Interview with Mr S. P. Oswal

Mr S. P. Oswal
Mr S. P. Oswal
Chairman -
Vardhman Group and Yarn Business Head
Vardhman Group and Yarn Business Head

Vardhman is a major integrated textile producer in India. The Group was setup in 1962 at Ludhiana, Northern India. Since then, the Group has expanded manifold and is today, perhaps, the largest textile conglomerate in India. The Group portfolio includes manufacturing and marketing of Yarns, Fabrics, Sewing Threads, Fibre and Alloy Steel.

What is your reaction to the Budget proposals for the textile industry?

"The Government of India has been giving considerable importance to the textile industry for the last couple of years. Budget proposals for 2005-06, related to the textile industry, are steps in this direction and would enable consolidation and technology upgradation of the entire industry. The announcement of capital subsidy for the processing sector is a welcome step keeping in view the present fragmented outlook and critical importance of the sector.Further, the duty structure for the industry has been rationalized, however this process of rationalization needs to be carried forward as the duties on man-made fibres is still very high. This is especially important in the light of the fact that currently our exports are skewed toward cotton based textile products, and industry needs to diversify towards man-made fibres based textiles products to gain a higher market share in textile and clothing sectors of the world.Similarly, de-reserving the knitting sector is another important policy decision announced, which will go a long way in improving the outlook of the knitting sector, and increasing the knitwear exports from India in sync with the global trends."

Spinning companies turned in a good performance recently. What is the reason behind this? Do you think such a performance is sustainable?

The good performance by spinning companies is on account of increased demand for yarns as well as lower cotton prices prevailing in the country due to higher cotton output. The present performance is likely to continue as cotton yield is expected to increase further and demand would grow due to quota phase out. Nevertheless, it would be pertinent to note that such anticipated growth would put pressure on prices due to increased competition and benefit those suppliers who are capable to provide yarns at competitive prices.

Many believe that an integrated facility would be a big advantage post 2005. What is your view?

We also hold similar views. In the past, the quotas resulted into fragmentation of the investment in non-competitive countries and survival of small suppliers. With phasing out of quota, this trend would discontinue. Various studies have shown that international buyers would like to narrow down their sourcing base towards few suppliers capable of providing the complete package at competitive prices. Therefore, advantage in post ATC regime would flow from the textile producers' ability to offer competitive products in large volume and variety, which would only be possible through integrated facilities.

What are Vardhman's future plans?

Vardhman plans to increase its capacity in the high value added segments like weaving, fabric processing and knitting alongwith technology upgradation of the spinning sector.

Do you expect more growth from fabric than yarn?

Yes, with increased capacity in weaving and fabric processing in the coming years, share of fabric business in the Group's turnover would definitely increase.

What are the major competitions you see from the domestic and overseas market, in each segment of your products?

"At first instance, it may be noted that price and customer service would remain major influencing factors in all segments of the textile value chain for the competitive forces. Segment- wise comments are given below Yarns The global trade in textile and clothing is moving towards complete package. Therefore, the international trade in yarn would reduce alongwith the prices. However, the yarn business in domestic market would increase in tandem with opportunities in export markets as well as domestic market, but the pressure on prices would increase. Fabric and processing The biggest challenge in fabric and processing sectors comes in the form of demand for high quality fabric at competitive prices. Due to liberalization, fabric imports from China and other countries has been increasing in the country. In such a situation, domestic producers from India would be able to survive only if they can match in terms of quantity, quality, prices and delivery schedules offered by China."

What do you think is the future of the Indian textile industry?

Indian textile industry has inherent strengths for the growth and larger share in world textile and clothing trade. The present miniscule share in world trade and fragmented outlook of the industry are a result of the fiscal policy distortions pursued in the past. However, with level playing field for all players, de-reservation of the high value added segments like knitting and garmenting, and availability of competitive funds under TUF for creating scale and world class technology level, would all lead to growth of the industry through consolidation and restructuring. This would enable the industry to increase in terms of size to more than $70 billion by 2010 and pick up a share of about 7-8 per cent of the world trade in textile and clothing. However, this entails provision of competitive inputs, and efficient and sufficient supporting infrastructure for the industry
Published on: 26/07/2005

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

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