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BW Businessworld

BSL: Sustaining Growth

In the domestic market, BSL has added more distributors where it is focusing on increasing its business and market presence. Says Churiwal, “Clothing is a basic necessity of a person, and the whole world is a market.”

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The last few years have seen a remarkable improvement in the performance of Indian textiles operators. Bhilwara-based BSL, which manufactures apparel fabrics and furnishings, is no exception. When it forayed into the business of furnishings six years ago, business was slow, but BSL pressed on, and also continued its drive on exports. The result? The strategy has paid rich dividends, not only resulting in higher margins, but also a solid increase in profits.

Revenue has increased 5.6 per cent due to a mixed trend in prices, but the higher-margin furnishings business has contributed to greater profitability in the last three years. Profits grew 172 per cent CAGR in the last four years. Its bread-and-butter operations in apparel fabric has been its mainstay for many years, but in the last few years, the company has added furnishing fabrics to its roster of products.

That strategy seems to have played out handsomely in the last few years. “The furnishings division that was started about five years ago has had a long gestation period, and the fruit of that is now being seen,” says Arun Churiwal, CMD. Furnishings contributed around 5-6 per cent of BSL’s business a few years ago; now it contributes around 15 per cent with a bottom line contribution of about 24-25 per cent, informs Churiwal.

Exports form part of another thrust area. In the last three years, BSL has increased export volumes by 30 per cent, widening its geographical reach and exploring newer markets across all the continents. In the last few years, it has added new areas to its list of importing countries such as Canada and Chile, and has now begun exporting to over 50 countries.

Margins in the export business vary with areas depending on volume and pricing. Churiwal explains that the margins are mixed in the export market. In countries where volume growth is high, margins are thinner than countries where volumes are lower. “Rather than have an intensive strategy in one market, we have looked at exports extensively across areas. Exports to a diversified basket of countries help weather ups and downs in any particular area,” says Churiwal.

BSL has also taken up building the domestic market and expanding its footprint across India. As a result, it is continuously upgrading its weaving and processing capacities, and constantly implementing cost-reduction strategies. It is implementing a modernisation and expansion plan of Rs 40 crore to shore up its weaving productivity. It is also constantly looking at increasing its fabric quality and adding more valued-added products. Says Churiwal: “Cost reduction is a very important aspect of the textiles industry, including inventory management. Increase in capacity of weaving and processing is a continuous process.”

BSL operates not only at 100 per cent capacity but is even outsourcing certain portions of its fabric requirement to meet the mounting demand for fabrics. This is being done at not much higher costs compared to its in-house production. While growth is important, sustainable growth is equally so. In the last few years, the company has implemented zero liquid discharge, making it one of the few textiles companies in India that are 100 per cent compliant on this front.

Indian textiles are now facing much lower competition from China because of cost increases in the Chinese market. This places textiles competitively in the export market. Indian textiles are also strong in the yarn-dyed segment, which enables fabric manufacturers to add more designs. This has opened up even larger opportunities for the country.

In the domestic market, BSL has added more distributors where it is focusing on increasing its business and market presence. Says Churiwal, “Clothing is a basic necessity of a person, and the whole world is a market.”