Welspun India is an FMCG brand of Textiles: Dipali Goenka, CEO & Joint MD

Welspun India is an FMCG brand of Textiles: Dipali Goenka, CEO & Joint MDDipali Goenka, CEO & Joint MD, Welspun India Limited, talks about the performance in Q1FY22, debt, CapEx, government initiatives for the textile industry, RoSCTL, distribution network, tie-up and collaboration with Target Corporation and inorganic growth opportunity among others during an exclusive interview with Swati Khandelwal, Zee Business. Edited Excerpts:

Q: Congratulations on an outstanding set of numbers. Back-to-back the company has posted a strong set of numbers. Tell us how have you managed it so well and is it sustainable growth or can be better from here?

A: US economy looks strong and retail sales stood at 1.5 trillion. E-commerce has also displayed a good performance and has had a contribution of around 15-16% in American sales. As the global economy is opening, so things are improving in UK, Europe, and others as well. So, the numbers are looking strong, and we have provided a projection of Rs 12,500 crore by 2025, 14% growth and maintaining the same, I would like to say that in this quarter, textile will have 10% contribution in growth, 50% of flooring – our upcoming business, and 25% of advanced textile. They will have a very big contribution to our businesses going forward because still our emerging businesses along with the core businesses, flooring, advanced textiles, our brands, our licensed brands, e-commerce have contributed around 21% to our top line.

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Q: You have successfully managed to reduce the debt by Rs 83 crores which is a significant number. How are you managing it and how do you plan to reduce it going ahead?

A: First I would like to talk about the debt, we have invested Rs 172 crore in our projects in the first quarter. Overall, we have a plan of Rs 600 crore across advanced textiles, floorings, and the Brownfield Project, which is coming in our textile section. It is likely to be completed by quarter three or four. Our debt was quite low in this quarter, in fact, it is around Rs 2,249 crore, which is Rs 404 crore lower compared to June 2020, and we will have an eye on it. But as these projects will kick in the whole production and all will also kick in. So, we are very confident to turn around and I think it is a definite positive that the kind of capacity expansion that we are going towards. I will say that a 7% expansion is occurring in our towel, which will take our capacity to 85,000 metric tonnes per annum, our sheets will increase by 20% by the third quarter and around that time, rugs will increase by 80%. So, our capacity is ready for a kind of buoyancy that we were looking at because India is going to be a prime spot, the whole Government of India will support this whole industry. I think India has a lot to gain and, we are ready and prepared for it. 

Q: How much CapEx you are lining in the short-term and in the long-term do you have any further plans to grow aggressively?

A: First of all, as I informed you about the Rs 600 crore of expansion and going forward, we will see that what is happening. In fact, at Welspun India, we generate free cash flows quarter-on-quarter and with a healthy bottom line that we have, we look at funding our own projects through internal accruals. So, if something is there in the future then let’s see what happens there but there are a lot of chances are there that we will have to do more integration because you have seen the scenario of cotton in relation to the ongoing Xinjiang’s cotton scenario in China and globally, there is a lot of sensitivity in a completed integrated supply-chain from cotton source from Xinjiang to end-to-end, so we are seeing an opportunity on the front. But, definitely, there is a lot of exploration that is happening. 

Q: The government has a focus on the sector and have good schemes to create India as a large textile hub. So, what contribution you will have on the front from what it is today to what it will be few years down the line? Also, the government recently extended the Rebate of State and Central Taxes and Levies (RoSCTL) scheme on exports of garments till March 31, 2024. How do you see this move and how is it going to benefit you? Beyond, this there are talks related to mega-cluster parks and the government is also working on textile. So, how do you see this development and what impact it will have on your company?

A: First of all, RoSCTL has had a big impetus and the biggest thing is that it has been extended till 2024 and that is going to play to a level playing field and gives a lot of encouragement to the sector, which is the maximum employer in this country after agriculture. So, it has been a big issue and if we have a look at it then the scheme will have an impact of 8.2% but in our category, where towels & sheets, has a 70% contribution, will overall have a 4% impact. So that is where we are looking from a perspective of RoSCTL but it is a mega boost to the whole Indian industry and putting it on the map of the world, very very integral to India’s growth and employment as well. You also talked about the parks, and I will talk from the perspective of Welspun and will like to say that it is going to be a very big opportunity that the government is doing in terms of the park, it will be great for the MSMEs because MSMEs are the bedrock for the textile industry. At Welspun India, we have our own industrial park, which is located 1.50 to 2 kilometres away from our factory. And that helps us to have just in time inventory for our trims, packaging and other things and also reduces the Carbon-footprint. Going forward there will be another important issue and that will be sustainability, ESG and that is, I think, is going to be the fundamental of doing the textile business and businesses so far going forward. 

Q: You have a strong global distribution network, and it is well known. How will you manage it more efficiently? Also, you have also worked on tie-ups including Target in the US. So, will we get a chance to see any more actions in this direction in terms of your global distribution network?

A: If we will talk about the domestic distribution globally then our warehouses have a complete integration in the US. Currently, we have three warehouses from where works like pick & pack, B2C and the pallet-in pallet out is performed. We have warehouses in the UK, the Middle East, Germany, and India. Fundamentally, we do predictive analysis for the customers, and we work as partners to them. So, as a result, we are just in time for our customers and for us, it is a service factor for our customers. So that is where we work as a partner, and we have a 360-degrees approach, and we are the FMCGs of textile and we work from farm to shelf. As far as partnerships in the future are concerned, we have two licensed brands Martha Stewart, which had tremendous growth of over 80% YoY. Recently, we have tied up with Scott Brother, Scott Living. I would like to give an idea of growth like in 72-hours; we could sell around 95% of our goods on the QVC channel. Christy, which is our brand of Jewel and Crown. The Wimbledon season received around half a million eyeballs this season. So, SPACES and Welspun, we can’t forget it. I would just like to say that we have been a home solution provider and we are just not a textile manufacturer, but we are the FMCG of the textile and we have a portfolio of brand licenses and of course, e-commerce has become an integral part of Welspun. 

Q: A lot of inorganic growth opportunities is available and the pace at which you are increasing and the growth targets, I think, you have will need an inorganic growth opportunity will be required. So, are you looking for something, if yes, what is the segment you are looking forward and what will be the ticket size for it?

A: I will not say that it is far fetched and there are great opportunities for Welspun India right now because I think it will be important to debottleneck things where the bottleneck is present. SO, we will look forward to such opportunities maybe it is related to the backend integration or for enhancement of our brand. So, exploration is going on and let’s see what folds out.