Mumbai-based Kennigton Industries that started with trading 15 years ago, has not just maintained its strong hold in import of man-made yarns but has also further expanded its specialities to all kinds of grey yarns. Speaking to AO, Rajeev Tulshyan, Chairman of the company talks about the market conditions, growing demand for man-made yarns and his future plans for the company.
Riding strong on imported yarns, Kennigton Industries has complete control of the products that it supplies with strategic tie-ups in China of 3,00,000 spindles for polyester and recycled polyester. The company also has access to 1,00,000 spindles for viscose in Indonesia. With pan-India presence, Kennigton has warehouses in Bhiwandi for Mumbai and northern markets, and in Kerala for Erode and other textile hubs in the south. Of late, the company has witnessed a surge in the demand for recycled polyester. “We are selling 100 containers of recycled yarn per month and many companies in the US are making it necessary to use recycled yarn, which is pushing up the requirement consistently,” informs Rajeev. Apart from sustainable yarns, the company also caters 100 per cent polyester spun yarn, virgin polyester spun yarn, slub yarn in polyester, cotton & polyester blended yarn and polyester viscose yarn to name a few varieties.
With 80 per cent business for basic yarn and 20 per cent for high-value-added yarns, the company is hopeful about the market conditions improving and the demand getting stronger. “Market has improved after December and the demand has also gone up with prices for basic crude coming down to an average of US $ 32-35 per barrel. Already we are close to bottom and I feel that maximum it will come down to US $ 25 per barrel, which will comparatively be a negligible loss against it coming down from US $ 100 to US $ 35. Even at US $ 25 the price will not sustain. Yarn which was stagnant at Rs. 160 a kg a year ago has dropped to Rs. 120 a kg, and in March the price of texturized polyester yarn, the benchmark yarn variety, has fallen further from Rs. 120 a kg to Rs. 105 a kg, so people’s confidence on man-made yarn is also increasing. Our stock bearing power has also increased,” explains Rajeev. Further he adds, “This would benefit not just the end customer, but also the whole supply chain.”
Supporting the positivity in the Indian market is China, which is pulling out of the spinning business, creating hope amongst Indian industry that the orders will come to them. “Though currently, there is a glut situation in India but since the viability of China is getting lower, we see a future in India as we have already a strong marketing setup in the country,” informs Rajeev. Though China has been pulling out of the spinning business, it is too early to predict the impact as it remains to be seen how much of their capacity will actually be reduced when the Government is so supportive of them. “All their machineries, factories are loan-free. Their industry is flourishing so they have to maintain that. But growth, which is happening in India is not happening in China for sure,” reasons Rajeev. Nonetheless, currency devaluation in China is creating an atmosphere of uncertainty, and February 2016 itself witnessed this twice creating ambiguity amongst the Indian players as well.
In the meanwhile, the market demand continues to keep constant between all kinds of yarns, i.e. basic and high-value added including, polyester, viscose, man-made fibre, etc. While drawing comparison between cotton and viscose, the companies believe in its viability against cotton. “Viscose is a natural fibre, which is environmental friendly. People don’t use much of this because it has a 12 per cent duty making it expensive, while cotton, which is grown in the country, is directly available. But viscose is actually a much better product than cotton,” believes Rajeev. He questions the perception that viscose is for the poor…, “Who said it a poor man’s substitute for cotton, rather it’s a rich man’s substitute,” avers Rajeev. He points out that man-made yarn is much more in use internationally, than cotton.
In fact, globally 60 per cent of the fabrics used in garments are polyester while the rest 40 per cent is cotton. “Internationally the trend of readymade garments came much earlier than when it came in India. A majority of Indians are still buying fabrics and getting clothes stitched. But now the trend of readymade garments is fast spreading across India, even in the villages, so the demand for polyester will definitely increase,” argues Rajeev. Currently, the company is concentrating on polyester and polyester blends for both weaving and knitting, manufacturing at a set of dedicated factories in China and Indonesia. “We have fixed the parameters of quality within the factory and while they look after the production, we look after the marketing part,” asserts Rajeev. The company is currently importing at an average 125 containers per month and around 1,500 containers per year. For product development, the company relies on the team in China, while having a technical line-up in India who coordinates with them. “We study the market and look at what’s trending. R&D is very important. China is doing well in R&D that is why they are able to grow. Also, they are very quick in replicating. If you try to replicate Chinese yarns or products, then at least 10-15 tonnes of yarn will go in wastage and it will take a while to cover the cost, but China on the other hand gets that done perfectly, in one go,” exclaims Rajeev.
Depending heavily on the business model of importing yarn and selling it in India, Kennigton is now contemplating the advantage of a spinning setup in Maharashtra and Gujarat and also expanding its importing activities into countries such as Bangladesh to maximize market opportunities. In 2015, Kennigton did a business of Rs. 450 crore and with the company building the foundation for future growth; the hope is to take the leap nearer to Rs. 500 crore in the running year.
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