Lockout at Jaya Shree Textiles' factory likely to hit Linen Club supplies

The lockout at Aditya Birla Group-owned Jaya Shree Textiles' factory in West Bengal is taking a toll on the group's premium apparel and textile brand, Linen Club. 

Linen from the Rishra mill, which is under lockout, is supplied to exclusive Linen Club stores and other retail outlets. There has been no production in the plant for over 20 days now. The fabric and the apparel range in stores is expected to last till mid-July and the stock from various warehouse can supply till the end of August. After that, around 6,400 retail stores and another 172 exclusive Linen Club stores are expected to run out of stock.

This will affect sales mostly in the third quarter of the current financial year, especially around the festival season. 

According to a senior company official, the fabric, blend and style for the festival season is manufactured during June-August and are made available in stores around September-October.

"Since there was no production since June 4, the fabric which would be rolled out during September-October could not be made. If the lockout continued, the entire festival season sales would be affected to a large extent," the company executive said.

Usually, Linen Club earns over 30 per cent of its annual revenue from festival season sales and another 30 per cent from summer sales.

The lockout is also likely to hit the company's expansion moves. Plans are on to open a new store in Guwahati on July 10 and another one in Abu Dhabi soon. Company executives are worried about meeting supplies. The Aditya Birla Group firm plans to add 30 more stores in 2018-19.

Linen Club usually procures the finished fabric from Jaya Shree Textiles, amounting to Rs 5 billion. The brand has been a 10 per cent growth in the Rs 16 billion linen garment space, and has a market share of over 50 per cent. Fabric sales account for over 94 per cent of the company's topline, while the rest comes from the ready-to-wear range.

Jaya Shree Textiles procures the raw material for linen from France and Belgium, and processes it at its mill at Rishra. Besides being a prime supplier to Linen Club stores, it also sells linen to brands, including Marks & Spencer's and H&M. 

CEO Satyaki Ghosh has been negotiating with trade unions, and is hopeful of "some positive developments", according to sources.

Dressing up
 

• Linen Club and Jaya Shree Textiles are owned by Aditya Birla Group
• Jaya Shree Textiles is the main supplier to Linen Club
• Fabrics in Linen Club stores may run out by July end
• Linen Club sales poised to take a major hit in the festival season