Bombay Dyeing Kicks Off Textile Unit Recast

Textiles and di-methyl terephthalate major Bombay Dyeing is engaged in a major restructuring of its crucial textiles division, which contributes more than 40 per cent of the companys turnover.

The restructuring, which is being advised by the UKs Warwick University, seeks to turn the textiles business into a leaner outfit with fewer products, which generate high returns under a reduced cost structure.

Under the plan, the textiles division will stop making low-value products like polyester cotton bedsheets and turn to high-value products like made-ups.

A parallel management structure has been established to implement the suggestions. A four member Warwick team is helping Prem Mallik (executive director, textiles) implement several suggestions and guide the restructuring.

 

The divisions marketing department is also being revamped through the induction of professionals from top-rated marketing companies like Colgate-Palmolive and Procter & Gamble.

Company sources said the aim of the restructuring is to leverage the Bombay Dyeing brand equity, which is very strong. We have a strong brand following and we want to exploit that instead of letting it suffer, they explained. In the past two years, Bombay Dyeings textiles division has been in the dumps following high cotton prices and low realisations in both the domestic as well as export markets. The divisions margins suffered and it could not grow beyond the normal rate of 15 per cent.

The current exercise is aimed at weeding out several products from its portfolio and focusing on selected items that would provide it higher value.

The restructuring dovetails with Bombay Dyeings decision to split the composite mill structure it had built up over the years. Faced with stiff competition from cheaper powerloom producers, Bombay Dyeing realised that it could not grow if it continues to produce under a high-cost structure.

Bombay Dyeing has three mills in Mumbai, which labour under high operating and wage costs.

Since government restrictions prevent the company from shutting the mills and shifting production completely to other centres, it decided to shift production of some items like terry towels and shirting to other locations to exploit the cheaper cost structure.

Last year, Bombay Dyeing signed up with Fieldstone Cannon of the US to set up a 50:50 joint venture to make terry towels. Similar shirting mills are also in the offing.