Chennai 21, December: SVP Global Venture Ltd inherent and unique strength is its latest and most advanced and cost efficient manufacturing facilities, strategically located between India and Oman on the global textile trade route. Owing to its 100+ years legacy in the textile trade, the company has an established and efficient raw material procurement system and extensive Sales distribution network in India and overseas for its products. Despite severe disruptions in Indian domestic demand for Yarn, including deferment of shipment and delay in the orders due to COVID 19 pandemic, the company has managed to leverage on its vast distribution network to selectively focus on more profitable markets overseas to overcome the exigency.
The company’s revenue rebounded to Rs. 364 Cr. in Q2FY21 compared with Rs. 91.82 Cr in last quarter. The Profitability stood at Rs. 10.75 Cr in Q2FY21 as against a loss of Rs.57.44 Cr in last quarter, primarily attributed to the COVID lockdown. The company currently has sales tie-ups and Yarn offtake arrangements for the next 2-3 years of Production, valued at Rs. 5000 crs., from buyers across the global textile markets.
The Company’s focus over the last few years has been to exit from low margin and non-core business and focus on high margin compact yarn capacity expansion. This has reflected in overall EBITDA margin improvements to 16.51% in FY 2019-20 against 14.87% in FY 2018-19 , registering a YoY growth of 12.4% . The PAT and EPS has registered a growth of 10.6% and 11.9% respectively during the same period. The current capacity utilization level is now back to pre-Covid levels and stood at more than 95% for Indian operations and around 50% for Oman operations. In Oman, ramping of the capacity utilization is currently in process for the recently set up 150,000 Spindles which is expected to operate at target more than 95% in coming quarters.
With 50 Million Spindles and 0.75 Mn Open-End Rotors, India has a commanding share of the global Cotton Yarn market, currently producing over 4700 Mn. Kgs of spun yarn of which over 3,400 Mn. Kgs is cotton yarn. Cotton Yarn accounts for nearly 73% of total spun yarn production.
Speaking on its Capacity and Consolidation Plans Mr. Vinod Pittie, Chairman, Shri Vallabh Pittie Group, observed: SVP’s quick response to competing in the global market has been its integration of latest manufacturing technology well adopted into business operations and capacity expansion. The company expanded its manufacturing operations in 2016 by setting up and starting commercial operations from state of the art, most modern and automated, 150,000 spindles and 2,400 rotors cotton yarn manufacturing facility in Jhalawar, Rajasthan. Constant innovation and adoption of new technology have become an essential element for competitive advantage in the global market and SVP has maintained quick and flexible responses to market demand using technologies, consumer behavior and expectations. In addition, digital transformation has fueled remarkable advancements in manufacturing technologies and expansion of existing capacities enabling the company to move from labor-intensive to capital-intensive production.
Additionally states “Between 2018-2019 we commenced set up and commercial operations of a manufacturing unit of 3500 rotors and 150,000 spindles in Oman. As on date the company has an aggregate manufacturing capacity of 4,00,000 spindles and 5900 rotors in India and Oman. Major problem existing with the Indian manufacturers is the lack of scale, low manpower efficiency and lesser focus on research and innovation activities.
India, second-largest manufacturer and exporter of textiles and clothing globally with a share of 5% of global trade has registered an increase in the export of 3 %, from US$ 39.2 billion during the year 2017-18 to US$ 40.4 billion in the year 2018–19. The share of textile and clothing in India’s total exports stood at 12% in 2018-19. With 48% of total textile and apparel export, European nations and the United States are India’s major export destinations. The trade war between the US and China and standoff between India and China could lead to the creation of additional yarn and cotton demand from neighboring countries to the tune of 0.5 million tonnes and 8-10 million bales.