`Business viability model for a SME Nonwoven project for needlepunched Filter fabric unit of 4ton/day`

A Presentation at N W T A, GandhinagarBy,MunishTyagi,Ceo,NuovatexCo.Newdelhi

www.nuovatexprojects.com

India has 2nd largest Textile Ind`y in world, with150 years history of mechanised production,yet the scenerio for Technical textiles and nonwovens is yet in emerging and evolving stages.

While China is already on the way to be No 1 producer in this new field, India s share is yet to touch even 1% of the global production,

For understanding the Dynamics of the sector, the key drivers are, 1> due to political patronage of Cotton, the traditional Textiles remained as cotton dominated

and also as cummodity industry,while the world has moved into extensive use of Synthetics with nearly 63% share in total.

2> due to poor Policy / vision,India has been a late adopter of new technology whether it be OE Spg, wide fabric Processing or Tech. textiles & non wovens,

3> as a result the Tech. textiles and nonwoven sector remained highly import dependant even though production of Synthetics was on the rise in India esp. polyester & PP from Reliance Ind.

4> despite above challenges, the size of the technical textiles markets has grown steadily at avg11-12% rate to current level of Rs 70,000 crore

5> with increasing Outlays on infrastructure,and the growth in consuming middle and urban/semi urban class the present share of 12-13% for tech textiles is estimated to touch 20% by year 2020.

6> However,overlap of technologies and Products needs serious clarity.

India s textile supply/value chain

The battle of 2 popular technologies

The high cost of European tech impacts cost /viability of SME nonwoven projects,in India.

If China can succeed, then their low cost Tech is okay

Needlepunched NP nonwovens This is a Fiber based system,

The technology is simple ,flexible & has low entry barrier,

With all Fiber resources,and being 4 th largest Synthetic fiber producer ,India has all competitive strength, other than Low cost Indeg.technology,

The reasons of being laggard are our usual Late n slow adoption of Technology ;and poor productivity.

The NP products have a wide and versatile Product range and command a Good 40% share globally.

With industrial uses esp. in Filter media and other felt like end uses,the NP nonwovens have an assured future and,incl .their use in NW composites.

v/s Spun melt/spun bond This is a polymer to filament to

nonwoven fabric making system. overall world share of Spunmelt/

spun bonds is 55% of total nonwovens,with extensive use in Disposable/hygiene products.

This is due to their high production rates; but cost of tech.and Investment are high too.

The leader and our fierce competitor is China ,with large synthetic/MMF fiber resources,

In just 10 years,China has become 3rd largest consumer of nonwovens,next to the USA & EC

India is endowed with geog dividend of largest young n employable population,and can expect avg. 5.5 to 5% GDP level over next 5 years.

Today, we find that traditional textile sector is getting saturated and not growing in exports vis a vis global competition.

We do have potential to be a $120 Bln textile producer,with 8-9% of global textile share; But it is to happen with growth from technical textile sector where the Needle-punched will be the key driver.

Key factors going in favor of Needle punched segment in India are;A] simple Technology and wide/versatile product range with fiber flexibility, B] successful role models like M/s Supreme and, UniProducts India,

C] special Incentives and Govt subsidy available to tech.tex sector to reduce the interest burden and gaining competitive advantage.

Our Indy`s comfort zone for staying in basics and cummodity will not help since Nonwovens are engineered products,

To survive and cont`sly evolve ;new Techtex units have to think `innovation `products esp composite nonwovens

Needle punched products are the way to lead the Technical textile growth

Assumed Project cost,and proj.Viability

Detailed break up of a new 4tpd SME project is provided.

Detailed production cost and economic Viability is provided

PROJECT COST BREAKUP Land- min of 2 acres recommended

at Rs 50 lacs

Bldgs-1800 sq mtr is proposed at Rs 9000/sq mtr

Imported NP plant e.g of Y- Yang China at FOB $6.3Lac,under EPCG.

The overall project cost incl.pre Interest and WC margin works out to approx Rs 9.5 crores

*the share of imported Plant in total proj.cost of 9.2 Cr is at 55%.

PROJ.FINANCIALS /Viability The proj cost,of 9.2 cr to be funded with debt-

equity of 2 to 1.i.e promoters share of Rs 3 Crore.

Conversion of nonwoven Fabric to usable Kits is the `weak link` in t Technical-textile chain. A

20-25% of output is recommended to Convertor.

In 2nd year at 75% capacity, the unit will have Sale T/over of Rs 19 crore ie. 2 times of invest,and with RM ratio of < 60%.

This leads to Healthy financial ratios of,GP orEBITA of 23.5%, before interest and tax;andSimple Payback of 4.5 years.TUF allows 1+5 Yrs.BEP of 55% and, Avg DSCR of 2.10 over 5 years.

Under practical Market input and output rates,the SME unit of 4TPD size for producing Filter media from NP nonwoven is economically VIABLE.

* the SME proj. having Capex under Rs 10 cr benefits under 15%TUFS,and both Viability and payback period and ROI would improve by +5%.

SWOT summaryfor a Needlepunch unit

Yes, There are serious threats from imports from China.

Strength+Opportunity .

Threats & weakness

Technical textiles—a new kid on block;can it be our Saviour ? ?

Other than high fashion,tech- tex to fast substitute textiles.

India has reasonable GDP and with young consumers can be global leader in tech tex consumption.

Technical textiles

Tech tex or nonwovens are fastest growing textile use products,with global share of 50 to 50.

These are used in industrial and consumer end uses;and demand in consumption is prorata x2 .5 of a country s GDP economy.

The biggest opportunity are in technical fabrics, medical textiles ,water/air Filter media, and all types of Disposable fabrics eg.diapers, hygiene pads etc etc..

We already do $12 Bln .worth.

What Tech-tex can or Not do for Indian textile indy

While USA and europe started 30 years ago,we started 5 years back. China is ahead of us by 12-15 in this field already.

USA and Europe are now stagnated,and it is Indian and China doing a 10-12% growth.

All fibers are available in India;and it is now challenge for new entrepreneurs to covert Nonwovens to usable kits.

India having missed the global share in Textiles: It has the emerging opportunity to cover by Techtex.

India did miss the bus to make its share at min 10% of world textile trade. With emergence of cost effective Nonwoven technologies; we have one more knock of opportunity to do so v/s competitors China,Turkey Vietnam,Indonesia ,others.But, this can only happen with a dedicated Road map and future vision outlined below:;

We have to sacrifice political ways,and accept to reduce Cotton share to be able to upgrade to versatile MMF fibers to help grow in Tech textiles,

The expansion of Nonwoven capacity,under the TUFS support,to be for New SME Techtex projects;with focus on conversion to make user Kits,

The SME sector to be encouraged to adopt cost effective plants based on low entry level technology from role models ,Korea, China,Taiwan.

The manufacturing focus on needle punch technology to produce industrial techtex products like felts, Filter media and for automobile uses etc. produced from natural and MMF fibers and innov blends.

The 4-5 COE in technical textiles to guide SME units on product innovation that is practical to increased demand in Indian markets

Govt to encourage More buying of Indian tech. tex into Infra, projects.

Road map and future vision

You have been kind to give me this muchvalued Opportunity.

The era of traditional textiles is getting over.Lets dream and Do tehnical tex, to prosper N profit.

Tech. tex is a new kid,and needs to be nurtured to bloom into a high profit driven sector in Text.indy.

A big thank you

Munish tyagi 98 11 25 33 32