Diwali will be good for textiles this year: Sanjay Lalbhai

Sanjay Lalbhai, chairman and managing director of Arvind Ltd, is optimistic that at least the textile industry will do well this Diwali, despite the inflation. Himansh Dhomse of DNA interviewed the textile baron about the prospects for the textile industry after the delayed monsoon, the reasons for the recent workers’ strike at his company and his plans for the future. Excerpts:

On the impact of delayed monsoon on the output of cotton
and its prices.
Cotton output in India may decline but its prices are likely to remain stable as there has been a bumper cotton crop globally. Moreover, China has drastically reduced cotton imports from India; it is now more interested in yarn from our country. Hence the demand for cotton in the domestic market will be higher this year. If demand exceeds supply, we can import cotton and that too at lower rates.

On imported cotton being cheaper than the domestic
variety.
Currently, domestic cotton costs Rs38,000 per candy (356 kg) while imported cotton comes for Rs35,000 per candy. The bumper cotton crop globally will ensure that its prices in the domestic market remain at similar levels even after the domestic crop arrives in the market.

The impact of inflation and slowdown on demand for garments this year.
The slowdown has lasted longer than expected. The excise duty levied last year pushed up cotton prices by almost 100%. As a result, garments are already expensive by around 20% this year. The growth of the textile industry has also slowed. But we are optimistic about Diwali. For a long time, the consumer has held back on spending. Hence, we expect good
demand during the festive season. Diwali will be better this year.

Whether he has received huge orders ahead of Diwali.
The industry has got orders not only from the domestic market but also from abroad. In fact, as of now everyone in the industry is sold out for the season. The Indian rupee has depreciated drastically in the last one year. It may go down further in the coming months, making India more competitive in the global market. For this reason, the US and European countries have given huge orders to the textile industry in India and Bangladesh.

Whether Arvind is considering expanding capacity to meet the demand.
We produce 120 million metres of denim fabric and 120 million metres of other cotton fabric. We want to have additional capacity of 10 million meters for denim. For this, we will outsource production. Producing garments in India is expensive and cannot be done in huge quantities. Hence we will make the fabric in India and export it to Bangladesh from where garments are exported to Europe.

The reasons for the labour strike at Arvind three months back.
High inflation was the reason for the strike. A hike in wages was due and negotiations were already going on but the talks took slightly longer and the workers could not wait. We realized that with salaries of Rs8,000 per month, they had every reason to go on strike. Hence, we have decided to take steps for workers’ welfare after giving them a hike.

Steps taken by Arvind for workers welfare.
We did research on their lifestyle and living conditions. We found that most of their spending was on healthcare and education. We have decided that the lives of the 7000 workers who live in the 7 areas around the mills need improvement. We will try to help them in improving education, healthcare, water, medical and other basic necessities in those seven areas. It may take a few years but there will definitely be a change. We will first implement our decision for Naroda workers and then for Santej workers.

The impact of the wage hike in the textile mills of Ahmedabad on the cost of fabric.
There hasn’t been much impact. But the price of garments may rise marginally during the festive season due to other factors such as rise in fuel cost.

His expectations from his sons who have also joined Arvind.
They have chosen their fields. Punit, my older son, is looking after technical textiles, engineering, agriculture business and CSR initiatives of Arvind Ltd. Kulin, my younger son, has joined the company this year. He will look after the retail business of the company.