Interview with Mr Sanjay Dalmia

Face2Face
Mr Sanjay Dalmia
Mr Sanjay Dalmia
Chairman
GHCL Limited
GHCL Limited

How impulsive is the domestic yarn market? Any predictions on future market trends?

• Domestic market has reacted positively by way of movement and price, mainly in (24s, 30s) and 40s combed yarn and 60s combed yarn significantly. In other counts, the positive reaction is comparatively less.

• This may probably be due to increased fabric requirement / orders in these sorts and may be due to increase in cotton prices, the fabric buyers wanted to cover their requirements. Also production of spinning industry is reduced due to power shortage. This can also be one of the reasons.

• Since the textile pipeline after the spinners [i.e. weavers, processors, traders etc] is dry, any bulk uptake in fabric orders can cause this type of reaction. But the payment realization is difficult still; weavers are telling their payment is delayed significantly.

FORECAST: THE YARN MARKET IS LIKELY TO IMPROVE GRADUALLY

What is your observation on latest developments in Home Textiles markets?

Home Textiles markets globally are still evolving & the dust is yet to settle. Keeping the global economic scenario in mind where continents such as US & EU are weathering the sub prime crisis leading to possibilities of near term recession, weakening dollar & erratic trends in consumption have created an interesting scenario for Home Textiles trade.

In the same breadth emerging economies such as India, China (Chindia) are stealing the mid-term focus with regards to consumption patterns & growth of markets. In such an environment in Home Textiles, manufacturing & supply chains are faced with near term challenges.

Consumption at front end sectors such as retail are also creating immense opportunities for new players to create space for themselves & existing retailers to attract more consumption & challenging customer loyalty.

As the world becomes a smaller place the consumer is getting spoilt for choices in emerging markets & over retail markets. In the over retail scenario such a situation could look attractive for overseas buyouts whereas in the emerging markets the current scenario could also look very attractive for investment opportunities by investing communities (PE funds & other investor categories) to lock into or seek such companies that have strong value creation possibilities in the economic upturns that have strong brands & brand creating potential access to emerging & those that have “right off way” to enter under retail markets.

Can you please comment on Organic Cotton market worldwide and India’s hold on this sector?

“Worldwide demand of Organic Cotton & Organic cotton products is growing by about 75-80% every year. As on date only 2.4% of Organic Cotton is cultivated out of the total cotton cultivation worldwide. India was at number 2 after Turkey until last year, however, according to recent data for the current financial year, India is now at the number one position. India’s contribution is about 38% of the total organic cotton production worldwide which is about 58000 MT.

In the last 15 years, Carbon dioxide emission from India has grown with an annual growth rate of 88% which is the largest among top 5 carbon dioxide emitter countries.

Five to seven decades ago, most of the cotton cultivated in the country was ‘eco-friendly’ with little or no use of toxic chemicals in its production. Even today, there are many pockets in India, where it is produced without the use of agrochemicals. Such soils require low-cost and low external input production systems to minimize cost on fertilizer and pesticides for imparting stability in production.

Organic cotton is not only cheaper to produce, but it also prevents soil damage as caused by the modern synthetic fertilizers and pesticides. Several cotton farming regions in Africa have been adapted by leading global brands on contract farming basis leading to higher remuneration for farmers, fair trade practices and women empowerment.

Since Indians still follow Ancient agriculture practices; we can always lead the world in this sector.

The estimated global retail sale for textiles is projected to touch 2.6 billion US dollars by the end of 2008. With this the demand for organic cotton fiber is expected to grow to 100,000 metric tons in 2008 from 40,000 metric tons in 2006, an average annual growth rate of 75 per cent.”

What helps GHCL to combat the competition, especially from low cost markets?

GHCL is present in the entire value chain from organic cotton to Fiber to Fashion. We are already present & have exclusive vendor relationships in low cost markets in terms of products.

We also have extreme leverage in creating sourcing hubs through large volume relationship that allows us to be cost competitive. Even in the Indian market where we have our own manufacturing presence we compete with the existing vendors & are more competitive than peers in certain avenues.

Published on: 04/02/2008

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.

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