Source: www.business-standard.com

Reliance Industries Ltd’s,’ recently re-launched brand ‘Vimal’ will manufacture majority of its garments from its own fabrics but when it comes to cotton range the company will outsource the products from textile majors specialising in cotton products.

The company’s first exclusive showroom, after the re-launch of brand Vimal, was launched in Ahmedabad and 23 exclusive stores will come up in Mumbai, Bangalore, Chennai and Kochi.

The company is also planning to tap an unexplored market of automative furnishings for passenger cars.

Talking to Business Standard, Anand Parekh, President, Textile Business, RIL, said, “We will have cotton range in Vimal brand but the company is not planning to go for backward integration so we will be outsourcing the cotton fabrics from companies like Arvind and Aarvee who specialise in cotton fabrics. Anyway the cotton segment, though growing in demand, will only consist two or three per cent of our total business through Vimal.”

The company is also looking at launching automative furnishings in the near future to tap the almost untapped organised market.

“There are 1.1 million passenger cars being added in India and we want to tap that market as it is hardly tapped by the organised sector. We will also look at exporting the fabric to the US market as the automative furnishing market is also growing there.”

Vimal brand was re-launched on October 20th with new logo and a whole new range of garments.

Talking about the market situation, Parekh said, “The textiles market in India is at present estimated at Rs. 100,000 crore. The market is projected to reach Rs 190,600 crore by 2010. The major growth is coming from the urban market. Out of the total market the urban share is 59 per cent and the rest 41 per cent business comes from the rural market.”

“Around Rs 37,000 crore is the menswear market in India and of that Rs 12,000 market is of branded garments. The new Vimal will be promoted as a brand for peppy and young. We are paying special focus on the designs, he added, and for that we are planning to rope in best designers from across the globe. Vimal’s men’s range has shirts, trousers, suits and jackets. These products are divided in three sub- brands; Vimal Red, Vimal White and Vimal Black. Vimal Black is inspired by the concepts of Italy’s famous designer Maurizio Bonas who is also the president of ‘Made in Italy’ committee.”

Talking about the exports market he said, “Our exports of textiles is almost 21 to 22 per cent of India’s total exports of textiles. We are confident that our export growth rate will be more than the industry’s export growth. Our plans include of exporting more value added or finished products. Instead of exporting fabrics we will focus on exporting shirts, trousers and suits just like major global garment manufacturers including Levi’s.”

Source: www.smartmoney.com

FROM FINANCIAL SERVICES to manufacturing, the outsourcing of information technology and consulting services to India from companies in the U.S. and around the world has grown to a torrent. Depending on whom you ask, the offshore IT industry in the South Asian country is growing between 30% and 40% a year. While Infosys (INFY: 49.92, +0.00, +0.00%) gets a disproportionate share of investors’ attention, its smaller rival Satyam Computer Services (SAY: 29.84, +0.00, +0.00%) is growing sales faster — indeed, at a greater rate than that of the overall industry — and its stock is a better value.

Based in Hyderabad, Satyam is the fourth-largest U.S.-listed Indian offshore IT company, behind Infosys, Wipro (WIT: 16.26, +0.00, +0.00%) and Cognizant Technology Solutions (CTSH: 39.64, +0.00, +0.00%). For a long time it was seen as the cheapo alternative and industry laggard. But no more.

“Satyam’s had a qualitative makeover in the last two to three years,” says Ashish Thadhani, an analyst with Gilford Securities, who rates shares at Buy. (Analysts’ average call is Buy, according to Thomson Financial.) “This used to be a company that was the low-cost competitor and today it has the largest proportion of higher-value revenue sources among its peers. It’s arguably the most improved company in the sector.”

A big contributor to that turnaround was Satyam’s early recognition and heavy investment in offering more profitable ERP, or enterprise resource planning, services, using software from Oracle (ORLC) and SAP (SAP: 52.80, +0.00, +0.00%). True, ERP is boring and complicated. It’s also critical to clients’ business, essentially putting together such prosaic processes as, say, quality control, cost management and billing, into a single unified database. If designed, installed and maintained correctly, it’s a big-time money saver for the client and a lucrative, ongoing business for the IT provider.

ERP packages and a range of other services have given Satyam tremendous momentum in winning new contracts and boosting results. Sales that stood at just $460 million in 2003 hit $1.44 billion last year. Analysts expect them to grow 45% this year to $2.09 billion. Meanwhile, earnings per share grew 40% last year and are seen expanding another 37% this year, something that should be achievable given how the company’s beaten the Street’s forecast in six of the last eight quarters. (The other two quarters met expectations.)

“The company is really doing well,” says James Friedman, an analyst with Susquehanna Financial Group, who rates shares at Positive (Buy, essentially). “They have blown out the numbers two quarters in a row. And as of last week the CFO said to me that the demand environment now is better than it was at this time last year.”

The company’s American depositary shares have done well year to date — they’re up 23% to $29.51 as of Tuesday’s close — but the stock remains a bargain. With a forward price/earnings multiple of 20, Satyam trades at a 17% discount to its Indian IT peer average. Analysts’ average long-term growth forecast stands at 25%. That makes the price/earnings-to-growth, or PEG, ratio, just 0.8, offering a 6% discount to peers and a 33% discount to the broader market. (PEG measure how expensive a stock is relative to its growth prospects.)

Satyam’s historically traded at a discount to peers, partly because of its slightly lower margins. The company has had to hike wages in order to keep employees from leaving. And, in a concern for all Indian IT players, the rupee — India’s currency — has gone on an unprecedented run against the dollar in the last year, pressuring the industry’s margins. Still, Satyam held up well, helped by new contract wins (Japan’s Fujitsu being the most recent big one), higher prices and having more profitable offshore vs. onsite work in the sales mix.

“We’ve seen some robust volume and price momentum really kick in, in the last couple of quarters or so,” Gilford’s Thadhani says. “The thing that strikes us is that profitability has held up quite well despite unprecedented year-over-year rupee appreciation. And this is the only company in the sector where you’ve seen employee attrition come down for five straight quarters. That’s pretty significant.” Competition for qualified workers in India is cut-throat, with IT outsourcing companies offering better pay and perks to lure away rivals’ employees.

Satyam also has a few attractive defensive aspects in these somewhat uncertain times. Sure, nearly 60% of its revenue comes from the U.S., but that’s a smaller percentage than most competitors. Meanwhile, Satyam is gaining in geographic diversity with greater contributions from places like Japan, the Middle East and India. (Yes, even Indian companies outsource to India.) That global revenue stream offers some protection should the U.S. economy slow. Additionally, Satyam’s management has said that a modest economic downturn could be good for the company. After all, when times are tough companies look to cut costs by outsourcing.

Satyam may operate in the shadow of Infosys, but it’s not exactly a secret, meaning that the discounted valuation gap is likely to close. “We think the company’s superior execution will warrant multiple appreciation in the shares,” says Susquehanna’s Friedman. “It’s really our best idea in India.”