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Establishment of

Textile Machinery
Manufacturing Unit

Heavy Engineering
Government of Gujarat

Contents
Project Concept

Market Potential

Growth Drivers

Gujarat Competitive Advantage

Project Information

- Location/ Size
- Infrastructure Availability/ Connectivity
- Key Players/Raw Materials required
- Key Considerations
- Project structure
- Potential Collaboration opportunities

Project Financials

11

Approvals & Incentives

13

Sources

15

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Project Concept
Project Overview

Textile machines are used in manufacturing fabrics or garments using various processes including
spinning, winding, weaving, knitting among others.
Textile machineries find applications majorly in cotton mills, wool mills, jute mills, silk mills and
garment factories
The proposed project involves the establishment of a facility for manufacturing of textile
machinery at Ahmedabad. The total estimated cost of setting up the facility is estimated to be
~INR 2000 million with upto 2,000 large textile machines
Potential investment locations in Ahmedabad include Naroda, Oodhav, Sanand, and Ahmedabad
apparel park at Gomtipur

Major categories of textile machines

Spinning
machines

Weaving
machines

Knitting
machines

Processing
and finishing
machines

Spinning is a process in textile manufacturing


to convert fibre (cotton, wool etc.) in to yarn (a
long continuous length of interlocked fibres).
Major methods of spinning include
Ring spinning
Air jet spinning
Open end spinning
Synthetic filament yarn
Weaving is a process in which distinct sets of
yarns are interwoven at right angle to form
fabric.
Major types of weaving machines include:
Jacquard looms
Dobby looms
Air/water jet looms
Rapier looms
Knitting is another method of converting yarn in
to fabric.
Major categories of knitting machines include:
Circular knitting machine
Sock-knitting machine
Flatbed knitting machine
Hobbyist spool knitting machine.
Textile machineries and accessories used for
printing, dyeing and finishing of yarn, fibre and
fabrics primarily to enhance the aesthetics.

Cotton

Others
machines

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ginning machines separate cotton fibre from seed.


testing: Tests strength and quality of fabric.
Texturing machines: Provide opaqueness to fabric and improve its
physical properties such as absorbency and texture.
Textile

Market Potential
Global textile machinery market
Global textile machinery market (million
of units)

12.1

13.2

CAGR:
10.8%
14.5

20.2
17.9

16.0

2015

2016

2017

2018

2019

2020

Source: Technavio

The global textile machinery market


is expected to grow at a CAGR of
10.8% between 2015-20 .
The market is driven by growing
demand from Asian countries such
as China, India, Bangladesh and
Vietnam.
Globally, Germany (with a value of
US$ 3.3b) was the largest exporter of
textile machines in 2014 followed by
China (US$ 2.8b) and Japan
(US$2.1b).
Majority of exports are made to Asian
countries.

Indian textile machinery market


Indian textile machinery industry demand
(INR billion)
CAGR:
10.7%

123

Indian textile industry is the second


largest employer in the country after
agriculture (employing around 105
million people) and contributes more
than 4% to the GDP.

India is the second largest producer


of jute and cotton fibre and second
largest producer of silk globally.

The demand for textile machineries


is expected to grow at a rate of
more than 10% between FY15FY22 led by favorable government
policies, potential in substituting
imports and growing textile industry.

74

FY10

FY15

Source: Department of heavy industries, GoI

Category wise textile machinery


production (FY15) (INR 69.6 billion)
Spinning machines

34.5

Weaving machines

8.9

Synthetic filament
yarn machine
Processing machines

8.0

Others

5.75
12.5

Source: Textile Machinery Manufacturer Association

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Growth Drivers
Strong demand from textile and apparel industry
Indian textile and apparel industry (US$ b)
CAGR:
11.2%

141.0

100.0
67.0

2014

2017E

2021E

Indian textile industry, expected to grow


at a CAGR of 11.2% between 2014-21,
will be one of the major growth driver for
textile machineries.
Rising per capita income and increasing
penetration of organized retail will be the
major growth drivers for textiles in India.
Further, textile and apparels export from
India are also expected to grow at CAGR
of 10.8% between 2014-21 giving boost
to textile machine industry.

Source: Indian brand equity foundation

Opportunities in substituting imports with domestic manufacturing


Textile machinery industry in India in FY15
(INR billion)

78.1
123.1

Exports

24.7

Domestic
44.9
consumption
Market size

Production

Local production meets


only around one-third of
Potential
the total textile
opportunity for
machinery demand in
domestic
India, pointing to growth
manufacturing
potential for domestic
manufacturing (India is
the fourth largest
importer of textile
machines globally)

Imports

Source: Department of heavy industries, GoI

Favorable government policies


Upcoming textile parks
Government of India (GoI) has
approved 74 textile parks, which
are expected to attract
investment of INR 300 billion
and will promote production of
value added and export oriented
products

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Financial incentives

New textile policy

GoI introduced revised


textile up gradation fund
scheme (TUFS) providing
subsidy to textile
manufacturing units
bringing modern and more
efficient machinery

GoI has introduced new


textile policy, under which
it will invest INR 740
billion by 2019 with focus
on boosting exports and
creating jobs

Gujarat - Competitive
Advantage
Advantage Gujarat

Textile hubs in Gujarat

Gujarat has a very established textile sector


Ahmedabad,
with more than 1500 medium and large textile
Kutch
Sanand
units and 18 textile-related product clusters
(Handicrafts)
(cotton and blended fabric)
(overall there were around 70 textile clusters in
India in 2014).
Major units of textiles are mainly concentrated
in Ahmedabad, Surat, Jetpur, Saurashtra and
Kutch.
The large number of textile units is attributable
to high availability of raw materials as Gujarat
Surendranagar,
is the largest producer of cotton in the country
Manavadar and
with production of ~100 lac bales.
Gondal
Gujarat also has a large number of manpower
(cotton ginning)
with required skill set attributable to better
educational infrastructure and Industrial
Training Institutes.
Jetpur
Gujarat is the largest producer of cotton and
(Hand
Ankaleshwar
denims in India. Its contribution to textile
Surat
printing and
and Tapi
exports is also the highest among Indian
processing)
(silk)
(Technical
states.
textiles)
In 2013, Gujarat accounted for 12% of textile
exports, which it aims to increase to 25% by
2017.

High raw material availability

Policy and infrastructure support

30% of the cotton produced in India comes

The Government of Gujarat (GoG) intends to


invest ~US$3.3b in the textile industry by 2020.
It aims to create 1 million jobs in the industry.

from Gujarat. Surendranagar, Jamnagar,


Rajkot, Bhavnagar and Amreli are the main
cotton producing districts and all are located in
close vicinity of Ahmedabad

The cotton production is also supported by its


climatic and geographical conditions as the
state has black soil mixed with lime and
potash and ~50 cm rainfall that are optimum
for cotton cultivation

Page 6

More than 28 ITIs in Gujarat provide


educational and training courses related to
textile and garment industry insuring availability
of skilled manpower.
The state provides tax incentives by providing
interest subsidy of up to 5% for five years on
setting up of new textile manufacturing facility.

Project Information
Location suggested: Ahmedabad

Ahmedabad district will be an ideal location to establish a textile machinery manufacturing plant
in Gujarat.
China Small and Medium Enterprise Investment Ltd (CSMEIL) is planning to set up a new
textile park in Sanand (30 kms from Ahmedabad) as part of INR 100 billion investment plan in
the state.
Apart form it, another textile park is also proposed by Bangladesh in Kadi (30 kms from
Ahmedabad) at an investment of INR 2.4 -3.0 billion.

Potential investment locations in Ahmedabad


Land price* (INR/
per sq. meters)

Focus industries

Distance from
Ahmedabad (kms)

4,780

Textiles, engineering,
electronics , ceramics
among others

19

Odhav

4,780

Engineering, textiles, auto


component, chemicals
among others

13

Ahmedabad apparel
park, Gomtipur

5,110

Textiles

Sanand

3,600

Textiles, chemicals,
engineering

22

Location

Naroda

*as on 1st April 2016; Source: GIDC

Why Ahmedabad ?

Ahmedabad has a strong base of cotton textile


mills and is popularly known as Manchester of
India (Manchester, located in United Kingdom
was one of the major global major textile hub
during 19th and 20th century).
Upcoming textile parks in Sanand and Kadi are
likely to create demand for textile machineries in
the region.
Several major fabric manufacturers including
Arvind mills, Reliance Industries and Ashima
group have manufacturing facilities in
Ahmedabad. Any potential expansion by these
major manufacturers will create demand for
textile machineries.

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Advantageous location
Kandla port

Delhi Mumbai
Industrial corridor

Ahmedabad

Surat (another
major textile hub)

Dedicated
freight corridor

Project Information
Infrastructure availability/connectivity

Ahmedabad has an extensive outlay of existing infrastructure - rail, road and air - which make it
an excellent investment destination.
Rail

Road
The city is connected to Delhi Mumbai
Industrial Corridor (DMIC). DMIC is
intended to be the manufacturing hub
serviced with world class infrastructure.
It also has a very good connectivity with
other cities of the state such as Vadodara
(182 km) and Surat (278 km).

Ahmedabad is connected via rail broad


gauge to Delhi and Mumbai
The Government is also developing a
Ahmedabad Vadodara rail link
In October 2014, a metro project was
approved for Ahmedabad and
Gandhinagar.
Air

Ahmedabad has an international airport


with cargo handling capacity of ~50,000
tonnes per year.
A new international airport at Dholera is
under development which is expected to
become operational by 2018.
Ahmedabad is also in close vicinity of
other domestic airports such as Surat and
Vadodara.

Port
The city is also connected to several
leading sea ports such as Dahej,
Kandala, Mundra and Nhava Sheva sea
port.
Most of the sea ports are within 300 km
from Ahmedabad.

Power

Water

Water for industrial purposes can be


obtained from four sources viz. Gujarat
Water Supply and Sewerage Board
(GWSSB), irrigation canal, dams, and
surface reservoirs.

Gujarat is power surplus state with installed


capacity of around 29 GW (second highest in
India) with robust distribution network. The
main source for the power supply is Gujarat
Energy Transmission Corporation Limited

Gas

Page 8

Gas Association of India Limited (GAIL), Gujarat State Petronet Limited (GSPL) and Gujarat
Gas Company Limited (GGCL) will provide gas supply to industrial sites.

Project Information
Major textile machinery manufacturers in India

Laxmi Machine Works

Kirloskar Toyota Textile


Machinery Pvt. Ltd

Yamuna Machine
Works

Prashant Group

Dhall Group

Rieter India

Harish Textile
Engineers (P) Ltd.

Suzler Textil

Raw materials required

Machine tools, fabricated metal products, steel re-rolled products, ball and roller bearings are the
major raw materials for manufacturing textile machines.
Industry
Textile machinery parts
Steel re-rolled products
Machine tools

Location (Distance from Ahmedabad)

Fabricated metal products

Ball and roller bearings

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Surat (263 kms)


Ahmedabad

Rajkot (215 kms)

Ahmedabad (10 kms)


Vadodara (111 kms)

Surendranagar (126 kms)


Bhavnagar (170 kms)

Ahmedabad
Jamnagar (305 kms)

Vadodara (111 kms)


Panchmahal (129 kms)
Ahmedabad

Baruch (191 kms)


Surendranagar (126 kms)
Bhavnagar(170 kms)

Jamnagar (305 kms)


Anand (77 kms)

Rajkot (215 kms)

Rajkot (215 kms)


Bhavnagar (170 Kms)

Project information
Key considerations

Second hand
machineries
impacting growth

Rising
competition in
textile exports
market

Installation of new textile machine requires high initial capital


investment.
Indian textile manufacturers, specially from unorganized sector
(contributes around 80% to Indian textile industry) prefer
second hand machinery over new machineries due to cost
considerations. For example, 80% of shuttle less looms bought
in India in 2012 were second hand.
This is one of the key challenge for textile machine industry
growth in India.
Exports are one of the major driver of textile industry in India
(it is the second largest textile exporter).
However, Indian textile exporters are facing tough competition
from cheap Chinese and Bangladeshi exports.
Further, majority of Indian textile manufacturers in unorganized
sector are not able to avail benefits of economies of scale.
Dwindling exports will directly impact the growth of textile
machinery industry.

Project structure
Project is likely to a be a private investment by either of:

an existing textile machinery manufacturer

new entrant/s in the industry

foreign investor/s looking to enter Indian electrical equipment industry.

Potential collaboration opportunities


Company

Base country

Rieter

Switzerland

Truetzschler

Germany

Murata Machinery

Japan

Itema

Italy

Lonati

Italy

Mayer and Cie

Germany

Benninger Textile

Switzerland

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Project Financials
Cost of setting-up a textile machine manufacturing facility (up to 2,000* large
textile machines) is likely to be around INR 2000 million

Project cost
Project components & specifications

Cost (INR million)

Land1 (Area: approximately 35,000 sq. meters)


Rate: (INR 3,600+ per sq. meters.)

126

Building (Area: approximately 22,000 sq. meters)


Rate: (INR 11,600 per sq. meters)

255

Plant, machinery, working capital and miscellaneous expenses

1620

Total investment required : ~INR 2000 million*

Means of finance2
Estimated Debt percentage

65%

Debt raised (INR million)

1300

Equity invested (INR million)


Estimated debt raised (INR crore): ~1300

700

Manpower required (150-200)


Designation
President

Number of employee
1

General managers
Sr. Manager, manager, assistant manager
Sr. engineers, engineers, assistant engineers
Skilled workers
Unskilled workers

2-3
5-10
25-30
50-70
50-70

*we have assumed that plant will have undermentioned manufacturing capacity: spinning preparatory (200 units),
yarn making machine (200 units), weaving machines (1,600 looms)
+It is assumed that plant will be set up at Sanand, where CSMEIL is planning to set up a textile park

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Project Financials
Payback period
Capacity (units) 1
Average capacity utilization in industry (%)
Production (units)

2000
65
1,300

Average revenue per unit (AR) (INR million/ unit)2

2.1

Industrial average EBITDA margin

13.7 %

Forecasting revenues at expected industrial growth rate


Time (years)
1
2
Revenue (INR billion)
27.3
30.03
EBITDA (@13.7% of rev.)
3.74
4.11
Undiscounted cumulative cash flows 3.74
7.85
Investment
2000
Estimated payback period: 4.5 years

10.0%
3
33.03
4.52
12.37

4
36.34
4.98
17.35

5
39.97
5.47
22.82

Minimum viable size


EBIT margin (Industry average)

9.0%

Total operating costs (as% of revenues)

91.0%

Total costs (91.0% @ 273) (INR million)

2480

Depreciation cost (5%* of 106.5 million2)

53

Employee costs (10.6%3 * 50% of TC)

132

Finance cost (12% of debt)

89

Others (including insurance and miscellaneous)


(2% of total investment)

Total fixed cost (FC) (INR million)

314

Variable cost (VC= TC-FC) (INR million)

2166

Variable cost/Unit (INR million)

1.7

Average revenue/unit (INR million)

2.1

Minimum viable size (FC/(AR-VC))


Estimated minimum viable size: ~785 units

~3950

*Plant and machinery life is assumed to be 20 years and straight line method is considered for depreciation for
estimation purposes with zero salvage value

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Approvals / Incentives
Gujarat Industrial Policy 2015
Government of Gujarat has announced an ambitious Industrial Policy, in January 2015, with the
objective of creating a healthy and conducive climate for conducting business and augmenting the
industrial development of the state.

Approvals

Registration of the industrial undertaking


Industrial Entrepreneur Memorandum or Udyog Aadhar
Non-agriculture land permission and purchase deed registration
Consent to Establish from Gujarat Pollution Control Board

Quantum of incentives
% of eligible fixed
Category of
% of Net VAT % of Net VAT to be
capital investment
Incentive period
Project Location
reimbursement to
paid to
(no. of years)
entitled for
(Taluka)
the unit
Government
Incentive
1
100
90
10
10
2
80
80
20
10
3
70
70
30
10

Net VAT incentives


Net VAT incentive will be reimbursed to the industrial undertaking in one financial year will not
exceed one-tenth of the total amount of eligible incentive.
Classification of the Project
Amount (in INR crore)
Ultra Mega Industrial Unit
500
Mega industrial Unit
400
Large Industrial Unit
150
Micro, Small or Medium Industrial Unit
50
Industries in the Manufacturing Sector can opt for either the general incentives under the
Gujarat Industrial Policy- 2015 or the incentives for large industries as provided below:
As per the Gujarat Industrial Policy-2015, following are the key incentives provided to the
manufacturing sector (including machine tools):

Interest subsidy of 5% with the maximum amount of INR 2.5 million (~US$ 37,5001) per annum
for 5 years on the term loan of machinery and equipment anywhere in the state.

Capital investment subsidy of 10 % loan amount disbursed by Bank/Financial Institution with a


maximum amount of INR 1.5 million in Municipal Corporations areas.

Assistance for technology acquisition from recognized institution for manufacturing products will
be provided by way of 50% of the cost payable subject to a maximum of INR 5 million (~US$
75,0001), including royalty payment for first two year.

Assistance for venture capital to raise promoter contribution in the form of equity or loan through
Gujarat Venture Finance Limited (GVFL).

Page 13

Approvals & Incentives


Incentives from Government of India
5% credit linked interest subsidy under TUFS (Technology Up gradation Fund Scheme) scheme on
purchase of textile machinery approved by government

Scheme for Integrated Textile Parks (SITP) : 40% capital subsidy to a maximum of INR40 crore on
total project cost on projects approved by government. Also, 100% FDI allowed for textile sector

The basic custom duty on imported textile machinery has been reduced from 10% to 5% and
support to start-ups

Page 14

Approvals & Incentives


Indicative

List of Approvals

Approvals/clearance required

Department to be approached and consulted

Incorporation of company

Registrar of companies

Registration/Industrial license

Secretariat if industrial assistance (SIA) for large and


medium scale industries

Allotment of land

State industrial development corporation

No objection certificate (NOC) under


air and water pollution control acts

State pollution control board

Approval of construction and country


planning

Town and country planning


Municipal and local authorities
Chief inspector of factories
Pollution control board
Electricity board

Finance

For loans higher than INR 1.5 crore, all India financial
institutions like Industrial Development Bank of India(IDBI),
Industrial Credit and Investment Corporation of India(ICICI),
Industrial Finance Corporation of India(IFCI) etc.

Registration under state sales tax act


and Central and State excise act

Code number for export and import

Regional office of director general of foreign trade

Environmental clearance

Ministry of environment, forest and climate change after


conducting environment impact assessment (EIA) for any
project

Hazardous waste import and export


approval

Ministry of environment, forest and climate change

Exiting business

Ministry of corporate affairs

Sales tax department


Central and state excise department

Government of Gujrat has introduced single window facilitation portal for investors providing
undermentioned benefits:
Centralized system to monitor applications.
User friendly and simplified application process for investors.
The unit shall be facilitated through Investor Facilitation Portal for obtaining all the
necessary state approvals/ clearances - https://www.ifpgujarat.gov.in
Sources:
1. Gujarat Textile Policy, Industries and Mines Department, Government of Gujarat, 5 September 2012
2. Approvals required for setting up plant,
http://dipp.nic.in/English/Investor/Investers_Gudlines/approval_clearances_required_for_new_projects.pdf, accessed 8 July
2016
3. Environment clearance http://envfor.nic.in/major-initiatives/environmental-clearances, accessed 8 July 2016
4. Gujarat single window clearance, https://www.ifpgujarat.gov.in/portal/jsp/aboutUs.jsp, accessed 8 July 2016
5. Exiting business, http://www.mca.gov.in/MinistryV2/CloseCompany.html, accessed 9 July 2016
6. Manufacturing Sector Profile, Vibrant Gujarat website, 7 October 2014

Page 15

References/Sources
Page
Number

Source

Global textile machinery market 2015-20, by Technavio via EMIS

Laxmi Machine works Annual reportFY15-16

$650 billion opportunity Modi Govt. 2025 road map for textile industry, Textile magazine website,
http://www.indiantextilemagazine.in/cover-story/650-billion-opportunity-modi-govt-2020-road-map-for-textile-industry/
(textile machinery industry growth rate)

Textile machinery manufacturer association, http://www.tmmaindia.net/PrintMediaPDF/IndianTEIProfileupdated.pdf,


accessed 19 July 2016

National capital goods policy 2016

Laxmi Machine Annual Report FY15-16

'New govt initiatives will help India's textile industry, The Times of India website,
http://timesofindia.indiatimes.com/life-style/fashion/trends/New-govt-initiatives-will-help-Indias-textileindustry/articleshow/48501912.cms, accessed 17 July 2016.

$650 billion opportunity Modi Govt. 2025 road map for textile industry, Textile magazine website,
http://www.indiantextilemagazine.in/cover-story/650-billion-opportunity-modi-govt-2020-road-map-for-textile-industry/,
accessed 17 July 2016

Govt expects Rs 30,000 cr investment in 74 textile parks, Business line website,


http://www.thehindubusinessline.com/economy/macro-economy/govt-expects-rs-30000-cr-investment-in-74-textileparks/article8252981.ece, accessed 17 July 2016

Centre urges states to fast-track approvals for textile parks, The Economic Times website,
http://articles.economictimes.indiatimes.com/2015-11-04/news/68017382_1_textile-parks-technology-upgradation-fundscheme-tufs, accessed 17 July 2016

Textile Industry To Benefit From Union Budget 2016-17. The Budget Continues On The Path Of Structural Economic
Reforms and Growth, Textile excellence website, http://www.textileexcellence.com/news/details/1005/textile-industry-tobenefit-from-union-budget-2016..., accessed 17 July 2016

Cabinet approves textile policy; aims at job creation, manufacturing and exports, Zee business website,
http://www.zeebiz.com/india/news-textile-policy-cabinet-to-boost-job-creation-manufacture-export-2726, accessed 18 July
2016

Gujarat Growth and Prosperity for All, Vibrant Gujarat website, 25 August 2014

Manufacturing Sector Profile, Vibrant Gujarat website, 7 October 2014

http://technotex.gov.in/BSTT_Rev_Final_report%2018042016.pdf

http://technotex.gov.in/mobiltech_mnu.pdf

Gujarat power capacity, https://www.sldcguj.com/compdoc/Installed%20capacity%2030041662.pdf, accessed 15 July


2016

Gujarat Infrastructure Development Board, http://www.gidb.org/gas-current-scenario#01, accessed 18 July 2016

Page 16

Baseline survey of the Technical Textile industry in India, Office of the Textile Commissioner, 29 March 2016

Manufacturing Sector Profile, Vibrant Gujarat website, 7 October 2014

Gujarat Growth and Prosperity for All, Vibrant Gujarat website, 25 August 2014

http://www.thehindubusinessline.com/economy/budget/rs-200-cr-set-aside-for-setting-up-6-more-textile
clusters/article6196604.ece
Sanand set to house Chinas textile park, Indian express website,
http://indianexpress.com/article/cities/ahmedabad/sanand-set-to-house-chinas-textile-park/, accessed 18 July 2016

Bangladesh to set up textile park in Gujarat, The Times of India website,


http://timesofindia.indiatimes.com/city/ahmedabad/Bangladesh-to-set-up-textile-park-in-Gujarat/articleshow/49330073.cms,
accessed 18 July 2016

Baseline survey of the Technical Textile industry in India, Office of the Textile Commissioner, 29 March
2016Government of India Ministry of MSME District Industrial Potential Survey Report of Rajkot District (2014-15), MSME
Development Institute (December 2014)

Why is Ahmedabad Called Manchester of India, http://pediaa.com/why-is-ahmedabad-called-manchester-of-india/,


accessed 18 July 2016

Textile unit at Dholka, http://timesofindia.indiatimes.com/city/ahmedabad/Textile-unit-gutted-at-DholkaGIDC/articleshow/52216546.cms

Naroda, http://www.narodaassociation.org/search?category=Textile-Industries

http://www.narodaassociation.org/search?category=Textile-Industries

http://www.ril.com/OurBusinesses/Textiles.aspx

Viramgam industrial focus, http://viramgam-ahmedabad.guialis.co.in/textiles

District industrial potentiality survey, Ahmedabad,


http://msmediahmedabad.gov.in/download/district/AHMEDABAD.pdf

References/Sources
Page
Number

Source

10

China, Bangladesh cornering India, The tribune website,


http://www.tribuneindia.com/news/ludhiana/community/china-bangladesh-cornering-india/255663.html,acessed 20 July
2016
https://www.dnb.co.in/IndianTelecomIndustry/Textile%20overview.asp

11

Comparable project:

LMW sets up plant in China, business line, http://www.thehindu.com/business/Industry/lmw-sets-up-plant-inchina/article6108067.ece, accessed 20 July 2016
State Clears INR 410-Cr Toyota's Textile Machinery Project, Business Line website,
http://www.newindianexpress.com/states/karnataka/State-Clears-Rs-410-Cr-Toyotas-Textile-MachineryProject/2015/09/15/article3028972.ece, accessed 20 July 2016
Rieter plans to set up textile machinery plant near Pune , Fibre2 Fashion website,
http://www.fibre2fashion.com/news/textile-news/newsdetails.aspx?news_id=63894#sthash.XB5Tk19o.dpu
The textile machinery investment of 500 million yuan project settled in Laiyang Development Zone,
http://textilemachine.fangzhi-jixie.com/machine_1/content/?373.html, accessed 20 July 2016

Major players, http://india-itme.com/pdfs/Textile_Machinery_Market.pdf


Manufacturing sector profile- vibrant Gujarat 2015

Assumptions:
Assuming proposed plant will be set up at Sanand upcoming textile park in Sanand
Benchmark project: LMW Chinese textile machine plant
Investment : US$29 million (approx INR 200 crore)
Area : 8.5 acre (35000 sq meters)
Building: 22,000 sq meters
Capacity: it is assumed that proposed plant will have capacity of around 1000 units
Building cost : assumed INR 10,000/sq. meters
Capital structure is computed by assessing the D/E ratio of Reiter (global company), as the only listed textile
manufacturing company (LMW) carries very low debt on its balance sheet (D/E=6.5%)
The actual capital structure of a company will depend on case to case basis and will depend on several factors
including exiting debt on the balance sheet, credit rating among others
12

It has been assumed that plant will have undermentioned manufacturing capacity:
Spinning preparatory machine: 200 machines (INR 30 lakhs average price) source: LMW
Yarn making machine : 200 machines (INR 60lakh average price) source: LMW
Weaving machine loom: 1,600 machines (INR 15lakh average price) (http://dir.indiamart.com/impcat/air-jetlooms.html)
1)Overall average price: (200/2000)*(30)+(200/2000)*(60)+(1,600/2000)*(15)= 21 lakhs
2) Average price per unit (from LMW annual report)
Industrial averages are taken by considering financials for LMW and Rieter group
3) 50% of the total investment in (land, machinery, working capital and miscellaneous expenses is assumed to be
invested in fixed assets) i.e 50% of 162 =81; further 25.5 crore is for building (Total depreciable fixed assets: 106.5)
4) Employee cost is assumed to contribute 10.6% to the total costs as per industrial standards
50% of the employee costs are assumed to be labor costs, which will fall under variable costs and rest are fixed
costs
+50% of total employee cost is assumed to be fixed, while rest is considered under variable cost
Source:
Laxmi Machine Works Annual Report
Rieter Group annual report

13

Gujarat Textile Policy, Industries and Mines Department, Government of Gujarat, 5 September 2012
Manufacturing Sector Profile, Vibrant Gujarat website, 7 October 2014

14
Gujarat Textile Policy, Industries and Mines Department, Government of Gujarat, 5 September 2012
Approvals required for setting up plant,
http://dipp.nic.in/English/Investor/Investers_Gudlines/approval_clearances_required_for_new_projects.pdf, accessed 8
July 2016
Environment clearance http://envfor.nic.in/major-initiatives/environmental-clearances, accessed 8 July 2016
Gujarat single window clearance, https://www.ifpgujarat.gov.in/portal/jsp/aboutUs.jsp, accessed 8 July 2016
Exiting business, http://www.mca.gov.in/MinistryV2/CloseCompany.html, accessed 9 July 2016
Manufacturing Sector Profile, Vibrant Gujarat website, 7 October 2014
Industries Commissionerate website, http://ic.gujarat.gov.in/?page_id=3175, accessed on 1 June 2016
Textile industry welcomes amended TUFS, Business Standard, 2 January 2016
Approvals http://dipp.nic.in/English/Investor/Investers_Gudlines/FAQ_GrantIndustrialLicence.pdf, accessed 27
June 2016

Page 17

Ministry of Textiles, Government of India


http://technotex.gov.in/
Industries & Mines Department
www.imd-gujarat.gov.in

Gujarat Industrial Development Corporation


www.gidc.gov.in

Office of Industries Commissioner


www.ic.gujarat.gov.in

Industrial Extension Bureau


www.indextb.com
This project profile is based on preliminary study to facilitate prospective entrepreneurs to assess a prima facie scope.
It is, however, advisable to get a detailed feasibility study prepared before taking a final investment decision.

Office of The Industries Commissionerate


Block No. 1, 2nd Floor, Udyog Bhavan,
Gandhinagar 382 010. Gujarat
Ph.: 23252683/23252617
Email ID: iccord@gujarat.gov.in