For VIP Industries, its employees, workers and peripheral stakeholders are too important to be laid off, or negotiated with, in these hard times. The company has expanded its portfolio to include personal protective equipment, and is hopeful that as the situation eases, production and markets should return to a semblance of normalcy in the next six months. Mr Kapil Pathare, Director, VIP Clothing Limited in an exclusive interview with Reena Mital.
The garment industry has painted a bleak picture of the impact of Covid-19 on the sector – exports and domestic market, factory closures, worker layoffs. Do you agree with this? How far is the light at the end of the tunnel?
The garment industry is largely retail driven, though there is a huge chunk of consumers that shop online. The need for trials and physical shopping continues. Thus, the impact of Covid-19 is quite large and looming over the industry.
The textile industry employs close to 45 lakh people across the value chain. It has been close to 60 days since the lockdown; all production, procurement, retail and support has been completely cut off; irrespective of online or offline businesses. At VIP, we are concerned about our people – employees, workers and peripheral stakeholder, so no such thing is happening on our end.
Post pandemic, we are expecting the industry to work below full manpower and expect only 20-30% returns. Yes, the road seems tough and long, and it should take around six months at least to revive the business to 60%.
How is your company placed in this scenario? How has Covid-19 impacted your business?
We were monitoring changes in the global market for a while, and late February we were anticipating such a scenario. Our factories and offices are shut and we have asked all our employees to stay at home, work from home and ensure that they’re taking care of themselves.
A lockdown is just that – a LOCKDOWN. Its unprecedented and untimely; but what we can do is take this crisis as an opportunity to think inwards on what can be done better.
The inner garments industry will see a slightly different market response than regular lines of businesses in apparels and textile. Innerwears are practically essentials and a commodity and being an iconic brand in this segment, we are preparing to cater to consumer needs in the best possible way.
VIP has always been driving value for money across all our product categories. Premium or basic, we offer consumers quality directly comparable for product cost. Post the lockdown, we are expecting innerwear industry to hold its strength as it is finally a basic need.
Being in basic innerwear, would it be right to say that you will recover faster than other clothing makers?
At the stage we stand at today, we are optimistic of bouncing back. We have been internally re-thinking our plans and strategies, assets, resources, sales and distributor channels and seeking areas of improvement.
The markets, consumer sentiment and economical impacts are too uncertain to predict anything. We are considering many sets of actions to adapt to the changing market scenarios and consumer behaviour.
Tell us in detail – how did you manage production cuts (if any); labour; wages?
We were expecting serious repercussions of the lockdown phase sometime early March. Then itself, we had already begun to inspect stocks on hand and operations at both manufacturing facilities in Thinglur and Umergaon. We halted production immediately as the announcement came and have currently arranged for all migrant workers to return home.
Will restarting your factory be seamless or would you face labour and input shortages? When do you plan to restart operations?
Though we have planned for essential operations to bounce back easily, we cannot predict how seamless the revival of factory operations would be. Policies and guidelines are being changed every 10 – 15 days, so we are ensuring that we remain prepared and in full compliance of government guidelines.
In fact, at our factories in Thinglur we have started production of masks that we see as a mandatory requirement for the next six months at least. With reduced labour capacity of around 40-50 workers and extreme hygiene standards, we are taking progressive steps to opening up production soon. We will be fully operational after all government policies and permissions are in place.
What steps will you take to ensure social distancing at the workplace, sanitization, hygiene, etc? And for how long?
To ensure safety and health of all our employees, we had already instated hygiene protocols and sanitisation procedures across manufacturing units and the main head office. Unit heads, administrative teams and departmental heads were ensuring that they not only sanitise the work space regularly but also maintain hygiene. We are a close-knit unit across and we are glad to note that we have had no Covid-19 casualties yet. Floor and surface sanitisation, face masks, distanced work units, regular communications regarding hand and health hygiene are few of the measures we plan to continue for the six months post resuming regular operations.
How do you see the cotton scenario this season in terms of availability, price, exports?
Several reports have shared that global cotton consumption has declined by 12%. In India, the pandemic effects are showing us reduced procurements, shut ginning facilities, lesser spinning units in operation, reduced cotton pressing activity and lesser farmers working on the supply. With most exports of cotton and yarn stopped, there will be plenty of domestic supply, but may spell an issue for cotton supply chain as we anticipate the prices to either stabilise or reduce further.
Do you think investments in textiles and apparel will come down due to the pandemic? And for how long?
Overall investments in most industries barring technology, is likely to fall. And yes, even more so in textiles and apparels. However, with the pandemic though we see a new business line developing – hygiene equipment. We are already working on face masks for regular consumer use. Similarly, investors will see a healthy opportunity in investing with textile businesses that work towards PPE manufacturing, safety gears, etc.
VIP is into basic innerwear, with a strong brand image. How did you achieve this, and what is your strategy going forward?
Consistent delivery of quality product, value for money since decades and the right communication strategies have been a driving force behind our brand image. Well thought campaigns strike a chord of familiarity among the audiences of the country building VIP to where we are at today.
With the lockdown, digital consumption has risen drastically. Audiences now resort to their mobile phones and television sets for entertainment. Going forward, staying digitally connected is one of the key ways VIP will reach out to audiences.
Engaging content across social media platforms is one of the things VIP as a brand is undertaking.
In fact, we recently revived one of our old advertisements for VIP Frenchie, which has reached quite widely among our audiences. It was also heart- warming to see Diljit Dosanjh remember our Frenchie campaign with Dilip Tahil on his Instagram handle. For VIP, it feels good to be that brand that the consumer is remembering today.
What is the emphasis on product development and product differentiation?
Currently VIP is extending its focus towards PPE and hygiene gear. Being a brand with a product portfolio in the personal wear space, this seems like a natural extension of product development.
VIP’s product portfolio has always been value for money. In fact, today VFM has become the need of the hour, with customers getting frugal and turning towards brands for better products. For decades, VIP products have been delivering different designs, consistent quality and durability at reasonable price ranges to consumers. We continue to maintain our focus on these aspects of product differentiations, to grow in the market.
The textile industry is quite dependent on China – both for exports and imports. Your view?
Historically speaking, there was quite a dependence on the China market. But today, with all that has transpired, globally, the sentiment is negative. In the near future, we see a growth in the Indian textile businesses, with more international players picking India over China.
This movement of textile business from China to India gives India a superb opportunity to build its infrastructure for both imports and exports right here. Right from consumers to up the chain; everyone is now looking to buy products #MadeinIndia. This is a golden opportunity for Indian companies to set up with global giants under joint ventures.
What according to you will be the new normal for the textile and clothing industry, post-Covid-19?
New normal is going to be a customer who is very cautious and mindful. We are already seeing a trend where customers are restricting their spends, focusing on value for money, and are getting brand conscious, especially for essentials and basic needs. How quick brands will adapt to rapidly changing markets will be the key factor to success.
Made In India is going to be the new norm. And we are hoping as an iconic brand of the country we can leverage this too. More and more customers would want to go local; buy local produce and ensure local consumption. Consumers are going to read labels more carefully to know where the product was manufactured and marketed.
Technology and automation will also play a huge role in productions, operations and retail.