Interview with Aditya Goyal

It is a very different situation compared to how we have seen wallet volatility or market perceptions changing in the past, especially pre-pandemic. Today, there is a significant amount of volume in the market. For the first time, I think manufacturers are being able to pass on the costs. Customers also now realise that there is an exorbitant increase in price, and they need to convince themselves as well as their end customers about the increase in prices. Today, everyone in the entire value chain must be going through a little bit of pain, primarily because everyone’s working capital requirements have got stretched tremendously. But because the costs are being able to be passed on to the yarn manufacturers, and from there to fabric manufacturers and then to the end consumers, there is momentum in the business. But how long will this momentum last is difficult to predict.

Apparel industry is the only industry which over the last 35 years has seen a steady decline of prices year-on-year, where as inflation has been there over all these years. So, from that angle a significant correction was already overdue for this industry. The paradigms have to change because if we had continued where the industry was moving in the past, i.e., of reducing prices every season, it was not a sustainable solution. In today’s situation, many people might think that this is not sustainable, but this is where we should have been gradually over a period of time. Hopefully, this will bring in the actual concepts of sustainability into the business which until now had seen an increasing amount of fast fashion at the expense of durability and quality.

Not only indigo but all apparel segments are equally responsible when it comes to saving the environment. If bad product processes and bad raw material are being used in the denim industries, then such processes are also being used in the rest of the apparel industry. Now, there is increasing prices of raw material, and at the same time there is tremendous amount of innovation which is going around in all industries towards reduction of the entire environmental footprint. With respect to both water consumption and chemistry consumption, a lot of work is currently going on, and gradually adoption of these technologies is also happening. Over the next four to five years, most of these technologies which are significantly impacting the overall energy and water footprint are going to become mainstream. Once that happens, we will definitely see a significant amount of change. Something like recycled cotton has started becoming mainstream now. We are also seeing a whole lot of scaling up projects happening on regenerated viscose. Once all these products start to gain a significant scale and they become mainstream, a whole lot of the challenges that we currently talk about will definitely be reduced. If there is an improvement in the process, denim production is bound to go eco-friendly, but going 100 per cent eco-friendly might take another ten years. Every year, we are going to see incremental changes. There will always be some brave first movers who are going to adopt and show the path, and then automatically everyone else will follow.

There are no actual numbers, but my guess is that India’s production capacity has reached more than two billion metres. Of this, close to a billion metres or plus is being consumed in the country with the balance being exported. Compared to India’s huge population, per capita denim consumption in the country is still very low, and it is bound to grow at the rate of 15 per cent CAGR over the next four to five years.

We have an installed capacity of close to 30 million metres per annum, out of which we are roughly utilising 20 million metres per annum. Our focus is not to grow up on the volumes, but to bring much better value into the business. Our aim is to make sure that at least we stay true to the words of sustainability, and try and make better products using our existing capacity rather than just try to increase our margins by increasing capacity and then getting into the rat race of volume changing - volume driving.

The industry should not expect too much from the government, rather it needs to find its own way. In spite of all the challenges that it faces, the resilience in the Indian textile industry is significantly high. With the government bent on signing a lot of FTAs, we should see improvement in textile exports. We should be able to get some amount of business that we were previously losing to our regional competitors who enjoy duty-free advantage.