Company chairman Cho Hyun-joon met with Indian Prime Minister Narendra Modi this week in Mumbai and reached an agreement to establish a spandex plant in Maharashtra by 2019. It will be the first spandex plant Hyosung will build in India, and is expected to lay the foundation for making inroads into the country’s domestic market.
“Hyosung started its first business foray in New Delhi in 2007 and has been operating a trading company in New Delhi since 2012,” Cho said to Modi. “Throughout that time, we have been continuously expanding our business. For example, we erected the extra-high-voltage circuit breaker plant in Pune in 2016 and our annual sales eventually exceeded $300 million. India is the world’s largest textile market and I am expecting that the size of its consumer market will grow remarkably. As Hyosung was able to build the new plant thanks to the Indian government’s full support, I anticipate that Hyosung and the Indian economy will flourish together.”
With an initial $100 million investment, Hyosung aims to increase its share of the Indian spandex market to 70 percent. The company markets its spandex under the Creora family of brands.
Hyosung is planning to purchase a 40-hectare (100-acre) site in the AURIC industrial complex near Aurangabad, an industrial district in Maharashtra, India, and complete the construction of the plant by 2019. The company will continuously increase investment as market demands and growth are forecast.
“Korea is playing a key role in the ‘Made in India’ policy that is driving the fast growth of India,” Modi said. “I hope that Hyosung’s investment will further solidify India’s competitiveness and industrial foundation and I will be sure to help facilitate a business-friendly environment so that Hyosung will continuously invest in India.”
Hyosung noted that since India is the world’s second-largest market with a population in excess of 1.3 billion, and it possesses cutting-edge IT technology and an educated and experienced workforce, it is considered an ideal location. Its emerging economy is growing by more than 7 percent annually and the country is expected to become one of the top three economic powers in the world after China by 2030.
India’s textile market is also expanding rapidly. The Indian spandex market has been growing by more than 16 percent a year, on average, from 2012 to 2017, and it is forecast to grow by more than 12 percent a year, on average, while the market size will reach $200 million by 2020, Hyosung said. The Maharashtra state where Hyosung is constructing a plant is recognized as being the core region that accounts for more than half of Indian fiber production.
Hyosung’s spandex brand Creora accounts for roughly 60 percent of the Indian market. It is focusing on the sale of spandex for things like hijabs, lingerie, sportswear and denim. In 2020, when the new plant will become fully operational, Hyosung will begin to concentrate on expanding the high-value-added premium market.
Hyosung believes it has a high probability of success because the Indian spandex market has been a monopolistic production market where only Indian companies have been producing. The company forecasts that if it capitalizes on its differentiated functions and quality to carry out marketing that meets the needs of Indian customers, it will realize expected profits soon.
India also expects that the new plant of Hyosung will help related industries, like weaving, knitting, dyeing and sewing, to grow and lead to an expansion of job growth and invigoration the overall economy.
Earlier this month, Hyosung committed to utilizing Vietnam as a global production base for producing all the company’s core products, such as textiles, industrial materials, chemicals and heavy industry.
Since Hyosung established Hyosung Vietnam in the Nhon Trach industrial complex near Ho Chi Minh City in 2007, the company has invested about $1.5 billion, making it the largest investor among the South Korean companies in the industrial complex. It is producing its core products, such as Creora spandex, tire cords, steel cords and motors on site.
Meanwhile, Hyosung said Thursday it has decided to convert itself into a holding company and to separate its business into four operating subsidiaries–Hyosung TNC (textile and trading), Hyosung Heavy Industries (heavy industries and construction), Hyosung Advanced Materials (industrial materials) and Hyosung Chemical (chemical products). The shares of domestic and overseas subsidiaries that are closely related to the business of the newly established companies will be succeeded to the relevant companies and the rest will remain in Hyosung Corp.
The company said with the spin-off, the surviving company Hyosung Corp. will act as a holding company to improve transparency of corporate governance and maximize shareholder value.