Welspun India the global leader in home textiles (terry towels, bed linens) in its Vision 2020 plans has chalked out a three-pronged strategy to achieve its target $2 billion in revenues with 25 per cent branded products share and becoming debt-free by the end of FY20. Mumbai-based Welspun India is Asia's largest and the 2nd largest terry towel producer in the world. The company exports more than 94 per cent of its towels to more than 34 countries.
The company’s market share in the US terry towel imports increased by 1.4x in the last two years. Welspun indicated that higher-margin innovative/branded products would help improve overall profitability. Significant FCF (Rs 3.7 billion in FY16) should help reduce its debt levels. It also suggested gaining further market share in US imports would be pivotal to achieving the company’s vision.
The company reported a 23 per cent revenue CAGR of over FY11-16 primarily through rapid market share gains in the US market. It is now targeting growth from newer geographies that includes UK, Europe and Japan and faster growth in institutional sales besides focusing on the branded segment in the domestic market. Welspun expects new capacities planned over FY17 to help drive incremental growth.
Calibrated capex spend, judicious working capital management coupled with improvement in profitability have helped the reputed company turn FCF positive within a span of three years. A hyper-investment phase is now behind the company which now intends to focus on balance sheet consolidation and quality of growth through higher contribution of branded sales.