Textile firms bet big on organic cotton products

As exports demands for textiles made from organic cotton are high, the country's major export-oriented textile companies are turning towards organic cotton products.

But, since the supply of organic cotton is scarce in the country, the companies are taking various steps, including hedging and contract farming, to ensure they have regular supplies.

"The exports demand for organic cotton products is growing by 70-80 per cent annually. At present, India caters to 35 per cent of the overall demand of organic products worldwide which is around 42,900 tonnes a year," said Nikhil Sen, head, strategy & international business, Gujarat Heavy Chemicals (GHCL). Domestic demand, however, constitutes only 3 per cent of the total consumption, and is limited to the luxury segment only, he added.

GHCL is a fully-integrated home textiles-to-retail enterprise with presence in the US and Europe Union (EU), besides the Indian sub-continent.

Talking about the opportunities in this sector, Sen said, "We are looking at the organic market in the western countries. We see a strong demand within our business-to-business as well as business-to-consumer (retail) clients. We have got our home textile facilities certified for organic production from Control Union, formerly known as SKAL International. We are in the process of developing and launching our products internationally with our own brand name. We have recently launched a bed linen brand, Grace, in the domestic market, and are planning to add an organic line to that brand."

Similarly, Coimbatore-based leading apparel manufacturing company KPR Mills is also witnessing a surge in exports demand for organic cotton garments. "We have purchased 1.6 lakh kg of organic cotton for supply of organic products to our customers," said P Nataraj, MD, KPR Mills.

KPR Mills is a Rs 550-crore integrated garment manufacturing company which manufactures and exports carded and combed yarn, knitted fabrics and knitted garments.

The company has recently received approvals from Control Union Certifications, Netherlands.

The firms which do not have organic products are also seriously considering this option. "We have got inquiries from countries such as Japan and European countries for organic products. We are taking up manufacturing of cotton yarn out of organic cotton on experiment basis during the next season," said Kaushik Khona, CFO, Gujarat Ambuja Exports. The firm manufactures and exports cotton yarn globally.

Scarcity of organic cotton in the country is bothering these firms and they are preparing themselves for this. "We are expecting volumes of 1,950 tonnes of organic cotton in the current financial year, which accounts 13 per cent of the total harvest in India. We will be entering into contract farming of organic cotton from next season and we are looking at states such as Orissa for this purpose," said Sen. The firm is currently planning to procure the entire requirement of cotton from Gujarat during peak season when the quality is at its best and prices are lowest.

P Nataraj of KPR Mills said, "We are mulling over the idea of hedging. The company will design suitable hedging plan in the coming days."