Reviving Denim Industry: Indian mills expect 10-15% growth in the next few years

Denim is the fastest recovering market segment post the pandemic outbreak and according to a recent projection by Research and Markets, a leading market research agency, the global market for jeans valued at US $63.5 Billion in 2020 and will see a revised size of US$87.4 billion by 2027, growing at a CAGR of 4.7 per cent over the period 2020-2027.India has been a leader in denim fabrics and off late the domestic jeans market has also been growing steadily, in fact faster than the global growth rate; various market studies suggest that the Indian domestic market for denim has been maintaining an average CAGR of 8 to 9 per cent for few years and is expected to reach Rs. 91,894 crore (US $ 12.27 billion) by 2028.

The growing denim market, both internationally and nationally, is the main reason why leading mills are optimistically believing that denim will continue to tap growth in years to come, at a rate more than the current one, and if projections are an indicator,its growth will touch 10-12 per cent on CAGR basis. In discussion with leading denim mills, Apparel Resources explores how they are geared up to cater to increasing demand, their focus area to match supplies with demand and product development expertise.

Denim infrastructure in India is expanding…

India has an annual installed capacity of around 1,600 million metres for denim fabrics which is the second largest in the world after China. At present, the total number of denim fabric mills operating in the country are believed to be over 50 (in organised segment) which is 60 per cent more than what the number was 10 years ago…Of the total capacity, the domestic consumption of Indian denim fabric is approximately 850-900 million metres, which includes domestic jeans production as also for exports, while remaining fabrics get exported to countries like Bangladesh, Colombia, Venezuela, Egypt and Sri Lanka among others.

As per the Ministry of Commerce & Industry of India, denim fabric exports during the period of Jan.-Oct. ’21 was valued at US $ 190.78 million, noting around 88.45 per cent Y-o-Y growth. To grab more markets, both domestic and international and to reduce their dependency on the market for yarns, mills here are increasing their denim production capacities and some of them are investing in spindles also. This backward integration is helping companies to have better control over raw material availability as well as timely and cost-effective production.

What is encouraging is that while the bigger and more well-known mills continue to consolidate,younger companies are also looking at growth and have plans for expansion. Vishal Fabrics is now aiming for Rs. 2,000 crore top-line (currently Rs. 700 crore) in the next two fiscals and this has become possible due to the expansion it is planning both in domestic and export markets. Another relatively new entrant, Jindal Worldwide is increasing its capacity from 140 million to 160 million metres per annum. The company is also focusing on spinning so that it can minimise its dependency on outsourcing yarn that will help the company to cater to its customers in a more efficient way. Another growing company is R&B Denims from Surat that currently manufactures 20 lakh metre fabric per month and is on the way to increase its capacity by 10 to 20 per cent by next year.

Companies that had gone slow with their expansions a few years ago have finally taken the plunge. One such case in point is LNJ Denim that was earlier producing 20 lakh metres denim fabrics a month and it has recently added another line that has scaled its capacity to 27 lakh metres per month. The Group is also adding 20,000 spindles for yarn production which is expected to become operational by February ’22.In addition, LNJ Denim has created an edge in producing recycled yarn as it has the complete infrastructure for the same.

With circularity gaining importance in the textile industry, sustainable denims and sustainable processes are a major direction for many denim companies, and leading the way is market trailblazer Arvind, which produces over 100 million metres of fabrics and 6 million pairs of jeans, annually. The company is proud of its tradition of innovation and sustainability and has extensively invested in technologies such as Neo, wash techniques that reduce water consumption, and sustainable fibres that make the company one of the most responsible denim producers in the world.

Indian mills positive of increased business…

Agreeing with the buzz that there is ample growth opportunities in Indian denim industry, Suketu Shah, Chief Executive/Business Head, Fabric Division,  (LNJ Denim & Mayur)informed, “There are multiple factors behind a surge in demand, the major being that there were no inventories left with anyone across the supply chain, so demand is piling up. After a lull,the economy is growing because money is back in the market, and revenge buying is also happening, resulting in booked capacities in mills. The versatility of denim is also a reason that’s creating demand.”Suketu also shared that there is an uptick for premium denim products and customers are willingly paying the price for it.

It is heartening to see demand for denim clothes coming in not just from Tier-1 and Tier-2 cities but also from less urbanised regions of India…“In India, denim consumption is increasing as it is now penetrating to the bottom level of the consumption pyramid at Tier-3, 4 and 5 locations,”shared Vinay Thadani, CFO, Vishal Fabrics, who further added that currently 10 per cent of its fabrics is being exported and the target is to tap more export business along with domestic market. “The Latin America and European countries are on the company’s radar,” mentioned Vinay.

P K Sharma, Business Head, Nandan Denim, Ahmedabad also has a similar opinion about the growth of the denim industry and he feels that the growth will be catered to even more positively once yarn prices get stable in the market. Encouragingly, the demand for Indian denim in the international market is also improving. Nishant Giri, Senior General Manager, Jindal Worldwide,shared, “Our International sales have increased by 25 to 30 per cent, and we are trying to scale it to 40 per cent in next few years.”

Also Read: Unorganised jeans hubs – growing with plenty of challenges

New players are marking good footprints in the segment…

From 30 mills in 2011-2012 to around 50 mills in 2021, India has come a long way, of course scope of improvement is always there…Enthusiastic market conditions and ‘evergreen’ demand of denim has also motivated some companies to enter into this segment lately. Another good aspect is that these players are quite satisfied with their decision to enter into this segment and are further geared up for good growth. Among the latest entrants is

Future Textile Manufacturing Co.,Ahmedabad, which is an almost 7-decade old company and has entered into denim production just six months back with its‘Bright Denim’concept. The company, offering denim fabric for womenswear and kidswear, is focusing mainly on the domestic market but it also has future plans to cater to overseas demand.

Premo Denim Inc, Sonipat is another company that started the denim fabric segment just around 2 years ago, prior to which the parent company used to do garment manufacturing. Currently, it has a fabric production capacity of 10-12 lakh per month and is catering mainly to Indian brands and moving forward, it is planning to be in touch with leading global brands also. Talking about the challenges, Yash Singh, MD of Premo Denim informed, “There were a lot of challenges for the industry as well as for our company but with our offerings and current good market sentiments, we are hopeful about the future. We are working on various fronts to fit in buyers’ price. And sustainable initiatives are also helping to keep control of cost. ”

Also Read:US buyers rethink denim apparel sourcing with changed business environment!

With capacity building comes product development…

Till a few months back, most of the mills had slowed down their product development (PD) as the high cost of raw materials and uncertain market conditions were not supporting the PD initiatives. But now the situation has changed and nearly all the mills are focusing on new innovations. And it is interesting to note that the focus is on differentiation so as to offer unique products that make smaller players relevant in the denim market.

Premo Denim Inc. is focusing on different kinds of colours rather than focusing on just indigo, while slubs are also priority of the company…Use of laser technology is substantiating the efforts in fabric innovation at Premo, as revealed by them.Nandan Denim has shifted its focus on ‘super soft denim’with massive stretch and shrinkage control.On the other hand, Hridesh Nigam, Deputy Manager Marketing, R&B Denims told us that their focus is mainly on 3X1 (weave) denim. “Good thing is that earlier this 3X1 denim was being asked mainly for export but now the small players in domestic market are also asking for the same and this is a good sign for denim manufacturers,” shared Hridesh.

Sarthak Shah, Head-Sales, Future Textile Manufacturing Co.,asserted, “We don’t do regular or different kinds of Indigo. Our bright denim, which is developed in association with Bombay University Alumnus of University Department of Chemical Technology, is suitable for all kinds of jeans apparels for kids, girls, women and men.” With the basic construction of 3/1 RHT weave and Smart Lycra Weft, it has width of 58” and weight of 390 gm/270 GSM/7.000ozs.

The focus at Jindal Worldwide is on hand-feel touch when it comes to knitted denim and they have also played with the shades of Indigo by taking a deep Indigo shade so that wash down can be created on the pocket and main body of the product. The company is also offering organic cotton performance denim and antibacterial finishes.

Leading denim mills and their capacity

Source: Market and Apparel Resources