SVG Fashions Navigates a Changing Textile Landscape
Mr Sandiip Agarwwal
Director of Raj Rayon Industries Ltd and
Joint Managing Director of SVG Fashions Pvt.
The textile industry, a cornerstone of global trade, is experiencing a period of profound change. Consumer trends, technological advancements, and environmental concerns are all weaving a new tapestry for fashion’s future. At the forefront of this transformation is SVG Fashions, a vertically integrated textile manufacturer headquartered in India.
From Yarn to Garment: A One-Stop Shop
Established in 1984, SVG Fashions has evolved from a weaving and processing unit to a comprehensive player in the textile space. Their journey reflects a shift towards vertical integration, where companies control every stage of production, from raw materials to finished goods. Across their facilities, they orchestrate the entire process, transforming polyester into yarns, fabrics, and ultimately, readymade garments, all tailored to client specifications. This allows for greater control over quality, cost, and delivery timelines.
Sustainability Stitched into the Fabric
SVG Fashions recognises the urgency of environmental responsibility. They champion sustainable practices, demonstrated by their state-of-the-art effluent treatment plant in Ankleshwar. This facility recycles over 80% of wastewater, minimising the environmental impact of its operations. Looking ahead, sustainability is embedded in their vision, paving the way for a more eco-conscious future.
The Art of Acquisition: Breathing New Life into Raj Rayon
In 2021, SVG Fashions made a strategic move by acquiring Raj Rayon Industries Ltd. This acquisition served a critical purpose: backward integration. By taking over Raj Rayon, SVG gained control of the entire polyester value chain, from creating the raw polymer to finished garments. Raj Rayon, previously shut down, presented an opportunity for SVG to revitalise its production and modernise its facilities. This strategic move paid off quickly, with Raj Rayon achieving a turnover of 750 crores within the first year of Turnaround.
Reweaving a Company: The Raj Rayon Story
Raj Rayon’s acquisition wasn’t without challenges. The company had been plagued by outdated machinery, poor financial management, and consistent losses. SVG, however, saw the potential in Raj Rayon’s production capabilities. Their understanding of the Polyester business, coupled with a desire for vertical integration, made the acquisition a strategic move. Investing nearly 300 crores on top of the initial cost, SVG breathed new life into Raj Rayon, propelling it towards a brighter future.
Vision 2029: Building on Strength
Looking ahead, Raj Rayon has a clear vision for the next five years. Their primary focus is on increasing value addition to their polyester filament yarn. This will be achieved by maintaining high standards, supplying high-quality yarns and fabrics for various applications, and significantly increasing their production capacity. Their goal is to become a major supplier of polyester for SVG’s production, aiming to reach 400 tons per day by the end of 2024 and further expand to 700 tons per day.
Synergy Through Independence: SVG and Raj Rayon
While SVG acquired Raj Rayon, the two companies have not merged. SVG recognises the technical hurdles associated with merging at present. Instead, they operate as separate entities with shared management and core competencies. This fosters a symbiotic relationship, where SVG benefits from a reliable source of raw materials, and Raj Rayon leverages SVG’s expertise, market reach and most importantly quality feedback.
Strength in Numbers: The Consolidation Trend
The SVG and Raj Rayon story highlights a growing trend in the textile industry: consolidation. Companies are merging or being acquired to build resilience during economic fluctuations. Cyclical profits, high fixed costs, and downturns can be crippling for some textile companies. Acquisitions offer a lifeline, allowing struggling companies to keep their essential infrastructure operational. However, success in this strategy hinges on a measured approach, focusing on cost reduction and organic growth over rapid expansion.
Slow and Steady Wins the Race: SVG’s Measured Approach
SVG embodies a philosophy of calculated growth. Their strategy prioritises organic expansion, coupled with strategic acquisitions like Raj Rayon. This cautious approach avoids unnecessary risks and allows them to achieve goals within a realistic timeframe. SVG believes in utilising existing capacity efficiently before venturing into new acquisitions, ensuring a sustainable path to success.
Bridging the Gap: Advice for Young Entrepreneurs
Sandiip Agarwwal, Director of Raj Rayon Industries Ltd and Joint Managing Director of SVG Fashions Pvt. Ltd., offers valuable advice to young entrepreneurs entering the textile industry. While he emphasises the importance of the foundation laid by previous generations, he acknowledges the rapid changes driven by technology and online shopping. He encourages young people to leverage their creativity and embrace new sales methods, particularly in the booming space of online commerce. Collaboration between established firms and agile start-ups can lead to innovative solutions and a thriving industry ecosystem.
Fast Fashion vs. Sustainable Style: A Coexisting Future?
Agarwwal argues that these trends can coexist. Minimalism, more than just a fad, reflects a growing environmental consciousness. The concept of garment recycling echoes the recycling of plastic bottles, paving the way for a “circular economy” in textiles. In the future, clothes could be broken down and reborn as new fibres or materials. While this won’t happen overnight, a significant shift in textile production and consumption is on the horizon.
Fashion, by its very nature, is cyclical. Trends like flared pants or cuffed sleeves come back into style, but the core concept of expressing oneself through clothing remains constant. Minimalism and sustainability will likely coexist with broader trends. The next generation of consumers will have a powerful voice, demanding clothing that aligns with their values and avoids excessive consumption. The industry will need to adapt to cater to both minimalist/sustainable preferences and the ever-evolving trendscape.
Shifting Sands: Consumer Trends in Textiles
Agarwwal observes a mix of trends in consumer preferences. Minimalism hasn’t taken centre stage yet, with people generally having larger wardrobes than before. Knitted fabrics are a major growth area, replacing woven fabrics in many garments due to their comfort and stretch.
Another prominent trend is the rise of recycled fabrics made from plastic bottles. SVG has been supplying such fabrics for over a decade to major brands with ambitious sustainability goals. As consumers become more environmentally conscious, brands will need to adopt sustainable practices like recycled materials to stay competitive. While currently driven by international brands, Agarwwal believes Indian brands will follow suit.
The Fabric of the Future
The textile industry is poised for a period of exciting transformation. SVG Fashions, with its commitment to sustainability, strategic acquisitions, and focus on innovation, is well-positioned to navigate this changing landscape. As consumer preferences evolve and technological advancements emerge, companies that embrace adaptability and a holistic approach will be the ones who weave the future of fashion.
