1999 the Group has added yet another feather to its cap with the setting up of Vardhman Acrylics Ltd., Bharuch (Gujarat) which is a joint venture in Acrylic Fibre production

undertaken with Marubeni and Exlan of Japan. The company also has a strong presence in themarkets of Japan, Hong Kong, Korea, UK and EU in addition to the domestic market. Adherenceto systems and a true dedication to quality has resulted in obtaining the coveted ISO 9002/ ISO14002 quality award which is the first in Textile industry in India and yet another laurel to itscredit.

http://www.vardhman.com/about_history.asp

1.2 MISSION







Vardhman aims to be world class textile organization producing diverse range of products for theglobal textile market. Vardhman seeks to achieve customer delight through excellence inmanufacturing and customer service based on creative combination of state-of-the-art technologyand human resources. Vardhman is committed to be responsible corporate citizen.

S P Oswal, Chairman - Vardhman Grouphttp://www.vardhman.com/about_mission.asp

1.3 GROUP OF COMPANIES

http://www.vardhman.com/about_mission.asp

http://www.vardhman.com/about_mission.asp



1.4 HOLDINGS

Vardhman Holding Limited

Vardhman Textiles Ltd.Vardhman Acrylic LtdVMT Spinning Company Ltd

Vardhman Yarns and Threads Ltd

http://www.vardhman.com/about_holdings.asp






1.6 MARKET SHARE OF VARDHMAN TEXTILES LTD

Spinning Business

Spindle Capacity ( financial year 2005 -06 )

Existing About 600,000

Post Expansion 800,000

http://www.fibre2fashion.com/textile-market-watch/company-brief/vardhman

Fabric Business Fabric Production in Lac (100 thousand) Metres/Month

Auro Textiles (Existing) 42

Post Expansion 85-90

Sewing Thread Business

Production in Metric Tonnes/Day

Total 28.30

Dyeing (Yarn & Fibre) & Mercerising

Production in Metric Tonnes/Day

Total 54.5

Steel BusinessProduction in Metric Tonnes/Annum

SMS 100000Rolling Mill 84000

Acrylic Fibre Business Production in Metric Tonnes/Annum

Total 18500






YARNS Yarn Manufacturing is the major activity of the group accounting for 47 percent of the groupturnover. Vardhman is virtually a supermarket of yarns, producing the widest range of cotton,synthetics and blended, Grey and Dyed yarns and Hand Knitting Yarns, in which Vardhman isthe market leader in India. The group has twenty one production plants with a total capacity of over 8 lacs spindles, spread all over the country. In many of the yarn market segments,Vardhman holds the largest market share. Vardhman is also the largest exporters of yarn fromIndia, exporting yarns worth more than USD 150 million.

SEWINGTHREADS

Vardhman is the second largest producer of sewing thread in the country. The sewing threadmanufacturing capacity is being expanded from 17 tons per day to 33 tons per day in its sewingthread plants located at Hoshiarpur, Baddi and Ludhiana. Sewing threads contributes 11 percentof the group turnover.

FABRICS

The group has created state-of-the-art fabric weaving and processing facilities in its plant atBaddi, Northern India. The group has installed 900 shuttle less looms and a fabric processingcapacity of 90 million meters per annum in collaboration of Tokai Senko of Japan. Fabrics business contributes 22 percent to the group turnover.

FIBRE

The group has set up an Acrylic Staple Fibre plant at Bharuch in Gujarat in collaboration withMarubeni and Japan Exlan of Japan. The plant has annual capacity of 18000 tons per annum.

Fibre contributes 8 percent to the total turnover of the group.

STEEL The Group is also present in upper-end of the steel industry. The group has manufacturing



capacity of 100000 tons of special and alloy steel. The group supplies its steel products to someof the most stringent quality steel buyers like Maruti and Telco. It contributes 10 percent to thetotal turnover of the group.

http://www.vardhman.com/about_portfolio.asp

2. PRODUCT PROFILE

2.1 YARNS

2.1.i OverviewYarn is the largest strategic business unit of the Vardhman Group with 8,00,000 spindles and 65MT tons per day yarn and fiber dying capacity. The Group offers one-stop solution for variety of yarn requirements of the leading customers in India and the international markets. Vardhmanoffers the widest range of specialized greige and dyed yarns (NE 10 to NE 200) in cotton, polyester, acrylic and varieties of blends. The group offers value added products like Organic

Cotton, Melange, Lycra, Ultra yarns (contamination controlled), gassed mercerized, super fineyarns and fancy yarns for hand knitting. Vardhman is India's largest exporter of cotton yarn tothe most quality conscious markets like EU, USA and Far Eastern countries.

roducts

Cotton Yarn Special Blended Yarn

Organic Cotton Yarn Core Spun Yarn

air Trade cotton Yarn Melanges

Organic Fair Trade Cotton Yarn Gassed Mercerised

llitwist Modal Yarn

ortex Yarn Tencel YarnSlub Yarn Viscose Yarn

crylic Yarn Hand Knitting Yarn

oly -Cotton Yarn Speciality Yarn

http://www.vardhman.com/products_yarns_overview.asp

2.1.ii Yarn product profile

Grey cotton yarn

Grey acrylic yarn Grey polyester cotton yarn

Special blended yarn

Crayons

Rainbow

Rangoli

Gassed mercerised cotton yarn



Paragon

Harmony

Padam

Daffodil

Hank dyed acrylic yarn

Vardhman knitting yarn

Speciality yarns

http://www.vardhman.com/products_yarns_productprofile.asp

2.1.iii Yarn machinery

Preparatory – reiter, trutzschler

Pre-spinning – reiter, cherry hara, toyoda

Spinning – lakshmi reiter, kriloskar toyoda

Post spinning - schlaforst, murata

Doubling – volkman, leewha, vijaylakshmi

http://www.vardhman.com/products_yarns_machinery.asp

2.1.iv Integrated yarn dyeing unit

1994 has witnessed a milestone toward our mission, to supply value added product i.e. cone andfibre dyed yarn and tops. A fully integrated dye house plant with technology from Nihon Synmo,Japan, the leader in dyeing technology in the world, emerged on the landscape of Vardhman.With setting up of this new dye house , the installed capacity to process has increased to 20 tonsof Yarn and 15 ton of Fibre per day.

Technological collaboration with Nihonsanmo, Japan.

Dyeing capacity :- fiber dyeing 15 tons per day and yarn dyeing 20 tons per day.

Facility of dyeing a vast range – 100% cotton , P/C blends, cotton/ wool, cotton/

viscose, acrylics/ cotton, 100% acrylics.

Lot size flexibility.

2.1.v Yarn operation

The unique combination of man and machine, competing and supplementing each other withcontinuous increase in productivity has enable Vardhman to dexoterously ripe the fruit of

economies of scale and process variety of raw material required for variety of end products totextile.

Evennes Results fall in 5% to 15% of Uster standards, achieved through

Proper selection of Raw Material



World class Pre-spinning and Spinning Facilities

Technical Know How

Human Skills

100% Quality Assurance System

http://www.vardhman.com/products_yarns_operations.asp

2.2 FABRIC

2.2.i Overview

Vardhman is among the few fully integrated fabric suppliers in the country. An exquisite rangeof fabrics for shirting and trousers enables Vardhman to offer fashion solutions to the leadingclothing manufactures in the world. The state-of-the-art manufacturing facilities having 900shuttleless looms and producing 90 mn meters per annum processed fabric are located in Northand Central India, which cater to the highly customized fabric needs of the buyers. An integratedfabric supply chain extending from raw materials to yarns and from weaving to processing provides the winning edge to the customers.

http://www.vardhman.com/products_fabrics.asp

Shirting

Count range Ring spun Ne 20's to 80's Ring spun Blends 2/40's to2/210's 100% cotton, Polyester cotton, Cotton stretchDowXLA, Cotton Tencel, Cotton Modal, CottonBamboo, Cotton silk, Cotton Nylon, Cotton Nylonstretch, Cotton Linen.

Weave Yarn Dyed: Chambray, fil-a-fil, checks, stripes,Oxford, HBT Others (yarn dyed & piece dyed) Plain,twill, satin, oxford, dobby, herringbone, Pique Cord.

Fabric weight 2-5.6 oz/yd'2

Finished width 58"

Bottom weights

Count range Ring spun Ne 20's to Ne 2/80's Open end Ne 6's to Ne16's 100% cotton, Polyester cotton, Cotton stretch





DowXLA, Cotton Tencel, Cotton Modal, CottonBamboo, Cotton silk, Cotton Nylon, Cotton Nylonstretch, Cotton Linen Coolmax.

Weave Chambray, fil-a-fil, checks, stripes, Oxford, HBTOthers (yarn dyed & piece dyed) Plain, twill, Drill,

satin, oxford, dobby, herringbone, Pique Cord, Honeycomb

Fabric weight 6.00 to 12.00 Oz.yd'2

Finished width 58" to 60

Finishes

Soft, Peach, Mechanical stretch, Microsand, Easy toiron, Water resistant, Stain Release, Stiff finish, Airofinish, Carbon finish, Diamond finish, Airo enzyme,Soft Easy Care, Soil resistant, Thirsty finish, Feather touch, Banana Peel and to add Ammonia finish.

Eco-Friendly Blends Bamboo, Organic Cotton, LinenAlso certified by FLO, OEKOTEX, SKAL.

http://www.vardhman.com/products_fabrics_productprofile.asp

2.2.ii Machinery

Grey

State of the art looms: Airjet and Rapier looms of Picanol Delta/Omni Plus, Tsudakoma, Zax,

Rapier GTX/Gammax and ToyotaBenninger and Sucker Muller Warping & Sizing Machines

2.2.iii Fabric Processing

Continuous Bleaching Range

Singeing with 4 burnersChemical doising electronically controlledSuitable for wide range of fabrics

Chain Mercerizer

Electronically controlled caustic concentrationand temperatureEcofriendly

Pad steam rangesUnique steamer. Efficient washing range.

Continuous Dyeing Ranges





Kuster mangle ensures uniform dyeing.

Curing MachinesEnables us to give Resin Finish to Fabric

Sueding Ranges Precise levels of Peaching

Stenters and Shrinking Ranges Stenters with 7 heat chambers

2.2.iv Quality Assurance

4 Point inspection system.

SO - 9002 certified plant

CAT System from Datatex for Fabric Inspection

CAD System from Technograph Infotech Services for Fabric Inspection

2.2.v Fabric Testing Capabilities

Laboratory having state-of-the-art Testing equipments from USA & UK to test various

fabric parameters Stretch, Recovery & Growth Test (Stretch fabrics)

Abrasion Test ICI Pilling Tearing Strength Tensile and Seam Strength Formaldehyde Content Skew / Bow test D P Rating CRA test GSM test Sample Drying Shrinkage test

Perspiration, Water Fastness Perspiration, Water Fastness Rubbing Fastness Sublimation Pilling Test Washing Fastness Light Fastness



http://www.vardhman.com/products_fabrics_machinery.asp

2.3 THREADS

2.3.i Overview

Vardhman is a leading player in the Indian sewing thread market. The joint venture with A&EThreads of USA offers complete thread solutions from tailoring to industrial applications. With33 tons per day capacity spread over three plants located in North and South India, Vardhman isuniquely positioned to serve the garment manufacturers across the world. Vardhman's customer value proposition includes threads made from cotton, polyester, core spun, nylon and filaments,which are AZO free and meet OEKO Tex Standards.

http://www.vardhman.com/products_threads.asp

Embroidery

They manufactured products through following ways:-

Machine

Hand / Needle

Schiffli / Lace

2.3.ii MACHINE

Vardhman textiles ltd. Manufacture the following machine stitched embroidered products:- Polymerized: - Pride is a 100 % Trilobal polyester continuous filament thread ideally

suited for embroidery on high speed machines. It offers sparkling lustre and enhanced

productivity due to low breakages. The dye fastness rating is also very good.

Metallic: - Eureka metall is a metallic embroidery thread with a nylon core and a

metallised foil cover. A special lubrication ensures proper running of the thread on high

speed machines. Available in 36 colours including Gold and Silver.

Specials -- Puff is a 100 % Acrylic thread which is ideal for raised effect embroidery.

It can be used on Multi head machines as well as manual machines

ApplicationEmbroidery on all types of fabric for raised effect with Matt finish.Sizes AvailableTex 70





Puff wool is composed of 50 % Wool and 50 % Acrylic. Embroidery done with Puff Woolgives a raised and wool effect

.ApplicationEmbroidery on all types of fabric for raised effect.

Sizes AvailableTex 60Puff wool

MULTI COLOUR Multi Colour or better known as space dyed is a combination of two or more colours in thesame thread. PRIDE offers multi colour threads in a combination of two or four colours. Itis available in Tex 27.

Cotton embroidery threads – Superseam is a 100% extra long staple mercerized cottonthread. Its available in Tex 35.

http://www.vardhman.com/products_threads_embroidery.asp

2.3.iii HAND/NEEDLE

People have always found deep personal pleasure and sense of satisfaction in creating articles of daily use and artistic works from basic equipment and materials. One of the crafts practiced sincetimes immemorial is needlecraft and embroidery - the urge to create with colourful threads.Embroidery was used in Ancient Egypt to decorate the hems of royal robes, in tapestries in theMiddle Ages, and in ladies' samplers during the Colonial and Victorian eras. It continues as anart form today.Hand embroidery is used to decorate wall hangings, pillowcases, quilts and table runners. Handembroidery differs from counted cross stitch in that it uses many different types of stitches to

achieve texture and interest, whereas counted cross stitch uses a single stitch and relies on color and shading for texture. Five stitches form the basis for hand embroidery. The stitches areoutline, satin, lazy daisy, cross and French knot.Hand embroidery is a beautiful art that almost anyone can learn. It is an art that should be preserved and well worth learning. The hand embroidery market in India is segmented into threesegments.

Premium Embroidery Threads

Popular Embroidery Threads

Crochet Threads

Usage of Hand Embroidery Thread

Cross stitch Counted thread work Embroidery Smocking





Tapestry Applique work Quilting

2.3.iv SCHIFFLI/LACE

Embroidery, the art of forming attractive designs with hand or machine needlework, has beenaround virtually as long as clothing itself.Schiffi embroidery is a single needle and single/multi head machine embroidery. Bothmercerized cotton as well as staple polyester fibers is used to manufacture this thread. It givesexcellent resistance to heat and organic solvent and good resistance to alkalis but sensitive toacdis.Application:All Kinds of Embroidery with Lock stitch.Top Thread (Cotton)Tex Sizes Available: 14, 18, 27, 35, 60, 80, 105, 120

Bobbin Thread (Polyester)Tex Size Available: 16, 18


INDUSTRIAL PRODUCTS

Apparel :- they manufacture the following categories of threads for industrial application – Knits Wovens Denim

Over dyed Special application

Shoes , leather & non – apparel :-

Footwear Leather garments Leather accessories Automotive seating and upholstery Luggage Mattress and quilting Saddler industrial Filter Compressor Winding curtains and tents Book bindin





2.4 FIBRES

2.4.i OverviewThe acrylic fiber of Vardhman is acclaimed for a wide variety of textile applications. Themodern manufacturing plant based on renowned Japan Exlan Wet Spun technology produces

18000 MT per annum acrylic fiber at Gujarat (Western India). The fiber marketed under the brand name VARLAN has achieved high level of recognition in the Indian market because of super soft touch and silky appearance.

2.4.ii Product Features Superb soft touch & silky appearance; resilence; excellent dye -ability; brilliant shades, high bulk yarn products incorporating shrinkable fibres; low pill formation; better crease recovery; highresistance to chemicals, light, weathering and midew make VARLAN a preferred fibre inknitted, woven and other applications.

2.4.iii Product Range

Acrylic Bright & Semi-dull Non shrinkable fibre in 1.2,1.5,2,3,5,7,10,15 deniers in a widerange of cut lenghts. Acrylic Bright & Semi-dull Shrinkable fibre with different shrinage levels in 2,3,5 deniers in

a wide range of cut lengths Acrylic Tow endless Bright & Semi dull in 2,3 denier. Specialty acrylic fibres suitable for Open end spinning; Soft handle, Water absorbent

applications etc.

3.1.v.PERFORMANCE

In markets like the EEC, USA, Canada, China, Japan, Korea, Mexico, Brazil andMauritius, Middle East. Vardhman has a share of more than 6% in total Yarn exports

from India.

Its trusted, tested and reliable workforce, coupled with the latest technology, qualityconsciousness, customer oriented services and strong logistics has given Vardhman an edge over its competitors and in the world’s most quality conscious and price sensitive markets. Therebymaking Vardhman a truly international organisation in terms of sourcing from and catering to theworld market.

FINANCIAL STATUS

PARTICULARS SALES REVENUE (RS CRORE)

Yarns 102873.31

Sewing thread 29634.83



Steel 34702.19

Fabric 33239.58

% SALES REVENUE

During the last 5 years, Vardhman Group has recorded 10 percent top line growth rate, which ishigher than the industry average growth rate. The Group turnover has grown from Rs 723 croresin 1995 to Rs 3186.32 crores (about USD 700 million) in 2008-09. The exports has grown fromnegligible level in early nineties to Rs 689 crores (USD 150 million) in 2008-09.

6. SWOT ANALYSIS

6. 1 STRENGHS

Company has large and diversified segments that provide wide variety of products. Industry has Manufacturing Flexibility that helps to increase the productivity. Hard work put in is recognized and felicitated. A feeling that galvanizes the Group

into believing in more, in itself and reaffirming its commitment to offer products thatinvoke trust and reliability.

Vardhman offers the widest range of specialized greige and dyed yarns (NE 10 to NE200) in cotton, polyester, acrylic and varieties of blends.

The group offers value added products like Organic Cotton, Melange, Lycra, Ultrayarns

With setting up of INTEGRATED YARN DYEING UNIT,the installed capacity to process has increased to 20 tons of Yarn and 15 ton of Fibre per day.

Offers eco friendly blends, Anti bacterial finished yarn also available

yarns , 57%sewing

thread, 15%

steel, 15%

fabric, 13%



Though automation has taken place in many operations the industry is largely labour oriented. Hence they can capitalize on cheap labour.

The company is financially sound and has good amount of current assets and reservesto pay off the liabilities, fulfill the anticipated cash requirements and to work on theexpansion plans.

http://0301.netclime.net/1_5/R/H/Y/Textile%20Industry.pdf

6.2 WEAKNESS

Company is highly depended on cotton Lower productivity in various segments Lack of technological development that affect that productivity and other activities in

the whole value chain

Profits before taxes are declining which can create financial decline Changing trends could lead to lower volumes

Competition from other low cost industry or country Eg: china

A lot of money is blocked because there is a lot of unsold stock.

Improper use of available funds which are lying idle

6.3 OPPORTUNITIES

Abundant raw material availability that helps company to reduce costs and controllead time across the operation

Availability of low cost and skilled manpower gives company a competitiveadvantage.

Availability of large varieties of cotton fibre and has a fast growing synthetic fibreincrease market

India is one of the largest exporters of Yarn in international market and contributesaround 25% share of the global trade in Cotton Yarn

Large potential ,domestic, international market Company has manufacturing flexibility that increase productivity.. Product development and diversification to cater global needs

Elimination of quota restriction leads to greater narket development Market is gradually shifting towards branded readymade garments Increase disposable income and purchasing power of Indian consumer opens new

market development Textile being 2nd largest employment generator already has captured government

attention Greater investment and FDI opportunities are available Product development and Diversification to cater global needs.



Growth rate of Domestic Textile Industry is 6-8% per annum. There is increasing growth potential in sustainable products A Japanese joint venture has opened wide opportunities for their textile industry Overseas alliances to help move up the value chain and gain global presence.

6.4 THREATS

Competition from other developing countries specially china Continuous quality improvement is needed as there are different demand patterns all

over the world Elimination in quota system will lead to fluctuations in export demand. Threat for traditional market for power loom and handloom products and forcing

them for product diversification Geographical disadvantages Lack of trade membership which restrict to tap other potential market International labour and environment laws.

To balance the demand and supply. To make balance between price and quality. Unfavourable labour laws Fibre prices, especially cotton is determined to a large extent by factor such as weather

conditions

Higher indirect taxes, power and interest rates Indian Textile Industry is highly Fragmented Industry. Infrastructural Bottlenecks and Efficiency such as, Transaction Time at Ports and

transportation Time. The fabric and garmenting sector need modernization, which is under process.

Documents

Vardhman Report