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Textile firms weave global ambitions

Rakesh P Sharma & Reeba Zachariah in Mumbai | July 21, 2004 11:12 IST

Domestic textile companies, in a bid to have a global footprint, are scouting for acquisitions overseas, especially in China and Taiwan. According to investment bankers, over a dozen deals are on the verge of conclusion.

"The objective is to become a global player. To accomplish this mission, domestic textile firms are either expanding operations to a global scale or planning to increase presence by shopping textile companies overseas," an investment banker said.

While a lot mid-size textile firms have started looking at domestic acquisitions, the need to acquire units abroad is gaining ground with the industry readying itself to face the dismantling of quotas worldwide from January 1, 2005.

The first salvo has been fired by Reliance Industries, which acquired German Trevira, a leading producer of branded polyester fibres in Europe. The acquisition, when consummated, will be the second international acquisition by Reliance and the first international acquisition in polyester.

The Gautam Singhania-controlled Raymond is also scouting for acquisitions overseas. Nabankar Gupta, group president -- Raymond Ltd, said the company is looking for acquisitions abroad.

Meanwhile, the textile division of Grasim Industries, an Aditya Birla group firm, plans to give more thrust on outsourcing special types of blended fabrics from China. The company plans to do so because it does not have the technology to weave such blended fabrics.

Riju Jhunjhunwala, joint managing, Rajasthan Spinning & Weaving Mills, said: "Nobody in the industry is ignoring the China factor which enjoys the benefit of huge economies of scales. In fact, a lot of players in the industry are looking at acquiring units either in India or in Taiwan."

B K Patodia, vice-chairman and managing director, GTN Textiles said, "China will be the biggest beneficiary from dismantling of quotas." He also added, "Indian companies going for acquisition here (China or Taiwan) cannot be ruled out."

While big players are looking at spreading their wings abroad, small players are not left behind. The south-based Sambandam Spinning is looking to acquiring a unit with 50,000 spindles and has set aside Rs 20 crore (Rs 200 million).

Himatsingka Seide has set up a wholly owned subsidiary in New York and has invested $1.5 million to strengthen its distribution and set up a design studio.

Morarjee Mills, part of the fast expanding Rs 2,000 crore (Rs 20 billion) Ajay Piramal group, is forging a joint venture with a team of industry professionals to tap the global market for garment exports as textile quotas unravel in January next year.

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Sub: Removal of quota are not likely to benefit small manufacturer

In india there are very large nubber of small manufacturer who earn there lively hood from textile. On the other hand there are mass number ...

Posted by Yashpal Agarwal


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