Mukund Choudhary-Managing Director, Spentex Industries

Please take us through the turnaround in your bottomline, how did you achieve that?
Since the time of economic slowdown of 2008, we have been suffering. Moreover FY09 was also a bad year but things started improving and FY10 was a nice year and FY11 we did good. Company was always fundamentally good and we faced the bad years because of adverse market conditions. Otherwise our unit is very good and modern. Our team is committed to give their 100 per cent. We regularly upgrade our machinery for smooth running of our operations. It was just question of right time when it came we made the turnaround.

What is your strategy on overseas market and especially CIS?
CIS countries, it was in 2005-06 the opportunities came to us and then we did a lot of studies and surveys for the feasibility to venture out there. Our team said that it is good opportunity to avail and we went ahead. It was not pinpointed to certain country and went there; Uzbekistan is certainly a big cotton growing country which is prime raw material for us. The energy prices is much more competitive than in India. So that way it was good.

What is your present capacity both global as well as domestic?
We have capacity of little more than 500000 spindles out of which about 225000 spindles capacity is in India and balance is outside India. And for the time being we are not going to increase the capacity for at least next couple of years. We want to consolidate as this year is not so good due to volatility in the commody prices. Not only that I would blame Indian government on putting us on a very tight position. In fact if you look at the reserves of the companies at the end of the first quarter they are all in negative. We are not doing well either. Yarn spinning industry has been affected more because of the decision by the Indian government to ban on export of yarn in the month of December 2010 that again was relieved on April 2011. It affected us for the four months when we were not allowed to export. Not only we faced pending order book, we also gathered so much of inventory as a company and as a country. When we all went to sell in the open market the prices came down. So, we all have suffered huge losses.

What kind of policy changes that you expect from the government?
If government does not changes the policy which would be the best policy and that is what we want. Last year the government took the drastic step of banning the export of yarn which was not warranated. Yarn is a manufactured product it is not an agricultural product and the amout of investment that industry has made in this sector is very very huge. Without thinking of all the investment been made as capital by all these companies they banned the export.

What is your share of cotton and synthetic?
In India its all most 50:50. Globally that is outside India it is 80 per cent cotton.

Are you planning to for forward integration into readymade garments?
No we are not planning for any forward integration and will stick to yarn and a little bit of fabric.

What kind of potential you find in domestic market?
Domestic market is very big market and when it comes to yarn India has overcapacity of 75 per cent in yarn manufacturing and we need to export it. If we do not export then it will be a big problem.

What is export revenue as percentage of total revenue?
Almost 70-80 per cent we export and rest 20-30 per cent we sale in the domestic market

What are the risk and challenges do you see in current scenario?
Inventory management and cash flows are two big challenges.

How are you creating value for the investors?
If Government of India does not harm us than we will certainly do that. We will come back to profit again then only we can create value for the investors. That is what we want to do.