What are your remarks on raw materials' market scene?
Cotton accounts for 65% of the cost of production of cotton yarn. There has been unprecedented rise in cotton prices during current year. Average price of sankar-6 during October 09 was Rs.23,000/- per candy whereas it has shot up to Rs.45,000/- per candy in November 10, recording around 100% hike. Low global cotton stocks, continued demand by spinning mills and the panic induced by fear of defaults in contracts resulted in high volatility of cotton prices. Against clearance of Rs.55 Lakhs cotton bales by the Govt, of India, so far Rs.25 Lakhs bales have been exported.
Its export should be permitted only after ascertaining the projection of cotton consumption of Domestic Mills Vis-à-Vis expected cotton production, availability of surplus cotton to calibrate its export and ensuring availability of the prescribed carry over stock at the end of season. This can be possible only by maintaining strong database. Stipulation of actual user condition for purchase of cotton may avoid hoarding of cotton by middle man and the speculators. Unless its prices are regulated with proper mechanism, it shall continue to be a cause of concern for the Textile Industry that is already facing stiff competition from the neighboring countries, which are supported by various incentives extended by their Governments.
Unlike past, the prices of Yarn and cotton now travel together; hence, the additional cost could be passed on to the Yarn. However, this shall become a matter of concern for other Non- integrated Garment Exporters.
Domestic presence for Indian companies is believed to be most rewarding one these days. How would you opine on this point?
That is true. Changing life styles coupled with greater disposable incomes in the hands of young generation and growing urbanization in the country, have created a growth in demand for novel products. The Technology up-gradation in the Textile Industry is offering new products of innovative Designs that infuse further demand. Products focusing on ethnic young generation consumers will boost sales and profits. The highly competitive Textile market has geared itself to meet out the aforesaid new segment of demand.
In the total revenue of the Company, the domestic sales constitute 70% and export 30%. Our capability of meeting the demand of high quality conscious customers at Tirupur, one of the largest apparel hubs in Asia and that too commanding Premium prices for the Products ensuring delivery on time, itself would speak for our credentials.
We have heard that KPR has girded itself to boost its topline by this fiscal 2011. Can you share about the plans inline?
Prevailing uptrend in the domestic market manifested by the rise in the prices of high quality yarn produced by the Company; Continuous growth at International Market reflected by persistent demand for Garments; our unique strengths; sustained and expanded profit making ability; further expansion and modernisation activities under implementation more particularly in value added Products; increase in capacity utilisation by the improved power scenario would certainly boost KPR‘s top line in the Fiscal 2011.
Is KPR going green?
Definitely it is! The company has 40 wind mills with a total generation capacity of 40MW for captive consumption at Tirunellveli, Thenkasi and Coimbatore districts with an objective to become self - reliant in power consumption needs. To support its expanding operations, the Company is adding up a further 22 MW to its wind power capacity.
Being one of the largest in-house power capacities in India, the company achieves substantial competitive advantage in power costs. The windmills are sufficient to meet about 75% of its power requirement through captive consumption. With every capacity expansion plan, the company strategically plan to invest in wind energy towards captive consumption. Hence, KPR’s power cost as a percentage of revenue stood at 3% as compared to industry’s average of 9%.
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.