Welspun India expects exports to bounce back by end of next fiscal after being hit by global recession in the last few months.
The company plans to deepen its reach in the domestic market by tapping smaller cities through franchise model. It has enhanced its store count to over 10,600 by opening 1,000 stores in the last quarter and targets to reach 50,000 by FY26 with revenue of ₹1,700 crore from home textile and domestic flooring business.
Dipali Goenka, Jt Managing Director and CEO, Welspun India, told businessline that the demand for home textile in the US and Europe has been hit by mild recession and high inventory due to logistics constrains during Covid times.
The retailers had raised prices due to high incidental cost and this led to drop in demand but retail prices have started falling with the easing raw material prices and logistics cost, she said.
The US is a vibrant economy and it will return to normalcy by the December quarter, she added.
The brand licencing pact with The Walt Disney Company for Europe, the Middle East and the Africa region will add another portfolio besides providing extra shelf space at top retail outlets. Interestingly, spending on kids’ wellness has never seen a slowdown even during recession.
Home textile logged revenue of $1 billion with the emerging business contributing about 19 per cent and growing at CAGR of 25-30 per cent.
“We already have roadmap of 25,000 stores. Besides MDUs, we are also looking at franchise model as the brand get stronger,” she said.
On the company’s retail experience, Goenka said the company launched 200 company-owned and operated Spaces and Welhome, but had to shut it down by 2008 due to soaring real estate cost and other challenges.
Now, she said the company has changed strategy and managing retail through MDUs with a strong sales team which visits stores and tracks sales at MDUs using latest technology.
The company’s margin was impacted by rising cotton, coal and container cost. However, cotton and container have started falling while coal prices continued to remain at elevated levels.
The average cotton cost in December quarter was ₹69,000 a candy against ₹83,000 September quarter. The average freight cost was down at $5,300 against $9,000 in Q2 and it has fallen further to about $3,500.
The company expects the ₹260-crore expansion projects of flooring, Advanced Textile and Home Textile to end this fiscal with an investment of ₹20 crore in March quarter. The company plans fresh capex of ₹200 crore in renewable energy to bring down cost besides another ₹150 crore on maintenance capex.