TVC Media Team sits down with Mr Sandiip Agarwwal, Director of Raj Rayon Industries Ltd and Joint Managing Director of SVG Fashions Pvt. Ltd. Established in 1984, SVG Group has grown from a weaving and processing unit into a comprehensive textile manufacturer. They take pride in their ability to offer a one-stop solution, from yarn creation to finished garments.
Across their facilities in Silvasa, Daman, and Ankleshwar, SVG produces everything from polyester yarns to finished fabrics and readymade garments, all tailored to client specifications. Committed to sustainability, their Ankleshwar processing unit boasts a state-of-the-art effluent treatment plant that recycles over 80% of wastewater.
Sandiip Agarwwal brings over 3 decades of experience to the table. He spearheaded the introduction of home furnishings to SVG’s portfolio and recently led the takeover and revitalization of Raj Rayon Industries Ltd. An MBA graduate from NMIMS University, Agarwwal is a fitness enthusiast with a passion for weight lifting and self-improvement.
What was the purpose of SVG acquiring Raj Rayon?
SVG, a polyester fabric manufacturer, acquired Raj Rayon to achieve backward integration. This means they gained control of the entire polyester value chain, from creating the raw polymer to finished garments. Acquiring Raj Rayon allowed SVG to do this because Raj Rayon had been shut down for several years and SVG invested in restarting production and modernising the facilities. In just the first year since reopening in January 2023, Raj Rayon achieved a turnover of 750 crores.This is an all time high for the company since its inception.
What was the situation of Raj Rayon when you acquired it? Were they making a loss and who was the previous promoter?
Yes, Raj Rayon had been shut down for 5-6 years before we acquired it. It was under Coprorate Insolvency Resolution Process(CIRP) and we acquired it from the banks through the order of National Company Law Tribunal(NCLT) approving our resolution plan. The company had several legacy issues – outdated machinery, poor management, and financial problems. They were consistently losing money and eventually shut down. Our company understood the Polyester business and the products they manufactured. Since we wanted to vertically integrate our operations and produce Polyester ourselves, acquiring Raj Rayon during COVID-19 times seemed like a good opportunity. It was a big challenge, but we’ve been able to turn the company around successfully.
How much did you pay to acquire the additional production capacity?
We have so far invested nearly 300 crores on top of the initial acquisition cost. Currently, our production is at 250 tons per day, and we expect to reach 400 tons by the end of the calendar year.
What is Raj Rayon’s vision for the next 5 years?
Raj Rayon’s vision for the next 5 years focuses on increasing production capacities to their maximum potential of 700TPD with strategic product mix with a combination of high quality and value added Specialty polyester Filament yarns and fabrics. They aim to achieve this by:
- Maintaining high standards for yarns required for knitted and woven fabric production.
- Supplying high-quality Yarns for various applications like home furnishing, sportswear, and fashion wear.
- Significantly increasing production capacities.
- Progressively increasing the share of value added yarns and fabrics in their product mix.
Raj Rayon currently supplies 225 tons of polyester yarns. They plan to reach 400 tons per day by the end of 2024 and further expand to 700 tons per day shortly after that.
Since SVG acquired Raj Rayon, will Raj Rayon’s identity eventually disappear and become part of the SVG group entirely?
No, SVG and Raj Rayon have not merged. Raj Rayon will continue to operate as a separate company for the foreseeable future. Merging companies face technical hurdles at the moment. However, both companies share the same management and core competencies. This means SVG benefits from having a reliable source of raw materials from Raj Rayon, and Raj Rayon benefits from SVG’s experience and market reach. While a merger isn’t currently possible, both companies operate closely together. It’s important to note that SVG’s production capacity is significantly lower than Raj Rayon’s, so SVG couldn’t consume all of Raj Rayon’s output even if they merged.
So SVG acquired Raj Rayon. What does SVG hope to achieve by taking over this company?
By acquiring Raj Rayon, SVG has essentially gained control of the entire textile value chain, “from making the polymer down to the garment,” as you mentioned. This vertical integration offers significant advantages for SVG as a group. Raj Rayon’s production will replace SVG’s need to import materials from various suppliers. Over the next year, SVG aims to substitute these imports entirely with Raj Rayon’s production, allowing them to create high-quality products with a more reliable source of materials.
What is the current turnover of SVG and Raj Rayon?
SVG’s current turnover is close to 300 crores, and Raj Rayon is expected to reach approximately 750 crores by the end of this year.
The recent acquisition of Raj Rayon by your company and similar acquisitions in the textile industry seems to suggest a trend of consolidation. What’s your take on this trend?
Consolidation is a common phenomenon across many industries. Companies are bought and sold based on their current state. In the textile industry specifically, there are a few key factors at play. It’s an industry with cyclical profits, meaning there can be periods of high and low profits. Some companies struggle during downturns because of high fixed costs. Acquisitions can be a way to keep the infrastructure of these companies running. However, simply acquiring a struggling company isn’t a guaranteed success story. New ownership needs to focus on reducing fixed costs, improving efficiencies and taking a slow and steady approach to growth. The textile industry isn’t one where rapid growth is sustainable. Organic growth is key to long-term success in this industry.
SVG seems to have followed a strategy of slow and steady growth, with a focus on acquisitions and organic industry expansion. Is this a fair assessment?
Yes, you’re right. We believe in a slow and steady approach, coupled with conservative management. The textile industry isn’t one where you can make huge leaps forward quickly. It’s a capital-intensive industry with high capacity. We need to be strategic in how we expand—by first efficiently utilising existing capacity before moving on to the next acquisition or growth opportunity. Core competency helps in identifying demand supply gaps and correct growth areas. This measured approach ensures we reach our goals within a reasonable timeframe, say three years, rather than taking unnecessary risks to achieve them in just one year.
The younger generation seems very focused on starting businesses and achieving success quickly. They often take a very different approach than you, who built your business over a longer period. What advice would you give to these young entrepreneurs?
That’s a great question. The experience I’ve shared about the textile industry is just the foundation. The exciting part for the younger generation is what’s happening on top of that foundation. The way textiles are sold has completely changed – everything’s online now, and fashion trends move so fast that styles can go from designer wear to fast fashion within months. This creates a huge opportunity for young people to come in and create their products and develop new sales methods. This is where start-up culture can thrive. There’s no reason why the old school and the new school can’t work together. The new generation has incredible potential for creativity, and they can combine that with the strong foundation laid by the previous generation. They can create their brands, experiment with wild ideas, and sell their products however they see fit. The clothing industry is constantly evolving – what was popular ten years ago is completely out of fashion now, and people dress completely differently today. Products are changing rapidly, and the next generation has the freedom to be bold and innovative, but it’s important to build on that solid foundation.
It seems like fast fashion and minimalist, sustainable fashion are two opposing trends. Can both trends coexist in the long run?
Absolutely! There are two key points to consider.
Firstly, minimalism is more than just a fashion trend; it’s a lifestyle choice that prioritises environmental consciousness. Similar to how we recycle plastic bottles, the concept of garment recycling is emerging. In the future, we might be able to recycle clothes, turning them back into fibres and even new textiles or composite materials. This “circular economy” approach won’t happen overnight, but within a decade, we could see a significant shift in how fabrics are produced, used, and reused.
Secondly, fashion trends are cyclical. Styles like flared pants or cuffed sleeves come and go, but the core concept of fashion – expressing oneself through clothing – remains constant. The minimalist and sustainable movements will likely coexist with broader fashion trends. The next generation of consumers will have a strong voice in shaping the industry, demanding clothing that reflects their values and avoids overconsumption. So, the industry will need to adapt to cater to both minimalist/sustainable preferences and the ever-evolving trends.
What are some of the consumer trends you’re seeing in the textile industry?
I see a mix of trends. Minimalism isn’t a major one; people tend to have larger wardrobes than they did five or ten years ago. Knitted fabrics are a big growth area, replacing woven fabrics in many garments like shirts, pants and dresses due to their comfort and stretch factor.
Another major trend is the rise of recycled fabrics made from plastic bottles. We’ve been supplying yarns made from recycled bottles for over a decade to major brands with ambitious sustainability goals (100% recycled by 2025-2030). Some brands are already at 80-90% recycled content. We are also planning to invest in manufacturing these recycled yarns ourselves in the future.
While this trend is currently driven by international brands, I believe Indian brands will follow suit. Consumers are increasingly environmentally conscious, and brands will need to adopt sustainable practices like recycled materials to stay competitive.
