The Hindu Business Line : Home textiles - the next big opportunity

AFTER garments, home furnishing is emerging as the next hot destination for textile players. Exports of home textiles - bed, bath and kitchen linen - have zoomed over the past six months, after the dismantling of quotas, sparking off a fresh wave of investment in the segment.

Larger players, such as Welspun India and Abhishek Industries, are sinking big money into expanding capacities. Smaller companies, some of whom are in unrelated businesses, are also foraying into home textiles - Gangotri Textiles, KG Denim, S Kumars Nationwide, Bannari Amman Spinning, to name a few.

GHCL (Gujarat Heavy Chemicals), which has a spinning division, plans to get ahead in the race by acquiring companies in the US and Europe.

The housing boom is driving up demand for home textiles, according to Mr Harminder Sahni, Principal and Associate Director of textile and retailing consultant, KSA Technopak.

Home textiles as a segment, is very exciting - both domestic and exports. On the domestic front, while the consumption is pretty large and growing quite fast with millions of new homes coming up every year, there are hardly any brand or retail chains focused on this segment.

Similarly in exports, Indian textile companies have not put enough wide- width capacity due to quota issues, but now there are more than 15 new projects coming up and India's share (currently at 7.3 per cent of world trade) is bound to grow.

KSA Technopak expects India's home textile exports to grow from $1.2 billion now to $5 billion by 2010. With manufacturing facilities closing down in the West, international retailers are stepping up their sourcing of home textiles from countries such as China, India and Pakistan.

The segment, which has till now, been largely unorganised, is attracting investment from outfits that are betting big on export growth.

Besides, home textiles appears to be a good way to scale up the value chain or diversify as is the case with companies such as KG Denim and Aarvee Denim. For fabric players, home textiles might prove to be a logical extension to their existing business. According to Mr Sahni, the segment could be a "safer business option compared to apparel."

The domestic market looks appealing too. According to Mr Akhil Jindal, President, Welspun India, "Demand for housing has increased the home textile market fourfold. With hygiene, fashion and coordination on the upswing, the requirement of home textiles will concurrently increase". Welspun, one of the larger exporters of home textiles, is expanding aggressively in the domestic market. It plans to set up 40 of its "SPACES- Home & Beyond" stores by 2006.

But despite the potential in the domestic market, new entrants appear to be focusing on exports. The large investments in brand building and distribution that would be required to become a prominent player in the domestic market could be a reason for this.

Says Mr Sahni, "Manufacturers should either focus fully on exports or if they wish to have the domestic market share too, go ahead and set up a retail chain. The other option to enter domestic market would be to become a private label supplier for the retail chains such as Shoppers' Stop and Westside."

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