Mumbai-headquartered SVP Group, which was founded by Shri Vallabh Pittie Group in 1898, carries a deep family legacy of producing textiles for many many years. However, unlike many of its peers which left behind when the competition and technological disruptions hit the market, SVP went ahead with heavily investing in manufacturing technology and latest machines for the future. In most of its initial phase, the company focused primarily on trading while relying on third parties for manufacturing. It was in 2007 when the company decided to establish its own manufacturing unit with the acquisition of its first plant in Palani Distt of Tamilnadu. Soon it acquired two more plants at Coimbatore and Ramnad in 2010. The big transformation came when the company set up the most modern, AI based, state of the art plant at Jhalawar, Rajasthan in a record 15 months in 2016. Backed by advanced manufacturing facilities, SVP went global in 2019 and set up another plant at Sohar, Oman. Today, with a total capacity of 5,48,000 spindles and 5900 rotors across its plants, SVP has become one of the largest compact cotton yarn manufacturers in the world.
The domestic market includes Ichhalkaranji, Bhiwandi, Ahmedabad, Surat, Wapi, Silvasa and Bhilwara in India. Whereas, internationally, it supplies to Vietnam, Bangladesh, China, Pakistan, Turkey and Portugal.
In an exclusive interview with Manufacturing Today, the company’s CEO OP Gulia shares how the century-old textile company shed its legacy baggage to embrace smart manufacturing to become one of the leading suppliers of combed compact cotton in the world.
Here are the excerpts:
What steps did you take as part of the transformation of the manufacturing process?
Our plants in India and Oman are equipped with the most modern technology, from blow room to winding with machinery, sourced from Europe and India. We are proud to be among the 2 percent of manufacturers of the world having technology which is less than five years old. The state-of-art machinery with latest technology use Artificial Intelligence to enable the company to manufacture yarn of the highest quality at optimum operational efficiency and result in higher operating margins in relation to traditional spinning mills.
The technologies involved are absolutely state-of-the-art and based on machinery from world leaders such as Rieter (Switzerland), Electro-Jet (Spain), LMW (India), Uster (Switzerland) and Schlafhorst (Germany). To ensure top class quality, we use machines like Autoburst 70, TPI Tester, Moisture Meter Digital, Digital Tachometer CE and Stroboscope.
How did this process help you improve your efficiency, productivity and optimise your costs?
The AI Based machines need minimum human intervention. Apart from saving on manpower, it also ensures best quality and uniformity. The interruptions are minimized and productivity is increased by running the machines to its highest capacity. The power usage is optimized which results in cost efficiency. All the processes are run at its maximum capacity and best efficiency. The introduction of modern machines has enabled us to switch over to high margin best quality compact cotton yarn from the traditional yarn. Today, our 85 percent capacity manufactures compact cotton yarn. The company’s yarn output (40 CCW weaving) per spindle is at around 153 gms-154 gms, which is the highest in the industry.Â
What’s your take on the current cotton yarn manufacturing industry — how big is the market, level of competition, and India’s positioning in the global map?
The global textile industry in 2018 was approximately US$920 billion and is estimated to be approximately US$1,230 billion by 2024, growing at a CAGR of approximately 4.4 percent. China is the world’s leading producer and exporter of both raw textiles and garments. However, of late there has been a tectonic shift during 2020 due to various reasons.
India is the third-largest textile manufacturing industry and holds an export value of more than US$30 billion. The country is responsible for more than 6 percent of the total textile production, globally, and it is valued at approximately US$150 billion. India’s textile industry contributed 13 per cent of the industry production in FY-20 and 12 per cent to the country’s export earnings. It currently employs 4.5 crore people, which include 35.22 lakh handloom workers across the country.
India has the second-largest yarn-spinning capacity in the world (after China), accounting for roughly 20 percent of the world’s spindle capacity. There are approximately 1,227 textile mills with a spinning capacity of about 29 million spindles.
How are you staying ahead of your competitors as it’s a highly competitive market? What’s the USP of your products? Â
Currently, 80 percent of Indian spinning capacity is more than 20 years old. There has been very less capacity addition and modernization in the last 10-15 years. SVP Global Ventures’ plants are equipped with state-of-the-art technologies, which enable better quality of production and at higher operational efficiency.
The company also has maximum certifications for its products from key quality assurers related to textiles such as Organic Content Standard (OCS), Global Organic Textile standard (GOTS), Better Cotton Initiative (BCI), OEK-TEX STD.100, Fair Trade, SUPIMA Gold and ISO. Having these certifications established our company as one of the highest quality, HSSE standards and results in a large brand. Recently, SVP Global was accredited as an approved supplier for Swedish retail giant IKEA.
The subsidies that were available for the sector have expired and there is now a barrier to entry for new units. We are having an edge as our units are still young and continue to get this benefit.Â
Our strategic location provides us the best advantage as we are close to the traditional cotton belts and yarn markets of Maharashtra, Madhya Pradesh, Gujarat, Rajasthan and Punjab. Similarly the Oman plant provides us the logistic edge to cover the international market of Europe, West Asia and Arab countries.
To sum up, the company is differentiated from its competitors in terms of its technology, product mix, output, quality, certifications and also in terms of costs, which enable higher sustainability and competitive edge over peers.
Tell us about your international operation – why did you think of starting a plant in Oman?
The basic vision and concept of our group is to meet the demand of each continent at its doorstep. The Oman plant provides us tremendous operational and logistic advantages in the Middle East. It’s the first spinning yarn plant in the entire GCC. Its strategic location offers us a number of advantages including lower power cost (almost 40 percent lower than India), reduced logistics costs for being located next to Sohar Port, lower cost of borrowing, income tax exemption for upto 25 years, and access to new markets which are not otherwise accessible from India.
What are your future plans in regards to modernisation of your operation? How much investment do you plan to make?
AI is going to play a major role in the manufacturing sector in the future. We are focusing on this very important aspect. We are ramping up the capacity of Sohar Plant by 150000 spindles and 3500 rotors by an estimated capex of US$150 million by March 2022. We will install the latest machinery in this expansion. Another essential department we are focusing on is quality assurance. We have installed the best in line machines to ensure the highest quality is maintained.
What’s your future plan and expansion strategy? How do you plan to achieve that?
The business strategy of the company has been to expand in high margin compact cotton yarn manufacturing over traditional yarn. Our constant efforts and investments has led to change in this business shift and has resulted in improvement in the EBITDA margin from 6.1 percent in FY 2017 to 13.2 percent in FY 2020.
We are also looking into forward integration and plan to set up a garmenting unit to make it an integrated textile company. The company is also focusing on to consolidate the core business and exit from its subsidiary businesses. Deleveraging balance sheet, reduction of debt and hive off non core assets. Â
The sustainability will be achieved by continuous technology upgradation, upskilling the manpower, concentrating on high margin compact cotton yarn, forward integration, higher productivity and better quality product coupled with operational and logistics efficiency.