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Turkey's stability, potential and the investment incentives were critical in attracting foreign investments.
R S Jalan, Managing Director of GHCL Ltd. emerging economies and what they have got to offer in an interview with Fibre2Fashion Correspondent Manushi Gandhi.
The Textile division at GHCL manufactures premium quality Yarn, Griege Fabric and Home Textile products like Bed Linen, Curtains and Cotton Yarn. Products manufactured by the company are well accepted both in the Domestic and International Markets, by the Premium Buyers, who cater to the Fine Count End Products like apparels ranging from Shirtings and different types of garments, to Home textile products such as Bed-sheets, Bed-Linen, Madeups and Curtains.
Ravi S Jalan is the Managing Director of GHCL since the year 2004. He is keen follower of technological advancements in business, and is particularly eager in adopting the new methods in operating processes which have resulted in immensely improving the productivity levels. Mr. Jalan is a Chartered Accountant by background, and his abilities in structuring strategic business deals has contributed significantly in charting out the company’s progress.
Tell us about transformations GHCL has gone through in the past 5 years.
As far as spinning division is concerned, we have gone for more and more value added products like compact yarns, slub yarns and fancy yarns with a different fibre blend. Recently we added in our portfolio a state of the art Rieter Open end Unit with 2400 rotors to cater to open end yarn market. Additional 23000 spindles have been installed which are exclusively dedicated to produce value added fancy yarns to cater to high end shirting and suiting markets. GHCL adopted continuous modernisation programme in all the units.
Parallely more emphasis is given in the HR front to develop team work, ownership, competency building of an individual to make him perform better which results in a more focused, motivated and result oriented dedicated team at all levels. The team works in perfect harmony and coordination to leverage on the overall combined strength of GHCL group. The division implemented Six Sigma Principles and is continuously working towards improving quality and productivity to achieve “Cost Leadership”.
Do you feel that the supply of cotton has always been an issue hampering the production and making it difficult to meet up the demand?
Yes. Timely capturing the good quality raw cotton at right price is one of the important areas which decide the financial performance. In recent years, the supply of cotton has become an issue due to frequent policy changes by the government especially on export of cotton. This policy deficiency has led to exporting of good quality cotton at cheaper price during cotton season and importing cotton at higher price on later date. Indian mills are deprived of the right quality of cotton along with the right price. Sizable capacity of spinning mills in southern India produces fine and super fine counts and hence there is always an issue in getting the right quality cotton. Since the focus is on Bt cotton, in long staple cotton varieties, the length has come down and micronaire value has gone up, which seriously affects the working of the fine counts. We need to give quicker and stronger push to improve the quality of long staple cotton varieties.
Government has to extend support in the form of interest subsidy for the working capital requirement of cotton coverage during the season, in order to compete with multinational trading community.
What is the status of Indian cotton in the international market?
India is the second largest cotton producing country next to China, and second largest exporter as well. China, the world’s largest cotton importer, accounts for more than 60 percent of total raw cotton exports from India. The rest goes to Bangladesh, Pakistan and Vietnam. India is only the country where numerous varieties of cotton is cultivated to produce wide ranges of counts from very coarse to super fine. There are issues like quality in terms of adulteration/mix-up and high contamination which needs to be addressed. In the international market, Indian cotton is given least preferences for higher end use due to serious contamination problems. In the current crop season, Cotton export registration has touched 9.5 million bales, out of which around 9.2 million bales have already been shipped.
What advice would you give to the investors who are willing to invest in textile sector?
Textiles are known to mankind since or earlier than 7000 BC. The knowhow of textiles is older than metal working or pottery making, perhaps even older than agriculture.
Investing in textile sector is always considered good for country like India. India is one of the major global textile players and will continue to be. India’s share in global textiles has increased by 17.5% in 2013 compared to the previous year. India’s textile exports are worth $40.2 billion with a growth of 23% beating China and Bangladesh which have registered 11.4% and 15.4% growth respectively.
Textile technologies are undergoing a profound change. Textile structures in technical applications are creating a new market potential. Creative and successful considerations of textile investment in widely diverse fields will shape our future and provide assurance.
The proposal of the new National Textiles Policy has been drafted which aims to achieve USD 300 billion exports by 2024-2025 (present USD 40.2 billion). This translates into additional investment requirement of the order of USD 120 billion and creation of additional 35 million jobs is expected to take place. The increasing labour cost in China and non-compliance of a large number of factories in Bangladesh provide India a big opportunity. Overseas buyers are looking at India as a safe and reliable option for sourcing. Keeping the above in mind, I personally advice the investors to continuously invest in textile sector which is for a definite reason popularly known as the “Sunrise industry”.
Which are the emerging economies and what they have got to offer to this huge textile industry?
Even though China is a major textile producer and its exports is slowly losing out from the competition. China is facing high labour costs, and this is working in India’s favour. Other than emerging economies like Brazil, South Africa and Japan countries like Indonesia, Turkey, Vietnam, Bangladesh and to a certain extent Sri Lanka have better chance to perform in textiles.
As China unwinds a controversial stockpiling scheme, the raw cotton export to China would come down around 20% in the next crop year. Changes in Chinese policies coming on top of rising cotton consumption in India is a spurt in exports of finished yarn. China abandons a stockpiling scheme, under which it has amassed more than 10 million tons of the fibre – around 60% of global cotton inventories. The policy had driven import demand by removing cotton from the domestic market and pushing up local prices.
Yuan has depreciated 2.4% against the dollar to 6.2 in the year beginning; while the rupee has appreciated by 2.7% to 60.14 a dollar. India thus has a cost advantage as compared to China, where the labour cost is higher. This is getting offset due to the yuan’s slide.
Turkey’s stability, potential and the investment incentives were critical in attracting foreign investments. Economy has grown by 4.4% in 2013 the highest growth among European economies.
Vietnamese firms are expecting to bag more export orders this year due to economic recovery in developed countries and prospects of the signing of the trans-pacific partnership (TPP) agreement by June this year.
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