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The Emerging India Awards have encouraged SMEs to dream big and become big. This year the awards focus on SMEs that have had the vision to thing global and go global. One such story is that of Susindran who after the completion of his Chartered Accountancy degree, headed for a job with a textile firm in the small town of Karur in Tamil Nadu. In 1992, he set up Sabare International which has, in the past 16 years, emerged as one of India's leading suppliers to the US home textile industry. It has US retail giants such as WalMart, Target, JC Penny, Home Depot and Kohls under its belt. In 1992, its annual revenue was just Rs 30 lakh that grew to a whopping Rs 243 crore by 2007, a growth of more than 50% YoY.

 

However, China is posing to be the biggest threat for Indian SMEs in the home textile category. The US procures 70% of its products from China, 20% from India, 5% from Pakistan, 3% from Portugal and 2% from other countries. Adding to this is the woe of a hardening rupee, which is currently trading at Rs 39.8 to a dollar. The rupee has slid from Rs 44 in the past one year.

 

Due to the rupee appreciation, Sabare International had to hike its products prices by 15% last year in an attempt to keep profit margins intact. However, the company paid a very high price for this move. Global brands cut down the sizes of orders and sourced from China instead. Sabare's sale suffered by 25%.

 

India's biggest business awards, the Emerging India Awards, seek to recognize the achievements of small and medium enterprises - the backbone of India's fast growing economy. Last year the Emerging India Awards encouraged SMEs to dream big and become big. More than one lakh SMEs stood up to be counted and were felicitated by the Indian Prime Minister, Dr Manmohan Singh.

 

This year the Emerging India Awards has gone global. SMEs that have had the vision to think global and go global will perhaps be able to shine in this fast globalizing world of business. CNBC-TV18 brings you some such success stories.

 

By Priyanka Ghosh, CNBC-TV18:

 

Karur is a small town in the heart of Tamil Nadu, about 150 kilometers away from Koimbatore. It is the largest manufacturer of home textiles in India and produces home linen worth Rs 3,500 crore every year. It also houses 350 industries that together employ more than one lakh people.

 

Susindran did not come from a family with a business background, but he always wanted to start his own enterprise. So after finishing his Chartered Accountancy degree in Bangalore, instead of starting his own practice, he headed for a job with a Karur based textile firm. He felt he needed the experience to understand the textile industry. In 1992, after having worked for four years, he set up Sabare International with a capital investment of just Rs 10 lakh.

 

Karur is the most popular cluster of home textiles in India, exporting materials worth Rs 5,000 crore every year. It is not surprising that Susindran chose this town to set up his manufacturing base. Besides, he also held from a small town and wanted to bring revenues back home.

 

Sabare has two manufacturing units in India, one in Karur and the other up north in Panipat. Together these units produce 18 million meters of home textile and floor covering. The company employs 2000 people, 70% of whom are from rural India. Most of them stay within 50-60 kilometers of the township and earn about Rs 120-150 per day.

 

In the past 16 years, Sabare has emerged as one of India's leading suppliers to the US home textile industry. It has US retail giants such as WalMart, Target, JC Penny, Home Depot and Kohls under its belt. In 1992, its annual revenue was just Rs 30 lakh that grew to a whopping Rs 243 crore by 2007, a growth of more than 50% YoY.

 

The company exports all its products with 70% going to the US, 7% to the UK, 8% to France, 9% to Germany and 6% to the Latin American countries.

 

The USD 15 billion US home textile industry is the biggest in the world and just 20% of the business is outsourced to India while 70% goes to China. How are small and medium industries like Sabare International fighting Chinese prices?

 

China is India's biggest threat for SMEs in the home textile category. The US procures 70% of its products from China, 20% from India, 5% from Pakistan, 3% from Portugal and 2% from other countries.

 

Susindran , CEO, Sabare International said, "The US markets need mass production for their supply. Chinese vendors have gone ahead and invested in huge infrastructure because of which they are able to give continuous production at a very low price. Added to that, they have also mastered production efficiency and when it comes to logistics, China is closer to USA and so it consumes less number of days in transit."

 

Adding to that is the hardening rupee. Currently trading at Rs 39.8 to a dollar, the rupee has slid from Rs 44 in the past one year. The Yuan on the other hand is now trading at 7.1 to the dollar. In the past year, it has fluctuated between 7.1 and 7.75, averaging about 7.5.

 

Due to the rupee appreciation, Sabare International had to hike the prices of its products last year by 15% in an attempt to keep profit margins intact. But the company paid a very high price for this move. Global brands cut down the sizes of orders and sourced from China instead. Sabare's sale suffered by 25%. And so the company has had to rethink many of its strategies to stay alive in the global markets.

 

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