Date:29/04/2005 URL: http://www.thehindubusinessline.com/2005/04/29/stories/2005042901230400.htm

Back Welspun eyes growth via factory-owned mall model

Nirmal D. Menon

Mumbai , April 28

WELSPUN India Ltd may soon piggyback on the emerging format of malls with factory outlets to sell its manufacturing and export surpluses of home textile products.

The home fashion major is in talks with upcoming discount malls such as Royal Palms in Mumbai and might open up at Pune-based KK Bazaar as part of its value retailing strategy. The company will also launch a factory-owned store at H City Mall in Mumbai.

"Manufacturing and export surpluses were usually sold through intermediaries. Such outlets would enable us to skip intermediaries and reach the customer directly," Mr Anshuman Singh, CEO (Domestic Division), Welspun India Ltd, told Business Line.

The discounts offered at these outlets could be 20-30 per cent, depending upon the product, he added.

The company is also foraying into value retail by planning to set 25 factory-owned outlets by end of this year. It has seven factory outlets including the one that was opened here today.

The Welspun factory outlet model is franchisee-driven. Places where infrastructure costs are higher would have company-owned outlets.

The second plant of the company at Anjar, Kutch, is nearing completion. The Rs 575-crore expansion project will be able to produce 12,000 tonnes of terry towels and 32 million sq m of bed sheets every year, and would have proportionate manufacturing surpluses.

"The factory outlet is a need-driven model. So, as we increase capacities, surplus is bound to increase," said Mr Singh, adding that though value retailing is at a nascent stage, it is an integral part of the company's growth strategy.

While Welspun is foraying into value retailing, it has set aggressive targets for its fashion retailing brand. The company plans to set up 40 `Spaces' stores by December. It has 10 `Spaces' stores in six cities.