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Indian Rayon set to become textile major - Views on News from Equitymaster
 
 
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  • Jan 31, 2000

    Indian Rayon set to become textile major

    Indian Rayon has drawn up a strategy to hike the capacity of industrial fabrics by over 50%, reduction in the production of blended fabrics and buying out of more brands.

    Indian Rayon de–merged its cement business last year. Along with that, the debt of Rs. 43.70 bn was apportioned to Grasim as cement related debt. Thus the company has three existing businesses viscose filament yarn, carbon black and insulators. Besides, Indian Rayon has taken over the garment division of Madura Coats which includes brands such as Allen Solly, Van Heusen, San Frisco, Byford and Louis Phillipe.

    The A.V. Birla group is laying down a strategy based on focus. Grasim would be concentrating on the cement business whereas Indian Rayon would emerge as a textile major. It is quite possible that carbon black and insulators of Indian Rayon could be hived off to another group company. But as of now it is these businesses which are keeping the company afloat in the face of a mediocre business performance of the viscose division.

    Also the company seems to be changing its contours from being a commodity-based textile major to a consumer led apparel manufacturer. It is also not letting go of its industrial fabrics division (which comprise items such as fire-retardent and water-proof fabrics, canvas etc.) where it would in fact end up competing with Madura Coats.

    Market View:
    Analysts have rated the stock has a buy primarily due to its brand acquisitions, its cash rich status which would enable it to bear the losses of the sea water magnesia division and its carbon black and insulator business doing well due to better price realisations.

     

     

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