Interview with Arvind Sharma

The cotton textile industry is undergoing a transition. Consumption growth rate is expected to be in the range of two per cent in South and South East Asia, as against less than one per cent of the world. E-commerce is showing rapid progress in countries like India. With stabilisation of cotton prices this year, consumption growth rate in 2015-16 is expected to exceed the growth rate of 2014-15. The mantra for reaping benefits has to be Cheaper, Better and Faster. 'Cheaper' implies competitive price. 'Better' implies quality second to none while 'faster' implies quicker turnaround time of the product. Accumulating yarn stocks, reduced yarn margins and uncertainties regarding income growth in developing countries are indicative of challenges currently facing global cotton consumption. World macroeconomic indicators are still positive. I am hopeful of the favourable outcome in cotton fabric consumption for the festive reason to give an added impetus. Indian industry is sure to reap the benefits with the entry of multinational giants like Ikea, who have already initiated big bang inception plans. The Indian textile and apparel industry is estimated at US$ 110 billion. It has grown at a Compound Annual Growth Rate (CAGR) of 13 per cent from 2008 to 2013. It is projected to continue growing at a CAGR of 12 per cent and attain a size of US$ 440 billion by 2025. With an estimated domestic consumption of approximately US$ 70 billion and an export value of roughly US$ 40 billion, it contributes to about six per cent of the US$ 1.8 trillion Indian economy, and nearly 13 per cent of the country's total exports basket. It is the second largest provider of employment after agriculture, providing jobs and income to around 45 million people directly and indirectly. The Indian consumers' affinity towards brands and organised retail is increasing. This is fuelling the consumption of all commercial products, including textiles and apparel. Organised retailing in India currently stands at only 8 per cent of the overall retail market of US$ 550 billion. Within this, apparel is the single largest category with a share of 35 per cent. The vast population base and a growing economy have attracted global retailers and brands into the Indian market, either on their own or in partnership with local players. Many new textile investments are already in progress, and there is room for a great deal more. Per capita consumption in the urban areas is always higher than in the rural areas. India is witnessing fast growth and urbanisation. By 2030, it is estimated that 40 per cent of India's population will live in urban areas. India, by then, will have 68 cities with a population of more than one million. This migration from rural areas into cities will accelerate consumption of textiles and apparels. Cotton: The size of the global cotton industry is in the range of 24 million metric tons. The Indian textile industry is the second-largest after China, in terms of spindleage. It has a share of about 25 per cent of the world's spindle capacity. Polyester: Worldwide, manmade textiles, which make up around 70 per cent of the total textile output, are growing at more than five per cent per annum. However, the total global textile system - including all natural and manmade products totalling around 90 million metric tons of equivalent fibres - is growing only by an average of just below four per cent. This optimistic scenario of manmade textiles prevails despite the economic uncertainty that pervades most regions. It is largely because of the rapid technological developments seen within the polyester chain, especially within the performance apparel and home textile segments. Also, it is because of a strong surge in consumption within the fast moving nonwoven area. Within the global textile system, the study demonstrates that polyester is by far the dominant textile constituent in most end-use sectors, like apparel, home textile and technical textile. Polyester claims more than 75 per cent of the estimated 70 million metric tons of fibres consumed in manmade textiles. This share is set to increase over time. The global polyester market is in the range of US$ 70 billion, and expected to reach US$ 111 billion by 2019. Nylon: Growing demand from increasing automotive applications is expected to drive the nylon market. It finds a major application in replacing the metal used for reducing the weight of the vehicle and meeting the vehicle emission standards. Changing lifestyle and rising disposable income of consumer groups in developing countries is driving the growth of the automotive industry. Emission standards of vehicles and environmental regulations in the developed countries of Europe are driving the light-weight vehicles market, which in turn is expected to boost the nylon market. Further, growing demand from electrical and electronic industry is expected to fuel the market growth. Owing to processing flexibility and other advantageous physical properties, electrical and electronic form the major application areas of nylon. Increasing demand for light-weight, high performance materials from a growing population in developed as well as developing countries is driving the electrical and electronics market.

The consumption of manmade fabric has been growing significantly over the last couple of years. Brands have contributed to a large extent in this scenario. Most big sports brands like Adidas, Nike and Puma have a major chunk of garments of manmade fibres in their product portfolio. Globally, major fashion brands have manmade fibre collections, and the same is true for India. Manmade fibres are best suited for conversion into fashionable garments. Over the last 10 years, cotton production has been ranging between 24 and 27 million tonnes. With pressure on land for food cultivation, it is evident that the incremental fibre demand will have to be met by manmade fibres in the future. It is estimated that King Cotton will have growth constraints in the future. I believe India has not tapped its potential in utilising the vast resources of available natural fibre. If intelligently planned, the EBITDA and PAT margins in natural fibres can go beyond 20 per cent. It is an irony that margins in manmade fibres are on the higher side. India has a robust banking and legal system. With these inherent strengths, India needs to grow faster rather than limping or falling in the category of gradual growth. With 65 per cent of the Indian population falling in the category of youth --- the predominant market driving force, initiatives have to be taken to enhance the market growth of natural fibres. Why are we dependent on exports when it comes to King Cotton? We have a market size of over 1.2 crore prospective customers. The global kidswear market is close to US$ 200 billion. It is growing at the rate of 15 per cent. What better opportunity can we have? Let us make our newborn children wear natural fibre and fabric, which will add to their comfort and well-being. The world bridalwear market is in the range of US$ 60 billion. What better place to enhance our market share than India, where marriages are celebrated like once-in-a-life occasion? The average American household spends about US$ 2,000 on apparel, footwear and related products. Going by conservative and rather pessimistic estimates, if we assume that the average Indian spends ₹ 2,000 to ₹ 2,500 per annum on apparel and only 50 per cent of it is from natural fibres, we will have an estimate that cotton fabric consumption does not match our available organised mill capacity.

India is the second largest producer of textile and garments in the world. The Indian textile and apparel industry is expected to grow to a size of US$ 223 billion by 2021, according to a report by Technopak Advisors. This industry accounts for almost 24 per cent of the world's spindle capacity and 8 per cent of global rotor capacity. The textile industry has made a major contribution to the national economy in terms of direct and indirect employment generation and net foreign exchange earnings. As mentioned earlier, the textile sector contributes about 14 per cent to industrial production, four per cent to Gross Domestic Product (GDP) and 27 per cent to the country's foreign exchange inflows. It provides direct employment to over 45 million people. The textile sector is the second largest provider of employment after agriculture. Thus, growth and all round development of this industry has a direct bearing on the improvement of India's economy. Trends in the textile industry revolve and will continue to revolve around the following five aspects: 1. Contact 2. Probe 3. Schismatic 4. Transcendental 5. Defence Contact: A combination of natural and synthetic yarns is emerging and will continue. This trend is about pushing limits, and fabrics responding to the challenge and delivering the desired level of performance - whether it is protecting the body directly through high-compression fabrics, keeping it warm or just simple protective elements of keeping the wind and rain out. It is no longer confined to only the outdoor market. It is also influencing the streetwear and the growing leisure market which is taking the business by storm. Some noteworthy trends worth mentioning here are: 1. Cotton, wool and modal 2. Recycled nylon and polyester 3. Spandex or elastane for performance fit with stretch and recovery 4. Caffeine and mineral embedded yarns and finishes 5. Eco-friendly multiple protection - windproof, waterproof, breathable and moisture management 6. Featherweight moisture management fabrics - moisture wicking and quick dry 7. Brush the technical side of fabrics for super soft touch against the skin in base layers 8. Seamless and clean cut fabrics for reduced production processes Probe: Rethinking old traditions and delivering new concepts is pivotal to Probe. Fabrics and trims are incredibly light, but will maintain high-levels of function. For appearance, look to the semi-dull and iridescent finishes in creating a new visual appeal. Consider metallics through to liquid waxy finishes for a robotic shell look. Bi-stretch wovens can be lustered or delustered through pattern formation in creating something little bit different and unique. Some noteworthy points are enumerated as follows: 1. Space-dyed yarns bring detail to surfaces 2. Silver fabrics and finishes for added permanent performance 3. New generation fibres in creating light-weight fabrics with anti-tear appeal 4. Reflective trims - consider new colour ways 5. Crisp and compact rip stops 6. Ultra light fleece for second layers 7. Super light but maintaining high levels of performance in knits and wovens 8. All sectors of the outdoor market from synthetic base layers through to ultra-light, multi-functional outer layers with bi-stretch Schismatic: A rebellious and free-thinking mood of today's generation inspires this textile trend. It is not quite about breaking the rules, but about bending them. To mention few noteworthy points: 1. Natural fibres - recycled cotton, BCI cotton, merino wool 2. Modal and viscose 3. Recycled nylon and polyester 4. Dull synthetic yarns for a matte appearance 5. Eco-friendly matte lamination and coatings 6. Aramid fibres for lightweight robust finishes 7. Brushed surfaces on knits and wovens 8. Reworked camouflage and urban-inspired prints in delustered effects on bright surfaces 9. High performance denim - tough, slubby structures but with invisible function and soft hand 10. Rugged fleece for second layers or bonded onto wovens for double-sided outer layers 11. Wool and cotton mesh - blend with polyester for lighter results TRANSCENDENTAL: Extreme lightweight products that still deliver high levels of performance, enhancing the wearer's performance and capability are expected to be integral to the market. There are interesting new fibres coming through which will suit this textile trend. But light doesn't just refer to weight. We also need to look at light diffraction and a new generation of luminosity that compliments the more matte appeal of the core of this textile trend. Some points worth mentioning are: 1. Super bright new tri-global aspects 2. Phosphorescent yarns and finishes 3. Mercerized cotton 4. New look wool combinations through synthetic blending 5. Viscose and modal 6. Surfaces in knits and wovens are micro and perfect in appearance 7. Micro fine gauge knits with opacity 8. Look to pushing finer count natural base layers in pure or blended compositions 9. Make the impossible possible - really work with ingredients and move out of the comfort zone 10. Super light rip stops 11. High performing bi-stretch shell fabrics Defence: Protective in its appeal, tough fabrics and components add value to the final sportswear product through anti-abrasive features which lead to longevity. Core stability through to multiple finishing, aramid fibres and dense structures work alongside safety aspects, especially appealing in the trim sector. Tough and robust, ranging in a variety of fibre content, enhanced finishes to final fabric weights are boosted further with softer touch and comfort appeal when worn. What is being increasingly developed is the correlation between natural and synthetic sources in creating tougher and protective element. Inspiration pulls from natural protection through to high-tech protective features, which in turn incorporates both natural and synthetic fibres in creating the protective aspect. Tough yarns and innovative structures lighten the load but deliver a truly carapace effect, whether it is from base layer through to outer. Look to anatomical zoning of performance from core stability through to moisture management or added thermal regulation. Some points to note: 1. High tenacity nylon yarn 2. Thermoregulation fabric 3. Chlorine resistant spandex/elastane 4. Tough and robust fabrics - micro light rip stops through to raised relief warp knit 5. Abrasion resistant fabrics - softer and lighter in wovens and knit 6. FIR yarn 7. Protective elements - this can range from prints or trim through to the actual fabric 8. Tough-look trims

Technical textile is the sunrise segment of the global textile industry. With increasing competition and diminishing margin in the production of conventional textiles, textile manufacturers in industrialised countries have switched over to the production of value-added technical textiles. As the use of technical textiles is dictated by need, its pricing normally offers good margin. The technical textile industry is estimated to account for over 50 per cent of the total textile activity in certain industrialised countries. Since price margins on paper look very attractive in the beginning, many companies have joined the bandwagon on the pretext of high value of products. But performance has not remained as per expectations. Specialised products need special focus. You cannot have two businesses running simultaneously under one belt. Every company wants to be identified as one which has initiated technical textiles. Just keeping a few people to market this product and running these products along with conventional products will not be successful in the long run. One needs to have broader vision with short-term focused missions. The problem with the textile industry is that every company wants to have a bigger share of the market pie. In their eagerness to do so, they keep adding products. They fail to do justice to any product and tend to lose focus. One cannot master the technique of specific products whilst producing basic products. We all know how Toyota was able to develop a niche brand called Lexus. One can develop a specialised product only after emerging out of the shadow of routine one. It cannot go hand-in-hand. But still technical textile is an emerging area for investment in India. As mentioned, the potential of technical textile in India is still untapped. Technical textile represents a multi-disciplinary field with numerous end-use applications. The production of different items in the technical textile industry has been slowly but steadily increasing in the country. However, there is a lack of information about the status of the technical textile industry. The awareness on technical textile among prospective entrepreneurs and consumers is very less. With an increase in disposable income, the consumption of technical textile is expected to increase. Based on past trends of growth and estimated end-user segment growth, the working group on technical textile for the 12th Five Year Plan (FYP) projected the market size to reach ? 1,58,540 crore by 2016-17 at a year-on-year growth rate of 20 per cent during the 12th Five Year Plan. USA is the largest consumer of technical textile, followed by Western Europe and Japan. However, the technical textile industry is maturing in a significant way in developed world, resulting in moderate growth in these economies. In contrast, China, India and other countries in Asia, America and Eastern Europe are expected to experience a healthy growth in the near future. Asia is emerging as a powerhouse of both production as well as consumption of technical textile. China, Japan, Korea, Taiwan and India have great potential to make an impact in this industry in the coming decade.

The Indian market was governed by blended fabrics. Pure fabric, be it 100 per cent cotton or any other premium fibre, has always been considered an elite product. We come across cotton-polyester blended fabrics in all daily wear. The usage of 100 per cent cotton fabric was limited to certain specific brands, and almost all local unorganised players relied heavily on blended fabrics. The school uniform segment in India and the majority of institutional fabrics are blended. Over the last four to five years, prices of cotton have swung upward. We have come across different studies where synthetic fabrics are not recommended by medical and health-conscious experts. What we need to understand is what was right yesterday is a disaster today, and what is right today may be a disaster tomorrow. Emulation has never been successful. Innovation has always been the key to success. With no less than our Prime Minister promoting khadi, a new era of natural fibre is about to begin. With cotton prices expected to stabilise over a period of time, days of single material fabrics are bound to come. With the industry showing signs of recovery, India is being projected as an exception in an otherwise dull market. It appears that we are in the process of creating our own Desi brands, which will command a respectable share in the world fashion market. Technology is also playing its part. With specialised finishes available, single material fabric is expected to have double digit growth. Fabrics which contain over 95 per cent of parent constituent fibre like cotton Lycra will have to be considered a single material fabric. This is because the core properties of the basic fibre are predominant in this type of slightly-blended fabrics. Since cotton is blended with Lycra in more than 50 per cent of the bottomwear market, we expect the share of synthetics and blended fabrics to decrease in this segment. One of the major areas where textile conglomerates will have to concentrate on, is market penetration. It is rather ironic that companies are being forced to market their products in far off places instead of selling it in our backyards. India is a land of villages. The textile market was, and to a great extent still is, in the hands of a predominant few wholesale players who majorly rely on seconds, leftovers and surpluses. In fact, the price of the purchased fabric by these wholesalers is in the same range as of the blended fabrics. In some instances, it is cheaper. The mill sector or all the textile conglomerates will have to group together and ensure that the single-fibre fabric like cotton is available at a competitive price to the people of India. The rest will be history. You can call it the Textile Revolution just like the Green Revolution, or just like the success story of Amul in Gujarat. Which country has a market of over 120 crore people, out of which 65 per cent are young and who prefer to choose clothes that have a soothing effect?. With abundant availability of raw materials like cotton, wool, silk and jute as well as skilled work force, let us make our country a sourcing hub. It won't be just Make in India. It will be Make in India, Use in India and the entire world, show the world and let it be the world's envy and India's pride. Imagine a scenario where our single-fibre fabrics are asked at premium prices and our brand value surpasses Louis Vuitton!

The regional dynamics have undergone a sea change in the textile industry in the last couple of years. A decade back, the south was flourishing in greige fabric and yarn. Prices were competitive and quality was as per international standards. With cotton yarn exports receding over time and with bulk availability of fabric from China at competitive prices, the industry has taken a blow. The USP of fine counts in cotton and quick delivery also took a beating with easy availability of fabric via the import route. With cash-flow taking a beating, the companies are finding it difficult to survive. With enhancement of capacities by two textile conglomerates in the north - Vardhman and Nahar and with the revival of JCT, the fabric market looks upbeat there. Western India (Alok Industries Ltd) also played a predominant role in the market shift from the south. But with Alok Industries not being able to utilise its capacities significantly, the market scenario has further emerged favourable towards the north. Vigorous cost-cutting and cost-saving initiatives and excellent productivity norms achieved by Vardhman has snatched the most competitive price-tag from the south. In some basic fabric cotton qualities, even the south is facing a tough challenge to match the quality and price of premium textile conglomerates. The concept of small-scale industries being able to sell at lower prices due to lower overheads no longer holds good. Now, the mantra for success is, the bigger you are, the more competitive you should be is. Follow it, and you win hands down. Quick rescheduling to arrive at a shorter turnaround time is becoming the need of the hour. It is the new tool to enhance your EBITDA and PAT. Customers are willing to pay more for a speedy delivery. This is how we can extract more out of our installed capacities. The simpler you make your business in textiles, the more cash rich you will be. More the financial muscle you have, more competitive you can afford to be. Make to order and right on time: That is the route to money. Make to stock means fabric goes for a song and no money is earned. Running all the machines all the time may not prove to be beneficial in times to come. In case we run all machines all the time, we have to have an extra strong planning in place. Planning where we have a strong team of inspired people with passion to perform and initiate dynamic rescheduling!

With meticulous planning and smart marketing, any textile has the potential to grow five-fold over the next ten years in India. Each company will have to add an e-commerce portfolio under its belt to reap this growth benefit. With vigorous cotton-cutting practices, the need of the hour will be to penetrate the market vigorously with competitive prices. JCT has had a handsome growth of over 20 per cent in the last three years. The last two years were appreciable, and we plan to keep the momentum. Our thrust areas are: 1. Focus is on increasing volumes with optimum utilisation and better realisation 2. Entering new markets, both in traditional and new products 3. Entering new product line and establishing new earning avenues without any appreciable investment 4. Innovative textiles division 5. Standardisation of vendors 6. System driven and planning driven work 7. Initiating and implementing micro-planning to the level of shop floor

High R&D expenditure is no assurance for success. R&D as percentage of sales is the wrong criterion for determining the size of the R&D budget. In fact, increasing the R&D budget to meet the competitors' level will often lead to wasted resources and will divert top management's attention from the critical areas. The budget should be determined based on the amount required to meet the R&D objectives and strategies. The product portfolio that the company is supposed to target should always remain in focus. Some guidelines which we follow while arriving at our R&D budget are shared as follows: A significant portion to the tune of 20 per cent of the R&D budget is kept for the support of current products. Another 20 per cent is kept for the enhancement or value addition of these current products. Next 20 per cent is kept for addition of new products, or for expanding the market portfolio of the firm. Next 15 per cent is put aside for the development and maintenance of technological and management infrastructure required to support R&D. Another 15 per cent is kept for managing external R&D activities including selection and management of licensing and other technological alliances. For any textile company, some amount has to go to utilise e-com or online sales boom. I consider this a part of R&D expense nowadays. You have got to target your clients, expand your client base and consolidate your client base, if you want to enjoy the fruits of obvious online growth. Your smart phone is going to your trusted friend with whom you will spend your maximum time. What better way to promote your products than this medium? Mobile apps are here to grow and textile giants should tap this potential.