Corporate / SME | Interviews

Journey from Yarn to Garment, integrated TVC unit in India…

Published: February 6, 2019
Author: TEXTILE VALUE CHAIN

Interview with SVG Fashions Ltd.

Shri  Venkateshwara Group (SVG) needs no introduction. It is one of the leading integrated textile value chain company from yarn to garment, not only making its mark in India but also worldwide by supplying quality products and correct solution to the textile industry. We had opportunity to converse with Mr. Rajkumar Agarwal, Managing Director of SVG Fashion Ltd.

TVC: What is your inspiration for starting the company?

RA:. This company is started by my father, Mr. Satyanarayan Agarwal. He is a veteran of more than 55 years. He  established SVG Fashion Ltd in 1978. He has deep knowledge of how a textile manufacturing industry works starting from spinning to garment. It is our family business. We have been working under his guidance and have gradually moved up the ladder and helped in growing the business. However, my father is the sole reason behind the existence of this business and he is still very active member of the company. Though he does not look after day to day operations but he looks after the overall business. He keeps encouraging us to grow and expand and diversify and control. Our company is very conservative in terms of leveraging. We are almost debt free. My father always tells us that do not take too much debt in textiles. We are following it and are benefitted by it. We are one of the most financially sound companies. We are among the top five companies with the kind of robust financial structure. We focus on coming up with new ideas. Less debt, more profit that is his core fundamental and for us if you ask who the inspiration is, he is the inspiration. Our father is the inspiration for whatever we are now…! Ours is the closely held limited company, not publicly held. Our shares are not with public, as no requirement of public funding.

TVC: What is the thought process & How it all began?

RA: I believe that we are not a product company, we are a solutions company. We believe in reaching out the end user and hence, we go across the globe and meet our customers to understand their problems and needs. And we design solutions that will meet customer needs and resolve any problem thet he is facing. and fill the gaps in the business.   we used to make woven fabrics. We noticed that there is a gap in the knit line particularly there was no one who was making polyester knits. Similarly Schifli embroidery, we entered in the Schifli embroidery in the year 2002-03. At that time there were very few factories of Shifley embroidery. Thailand was doing very well and Europeans used to love this kind of work. They were making laces and at that point there were few companies in India and they were not using latest technology. We identified the gap and capitalised on it.

The per capita consumption of furnishing fabrics was abysmal in india.there was a boom in the housing sector and foresaw the consequent boom in consumption of furnishing fabrics.So we entered furnishing fabrics. Once you adopt the problem solving attitude it directly changes your vision just production to  customer satisfaction and ultimately its gives you business.

TVC: What Challenges & Struggle you have faced?

RA:  Challenges change from time to time,  now we are in Sports tech it’s a challenge because it’s new in India  and polyester is perceived as not suitable for sportswear. we are having to create awareness about excellent wicking properties of suitably treated micro polyester

Another challenge is the import export policy.in india we have various safeguard duties on polyester and its raw materials whereas there is no such protection for fabrics and garments.for a labour surplus country like india this policy diametrically opposite of what it should be.inadvertently we are encouraging exports of raw material and imports of finished products.

TVC: CMAI, the Garment Association, always has the problem that what fabric they require is still not made in India. Are you agreeing with this?

RA: There are thousands of types of fabrics. There could still be some fabric which is not made in India. I am not saying that everything can be made in India. But if encouraged, if imports are discouraged, it is possible to make in India. If CMAI discusses their specifications and puts it on their site, there are people in this country who can get it done. They just need to specify the type of fabric they are looking for. I am not saying no to fabric import, but it should come at the right value. And suppose it is against exports, and then there is no problem. Even if there is a safeguard duty, if it is against advanced license, then you don’t need to pay that duty. So let exporters import, there is no problem. Otherwise, there has to be safeguard duties or prevention of under-invoicing, which is the biggest problem. Under-invoicing is a big problem in India. People will go to any length to save even 2-3-4-5%.this has to be prevented.  We want to add value in India. That is what we have to focus and we want to prevent all this under-invoicing and hanky-panky that needs to be checked. So the authorities need to come up with ideas to control this.

TVC: Product Specification: Unique in Product / USP of Product.

RA: Our USP is our problem-solving approach & providing appropriate solution. Eg. Solving a need/ a gap of imported fabrics by creating fabric in India for ladies and children’s wear. We provide solutions in terms of quality, supply, Tweaking the features of the product to meet the buyer’s needs.

TVC: Pricing Strategy: Competitive / Premium / Lowest.

RA: We are a B2B company primarily. So our pricing strategy cannot be premium. We can’t charge premium because it is not a brand. We sell our products on uniqueness, not on price. Price is competitive but not lowest. We provide premium product with competitive price.

TVC: Market Focus: Domestic or Export or both (% of each in total revenue).

RA: Our Market focus majorly on domestic but we do exports too, but ratio of turnover is 90%(Domestic):10% ( Export). In the domestic turnover, more than 50% is import substitution from China. The world does not know India is making good polyester so direct export is 10% due to challenge of awareness.

TVC: Market Share for your product in Domestic / international market

RA: In a Sportswear category, I would say we have a market share of more than 20% In the branded segment. In sportswear,there are quality conscious buyers but there is a huge category of footpath buyers and that share we can’t determine. So, there we miss so many players. And similarly other categories also, we are also doing ladies night wear, ladies innerwear. So in that product-wise our share is good, it could be more. Specific product now, in night wear there are cotton knits and there is cotton spandex knits and there is polyester viscose knits and there is polyesters knit also. There are so many categories. So category-wise we have to see. But in each category wherever we are there, we have a good presence and we have market leadership. Every category, our product is the best and that is a core value of the company. We are not into substandard product. We want to exceed customer’s expectations, exceed the market standards.

TVC: What is your product innovation approach?

  • In-house R&D centre / Design Team/ Outsource Design.

RA: Yes. All the time. This is our full time business. I mean, the founders focus on generating new idea, finding solutions, and creating best product. So we have an R&D centre with qualified team, good set of sampling machines in all segments.  Without innovation, you cannot survive.

TVC : Inspiration from other international market ?

RA : We do take inspiration from international market. We roam around & see the world and we always get inspired. I cannot say that ideas come to me. I’m not Illaiyah Raja. Illaiyah Raja is a music director who does not listen to music. He only creates his own music. We are not that. We are going to markets. We are seeing things and then we are creating multiple products out of it. We are taking inspiration from international market here. Internationally, We participate in  HeimTextiles, Germany every year & Some exhibitions we visit to buy machines, visit factories, visit showrooms and visit customers. We are looking for fresh ideas, our mind is open.

TVC: Turnover of your company.

RA: Our group turnover is more than 350 crore.

TVC: What is your Future plan for next 5 years & 10 years?

RA : We have to grow at a furious pace. Already this year we are investing close to 40-45 crores & expanding our knitting, dyeing, printing, garment, and embroidery facilities. This process will go on. We have to cross 1000 crores in five years that is our target. However, there are few challenges that will define the game plan.

For example, GST is going to be a major game changer, how it pans out; it could reduce the problem of under-invoicing. Because if you under-invoice, you have to keep doing it at every stage and that may become difficult. So this under-invoicing problem will, if GST falls into place properly, will get reduced and that will reduce imports. At least protect cheap imports or under-valued imports that will give a lot of boost. So then achieving this target won’t be difficult, this involves a year-on-year growth of 25-30% which is possible. Awareness of polyester making in India and safeguard against under-valued imports. If these two things fall in place, we will be able to do it.

TVC: Any future generation joining business in next 5 years?

RA: My son is only 18 years old and is still studying BBA. My brother has a daughter and she is 11 years old. Maybe in the next 5-10 years. I believe that if you help your people grow, they become part of your family. So in that case, there are lot of people joining in the next 3-5 years.

TVC: Why I was asking , because younger generation does not wants to join the textile industry?

RA: That is correct. That will also change. See textile has become more and more modern and it has become bigger. Once pay scale will improve, efficiency will improve automatically, it is a vicious cycle. This industry has bright future, as nude will never be a fashion in India.

TVC: Outside industry person wants to enter into making a brand of fashion, ie B2C, not in B2B, we have lost charm of B2B?

RA : Money is into brands. India needs to create brands.  we maybe industrialists, but. If you look at it holistically, we we are mere converters. Brand owners are the real winners, taking a big pie of the industry.

So the margins are in the brands. We are going to create home grown brands; there you get the real margin. Once the brands are there, you start paying better so you get better people. So you have to do branding. So this is what I have identified for myself for our company as something we need to do. In another interview, I have mentioned this that we have to graduate from being B2B to B2C. But it is not easy. So you have to consolidate yourself properly and then get into a systematic manner. And that is where the real money is. It is where the real margins are. Zara the most profitable retailer in the worldcomes from Spain  a country in doldrums. This is possible because of the strong brand it has managed to create.

TVC : As many international brand is already coming in India, so it is very difficult to survive for the Indian brands ?

RA : I agree with you since international brands have deep pockets and robust systems in place apart from extensive domain knowledge due to their wide experience. However Indian brands can still survive because of better understanding of Indian consumer and demography as also lower costs.

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