INDIAN RAYON AND INDUSTRIES LIMITED - Aditya Birla Nuvo, Ltd

like the introduction of “Elements”casuals from Peter England and “Byford Cargos” bottom-weights by Byford introduced during the year. The
Company will strive to ensure growth ahead of the market by leveraging its existing brands and through optimum use of its strong distribution
network even in future.
Retailing Strategy
New retailing formats to grow its current portfolio and compliment traditional channels with innovative initiatives in “Click and Mortar” will be
created.
The Company created a net retail format by setting up exclusive all-trouser mega stores in the name of “Trouser Town” in the cities of Chennai
and Ahmedabad during last quarter of 1999-2000. These mega show-rooms have received excellent response from its target audience within a short
time. Creation of such Trouser Towns as well as similar retail formats even in future is on cards.
Plans to take new initiatives in the “Click & Mortar”, which will compliment traditional distribution channels. It will go a long way in strengthening
our brand image and distribution network. This will be achieved through creation of its distinctive brand site as well as I-Malls and portals in
joint venture with established players.
Branded Exports
The Company will focus on strengthening existing structure and create a new structure, where required, for exporting its brands to SAARC
countries and Middle East, while also focusing on expansion of existing distribution network for Van Heusen, Louis Philippe and Peter England. The
Company aims to have a complete portfolio presence in its key markets of the SAARC countries and Middle East in the near future.
Growth Strategy for Medium Term
The Company’s strategy for growth in the medium term is through acceleration of conversions, addressing life styles and entering new markets
that offer high growth potential. Its endeavour will be to accelerate the process of conversion from “tailor-made” to “ready-made” segments through
aggressive promotion and marketing efforts. These are expected to boost the industry demand and in turn benefit the Company, being the market
leader. The Company will work ceaselessly on grooming aspirations and addressing relevant lifestyles with wardrobe and line extensions, with the
ultimate objective of strengthening of its market position and ensuring a sustained growth in the future. Finally, the Company will evaluate possibilities
of entering new markets with high growth potential to generate “critical mass” in the women’s wear as well as the active wear segments of the
RMG industry. These measures, along with continued focus on leveraging existing strong brand equity discussed earlier, will go a long way in ensuring
strong, profitable growth in the Garments business going forward.
TEXTILES
Review of Operations
The company pursued rightsizing of its operations by emphasising on higher margin products and reducing the output of low margin products.
The division concentrated on three key products viz., Flax yarn, Worsted yarn and Synthetic yarn during the year. Aggregate exports accounted for
45% of divisional revenues.
Flax Yarn – the capacity utilisation increased by 9% due to higher fashion led demand. Realisations also saw an increase of 8.5% though
manufacturing cost went up on account of high raw material cost and adverse $-Rs parity.
Worsted Yarn - Despite capacity utilisation going up by 13%, the total volume decreased due to spinning of finer counts. This also helped
maintain operating margins despite a 5% fall in average realisations during the year.
Synthetic yarn - The plant maintained its capacity utilisation at 97% though volume reduced by 18% on account of the ongoing downsizing
programme. Realisation was up by 14% and enabled the unit make operating profits during the year.
Outlook
The demand for flax yarn is expected to grow at a CAGR of 10% in the next 3 years though competition is likely to intensify due to cheap imports
from China. This is likely to keep the prices under pressure. In the worsted yarn industry over capacity is likely to continue. The company is actively
developing customised products to achieve better returns. To counter the poor domestic market for synthetic yarn, the company is developing exports
market and also developing new products. The company will continue to downsize its synthetic operations to make it more competitive in the world
market.
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