Making the best of opportunity

Reshma Krishnan

THE LATEST developments in the textile industry enhance the inherent strengths of the industry's big players.

The big companies can leverage their existing brands and create product extensions. They can also plough in the cash flows from the fabrics business, as such companies as S. Kumars and the A. V. Birla Group have done.

With more retail showrooms such as Shoppers Stop and Crossroads setting up shop, the market is gaining more exposure and visibility. It will be crucial for manufacturers to make themselves visible and appeal to consumers.

While the new Textile Policy 2000 opens the door to new opportunities, the companies and the industry still have to deal with a few obstacles. The Indian retail market is a mess and distribution channels murky. Even if the manufacturing segment is taken care of, a focussed strategy for each product still has to take shape. With market segments not being clearly defined, specific customers cannot be targeted. The disadvantage here is that the marketing strategy becomes vague and, thus, more expensive.

A gradual shift from a manufacturing environment to a knowledge-based environment, where quality and design are key, is being witnessed. Textile companies need to develop management skills that manage knowledge rather than follow the purely manufacturing approach prevalent in India.

According to Mr Deepak Sheti, Additional Textile Commissioner, Ministry of Textiles: ``The future is in creating value-for-money goods both in the domestic and international markets.''

Quality is crucial for a company's survival. Big firms need to have good inventory systems that will allow them to compete with smaller companies that have leaner systems and adapt faster to changes in fashion. To be profitable, companies would have to be flexible at low cost, sustain good growth rates and attract investor interest.

The industry's prospects lie in what the companies make out of the opportunities presented to them with the opening up of the sector.

The potential is enormous and investors should hold on to any company that is seriously entering the readymade garments sector. Scrips such as Indian Rayon, Raymond, Zodiac and Pantaloon fall in to this category.