Soon after its December quarter results, Dipali Goenka, executive director, Welspun India talks to Sharleen D'Souza about the company's ambitious expansion plan and how the company also looking at the domestic market to increase its retail footprint.
The company has plans to invest Rs 2,500 crore, where has it been utilised?
All our expansion has taken place under Technology Upgradation Fund Scheme (TUFS). As Tufs gives us an interest subsidy and so does the government of Gujarat as the interest cost is around only three to 4%. We have already invested around Rs 1,300 crore and the rest will happen in the next two years.
The first pasrt of our investment has been used for vertical integration which is critical to us as demand still continues to be robust. The rest of it will go into upgradation and mordernisation and automation.
It is going to be a calibrated approach. We are currently producing 45,000 tonnes of towels which will jump to 60,000 tonnes by 2016 year end. Bedsheets currently stands at 55 million and will increase to 72 million metres, while rugs is 12,000 tonnes which will go up to 20,000 tonnes.
How do you see India placed as a textile exporter compared to other countries?
When you talk about India, we have become from a net importer to a net exporter of cotton, and it plays a key role for us. In terms of geo-political we are in the right place.
And in the terms of manpower and energy, if we compare ourselves to countries like China where costs have gone up dramatically to the extent of $1,000 per month plus 25% of perks, that is where we have an advantage and it gives us an impetus.
When we talk about ourselves (Welspun India) we not only in US but now we are into different geographies as well. We have UK, Europe, Japan, Australia, New Zealand, South America.
US market has started to revive, but the European market still continues to lag due to the economic crisis. How will this pan out as demand for the company and how much demand do you see coming from there?
Demand will be from key retailers like IKEA, ASDA. We see that demand will grow as they are key retailers with a global footprint. At Welspun we definitely focus on innovation which definitely puts us on a different edge altogether. Pakistan and China as they have the FTA advantage, but, we cater to the mid to premium market due to innovation and complete service model.
Are you looking at newer markets for expansion?
We are looking at Australia, New Zealand, South Africa, Japan. Also, our product portfolio that we have is very important. We started with towels, now we have sheets, bedding, bath rugs and area rugs. The innovation with diversity of the portfolio will remain important to us.
How does the domestic market play for the company in terms of revenue?
When we talk about today, the company's exports stands at 95% of the company's revenue and the domestic is only 5%. But, as we go forward with our retail market evolving we definitely see that as a key substantial role for us. We have two brands, SPACES and Welhome and we are also looking at e commerce for growth.
E-commerce will not only help us grow domestically but also looking at a global footprint via the same channel like in US and UK. We plan to increase our share of revenue from the domestic market to 15% eventually. In the next three years we are aiming at 10%. This year we witnessed a modest turnover of Rs 105 crore and a growth of 45% and next year we are looking at doubling our revenue.
In the last two years you have changed your retail model how is it now working out for the company?
Spaces is available through shop in shops in metros and tier one cities. In our country most of our population lives in the tier two and tier three cities and that is what Welhome is all about. Aspirations run the highest in tier two and tier three cities and that is where we see a lot of e commerce demand coming which will help us grow.