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October 08, 2006

Coimbatore's second rung textiles firms begin to scale up

Businessworld has an article featuring the second rung textiles firms in Coimbatore which are now beginning to scale up.

Coimbatore is India’s largest cotton spinning hub, contributing nearly half the country’s cotton yarn, and has been dominated by a handful of large family business houses. The oldest in the private sector, Lakshmi Mills, began life almost a century ago. Naturally, the going can be tough for newcomers, especially as textile spinning is a labour- and capital-intensive business with low margins. To be successful, you need scale, something that the startups haven’t got yet.

However, they are attempting to plug that gap. Rajave’s expansion will see its capacity double to 24,000 spindles. But Ravindran is aware that even that much is too little. So, he plans to add another 25,000 spindles with compact spinning, which will commence production next year. “The target is to have 100,000 spindles,” he says.

These companies have also been bold enough to venture beyond traditional markets such as the US and Europe, and foray into unexplored territory. Purani, for instance, supplies special grade fine yarn to Japan while Venkateshwara sells its yarn to Mauritius.

Arun Natarajan is the Founder of Venture Intelligence, which tracks private equity and venture capital in India and Indian-founded companies worldwide. View sample issues of Venture Intelligence India newsletters and reports.