Domestic market key area for us, says Dipali Goenka

The Indian textile sector has witnessed significant challenges this year, including duty drawback, increase in minimum support price (MSP) for cotton and cheap imports from neighbouring countries. While a weak Indian against the US dollar gave export-oriented units a breather, the upside was mitigated owing to other challenges faced by the textile manufacturers. Dipali Goenka, chief executive officer and joint managing director, Welspun India, spoke to Ashish K Tiwari, about the overall business scenario and more. Edited excerpts.

How has the year been for textile industry?

The textile sector has witnessed quite a few ups and downs, but that's true for a lot of other industries as well. We had projected cotton prices to be around Rs 38,500 per bale, but they have reached Rs 46,000 per bale. There are concerns around Brexit for a while and we are looking at how it will pan out globally. Duty drawbacks among a few other things was another area of concern. Talking about Welspun specifically, our American markets did pretty well and we have seen decent growth in our numbers.

Did cotton prices pose a major challenge?

Based on what we budgeted and planned, cotton did take its toll, but the upside from a weak rupee helped balance it out. Overall, the markets were challenging in the UK, Europe and a few other parts of the world, however numbers from the US market were good. So it has been a leveller of sorts, neither very good nor very bad. I also wouldn't say 'Oh, we had a fabulous year'. No, it hasn't been like that, but it has been a decent year of evaluations and looking at how the businesses are getting along.

Will 2019 be any better?

We will have to see how the cotton prices are next year. We see the minimum support price at Rs 44,000 right now. In terms of international markets, the UK appears to be a bit weak, but I think other markets are looking pretty good. The Indian market is certainly growing thing and we see a definite upside coming in.

Are your margins sustainable, given the increase in input cost?

Our margins are in the 17% to 20% range, and that's the general guidance we'd stick to.

Could you tell us about your domestic business?

Domestic business is a key driver and a crucial growth area for Welspun. The market is already witnessing a growth of 25-30%. Currently, about 6% of the revenues come from the domestic market and we plan to increase it to 20% in the next couple of years. We have Spaces brand that is positioned as mass premium, but we are also looking at a mass brand that actually will target the bottom of the pyramid. Markets in Tier III, IV and beyond will be catered to through the Welspun brand. We have done a very focused, intensive consumer research. We created products including towels, sheets, beddings, bath and area rugs among others and took them to certain markets across India to get consumer feedback. The products have been tweaked based on the feedback and launched in Mumbai and Pune. We gradually plan to take these products across the country.

Where are you manufacturing the mass market products?

It will be done from one of the units. Given the volumes required, it could be done at our Anjar facility which is a large production unit. We are still working on the final details.

You will also look to export the mass market products?

Yes, definitely. There are quite a few markets globally where these products will do very well and we will certainly look at tapping them.

How is the online channel working for your products?

The online space has been pretty interesting for us. We are working with Myntra, Flipkart and Amazon for online sales. In fact, Myntra is our main partner for Spaces. Interestingly, online sales have been very encouraging in the UK and US markets and we are looking to aggressively pursue this channel across other geographies as well.