Shankarlal Somani-Chairman, Sumeet Industries

What factors helped you to register phenomenal results in the last financial year?
Previously we used to manufacture yarns from chips sourced from outside suppliers. Now the company has set up a fully imported continuous poly-condensation (CP) plant of 1,00,000 TPA capacity under the technical guidance of Huitong Chemical Engineering Technique Co Ltd of China and ten lines of POY / FDY of direct  spinning plant with installed capacity of 48,300 TPA under the technical guidance of  Beijing Chonglee Co in which yarn is produced directly from melt instead of producing chips.
Under the present expansion programme, the company is going to enhance its capacity of direct spinning of POY and FDY to 1,00,000 TPA from melt under the technical guidance of Barmag, Germany. The company has an in-house state-of-the-art laboratory facility both for PET chips and yarns where products  are tested and packed with adherence to strict quality norms. This expansion of our capacity from 30 MT per day to 300 MT per day is what has resulted in phenomenal growth.

What strategies are you adopting to enhance  your overseas presence in terms of better  export revenue?
The company has been exploring various possibilities for exporting its products. At present the company exports PET chips and polyester yarns to South Africa, Bangladesh, Egypt, Saudi Arabia, China, Peru, Argentina, Portugal, Indonesia, Iran, USA, Singapore, etc. Exploring the export market has been a key focus area of the company. Our vision always has been global.

What is your present manufacturing capacity? Is there any plan to expand your production capacity further in this financial year ?
As mentioned earlier, the company has successfully commissioned a fully imported 1,00,000 TPA CP plant and a 23,500 TPA POY plant along with a 21,000 TPA FDY plant. We also have a 6 MW gas-based genset captive power plant with project cost of  Rs. 130 crore. The company has further chalked out a plan to invest Rs 530 crore in expansion for enhancing its manufacturing capacity of POY, FDY and PET chips in two phases. Under the first phase of this expansion programme, the production capacity of POY and FDY will be increased from 50,000 TPA to 1,00,000 TPA. We are also setting up another  8 MW gas-based genset captive power plant with project cost of  Rs. 130 crore.
This expansion will utilise the balance capacity of the poly-condensation plant as captive consumption by manufacturing POY/FDY directly from MEG and PTA instead of producing PET chips. It will enhance the scale of operation and improve the cost competitiveness of the company’s product. After completion of this expansion programme, the total turnover of the company will increase by  Rs. 100 crore and its EBIDTA by  Rs. 40 crore. In the second phase of expansion, a new greenfield project of 2,00,000 TPA CP plant will be set up to produce yarn grade and bottle grade PET chips along with a 20 MW gas-based genset power plant entailing project cost of  Rs. 400 crore.

With the commissioning of the new plant what has been the impact on overall revenue and profit?
In the full financial year 2010-11, the  turnover of the company jumped by 125 per cent from  Rs. 363.82 crore to  Rs. 818.47 crore and the net profit after tax zoomed by 215  per cent from  Rs. 10.85 crore to  Rs. 34.16 crore and we expect to post excellent growth in the current financial year also. The future of the organisation certainly holds new promises.

How have the latest technologies and value engineering helped the company to gain better margins?
We offer a strong technology-based value proposition to our customers. Over the years we have developed capabilities to customise and improve our product designs by absorbing, adapting and improving the acquired technology from both national and international suppliers. This coupled with the company’s strategy of producing varied denier and filaments of yarns will enable it to supply different qualities of yarn to different classes of manufacturers and thereby grow in a competitive market. At present we manufacture yarns directly from MEG and PTA instead of producing PET chips. Yarn produced directly from melt is superior in quality and improves the cost competitiveness of the product.

What kind of growth rate do you expect in this financial year?
The company has shown tremendous growth with 343 per cent CAGR of turnover (FY06–FY10) and 1,179 per cent CAGR of profit after tax (FY06–FY10). The company has further planned to expand its spinning capacity by 47,000 TPA and PET chips manufacturing capacity by 2,00,000 TPA with project cost of  Rs. 530 crore. After completion of this project, the company will achieve a record turnover of  Rs. 2,500 crore and profit will be around  Rs. 100 crore.

What kind of risks and challenges lie ahead for the company?
We face competition from the existing players and potential entrants in the Indian textile industry. Our company is of medium size as compared to market leaders such as Reliance Industries Limited. Further, crude oil and petroleum products are globally traded commodities and therefore the prices are influenced by the international market forces of demand and supply as also other geo-political uncertainties.

Any message for your investors?
The financial information tabulated herewith will provide a clear message for our investors about our healthy growth curve.