Chennai: Karur-based Sabare International Ltd, which supplies home furnishings to retailers such as Wal-Mart and JC Penny, plans to invest about Rs 30 crore in a factory in China in the next eight months to make fabrics, especially polyester-based ones, at a cheaper price.
This factory would be Sabare’s second in China, and the first wholly-owned one. The Chinese facilities would focus on exporting polyester-based textiles while cotton-based products would be made and shipped out of its Indian units—in Karur, Noida and Panipat.
“Polyester-based products such as bed spreads are about 20% more costly to make in India, compared to China,” said CEO S. Susindran, who founded Sabare in 1991. The move comes as the company plans a Rs150 crore domestic expansion plan, including a Rs90 crore unit at Perundurai, located 80km from Coimbatore in Tamil Nadu.
After the expansion, the Indian facilities will make about five million metres of material a month, roughly the same as the Chinese units put together.
Sabare is looking at various funding sources, including private equity investment. In June 2005, Kotak Mahindra Bank’s private equity division invested Rs30 crore for an 18% stake.
“They (Kotak) would be prepared to invest if required,’’ said Susindran, but added that nothing has been finalized yet.
In its initial years, Sabare started supplying to importers of home textiles in the US and Europe but recently moved to supplying to large retailers directly. The company also has a manufacturing facility in the US. It ended the last fiscal with revenues of Rs 340 crore.
Sabare also supplies to retailers such as Target, Kmart, Sears and Kohl’s.