The bottomline then is
we are seizing the day to emerge stronger tomorrow; weare strengthening our core to make our business operations more flexible.
And we are working to break out of the challenges that held us back earlier.
Fiscal 2018-19 was an outlier as it truly tested the robustness of the business modeland the resilience of the organisation to withstand disruptive headwinds. While our yarnand fabric divisions were marginally impacted by the prevailing challenges the strong andpersistent headwinds in the denim space pulled the Company into the red.
I would have been happy had we reported a net profit but I am not too perturbed with aloss. Because I believe in a simple philosophy Change resides in every Challenge.Because the challenge we face now - to get back on our feet - will help us todispassionately unearth potential areas for unlocking value. And I am sure that our teamwill orchestrate this transformation with speed. They have already started!
We had made considerable investments in the last 3-4 years in capacity augmentationmodernisation and technology upgradation. But these investments did not yield theanticipated results. Our turnover hovered around C3000 crore mark over the same period.This for me has been our stumbling block.
Why did this happen?
1) A sectoral perspective: The textile sector has lost its momentum postdemonetisation and the introduction of GST. In FY17 all segments within the textilesector registered a de-growth except the Ready Made Garment (RMG) vertical which grew ata meagre 1%. In FY 18 all the segments performed better but the RMG space declined byabout 1% which dealt a body blow to the textile sector. Market prices of all products inthe textile value chain were significantly down owing to the competitive intensityprevailing in the domestic ecosystem. Margins got squeezed.
Moreover we could not divert our output to international markets as other globaltextile hubs namely Bangladesh Vietnam and Cambodia (which are protected by theirGovernments) emerged more competitive. As a result considerable global growthopportunities got diverted to these nations.
2) An internal reality: Our edge in the intensely competitive sectoral space dulleda little. This was owing to the additional costs that got built into the system withmultiple rounds of investments. Inefficiencies started creeping in. The debt burdenexpanded with each passing year. And the consequent interest liability eroded businessmargins.
I am happy to state that we have not only drawn the contours of our potential unlockingblueprint but have also made some headway in implementing important initiatives.
We are cutting costs. We are improving man-machine productivity and enhancing productquality. We are actively considering the make-or-buy' strategy based on multipleparameters. We are developing niche products that can enhance value-addition. We areentering new market spaces. We are adding more customers. We are closely monitoring ourworking capital. We are implementing strategies to enhance our cash flow. All this ishappening simultaneously.
The energy in the team is high. The passion to get back to winning ways is visible. Thebuzz is palpable. These realities gives me the confidence that success is just round thecorner.
From a sectoral perspective the opportunities are significant. Globally trade warsarising out of protectionist policies by developed economies is creating interestinggrowth avenues for multiple sectors textiles is one of them.
But the sector needs effective Government intervention policies and legislations thatallow domestic players to operate on a level playing field with global peers. When thathappens I am confident that the sector will witness robust growth and emerge as a trueglobal textile hub.
At RSWM the excitement is intense. For a number of things are happening at the sametime some are course corrections while others are new initiatives. The bottomline then isthat we are seizing the day to emerge stronger tomorrow; we are strengthening our core tomake our business operations more flexible. And as we are working to break out of thechallenges that held us back earlier opinion makers suggest that sectoral tailwinds alsoherald promising times going forward.