I started making profits immediately because I was trading, not manufacturing
It is a company that is barely ten years old, but after the first crore that came in 2008, it has been a whopping 30-35 per cent growth for Everflow Petrofils. Now rechristened Everflow Technotex , the group's turnover is more than ₹800 crore. Everflow was launched by Pinkesh Jain in 2006 after he broke off from his uncle with whom he had been working even as a student. With an investment of ₹40 lakh, some 70 per cent of which had to be financed, Jain imported a container of polyester spun yarn that the Indian industry hardly knew about at the time. Jain made his margin, and since then the trajectory has only been one of growth. In this full-length interview with Fibre2Fashion, Jain shares his success story.
How weak is India in terms of commodities?
India can produce a lot of fibres, but people are not involved in that because of the excise duty and power costs. The power cost in India is around ₹8 per unit whereas in China it's ₹4.5. In spinning, for instance, the biggest cost is that of power. So, if these two factors get reduced within six months, India will be exporting polyester spun yarn, fabric, etc. Right now we are exporting to Africa.
How environment-friendly are these yarns?
It is environment-friendly because it's been recycled already. You have heard about plastic-it doesn't melt easily and takes 100 years to decompose naturally. So, it's (recycled spun yarn) environment-friendly.
So, how did it all start?
It started in 2006 when I parted ways from the old business of my uncle.
What was the old business of your uncle? Where was this? And, what was your role there?
That was yarn dyeing of polyester-in Bhiwandi. I was handling marketing over there, besides import of all partially oriented yarn (POY), which is made from by-products of crude oil i.e. PTA (purified terephthalic acid) and MEG (mono-ethylene glycol). The POY was being imported from China.
How environment-friendly are the chemicals and the processes of reuse?
The chemicals used in the processes are natural and no harmful or hazardous chemicals are added. They also meet compliance standards. Bottles are made crystal clear; first by hot wash, then through dry cleaning by acid. After this, it's used to make fibres. Recycled fibres are as good as virgin fibres with little difference in the colour. Once the fibre has been made, the process of making yarn and fabric are just the same. It was not easy to make yarn from PET bottles in the past, but now the technology is there. This technology came to India in 2008, and Everflow was the pioneer. We were always a step ahead from the rest in the Indian market. Making yarn of 10s count- which is thicker-is easier; but we have been able to make till 70s count which is much thinner from recycled PET, and for virgin we have gone till 80s count. Yet, recycled fibres were not something new for India in a way. People were already making soft toys, pillows, etc, but it was very difficult to make yarn out of such material. But now-for the past three years, Indian recycled fibres can also be made for spun yarn. The recycled fibre makers are 7-8 in number in this region, but not all of them are at present making fibres for recycled yarn. Ganesh Polymers from Kolkata was the first company in India to make finer count recycled fibres for spun yarn.
Where is the demand for these kind of fabrics?
Everywhere in the world. In Europe, the winter season is longer and people can easily use polyester.
Polyester is mimicking a host of natural fabrics. There is already a lot of hue and cry about powerloom vs handloom. And now with these various types of polyesters, how do you expect matters to unfold?
Handlooms have their own demand and market. The US and European markets have a higher demand for handwoven fabrics. So, handlooms and powerlooms are not actually competing with each other since they both have fairly different markets. We, at Everflow Petrofils, have come up with blends that provide the look and feel of natural fabrics.
Are there any statistics about how many PET bottles are required to make a metre of cloth? How many tonnes of bottles are you buying from your collection centres?
Five used bottles can make a garment. For producing 350 tonnes, we buy more than 350 tonnes of PET bottles. The bottle price is ₹23/kg from collection centres, and we are selling yarn at ₹120/kg, knitted fabric at ?180/kg and woven fabric at ₹25/ metre. Annually, we consume about 12000 tonnes of PET bottles. There is a crushing and washing plant for the PET bottles, which is similar to a PTA and MEG plant used for making polyester virgin yarn. The caps and stickers are first removed from the bottles in the washing plant, and then they go into the crushing plant, where they are broken down into flakes. These then go into the extruder, and then are converted into a thick liquid. The liquid gets transformed into polyester staple fibre, which is further used to make the polyester spun yarn, which is recycled.
But, why did you separate? What is your uncle doing now? What are the reasons that Bhiwandi is at the centre of the yarn dyeing business?
It is a company that is barely ten years old, but after the first crore that came in 2008, it has been a whopping 30-35 per cent growth for Everflow Petrofils. Now rechristened Everflow Technotex , the group's turnover is more than ₹800 crore. Everflow was launched by Pinkesh Jain in 2006 after he broke off from his uncle with whom he had been working even as a student. With an investment of ₹40 lakh, some 70 per cent of which had to be financed, Jain imported a container of polyester spun yarn that the Indian industry hardly knew about at the time. Jain made his margin, and since then the trajectory has only been one of growth. In this full-length interview with Fibre2Fashion, Jain shares his success story.I started making profits immediately because I was trading, not manufacturing The reason was that many people were already there in the same business; one did not need to be there at all. I was 18 years old then, doing graduation from Hinduja College in Mumbai. My uncle is still a trader. He has stopped the dyeing business, and is trading in the same business (as us), and is buying yarn from us. Bhiwandi has availability of water, and at that time power charges too was less, and moreover drainage was easy in Bhiwandi (since yarn dyeing need some chemicals to be drained).
And, how did Everflow happen?
After separating from my uncle's business, I was studying and also looking at how to get into a new business area. At that time, there was one particular import from Indonesia that was new to the Indian market- polyester spun yarn (PSY). In the past, there had been products like DTY and FDY, but PSY was absolutely new. I purchased PSY and studied the quality which was really great, and our customers were also demanding more of PSY. The price was not comfortable those days. I therefore started searching in the B2B marketplace -on websites like Alibaba. Since 2006 I had been looking into this, and wondering how I can get a cheaper price of spun yarn since it has a good market in India. Then, I found a factory in China. I raised an order of one container costing ₹40 lakh. I sold it, and the margin was good. For this ₹40 lakh, I took a finance of about 70 per cent. When I separated, I had ₹15 lakh as a part of my share of the earlier business. I started working with my uncle when I was 16 years old, and I was studying in a private university at the time. I have also been in the textiles institute Sasmira and have studied for a year. Then I was in Bhiwandi, and learnt a lot about machinery, how they are operated, etc.
So, after this one container, buyers were so happy that they started to invest in me-like buying on an advance basis. I was directly putting money in the Chinese market. Later, we heard of recycled spun yarn in China which is made of used PET bottles and which is now commonplace in India. But in 2006, we were the pioneers in importing those. So, that's how it all started. In 2007, I had imported 15 containers. Then I went to the banks as the business was growing, but funds were in short supply. My margins increased, but I did not have much money in hand. At the end of 2007, Punjab National Bank gave me ₹2.5 crore. The next year, I was able to import 15 containers a month. In 2007, I introduced recycled spun yarn into the Indian market. Normal spun yarn is white in colour while recycled spun yarn is greyish; hence, people did not accept the goods initially. I went to Bhiwandi and Surat, sitting by the looms, and letting them make the fabric, dye it, print it, and the final result they obtained was the same. Then gradually, by word of mouth, the market for recycled spun yarn expanded in Bhiwandi as it was cheaper by 15-20 per cent than virgin yarn. After that, markets began to be set up in Surat, Malegoan, Puranpur (in Madhya Pradesh). By then, recycled polyester was a brand with brand name MC (Ming Chang, a Chinese company). We have had a monopoly in India since 2008. The spindle capacity of MC is more than RSWM. We have also been awarded by the Chinese government for establishing recycled spun yarn in India. People who didn't want to dye their fabric but wanted to print them bought the recycled yarn. So, there were two categories now-for print they used recycled yarn, and for dyeing they used virgin yarn. Whatever is polyester-made can be recycled; it need not be virgin yarn. There is no difference in the fabrics that have been made from recycled or virgin yarn. There are some difference in the strength though, as recycled yarn is a bit lower in strength. For running on high quality looms like waterjets or airjets, it was difficult to run on those machines because of the strength. So, on this we researched a lot to make the strength equivalent to that of virgin yarn. Now, the difference between the strengths of the two is barely 5 per cent.
How do you see the future evolving? And how do you see things changing in the next 4-5 years?
About 30 per cent of the Indian manmade fibre (MMF) industry has converted into this (recycled material) in the last four years; so, it's growing well. I think it will grow more into other items like high tenacity products in the coming years. On my part, the company's name was changed into Everflow Technotex in April. My factory's name at present is Siyon Spinners, which too will be changed to Everflow Technotex.
Are you getting into the retail markets as well?
We have started three brands since December 2015.
Please tell us about the latest innovations and developments at Everflow.
We have brought a dynamic change in the denim industry with our brand Bluzen. Earlier, denim was made with 100 per cent cotton. But with Bluzen, we have introduced tencel-denim, modal-denim, linen-denim, and 100 per cent viscose-denim. Conventional colours were being used in denim like blue and black, but with Bluzen we have introduced many new exciting colours with the same effect of the original denim. Our latest innovations will be displayed at the Yarn, Fabric and Accessories Trade Show 2016 in Delhi. We will also be exhibiting these products in Sri Lanka and China in 2017.
We are also coming up with a production unit with manufacturing capacities of 10 million metres of denim fabric and 10,000 kg of yarn every year in Sarigaon near Vapi in Gujarat. Complete manufacturing from fibre to garment will be done here. Until now we were into manufacturing fabrics, but we will get into manufacturing garments from February 2017.
But, why only manmade fibres?
Cotton is much cheaper in India to export; import is not easy. The Indian market-specially for viscose spun yarn-is monopolised by big companies. In India, only the Birla group was producing viscose yarn and fibres, and the price was so high that people couldn't use and export this product. They could not even make a cheaper fabric out of the viscose spun yarn because of the higher price. So, we thought that we are getting a cheaper yarn from China (in terms of viscose); the import was free, with no anti-dumping in spun yarn. So we started this to reduce the costs, to let buyers come into contact with the product. There has been around 30 per cent growth in India for viscose spun yarn. Today, viscose spun yarn is expensive in China, but the market in India has grown. So, Indian weavers and exporters are making the best of it. We must import products which make us competitive in exports and in local markets as well. There is no point importing garments; if you are to import garments, there's not much you can do. The market for cotton is already there in India; if you import garments, antidumping will be there on garments but not on raw materials. The government has to think that way, and your imports should be liberalised in raw materials.
What are the processes required to make recycled yarn equivalent to virgin yarn?
The process involves addition of some chemicals to the fibre. There are some high-quality strength used-bottles that you can use. This we started buying from airlines and five-star hotels. The bottles we bought from the collecting centre went to the manufacturing unit in Silvasa, where there were crumpled and converted into recycled yarn. The energy consumed for making both virgin yarn and recycled polyester is the same. The amount of chemicals being used and labour are also equal.
How is India placed with respect to these commodities?
In polyester, India is placed very low and is not at all competitive. The reason is that our government has kept 12.5 per cent excise duty on this product. Nowhere else in the world is there a 12.5 per cent excise duty on this product. If the duty is high here, the raw material won't be cheaper. So, how will you compete with China as there is no duty there? If the 12.5 per cent comes down to 6-7 percent, that 5 per cent will be availed of by all sectors, and you will be competitive for exports. About 30 per cent of the global textiles industry uses recycled polyester yarn. In last seven years, the consumption has grown three times.
How is Bluzen faring?
The demand for Bluzen has been strong. Many customers are still getting used to the idea of polyester blends in denim. Also, there is an increasing demand for denim in knits and hosiery with the growing dominance of sportswear and athleisure. We are also working on cotton with nylon denim blend. The major markets for Bluzen are Delhi, Ludhiana, Surat and Tiruppur. We also supply to JC Penny, Zara, Being Human, Killer, Jack & Jones, Spykar, and Killer. Bluzen has shown the market the new and unique usage of denim yarn. It can be used to make saris, salwar kameez, burkhas, ethnicwear, besides shoes and bags.
What is the USP of these new denim varieties?
Tencel-denim is very soft, thin, and gives a beautiful shine; viscose-denim gives less shine than tencel-denim, but provides extreme comfort; Bluzen offers summer linen-denim for shirts and knitted garments.
What are your expectations from the new textiles policy when it comes to manmade fibres?
For manmade fibres, the excise duty has to be reduced. In such a scenario, exports of polyester will increase within six months. As of now, we are exporters for cotton, but not polyester.
Which are the markets that India can look at in terms of exports?
China-the labour cost is three times higher in China as compared to India. It's 30,000 per person that they are paying in China, and getting a 75-80 per cent efficiency in eight hours. On the other hand in India, the payout is 8,000-10,000 with an efficiency of 75-80 per cent in the south and 60-65 per cent in Gujarat. The textiles and garment industry is labour-oriented. Power is expensive and labour is cheap, while duties and interest rates are high. Interests are now being reduced, but power is still costly. If excise duty is reduced by 5-6 per cent, India will also be able to export manmade fibres to China. I have started exporting recycled fibres to China now because just there is only a 2 per cent excise on that. However, finishing of China is better than that of India. The reason is that they have demand from all over the world. Here, we are just making for India and not for exports since we know that we are not competitive.
What are the new yarns introduced by Everflow?
Everflow has come up with interesting cotton blends for the first time. We have launched blends such as cotton-cationic, cotton-acrylic, cotton-nylon, acrylic-viscose, and low-torque yarn. Cotton as a fibre is not very efficient in absorbing colours well. Hence, cotton fabrics have this dullness after a few washes. We have blended a yarn that we call cottoncationic which is soft, has sheen and has high colour fastness. The fabric also gives the effect of wool. Cotton fabrics also lack strength. Cotton-nylon blend therefore provides strength by making fabrics durable and providing improved efficiency of colour. Acrylic-viscose has been specially introduced for embroidery threads providing a cross-dyeing effect. It has again a high efficiency of colour and provides a soft feel, unlike conventional yarn used for embroidery that are harsh on the skin. This yarn can also be used for making wool-like suiting and jacketing. We have also launched a 100 per cent cotton long staple low-torque yarn, for the knitting industry. Usually, knitted garments have this spiral effect to them, but the low-torque yarn provides flatness to knitted fabrics. The long staple fibre used in the yarn provides a super soft effect and improved colour efficiency.
Backtracking once again, when did you started making profits? Please tell us about your first milestone.
The day I start importing. I started making profits because I was trading and not manufacturing, and when you are doing trading, you can count your profits every day. Our first crore came in 2008. Right now, the whole group's turnover is ₹800 crore. The growth story has been around 30-35 per cent.
When did you set up your first factory?
For recycled spun yarn, we set up a factory in 2011 in Silvasa-Siyon's Spinners. We bought this factory (which was making virgin yarn) from Mukesh Mehra. At present, we have a capacity of 35,000 spindles and production is around 350 tonnes of recycled polyester spun yarn per month. The cost of the unit was around ₹25 crore. From 2017, we are planning to start 15,000 more spindles.
What is the growth trajectory that you are looking at for this particular division?
We have already expanded this market to 30 per cent for manmade fibres. Of the total production of manmade fibres in India, around 30 per cent is converted into recycled. The margin is around more than 10 per cent. However, I only export the fibre.
Which are the countries that you are exporting to?
China. In 2008-2011, we were importing recycled spun yarn from Ming Chang, but now we are exporting it to them. The reason is that for recycled yarn excise duty is 2 per cent, but in virgin yarn it is 12.5 per cent.
What about the growth story of PSY?
We started importing PSY in 2006 when it was a commodity product. The cheapest quality of cloth is made from DTY, a variety of polyester, and it is followed by PSY, cotton and viscose. Now Everflow has an export certification for cotton yarn. We source cotton from the South, Gujarat and Maharashtra, and export 10 containers a month as a merchant exporter to countries like China, Portugal, Egypt, Turkey and Bangladesh.
What percentage of your raw materials and commodities go to Bangladesh?
Around 5-10 per cent. China is the biggest importer of cotton yarn, and can also be the largest importer of polyester yarn as well.
Apart from excise, the biggest cost factor is power. What about alternate sources like solar energy?
When the price of crude oil was around $135 per barrel, and furnace oil (FO) was around ₹37-38 per litre, people were using digisets which ran on diesel. Then generators were introduced which ran on FO that was much cheaper than diesel. Now, due to the reduction in price of crude oil, FO is much cheaper (around ₹13/litre). So, the cost of a unit comes down to ₹3.5 whereas the government is charging ₹7.5 per unit. But for using this pollution control certificates are required. Again, a digiset costs around ₹5 crore. For solar energy, the biggest drawback is the requirement of big land for the panels, and the cost is higher compared to windmills. According to me, solar energy should be used for lighting and not production.
What is the kind of budget that you allocate to the research and development?
R&D is the most expensive expense for us right now. We are spending at least ₹2.5 crore a year, which is roughly 3 per cent of the turnover of the imports of fabric.
Coming back to the question of the national textiles policy, what are your expectations?
If GST (goods and services tax) becomes a reality, then the growth will be tremendous. That's because excise duty will be removed. You will get credit when you import, and selling will pay too. The picture will be clear as to what everybody is paying and everybody is getting. The textiles industry needs this. I am importing 150 containers of virgin yarn every month only because here we have a duty of 12.5 per cent.
How was your journey from one container to 150 containers?
Earlier, we were into some two or three qualities, but now we are there in more than 80 qualities.
To wind up, what have been the major learnings in this business ever you started?
Satisfying customers with your products, business ethics, and a proper environment at the workplace.
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