2011 to be turnaround yr for textile cos: Gokuldas Exports

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2011 to be turnaround yr for textile cos: Gokuldas Exports

In an interview with CNBC-TV18, Rajendra Hinduja, Managing Director, Gokuldas Exports and Sunil Khandelwal, Chief Financial Officer, Alok Industries, talk about the Indian textile industry and give their outlook going forward.

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Excerpts from Midcap Radar on CNBC-TV18 Watch the full show » RELATED NEWS Govt unlikely to offer more stimulus to textile ALSO READ See latest News about Gokaldas Export See previous management interviews See what other Experts & Brokerages are saying about Gokaldas Export Gokaldas Export BSE | NSE 31/05/12 Are Mutual Funds betting on Gokaldas Export?

Q: Some would say whether the Americans want to buy cheaper clothes or not buy clothes at all that cannot really matter because the kind of brands you manufacture are really starting to sell in countries like India and China, so perhaps we should look at the kind of volume growth that would come in this high category rather than worrying about what the Americans buy or they buy basic or not buy basic?

Hinduja: Nike China, about 30% of its buying is sold in China itself. So if Nike starts selling in a big way in India they could be doing a lot of buying for the Indian market itself which will be a fashionable product.

Q: So there are a lot of textiles that are being made by the Eurozone, is that up for the grabs at all?

Hinduja: The EU manufacturing is going down drastically because of obvious reasons. Look at Turkey, it used to be a volume bigger than India, now it's got extinct, all the Turkish business are going with joint ventures in Portugal, coming to Sri Lanka, India and going to Vietnam or even Mauritius.

Q: What kind of a growth you can see over here, as Mr. Hinduja was pointing out is unlikely that the fashion gurus will perhaps start selling cheaper products, where would you see growth coming for you?

Khandelwal: You have to holistically look at the textile space. India is the only country in the world today who is having a cotton surplus and manufacturing textiles, except India all other countries like China, Pakistan, Bangladesh, Sri Lanka or Vietnam, everybody is importing cotton, the only other country supplying cotton is the US. Even in US the cotton production is slowly changing or going down because the farmers are moving to other crops. Now, given this situation if India is hugely cotton surplus in a sense that almost this year production is about 300 lakh bales, we are carrying forward about 75 lakh bales as inventory that is about 25% of our production and about 75 lakh bales we are exporting. So almost 50% of our production, we are not just doing any value addition to that. So that is a great opportunity, number one.

Second, in China, the overseas buying exposure on China has already gone upto 35-40% of their overall buying and now they are really looking at derisking their own model. In cotton textile, they have no option but to come to India and fortunately Indian players have realized that opportunity, the TUF (Technology Upgradation Fund) scheme has really helped us. We are seeing lot of expansions coming in. If today India can actually create capacity and do nothing, we have a market ready for it to take care of that situation.