India: The Next Big Frontier for Textiles

Prashant Agarwal

Jt. MD and Co Founder - Wazir Advisors

5th August 2014

Presentation Flow

2

1

Global Trade

2

Changing Pattern of Fibre Consumption at Global Level

3

Disconnect in Fiber Consumption in India vis-à-vis Global Level

4

Opportunities for Indian Textiles Industry in Domestic & Export Market

5

Action Plan for Indian Textile Players

6

Global Study: ‘India: The Next Big Influence in Global Textile’

in 2013 Global Trade in Textile and Apparel 738 In US$ Billion 504 556 616 630 628 770 686 542 360 2000 3 2005 Date Source: UN Comtrade 2006 2007 2008 2009 2010 2011 2012 2013 . from US$ 738 bn. it slightly dipped to US$ 686 bn. today  The global trade in textiles and apparel has grown at a CAGR of more than 6% from 2000 to 2013  In 2012.Global trade of textile & apparel stands at US$ 770 bn. in 2011 but grew at a level of US$ 770 bn.

India is the second biggest exporter of textile & apparel Largest Exporters of T&A India’s Ranking in Global T&A Trade in 2013 Values in US$ Billion Country China India Italy Germany Turkey USA Bangladesh Vietnam Belgium France Rep.7% Share 2nd in Global Export with 5.2% share India has potential to double its export share from present 5% to 10% in next 10 years . of Korea Spain Pakistan Indonesia 4 Date Source: UN Comtrade 2013 Exports 274 40 36 35 28 27 26 22 16 16 16 16 14 13 2nd in Textile Export with 7% Share 6th in Apparel Export with 3.

000 2.000 6.Globally polyester consumption is growing & will continue to grow further World Mill Consumption by Fibre (excl Polyester and Cotton) World Mill Consumption by Fibre 70.000 4.000 0 30.000 Nylon 20.000 Ktes 60.000 Cotton Share of World Mill Consumption 2000 2005 Acrylic 2010 Viscose 2015 PP&Other 40% 10.000 8.000 40.000 35% 30% 0 2000 2005 2010 2015 Polyester Nylon Acrylic Viscose PP&Other Cotton 25% 20% 2000 2005 2010 2015 Cotton Share Polyester continues to grow market share. Other MMFs have relatively flat volumes 5 2020 Date Source: PCI 2020 .000 Ktes 50.

453 KT Excludes PP & Others 6 Date Source: PCI Industrial 43% Apparel 50% Industrial 5% Apparel 65% Home 30% Home 7% 2012 Total 41.332 KT Fibre Market by Product Home Textile Industrial Textile Polyester 2012 Total 8.859 KT 2012 Total 1.642 KT .080 KT 2012 Total 2.372 KT Acrylic Viscose Industrial 8% Polyester 83% Nylon 6% Acrylic 4% Home 27% Apparel 65% Viscose 7% 2012 Total 49.Polyester dominates in all end use categories Apparel Textile Market by End Use Industrial Textile 16% Home Textile 24% Polyester 85% Nylon 5% Acrylic 4% Viscose 6% Nylon 15% Polyester 63% Polyester 91% Acrylic 1% Apparel 60% Acrylic Nylon 4% 2% Viscose 3% Viscose 21% 2012 Total 51.920 KT 2012 Total 31.872 KT Apparel 46% Industrial 45% Home 9% 2012 Total 3.216 KT Nylon 6 & 66 2012 Total 12.

Fibre Consumption Trend in India Cotton 7 Polyester Others 60% 59% 59% 59% 58% 56% 55% 34% 35% 35% 35% 36% 37% 38% 6% 6% 6% 6% 6% 7% 7% 2000 2007 2008 2009 2010 2011 2012 Date Source: Fibre Policy 2011. Wazir Analysis . growth of value retail etc.But Indian textile industry is still Cotton focussed  Indian textile industry is primarily cotton focused with cotton accounting for nearly 55% of total fibre consumption in 2012  However. increased presence & sourcing by global brands where polyester fibre dominates. growth of women’s wear segment. consumption of polyester fibre is gaining momentum due to factors like fluctuation of cotton prices.

breeches and shorts M/B Woven 4.37 8. etc. M/B Woven 6. (0. W/G Woven 5.50% Jerseys.02% Dresses W/G Woven 5.07 1.85 0.05 0.94 0. bib and brace overalls. wind-cheaters.60% Dresses W/G Knitted 4. pullovers.03 End user Type - Knitted Overcoats.1 0.India’s presence is insignificant in some of the major MMF based product categories  India’s overall share in global textile and apparel trade is about 5% in 2013.40% Blouses. waistcoats Share 0.19%).  However. W/G – Women’s/Girls’ 8 * At 6 digit HS code level Data Source: UN Comtrade .07 0..58 0. wind-cheaters. etc.02% Overcoats. cardigans. which can give an exponential growth to India’s export of textile and apparel. capes.001 0.  The untapped opportunity remains in MMF based product categories.  Collective trade in these commodities is ~ US$ 208 bn. India’s Trade Share in Top Traded MMF based Apparel Categories in 2012 Category Total Trade Indian Trade (US$ Billion) (US$ Billion) 18. while India’s trade in them is only ~US$ 385 mn.001 0. shirts and shirt-blouses W/G Woven 4. cloaks.06 1.20% Note: M/B – Men’s/Boys’.90% Trousers. cloaks. capes. out of total 864 textile and apparel commodities* traded in 2012 there are 317 commodities in which India had a share less than 1%.35 6.3 0.

 By 2030. Global Fibre Consumption Trend Cotton 37% 36% 43% 44% 46% 48% 36% 36% 35% 33% Others 50% 50% 52% 31% 30% 31% 27% 21% 2000 9 2007 Date Source: PCI Fibres 20% 2008 19% 2009 59% Polyester 19% 2010 19% 18% 2011 2012 Widening gap between Polyester and Cotton fibre consumption 27% 18% 14% 2020 (P) 2030 (P) . it is expected that consumption of polyester will be more than double to that of the cotton fibre. fibre consumption at global level was majorly cotton focussed.Globally consumption of polyester will increase further  Till 2000.

Following are the few major trends which will help increased consumption of Polyester fibre in domestic market:  Increasing women participation in workforce will push the demand of western office wear.Consumption of Polyester based products will increase in domestic market as well Volatility and upward trend of cotton price has already pushed the fibre mix in favour of Polyester for major apparel an home textile products. seat covers and headliners  Stricter compliance norms and increasing workers’ awareness towards health and safety will create large demand for protective wear products 10 . airbags. party dresses as well as lingerie  India’s large young population base with increasing awareness towards fitness will increase the consumption of active-wear / sportswear  Increasing no. of school going children & consciousness of corporates towards their image are likely to create more usage of school & corporate uniform  Awareness of Indian women towards health and hygiene will cause increased women hygiene product usage  India’s emergence as global automobile manufacturing hub will surge the demand of technical textile products like seat belts.

To reap maximum benefit of the future scenario. India needs to focus on manufacturing of Polyester based textile products .

China. Taiwan & South Korea are the Global leaders in MMF based fabric Countries with > 4% Share in Global Exports of MMF Based Fabrics China Italy China 27 % Taiwan Italy South Korea USA Turkey France Japan 6% 5% 5% 5% 4% 4% 4% Germany South Korea USA 35 % Japan 6% 6% 5% 5% 4% 4% 4% 9 33 % South Korea Germany USA 6% 5% 5% 5% 4% 4% 4% Taiwan 35 % 36 % Japan 34 % 8 Italy Germany 5% 5% 5% 5% 4% 4% Turkey Taiwan China 38 % South Korea Germany Italy 5% 5% 5% 5% 4% 4% Taiwan South Korea Germany 40 % 5% 5% 4% 4% 4% Italy USA 37 % Turkey 36 % USA 38 % Others Others Others Others 2008 South Korea USA Turkey Others 2007 Taiwan China China Italy Turkey Others No. of Countries 31 % Taiwan 6% Germany China 2009 2010 2011 2012 8 7 7 6  Top ten exporters of MMF based fabrics constituted 75% of world’s total trade in 2012  China has over dominance in the exports of MMF based fabrics with 40% share followed by Taiwan having export value only one eighth of China 12 Date Source: UN Comtrade .

3 million meter Company reported revenue of US$ ~8 billion in FY 2013 Group had consolidated revenue of US$ 5.000 MT PFY: 150. weaving/ knitting.3 billion in FY 2010 Group reported consolidated revenue of US$ 10 billion in FY 2013 Company Revenue 13 Date Source: Company Websites Polyester. garment fabric and home textile fabric In-house Facilities Fibre & filament manufacturing .000 (hydraulic & air-jet) Spandex: 150. Nylon. PFY: 600.Leading companies in MMF based textile manufacturing are mostly vertically integrated with big capacities Taiwanese competitor Chinese competitor South Korean competitor Far Eastern New Century Jiangsu Hengli Group Hyosung Products Polyester fibre & filament.000 MT Loom: 12. performance fabrics and carpets . spun yarn. spinning.000 MT Spun Yarn: 395 MT Fabric: 22. processing and apparel manufacturing Filament manufacturing and weaving Fibre & filament manufacturing.000 MT Processing: 2. Spandex fibre & filament. weaving and processing Capacities PSF: 360. apparel Polyester filament yarn. knitted & woven fabric.000 MT Apparel: ~83 million pcs. Aramide & carbon fibre.

• Weaving infrastructure will need to be upgraded to handle specialty yarns and complex fabric types Knitting • Processing will be the main challenge for Indian sector • Players will have to opt for tie-ups with international partners for technical and market exposure Processing Garments 14 Home Textiles Technical textiles • Industry will have to focus on design and product development aspect to sensitize demand growth • Technical textiles investments will be required from Indian as well as international players . we will see international players investing on their own or in partnership with Indian players Staple fiber Filament • Existing Indian yarn spinners are competitive globally. They will be able to meet the demand growth through expansions as and when required Yarn spinning Weaving • Significant investments will be required in knitting including warp knitting.India has to work across its value chain • Existing Indian manufacturers can scale up the capacities but for specialty fibers.

It would be difficult for any new entrant to establish itself in this business scenario. The intra-industry competition level is very high and it is majorly a commodity business. Chinese. 15 Fabric Manufacturing Processing • Weak-link in manmade fibre based textile value chain of India • Smaller units are unable to take the advantage of economy of scale • Too many players are involved in this part of the value chain. technology in JV with Korean. which increases the cost & degrades the quality of service • Most units have old technology. processing as well as garmenting is an attractive investment opportunity Attractive Investment opportunities Fiber Manufacturing India is leading manmade fibre manufacturer of the world and has over capacity of manufacturing polyester fiber Spinning India is globally very competitive in spinning and enjoys leading position. Japanese companies .Investment in MMF based fabric manufacturing. which are not suitable for high quality products • Focus is on commodity products • Lot of MMF based processed fabric are imported to India Garmenting • Investment in fabric manufacturing will open immense opportunities in garment sector • Bigger players can leverage this opportunity by setting large scale factories with defined process systems • Indian players can bring high end garment manuf.

455.000 MT) by 2030 16 Source: Wazir & PCI Analysis .Indian textile industry will consume more Polyester than Cotton within next five years Total Fibre Consumption At Mill Level Values in ‘000 MT Polyester Other MMF Cotton Other Natural Fibres 9163 3% 9741 4% 10189 4% 10670 5% 11093 4% 11392 3% 11678 3% 17951 5% 51% 47% 46% 45% 44% 43% 32% 48% 11% 6% 6% 6% 7% 7% 8% 8% 40% 41% 42% 43% 44% 45% 46% 53% 2014 2015 2016 2017 2018 2019 2020 2030  Share of manmade fibre in total mill consumption is expected to reach ~65% by 2030.  A drastic change is expected in the mill consumption of polyester fibre. However. share of which is projected to grow to 53% (9. the share of cotton is expected to decrease from current level of ~55% to 32% by 2030.

The Next Big Influence In Global Textiles 17 .

PET and Film) • India’s polyester based textile value chain (yarn.Coverage of Study Report Chapter 1 Chapter 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6 Chapter 7 Conclusio n 18 • Global economic scenario with India in perspective (FY2013 – FY2025) • Global Textile & Apparel Industry • Indian Textile & Apparel Industry • Current and future structure of India’s polyester industry (Fibres. it will be concluded how India can influence the global textile industry by playing a major role in global polyester based textile trade . knitting to apparel) • Investment climate for India’s textile industry • Textile industry profiling of selected Asian countries • Based on the analysis done. weaving.

Benefits of the Study Benefits of the study 19 Insights of global scenario in Textile Supply Chain India’s positioning in global textile industry Investment opportunities in India  This report provides a comprehensive study of global textile supply chain.  Analysis of various gaps in Indian textile industry vis-à-vis its competing countries will divulge various opportunities in the Indian textile industry. Investors as well as existing players can understand various trends which will lead textile industry’s future. Thus. . investment opportunities will be identified.  To bridge the gaps in Indian textile industry. enhancing the prospects of investment through FDI or JVs with Indian companies.

Ltd. Tel : +91 124 4590 300 www.in +91 9871195008 Wazir Advisors Pvt.agarwal@wazir.in 20 .Prashant Agarwal Joint Managing Director prashant.wazir.