The Covid-19 pandemic induced lockdown had impacted the global economy and brought it to a grinding halt. Many industries had to pivot fully while some had to pivot partially in their sub-segments and categories.
Textile was one such industry. In an interaction with TheSMEIndia, Vinod Kumar Gupta, Managing Director, Dollar Industries Limited, shares his thoughts on how the pandemic impacted textile industry, Dollar Industries, how they went for re-branding during the lockdown and came out with new product ranges and the how the overall financials have been for them. Edited Excerpts:
Q. How’s the impact of Covid-19 pandemic on garment manufacturing? And how has the sector revived?
The Indian textile and apparel industry is the second biggest employment generator after agriculture. Moreover, it contributes 2 percent to the country’s GDP as well as accounts for 15 percent of export earnings in 2019 fiscal.
In 2020, the economy experienced a massive blow by COVID-19 pandemic. Every single person participating in the industry has been tremendously affected by the coronavirus, which has wreaked havoc on their companies as well as their lives. With the whole country under nationwide lockdown, various transport facilities including trains and flights were suspended which really hurt the domestic operations in India. Moreover, the migrant workers bore the brunt of the nationwide lockdown, which really crushed their hopes and livelihoods in no time as factories had shut shop. The migrant workers started to returning to their native lands as they were unable to find jobs or sustain themselves in the city. Additionally, production of yarn in factories had also been put on hold during the lockdown.
Moreover, the upsurge in yarn export to Europe and the US since October, owing to the disruptions in their domestic production as well as them sourcing from China, has essentially resulted in a yarn shortage in the domestic market. As a result of this issue, hosiery brands have raised the prices of their goods. The condition is unlikely to change until July.
Apart from the negatives, COVID-19 has also opened up many avenues for the industry. It has given new opportunities for essential product categories such as masks, PPE Suits, and other meditech products a boost during the pandemic. Textile and apparel manufacturers started manufacturing these products and started supplying globally. Moreover, with the change in consumer behaviour due to the initial lockdown, many urban consumers working from home have drastically shifted to online for their shopping needs. Key segments such as athleisure or comfort wear has gained popularity during the pandemic. Furthermore, with the outbreak of COVID-19, health and safety has become a priority for everyone. The anti-viral and anti-microbial fabrics have emerged as the go to fabrics during the pandemic as the consumers have become more health conscious.
Q. How’s the period been for your company if we talk about the whole financial year?
We are currently on the route to recovery. The economy has been grappling with the socio-economic threats of the Covid-19 pandemic. Gradually, organisations have found alternate ways to sustain their businesses and it is imperative to think out of the box.
For Dollar, the lockdown period has been very productive. The first 45 days we were under a nationwide lockdown and our production was also halted. We did observe and implement the strict protocols laid down by our government during those 45 days. Post the initial lifting of the restrictions, we started our operations with all the safety measures. Due to the lockdown, our labourers in our manufacturing unit were stuck and could not go back to their native places. Keeping in mind their health and safety, we arranged for lodging and boarding facilities at the manufacturing unit.
During the lockdown, we planned to launch the new brand identity as well as the logo. We initiated our first ever digital launch in the presence of our brand ambassador, superstar Mr. Akshay Kumar. We even simplified our brand architecture into five broad categories – Dollar Man, Dollar Woman, Dollar Junior, Dollar Always and Dollar Thermals.
Later in the year, we joined hands with HealthGuard from Australia to launch our new range of anti-viral masks as well as innerwear for men. Moreover, we are planning to venture into the lingerie segment in future.
We digitized our internal processes and upgraded our systems – Digital Distribution Management, Sales Force automation, Auto Replenishment System, Moving to SAP
Since the hosiery industry is in the basic necessity segment, therefore the demands for our products have always been constant. Though initially, due to the lockdown phase we faced temporary hindrance, the market post that is on a recovery mode. With the lifting of the lockdown, the sales have picked up and we have witnessed 3X growth in our e-commerce business.
The company achieved revenue of Rs 419 crores for half year ended 30.9.20 whereas the Company recorded total revenue of Rs 259 crores approx. The Export revenue for the six month ended was on a lower side at Rs 23 crores approx. due to pandemic.
However, the Company did work on improving its working capital cycle which in turn improved the cash flow of the Company. The Company recorded highest cash flow these 6 months ended. Considering 135 days of operations the total working capital cycle stood at 168 days as on 30.9.20 as compared to 196 days as on 30.9.19. This improved cash flow helped the Company to lower its debt.
Q.Geographically and demographically, Where’s the major demand coming from for your products?
There has been no major change in the demand that we are witnessing.
- North – 43%
- East & West – 25% each
- South – 7%
Q. A lot of textile business has gone to countries like Bangladesh and Vietnam? Your thoughts?
As a homegrown brand, we firmly believe in the concept of ‘Vocal For Local’ and think that this would help rebuild the fallen economy, while uplifting those businesses that are highly in need.
Q. How can the government give a favourable domestic manufacturing environment to promote more textile manufacturing?
Many nations have suffered greatly due to the current pandemic situation. The coronavirus has taken a toll on the textile industry as well. Though most economies are still struggling to recover, India has emerged commendably from the third quarter. Even after the country came to a sudden halt for months which really affected the finances and supply chains, the textile industry is trying to steadily return to its normal form gradually. Though our strong organizations deserve a praise in handling the crisis situation with a lot of ease but the numerous initiatives and schemes introduced by the Government of India to promote positive movement in the textile industry cannot be overlooked.
But there are other measures that the government can take to create a favourable domestic manufacturing environment.
- Uniform GST structure for apparel and textiles to address the problem of higher duties on inputs
- Abolishing anti-dumping duties on viscose staple fibre (VSF)
The rising prices of cotton and yarn which is forcing us to increase our product prices 5 times in the last 5 months.
Q. How are you planning growth for the coming next few months?
In the coming few months, we will be focusing more on the online/e-commerce sales as we witnessed a very good response on them. Moreover, we will also be concentrating on digital process implementation or up-gradation of our internal digital platforms to smoothen our operations.
- Sales force automation system (Field Assist)
- Auto replenishment system (Vector flow)
- Moving to SAP
- Digital Distribution Management system
At Dollar, we are focusing on ‘Project Lakshya’ where we are working to increase the reach and range in the market in the areas where our direct presences through distributors are low or negligible.
We are also planning to enter the booming lingerie business and planning to build up our kids wear portfolio since we believe that these two are still untapped segments and have a huge potential for growth in the coming years.
Dollar as a company always believes in adding value hence we are not only focusing on the growth aspect but also firmly believe in giving back to the society. Hence, Dollar Foundation, the CSR wing of Dollar Industries Limited has initiated and executed a number of CSR activities which are not only beneficial for the society but also spread a lot awareness for a lot of issues that has plagued the society.
For Dollar, ‘Going Green’ is a way of life for us and also believe that it is a powerful way to not only enhance the business but also generate a competitive differentiator for our company. Moreover, Dollar takes the collective responsibility to for our environment to leave behind a lasting legacy for the future generations. Under the ‘Green Mission’ we have commissioned a 4 MV solar power plant which has the capacity of generating 75 lakh power units annually at their manufacturing facility at Tirupur. Being a responsible corporate, Dollar Industries Limited has always paid special attention to environment friendly practices and opted for renewable sources of energy. From 2008 – 2013, the company has installed four windmills with a power generation capacity of 4.95 MW, that can generate approximately 70 lakh units of power annually. Apart from this, our manufacturing facility has a capacity of 1000 KL Zero Liquid Discharge, which treats the water chemically and biologically. The treated water is then reused in the factory while the remainder goes to watering plants and landscaping the area.