Home Interviews Pioneer Embroideries Limited (PEL) is a leading manufacturer and exporter of value-added Specialty Polyester Filament Yarn (SPFY) and embroidery and laces

Pioneer Embroideries Limited (PEL) is a leading manufacturer and exporter of value-added Specialty Polyester Filament Yarn (SPFY) and embroidery and laces

by Surendra Sharama - Sep 22, 2021
Pioneer Embroideries Limited (PEL) is a leading manufacturer and exporter of value-added Specialty Polyester Filament Yarn (SPFY) and embroidery and laces, Interview, KonexioNetwork.com

PEL has a state-of-the-art SPFY manufacturing facility at Himachal Pradesh and three Embroidery & Laces manufacturing facilities in Gujarat, Dadra & Nagar Haveli and Tamil Nadu. The company owns two strong brands, “SILKOLITE” in the SPFY segment and “HAKOBA”, a heritage brand, in the retail segment for Embroidered Fabrics, Garments, Salwar Kameez Dupatta (SKDs) & Sarees. PEL has announced a Rs 58 crore project to expand and strengthen its global presence.

Pioneer Embroideries’ Managing Director, Mr. Harsh Vardhan Bassi, discusses the future growth plans of the company and his experience in various verticals of textile industries which has helped PEL in growing the business over the years.

1. We have seen a good demand in the textile segment. In your 4QFY21 concall, you mentioned that you are working at 95% capacity utilization in the SPFY business, so what are growth plans going forward to tap the rising demand?

Yes, we were working at 95% capacities in 4QFY21 as mentioned during the concall. So, we have taken up an ambitious Rs 58-crore project to expand and strengthen our global presence in SPFY business. The project will be funded through internal accruals of Rs 18 crore and the balance through bank borrowings. With the proposed expansion programme, our SPFY capacity will increase by 8,000 MT to 26,000 MTPA. i.e. by almost 45%. The new facility will potentially add Rs 100-110 crore of turnover at a peak utilization, with a mix of both domestic and direct & indirect export business.

The project is expected to be completed in 4-5 quarters and the new capacity will be fully operational by the fourth quarter of FY 22-23. The major equipment is being sourced from Germany-based Oerlikon Barmag Group, a world-renowned supplier of quality textile extrusion equipment.

This expansion in POY (Partially Oriented Yarn) and DTY (Draw Textured Yarn) segment will cater to the increased demand in newer segments like home textiles and technical textiles.

We see a good uptick in demand. Home textile segment is growing and the company is aggressively focusing on specialty textile avenues such as Flame retardant, Automotive, Anti-Microbial, etc. to name a few. With the newer product offerings in place, the company will become a complete supplier or a one-stop-shop for its customers for all kinds of specialty yarns.

2. Where do you see business opportunities coming from?

Home textile is a segment where we will see huge opportunities in the coming year. Some part of home textile is also a part of technical textiles and key products include bed sheets, pillowcases, curtains, carpets and rugs etc treated with special properties like Flame retardant and Anti microbial.

China is a leading supplier of home textile with 39% of market share in global exports while India enjoys 11% market share. Demand for Chinese home textiles is reducing due to China’s geo-political relations in recent times. India stands to benefit from it, as it is the second largest supplier in the global export market. Secondly, COVID pandemic has grown Work-From-Home culture. The recent trend observed is that the people have started spending increasingly on home furnishing, as the majority of time is being spent at home.

India is the fastest growing home textile market, but exports too remains a big opportunity, especially after the heavy duties and ban imposed on Chinese goods imports to the US and Europe. While India’s share is 11% in global exports currently, the exports to the US is one of the key strengths of India, as it enjoys a strong market share of 50% in home textile.

Pioneer Embroideries is one of the key players in home textile business and is set to benefit from rising opportunities in the domestic and export market in near future. We are focusing on higher operational efficiency and new value-added products to tap the growing market.

3. Currently your domestic business contributes 85% while export is 15%. With the ban on Chinese textile in certain regions, do you see the export market will provide bigger opportunities?

Yes, Indeed. We see a good demand shaping up in the global market and post the ban of Chinese textile in certain markets, India seems to be a direct beneficiary. We currently export our products across North America, Latin America, Europe, Middle East and Africa, and are confident that the export business will grow substantially

Our sales in the domestic market is approx. 45%. While about 15% of our sales is as exports, another 40% is accounted as indirect exports - to those manufacturers who sell their products in the export market. Exports are a good business opportunity for us but let me clarify Pioneer's policy. We are an EBITDA-driven company. What I mean by that is, we are focused on those orders which earn us good EBITDA margin, whether these come from the domestic market or from exports, and we also constantly change our product mix to meet the demand for products which offer the best EBIDTA at any point in time. We don’t get carried away by the export market alone but we are very happy to cater those orders which yield us higher EBIDTA. Also, since the prices of both our end products and raw materials are linked to crude oil price movements, the EBIDTA margins also fluctuate, and hence our focus is to tweak our product and client mix to maximise our EBIDTA. With new value added products and enhanced capacity, we feel we can cater to the export market in a better way in the coming period.

4. What are strategies for reviving HAKOBA brands?

HAKOBA has been a heritage brand since 1961. As part of strengthening its sustainability objectives, Hakoba brand now offers organic, GOTS-certified textile products manufactured by PEL. PEL has revamped and relaunched its website hakoba.in with a wide range of premium textile products including organic variety and designs that expand its demographic presence beyond its traditional markets. Hakoba has a presence on marketplaces like Amazon also, to attract online buyers. Going forward, our focus is to attract new generation users with a more appropriate product range, and thus ensure continuous growth for Hakoba. We have been witnessing increased overseas traffic on our website, and are now planning to offer shipping of Hakoba products to international customers. We are working on increasing our presence with few experience stores in key Tier I & Tier II cities to expand our retail business. PEL has recently launched its first range of HAKOBA Ready-to-Wear (RTW) garments for both women and men in white. It was the first RTW collection in a long time. The Company is taking all the right steps to redefine the brand appeal of “HAKOBA” and focus on Gen Next customers. We feel retail is a promising segment and in a very short time, we see HAKOBA establishing its presence.

5. How does the government's PLI scheme for the textile industry help us in the long run?

The big positive is the creation of a PLI scheme by the government for the textile industry to create global champions in MMF apparel and Technical Textiles by providing incentives from 3 per cent to 15 per cent on stipulated incremental turnover for five years. We are waiting for fine print to evaluate the impact on PEL.