Lakshmi Machine Works (LMW), which is celebrating its golden jubilee this year, is part of the Indian spinning sector's growth story. The country's textile industry is the second largest in the world, next only to China, and it continues to expand its global footprint. It is also unique as it is largely cotton-based. The industry is just reviving from a tough year.
Managing Director of LMW Sanjay Jayavarthanavelu shares his views with M. Soundariya Preetha on the challenges and opportunities for the textile industry. Excerpts.
At a time when the textile industry is showing signs of revival, the Indian economy is facing challenges. What are your views on the economy and the prospects for a growth rebound this fiscal?
We are fully into the globalised era. The U.S. and Europe are showing signs of economic strain. On the eastern side, China is showing signs of slowdown. Everywhere, there is concern and a feeling of economic stress.
In India, we are plugged into the global scenario. Further, there are issues of fiscal deficit, currency depreciation and inflation.
Inflation is a big issue for the manufacturing industry, in terms of sentiment and performance. These need to be addressed. This year, the Indian business is expected to reflect the global sentiments.
Though the spinning sector has faced several ups and downs, was 2011-12 one of the worst periods for it?
Two years ago, the Indian textile mills were doing good. Then came the sharp rise in the commodity (cotton) price and a steep decline in the price within a short period.
This had an impact on the cost and quality and set off a cyclical action. As the situation eased on the cotton front, power availability was a problem to many of our clients. Some States were affected more than others. Then, it was uncertainty in the global market.
All these have had an impact on investments in the textile industry. The interest rates were also high. Hence, many projects were deferred. Right now, for the last few months, there were signs of recovery. It will take some time for the industry to revive fully.
The second-half of the year will be more positive. We will definitely see better investments in the textile sector during the last six months of this financial year.
Cotton had been a major subject of concern to the textile industry. What is needed on the policy front for stability in cotton prices and availability?
In the long-term, I see it positive to be in the textile business. There is a strong demand for textiles for domestic consumption. The export potential is also huge.
The global textile manufacturing industry is moving to India, China and Pakistan. The textile equipment manufacturing industry moved to these zones. Cotton is one of our strengths.
Cotton, as an agricultural commodity, should be remunerative to farmers. The Indian textile industry should also be satisfied with the raw material. Rather than just exporting the raw material, the priority should be to meet the needs of the domestic industry. We need to add value to the raw material. Hence, the excess availability of cotton should be exported.
Today, the banking system is strong and the banks are reaching out to small farmers. More of it should happen so that farmers' exposure to banks improves. We need to be innovative in providing the required funds to the farmers at the right time.
Will India see greater development across the textile value chain?
The Indian spinner is, perhaps, the most efficient globally. Though the spinning industry faces several challenges related to raw material, capital, and human resource, it is efficient.
We must encourage value addition even for the benefit of the spinning capacity. In the long-term, instead of export of just yarn, it should be more of value-added products.
Though India will continue to be a major yarn producing country, value addition needs focus.
The value adding segments continue to import most of their machinery needs. Does LMW plan to expand to these segments?
For the textile machinery industry in India, it is a catch-22 situation. A large part of the machinery that is imported is second-hand that is available at throwaway prices.
The cost of acquisition of technology is high for the domestic manufacturers. Policy support is needed for the development of post-spinning machinery (weaving, processing and garmenting).
LMW offers a complete range of spinning machinery. Affordable price had been the foundation for our company. For now, we are not looking at any other segment in the textile value chain. We are giving the spinning industry new technology to keep it competitive. The spinning sector is energy, labour, and capital-intensive.
These areas will continue to pose challenges in future, too. We are trying to make the machinery more energy-efficient and offer higher automation. Our customers will soon be able to avail themselves of better technology for compact yarn systems from LMW.