Indian apparel market expected to reach value of INR 300,000 Crores, witnessing 12% growth by 2015.
Incorporated in April 1968, National Textile Corporation Limited (NTC) is a Central Public Sector Enterprise under the Ministry of Textiles for managing the affairs of sick textile undertakings, in the private sector, taken over by the Government.
Starting with 16 mills in 1968, 103 mills by 1972-73, in the year 1974 all these units were nationalized under the Sick Textile Undertakings (Nationalization) Act 1974. The number of units increased to 119 by 1995 and 1 new mill purchased set up on land purchased by NTC in SEZ area in Hassan (Karnataka).
These 120 mills were controlled by NTC(HC) Ltd with the help of 9 subsidiary Corporations, with an authorized capital of INR 10 Crores which was raised from time to time and which is now INR 5000 Crores and the paid up share capital of the corporation is INR 3062.16 Crores as on 31.03.2011
NTC is today a single company as against 10 companies in the past with the merge of 9 Subsidiaries with the Holding Company.
Mr. K. Ramachandran Pillai is currently the CMD of NTC. He has 30 years of industrial experience both in private and public sector companies, including HMT Ltd., Hindustan Latex Ltd; BRPL the subsidiary of Indian Oil Corporation. He is also the Chairman of 5 Joint Venture Companies of NTC with leading private sector textile players. To his credit, Pillai has numbers of accolades and awards. To name a few – ‘NIPM Ratna Award’, ‘Delhi Ratan Award-2007’,’Bhartiya Shiromani Puraskar’-Excellence Award with Gold Medal, and ‘The Great Son of the Soil’.
To make NTC a world class eco-friendly integrated textile company, catering primarily to the clothing needs of the nation, Mr. Pillai has been spearheading a total transformation of NTC involving financial restructuring; technology upgradation; and organizational delayering.
In Face2Face talk, divulging details on these vibrant plans, K R Pillai also shares about his outlook on the industry with Madhu Soni- Sr. Editor & Correspondent.
Mr. Pillai, welcome to the Face2Face talk. Let us start the conversation with an overview of the global textile and garment industry today?
If we analyze the global textile trade scenario, we find that the trade from developed countries like US, Europe and Japan is shifting to Asian countries and predominately captured by China. India’s trade in textiles is about 20% of China’s trade.
USA, Europe, Turkey and Mexico are major global importers of textiles. China is also importing textiles for conversion into value added products, whereas India is exporting textiles to countries like Vietnam, Bangladesh, Sri Lanka and losing its cream of value additions to these smaller countries.
The past year has been challenging to say the least but we are hopeful that we can find positives to take forward, including the better than expected holiday season, more new and innovative product offerings, industry streamlining that, to a large extent, has already resulted in a leaner and meaner and more productive industry.
Sir, we understand there are lots of happenings at NTC also, regarding its repositioning. Please provide us a gist on it.
Basically, we are going for an image makeover of the company. For the last 2-3years we have been focusing on the modernization of the mills, which is complete now. The next stage for the organization is to undergo a drastic change in the ‘outdated’ image of the company. In this direction we have revamped the logo. This new logo will be formally launched by the hon’ble Minister of Textiles, either on 17 or 20th December in a function in Delhi.
We also have planned dynamic phases as growth strategy in place. Firstly, we have to expand market reach through about 83 retail showrooms pan India. These showrooms will have a uniform and latest getup, whether it is about the logo, the interiors, infrastructural or the technology.
The second phase will see the expansion of the number of retail showrooms at least to be doubled by next year, and in immediate future we shall come up with new brands too.
Why has NTC decided to foray into the sector of the Branded Apparels?
Reason why we are to foray in branded apparel sector is to reposition NTC as a preferred clothier of Indian masses and a supplier of choice for yarn customers and also as the repository of Indian textiles legacy. NTC intends to widen its product portfolio and would do so by entering into the branded apparel sector.
The total Indian apparel market is valued at INR 170,000 Crores and is expected to reach a value of INR 300,000 Crores, thereby witnessing 12% growth by 2015. Hence, our endeavors to have some part of this pie in the near future and subsequently increase our share in the years to come.
How about the market spread across the nations?
Of course, we have major thrust on exports too. The company shall no more be confined to domestic markets. In addition to domestic presence, we will explore the export potentials in Europe and countries like Korea, Pakistan, and South Africa etc.
Mr. Pillai, as you too know, these markets are studded with the big ticket players be it domestic or international. How prepared is NTC for this cut throat competition?
Actually, NTC is not looking the elite group as its consumer market. It has always been focusing middle class and lower middle class. So, it is not going to be affected by hi-end brands which are basically catering high income earning/spending category of consumers.
We have expertise in the yarn market and are in good stead with Apparel manufacturers across the nation and abroad as a lot of them are our clients. We have empanelled agencies to carry over the survey and strategize our entry into this segment which you rightly mentioned is a crowded segment.
We have chosen Menswear (Shirts and Innerwear), Technical Textiles and Home Textiles. Menswear accounts for 36% of the overall market and in that Shirts account for 38% of the market. We are not entirely new to the segment with our brands Entyce and Finalys already in the market.
Mens innerwear also has a large market and throws up an interesting proposition. Men’s innerwear market has been growing at 14% since 2006 and is valued at INR 4,500 Crores in 2010. It is expected to reach INR 7,200 Crores with a CAGR of 10% by 2015. We would make our presence felt in the Value for Money segment, with a large customer base interested in buying branded products at affordable prices.
Home textiles market has been growing at 9% since 2005 estimated at INR 17,000 Crores in 2010. It is expected to reach INR 26,600 Crores with a CAGR of 9.3% by 2015. In the Indian home textiles market, bed linen accounts for more than 50% of the market. This is where our prime focus shall be. Very few players are in the market that made such a focused entry like ours.
Interesting! And, what is your take on current moves by Government in FDI policy?
100% FDI in Single brand retail and 51% FDI in Multi brand retail is a positive step in the progress of the nation. We see nations like China, Thailand, Russia, Indonesia, Brazil, Argentina, Singapore, Chile and Malaysia where hypermarkets and small retail outlets continue to co-exist. Employment generation would be a big plus and ultimately consumers would get to choose and benefit from this model. Individual states will be free to allow opening of retail outlets in their states under their policy. We would see huge influx of foreign investment and creation of jobs, thus curbing inflation and generating employment.
Internet is known as powerful tool. NTC has already deployed this tool in the form of e-auction; how successful has it been?
It was done a year back in July 2010 and was a great success for the sale of our two properties in Mumbai. We got about 200 Crores per acre.
There is absolutely no scope for any allegation, for even if you do an excellent job there can be vested interest in the society or company who will try to malign the image for their interest or reason, and this is what absolutely, in fact totally, could be avoided in the e-auction which is very transparent process for auctioning properties. So, utmost transparency is its salient feature. Secondly, every bidder can see what other bidder is quoting; hence one can jack up the figure in competition, which ultimately helps the seller to bag highest sale price.
We sold about 10 acres of land in Mumbai in July 2010, we got 1979 Crores, and no body has yet broken these record figures so far.
To my knowledge, perhaps NTC is the first company for the land e-auction. In fact our idea is to go only for e-auction process for future sales of our lands.
What is your view on the potential of Technical Textiles?
In India this sector is not grown to what it should be and is very much in the nascent stage. So the potential of this field is very high and therefore we have decided to venture into two areas of Non-wovens: Geotech and Meditech. Initiatives are already taken to explore these two most lucrative areas in India.
Any more plans, you may wish to share-
In short we basically are trying to make NTC a ‘Navratna’ if not ‘Maharatna’.
We have fully conceived all the plans for it that comprise of strong marketing strategy followed by market diversification to Nonwovens, and even Real Estate.
*(Navratna was the title given originally to nine Public Sector Enterprises identified by the Government of India in 1997 as "public sector companies that have comparative advantages". The Maharatna status, raises a company's investment ceiling from INR 1,000 crore to INR 5,000 crore).
Thanks for joining us on Face2Face, Mr. Pillai! We wish you all the very best for these endeavors.
