The Indian Texpreneurs Federation (ITF) has always believed in charting out its own distinct path for the betterment of the textile industry. Whether it is through introducing new sourcing methods in cotton purchase for its members or helping mills improve their energy efficiency or sharing market intelligence, it has always been taking proactive steps. We recently interacted with Prabhu Dhamodharan, convenor of ITF, and got to know from him the various new initiatives of the federation, including the ITF training academy, market intelligence platforms and sustainability focus, among others.
India’s largest textile entrepreneurs association from Tamil Nadu, the Indian Texpreneurs Federation (ITF) was established by like-minded textile entrepreneurs with a combined annual turnover of over Rs. 40,000 crores. ITF is India’s fastest growing textile entrepreneurs association representing the entire textile manufacturing value chain from this southern State. It aspires to establish the Indian textiles industry in the global arena and gain world class status. Beginning the interaction with a brief introduction of the key areas of focus of ITF, Prabhu Dhamodharan said: “ITF now represents the entire value chain of the textile industry in Tamil Nadu. We have around 450 companies on board.”
“Needless to say this number is constantly growing. Spinning is one of our target segments. In spinning, our members currently have a total spindle capacity of around 9 million spindles. We have 230 standalone spinning companies, 40 integrated companies, 90 apparel, 55 modern weaving companies and 20 processing companies as our members. Our focus is very simple. How can we improve the competitiveness of the textile industry? That is our driving mantra. While all the members may be competitors, we have all collected together under one umbrella. It is like cooperative competition. It is a new terminology, one that can help achieve collaborative growth,” he added.
“At the end of the day it is all about financials. The company has to perform and the owner needs to earn a sustainable margin. This is what matters. Their earning sustainable margin depends on two factors, internal as well as external. We work on the external factor by constantly interacting with the policymakers to remove friction points. We are continuously submitting concept papers; we discuss with the policy makers about the structural changes that need to be brought about. Instead of just sending representations, we prepare study papers, so that policymakers can understand better. We collect and submit a lot of data,” he elaborated.
Citing an example, he said: “The US imports about Rs. 3 lakh crores worth of MMF apparel every year. Even with this large base the market there is still growing. Out of this India’s share is a miniscule Rs. 7,500 crores. We compared 24 HS codes between India and Vietnam in MMF space and published the data. We then advocated that the government should bring in necessary policy initiatives to encourage MMF production. We are lagging behind in terms of product innovation, technology, design aspects, etc., when it comes to MMF. So we need to build the entire ecosystem.”
Continuing further on the subject, Dhamodharan said: “Similarly, we formulated an ITF calculator to show the inversion in GST in MMF products. If this is corrected, the MMF value chain also will become efficient like the cotton value chain. We had also advocated the idea of mega apparel parks. We need scale. There is one Chinese company that is doing Rs. 21,000 crores worth of business in the apparel sector with 30% EBITDA margins. Isn’t it time we also increased our scale? We need more sustainable, compliant and integrated facilities.” Dhamodharan feels that the government is very much focused on the growth of the textile industry. Elaborating on the point, he said: “The government is focusing on the textile industry’s growth continuously and bringing much needed structural changes.”
“Remember, this is one industry that can generate huge employment opportunities. For example, a USD 1 billion addition in apparel exports would mean direct employment to about 1.5 lakh people,” he added. Speaking about the internal factors that ITF is trying to address, he said: “No global player will pay an extra penny for our inefficiency. We need to be very competitive. We need to attain a certain EBITA margin to sustain business. Very few are able to do so. We need to study better models with top performers in each segment and help everyone to achieve a similar business performance.”
ITF cotton team
Another initiative of ITF has been creation of a cotton team with 33 mills. Presenting further details, Dhamodharan said: “Cotton is a globally connected commodity. Mill owners therefore need to take the right decision on things such as how much stock to buy and where to buy. That is the intelligence we provide. Apart from this we have also created a platform for contamination controlled cotton. Contamination is a major issue in our country. We have educated ginners and spinners. We are asking our members to buy from a few select ginners. This way these ginners will also get assured off-take on a daily basis. ITF has fixed a standard for per bale and this should be the contamination. This is an initiative that has received tremendous response.”
Meanwhile, sharing market intelligence has always been a key area of focus for ITF. It has now created a ‘yarn group’ on a social media platform for its members, whereby they get information regarding quality speculations, rate, payment terms, etc., on a daily basis. “We conduct two monthly surveys with a large sample size of 8 million spindles on utilisation and stock levels. We give them a clear picture. Which product is performing, how is the market, what are the trends, etc. We also give them the reasons why someone is running low or high – whether it is due to market condition or whether it is a manpower-related issue. We share this data with our members. While we may not have any control over the market, this kind of market intelligence definitely helps in taking the right decisions,” he pointed out.
Improving manufacturing efficiency
Improving manufacturing efficiency is another area of focus of ITF. Explaining the work that is being done in this particular area, Dhamodharan said: “There was a benchmark earlier for producing one kg of yarn. Now with some education from our side and some smart work from the members, a few of them are setting new benchmarks. We are publicizing their work and motivating other members to achieve similar results. Even small improvements matter. For example, let’s assume for a count in thirties, a mill is using three units of electricity to produce one kg of yarn. Now, another mill achieves the same result with consumption of 2.7 units.”
“While the difference between 3 and 2.7 units may appear miniscule, for a 20,000 spindle capacity mill, this will mean a saving to the tune of about Rs. 1 crore per annum for the owner. We are educating mills about energy monitoring systems. We are also supporting them with software solutions for the same. For example, we have set a benchmark and every machine uses a particular amount of energy. If there is any deviation, the software will send out an alert. Similarly, we also conduct air audits. We have also launched an app for the purpose. With such systems in place, even if any deviation happens, corrections are possible within about 48 hours’ time frame,” he informed.
Training initiatives
ITF has been in the news recently for launching a training academy. When asked what the training program entails, Dhamodharan said: “Why is it that only a few organisations are successful whereas others are not? It is because of optimum utilisation of human resources. That is what the training academy is all about. The basic idea is that every human being, whether he is part of the top management or an employee on the factory shop floor, should be able to work in a happy environment. Only a happy employee can contribute to increasing productivity. This in turn means you need a synergy between all the employees. You should nurture teamwork. Employees need to have leadership skills.”
“The employees already are doing a tremendous job, no doubt. But at the same time we need to accept that the business environment today is changing. You need people who are innovative and creative. You need people who take up initiatives and are leaders. So, we have designed a nine-month program. There are separate modules for different levels such as the supervisor, middle level manager, vice president, managing director, etc. They come here once in a month for full-day training. We ensure that there is no distraction. Even mobile phones are not allowed in the training sessions. A variety of subjects are covered such as positive attitude, communication skills, creativity, teambuilding, finally culminating with emotional intelligence, which is now a key thing required these days,” he added.
“Usually what happens with training programs is that people attend them for a couple of days and then tend to forget what they learned. That is the reason why we have designed the training program to be spread out over a nine-month period. Even after the training program is over, our trainers are in touch with the employees and constantly give them necessary inputs. Apart from this we also have regular technical training workshops. We are very happy with the response that we have received. In fact, after seeing the change in attitude among those who have attended our training programs, we have received requests from other employees too to enroll them. For example, there have been instances of foremen and electricians from some mills wanting to attend the program. ITF Leadership Academy infrastructure was created with 55 mills as founding members,” Dhamodharan explained.
ITF daily thoughts
Prabhu Dhamodharan has also been sharing ITF ‘daily thoughts’ as part of the initiatives to benefit members. “Yes, I am sharing one thought every day. For the past two years, we are sharing daily thoughts on various topics including economy, business trends, financial analysis, best practices, leadership, etc. We have now also started preparing and sharing educative videos as part of the initiative. Members have shared their feedback and are saying that the daily thoughts are helping them be positive and make a good start to their day,” he said. Meanwhile, ITF has also appointed CRISIL to analyses data across mills in India on various parameters. “For example, we have got them to analyse data from 1,838 spinning units across the country.”
“We have submitted this data to the Textile Ministry. We have put forward suggestions based on the data collected. For example, we found out that lack of working capital is a major issue and why about 30%-40% of the companies are not doing well. We found out through the analysis that steps such as one-time intervention of the Reserve Bank of India for conversion of working capital loan into long-term loan and two years’ moratorium along with fresh infusion of working capital could help such units to recover and come back to the growth path,” he said.
Importance of integration
ITF will also be setting up an advisory cell with industry experts to guide members into integration with the objective of helping them improve their financial performance. Elaborating on this subject, Dhamodharan said: “Our ITF-CRISIL research report on financial performance of the textile sector over the recent years clearly shows a trend of differentiation in margins between standalone spinning as compared to semi-integrated and integrated companies. At the EBIDTA level, there is a difference of 250 to 350 basis points and 500 basis points’ difference in ROCE levels. In order to address this issue, we will be setting up an advisory cell with industry and external experts very soon. Spinning mills these days are selling yarn at 60-75 days’ credit due to the changed credit environment. Once this integration happens it will help them use a portion of the yarn that they produce as raw material instead of long credit selling.”
Sustainability factor
To brand Tamil Nadu as the most sustainable textile cluster is another key initiative of ITF. Providing details, Dhamodharan said: “I think Tamil Nadu deserves to be branded. This State is a pioneer in terms of sustainability initiatives adopted by the textile sector. The sector uses about 4,000 MW of wind power and 1,000 MW of solar power. We are practicing ZLD in the processing sector. In energy consumption I would say we have beaten even global benchmarks in certain cases. Similarly, waste from garmenting and fabric units is being used by open-ended mills to produce yarn. In recycling of PET bottles too there is a silent revolution going on in the cluster. Many of our members have started GreenCo and Higg index certification process. Branding can be a game-changer for the textile industry in the State.”