Riju Jhunjhunwala
Chairman and Managing Director RSWM Ltd
‘China plus one’ model has proven to be beneficial for Indian textile industry
LNJ Bhilwara Group, which started as a textile mill in Rajasthan in 1960, is one of India’s oldest and most diverse business conglomerates. The Group includes RSWM Limited, which is now one of India’s leading textile companies. In a candid interview with Fibre2Fashion, RSWM’s chairman and managing director Riju Jhunjhunwala talks about demand for yarn, ‘China plus one’ strategy, and further expansion plans.
Has the demand for yarn improved in comparison to the sluggish phase seen earlier this year?
The demand for yarn has been mainly driven by the spike in the demand for school uniforms in the domestic market due to the reopening of school’s post-pandemic. In addition, ‘China plus one’ model adopted by countries to diversify their investment has also proven to be beneficial for the Indian textile industry. Our financial summary for the first quarter of FY23 stood at ₹1,024 crore, up by 38 per cent on a year-on-year (YoY) basis. Looking at the current market trend we are optimistic about the future. The rise in demand and diverse range of products is helping us deliver the best-ever results in FY23.
How would you describe the Indian textile market at present given the economic and geo-political challenges?
There is a possibility of a recession in many developed countries, which can have a trickle-down effect on the global economy. This might impact the Indian textile market as well. However, RSWM Ltd is prepared for all kinds of challenges.
Has the crisis in Sri Lanka and the trade war between China and the US benefitted the Indian textile market?
The impact of the ongoing crisis in Sri Lanka has not led to any major implications on the Indian textile market. As far as China plus one strategy is concerned, it is creating several diversified opportunities for Indian players. Considering the growing demand for Indian textile products in the wake of this policy, India may soon become one of the top textile exporters in the world. Additionally, the Central government’s schemes and the ‘Make in India’ initiative are also helping to shape the country’s image and make it the preferred textile manufacturing and exporting destination.
Have you witnessed an inflow of orders from new markets in recent period?
Yes, we have.
You invested in a knitted fabric line last year. What are your current capacities?
In phase one, LNJ Knits offers a manufacturing capacity of 6,000 MT. We will gradually increase the production capacity over time. With unparalleled expertise earned by being pioneers in the textile industry, we offer our clients the choicest blends ranging from cotton, cotton blends, modal, high-performance synthetics, spandex, nylon and others, produced using yarns made with exceptional fibres.
Are any further capacity expansions in the pipeline for RSWM?
The company has invested around ₹410 crore in the process of modernisation and balancing equipment of the denim, cotton melange yarn, and knits units. These projects commenced commercial production on July 1, 2022. The expansion plan is expected to increase our top line by around ₹700 crore per annum. Besides, we will invest an additional capex of ₹315 crore for the expansion of spinning capacity in Banswara. This project is underway and expected to be operational in FY24.
What has been your growth story for the last two fiscals and what is the target set for the next two?
The last fiscal year turned out to be quite profitable for us. With our sheer determination and strategic business model, we have recorded the highest-ever sales led by volume and value growth. The export sales increased by 87 per cent in FY22 to ₹1,419 crore, while the domestic turnover increased by 27 per cent YoY compared to last quarter.
This year also we are expecting to generate higher revenue. In the first quarter of FY23, we reported sales of ₹1,024 crore, up by 38 per cent YoY, which is mainly contributed by higher domestic sales. Our EBITDA (excluding other income) stood at ₹109 crore, up 32 per cent. EBITDA margin contracted 30 bps on account of higher input costs during the quarter. The profit share in the domestic and export market is further expected to rise later this year due to unrestricted festive gatherings and weddings after two years of lockdown due to the pandemic. Additionally, we are planning to upgrade and modernise all our units by the end of this year, which will increase our production capacity and generate more revenue in the coming years.
What would be your suggestions to the Indian government to help overcome the current challenges of the Indian textile sector?
No Suggestions. The Indian government has already taken several initiatives to help the textile sector face the challenges. Some of the recent initiatives taken by the government have been beneficial to the Indian textile industry. These are:
1.Scheme for Capacity Building in Textile Sector (SAMARTH)
2.Amended Technology Up-gradation Fund Scheme (ATUFS)
3.National Technical Textile Mission (NTTM)
4.Production Linked Incentive (PLI) Scheme
5.PM Mega Integrated Textile Region and Apparel (PM MITRA)
6.Scheme for Integrated Textile Parks (SITP)
7.Integrated Processing Development Scheme (IPDS)
8.Special Package for the Textile and Apparel sector
9.Various sectoral schemes to support traditional textile sectors such as handlooms, handicrafts, silk and jute.
Published on: 29/08/2022
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.
