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Jaya Shree To Look At Exporting Linen Yarn
March 27, 2014
Increasing cost of production in China, the largest manufacturer of linen yarn and fabric, is opening up export opportunity for Jaya Shree Textiles, the Rs 1,300 crore division of Aditya Birla Group. However, the company’s hands are full with the demand for linen from the domestic market.

The company is doubling its yarn production to 40,000 spindles in two years, after having made a capacity addition of 5,000 spindles last year. The company is investing Rs 200 crore in order to double yarn capacity and increase fabric capacity by three million metres. The capacity addition last year had cost Rs 100 crore to the company.

According to S Krishnamoorthy, CEO, domestic textiles, Aditya Birla Group, while the increased production will help it meet the growing demand for linen in India, once production touches 40,000 spindles, it will also look at exporting yarn to Portugal and other parts of Europe. Jaya Shree currently exports only fabric, which accounts for five per cent of the production.

“Due to higher scale of production, China, the largest producer of linen yarn and fabric, has been able to control its costs. But in two to three years our cost of production will be three to five per cent lower than China. While the labour costs have been going up in China, we have been controlling our cost by bringing in sourcing and production efficiencies,” he said.

Imported from France and Belgium, linen attracts a duty of 30 per cent. The depreciated rupee too had affected profitability. However, the company has been able to maintain 10 to 15 per cent growth in profits, said Krishnamoorthy. “Last year, we increased prices by five to seven per cent while the cost had gone up by 10 to 12 per cent. Blended fabrics too helped the company make linen more affordable,” he said.

However, the company wants to retain the share of pure linen at 90 per cent as the demand has been growing in the retail market. “The domestic demand is growing and we grew by 20 per cent this year. Retail sales account for 70 per cent of the revenues, with 20 per cent bought by national and regional apparel brands and five per cent by global brands,” said Krishnamoorthy.

In order to meet the growing retail demand, the company is opening 150 Linen Club outlets in four years. It will also add 120 to 140 multi brand outlets every year.

The company had also introduced linen garments in Linen Club outlets. It plans to retail garments through MBOs as well and launch women’s garments too.

Source: mydigitalfc.com
 
 
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