Interview

'KSL and Industries will continue its dominance in cotton textiles'

After a prolonged depression, the domestic textile industry is now showing signs of revival. In an exclusive interview with Arbind Gupta, Mr Saurabh Kumar Tayal, Chairman, KSL and Industries discusses his company's future plans in the new environment

With margins getting squeezed, most of the major players are now moving up the value chain. However, in case of your company, you still prefer the commodity segment ?

Though it appears that we are just producing yarn and knitted fabrics, the fact is that in case of both these products, we are producing very fine cotton yarns, all above 60s. In fabrics also, our production line is aimed at high-value knitted fabrics which are used for export-oriented garments. Since both these products are primarily used for the production of high- value textile items, it won't be prudent to slot us among the commodity textile producers.

Why is that you still don't want to diversify into woven fabrics?

This is our conscious decision to remain in knitting which has got a huge potential both in domestic and international markets. In fact, currently there is a vast gap between demand and supply. Our present industry capacity is too little to meet the global demand. Moreover, only a very few players are into quality production. All this offers a considerable opportunity for KSL and we intend to leverage the same.

Why is KSL still confined to only cotton?

As part of our strategy, we as a group, will continue our dominance in 100% cotton, even as we may consider some portion of our business in blends in future. We want to be one of the largest cotton textile producers in the whole of Asia. In the next two years, we are adding around five lakh spindles to our existing capacity of one million spindles. With this expansion, our group will have almost 10 per cent of country's operational spindleage and consume 7-8 per cent of country's cotton production. We want to be the number one player in cotton textiles in the country.

Cotton futures despite all efforts have not evoked much response....

Awareness is still not to the expected level and that is adversely impacting the overall participation. In fact, the domestic commodity market still has a long way to go, even as things are of late moving in the right direction. I am very optimistic about the futures market. We as a group and a company will also intend to participate in this market but our approach will be a conservative one depending upon our consumption pattern.

How did your group manage to face the depression of recent times?

During all these difficult years, we continued to consolidate our operations as we were very much confident about the turnaround post quota. We were involved in quite a few mergers as well as acquisitions as we added to our overall capacity to meet the future market requirements. We are still continuing this effort and investing across the group in a very big way. As you are aware the textile manufacturing base is shifting to the Asian region from the West. This is the only way that one can compete in today's global market scenario. KSL and Industries currently has got a spinning capacity of 10,000 tonnes per annum (tpa) at 65,000 spindles, 19,000 tpa of knitting with 200 machines and 1,000 tpa of processing. The expansion project aims at adding 1,50,000 spindles to the cotton spinning capacity as also expanding knitting and fabric processing capacity. The company will also set up a captive coal-based power plant at Kalameshwar, Nagpur.

What kind of growth does KSL and Industries foresee after implementing the expansion?

For funding the project, we will avail the Textile Upgradation Fund (TUF) scheme. While Rs 400 crore will come as debt under TUF scheme, the balance of Rs 200 crore will be funded through equity and internal accruals. On completion of the aforesaid project, the company's textile business is likely to contribute Rs 300 crore to the net sales and Rs 30 crore to the net profit in the year 2006 and further to Rs 1,500 crore and Rs 75 crore by the year 2009.

Is the Indian industry prepared to face the recent change in global trade order?

The industry is undertaking the desired preparations on all possible aspects. I am very optimistic about the future prospects in the given situation. We have all necessary ingredients to contribute heavily to the global textile production. The government has shown a considerable interest in addressing various issues. I am confident that by 2010, country's exports will surpass the $50 mark.