Retail environment in US is extremely volatile
GHCL, incorporated in 1983, is a well-diversified group with an ascertained footprint in chemicals, textiles and consumer products segment. RS Jalan, MD, discusses the challenges for the home textiles sector and shares details of latest developments at the company.
What are the synergies between the chemicals, textiles and consumer products businesses at GHCL?
All the three businesses are autonomous, and there are no direct synergies.
How has been the performance of the textiles division over the last two years and what are the prospects for the current year? What new can one expect from the division?
Our textiles division has been doing well. The turnover for our textiles business was ₹1,229 crore in FY 17 and we have achieved a CAGR of 14 per cent in the top line of our textiles business for the last eight years. Our target is to achieve a CAGR of 20 per cent for this business. Our vision in the years to come is to become the one-stop-shop for any type of textiles product.
How has the spinning unit of GHCL performed in the last two years?
The spinning unit of GHCL has been performing well. We achieved a turnover of ₹458 crore in 2015-16 and ₹540 crore in 2016-17.
Which are your major markets for yarns and home textiles products? What kinds of yarn blends are popular in the export markets?
Our major markets for home textiles are the UK, US, Canada, Germany, Israel, Australia and New Zealand. For yarn, our major area of focus is the domestic market.
Home textiles is a highly competitive segment. What are the challenges ahead?
The retail environment in the US is extremely volatile, with several retailers going under and almost the entire department store space underperforming. The constant reduction of the pie and overall performance levels is leading to a severe price pressure. The space that is doing well is the deep discount / off price space.
- A great deal of pressure on brick and mortar retailers from Amazon;
- Erratic expansion of supply capacities leading to acceptance of businesses at lower margins;
- Government benefits in countries like Pakistan and Bangladesh work in favour of purchase decisions being skewed towards these countries, not to mention the duty advantage they get through trade agreements.
You have collaborated with Adnas to tag your Pet & R-pet products. Do you plan to integrate it into other products too?
Our license for using Adnas CertainT platform of source verification of recycled Pet fibre is limited to bedding. We have started off with sheet sets at the moment and intend to include comforters in the mix.
GHCL's sales and margin in the textiles business is improving. Any expansion plans in the pipeline?
We are constantly upgrading our technology and expanding capacity. We have recently expanded our weaving and processing capacity to 12 million metres per annum and 37.5 million metres per annum respectively and plan to further increase it to 45 million metres per annum by the end of this fiscal. In the spinning business, an airjet spinning project with 480 spindles is under implementation at Madurai. We also intend to set up 3 more windmills of 2.1 MW each thus increasing the existing capacity of 25.2 MW of captive wind energy to 31.5 MW. Our aim is to continuously expand and be one among the top three players.
Tell us about your sustainability measures - the key ones taken and what new in the pipeline.
At GHCL's textiles division, sustainability is integral to the business philosophy. The key areas of focus are health, safety & environment, compliance to labour/human rights, initiatives on ethical sourcing, and contribution to community development through strategic CSR initiatives. At GHCL, approximately 40 per cent of the energy consumed is sourced through renewable energy sources. We also lay a great deal of emphasis on enhancement of green cover surrounding the plant premises. Our operations are compliant with global and international standards/certifications governing textile sector such as:
- Sustainable Textile Production (STeP)
- Business Social Compliance Initiative (BSCI)
- The Global Organic Textile Standard (GOTs)
- Strategic sourcing of cotton in compliance with Better Cotton Initiative (BCI)
- Formalized system of HSE incident report, investigation and communication (HO)