With the launch of a large garmenting hub with a monthly capacity of 3 million pieces, Arvind Limited is making a strategic but organic shift from a leading fabric maker to a top garment maker. Speaking to BusinessLine, Punit Lalbhai, its Executive Director, shares his insights on the transformation taking shape in the company and what is in store for the investors. Excerpts:
What is the significance of the latest investment in garmenting?
Our textile journey is in the midst of a transformation. There is a huge opportunity to create value in textiles going forward. Garmenting, being an asset-light model, matches our growth vision. Though most of our garment units are in Bengaluru, some are in Indore and Ethiopia too. In Gujarat, we are taking the first strong step in garmenting. We are one of the largest fabric players in the world with over 300 million meters of annual fabric making capacity. But we are only 10 per cent vertically integrated. We want to convert more and more of our own fabric into garment, which allows us to strike a more strategic connect with our customers. So, we are dramatically expanding our garmenting capacity as part of our verticalisation plan.
What is the market potential for garmenting and what new markets do you plan to tap?
At the new facility in Bavla, there will be two units. One will be denim to make jeans for our domestic and international customers and the second unit is where we are setting up our sportswear and athleisure facility. It [the unit] takes in high performance synthetic yarn and makes knitted and woven products for sportswear and athleisure brands globally. This is a completely new segment in India, so it will have a new set of customers. It is also the fastest growing segment in textiles, globally. For us, it is almost like adding a new business vertical. There are existing tie-ups with all the top global sportswear brands.
How will you position yourself in the domestic and global markets?
Our potential export markets will be the US and Europe, but India is a fast-growing market too. Most of these products are currently imported from China, Taiwan and Indonesia. This will be a big boost for localisation drive. With this facility, we will be able to serve Indian requirements very fast. Our business mix will be 70 per cent domestic and 30 per cent exports.
Garmenting being a labour-intensive business, how do you plan to source labour and maintain productivity?
At full capacity, we should be employing about 12,000 people — mostly women from tribal areas. We will train these women at our own in-house learning centre and encourage them to upgrade their skills to work for higher employment. We are working closely with the tribal development department to identify the regions to source women workers. We will also directly recruit from the tribal districts of Panchmahal, Godhra and Narmada. Our pilot project with 500 women has been very successful with reduced absenteeism and attrition. We are implementing a residential model for women, wherein we will recruit fresh graduates and enrol them for skill development also.
Now that you are going big on garmenting, what is in store for investors?
As a conglomerate, we have been incubating many businesses and our cash flows have been going towards building the new businesses. Our brands and engineering businesses now have strong cash flows of their own. So, we announced the de-merger. For textiles, we will have a lot of cash available for reinvestment, and this will completely transform the business and put it on a high-growth trajectory. We will also be investing in innovation to bring a new, game-changing technology. We are investing in parts of the value chain where the asset intensity is low but whose strategic importance from a customer’s view point is high.