Interview of the month – Thomas Varghese
Thomas Varghese, Business Head, Textiles, Acrylic Fiber and Overseas Spinning, Aditya Birla Group
Mr. Thomas Varghese is the man behind the functioning of the Aditya Birla Group’s textile division. He is the Business Head for the Group’s Textiles, Acrylic Fiber and Overseas Spinning businesses, which include three textile companies, five overseas spinning companies and two acrylic fiber firms.
He joined the company in 1999 as CMO of the Pulp & Fiber business and integrated all the elements of this business for the first 11 years of joining the group.
The overseas spinning business, spread over three countries – Indonesia, Thailand and the Philippines – comprises of five plants with as many as 625 thousand spindles and a jaw dropping production capacity of 172 thousand tons of yarn. The three plants in Indonesia – PT. Indo Liberty set up in Karawang, PT. Sunrise in Bekasi and PT. Elegant set up in Purwakarta – are huge plants with latest spindles and are regarded as some of the most modern mills in the world. A bulk of the textile production comes from these plants. The plant in Thailand, known as Indo-Thai Synthetics, is also a very large complex with 75 thousand spindles.
The plants use completely European equipment and top-of-the-line machinery, coming out of some of the best manufacturers in the world like Rieter, Toyota and Muratec, and because of having the best machinery in the world they produce the best quality yarn.
In an exclusive interview, Mr. Thomas Varghese said: “With a very high level of automation and productivity, these fully modernized plants have given us the liberty of cutting down the number of hands per thousand spindles and it is a very critical thing as the work wages in Indonesia and Thailand have risen significantly in the past few years.”
A fifth plant set up in the Philippines in the mid-1970s, unlike others is a not so modern. It predominantly turns out cotton products and is one of the first overseas spinning plants of the company with about 90-100 thousand spindles.
The plants in these countries have been set up because of the reasonably large market size and global accessibility. The company focus is on the domestic market, but 80-85% of the massive produce goes to global customers spread across 100 countries around the globe. “This is the reason why Aditya Birla yarns, as the brand is called, is one of the best known brands in the world today for yarn and enjoys tremendous preference by global customers for the quality and the service that it has rendered not only now but over the last three decades”, said Mr. Thomas Varghese.
The second business managed by Mr. Varghese is that of acrylic fiber. The group has two plants one of which is set up in Thailand and with a production capacity of about 125 thousand tons of acrylic fiber. This is the fourth largest plant of its kind in the world, and the company is the fifth largest producer of acrylic fiber. The second plant set up in Egypt of 36,000 MT annual capacity is however in the process of liquidation due to the overall condition of work and production in the country. The Acrylic Fibre business has recently acquired PyroTex, a German company which produces one of the most unique flame-retardant fibers.
The third business is of domestic textiles which comprises of two companies, one of which is Jaya Shree Textiles that is a wool and linen major. The Aditya Birla Group is the largest company in India for production of wool, that is wool tops and yarn, and also for linen yarn and fabric. Although the reach in the domestic market is considerable, a large amount of the produce of wool tops and worsted yarn, viz., 55-60%, gets sold in the overseas market. The group is regarded as one of the largest exporters of tops and worsted yarn globally.
“The Aditya Birla Group is a pioneer that brought linen in India when no one even knew about it, said Mr. Varghese. “Our linen journey began three decades ago, and we were the first producers of yarn and linen fabric. We have personally grown this category from what it used to be, to a very large category that it has become now.”
The company has a very strong market share in this category that is more than 50% of the total market. Their highest share in this line of linen yarn has been 65-70% which was when the brand used to trade in imported goods also which they have now stopped. Also, a lot of new units have entered the market and the market share has come down to 50-55% now. Despite all these hurdles the brand is still dominant and has maintained its hold on the market with a majority of domestic and export share.
The company also possesses a small unit in Gwalior known as Vikram Woollens with 11 thousand spindles. The Jaya Shree Textiles unit of the Group is located in west Bengal. Their linen business, with 150 EBOs selling fabric across the country, makes them the largest linen fabric retailer in the world. Mr. Varghese further said: “We have been the undisputed leaders in linen in India, because we have linen yarn, linen fabric, and we have linen retail. Linen is synonymous with Jaya Shree.”
The third unit, Grasim Bhiwani Textiles Ltd. located in Bhiwani, is one of the largest manufacturers of spun dyed polyester viscose suitings in India. Besides OTC presence through leading brands like ‘Grasim’ and ‘Graviera’, it was a leading supplier of PV / spun-dyed suiting fabrics to the world’s leading brands and retailers. This business was sold off to the Donear Group of Textiles in July last.
Expansions and diversions
The Aditya Birla Group recently acquired a German company called PyroTex which makes flame-retardant fibers and tow. The reason for such investment is, as Mr. Thomas Varghese mentioned: “This company is making a very unique product, very special and it is the only fire-retardant company in the world that has a LOI index of 43 and is also the only product in the world which does not release any toxic fumes or any harmful gases when it burns. This company has an operating plant in Spain and is a German-based company. We are also looking forward to acquisitions in technical textiles business and in spun yarns.”
The group’s main reason for diverting from the parent or in other words, their main business is, according to Mr. Varghese, the dwindling margins in commodity textiles. He further elaborated that even for such a low cost company as theirs the selling price and the uncertainty of margins has led them to believe that there is no long-term and prosperous future in commodity yarns which is apparently true for all the businesses. In such a situation, the company’s focus since the last three years has shifted from their base of commodity yarns to specialty yarns and value-added yarns.
“Our journey has been supplemented and complimented by the various infrastructural investments we have made. We have created a pilot plant, a center of excellence and design studios in Indonesia whose job is basically to cater to the needs of the brand and retailers and to the needs of the value chain. While we are a yarn producing company, we have also created knitting as well as dyeing and processing facilities to develop the end product and to discuss it with the value chains to create new products”, revealed Mr. Varghese.
The company’s Textile Research and Development center or the TRADC, in Kharach, Bharuch, Gujarat, conceived by Mr. Thomas Varghese, has now become one of the best textile research and development centers in the world and is a very elaborate institution and they have tried to make the same kind of an institution in Indonesia which is equally good. The company has a very strong research and development and applied research facility in Thailand as well for acrylic fiber.
“I am very proud to say that most of the new and high-tech products developed for the market were made with our own technology because we did not have access to technology in acrylic”, Mr. Varghese said. A similar sampling and prototype facility has been created in India as well.
The Aditya Birla Group has also been the first investor and producer of spun lace products. The first plants of spun lace machines of Rieter were set up by them. The company made products like Kara wipes. The Kara wipes were the first ever entry of a consumer non-woven textile product in India in the field of viscose that was produced by the Aditya Birla Group.
Awareness creates business
As the past Chairman of CII’s National Committee on Textiles, Mr. Thomas Varghese made efforts for making people aware of technical textiles, and to create awareness and knowhow for the product in the competitive market of today. The company has joined hands with Gherzi to look at Technical Textiles opportunities globally. Mr. Varghese disclosed: “We went to Gherzi as when we started the journey in spun yarns, we did not have the knowhow and they are the biggest company in technical textile consultancy, a Swiss company based in Geneva. Gherzi has been working with the Aditya Birla Group for one and a half years now, and they have been sharing with us their knowledge and understanding of technical textiles. They are in a very interesting module of work where they not only guide us but also help us create and build relations that could be turned into businesses.”
The Aditya Birla Group, with its current presence in textiles, is the largest of its kind in the world, housed in different verticals. “If you look at our garment business, it is a billion dollars plus, if you look at the pulp & fiber, it is a two and a half billion dollars. If you look at my business it is one point one billion dollars. So if you put this all together, you have a business which is probably the largest in the world. If you look at the spread of the product, viscose, acrylic, wool, linen and cotton, and the array of yarns we make, predominant categories are ring spun yarns, open-end yarns and we make air jet spun yarns. The kind of width and breadth we have is unmatched by any other textile major,” Mr. Varghese added.
The Aditya Birla Group is also India’s largest garment company with brands like Louis Philippe, Peter England, Allen Solly, Van Heusen, Forever 21, etc. The company’s main aim for the future is to maintain and grow its businesses to its fullest extent.