Financial Daily from THE HINDU group of publications
Monday, Jul 25, 2005
JVS Exports plans Rs 80-cr expansion
Chennai , July 24
JVS Exports, which recently won the `International supplier of the year 2004' award from Wal-Mart, chosen from among 45,000 suppliers worldwide, has charted a Rs 80-crore expansion plan to be executed over the next three to four years.
The company is now in the process of acquiring 50 acres near Madurai for the purpose.
This follows a recent announcement by Wal-Mart that it would increase outsourced textiles manufacture by 30 per cent.
For 2004-05, JVS did business worth about $12.5 million with Wal-Mart, roughly half its current turnover of Rs 105 crore. With the expansion, JVS is eyeing revenues of Rs 500 crore by 2009.
Speaking to Business Line, Mr M. Britto, Managing Director, JVS Exports, said, "The investment would be in three phases. The first phase would see Rs 20 crore invested in creating extra capacity for our kitchen and dining textiles unit. This would eliminate the need for sub-contract jobs when demand spurts.
"The second phase, to become functional by April 2006, would require a similar investment. We plan to begin manufacture of terry towels at that point. The third phase, with an investment of Rs 40 crore, would see us expand into bathroom and bedroom textiles - that would start in April 2007."
The expansion would be partly funded through debt. According to Mr Britto, half of the funds necessary for the first two phases would come through debt and the other half from internal accruals.
"For the third phase, 60 per cent of the required funding would come from debt."
For the first phase, the company has tied up with Central Bank of India for the debt portion. In the course of the expansion, JVS would double its number of automatic looms to 66 with the new plant.
JVS is also looking at backward integration. That is, it currently outsources dyeing of spun cotton. At the new facility, it plans to do its own dyeing.
Asked if JVS would go into spinning raw cotton to realise savings, he said, "There is no saving when it comes to spinning raw cotton. Because of a glut, buying readily available spun cotton in the market is currently cheaper."
For the dyeing process, JVS is looking to invest in an effluent treatment technology, called `Multiple Evaporator', which uses the principle of evaporation. Mr Britto said, "Once we start to dye the cotton ourselves, our savings would amount to about Rs 6 per kg of spun cotton." JVS uses about 10 tonnes of spun cotton a day. That means savings of about Rs 60,000 per day.
JVS' client list includes Canada-based Sears, the UK's Primark Stores and South Africa's retailer Pep Stores.
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