Prima facie potential
1.1] Growing global demand in post covid era
Spun laced Nonwoven fabrics are light weight non woven functional fabrics,in 10 to 80 GSM range, mainly of polyester-viscose fiber blends,and are now increasingly being used for its ensues in consumer hygiene and PPE products like Baby wet wipes,cosmetic wipes, Diapers and Sanitary pads and ,as also for hospital and industrial filteration products and for multiple uses as wipes.
MARKET SCOPE:
Considering the end use of such Spunlaced NW fabrics in converted kits of hygiene products [mentioned to as above] sold by large MNC s like Proctor & Gamble, Johnson & Johnson, Kimberley Clarke and others of which home grown brand Himalya and Ginni are market leaders in India.
This product category is registering a growth of 15 to 20% p.a .especially for consumption by urban young consumers,working women and urban housewives.In India,the end use consumer sector has a market size of Rs 3000-3500 Million.
With the presence of 2 large manufacturing Co `s in India,mainly Gini Filament and Welspun and their prime focus being exports,a substantial Gap for domestic demand is being observed especially in the post Covid markets for hygiene care and hygience kits.
In the international expert`s considered view and opinion,there is a good and positive scope for a 3 rd large new high-tech unit of capacity and size 12000 TPA to enter markets and to successfully slot into for both domestic and export. In our opinion, such New unit would be able to reach optimum 85% Utilisation level by year 2024. And fill in the demand-supply Gap of other 2 large units which seem more focused on exports.
MARKET SCOPE:
Considering the end use of such Spunlaced NW fabrics in converted kits of hygiene products [mentioned to as above] sold by large MNC s like Proctor & Gamble, Johnson & Johnson, Kimberley Clarke and others of which home grown brand Himalya and Ginni are market leaders in India.
This product category is registering a growth of 15 to 20% p.a .especially for consumption by urban young consumers,working women and urban housewives.In India,the end use consumer sector has a market size of Rs 3000-3500 Million.
With the presence of 2 large manufacturing Co `s in India,mainly Gini Filament and Welspun and their prime focus being exports,a substantial Gap for domestic demand is being observed especially in the post Covid markets for hygiene care and hygience kits.
In the international expert`s considered view and opinion,there is a good and positive scope for a 3 rd large new high-tech unit of capacity and size 12000 TPA to enter markets and to successfully slot into for both domestic and export. In our opinion, such New unit would be able to reach optimum 85% Utilisation level by year 2024. And fill in the demand-supply Gap of other 2 large units which seem more focused on exports.
1.2] Regarding site and location.
The 2 key drivers for consideration of ideal Site for setting up such greenfield project are to be a] export intensivity of this project and thus location closer to a sea port or a Dry ICD Port, b] availability of good quality of abundant water and c] RM availability of synthetic fibers like Polyester and Viscose at competitive rate. The Ideal location works out for the project to be nearer to a major western India port. However, with very active Dry port/ICD at Tughlakabad in Delhi and Kathuwas,on Delhi to Jaipur Road,the new unit can be set up in 100 Km radius of Delhi. Large ind`l plot are available in developed Giloth RIICO Indl.Area which is just 5-6 Km from Kathuwas ICD,and where the state of Rajasthan does provide special and additional Incentives for new Tech.tex units.
Alternatively,considering the Power cost [ and subsidy on it],and a no. of Capital based subsidies from UP; we do recommend the fast coming up Indl. area of UPSIDC Kotvan on Delhi -Agra road[ and about 2.5 hour away from Delhi. For the south India location,and with significantly more incentives for such technical textiles, the state of Telengana is to be a preferred location with ports of Kakinada and Vishakhapatnam near by.
1.3] Regarding Plant And Technology
Technical textile unit of Spun Laced type is a high technology/ high output manufacturing system;and quality is determined by the process technology,based on large volume fiber blends /batches and their conversion via high automation and controls.
In our considered opinion, for producing world class quality products; It is advisable to go for Europe origin technology and plant to deliver quality that’s acceptable in Europe, USA,Japan. Technology and plants from Adrtitz and Dilo of Europe origin are suggested. This will also make the new unit stand in competition ,in terms of level of technology and productivity to 2 other large Cos .in India like Welspun and Ginni.
1.4] Critical Factors For Success Of Such High-Tech Based Manufacturing Unit Of 12000 TPA Size.
· Export from China co` s are very competitive in price ,and quality too,and short shipping times. · China is losing part of its supply/share to S.Korea,Taiwan/India/Turkey and imports into Indian markets are also on duty restrictions now on. · However, China s avg price of Rs 170 to 200/Kg remains fiercely Competitive ,even on landed basis. |
· In Covid period, China supply chains have got disrupted and,otherwise out of favour for Exports esp. to US, EU, India,Australia,Japan. · There is now export supply Gaps that Indian co s like Welspun and Ginni are filling in to USA and EU · Any New unit coming up in India has to be price competitive to China imports,and also have access to `Converter` units making consumer kits in India under the umbrella of MNC leaders like P&G Johnsons & Kimberly Clark,others. |
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· A new Unit with ongoing TUF Subsidy support, and interest subvention,can compete with China s exported fabrics. |
· A new Unit in India has to be of global viable size 12000TPA, and has to pre Study all market to which China export |
1.5] Project Recommendations
We ,AT Nuovatex Projects, positively and favorably recommend to set up a New high tech based project for SpunLace non woven fabrics,preferably on an European technology based plant, along with 1 T- line for needlepunched composite fabrics for such hygiene and PPE end uses.The combo with Needle punched will allow heavier GSM composites to be created.
a)We believe that in post Covid global markets, Spunlace being a comfort fabric for vast range of personal hygiene kits,will have a growing demand;and also 10-15% of China share will go to India,Turkey,others considering the increasing restrictions on trade supplies from China.
b) We recommend that the New unit,initially works on a Business model of 60-65% capacity utilization for first 1-2 years and, mainly directed to the unfilled and growing Domestic demand/import substitution demand. This % capacity offtake will grow to optimum 85% level in 3 years time.
Once this level of output is marketed successfully in the domestic markets; the new Unit to then slot into the export pipeline and world markets created by 2 peers like Ginni and Welspun; and focus on export markets of China where its share will keep falling vis a vis other countries slotting in.
Finally, we do strongly opine that India should leverage labor-intensive exports to capture space being vacated by China. It should be the endeavor and long term plan of such mega project to create an umbrella of small to medium Hygiene making units to create hygiene kits from such nonwoven fabric supplied to them;and also helping to create a Private label to such large parent unit.
In Summary, the Nuovatex Project Consultants recommends this project as a Viable investment opportunity in the fast growing Technical Textiles domain,to set up in 2021 so that the new growing demand,with China disruptions,can be partly filled when global supply chain demand and new growth begins from early 2022.
