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CRISIL Equities


Business overview

KLRF’s main business is to manufacture and distribute wheat flour, cotton yarn and grey iron castings.

Flour milling - Wheat flour (mainly maida), produced from roller flour mills, is used in the preparation of parottas (a South Indian bread), and in bread and biscuits. The main customers of KLRF are bakeries and parotta makers. The products are sold through dealers and agents in Tamil Nadu and Kerala. A small portion of retail sales are made to the local markets in South Tamil Nadu and South Kerala. It does not intend to enter the retail segment in a big way since it faces competition from MNCs and other established domestic brands in this segment.

Textiles - The textile division at Gangaikondan has a capacity of 29,520 ring spindles. The company has the facility to manufacture ring spun yarn from 30s to 100s counts. The superfine counts ranging from 92s to 100s are used to manufacture high quality fabrics. The yarn is sold through depots and agents who have been associated with the company since the inception of the textile mill in 1982. The cotton yarn manufactured in unit II ranges from 6s to 20s and is mostly used to manufacture home furnishing fabrics.

The entire plant and machinery for the unit has been supplied by LMW. The unit also manufactures hosiery yarn, which is used for knitted garments. The company supplies to various knitting fabric manufacturers in Tirupur.


Sheet metal fabrication – This unit is involved in the manufacturing of sheet metal fabrication, involving simple engineering processes of cutting, notching, welding and surface treatment of cold rolled steel sheets. Grey iron castings – This new line of business was identified due to:

  • 1.

    Proximity of foundry to pumps and valves, and auto industry players in Tamil Nadu.

  • 2.

    Capacity enhancements by general engineering units like pump and valve manufacturers.

  • 3.

    Developing export potential due to closure of foundry units in the European Union and America due to environmental issues.

  • 4.

    Entry of new units in this sector is limited due to considerable delay in getting pollution control approvals.

The foundry has an installed capacity of 7,200 tpa and it operated at a utilisation rate of 58% in FY10. Currently, the top three clients account for around 50% of the company’s revenues from castings.


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