1. Chief Financial Officer
Home Textiles & Furnishings: Does India stand adequately invested to tap the opportunity?
Sunil O. Khandelwal
Chief Financial Officer

2. Source: - UN Comtrade, OTEXA, Eurostat & Technopak Analysis
BIG Picture - Global Textile Industry
2009
Global trade in textiles and clothing increased to US$ 510 bn from US$ 355 bn. in CAGR of 4.63%
2020
Global trade expected to grow to US$ 1000 bn from US$ 510 bn in CAGR of 6.3%
USD bn.
Top Exporters
Amount US$ BN. %
Europe
162
31.76%
China
189
37.06%
India 23
4.51%
Others
136
26.67%
Total
510
100.00%
CAGR 5%
1000
800
612
586
529
510
Source: - UN Comtrade, OTEXA, Eurostat & Technopak Analysis 2 2

3. BIG Picture - Indian Textile Industry
220
134
CAGR 11 % 78 70 46
Projections
The domestic textile market in India is projected to grow from USD 52 bn. in 2010 to USD 140 bn. by 2020 at a CAGR of 10.5%
The export market in textiles is projected to grow from USD 26 bn. in 2010 to USD 80 bn. by 2020 at a CAGR of 12%
The total Indian Textile Industry is projected to grow from USD 78 bn. in 2010 to USD 220 bn. by 2020 at a CAGR of 11%
In order to meet the additional estimated demand (US$ 150 bn) created for Textile and Apparel by 2020,investments to the tune of Rs.320,000 Crores (US$ 68 bn) across the Textile supply chain will be required.
India has the potential to increase its export share in world trade from the current 4.50% to 8.00% by 2020.
The high growth for Indian exports is possible due to increased sourcing shift from developed countries to Asia and India’s strengths as a suitable alternative to China for global buyers.
Source: - Technopak

4. Source: -Company Estimates and Technopak Analysis
BIG Picture - Global Home Textile Industry
CAGR 7%
Year
2006
2007
2008
2009
2015(E)
2020(E)
China
34.28%
35.88%
36.52%
39.21%
45.31%
44.45%
India
6.55%
6.07%
6.28%
6.94%
10.00%
Pakistan
9.12%
8.44%
8.04%
9.05%
7.81%
8.89%
Going forward India’s share expected to rise from 7% to 10% . Expected to be biggest beneficiary as Chinese Industry reaching its peak
% Growth in Exports 2000 to 2007
Home Textiles
China
250%
Pakistan
200%
India
72%
Germany
48%
Turkey
38%
Source: -Company Estimates and Technopak Analysis

5. Source: -Company Estimates and Technopak Analysis
BIG Picture - Indian Home Textile Industry
18.0
CAGR 11%
12.40
6.00
6.3
5.3
4.3
Source: -Company Estimates and Technopak Analysis

6. What's happening in the Industry
US and EU which are the main consumption centers are gradually but steadily coming out of a recessionary phase. Buyers are back in stores. Apparel and Home Textile consumption picking up
Shifting of production capacities from the West to the Asian continent. China, India and Pakistan make up 70% of total home textiles imports by US- the largest market.
Chinese industry touching its peak as buyers looking at diversifying their sourcing. Strong domestic demand outstripping supply leaving lesser export surplus. Rising wages and environmental concerns restricting further investment in textiles in China.
Global price rise in cotton has been fuelled by a combination of factors including stronger than anticipated demand in major emerging economies such as China and India, and lower than expected cotton crop yields in some countries.
Currency fluctuations affecting export competitiveness of the industry thereby compelling industry to work on product development and sustain margins.

7. Home Textile Opportunity
The global textile and apparel industry is reviving after the recent global recession with increasing consumer demand. With the positive outlook the global home textile trade has the potential to grow up to USD 64 bn. by 2015 and USD 90 by 2020
The Indian home textile industry is expected to grow to USD bn. by 2015 and to USD 18 bn. by 2020 from present size of USD 6.3 bn.
The Ministry of Textiles is also encouraging investments through increasing focus on schemes like, TUF scheme. cluster development activities etc.
Ministry is also looking to attract foreign investments through promotional visits to countries like Japan, Germany, Italy, France, etc.
Chinese announcement to allow more flexibility to its currency Yuan vis-a-vis USD shall most likely appreciate the Yuan from their current levels thereby giving better level playing field and benefitting the Indian Textile Exporters
China has become fourth largest importer of textiles after Europe, USA and Japan
Indian Home Textile players have to invest in R&D and develop special finishes to create their own niche. Institutional branding of products will differentiate players to capture market share. Eg Wrinkle free bed sheets became an overnight hit with the US consumer and emerged as the largest selling bedsheet 7 7

8. Contribution from Cotton to Bed sheet Set – 300 TC Wrinkle Free
Particulars
Amount
(Rs. Per Kg)
Cost as % of sales
Raw Material Cost – Cotton
132.00
14.04%
Conversion Cost
123.00
13.09%
Additional Processing Cost for Wrinkle Free Finish
15.00
1.60%
Cost
270.00
28.72%
Add: Wastage 5%
14.00
1.49%
Total Cost per Kg.
284.00
30.21%
Conversion (1 Kg = 2.75 mtrs)
103.00
Total Fabric Cost per sheet set (1Sheet set = 5.6 mtrs.)
577.0
61.38%
Sticthing and Packing Charges per sheet
70.00
7.45%
647.00
68.83%
Add: Wastage about 2.5%
16.00
1.70%
Total Cost
663.00
70.53%
Average Selling Price USD per sheet set – 300 TC
940.00
100.00%
Contribution
277.00
29.47%
Contribution as a % of Sales

9. Typical Investment – Integrated Bed Sheet Sets
Particulars
Production
Cost
Rs. in Crores
Sales 100,000 mtrs. i.e sets X 336 days X Rs. 940 per sheet set (300TC)
568.00
Investment – Capacity 100,000 mtrs/day
- Spinning – Spindles (60s cunt)
40000 kgs / day
Rs. 30,000 / spindle
240.00
- Weaving – 400 looms
250 mtrs. / day/ loom
Rs. 50 lakhs/ loom
200.00
- Processing - 1 continuous line
100,000 mtrs/day
Lot
150.00
- Stitching machines
18000 sets / day
30.00
Sub-total
620.00
Working Capital (100 days)
155.00
Total
775.00
Sales
EBITDA 30%
170.0
ROCE (Capex + Working Capital)
21.9%
Asset Turnover (Sales / Net Block)
0.92

10. Contribution from Cotton to Terry Towel
Particulars
Amount
(Rs. Per Kg)
Cost as % of sales
Raw Material Cost – Cotton
95.00
34.5%
Conversion Cost (Cotton to Terry Towel)
115.00
41.9%
Total Cost per Kg.
210.00
76.4%
Average Selling price
275.00
100.00%
Contribution
65.00
23.6%
Contribution as a % of Sales

11. Typical Investment – Terry Towel
Particulars
Production
Capacity
Rs. in Crores
Sales 40 tons X 336 days X Rs. 275 per kg.
370.00
Investment – Capacity 40 tons per day
- Spinning –
Open End
15 tons/ day
1632 rotors
45.00
Ring Frame
25 tons/ day
40800 spindles
150.00
- Weaving – 100 looms
400 kgs / day/ loom
Rs. 60 lakhs/ loom
60.00
- Processing - 1 continuous line
40 tons/day
Lot
100.00
Stitching
30.00
Sub-total
385.00
Working Capital (100 days)
Total
485.00
Sales
EBITDA 23.6%
87.00
ROCE (Capex + Working Capital)
18.00%
Asset Turnover (Sales / Net Block)
0.96

12. Investment Required by Indian Textile Industry
Investments Required in Textile Industry
Segment
Additional Capacities Required
Investment Required by
Indian Textile Industry
In Rs. Crores
In US $ Billions
Indian Home Textile
Spun yarn
New Spindles-13.6 Million
Modernized Spindles-8 Million
42,000 9 1
Filament Yarn
Prod. from modernized capacity-0.5 Bn kg
Prod. from Brownfield expansion-4.2 Bn kg
Prod. from Greenfield projects-1.1 Bn kg
31,000 7 -
Weaving
New Shuttleless Looms- 77 thousand
Second hand Shuttleless Looms- 65 thousand
Automatic looms- 1 Lakhs
Semi automatic-2 Lakhs
Plain-2.35 Lakhs
37,000 8
1.5
Knitting
New Machines- 84 thousand
Second hand machines-56 thousand
25,000 5
0.5
Processing
90,000 19 3
Garment and Made-ups
Machines required- 21 Lakhs (for 2 shift working)
65,000 14
Technical Textiles
30,000 6
Total
3,20,000 68
7.50 12 12

13. Concluding Remarks
For Indian textiles, an era of unprecedented growth has set in. Its our privilege and responsibility to capitalise on this opportune time by building scale, integration and technology
So far the industry has not been able to capitalise on this opportunity and investments made so far is not in proportion to the size of the opportunity available
However, now Indian Home Textile Industry is getting ready to grab this immense opportunity and capture at least 10% of global market share
Domestic markets are equally promising and offers great opportunity to grow
TUF scheme continues till FY 2012 and expected to be continued for the hole of next decade as players take maximum advantage of opportunity offered
Investments will be made across the value chain as demand no longer an issue and industry enters a supplier’s market

14. Happy Investing!!! Indian Textile Industry Ki Picture Abhi Baki Hai !
The Great Indian Textile Story is yet to unfold!
Happy Investing!!!