Interview - Mr Sanjay Dalmia, Chairman, GHCL Limited 04 Feb 08

Mr Sanjay DalmiaGHCL Limited
Interview

Mr Sanjay Dalmia - Chairman, GHCL Limited

GHCL Limited is a publicly-traded multinational company with a leadership position in three industries – chemicals, textiles and information technology outsourcing. Headquartered in India, GHCL is backed with the work force of total 7000 employees working in Asia, the US, the United Kingdom, Eastern Europe, and Cambodia.

Company’s chemical products include high-grade soda ash, a key ingredient in detergents, soaps, dyes, glass, and refined salt used for food processing, with state-of-the-art manufacturing facilities in India and in Romania.

In the Home Textiles arena GHCL revenue base has grown from approx. $50 million to a revenue base of $615 million in 18 months.

The Chairman, Mr Sanjay Dalmia has hand of expertise on several industries such as telecommunication, information technology, finance & investment, soda ash, textiles, man-made fibers, holiday resorts, concept marketing and researching health products.

In recent times, Mr Dalmia has attracted the attention of both corporate analysts & investors not only for the scale of his new investments but also for his innovations. Mr Dalmia is very keen on the effective industrial growth of India and is actively associated with various trade organizations like PHD Chamber of Commerce & Industry. He was also associated with FICCI - Federation of Indian Chambers of Commerce & Industry. In his long successful diverse career, Mr Dalmia has served on the Board of Directors of Union Bank of India, a Member of the Northern Committee of Industrial Development Bank of India. He was a member of the Rajya Sabha, (Upper House of the Indian Parliament) where he worked as a ‘constructive-link’ between the Government and the Industry to improve the overall economic development of the country.

Inspite of being actively involved in varied industrial projects, Mr Dalmia efficiently manages time for participation at various civic & welfare activities. He is the past President of Delhi Junior Chamber and the member on the Board of Trustees of Indian Literary Society. He is keenly interested in the quality of education in India, and contributes time for affairs of various Educational Institutions.

Mr Dalmia's achievements have been recognized by the International MERIDIAN which conferred its prestigious ‘International Corporate Sector Gold Award 1987’ on him for his venturing into industries which are aimed at taking India forward to the 21st Century.

Interviewed by Face2face team, Mr Sanjay Dalmia speaks on global as well as domestic markets of yarn, organic cotton and home textiles, and their future trends too.

fibre2fashion:

To begin with, would you like to share with our global audience any memorable episodes from the history of GHCL’s textile business?

Mr Sanjay Dalmia

At GHCL we are ;

i. Creating an alignment of traditional leadership towards achieving global value chain creation

 

ii. Developing a strong understanding of acting global & being local at company levels (subsidiaries)

 

It has been a great experience. Memorable Episodes are many. Sharing a few;

 

i. One strong memorable event was at the time of takeover of Rosebys when GHCL Team and Rosebys team spent 2 full days in brainstorming sessions to develop new standards & concepts in UK retail market and at the same time was able to expand the UK management’s thinking towards creating replicable business model in retail to take Rosebys to the international market, audience, consumers.

 

ii. Second most memorable episode would be to remove traditionality in the thinking of local HR management at GHCL levels & challenging there thinking & mindsets to align & evolve to a department that adds value towards the growth & integration of our ventures.

 

iii. Third most memorable moment would be to eradicate conventional thinking at middle level management & challenge them to develop systems & practices that enable top & bottom management towards achieving & strengthening our operations.

 

fibre2fashion:

How do GHCL Group epitomize on dictum “Leadership through quality”?

Mr Sanjay Dalmia

Leadership through Quality – to the GHCL group leadership through quality does not only hold meaning at the manufacturing/ process driven environment where standards such as ISO, OHSAS, GOTS (global organic textiles standards), Organic exchange 100 guidelines etc exist. It has a broader meaning here, top management tries to create leadership abilities to the manager’s below & empower the future leaders of the company to challenge conventional thinking.

 

Leadership through quality in GHCL is about creating new standards that can be replicated at front level operations to deliver products/ solutions & a lifestyle environment to customers and others stake holders on a daily basis.

 

fibre2fashion:

Through recent four acquisitions, how do you estimate the synergies would bode for GHCL’s international identity?

Mr Sanjay Dalmia

In the recent 4 acquisitions (Dan River, Rosebys, Best & Baker) GHCL has become the world’s only company to be integrated from “Fiber to Fashion”. As a new entrant with revenues of only USD 49 million to global revenues of USD 700 million spanning 3 continents & presence in 8 countries that contribute to 70% of global Home Textiles trade.

 

GHCL’s international identity as a local (regional) player within India has transformed to a global sourcer to a global retailer employing over 7000 people.

 

Having achieved critical mass GHCL’s Home Textile entity is soon to be restructured and rechristened into an international power house of Home Textiles with a vibrant leadership & possibly a new name. In this regard in the future possibly be 2 GHCLs (GHCL Soda Ash & GHCL Home Textiles) thereby creating 2 focused pure play entities/ organizations.

fibre2fashion:

How impulsive is the domestic yarn market? Any predictions on future market trends?

Mr Sanjay Dalmia

• Domestic market has reacted positively by way of movement and price, mainly in (24s, 30s) and 40s combed yarn and 60s combed yarn significantly. In other counts, the positive reaction is comparatively less.

 

• This may probably be due to increased fabric requirement / orders in these sorts and may be due to increase in cotton prices, the fabric buyers wanted to cover their requirements. Also production of spinning industry is reduced due to power shortage. This can also be one of the reasons.

 

• Since the textile pipeline after the spinners [i.e. weavers, processors, traders etc] is dry, any bulk uptake in fabric orders can cause this type of reaction. But the payment realization is difficult still; weavers are telling their payment is delayed significantly.



FORECAST: THE YARN MARKET IS LIKELY TO IMPROVE GRADUALLY

 

fibre2fashion:

What is your observation on latest developments in Home Textiles markets?

Mr Sanjay Dalmia

Home Textiles markets globally are still evolving & the dust is yet to settle. Keeping the global economic scenario in mind where continents such as US & EU are weathering the sub prime crisis leading to possibilities of near term recession, weakening dollar & erratic trends in consumption have created an interesting scenario for Home Textiles trade.

 

In the same breadth emerging economies such as India, China (Chindia) are stealing the mid-term focus with regards to consumption patterns & growth of markets. In such an environment in Home Textiles, manufacturing & supply chains are faced with near term challenges.

 

Consumption at front end sectors such as retail are also creating immense opportunities for new players to create space for themselves & existing retailers to attract more consumption & challenging customer loyalty.

 

As the world becomes a smaller place the consumer is getting spoilt for choices in emerging markets & over retail markets. In the over retail scenario such a situation could look attractive for overseas buyouts whereas in the emerging markets the current scenario could also look very attractive for investment opportunities by investing communities (PE funds & other investor categories) to lock into or seek such companies that have strong value creation possibilities in the economic upturns that have strong brands & brand creating potential access to emerging & those that have “right off way” to enter under retail markets.

 

fibre2fashion:

Can you please comment on Organic Cotton market worldwide and India’s hold on this sector?

Mr Sanjay Dalmia

“Worldwide demand of Organic Cotton & Organic cotton products is growing by about 75-80% every year. As on date only 2.4% of Organic Cotton is cultivated out of the total cotton cultivation worldwide. India was at number 2 after Turkey until last year, however, according to recent data for the current financial year, India is now at the number one position. India’s contribution is about 38% of the total organic cotton production worldwide which is about 58000 MT.

 

In the last 15 years, Carbon dioxide emission from India has grown with an annual growth rate of 88% which is the largest among top 5 carbon dioxide emitter countries.

 

Five to seven decades ago, most of the cotton cultivated in the country was ‘eco-friendly’ with little or no use of toxic chemicals in its production. Even today, there are many pockets in India, where it is produced without the use of agrochemicals. Such soils require low-cost and low external input production systems to minimize cost on fertilizer and pesticides for imparting stability in production.

 

Organic cotton is not only cheaper to produce, but it also prevents soil damage as caused by the modern synthetic fertilizers and pesticides. Several cotton farming regions in Africa have been adapted by leading global brands on contract farming basis leading to higher remuneration for farmers, fair trade practices and women empowerment.

 

Since Indians still follow Ancient agriculture practices; we can always lead the world in this sector.

 

The estimated global retail sale for textiles is projected to touch 2.6 billion US dollars by the end of 2008. With this the demand for organic cotton fiber is expected to grow to 100,000 metric tons in 2008 from 40,000 metric tons in 2006, an average annual growth rate of 75 per cent.”

 

fibre2fashion:

What helps GHCL to combat the competition, especially from low cost markets?

Mr Sanjay Dalmia

GHCL is present in the entire value chain from organic cotton to Fiber to Fashion. We are already present & have exclusive vendor relationships in low cost markets in terms of products.

 

We also have extreme leverage in creating sourcing hubs through large volume relationship that allows us to be cost competitive. Even in the Indian market where we have our own manufacturing presence we compete with the existing vendors & are more competitive than peers in certain avenues.