Interview with SN Modani

The Indian denim market has evolved over the years and become need-based. Due to the retail revolution, denim has become both affordable and fashionable. With Indian production of about 1 billion metres and consumption of 700-800 million metres, India has embraced the denim revolution. In addition to being a casualwear and fashionwear, denim has crept into the boardroom as well. In spite of a robust growth in the denim segment, India's per capita consumption is among the lowest in the world-at 0.3-0.4 pairs. China's per capita consumption is at 1.8-2.0 pairs, and that of the US is 8 pairs. Changing Indian demographics, increased disposable income and globalisation aids in the forward growth of the denim industry. Denim is penetrating deeper among women in the metros and mini-metros, especially among the younger generation. Even working women in smaller cities have started accepting denim as a casual outfit. The growing focus of retailers and brands on women's denim will contribute to its further penetration.

The domestic textiles and apparel industry in India is estimated to reach $100 billion in 2017 from $67 billion in 2014. The domestic apparel market is expected to grow at a compound average growth rate (CAGR) of 9 per cent over the next decade. The innerwear market was approximately of $2.6 billion in 2015, where womenswear constituted 60 per cent. The Indian innerwear market is estimated to grow at 13 per cent by 2023 to reach $8.75 billion. Menswear is the largest segment in India's apparel market, accounting for 42 per cent of the overall market. In comparison, womenswear makes up 38 per cent and kidswear comprises 20 per cent of the whole market. The menswear market can be divided into various categories including woven shirts, trousers, denim, winterwear, innerwear, t-shirts, suits, activewear, ethnicwear and dailywear. The woven shirts category is the single largest within the menswear market, followed by trousers and denim. The menswear market is expected to grow at a CAGR of 8.5 per cent over the next 5 years to reach Rs 1,31,000 crore ($24 billion) by 2017. We are relatively a new player in this seamless market, as we started seamless operations in 2015.

The Indian textiles industry is blessed with abundant raw materials like cotton, wool, silk and Jute. India is the second largest producer of cotton in the world. Besides, India has technical competence in weaving and processing capabilities. Further, due to a skilled workforce, India is the second largest producer of textiles and garments in the world. Challenges of economies of scale, escalating energy costs, high transportation costs, obsolete labour laws and cost-efficient technology are faced by the industry. Recently, the government amended the textile scheme, TUFS - Amended Technology Upgradation Fund Scheme (ATUFS) to encourage further investments in the textiles sector, which is witnessing sluggish investments. We believe that the total benefit to textile companies is likely to reduce due to the change in nature, quantum and target segment for benefits under the scheme. The subsidy will be largely capital-based. The garmenting segment will receive a higher subsidy as compared to other segments, but the overall quantum of subsidy appears to reduce. Also, the government has preferred to channel benefits towards small to mid-sized enterprises instead of large companies by capping the subsidy amount. This scheme is positive for the existing projects which were awaiting release of the subsidy under earlier versions. India has the largest spinning capacity globally, but only accounts for 4 per cent of the total global garmenting exports, indicating the need to build capacity in value-added segments. We need to achieve $300 billion textile exports by 2024-25, and envisage the creation of additional 35 million jobs. In this regard, the textiles ministry has set up an expert committee for reviewing and revamping the textile policy of 2000. The expert committee has since submitted a draft of the vision, strategy and action plan. The new national textiles policy is currently under finalisation. There are various changes in the textile industry on the domestic and international fronts. And there is a need for a road map for the textiles and apparel industry. So, the Ministry of Textiles initiated the process of reviewing the National Textile Policy, 2000.

The industry needs funds for research and development of new machines, which are much faster and help the industry introduce new eco-friendly products for future use. We need proactive action policy from the government that can make the Indian textiles industry global. We should swiftly align with international trade groupings like ASEAN, Chinese-led grouping called the Regional Comprehensive Economic Partnership (RCEP), US-led Trans-Pacific Partnership (TPP), etc. We should tweak fiscal policies to attract FDI in the sector.

We are one of the low-cost producers of polyester viscose (PV) fabrics, with a databank of innumerable shades and colours. We have the best of technology in seamless manufacturing. We are also ramping up our denim capacities by 8 mmpa.

The company is currently implementing a Rs 198 crore expansion plan, which is funded by a term loan of Rs 157.50 crore and balance by internal accruals. The project envisages installation of 26,736 spindles of polyester-viscose dyed yarn, 74 imported airjet shuttleless weaving machine, one denim line and a two MW solar project. The project activities are in progress as per schedule.

We have a strong distributor and MBO layout, with focus strategies in EBO, franchisee model and modern retail trade.