'India Remains a Lucrative Market, But It Is Getting Rather Difficult To Judge When Its Potential Will Be Realized'

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'India Remains a Lucrative Market, But It Is Getting Rather Difficult To Judge When Its Potential Will Be Realized'

SRF's technical textiles business grew 4% in the second quarter of this financial year, to Rs 453 crore, and operating profit increased 43% to Rs 47 crore. The company has performed well even in a weak environment. In an interview with Reena Mital, Sushil Kapoor, President & CEO, Technical Textile Business, SRF Ltd, speaks about the current state of the industry, and the company's strategy in the coming days.

How was the technical textiles market for SRF in the last few years?

The company made significant investments in technical textiles business in the last one year, but so far we have been unable to utilize the full potential of these investments. We have seen increase in sales, but we expected better figures.

The market is taking a long time to understand new applications, for demand to come through. You will have noticed that every time we participate in Techtextil, we bring in new products. So products are there, but demand is not significant.

Why is the market taking so much time to pick up, even as we see so much potential?

This is a combination of factors. If the general economic condition is not good, which is currently so, these products will take a hit.

SRF's technical textile products span several industries. For instance, products linked to the fortunes of the automotive industry are not doing well at present, as the automotive industry is not doing well, particularly commercial vehicles segment, and to a large extent the passenger vehicle segment too. So, these products are witnessing a downturn.Another segment - lifestyle products - has seen growth in the last few years, the market has typically grown at a rate of 10% or so, much below the industry expectation of a growth of 30%. The market has not reached a stage of maturity, we are still caught up in buying the cheapest product, without enough emphasis on the properties of the product. These factors affect the technical textiles industry.

Having said that, I believe India still remains a lucrative market, irrespective of potential, but it is getting rather difficult to judge when this potential will be realized.

Do you expect an improvement over the next five years?

Surely there will be growth, I am still an optimist. As a new government comes in, we will see an improvement in general economic activity in the country, I expect business sentiments to improve, and then some numbers will pick up. We can expect to go back to growth rates of 7-8%, and we will see performance improving in the technical textile industry too.

How has the tensile structures business shaped up? Are you targeting the domestic or export markets?

We are only in lower end of tensile structures. The higher end of tensile structures we have not started to do, we will move into that segment eventually. The high end of the market is associated with long term guarantees. We need to generate adequate data at our end, of the history of these products, and that will take some time. So as of now, we are only in the domestic market, we do export, but other products.

How has the coated fabrics business turned out for SRF?

Coated fabrics business has not been very good this year. This is where we made large investments, and we still have some distance to go. The demand for coated and laminated fabrics has been dull. And then we have four new players in the market. It will take some months for this additional capacity to find its place in the market.

Our tire cord and conveyor belt business have done quite well.

What is your strategy in this dull market?

What we are trying to do is introduce new products for new applications, which are internationally used but not so much in India. For example, this time, at Techtexil India, we displayed multi-colored pagodas, this is the first time in India, and even internationally, it is white pagodas that are common.

Another new product is cool fabric, which keeps the area cooler by at least 5-7 degree Celcius.

As a company into multiple businesses, technical textiles are still about 50% of our business. We are waiting for the investments to start providing returns, so that we can look at the next phase. In the next couple of years we hope to consolidate our position. We have also begun exports of many of the products, because today we believe we are producing internationally acceptable levels of production.

Fabrication is a weak link in the chain. How do you deal with this?

Yes, fabrication is a weak link for our industry, and one of the reasons why some of the products don't sell. To address this, for some products, we have started our own fabrication facility. For instance, for pagodas, we sell the structure, we have somebody designing this in partnership with the company, and we have thus integrated the chain.

But this we are doing on a select basis, because our intention is not to get into the convering industry. So, when it is a completely new product, or does not compete with the business of our existing customers, and if we feel that without fabricating the sale will be difficult, then we offer this service.

There is said to be an overcapacity already in the Indian geotextiles market, with just a handful of players. Your views.

In geotextile products, any capacity that the country has would become under-capacity if we started using it. The trouble is we make our roads and don't use geotextiles, even as there are compelling reasons to use the same. Geotextiles in road infrastructure are used only when a project is in public private partnership domain.

The industry for many years has been asking for government legislations and mandates. Do you think this will help?

To give an example, temporary covers in public functions have to be flame retardant. This is a law. But how does one ensure its implementation? How will a cop distinguish between FR and non-FR fabric?

There needs to be greater social awareness about the use of these products - FR fabrics in public places can prevent gruesome accidents, geotextiles in roads can improve the longevity of roads, preventing accidents and deaths due to bad road conditions.