I am very happy to share with you some thoughts on our journey last year.
Over the course of 2016 we saw cotton prices begin to stage a recovery from the peakswitnessed at the beginning of the year. The Indian economy continued its buoyancy growingat 7.1 per cent as against 7.6 per cent in FY15-16. Against all expectationsdemonetisation did not create a major roadblock for the economy as a whole but did impactend-user driven industries.
Among the most severely impacted was the textile industry. Despite efforts to minimisethe impact of demonetisation most of the textile companies were affected in the second ofthe FY16-17. At Suryalakshmi our response to these microeconomic challenges has been torenew our focus on sustaining profitability. As a strategic measure we are focusedtowards building a business model which will generate positive free cash flow throughvolatile business cycle and generate decent returns on the invested capital.
I am proud of our team who has worked tirelessly during the year under review tosustain the Companys operating performance and reliability achieving some notablemilestones. At Suryalakshmi we successfully reached 93% of average capacity utilisationlevels and increased production of value-added products. We launched many new designvariants and participated in several global exhibitions to showcase our new line ofproducts.
Over the course of FY16-17 we also managed to bring down the costs and improveproductivity. Our manufacturing unit at Amravati Maharashtra witRs. 25000 spindles isfully operational delivering yarns of high quality and large variety. From yarns thatcomprise 5% of USTER to garments with AQL 1.5% system we delivered best in class qualityproducts.
We continue making strategic investments in strengthening R&D processes tocomprehend customer preferences in line with latest industry trends. We now havecollaboration with leading designers from Europe and Asia to give their insights for abetter customer experience. Increasing the share of high-value products in the totalrevenue we are focused to strengthen our profitability levels in the coming months.
Further our captive power plant setup in Ramtek Maharashtra caters to the powerrequirements of our denim manufacturing process. With assured raw material linkages thisis an integral part of the backward integration process aimed at reducing operating costs.
Going ahead the Indian textiles industry currently estimated at around US$ 1 billionis estimated to grow further. By 2030 India will have 68 cities with population of morethan one million each driving rise in urban population and thereby increasing the demandfor denim. Denim continues to be the preferred fabric with the potential to expand becauseof the fashion quotient stretch lightweight fabric styling and detailing. The denimcategory is growing in India at a CAGR of 15% while the global market is growing at 3-5%.
At Suryalakshmi we have achieved the position of Indias premier original denimmanufacturer. We are consciously driving our business towards the continuous modernisationof denim manufacturing as per global production quality and environmental standards. Ourstrategy is aimed at becoming the lowest cost producer by leveraging backward integrationand higher operating efficiency.
We look forward to continued good performance owing to improved consumer sentimentshigher spending power and rise in retail level demand. Faster turnaround and designinnovation will be the pillars of our success as we look forward to meeting the targetsset forth. I would like to thank all our employees and Board for their continued support.
We look forward to an exciting year ahead.
L N Agarwal
Chairman & Managing Director