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IMPRESSIONS from a Cross-section

Mr. Anil Sharma
Mr. Anil Sharma
CEO
Winsome Group

Company Details

Business Area:
Yarn & fabric manufacture
Turnover:
USD 75 million
Export Capabilities:
50% export, 50% domestic
Clientele:
Far East, Bangladesh, Srilanka, Mauritius, China, HongKong, Egypt, Morocco, Tunisia, Turkey, Europe, South Africa, East Europe, Russia, Latim America, Central America & North America

 

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. 

(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.

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.