This Indian business supplies sustainable denim to international brands like Levi’s, Lee, Zara, Calvin Klein, H&M
Ahmedabad-based Vishal Fabrics, a denim manufacturing and fabric processing unit, has landed deals with prominent international brands on the back of its sustainable practices and tech expansion. Here’s how.
Did you know--a single pair of denim jeans needs over 1,500 litres of water to be produced?
The extensive use of a natural resource like fresh water for manufacturing denim is a primary reason brands are focussing on sustainability.
For international denim brands, being sustainable has now become central to their identities.
One Indian firm--upon whom many international brands rely on for sustainable denim production for domestic markets--is .
Founded in 1985, the Ahmedabad-headquartered company is a denim manufacturing and fabric processing unit with a dyeing capacity of 80 million metres per annum and a processing capacity of 105 million metres per annum.
Not only does it supply sustainably-manufactured denim to local distributors for white label products, but it also supplies to brands like Levi’s, Lee, Tommy Hilfiger, Zara, Calvin Klein, H&M, and others.
“We have a liquid discharge effluent treatment plant, which helps reuse 70 to 75 percent of water used in denim manufacturing. We end up using only 20 to 25 percent,” says Vinay Thadani, CEO, Vishal Fabrics, in a conversation with SMBStory.
The firm has also been optimising its thermal energy plant, as well as setting up solar rooftop panels and a solar plant.
“This could cater to 30 to 45 percent of our power requirements,” Vinay adds.
Vishal Fabrics has a dyeing capacity of 80 million metres per annum and a processing capacity of 105 million metres per annum.
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Building sustainability for brands
Setting up efficient effluent treatment plants, thermal energy plants, and solar capacity involves high capital expenditure.
One may wonder why should a denim manufacturer like Vishal Fabrics spend a significant amount of capital on this, while the consumer-facing brands end up taking all the credit for selling sustainable products?
“Our sustainable practices are why we are able to get deals with prominent brands,” Vinay explains.
Only if every player in the supply chain follows sustainable practices can a denim brand ethically claim its products are sustainable.
Thus, the likes of Levi’s, Lee, and many other leading brands have a heavy reliance on players in their supply chains (fabric manufacturers, washers, cutters, etc.) to ensure sustainability.
As a fabric manufacturer, Vishal Fabrics plays a critical role in ensuring any consumer denim brand can claim its products are sustainable.
“Many brands nowadays prefer vendors that follow sustainability measures, and have been audited for the same,” Vinay says, adding:
“Once a brand procures material from us, they usually have joint ventures with other players involved in washing, cutting, etc., taking care of most of the rest of the production of the finished product. The brand itself is not involved much in the process of manufacturing a sustainable product.”
However, denim brands need to maintain processes where all vendors and customers are operating in an environmentally-conscious manner.
Vishal Fabrics claims that its more recent capacity and technological expansion (post 2018) gives it the edge over other local denim manufacturers, which expanded back in the 2010-2014 period.
“There was an over-capacity in the market back in 2018, but since then, the industry has evolved rapidly, and we’ve been there to cater to its latest needs. For example, we’ve upgraded our internal processes and platforms by embracing superior technology and higher automation. We have integrated our machines with the SAP platform,” Vinay says, and adds that it has enabled the firm to reduce its operating expenses, optimise costs and improve operational efficiency.
Some of the larger denim fabric manufacturing firms in the country include Jindal Worldwide, Arvind Limited, Aarvee Denims, Pratap Spintex, and more.
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Growth in a post-COVID world
Despite its recent tech integrations and expansion, plus its sustainable practices, Vishal Fabrics was unable to escape from the COVID-19 pandemic unscathed. When the demand for denims plummeted, so did the firm’s sales.
In FY 21, it recorded Rs 967.54 crore revenue from operations, down from Rs 1,296.84 crore in FY 20. Its profit after tax in FY 21 also went down to Rs 18.10 crore, down from Rs 30.10 in the previous year.
Although the COVID-19 pandemic placed a dark cloud over countless Indian businesses, it had a silver lining for local manufacturers who had potential to export their products.
“As the pandemic subsided and demand returned, there was a strong demand from the Western world, which wanted an alternative to denims from China. These companies were building their China-plus-one strategies, and naturally, India emerged as a favourable candidate,” Vinay says.
In fact, reports suggest the global denim market to grow at a CAGR of 4.2% between 2021 to 2030, but the Indian market could see growth of up to 10 to 12 percent.
Anticipating this rising demand, Vishal Fabrics added an export arm to its business in 2021-22, and began exporting denim fabric to distributors in South Africa, Thailand, Bangladesh, Thailand, etc.,--places where Western brands sourced their denim from.
And with returning demand from domestic markets, Vishal Fabrics saw a recovery in FY22, posting Rs 1,546 crore revenue from operations and Rs 69.10 crore profit.
Around 70 percent of its sales came from selling to local distributors, while 30 percent came from sales to ecommerce brands, international denim brands, and overseas customers.
Going forward, Vishal Fabrics will continue to invest in environmentally-conscious manufacturing capabilities, but it still faces labour challenges and uncertainties around physical retail.
With the Indian textile industry heavily dependent on manual labour, the 200-employee firm claims it is difficult to consistently meet desired quality standards.
The firm also says the pandemic has impeded denim sales at physical retail stores, and has led to confusion among consumers and brands alike about the way ahead.
This has a follow-on effect to denim manufacturing firms like Vishal Fabrics, who have to navigate uncertainty among its customers and distributors. The enterprise sees this as an opportunity for building strategic and long-term tie-ups with global retail brands for direct sales.
Edited by Megha Reddy