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.

  • SPECIFIC  `CHINA` DIRECTED KEY FACTORS

· 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.

  • OTHER FACTORS/CONSIDERATIONS

· 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.

· 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.