Welspun India Ltd, part of the Rs2,500 crore Welspun Group, is ready to take its retail business to the next level of growth.
Will expand domestic presence aggressively
MUMBAI: Welspun India Ltd, part of the Rs2,500 crore Welspun Group, is ready to take its retail business to the next level of growth.
Plans on its table include a hive-off of retail venture Welspun Retail next fiscal and expansion of its footprint through inorganic means. In order to fund these plans, the company may sell some stake to private equity players or go for an initial public offering.
However, nothing has been finalised in this regard yet, Dipali Goenka, director, Welspun Retail Ltd said.
The company aims to raise the count of its Welhome brand stores to 600 from 200 now and that of Spaces stores to 60 from the current 30, by March 2009.
It would also roll out international home decor brands — Christie’s of UK and Sorema of Portugal, which it acquired in 2006 and 2007, respectively — in the next six months.
Also, Goenka said, “We will be taking Welhome to Middle East for further growth.”
Welspun expects a topline of Rs1,000 crore by 2010 from the expected Rs100 crore this fiscal.
According to analysts, Welspun Retail is expected to turn profitable this fiscal.
The company is also working towards increasing the export volume, which currently accounts for around 90% of its gross sales, mostly to the US. It is now taking initiatives to increase exports to the UK and Australia, taking advantage of a reduction in import duty from 25% to 17.5% on home textiles in Australia.
Manish Sarawagi, a research analyst with DSP Merrill Lynch (India), said in a recent report that bed linen margins are expected to improve sharply this fiscal, as the business has now started stabilising. He expects the volume growth for both towels (27% per annum) and bed linen (over 40% per annum) to remain strong, driven by new capacities coming on stream.
Sarawagi further wrote that textile exporters have witnessed sharp correction in the recent months following the rupee appreciation though India enjoys greater competitive advantage in this space. Welspun has a far stronger earnings growth trajectory underpinned by strong volume growth (over 30%) on the back of new capacities coming on stream.
Welspun is among the top four terry towel manufacturers in the world and accounts for 30% of the country’s terry towel exports to the US and 8% of the total US imports of terry towel.
r_mithun@dnaindia.net
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