Aarvee Denim is the second largest producer of denim in India. What makes it unique and so popular?
Aarvee is not only the second largest producer of denim fabric in India but also the denim producer with the lowest cost and highest market share in the domestic market and exporting approximately 25% of its production.
Indian denim is gradually making its niche in global markets. In your opinion, what are strengths and bottlenecks in its path of progress?
Strengths: • Ample supply of cotton • Easy availability of technical and skilled manpower • Latest technology, as most of the plant installed in India has been installed in mid 90’s or early 2000.
Bottlenecks: • Government controlling the cotton prices by announcing 40% higher Minimum Support Price (MSP). The higher MSP will enhance the RMC and will make Indian denim producer less competitive in the international market. • Higher power / energy costs. • Higher interest costs. • Lack of strong support infrastructure for exports.
Can you share about current trends in the sector and future that the sector has?
Till near past, China was our biggest competitor in the international market. However, recent developments in China like higher power / energy costs, higher labour costs, reduction in export subsidies from 14% to 8% and more stable currency have brought Chinese producer at par with Indian producer. In the present circumstances, we can re-enter the global market and compete with China provided the Government of India does not control the cotton prices and energy / power costs and interest costs are brought down.
Depreciation in Indian rupee and the present economic slump in the Chinese economy seem to be a good omen for Denim industry at least, isn’t it?
Yes. Depreciation in the Indian currency has definitely helped Indian denim producer to be more competitive against China and has resulted in to improved realisation. Our exports have doubled in the current year as compared to the last year.
Please let us know about the countries that you categorize as strong or growing markets in this arena?
Latin (South) American countries are the strong and fast growing markets but the problems with these markets are their banking system and the language.
Your industry is marked with fierce competition. How does Aarvee fight it out?
Mainly the competition is on the price front and being the lowest cost producer, we are not afraid of the same. We are having total of 20.50 MW of installed wind energy generation capacity which is solely for captive requirement. This has also made us stronger on lowest costs. Further, we have a very strong and exclusive marketing and distribution network at Delhi which is taken care by the Arora Group (co-promoter of AARVEE). This is our real strength.
How does your company maintain its corporate responsibility towards ecology and environment?
We have well laid down corporate governance policies which are strictly followed in spirit by us. So far as ecology and environment are concerned, we have sufficient and well equipped latest plant for controlling water and air pollution. As I have said earlier, we have invested hugely in wind energy as a part of our commitment towards the environment and Green Energy.
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DISCLAIMER: All views and opinions expressed in this column are solely of the interviewee, and they do not reflect in any way the opinion of Fibre2Fashion.com.
