Arvind Mills Ltd, the flagship company of the Rs 2,000-crore Lalbhai Group, has been at the forefront of a turnaround in the textile industry.
The company put up an impressive show during the quarter ended March 31, 2003, posting a 278.2 per cent rise in net profits to Rs 38.01 crore.
The lifting of the quota system by 2005 is expected to further boost the fortunes of the domestic textile and apparel industry in the export market.
In an interview with The Smart Investor, Sanjay Lalbhai, managing director, Arvind Mills, speaks about fortunes of the company and the textile industry.
Post-quota system, how will companies like Arvind Mills, and the textile industry in general, be affected?
We believe that the abolition of quota will be a turning point for the domestic textile industry in general and Arvind Mills in particular. It will open the doors for India to global trade.
India is one of the most cost-efficient producers of garments in the world as manpower cost accounts for a significant portion of the cost of converting fabrics into garments.
The potential size of opportunity is so large that even after accounting for healthy competition, most of the Asian countries will benefit. Due to macro level changes in the industry, the sourcing pattern of garments has changed.
With 2005 approaching, brands in the US and EU are looking towards the Asia Pacific for sourcing garments. The sourcing model is moving towards countries with local fabric availability and low garment conversion cost.
Within textiles, garmenting is best suitable for countries like India, where skilled labour is available at lower cost.
Companies like Arvind Mills, which have composite facilities with large capacities in all major product groups, will definitely have an edge over other suppliers.
Differentiation in products and better customer service will be added advantages.
Arvind is uniquely poised to take advantage of the opportunity. It has established itself as a quality supplier of fabrics to leading international brands.
It is planning to move up the value chain and supply garments to international customers, which will enhance its profitability.
Exports amount to more than 50 per cent of your turnover. How do you see growth in this segment?
We have presence in all major markets across the world. With the abolition of quotas, the company
