Interview with Mr Yash Birla

We had started in textile sector many years ago and genuinely wanted to be very big here. But from late 80`s till early of this decade, textile industry was not doing well and at the same time many new areas were developing very fast. One such example was IT/Software. So, we diversified into this segment as Melstar. After 2004/5, textile industry was showing positive growth and at that point we thought of making a major foray into it and entered JV with one of the World`s strongest player in Textile i.e. PB Bharadwaj group of London and formed Birla Cotsyn India Ltd. Under this JV we planned for a capex of about Rs 300 Crore and we expanded our capacity in our existing business i.e. yarn and have also planned for complete forward integration like weaving, processing, textile/apparel retail etc. People will see our presence in a big way in these segments in coming years.

As you know that Cotton is a seasonal and natural product. The price for the same is controlled by demand & supply, good crop and also Govt`s policy about export of the same. Yes as on day standard cotton has reached to its all time high of Rs 34800 per candy( 355 kg) which was Rs 24000 per candy in last October i.e. an increase of about 45%. This rise is also due to the Govt`s decision to withdraw all sanctions on cotton exports from Oct 1. The Govt recently announced it would withdraw Rs 2500 pet tone export duty on cotton under OGL. Even Pakistan who produces huge quantity of cotton and exports too, is depending on India to meet its requirements as floods took away about 30% of its crop. Another example is Srilanka which earlier used to source from mainly Pakistan is looking at India to meet its requirements. At the same time the demand for good quality cotton fabric has gone up tremendously in last 3 to 4 months, both within India and also from International markets.

All these factors indicate that this year cotton price will not be reduced substantially i.e. in other words, We do not foresee its price reduction to the level of last year. So, naturally the yarn will be sold at higher rate to cover the input cost and similarly all players of value chain like Fabric manufacturers, apparel retailers etc will increase its price. Ultimately the final consumers have to pay more for the fabric and apparel. In fact many apparel brands have started thinking about price hike to the tune of 7 to 8% at least.