Last Updated : 14 February 2013 at 17:10 IST
In the era of slowdown only a handful of business entities would open their war chest of cash to expand businesses. Suryalakshmi Cotton Mills Ltd headquartered in Secunderabad in Andhra Pradesh is one among them.
Rakesh Neelakandan of Commodity Online conversed withParitosh K Agarwal of Suryalakshmi Cotton Mills to know more about the company and its expansion plans. Agarwal joined the board of Suryalakshmi Cotton Mills Ltd in September, 1995 as Executive Director and was elevated as Managing Director in June, 2005.
In the meantime the turnover of Suryalakshmi Cotton Mills grew from Rs.65 crores in 1994 – 95 to Rs.670 crores in 2011 – 12. It has a denim manufacturing facility in Ramtek [Maharashtra] and two spinning units [Polyester Cotton and Synthetic Yarn] in Amangallu, in Andhra Pradesh.
E-mail interview is provided below:
Forty million meters/annum of denim capacity! can we know which are your major markets? And who is your major competition?
Our major markets are USA, Europe, Asia and India; the biggest market being India. Our major competition includes mills in Pakistan, turkey and a handful of high quality mills in India. The company caters to the growing need of reputed brands like VF Corporation, Levis, Wal-Mart, Perry Ellis, Jones International, M&S, C&A, ASDA, George, Nest, Miss Sixty, Mango, Carrefour, Sainsbury, Mothercare, Li& Fung and Woolworth among others. We are successfully coping with the competition and would continue to grow.
What is the action plan behind your mission which is outlined on your website? What are your priorities as a business and how do you intend to go out and you know, grab it? Where do you see yourself five years from here?
Our action plan is A) investing in design and development of superior products, B) Be cost effective in our operations, C) Strategic marketing to get desired customers and segments of business, combined with assertive sales operations. We are putting in huge resources and time in
this activities and get good results from the same. We want to make a Rs 1000 crore company in the next two years and then to double the turnover in the next 5 years.
this activities and get good results from the same. We want to make a Rs 1000 crore company in the next two years and then to double the turnover in the next 5 years.
How robust is the financials of Suryalakshmi? Did the Q3 performance make you give a pat on the back?
The profits before tax for the quarter at 7.03 crore was in line with the estimates and it would have been even higher but due to steep increase of power and fuel.
What made Suryalakshmi opt for a captive power plant? What is the percentage of its contribution to Suryalakshmi's power requirements? How viable it is to maintain a power plant and what is the kind of risks involved in it?
The company has opted for a captive power plant due to its uninterrupted hassle free quality power which will take care of the increased power requirements of future growth potential. The capacity is being utilized for company’s denim unit and the balance will be either wheeled to the company’s Spinning Unit at Amanagallu in Andhra Pradesh or will be sold out through the power exchange. It is definitely viable.
What is the purpose behind merger of Suryalakshmi with Suryakiran International Limited?
The rationale behind the merger of Suryakiran International Ltd with Suryalakshmi cotton mills limited is
--To reduce the fixed costs by removing the duplicate activities and lowering the costs of the company relative to the same revenue stream, thus increasing the profit margins.
--To increase the scope of market and distribution of different types of products.
--To increase the revenue and the market share,
--To increase synergy to the managerial economies.
--To take the advantage of losses to bring down the tax liability.
--To reduce the fixed costs by removing the duplicate activities and lowering the costs of the company relative to the same revenue stream, thus increasing the profit margins.
--To increase the scope of market and distribution of different types of products.
--To increase the revenue and the market share,
--To increase synergy to the managerial economies.
--To take the advantage of losses to bring down the tax liability.
On the proposed spindle spinning unit in Maharashtra: is capacity addition advisable in the age of slowdown?
Company wants to strengthen itself during the slowdown period to become stronger without any time lag when the situation improves. With the backward integration in spinning which the company is planning, bright potential for the spinning in future and the availability of power from company’s captive power plant, company feels that it is the right time to go for expansion.
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