Establishment of

Textile Machinery

Manufacturing Unit

Heavy EngineeringGovernment of Gujarat

Page 2

Contents

Project Concept 3

Market Potential 4

Growth Drivers 5

Gujarat – Competitive Advantage 6

Project Information 7

- 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

Page 3

Project Concept

► 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

Project Overview

Major categories of textile machines

Spinning

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

machines

► 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

machines

► 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.

Processing

and finishing

machines

► Textile machineries and accessories used for

printing, dyeing and finishing of yarn, fibre and

fabrics primarily to enhance the aesthetics.

Others

machines

►Cotton ginning machines separate cotton fibre from seed.

►Textile testing: Tests strength and quality of fabric.

►Texturing machines: Provide opaqueness to fabric and improve its

physical properties such as absorbency and texture.

Page 4

Market Potential

Global textile machinery market

Indian textile machinery market

74

123

FY10 FY15

Indian textile machinery industry demand (INR billion)

Source: Department of heavy industries, GoI

CAGR:

10.7%

► 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 FY15-

FY22 led by favorable government

policies, potential in substituting

imports and growing textile industry.

12.113.2

14.516.0

17.920.2

2015 2016 2017 2018 2019 2020

Global textile machinery market (million of units)

Source: Technavio

CAGR:

10.8%

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.

12.5

5.75

8.0

8.9

34.5

Others

Processing machines

Weaving machines

Spinning machines

Synthetic filament

yarn machine

Category wise textile machinery

production (FY15) (INR 69.6 billion)

Source: Textile Machinery Manufacturer Association

Page 5

Growth Drivers

123.1

44.9

24.7

78.1

Market size Production Imports

Exports

Domestic

consumption

Potential

opportunity for

domestic

manufacturing

Textile machinery industry in India in FY15

(INR billion)

Opportunities in substituting imports with domestic manufacturing

Local production meets

only around one-third of

the total textile

machinery demand in

India, pointing to growth

potential for domestic

manufacturing (India is

the fourth largest

importer of textile

machines globally)

Source: Department of heavy industries, GoI

Strong demand from textile and apparel industry

67.0

100.0

141.0

2014 2017E 2021E

CAGR:

11.2%

Indian textile and apparel industry (US$ b) ► 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

Favorable government policies

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

Upcoming textile parks

GoI introduced revised

textile up gradation fund

scheme (TUFS) providing

subsidy to textile

manufacturing units

bringing modern and more

efficient machinery

Financial incentives

GoI has introduced new

textile policy, under which

it will invest INR 740

billion by 2019 with focus

on boosting exports and

creating jobs

New textile policy

Page 6

Gujarat - Competitive Advantage

► Gujarat has a very established textile sector

with more than 1500 medium and large textile

units and 18 textile-related product clusters

(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

is the largest producer of cotton in the country

with production of ~100 lac bales.

► Gujarat also has a large number of manpower

with required skill set attributable to better

educational infrastructure and Industrial

Training Institutes.

► Gujarat is the largest producer of cotton and

denims in India. Its contribution to textile

exports is also the highest among Indian

states.

► In 2013, Gujarat accounted for 12% of textile

exports, which it aims to increase to 25% by

2017.

High raw material availability

30% of the cotton produced in India comes

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

Policy and infrastructure support

Advantage Gujarat Textile hubs in Gujarat

The state provides tax incentives by providing

interest subsidy of up to 5% for five years on

setting up of new textile manufacturing facility.

More than 28 ITI’s in Gujarat provide

educational and training courses related to

textile and garment industry insuring availability

of skilled manpower.

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.

Ahmedabad,

Sanand

(cotton and blended fabric)

Surat

(silk)

Ankaleshwar

and Tapi

(Technical

textiles)

Jetpur

(Hand

printing and

processing)

Surendranagar,

Manavadar and

Gondal

(cotton ginning)

Kutch

(Handicrafts)

Page 7

Project Information

► 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.

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.

Location suggested: Ahmedabad

Potential investment locations in Ahmedabad

LocationLand price* (INR/

per sq. meters)Focus industries

Distance from

Ahmedabad (kms)

Naroda 4,780

Textiles, engineering,

electronics , ceramics

among others

19

Odhav 4,780

Engineering, textiles, auto

component, chemicals

among others

13

Ahmedabad apparel

park, Gomtipur5,110 Textiles -

Sanand 3,600Textiles, chemicals,

engineering22

*as on 1st April 2016; Source: GIDC

Advantageous location

Surat (another

major textile hub)

Ahmedabad

Dedicated

freight corridor

Delhi Mumbai

Industrial corridorKandla port

Page 8

Project Information

Infrastructure availability/connectivity

Ahmedabad has an extensive outlay of existing infrastructure - rail, road and air - which make it

an excellent investment destination.

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.

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 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.

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.

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 Association of India Limited (GAIL), Gujarat State Petronet Limited (GSPL) and Gujarat

Gas Company Limited (GGCL) will provide gas supply to industrial sites.

Water for industrial purposes can be

obtained from four sources viz. Gujarat

Water Supply and Sewerage Board

(GWSSB), irrigation canal, dams, and

surface reservoirs.

Water Power

Gas

Air Port

Rail Road

Page 9

Project Information

Major textile machinery manufacturers in India

Laxmi Machine Works Rieter India Dhall Group

Kirloskar Toyota Textile

Machinery Pvt. Ltd

Prashant Group

Yamuna Machine

Works

Harish Textile

Engineers (P) Ltd.

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 Location (Distance from Ahmedabad)

Textile machinery parts► Surat (263 kms)

► Ahmedabad

Steel re-rolled products► Ahmedabad (10 kms)

► Vadodara (111 kms)

Machine tools► Ahmedabad

► Jamnagar (305 kms)

Fabricated metal products

► Vadodara (111 kms)

► Panchmahal (129 kms)

► Ahmedabad

Ball and roller bearings► Jamnagar (305 kms)

► Anand (77 kms)

► Surendranagar (126 kms)

► Bhavnagar (170 kms)

► Rajkot (215 kms)

► Bhavnagar (170 Kms)

► Rajkot (215 kms)

► Baruch (191 kms)

► Surendranagar (126 kms)

► Bhavnagar(170 kms)

► Rajkot (215 kms)

Suzler Textil

Page 10

Project information

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

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.

Page 11

Project Financials

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) 700

Estimated debt raised (INR crore): ~1300

Cost of setting-up a textile machine manufacturing facility (up to 2,000* large

textile machines) is likely to be around INR 2000 million

*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

Manpower required (150-200)

Designation Number of employee

President 1

General managers 2-3

Sr. Manager, manager, assistant manager 5-10

Sr. engineers, engineers, assistant engineers 25-30

Skilled workers 50-70

Unskilled workers 50-70

Page 12

Project Financials

Payback period

Capacity (units) 1 2000

Average capacity utilization in industry (%) 65

Production (units) 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 10.0%

Time (years) 1 2 3 4 5

Revenue (INR billion) 27.3 30.03 33.03 36.34 39.97

EBITDA (@13.7% of rev.) 3.74 4.11 4.52 4.98 5.47

Undiscounted cumulative cash flows 3.74 7.85 12.37 17.35 22.82

Investment 2000

Estimated payback period: 4.5 years

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)4

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)) ~3950

Estimated minimum viable size: ~785 units

*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

Page 13

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.

Category of

Project Location

(Taluka)

% of eligible fixed

capital investment

entitled for

Incentive

% of Net VAT

reimbursement to

the unit

% of Net VAT to be

paid to

Government

Incentive period

(no. of years)

1 100 90 10 10

2 80 80 20 10

3 70 70 30 10

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.

Quantum of incentives

Net VAT incentives

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

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

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 14

Approvals & Incentives

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

Incentives from Government of India

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

support to start-ups

Page 15

Approvals & Incentives

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

► Sales tax department

► Central and state excise department

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

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

► Indicative List of Approvals

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 16

References/Sources

Page

Number

Source

4• 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

5 • 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-textile-

industry/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-textile-

parks/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-fund-

scheme-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-to-

benefit-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

6 • “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

7 • “Sanand set to house China’s 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

2016“Government 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-Dholka-

GIDC/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

8 • “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 17

Page

Number

Source

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

Manufacturing sector profile- vibrant Gujarat 2015

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-in-

china/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-Machinery-

Project/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

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-jet-

looms.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

References/Sources

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

Gujarat Industrial Development Corporation

Industries & Mines Department

Office of Industries Commissioner

www.gidc.gov.in

www.imd-gujarat.gov.in

www.ic.gujarat.gov.in

Industrial Extension Bureau

www.indextb.com

http://technotex.gov.in/

Ministry of Textiles, Government of India