Company Details
Your group is a dab hand in yarn business. Please apprise us with your outlook on global yarn market shaping amidst upheavals in raw material industry.
India is the second largest spinner of yarn in
the world next only to China. Also, India is the largest exporter of the yarn in
the world.
Following are the opportunities and threats that we are going to face in the global yarn market
OPPORTUNITIES
Availability of raw materials
India is fortunate to have world’s 2nd
largest production of Cotton fibre and 2nd largest production of
man-made fibre. This gives India a sharp edge over other countries to expand
its production base. India is going to be net surplus in availability of both -
man made fibres and cotton and availability of local raw material is assured.
Demand for Textile products in general
Even though there is stagnation to fall in the
population of developed nations, but, overall there is still growth in the
world population. Also, there is healthy increase in the middle class
population in developing nations. This is going to be a fuel for growth in the
demand for Textile Industry in future.
Demand of Yarn from China
China and Hongkong are one of the largest importers of our 100% cotton yarn. Also, there is shift in the policy of China and they are already in the process of slowing the investment in spinning industry and to focus more upstream on the value chain. Indian Spinning Industry will gain directly from this China policy with increase in cotton yarn exports.
Your group is a dab hand in yarn business. Please apprise us with your outlook on global yarn market shaping amidst upheavals in raw material industry.
Growth in India
We have been showing a healthy growth of over 8%
for the last 10 years and, the way things stand today, it is going to continue.
Also, there is massive increase in middle class population with good spending
power. Moreover, of late there has been increased focus on the spending power
of the village population which is about 70% of the Indian population. Increase
in the share of organized retail will also increase consumption. India has a very
low average per capita consumption of fibres which is also expected to grow
with the growth of the middle class.
There is huge latent demand within India for the
Textile products and in times to come, we will see major growth in demand from
within.
Other Fast Developing Nations
If we look at the other promising developing
nations like Brazil, Indonesia, Russia etc., although they are producers but not
economical producers of yarn, sooner or later it will become imperative for
them to source yarn from more economical suppliers and to focus up on the value
chain. India stands to gain from it.
THREATS
European and USA Story
Financial crisis in Europe and USA is going to affect
demand for Apparel and Textiles in general which will affect India’s yarn
demand. How these countries will come out of the crisis and what is going to be
their future consumption pattern will affect us in big way.
Uncertain cotton prices
In textile Industry the price, design and
delivery of the end product is fixed in advance of 6-8 months. With current
uncertainty and fluctuations in the prices of the raw material there is big
pressure on current business model. It is going to be a challenge to manage in
times to come.
Also, management of inventories is going to be a challenge. We have already seen devastating effect of such fluctuation in the last financial year.
(Contd.)
Your group is a dab hand in yarn business. Please apprise us with your outlook on global yarn market shaping amidst upheavals in raw material industry.
Government Policy
More than ever before, industry needs a stable
and consistent policy towards fibre exports and also policy of promotion of investment
in spinning as this is one of the most capital intensive segment of the industry.
Some of the steps taken like TUF scheme are helping. Also, some of the policy
indications from Karnataka and Maharashtra government will help in attracting industry
in these regions. Gujarat is also expected to come out with a policy very soon
to promote spinning industry.
But, there has been no clear visibility as far
as general fibre and yarn policy is concerned with many rumors driving the
business sentiments rather than the fundamentals.
Industry needs less of red-tapism to grow; however, there is increasing tendency towards red-tapism with licensing system etc. Thus, there are increasing inefficiencies and delays in the system.
Cost of Capital
Spinning is highly capital intensive industry
and the cost of borrowing affects the bottom line of the business.
High level of inflation and bank interest rate will pose challenges in times to come.
Labour laws and
availability
Industry is facing severe shortage of labour since the last 4-5 years. These issues have lead to drastic cut down in production. More flexible labour laws and policies to promote availability of labour are going to be a challenge.
Availability of Power
Power is important component in the spinning industry.
It is the 2nd most important input cost in the production of
the yarn after raw material and the availability of assured power at reasonable
prices in coming days will be challenge to face.
Business is seeing opportunities in the threats; we are passionate and skilled spinners. Also, we are sitting on good fundamentals, I am sure this industry will find its way through these turbulent times. We would come out of these uncertain times emerge stronger than ever before.
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Published on: 09/05/2012
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.
