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Interview with Vicky Shah & Sahil Shah

Vicky Shah & Sahil Shah
Vicky Shah & Sahil Shah
Director & Executive director respectively
SKS Textiles Private Limited
SKS Textiles Private Limited

New textile policy should not ignore synthetic fibres
From a humble beginning in 1982, Mumbai-based SKS Textiles Private Limited (SKSTPL) has evolved into a modern textile company under the leadership of chairman Sukanraj B Shah. SKS is into manufacturing cotton, giza, tencel and cotton-blended suiting fabric. A visionary, Shah has industry experience of more than 45 years and has made changes in the infrastructure to meet the changing demands and fashion trends. 

His son Vicky Shah, with 20 years experience, joined the company in 1995. Sahil Shah, the youngest son, has been handling the company's operations since 2007. The company maintains its pace to deliver fabrics as per changing trends. The vertically-integrated set-up equipped with modern facilities makes fabrics of high quality and finish. Its clients include Raymond, Digjam, Arvind, Siyaram and D&J. 

With the company gearing up to launch its IPO soon, the junior Shahs discuss the highs and lows of the Indian textile sector and the company's future plans.

What are your expectations from the new national textile policy?

The last textile policy was formulated about 17 years ago, when the world was operating under an unfair quota system called the Multi Fibre Agreement (MFA). Valid from 1974 till 2004, the agreement imposed quotas on the amount that developing countries could export in the form of yarn, fabric and clothing to developed countries. While MFA expired in 2005, India did not upgrade its policy accordingly. India is lagging behind Bangladesh and Vietnam in textile exports for the last two decades. 

The new textile policy must consider global technological developments in synthetic fibres and address the current challenges faced by the industry.  The synthetic fibres sector employs a significant number of workers and the government cannot afford to skip it. It will make Indian garments more competitive in the international markets by reducing production cost. Ensuring sustainable practices in the industry should be another concern. An organised growth across the supply chain is required to compete with China, Pakistan, Vietnam and Thailand. 
 

What are the latest trends in the Indian textile industry?

The Indian textile industry has witnessed its fair share of progress and trends. These include the Technology Upgradation Fund Scheme (TUFS) launched by the government in 1999 to make the Indian textile industry globally competitive and to reduce its capital cost; online marketing initiatives; setting up of cotton sales depot for small weavers and integrated textile parks; and global promotion of technical textiles and handloom exports.

What are the reasons behind low output and technological backwardness of the Indian textile industry?

As 80 per cent of this industry comes under the unorganised sector, it has not yet achieved much success. Reasons behind its low output, slow growth and technological backwardness include outdated machinery, lack of proper infrastructure, unavailability of skilled labour and competition from China and other neighbouring countries.

With an IPO coming soon, do you have any plans to integrate Industry 4.0 into your current set-up?

Adapting automation and modern technology with strong product research and development is the key to success. Several studies have pointed out that by installing modern equipment in textile units, India can help achieve higher productivity and minimise fabric defects.  While the spinning segment has made progress in this front, modernisation is yet to happen in weaving, fabric manufacturing and garment units. 

Machines to provide higher speeds and wider widths and software to monitor the efficiency of operations are prerequisites for units that make their mark in global markets. We plan a composite unit in coming years.

Do you see Goods and Services Tax (GST) being a growth driver for the industry? How will it impact the pricing of your finished products?

We think so. There could be some initial teething trouble in terms of rollout, but we think that the government will fix that. We do not have any doubt that GST as a concept will be a booster for the industry. For us, it will be revenue neutral, but the profit margin share contracted heavily for one quarter.

How is India faring compared to countries like Bangladesh and Vietnam that are growing rapidly in exports?

Bangladesh's garment exports exceeded India's in absolute terms in 2003. At present, Bangladesh exports more than $28 billion worth of garments, about $10 billion more than that of India. Even a late starter like Vietnam overtook India in 2011 and now exports garments worth $22 billion. These two nations have preferential access to the European Union and the US markets. Their exports growth rate has been 20 per cent annually against a meager 8 per cent for India.

The presence of cotton, whether in yarn, fibre, fabric or garments, is close to 70 per cent in India, which also reflects in our exports. Only 30 per cent is from synthetics and man-made fibres. The global fashion trend is the reverse, i.e. 70 per cent is from man-made fibres. 

Another big factor is the overhang of excess capacity in the Chinese fibre and yarn sectors that results in a downward pressure on prices. In the global textile trade scene, India's share is a mere 5 per cent against China's 39 per cent. In the subsegment of synthetic fibres, India's share is just 2 per cent compared to China's 66 per cent. India has a rich mix of synthetic and natural fibres and yarns, including cotton, jute, silk, polyester and viscose, but it still remains a cotton-focused country.

Where do you see new opportunities in the textile sector?

We feel the biggest opportunity is in technical textiles and we have plans to tap it. However, the difficulty is that in developed countries, the usage of technical textiles is mandated by law, which is not the case here in India.

What kind of blends do you produce for domestic and export markets?

Though we are not into direct exports, but the trend we have seen from our merchant exports is primarily in pure cotton and cotton-lycra fabrics. There is a mixed domestic demand of pure cotton, giza, lyocell, tencel and cotton poly fabrics for bottom weight.

Which have been the better performing markets for SKS in the last two years? Where are the prospects growing?

We have seen a huge jump in over-the-counter (OTC) markets and corporate sales in the last two years whereas the growth of readymade garment is slow. There is even a huge demand in institutional supply chain. The prospects are definitely growing in OTC. We can see more people opting for tailoring than buying readymade garments. Traditional tailoring is getting transformed into a complete boutique style tailoring where even the smallest thing is taken care of. We are even exploring the option of tapping markets like Turkey and other European countries in coming years for direct fabric export. Which have been the better performing markets for SKS in the last two years? Where are the prospects growing?

What is your strategy for future?

Our strategic objective is to improve and consolidate our position as a textile manufacturing unit with a continuous growth philosophy. The key focus points are increasing operational efficiency, being creative, expanding our geographical network, optimally utilising resources and building a professional organisation. 

For operational efficiency, we pay continuous attention to process improvement, quality control activities, customer service, technology development, change management and skills upgradation for Check spacing have always been driven by the quest to cultivate new trends and constantly strive to develop better products. We also offer mix-and-match fabric to attract customers and dealers. 

Our domestic distribution network has been critical to our growth. We intend to continue nurturing the existing market and create new channels in regions having low or no penetration. We aim to boost our sales network in territories with lower transportation costs and a substantial demand for our products. 

Efforts for optimal utilisation of resources include developing customised systems and processes to ensure effective management control. We periodically analyse our operations policy, identify bottlenecks and try to rectify those. We believe in transparency and consult with external agencies on technical and financial aspects of our business when needed.

Published on: 03/11/2017

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.

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