Jaya Shree Textiles (JST) a Unit of Aditya Birla Nuvo Ltd. is a leading player in Linen and Wool segment of the Global Textile Business. It has significantly revolutionized the Indian and foreign textile market by popularizing ‘Linen’ across a wide customer base with its brand “Linen Club”.
JST met the challenges of stagnating growth and profits head on with a strategy that simultaneously created an increased awareness of linen in the country, built a highly successful national brand and set global benchmarks in linen production.
A leading producer of linen fabric and yarn in India, Jaya Shree Textiles has come a long way from its humble beginnings as a textile company in 1948 to become a leader in the domestic linen market and one of the most preferred producers of wool globally. The company imports high-end linen fibres from France and Belgium and merino wool from Australia and is the third largest wool comber and independent spinner in the world. With a prestigious clientele that comprises the who’s who of the fashion world, Jaya Shree Textiles takes the credit for being the first to introduce linen in India, way ahead of its time.
Here’s how Jaya Shree spun its success story:
Challenge: To accelerate profitable growth.
Despite being one of the leading producers of linen and wool tops in the country, the company leadership felt a need to redefine its strategy and targets to take on new challenges. The ground reality was that the ready-to-wear market in India was outgrowing the ready-to-stitch market rapidly. Profit and growth figures had hit a plateau and the company needed a new business plan that would help it stay sustainable in the long run. The leadership devised a business strategy that encompassed the following parameters: Operational excellence, Market reach, Profitable growth and Working capital reduction.
With dogged determination and brilliant planning, Jaya Shree Textiles spun itself into an incredible success story.
The plan: Popularizing linen – One of the biggest obstacles was the consumer’s perception of linen. The fabric was widely considered to be a dull and boring fabric, affordable only by the rich, needing high maintenance, and to be worn only in hot weather.
In an attempt to ramp up growth and profitability, the leadership at Jaya Shree Textiles formulated a multi-pronged strategy: Creation of demand for linen yarn and fabrics in the domestic market, protection of the market share in linen yarn through supply chain management, and excellence in working capital management.
Creation of demand for linen in domestic market
Jaya Shree Textiles went all out to create awareness and grow market demand for linen by advertising its properties, tying up with apparel brands and fashion gurus, etc. Launching its products under the umbrella brand Linen Club, the company used media, social media and fashion shows to project linen as a high-end natural lifestyle fabric and educated customers on the attributes of linen to dispel myths that surrounded the fabric.
The company collaborated with various ready-to-wear national and domestic brands and extended its reach to make linen available to consumers across India. Fashion and film celebrities were roped in to spread the message that linen was both comfortable and all season. The perception barrier was broken, and linen is now perceived as a fabric that is exclusive, distinct, colorful and 100 per cent natural.
Working capital management
The company then set out to achieve what was termed unachievable in the textile industry – exploding the working capital myth and achieving negative working capital. The company changed the payment paradigm from ‘Make and Sell’ to ‘Sell and Make’ and improved financial ratios by reducing lead time in the value chain. It also negotiated better payment terms with suppliers and channel partners and managed risk better by early collection of receivables.
JST is the largest manufacturer of linen yarn and linen fabric in India with spinning and weaving capacities at 16,408 spindles and 106 looms, respectively. It retails linen fabric under the well-known brand “Linen Club Fabrics”. It is a leading manufacturer of wool tops and worsted yarn in India with a capacity of eight carding machines and 25,984 spindles, respectively.
JST achieved its highest-ever earnings in 2012-13, with revenue at Rs. 1,200 crores with 14 per cent EBITDA. Higher volumes and realisation in the linen segment contributed to the earnings growth. JST’s efforts for increasing awareness for linen in the domestic market and creating a wide distribution channel of wholesalers, multi-brand outlets and EBOs are yielding results.
JST is also focusing on the high margin Linen Fabric OTC segment, which accounts for 50 per cent of its total linen fabric sales. It added 19 new EBOs during the year, taking the total to 76. Linen Club is also being retailed through more than 3,000 MBOs.
To tap growing demand for linen, JST is expanding its capacity of linen yarn from 2,300 tons per annum (TPA) to 3,400 TPA and the linen fabric processing capacity from 7.3 million metres to 10.1 million metres, at a capex of Rs. 100 crores. The expansion is scheduled to be completed by mid-2013-14.
Increasing awareness about linen, coupled with wider usage, will drive volume upward in domestic market. Hence, expansion of in-house capacity of yarn, fabric and processing is under implementation, in addition to creation of world class design and development facilities for linen fabric. Demand revival is expected in the wool segment too.
Jaya Shree Textiles is striving to sustain its tremendous success by ensuring optimum utilisation of resources to remain cost-leaders. The company has in place a well-defined brand plan to establish Linen Club as a “Top of the Mind” brand, leveraging its high-level status and recognition in Indian and European trade circles.
At Jaya Shree Textiles, the vision is to keep its spindles spinning at top speed.