Vardhman Textiles: Largest Yarn Manufacturer

Vardhman Textiles Limited (VTL), based in Ludhiana, Punjab, is one of the leading Textile Manufacturers of India. The Company incorporated in the year 1973 as "Mahavir Spinning Mills Limited" by Mr. V.S. Oswal and Mr. Ratan Chand Oswal, founders of Vardhman Group. The company promoted as Vardhman Spinning & General Mills Ltd. (VSGML), the very first company of Vardhman Group,

In 2004, The textile business of Vardhman Spinning & General Mills Ltd. (VSGML), demerged into Mahavir Spinning Mills Limited (MSML). Subsequently, the name of MSML was changed to Vardhman Textiles Ltd. (VTXL).

Today, Vardhman is having presence across a wide spectrum – from manufacturing Yarns to Fabrics and is headed by Mr. S.P. Oswal, son of Mr. Ratan Chand Oswal.

Quick Links. Click to navigate directly to the detailed paragraph:

(B) Journey Since Inception

Stock analysis
Stock analysis

(C) Family Structure

vardhman textiles family structure and founders of the group

(D) Executive Management

(i) Mr. S.P. Oswal - Chairman, Vardhman Group

Mr. Shri Paul Oswal is the Chairman and Managing Director of Vardhman Textiles Limited. He is the son of Mr. Ratan Chand Oswal, one of the Founders of Vardhman Group. He holds a Masters degree in Commerce (Gold Medalist) from Panjab University, Chandigarh. Under his leadership Vardhman Group has achieved manifold growth in its Textile Business.

He was the Founder President and Director of Ludhiana Stock Exchange for the period 1983-87 and President of Ludhiana Management Association for the period 1987-1991. Mr. S.P. has an experience of more than 53 years in Textiles Industry.

His age is 73 years. Keeping in view his contribution to the Trade and Industry, he has also been conferred with Padma Bhushan Award by the Govt. of India. In the F.Y. 2019-20, Mr. Oswal received Remuneration of INR 6,52,84,280 i.e. 0.10% of Total Revenue and 1.13% of Net Profit.

(ii) Mrs. Suchita Jain - Vice-Chairperson and Joint Managing Director

Mrs. Suchita Jain is the Daughter of Mr. Shri Paul Oswal and is the current Vice-Chairperson and Joint Managing Director of the Company. She holds a degree in Masters in Commerce from Punjab University, Chandigarh. After joining the Vardhman Group, Mrs. Jain gradually worked her way through various departments in the Group.

After a year, she took charge of a completely new venture for the Group i.e. Fabric manufacturing. She played instrumental role in setting up the Fabric business in 1991. She is having experience of more than 27 years in Textile Industry. Age of Mrs. Suchita is 52 years. She received INR 2,21,60,975 as Remuneration for F.Y. 2019-20 i.e. 0.03% of Total Revenue and 0.38% of Net Profit.

(iii) Mr. Neeraj Jain - Joint Managing Director

Mr. Neeraj Jain is the Joint Managing Director of Vardhman Textiles Limited. He holds a Bachelor’ Degree in Commerce and is a qualified Chartered Accountant as well. Mr Jain was appointed to the Company Board as an Executive Director in April, 2010.

Mr. Neeraj has an experience of more than 28 years with the Group in finance and yarn business. His age is 53 years. He received remuneration of INR 1,86,07,489 i.e. 0.03% of Total Revenue and 0.32% of Net Profit for FY20.

(iv) Mr. Sachit Jain - Non-Executive Director

Mr. Sachit Jain is the Non-Executive Director of the Company. He is the Son in law of Mr. Shri Paul Oswal and Husband of Mrs. Suchita Jain. He holds a Degree in B.Tech (Electrical) from IIT, New Delhi and MBA (Gold Medalist) from IIM, Ahmedabad. Mr. Jain also studied Financial Management from Stanford, USA.

Hestarted his professional career with Hindustan Lever in 1989 before joining Vardhman Group. Currentl. He is also the Managing Director of Vardhman Special Steels Limited, a group Company. He holds vast experience of over 30 years in Textile and Steel Industry. Age of Mr. Sachit is 54 Years.

(E) Shareholding Pattern

vardhman textiles stock analysis with details of shareholding pattern
key promoters of vardhman textiles ltd
key public shareholders

(F) Vardhman Textiles Product Categorization

vardhman textiles group structure analysis

The company is engaged in the manufacturing of Cotton Yarn, Synthetic Yarn, Woven Fabric, Sewing Thread, Acrylic Fiber, and Garments. VTL's segments include Textiles and Fiber. 

Vardhman is a piece Dyed Fabric Manufacturer and Cotton Yarn Manufacturer and Exporter. It offers the range of specialized Grey and Dyed Yarns in Cotton, Polyester, Acrylic and a range of Blends. 

The company also manufactures Products such as Organic Cotton, Heather Yarn, Core spun Yarns, Ultra yarns, Gassed Mercerised, Super Fine Yarns, Slubs & cellulose yarns and Fancy Yarns for hand Knitting.

(G) Revenue Segmentation of Vardhman Textiles

Vardhman Textiles Limited operates mainly through 2 Segments - Textiles and Fibre.

vardhman textiles stock analysis with details of revenue segmentation

Textile Segment of the Company contributes 95.09% to Total Revenue and the rest 4.91% is contributed by Fiber Segment to the Total Revenue of the Company.

(i) Geographical Classification Of Revenue

stock pick and stock analysis

Vardhman Textiles are spread across more than 55 Countries across the globe.

(H) Cost Of Raw Material Consumed

Cotton is the key Raw Material for the Textiles Companies like Vardhman Textiles Limited. Thus, any fluctuation in the prices of Cotton affect the Cost of Raw Material Consumed of the Company.

During FY20, Cost of Raw Material Consumed by VTL is INR 3,613 Crores i.e. 54% of the Total Revenue of the company.

vardhman textiles stock analysis with details of raw material consumed

(I) Manufacturing Facilities

The Company has 17 Manufacturing Units across India.

(i) Yarn

The company has Yarn Manufacturing and Dyeing Units in Ludhiana-Punjab, Malerkotla-Punjab, Hoshiarpur-Punjab, Baddi-Himachal Pradesh, Mandideep-Madhya Pradesh as well as Satlapur Madhya Pradesh.

VTL has over 1.1 Million Spindles and a capacity to manufacture over 580 MT of yarn per day. Moreover, Vardhman Textiles is one of the largest Exporters of Cotton Yarn to the most quality conscious Markets like the EU, USA and the Far East.

(ii) Fabrics

Then, Vardhman's Fabric-weaving units are in Baddi-Himachal Pradesh and Budhni-Madhya Pradesh. These units have weaving capability above 180 million meters per annum and processing capacity of over 114 million meters per annum.

(iii) Threads

The Company has Sewing Thread Units in Ludhiana-Punjab, Hoshiarpur-Punjab, Perundrai-Tamil Nadu and Vizag-Andhra Pradesh.

(iv) Fibers

Vardhman also has Acrylic Fiber Unit in Jhagadia-Gujrat. This Unit has current capacity to manufacture over 20,000 MT per annum.

(v) Garments

In addition, the Company has 1 Garments Unit in Ludhiana, Punjab.

(J) Group Structure

As on 31 March 2020, Vardhman Textiles has 4 Subsidiaries, 1 Joint Venture and 2 Associate Companies.

vardhman textiles stock analysis with details of group structure


(i) VMT Spinning Company Limited (VMT)

This 100% subsidiary of the Company is engaged in the business of manufacturing Cotton and Blended Yarn.

(ii) VTL Investments Limited (VTL)

This 100% subsidiary of VTL is engaged in the business of Investment.

(iii) Vardhman Acrylics Limited (VAL)

This Subsidiary of the Company is engaged in the business of manufacturing of Acrylic Fibre.

(iv) Vardhman Nisshinbo Garments Company Limited (VNGL)

This 100% subsidiary of Vardhman Textiles is engaged in the business of Manufacturing Men’s Shirts.

Joint Venture

(i) Vardhman Yarns and Threads Limited (VYTL)

Vardhman Yarns and Threads Limited, Joint Venture with American & Efird Global, LLC (A&E), is an Associate of the Company. It is engaged in the business of Threads Manufacturing and Distribution.


(i) Vardhman Special Steels Limited (VSSL)

Vardhman Special Steels Limited is an Associate of the Company. The Company holds 24.03% shares of VSSL. During the year 2019-20, Aichi Steels Corporation, Japan had purchased 11.46% stake in VSSL and will also provide Technical assistance to the Company.

(ii) Vardhman Spinning & General Mills Limited (VSGM)

Vardhman Spinning & General Mills Limited is an Associate of the Company. The Company holds 50% Shares of VSGM. It is a trading company dealing in the business of Cotton and Fibre.

(K) Operational Parameters

(I) Production

(i) Production Of Yarn

The company's Production of Yarn increased from 168,285 MT in 2016 to 212,946 MT in F.Y. 2019-20, showing a good growth.

vardhman textiles is the largest manufacturer of yarn in india

(ii) Production Of Fabric

The Production of both Grey and Processed Fabric has shown a decent Growth over last 7 years i.e. Production of Grey Fabric, from 154 MM in 2014 to 207 MM in 2020 and Production of Processed Fabric from 107 MM in the year 2014 to 141 MM in FY 2020.

growth of fabric manufacturing of vardhman textiles ltd

(ii) Year-on-Year Geographical Revenue segments

growth of export sale of vardhman textiles ltd

VTL is one of the largest exporters of Cotton Yarn to the most quality conscious Markets of the EU, USA and the Far East.

(L) Financial Parameters

(i) Net Sales

The Company's Net Sales grew at a CAGR of 7.23% over the past 10 Fiscal years, which is mainly aided by volume growth on the back of consistent focus on aggressive expansion particularly in the Fabric Segment of the company.

net sales growth of vardhman textiles over last 10 years

(ii) Profit After Tax

Vardhman Textiles' PAT grew at a CAGR of 6.71% over the last 10 years. Textile industry is highly cyclical in nature because of the raw materials demand & cost fluctuation. That is why the earnings of textile companies fluctuate. Moreover, the demand of yarn and fabric is also cyclical. The cyclicality in the textile business is also closely linked to the discretionary income in the hands of people.

earnings growth of vardhman textiles over last 10 years

In the F.Y. 2016-17, Company's Net Profits increased drastically as it includes an Extraordinary Income on account of Profit On Sale of 40% stake in Vardhman Yarns & Threads Limited (VYTL) to A&E, Profit On Sale of Company's Hoshiarpur property to Vardhman Yarns and Threads Limited (VYTL), as well as Profit on tendering of Vardhman Acrylics Shares against the buyback of Vardhman Acrylics Limited.

(iii) CAPEX

VTL is continuously doing capacity expansion in ordered to meet the continuous increase in demand. In F.Y. 2018-19, the Company planned a capex of INR 1,400 Crore for Yarn and Fabric Business, by the year 2020. The Capex involved adding up of about 1,00,000 Spindles, on the Yarn side as well as setting-up of 3rd processing line at Budhni and 275 Looms, on the Fabric side.

capital expansion of vardhman textiles ltd

During the Fiscal Year 2018-19, the Company incurred a Capex of INR 800 Crore. On the other hand, during previous year 2019-20, the Company completed its above said planned Capex.

(iv) PBIDTM (%)

The margin and return ratios of Vardhman Textiles Ltd fluctuated over the years because of cyclicality of the business.

EBITDA margin growth of vardhman textiles ltd

(v) PATM (%)

PAT margin growth of vardhman textiles ltd

*Company's Net Profits for the F.Y. 2016-17 includes an Extraordinary Income on account of Profit On Sale of 40% stake in Vardhman Yarns & Threads Limited (VYTL) to A&E, Profit On Sale of Company's Hoshiarpur property to Vardhman Yarns and Threads Limited (VYTL), as well as Profit on tendering of Vardhman Acrylics Ltd Shares against the buyback.

(vi) ROE (%)

ROE growth of vardhman textiles ltd

(vii) ROCE (%)

ROCE growth of vardhman textiles ltd

(viii) Total Debt/Equity(x)

reduced debt of vardhman textiles ltd

(ix) Dividend Pay Out Ratio (%)

The company did not declare any Dividend for FY20.

dividend payout of vardhman textiles ldt

(X) Current Ratio

As cotton is a Seasonal Crop, its availability and quality is generally an issue after the Cotton Season. Due to Company's commitment to delivering quality products, VTL follows a strategy of Procurement during the Cotton Season and maintains large Inventory at the end of the Fiscal Year.

working capital of vardhman textiles ltd

(xi) Free Cash Flow

free cash flow growth of vardhman textiles ltd

In the last 10 Fiscal Years, Vardhman Textiles Financial Performance has shown a healthy growth. From the F.Y. 2016 to F.Y. 2020, Company has made a Capital Expenditure of about INR 2,700 Crores. Despite this significant Capex, company has been successfully maintaining its Debt-Equity Ratio below 1.

VTL's Free Cash Flow has also shown a volatile growth due to year-on-year Capex incurred by the company to increase its manufacturing capacity and also due to the repayment of its Working Capital Loans. In FY20, Despite the Capex of INR 657.01 Crores, Company has become successful in maintaining its Free Cash Flow Positive.

(L) Management Outlook - December 2020

Financial Highlights

  • In Q3 FY21, Vardhman Textiles' Revenues stood at Rs 1750 Crore which declined by 4% on YoY basis but grew 7.7% sequentially.
  • Total Yarn Business volume for the quarter grew by 3% YoY to 61,168 Metric Tonnes.
  • On the other hand, Grey and Processed Fabric volumes declined by 8.6% and 19.2% respectively on the YoY basis for Q3 FY21
  • On the sequential basis, there has been a sharp recovery in Grey and Processed Fabric volumes which grew by 42% and 40% respectively.
  • EBITDA Margins for the Q-3 of F.Y. 2021 stood 15.8%, expansion of 421 bps YoY.
  • Increase in EBITDA Margin was on the back of Gross Margin improvement of 340 bps YoY to 48.3% and lower Power Cost down 120 bps YoY to 9.9%.
  • Consequently, Profit Before Tax grew 31% YoY to INR 219 Crore.
  • However, Profit After Tax fell 13% to INR 175Cr owing to deferred tax adjustment in the base Quarter.

*Sequential Basis - Change from the immediately preceding Quarter.

Other Key Highlights

  • The management indicated that Yarn demand was improving due to enhanced demand from China. This is because Chinese Exporters to US were keen on showing raw material sourcing from India and other destinations.
  • Management also stated that Vardhman plans to expand its yarn capacity by INR 1 lakh spindles with capex of INR 700 crore. Current Yarn capacity is 11.26 lakh spindles.
  • Management also indicated that the new capacity would be in Madhya Pradesh. company expects to complete the project in the next 12 months.

(M) Opportunities and Risk/concerns


(i) Diversified Product Portfolio

Vardhman Textiles has a diversified Product Portfolio. VTL is engaged in the manufacturing of Cotton Yarn, Synthetic Yarn, Woven Fabric, Sewing Thread, Acrylic Fiber and Garments. This diversified Product Portfolio not only meets diverse customer needs, but has enabled the company to de-risk its business model and be less prone to the cyclicality of a particular Business Segment.

(ii) Government Initiatives

The Government of India also focuses on promoting Domestic Textile Clusters through its various Policies and Schemes like Scheme for Integrated Textile Parks, Integrated Skill Development Scheme (ISDS),Merchandise Exports from India Scheme (MEIS), Swarnjayanti Gram Swarozgar Yojana (SGSY), Technology Mission on Technical Textiles (TMTT), Market Development Assistance (MDA) etc. In addition to these, GOI is looking forward to achieve the vision of generating employment and promoting exports through “Make in India’’ with "Zero effect and Zero defect".

All these Policies and Schemes will facilitate the growth of Textile Industry  and the company has an opportunity to seek leverage.

(iii) Strong Market Position

Vadhman is one of the leading Yarn manufacturers in India and a major player in Cotton Yarn, Piece Dyed Fabric and Sewing Threads Segments. The company holds a strong Market Position, which is supported by its Geographical diversification across Domestic and Export Markets, Product diversification across value-added Yarns and Fabrics, multiple Plant locations and Technical collaborations.

Moreover, the company has established relationships with leading global apparel manufacturers (over 600 clients). It is one of the largest spinners in India, with installed capacity of around 12 lakh spindles, accounting for 2% of the country's total installed spindles.

(iv) Strategic Alliances With Global Players

The company has expanded its Product Portfolio and has entered into strategic alliances with leading global Textile Players helping the company gain access to latest technology. This has been in synergy with VTL’s business and has helped it to introduce innovative and value-added products in the market, and has also helped the company in driving business momentum.


(i) Delay in Government Policies

Indian Textile Exports are highly dependent on Government Policies and Subsidies like Merchandise Exports from India Scheme (MEIS), Rebate of State and Central Levies and Taxes (RODTEP) etc. Thus, any change and delay in these Policies and Schemes by the Government can impact the competitiveness of Indian Textile Exports.

(ii) Slowdown in Global and Domestic Economy

Any slowdown in the global economies will adversely impact the Company's Revenues. Domestic textile players, including Vardhman, facilities the Domestic Consumption and fulfil the Domestic demand of Textile Products. A slowdown in domestic off-take can also adversely affect the company and lead to underutilization thereby impacting its cash flows.

(iii) Volatility in Cotton Prices

Cotton prices have been volatile over the past few years. Vardhman procures Cotton during the Cotton Season and usually builds an inventory of around six to eight months at end-March. The seasonality of cotton production and the risks related to agricultural yields and production expose the company’s operations to volatility in cotton prices. The extreme volatility in cotton prices would result in lower EBITDA.


Vardhman Textiles is a strong textile player with strong financial position as well as on the grounds of continuous expansion plans. The company shall capitalize on the emerging demand scenario in the textile industry.

PA Wealth Advisors Blog

Drop us your query at - info@pawealth.in or Visit pawealth.in

References:  Annual Reports, News Publications, Investor Presentations, Corporate Announcements, Management Discussions, Analyst Meets & Management Interviews, Industry's Publications.

Disclaimer: The report only represents personal opinions and views of the author. No part of the report should be considered as recommendation for buying/selling any stock. Thus, the report & references mentioned are only for the information of the readers about the industry stated.

0 Responses

Leave a Reply

Your email address will not be published. Required fields are marked *


Recent Post

Have Any Question?

Do not hesitate to contact us. We’re a team of experts ready to talk to you.

+91 99882 75566


Connect With Us