Interview with Shujaul Rehman, Chief Executive Officer, Garware Technical Fibres Ltd
In this exclusive interview, Shujaul Rehman Chief Executive Officer, Garware Technical Fibres Ltd asserts that their approach includes a structured plan for market visits by our R&D and business teams, enabling us to enhance and adapt our offerings to meet the evolving demands of our customers.
How is Garware positioned to capture the projected growth of the global technical textile market, reaching USD 274 billion by 2027?
Garware is strategically positioned to leverage the anticipated growth of the global technical textile market, which is forecasted to reach USD 274 billion by 2027. This expansive market encompasses diverse application segments and products across woven and non-woven categories.
Garware Technical Fibres Limited (GTFL) specialises in woven textiles, particularly in three key application areas: Agro tech, Geo tech, and Sports tech. Within these segments, GTFL offers a range of specialized products, such as marine fishing nets, aqua cages, sports nets, shade and insect nets, safety nets, cover tarpaulins, mooring ropes, geo bags, geo tubes, geo grids, and more.
In these targeted application segments and products, GTFL holds a prominent position as a leading player in the global technical textile market. The company perceives significant opportunities for growth, both in international exports and within the Indian market.
A notable growth segment for GTFL is the aquaculture market, which falls under Agro tech. GTFL is recognised as the largest producer of salmon aqua nets globally. Given the rising global consumption of salmon, with per capita consumption expected to reach 20 to 22 kg by 2028 and production set to reach 5 million tonnes, GTFL sees stable and increasing demand for its salmon aqua nets. Moreover, the company has strategically diversified into non-salmon markets in the Mediterranean and Southeast Asian regions, expanding its market reach.
With a dedicated team focusing on both salmon and non-salmon markets, GTFL's combined addressable market size is estimated at around USD 185 to 190 million.
In the sports segment, GTFL targets an addressable market size of approximately USD 20 million, primarily with its core netting products, where the company holds an estimated market share of 30 to 35 per cent. Additionally, GTFL is actively engaged in allied products within the international sports market, enhancing its market presence and revenue streams.
What specific strategies are in place to capitalise on the rising demand for geosynthetics and non-woven technical fabrics?
To capitalise on the growing demand for geosynthetics and non-woven technical fabrics, specific strategies are being implemented:
The strategy for Geosynthetics is centred on several key sectors in India, including slope stabilization and geo-hazard mitigation, landfills, and coastal and riverine protection. Additionally, targeting export markets in coastal and riverine protection and slope stabilization segments is part of the strategy.
Our aim in India is to establish ourselves as one of the top players in these segments by introducing innovative products to the market. Simultaneously, in export markets, we strive to become the preferred partner in niche markets.
The addressable global market for these strategies is estimated to be around USD 700 to 800 million. However, we do not venture into non-woven technical fabrics due to our experience indicating that it is a commoditized product.
What are the biggest challenges Garware faces in the current market environment?
The penetration levels of technical textiles in the Indian market are currently only around 10 per cent. Customer awareness regarding the benefits of technical textiles is still gaining traction, given the prevailing market trend of using traditional products. As awareness grows regarding the advantages of technical textiles, the market is expected to recognise their value, cost competitiveness, and durability.
In contrast, export markets show higher penetration levels, exceeding 30 per cent in various geographical regions. However, reaching different countries on time remains a challenge, especially considering transit times.
The current scenario, including challenges like the Red Sea factor and container availability issues, contributes to increased freight costs and delivery times in export markets, inconveniencing customers.
Our products are primarily polymer-based, and fluctuations in global oil prices significantly impact raw material costs. While we do pass on the increase in raw material costs to customers, there may be a slight time lag due to pipeline orders and inquiries.
How is Garware preparing for the future of the textile industry, considering technological advancements, and changing consumer preferences?
We actively seek opportunities in technical textiles for both domestic and export markets. Our approach includes participating in relevant exhibitions, seminars, and symposiums for key application segments like Agro tech (including Fisheries), Geo tech, Sports, and Infrastructure. We engage regularly and systematically with the market through our Marketing & Sales team, as well as involving our R&D & Manufacturing team. This ensures that we stay updated on industry developments and customer needs, allowing us to tailor our offerings effectively.
We invite customers to visit our manufacturing facilities to showcase our capabilities and products. This not only fosters transparency but also builds trust and confidence in our brand.
To meet increasing demand effectively, we expand our capacity modularly. This approach enables us to scale our operations efficiently while maintaining quality standards.
Investing in training, reskilling, upskilling, and recruitment for our workforce is a priority. We believe that a skilled and motivated team is essential for driving innovation and delivering high-quality products and services.
Operating a dedicated technology development wing within our R&D function allows us to stay at the forefront of technological advancements. This ensures that we can offer cutting-edge solutions to our customers and remain competitive in the market. Our Solution Provider Approach to business opportunities emphasizes comprehensive and tailored solutions. This approach enables us to address the unique needs and challenges of our customers, strengthening our relationships and driving business growth.
What metrics does the company use to track and measure its progress in improving margins and profitability?
Garware is strongly focused on profitability, being a margin-driven company. We use several key metrics to track and measure our progress in improving margins and profitability. These metrics include volume, value, fixed costs, cash flow margins, operating profit (OP), and Return on Capital Employed (ROCE).
Our approach to measuring progress is governed by strategic imperatives and operational budgets for each financial year. We conduct structured monthly reviews where we thoroughly analyse the strategic imperatives and financial performance of each business unit. These reviews involve discussions with the business teams, including Manufacturing, Supply Chain, and Finance, following a structured agenda. During these reviews, we identify gaps and take corrective actions to address them.
To provide context, our performance data reflects significant growth. For instance, our Profit After Tax (PAT) has shown a Compound Annual Growth Rate (CAGR) of 23 per cent from Fiscal Year (F) 2014 to F23. Similarly, our EBIDTA margins have improved substantially, ranging from 10-14 per cent from F14 to F16 to 20-23 per cent from F20 to F23. These figures highlight our continuous efforts and progress in enhancing margins and profitability over the years.
What are the long-term growth aspirations for Garware? How does the company plan to achieve them?
We typically do not disclose specific growth targets publicly, but internally, we have a comprehensive five-year strategic plan for the company. This plan encompasses various business initiatives aimed at achieving our growth aspirations. Our primary goal is to enhance and expand our market leadership across different application segments, becoming the preferred choice for both our users and channel partners. Our growth strategy revolves around leveraging our core competencies.
As we progress towards profitable growth, we aim to maintain our current Operating Profit (OP) level at around 15 per cent in the long term. This approach reflects our commitment to sustainable and profitable expansion in the market.
How is Garware planning to expand its product portfolio and production capacity to meet the growing demand for technical textiles?
Expanding our product portfolio is a crucial aspect of our business strategy. We allocate around 25 to 30 per cent of our annual business to new products as part of our established norm. Our approach includes a structured plan for market visits by our R&D and business teams, enabling us to enhance and adapt our offerings to meet the evolving demands of our customers. We conduct monthly reviews of new products, focusing on key metrics such as volume and margins to ensure optimal performance and alignment with our growth objectives.
Disclaimer: The opinions expressed above are personal and may not reflect the views of Dalal Street Investment Journal.