The Perfect Human-Machine Interface

he Vardhman Group is a market leader in yarn production and has a corporate philosophy
that attaches great value to first-class production facilities equipped with the latest technology.
In the mid-1980s, Vardhman commenced its yarn conditioning activities and from the outset worked
closely with Switzerland-based Xorella AG. Now, Vardhman will expand its spindle capacity from
550,000 to about 800,000 spindles. Xorella conditioning equipment of the latest generation has been
ordered for this expansion.

India is currently the object of much discussion, and textiles are not the only national
industry that is booming. Sales are rising and massive sums are being invested in a trend that also
applies to the Vardhman Group, which is located in Ludhiana in the north of India.

“Using the Xorella CONTEXXOR® conditioning systems, we achieve quality yarns with excellent
running characteristics,” said S.P. Oswal, Vardhman’s chairman.

A Vertically Organized Company

The Vardhman Group was founded in 1965 by Lala Rattan Chand Oswal, and is now one of the
largest enterprises in the Indian textile industry. Initially, the company had 14,000 spindles;
today, it has more than 550,000.

In 1982, Vardhman commenced sewing thread production and is currently the second-largest
Indian manufacturer in this segment. A further diversification took place in 1990 with the start of
weaving. Production is located in Baddi (Himachal Pradesh) and has a daily capacity of 150,000
meters. Vardhman enjoys an excellent national and international reputation as a supplier of poplin,
shirt and trouser fabrics.

Company verticalization was systematically extended through the creation of the Auro
Textiles finishing operation in Baddi, which currently has a capacity of 160,000 meters per day.

In 1999, a joint venture company — Vardhman Acrylics Ltd., Bharuch (Gujarat) — was founded
with Japan-based companies Marubeni and Exlan. This company provides the raw materials for acrylic
fiber production and, apart from having a strong national presence, is also a leading player in the
Japanese, Hong Kong, Korean, United Kingdom and European Union markets. The absolute focus on
quality was underlined in 1999, when Vardhman received ISO 9002/ISO 14002 accreditation. It was the
first Indian company to receive these certifications. In 1994, Vardhman passed a further milestone
as a supplier of value-added products with the start-up of a fully integrated dyehouse for fibers,
yarns and tops. In the meantime, capacity has been continually raised, to its present level of
27,000 kilograms (kg) of yarn and 22,000 kg of fibers per day.

Today, the Vardhman Group comprises five companies
(See Table 1). The group’s activities are highly diversified
(See Table 2).


Market Position

Vardhman has the largest spinning capacity in India and is the biggest producer of cotton,
man-made-fiber and mixed yarns, as well as a large dyer of fibers and yarns. The company also is
one of India’s biggest exporters of cotton yarns, the Indian hand-knitting yarn market leader and
the second-largest producer of sewing threads. Table 3 shows the group’s annual fiber consumption.

Total company sales amount to approximately US $500 million. Some 20 percent of all yarns
are exported to countries such as the United States, the European Union, Canada, China, Japan,
Korea, Mexico and Brazil. Vardhman has a 6-percent share of Indian yarn exports.

“We are well-established in the market, and cotton yarns are selling well,” said S.P. Oswal,
chairman. “At the moment, we are operating with 550,000 spindles, which we intend to increase to
800,000 by March 2008. India is a good market for us and there are relatively few yarn imports. The
market is sure to grow further, but is set to become somewhat quieter.”


India En Route To The Top

India is among the leading group of cotton-producing countries, although increasing monies
are also being invested in man-made fiber production. However, as Oswal makes clear: “India has to
raise its yields. Today, with around 9 million hectares under cultivation, yield currently amounts
to 470 kilograms per hectare [kg/ha], while good yield amounts to some 700 kg/ha. If India succeeds
in raising this yield figure, and it must succeed, we will become number one in the cotton field.
The preconditions are ideal, with a huge domestic market and rising per capita income among the
population. In addition, the share of exports in the Indian textile industry only amounts to 35
percent, and here, too, there is tangible potential for expansion. These are just some of the
reasons why investment in the Indian textile industry is constantly increasing.”

Close cooperation with Xorella has existed from the beginning of Vardhman’s conditioning

Research And Development

Vardhman’s corporate philosophy attaches great importance to first-class production
facilities equipped with modern technology
(See Table 4). Moreover, the research and development focus is on production sequence
optimization. In all areas of the group, a large number of people are engaged with the improvement
of existing products and the development of innovations. Apart from cotton, tests are under way
with bamboo and lyocell fibers. “Naturally enough, we cannot offer everything, and this is not our
objective,” Oswal said. “Nonetheless, our production program is growing steadily.

“However, the most important factor in a company is formed by quality employees, and some 15
to 20 are always involved in further training courses. We also have an in-company programme in this
area, in order to enable employees to step up into management positions. An MBA is not an absolute
necessity for advancement in our company.”

Ninety-nine percent of all Vardhman yarns are conditioned, with the exception of polyester
and acrylics. After conditioning, the yarns are immediately packed in film and go straight to
further processing.

Conditioned Yarns Are Vital

Vardhman commenced its yarn conditioning activities in the mid-1980s. “Every yarn has to be
conditioned, as otherwise problems arise,” Oswal said. “The Indian climate is too hot to allow any
retained moisture. However, using Xorella CONTEXXOR® conditioning machines, we are able to increase
the moisture level by 1.5 to 2 percent and thus attain yarn quality with excellent running
characteristics for the subsequent production phases. Yarn conditioning is a must, yarns containing
Lycra® being otherwise impossible to process.”

With the exception of polyester and acrylics, 99 percent of all yarns are conditioned. As
already mentioned, spinning capacity is to be further expanded, and six new Xorella CONTEXXOR
machines have been ordered for this purpose. Up to now, Vardhman worked with round machines, but
now cubical systems have been purchased.

As Oswal explains: “Above all, cubical machines offer the advantages of rational working
processes. We can run in complete pallets, and this saves us a great deal of manual work during the
preparations for steaming and unloading for the downstream production stages.”

Hard-Earned Trust

And when he considers the Indian yarn market in general and the world market in particular,
where does Oswal see differences between today and 10 years ago?

“The differences are large. Today, Indian yarns have an excellent reputation. There are no
more difficulties in this area, and quality confidence has been created. In general, it can be said
that Indian quality has improved, and yarn conditioning with Xorella conditioning systems has
contributed to this fact. Cotton standards have also risen, and acceptance has increased
accordingly. Indian ginners now also offer organic cotton. The only problem continues to be
contamination, but all are working very hard to reduce soiling. We offer finer yarn counts than a
decade ago in a range from Ne 50/1 to Ne 100/1 and Ne 200/1. Gassed or mercerized yarns are today
essential to survival in the international market. However, here, too, it would be impossible to
attain this market position without qualified personnel, and that is what we have.”

The Arisht Spinning Mill plant in Baddi (Himachal Pradesh). Group spindle capacity is now
to be raised from 550,000 to about 800,000, and the latest-generation Xorella machines have been
ordered for this purpose.

Corporate Philosophy

“Our country and thus our company have great potential,” Oswal said. “India has very long
textile industry traditions. Our educational system is Western-oriented and our schools and
universities do a good job and furnish an excellent background for students when they move into the
world of work. As compared to our neighbouring countries, Western companies are recruiting Indian
personnel in increasing numbers. Indians have an iron will when it comes to climbing the career
ladder, and in order to reach this goal, apart from their professional abilities, they are also
ready to make sacrifices.”

The Future

How has Vardhman achieved its reputation? “We have been in business for 40 years, and our
customers are aware of our commitment to quality,” Oswal said. “Conversely, we know the
requirements of our clientele, and customer proximity plays an outstanding role in our
organization. Every employee dealing directly with customers is conscious of this fact. Moreover, I
would say that 10 years ago, machinery formed 90 percent of production. Today, I believe the human
factor accounts for 70 percent, and this is why we have a positive image among our customers.

“We have to continue on this path and develop ever better and new products. I do not expect
further strong growth in yarn trading except in the domestic market, and therefore, we must attempt
to export more clothing. In addition, we must ask ourselves if we should import yarns from China,
because today they make up 15 to 20 percent of the market.

“On the one hand, we are investing in capacity,” Oswal said, when asked how Vardhman planned
to maintain its positive status quo. “In 2005, our sales amounted to around US$500 million, and our
target for 2012 is US$1 billion. I have already mentioned the increase in the number of spindles,
but we also wish to raise the number of looms in the weaving mills from 432 to 800. You have seen
the new building at the Arisht Spinning Mills in Baddi, and we are confident of attaining further
growth. Our domestic sales alone are rising continually by 9 percent per year.

“However, in my opinion, this is only one side of the coin. As I have also stated, our
personnel is of equal importance. Today, customers do not merely wish to purchase yarns, but are
looking for a complete range of services. If the customer has a problem, we are immediately on hand
to solve it. This is our mindset, which involves a total commitment to customer proximity. It is
this that creates our positive market image and is something that no one can take from us.”

March/April 2007