Interview with Mr Giridhar Myneni

From a humble beginning in the seed business in year 1973, we have come a long way to become an INR 3000 Crore conglomerate. The Seed company was started by Mr M Venkatramaiah , the Founder Chairman of the company with a vision to provide every Indian farmer with good quality seeds at reasonable prices. Our current Chairman Mr. M. Prabhakar Rao took charge of the company the year 1982 and has since led the group with his sharp business acumen and the vision of transforming people lives.

Since inception, the Group has grown manifold in terms of size, business portfolio, revenue and profits. In year 2001, power business was added to the Group business portfolio. Subsequently, the Group expanded into Textiles (2002), Sugar (2003) and Infra (2008) businesses. Each of the businesses has grown significantly over the past years building on the Group’s strengths and the synergies that exist between different Group Companies.

Today, the combined revenue of the group stands at INR 1500 Crore set to grow to over INR 8000 Crore by FY 2014-15. The Group’s flagship company Nuzeevidu Seeds (P) Limited produces 45% of the top quality seeds in India and is reaching more than 10 mn farmers through its products. Company’s “Subeej” brand is a household name in rural India. The Group’s Sugar business is already among the top five Indian players in the industry. We have made investments to the tune of INR 1000 Crore in power business and INR 520 Crore in Infra business so far and set to emerge as major players in these businesses also.

Textile business is going to play a major role in realizing out goal for the Group. With our strength of “Cotton to Clothing”, we will offer customers the unique value proposition of full process control in the value chain. Keeping this in mind, we have made significant investments (to the tune of INR 1100 Crore) at every stage - ginning, spinning, weaving, processing and garmenting. With our Group’s traditional strength in Cotton seeds, cotton cultivation and cotton selection and the seasoned team, our textile business is poised to become a major Asian player in the industry.

With the flood scenario in Pakistan and China, the focus of the industry is mainly on cotton and cotton yarn. With 30% of the cotton fields destroyed in Pakistan and 7% of the cotton fields destroyed in China, the global cotton availability is reduced drastically. China already had less acreage under the cotton cultivation. On the other hand, rising consumption in China is expected to drive its import demand further. World demand is expected to grow while the yield has been stagnant. As a result of these factors, yarn prices, which were moderating a bit during July - August, are soaring again. Same is the condition of cotton market. We expect that the condition is going to remain the same in the near future.

Good market for yarn has prompted all the domestic spinners to run their plants at more than the normal utilization levels thereby increasing the workers’ demand. The effect is continuously increasing wages, which may affect the whole textile business chain in the long run.

Organized Mills in India continue to face problems of high costs due to higher wages and their presence in the urban areas. Going forward, the key to success in the fabric business will be the scale of operation and integration which will effectively reduce the overheads and the transfer related costs.

After the major demand slump experienced in 2008-09, garment industry has been picking up at a good pace. The imports from US and UK, the major importers of garments, have shown secular growth, which we expect to continue in the future. China, Bangladesh and Srilanka will continue the dominating exporters of garments.

With respect to the effect on the textile business we see the following as the major issues in cotton market –

Contamination: Cotton is vulnerable to contamination at the harvesting, marketing and ginning stages if proper care is not taken. Both fibrous and non fibrous contamination is of concern.

Quality: Due to average cotton quality, a globally competitive cotton sector has been difficult to develop. With growing demand for high quality products, the cotton sector and larger textile enterprises have already initiated imports of quality cotton.

Problem of admixtures: Mixing of different varieties of cotton (admixing) is another area of concern. This leads to inconsistencies in strength, length, micronaire, color and reflectance in cotton. Admixture also makes the grading and testing of cotton difficult.

Absence of uniform standards: Another problem is absence of uniform quality standards across the country. While there are various agencies involved into quality testing and grading of cotton across, uniform standards have not been in use.

Improvisation in growing and picking of cotton are the keys to improvement in this area. NSL Group is working extensively in this area. We are developing linkages with input suppliers of seeds and pesticide, credit providers and technology providers ( agriculture universities, ICAR institutes, private research division of leading private agric-input agencies ) so as to provide the best farming practices to the cotton farmer.

We are also working on developing mechanized picking system suited for Indian condition which will make the picking operation much more fast and efficient.

NSL Group is pioneering the concept of branded cotton. With the in house expertise in cotton contract farming, quality assurance and sourcing, our group company NCC will be able to offer branded cotton with guaranteed quality levels. NSL being capable of executing the above is uniquely positioned to tap the potential of cotton market.

We are already pursuing that avenue. Our Group’s flagship company Nuzeevidu Seeds Private Limited (NSPL) has state of the art bio technology laboratory involved in creating better variety of seeds by genetic transformation of crops, especially cotton. With NSPL’s strength in R&D and Group’s experience in cotton contract farming, color cotton ranges will be the next step for the Group.

Color cotton ranges will be good for both the industry and the environment. It will reduce the dyes and chemical consumption and reduce the effluents out of process house. We believe that the growing concern about the environment will be a major factor driving the industry towards colored cotton ranges; and our group is best placed to tap this trend.

We will also process organic cotton in our mills. We foresee a huge increase in demand of organic cotton. Keeping that in mind we have identified one of our units for processing organic cotton. Approval process for the same is underway.

Legal obligations apart, we strongly feel that there is a moral obligation on part of the industry participants that no child is hired for work. All recruitments in our garment factories whether at trainee or at employee level are only done after thoroughly ascertaining the applicant’s age. We have taken concrete steps to ensure that all our factories are fully complying with fair trade practices.

We believe that wages should be market driven. Our wages and salaries levels are best or at par with the industry level. But apart from wages, we take special care of the welfare of our employees. RMG manufacturing is highly manpower driven industry and it employs a lot of women workers. Creating a conducive work environment at all of our manufacturing plants is one of our key focus areas.

Process control is the most important factors for ensuring quality products and timely delivery, especially in a multi step value chain business like textiles. This requires – (1) ontrol over the basic raw material and (2) integration of the different processing steps. NSL Group, at present is best placed in terms of both these factors. Our knowledge in cotton cultivation, selection and purchase is unmatched in the industry. We already have significant capacities in spinning and weaving. Process house and garment manufacturing are the next logical steps to complete the value chain. With our strength in cotton and the fully integrated operations, we will be best placed in the industry to serve our customers – both domestic and foreign.

Our process house has a daily production capacity of 120,000 M per day and yarn dyeing capacity of 8000 KG per day. It also houses 100 looms for weaving dyed yarn. Apart from the normal processing and finishing facilities, we have machineries for special finishes like Airo wash, Sueding and Calendering. All the equipments are of latest technology. Our ETP is state of the art with a capacity of recovering 90% of the water used. We have plans for significant expansions in weaving, processing and finishing in the near future.

We are very fortunate that Honorable Chief Minister of Andhra Pradesh Dr K Rosaiah, Union Minister of Textiles Thiru Dayanidhi Maran and Union minister of Textiles (state) Ms Panabaka Lakshmi have agreed to grace the inauguration event of our Textile Process House on 6th of September.

Envisioning that green energy is the future, our Group has significantly invested in renewable power sector. Presently we are operating 100 MW (15 MW of biomass based and 85 MW of wind based) in renewable energy sector. Projects are under implementation for 430 MW of wind farms and 155 MW of hydro based power. All our sugar plants are integrated with molasses based power generation producing power with net zero carbon discharge. Apart from supporting the internal consumption, significant portion of power produced is supplied to the external grids. All our production units have water harvesting systems, zero discharge system and energy recovery systems.

Using our Seed business’ reach to rural areas, we organize training camps for farmers. Our experts in the agri business provide valuable inputs to the farmers with regard to the best practices in farming. It is a win – win situation for both – the farmers and the Group.

Understanding that people are important for a sustainable business, we take special care of our employees. Our wages are at par or above the industry levels. The facilities provided in the factories are excellent. Everybody in the organization is given ample opportunities to take new challenges and grow in career. Mandava foundation, the CSR wing of our group, works extensively in the areas of child education, child labor eradication, women’s education and women empowerment.

The textile business has taken special initiative to increase the employability of the local youth. In a Public Private Partnership between NSL Textiles, the company will train the local youth in weaving processing and dyeing. Upon completion of the training program, many of the trainees will be absorbed in the company’s roll.

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