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.
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 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.
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 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.