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.

Traditionally India has a very long history of Carpet manufacturing out of using different styles like handloom woven, hand tufted, hand knotted and also in a small bit in machine made carpet manufacturing. The availability of the handmade carpet weavers is mainly concentrated in the carpet manufacturing areas like Kashmir, Bodhoi, Panipath, Jaipur etc.

Due to the protection of Indian Govt. on imports of woollen carpets and the export of the hand made carpet to Europe and America has helped these weavers to survive for a long in the country.

As the carpet are made out of different natural and man made fibres, it is not very difficult to find both of them easily in India. Birla Transasia, is mainly into machine made wall to wall woollen carpets and there is no competitors in this segment to the company in India.

The carpet industries in India is not very well organised and hence to find the exact data to assess market shares is difficult but, definitely we are vendors to all the major groups of hospitality Industries, Entertainment Industries (like Cinema halls & Theaters), Government & Private sectors.

It will definitely have a negative impact on the growth of the industry. In last 10/12 years or so we have seen lot of investment has taken place under TUF subsidy and industry has seen a positive growth. Except some months of recessions in 2008/09, industry has done well right from spinning to retailing specially, since 2004/05.

Still industry has to do lot of up-gradation in particularly processing sector which is highly critical in terms of offering products of international standards. We have also seen a very good growth in export front in last 5/6 years as we have started making better quality product in a most cost competitive manner which has helped us to bag many prestigious export orders. Lot of European and American stores have kept faith on Indian suppliers. All such business opportunity growth might face a big challenge.

Policy makers have always given importance to the industry petitions in past and I am sure that this time also they will give a huge thought before taking any final decision. Before taking any decision, policy makers will also keep in mind the facts that the sector is one of the largest and oldest one in the country, as well as it employs nearly 35 million persons (After agriculture is the second-highest employer in the country).

It contributes: 4% of GDP, 14% of industrial production, 9% of total excise collection and 16% of country`s total export earnings.

We are out of this business now.

Sustainable business, or green business, is enterprise that has no negative impact on the global or local environment, community, society, or economy—a business that strives to meet the triple bottom line. Often, sustainable businesses have progressive environmental and human rights policies.

The Yash Birla Group is committed to this concept and strive towards this goal in all its business venture. For instance, Birla Power have recently launched ECO-Gen range of generators, Birla Edutech set up India’s first eco-friendly Pre- School called “Globle Totters”. We have recently entered the wellness space with our flagship venture Birla Lifesciences which offers all natural product free from harmful chemicals under three categories viz – Personal Care, Ayurvedic Medicines and Nutritious food products.

All our companies comply with all the pollution norms and actively strive to nurture their environment and the community they operate in.

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