Welspun India, the world's largest maker of terry towels, is now betting on the flooring business for its growth prospects.
"We believe our flooring business is going to be a game-changer in India with the kind of convenience and customisation which we are going to provide to customers and stakeholders such as contractors and the distributors and we believe flooring business is going to be our next growth engine," Altaf Jiwani, Director and Chief Financial Officer, Welspun India, told Moneycontrol.
Welspun Flooring will offer stone polymer composite luxury performance tiles, carpet tiles, wall-to-wall carpets and artificial grass.
In September 2019, the company commissioned its new flooring plant in Hyderabad, with around Rs 800 crore out of the planned Rs 1,150 crore capital expenditure already capitalised. The facility is spread over 27 million square meters.
Jiwani expects the new vertical to generate sales of around Rs 100 crore in the current financial year. The tile market in India is worth Rs 35,000 crore.
"This year it is more of a trial and sample of our flooring solutions, so in FY20 we should be getting a revenue of Rs 100-200 crore but in the next 4-5 years we are looking at about Rs 1,500 crores revenue from our flooring business," he said.
The company has roped in Bollywood actor Amitabh Bachhan as a brand ambassador to promote its products.
Jiwani feels flooring business will help Welspun India grow in double digits.
Jiwani has three expectations from the upcoming Budget.
The first expectation is a Free Trade Agreement (FTA) with the European Union, UK and US as these countries are a large market for textiles.
Free trade agreement (FTA) is a pact between two or more nations to reduce barriers to imports and exports among them. Under a free trade policy, goods and services can be bought and sold across international borders with little or no government tariffs, quotas, subsidies, or prohibitions to inhibit their exchange.
"We expect the Finance Minister to lay down the roadmap in the Budget. But the biggest one, which we are looking forward to is the FTA and negotiation of government which can swiftly negotiate the FTA with EU with UK as well as the US, which has a large textile market,” Jiwani said.
He believes once FTA is negotiated, it will open the floodgates for the new textile industry.
The second expectation is on the labor reforms front. “Our businesses are highly labor-intensive and a seasonality business. So we expect for some kind of roadmap for labor reforms or to provide kind of flexibility, so that other business loads can be managed properly,” Jiwani said.
The third expectation is about Merchandise Exports from India Scheme (MEIS) which was withdrawn retrospectively.
Merchandise Exports from India Scheme (MEIS) was to offset infrastructural inefficiencies and associated costs involved in the export of goods/products, which are produced/manufactured in India, especially those having high export intensity, employment potential and thereby enhancing India's export competitiveness.
Jiwan expects Finance Minister to announce an alternative mechanism for MEIS which will defray some of the costs ( including power cost, labor cost, infrastructure cost etc) and provide a level playing field to the textile exports.
Textile is one industry which is globally competitive, but some of these costs are creating some barriers. So, once those are resolved or mitigated, we can actually become a force multiplier for the exports,” Jiwani said.
From the economic perspective, Jiwani said that there is a need to induce credit flows in crisis-hit sectors such as real estate, NBFC and auto which will help induce consumption. He also expects a cut in the tax rates for individuals.