How often does the organization assess its strengths, weaknesses, opportunities, and threats to understand the current business climate?
SVP Global Ventures carries out a micro review of its operations in the given market scenario, on a weekly basis which is followed by a monthly and quarterly review and assessment of company’s business strengths, weakness, opportunities and threats to adapt quickly to dynamic business environment. This allowed the Company to be rebound its operations very quickly from the COVID -19 pandemic impact. After shutdown due to the pandemic, the company was able to start its operations at Jhalawar units on 20th April, 2020 and was further able to scale up operations to full capacity by July 2020. Most of the Spinning mills after the lockdown cut production by almost 40% due to subdued demand, however, the company was able to leverage on its vast sales distribution network in India and overseas to selectively focus on more profitable markets and maintain production.
Also, as part of its overall business strategy, the SVP Global’s focus, over the last few years, has been on expansion in high margin compact cotton yarn manufacturing over traditional yarn. Our constant efforts and investments has led to change in this business shift and has resulted in improvement in EBITDA margin from 6.1% in FY 2017 to 13.2% in FY 2020.
How well does your organization utilize its people as an asset to help it improve, stay competitive, and strategically meet goals?
People has been the core strength of our organization. The company houses a highly skilled workforce and management team, which have a strong focus on automation and adapting to new technologies. The management and operational team, with over 20 years average experience in the Textile sector, has been a core enabler for us to work towards the collective goal and vision of the company.
How well does the organization strategically differentiate from the competition in terms of the capabilities of its product?
The company is mainly into compact cotton yarn which is the highest quality of cotton yarn in the world. The market for the same is different than traditional yarn and the margins way better than traditional yarn. It is basically advanced technology which improves the product quality and operational efficiency which enhances the margins. The company’s plants are equipped with latest and state of art manufacturing capacity and uses artificial intelligence which enables higher quality and operational efficiency. Some of the additional features in our machines, as specified below, is not available with any of our competitors.
- Spin Connect to access and control the data globally on any smartphone or ipad with online machine software service support service support from LMW for Open End Project (Blow Room to Draw Frame) and Ring Project (Blow Room to Draw Frame and Ring Frame)
- Energy saving kits with IE4 motors and Silent Spindles with Credo+ rings
- Linkconer has the highest configuration with features like Computer Aided Metering and Computer Aided Package and with RFID chip in each caddy to identify rogue spindles
- Loepfe Clearer includes Lab Pack, Polypropylene sensor and Mill Master on every drum
- Random Automatic System with PLC control of Package trains
- Autocoro machine: Twelve synchro piecing and all machines with seam less lot change
Further, the company’s Yarn output (40CCW Weaving) per Spindle, is at around 153 gms-154 gms, which is the highest in the Industry. The company also has maximum certifications for its products from key quality assurers related to textiles such as Organic, BCI, OEK-TEX STD.100, Fair Trade and SUPIMA Gold. Having these certifications establishes our unit as one of the highest quality, HSSE standards and results in large brands and premium customers purchasing their yarn requirements from our unit as compared to our competition.
Company has also recently been accredited as an approved supplier for IKEA which is a testament to the company’s products, material, and services adherence to minimum environmental, social, and working conditions requirements.
The company has also been geographically diversifying its operation to benefit from various operational efficiencies arising out of strategic location in those markets. The company’s plant in Oman benefits from lower power costs and provides other logistical efficiencies that enables the company to have higher operational efficiencies relative to peers.
To sum up, the company is differentiated from its competitors in terms of its technology, product mix, output, quality, certifications and also in terms of costs, which enable higher sustainability and competitive edge over peers.
How clear is your vision for what corporate responsibility should be like in your organization in the future? Is the direction that the organization wants to go in clear and understandable?
Business has not been the only aspect of our founder ShriVallabh Pittie’s personality. He always wanted to give back to society and chose to lead by an example. A natural giver, he built many charitable organizations that contributed to the welfare of his hometown, Nagaur. When famine struck Rajasthan, he left behind all his business activities and travelled to Nagaur. He went door to door with camel tanks and fed water to his fellow residents, helping them out in their dire need. This act of his is still lovingly cherished till date. The people speak of his devotion and dedication to everyone's well-being. He also went on to build several temples for devotional purposes. He even donated huge amounts of land known as Gochar Bhumi, for the grazing of cows. He also contributed for the development of Dharamshala and Hospital in Jhalawar. His dedication to his values has led to the thriving of several individual businesses and enterprises. They truly reflect the legacy that we proudly uphold today.
Carrying on with this legacy, the company has set up its plant in Rajasthan at Jhalawar, which is classified in the “most backward area” category. The company operations have generated significant direct and indirect employment opportunities, leading to socio economic development of that region. The company has focused on women empowerment. The company has recently taken up 1,000 Omani women for training and employment purpose at its plant in Oman. We are proactive to the global need for sustainable practices. The company runs a subsidized food scheme “Jimosa” for the poor and labors, in Jhalawar. All our plants are Non-hazardous and come under the Orange category plant declared by the pollution department. The operations of the company result in zero waste. The company is committed to reduce carbon footprints and has already installed 5.4 MW captive solar power project in Jhalawar to curb release of CO2 emissions by 7,317 tonnes per annum. The company is looking at expanding the solar power capacity at other plants as well
What was the rationale behind selecting Oman for expansion and what is the current level of development for each phase of expansion?
The company has set up its manufacturing capacities in Oman to benefit from various logistical and operational efficiencies arising from operations at Sohar Free Zone, on the global textile trade route. The advantages are as under:
- Lower power cost (almost 40% lower) relative to India.
- Strategic location at the center of the global trade routes between Europe and Asia
- Location next to Sohar Port, giving a major competitive advantage for reduced logistics costs, as sea freight is very low compared to road transportation costs.
- Land leased for 25 years (renewable) at economical rentals with rent exempted for the first 3 years.
- Lower cost of borrowing
- Income Tax exemption in Sohar Free Zone for up to 25 years
- Sohar Free Zone offers all regulatory clearances through its One window clearance which helps to setup the project in a quick and efficient manner as well as for managing ongoing operations
- Access to markets which are which are not otherwise accessible from India due to political and diplomatic reasons as well as due to trade barriers with neighboring countries like Pakistan, Turkey etc.
- USA is one of the largest markets for textile products and Oman’s FTA with USA is beneficial in this regard.
- Oman has a stable & friendly diplomatic ties with all trading partners i.e. USA, European countries, Saudi Arabia, UAE, Iran, India, Pakistan, China etc.
The company has already implemented Phase 1 of Oman Project i.e. 150,000 spindles and 3500 Rotors at a Project Cost of USD 150 mn. Oman Phase 2 shall be a replica of phase 1 and shall double the existing yarn manufacturing capacity in Oman at an additional cost of USD 150 mn. The company is currently doing financial closure for Phase 2 project and expects to complete Phase 2 project by March 2022.
What would be the topline of the company post-Oman expansion and does the company have any plan to do a further extension in Rajasthan plant?
Post Oman Phase 2 expansion, the topline of the company from Yarn manufacturing should be in the range of Rs.2500-Rs.2800 Crs. The company is also exploring setting up garmenting units in Oman and India. The company does not have any immediate plans for expansion of yarn manufacturing capacity in Rajasthan.
How was the journey of the company and key milestones?
Over the years the Company has transformed itself from textile trading company to become one of the world’s leading manufacturers of compact cotton yarn. The company’s foray into Yarn manufacturing started with the acquisition of Palani unit in Tamilnadu in 2007. This was followed by acquisition of further units in Coimbatore and Ramnad in 2010. The company has set up its latest, state of art Compact Cotton Yarn manufacturing capacities in Jhalawar, Rajasthan in 2016/ and Oman in 2019.
How would you see the textile industry growing going forward and as per you what are the key advantage does India has over China in the textile sector?
Textile Industry caters to the essential life elements of Clothing and the demand continues to grow with the increase in population. China, which is the largest manufacturer of Yarn has in recent years lost its competitive edge due to rising costs of power and labor. The gradual shift of textile manufacturing from China has got accelerated in recent times. Further, post COVID, with made in India drive and China plus one strategy across the globe, large orders for Yarn has shifted to India and will benefit yarn manufacturers with latest and sizeable capacities.
What all benefits did the company received from state government while setting up plant in Jalawar Rajasthan and what is the current utilization and capacity level?
The company received following benefits, under Rajasthan Investment Promotion Scheme (RIPS) 2014 and Customized Package, while setting up the plant in Jhalawar, Rajasthan:
- Interest reimbursement under textile policy
- Exemption from payment of 100% of Electricity Duty
- Exemption from payment of Land Tax, Mandi Fee, Stamp Duty on purchase or lease of land and conversion charges
The Rajasthan Plant’s manufacturing capacity consists of 150,000 Spindles and 2,400 Rotors and the plants are running at more than 95% capacity utilization.
What are the key risk for your business in India and Oman and what is the approach of the company to counter it?
The key risks in our business is the fluctuation in raw material prices and global competition.
However, please note that generally the prices of Cotton and Cotton Yarn have high corelation and moved in tandem hence it has been a pass through for us. The company majorly covers for cotton as per the order booked for the customer.
As far as global competition is concerned, the Group is into manufacturing of Compact Yarn which is the highest quality of cotton yarn. Moreover, the units at India and Oman are “State of Art” with most automated technology in the world. The company’s products are registered/certified for all the major key quality assurances related to textiles, including IKEA. Higher productivity and better quality product and operational efficiency which helps in having competitive edge.