Interview with Mr Sanjay Lalbhai

Thank you so much. Well, it’s pretty early to discuss anything about agenda for, as you too know, it’s only around two weeks that I have been entrusted responsibilities. And so, I am still in the process of understanding things better.

Major change came when we embarked on Denim fabrics. We were the first company to bring denim into this country. Before that we were womens-wear domestic player. We were the leading composite textile mills in India. Very successful! But, because the powerlooms had started creating very fierce competition, we worked on a new strategy, and worked out that we need to go for global kind of product category like Denim, to change our focus from domestic market to global market, and to bring about a different lifestyle into India. So that was the major change. Before Swadeshi movement, we were a domestic player; subsequent to that we have become a global player with product categories which are globally accepted.

Well, we have always been dominant in textiles. The other sectors were some experimenting kind of joint ventures that we tried our hands upon, and disinvested them gradually on evaluating their less profitability proportion. Still now, we have interest in diversification. As you know, recently, we have made strategic change and renamed our corporate title from Arvind Mills to Arvind Ltd; this was to denote our very major interest in diversified sectors viz brands and retail, real estate and engineering, and telecom. So, we are definitely a diversified company but still textile remains to be more than 60% of our business. However, in gradual period, we see our activities in it to be confined to 30%, and more in other businesses.

Moreover, as I told earlier too, we thought of switching over to international product category which was definitely- Denim!

At that time, we were considering a dive into paper, cement, steel, refinery and telecom businesses. It was Mckinsey that suggested us to focus on Textiles and refrain from diversification. They suggested us to hold back those plans. It was of course a golden piece of advice, and good experience to work with.

We are still growing and upgrading in these arenas. This year as per consolidated results, we would be a billion dollar company, and just five years from here, I foresee our brands and retail business sector alone would be of a billion dollars. Thus we see a lot of growth coming to these new areas.

Denim is doing extremely well in India. It has grown almost from nothing to 300 million meters; this is the denim consumed in India for domestic market. And it is growing by 12 to 15%. So, Indian denim is growing very fast, and we believe that in another ten years it would become a billion meters of domestic market that is as large as American market.

Major problem faced by Indian industry is that we have no bilateral treaty or multilateral treaty with any of the largest apparel consumer markets like European Union or America. We have no preferential duties worked out with these largely consuming blocks. Current laws are not conducive enough.

Secondly, our macro economic factors like exchange cost of utility and cost of raw material fluctuates a lot. So we don’t have kind of controlled environment in which we can grow like China. China has controlled their exchange, so one can predict how the business will grow there, whereas we fluctuate by 10% to 15% every year which cause a lot of discontinuity in business.

Thirdly, the labor laws are not conducive enough for garment industry to grow in India. They are being controlled by the Industrial Dispute Act, IDR Act, which has not clearly been modernized.

Fourth is high transaction cost and poor infrastructure.

To certain extent yes, and to certain extent no; because people who are not genuine competitors also get into this business lured of subsidized interest cost. People with no background and experience try and create asset bubble as assets are available at cheap interest cost. So to certain extent it is disadvantage. Hence TUF is needed but how to execute- is a matter where difference of opinion prevails.

Technical Textiles, both– nonwoven and wovens, are going to flourish much in India. It is a nascent kind of industry. We are into fire retardants, and high visibility fabrics which are all protective fabrics. We are also going to enter into filtration and bullet proof fabrics. So, these are the areas where we are to focus and we expect immense growth.

Ahmedabad Education Society, where I chair as President, runs a number of colleges in Ahmedabad. Recently, we have got the permission to set up a private bureau. So we have created new University called Ahmedabad University, and we are integrating all these colleges into private university, where we will build the world class University for undergraduate, graduate and PHD level programmes for all discipline.

On textile front, we are rejuvenating Ahmedabad Textile Industry Research Association (ATIRA) itself as the textile body. There you will see a lot of developments in laboratories testing, research, product research, and also pilot plans where industry can work with the research body to enhance their performance.

Another CSR effort at Arvind is that we are also working with Municipal Corporation, and we have taken up three schools where we are teaching English, Maths and Computer from sixth to eight standards, thus upgrading skills of children going to Municipal School.

We have also undertaken some slum up-gradation projects in Ahmedabad.

The major CSR plan we have undertaken is in Akola, where we are working with 1500 farmers to grow organic cotton in 10000 acres of land. This project is going to grow up to 100,000 acres in next five year. So we will be working with 10000 farmers in upgrading their fields from inorganic to organic farm and helping them increase their revenue from their land.