Meenakshi India is a four-decade-old textile company that evolved from trading into specialised apparel manufacturing. Beginning with shirts, the company expanded its operations from Chennai to Salem and diversified into men’s bottomwear, outerwear and jackets—segments where Indian manufacturing has traditionally had limited capabilities. Shubhang Goenka, Whole-Time Director, Meenakshi India, in this interview with Divya Shetty, discusses how the company is driving growth in the Indian apparel sector.
In your recent press release, you mentioned that Meenakshi India plans to raise its capacity to 3.8 million pieces by 2030. What demand trends are you planning to capture while meeting this target?
We are seeing a very unique period for the Indian garment manufacturing industry—something that does not come around very often.
A lot of it is being driven by the relationships India is building with traditionally strong garment-importing markets. The UK, the EU and, to some extent, the US are all witnessing a shift in their trade dynamics with India at the same time. The UK has already signed an FTA, the EU has also agreed on an FTA and is awaiting its official implementation date, while the US is in advanced talks.
All of this happening simultaneously puts India in a much stronger position, or at least brings us closer to countries such as Bangladesh and Vietnam.
We are already seeing the impact in our day-to-day working. Marketing meetings that were earlier very difficult to secure have become somewhat easier. Ultimately, manufacturers that put in the required effort to market themselves and demonstrate to brands why they should work with them will benefit.
This, coupled with the move away from China, the saturation of Vietnam’s labour market and India being one of the more politically stable nations, is translating into more enquiries and greater customer interest.
We see this as a once-in-a-decade kind of opportunity, which is why we are confident about delivering the numbers we are targeting.
What fashion trends are currently shaping the apparel industry?
One clear trend is sustainability. It is a major push for almost everyone. Customers increasingly do not want man-made fibres unless there is a specialised functional requirement. The kind of customers we work with are definitely averse to polyester unless it serves a specific purpose, such as sweat-wicking, non-iron performance or another functional finish.
India is traditionally strong in cotton apparel. Along with that, there is a significant drive towards Lyocell, where India already has a strong base. Lyocell, Tencel blends, cotton blends and linen are driving a lot of growth, particularly for summer collections. Linen, in general, remains a very strong and evergreen fabric base for Indian apparel.
For winter, customers want wool-like aesthetics, wool without polyester and warmer fabrics. Again, this is something India has traditionally not been very strong in because we have always been a summer-heavy manufacturing country. We are growing significantly in winterwear by offering the fabrics and workmanship that international brands are looking for.
Athleisure is another major trend. That is where functional fabrics, including polyester, become relevant. Consumers increasingly want comfortable clothing that they can also wear outside.
Where are your manufacturing facilities located? Are they only in India, or do you also have manufacturing facilities outside the country?
At the moment, all our facilities are in Salem, Tamil Nadu. However, we are aggressively pursuing an expansion outside India and have shortlisted a few countries.
The primary purpose is to hedge against geopolitical risks in the market. Regardless of the current situation, everybody now understands that geopolitics can change at any point. Customers want manufacturers who can offer flexibility, and companies that can safeguard customers against geopolitical risks are likely to do well.
We are looking at Sri Lanka, Nepal and Vietnam, and intend to expand into one of these markets. We already have a strategic tie-up with a Sri Lankan factory, through which we can offer our American customers the flexibility of producing garments in Sri Lanka.
In the coming years, we intend to move towards our own operated and owned facilities outside India.
When you look at setting up manufacturing facilities outside India, what strengths do these locations offer? From the perspective of a global company looking to establish a factory in India or elsewhere in Asia, what does India lack?
Shubhang Goenka: The primary driver for us is geopolitical risk. It is not that there is anything wrong with India. In fact, there are significant opportunities within India, including in places such as Odisha, where new factories are coming up with government support.
However, expanding within India does not hedge you against geopolitical risks. If, for example, there is suddenly a trade restriction or tariff increase on India, customers will become wary of putting all their eggs in one basket. They may restrict the volume of business going to an Indian factory even if that factory is performing well.
If you give customers the option of producing in Sri Lanka, they know that even if something goes wrong in the first country, their order remains safe because production can be moved to another location. That is our primary driver.
At the same time, international expansion comes with other advantages. There is a lot of technology and knowledge transfer that can happen. Sri Lanka, for instance, is known for being more structured in its working and more efficient in certain production processes. There is a lot that can be learnt from factories outside India.
India, on the other hand, has a very strong cotton base. One major advantage is that the entire supply chain is available within the same country. That is one of the reasons buyers look at India. Every country has its own advantages.
Given your presence in athleisure wear, how would you describe the present state of the athleisure segment? What are the key opportunities and challenges?
Shubhang Goenka: There is significant opportunity in athleisure because, globally, consumers increasingly want clothing that is comfortable while also being stylish.
The good part about India is that we have the basic infrastructure required to manufacture these products. What we sometimes lack is the drive for development and R&D—to continuously create more designs and more options that can be offered to customers.
We are traditionally strong when a customer gives us guidance; we can manufacture what they want. But there is seldom enough initiative from our side to develop something independently and offer customers a product that they did not know they would like in the first place.
That is something we are trying to address. We want to do the development ourselves and then take those products to the customer.
China is very good at this because manufacturers there are constantly developing products that may not be their bread-and-butter products today but have the potential to become important categories two or three years down the line. That is something India does not do enough. We tend to concentrate on the core and the basics.
Another challenge in Indian manufacturing is MOQs. The supply base in India generally works with much larger minimum quantities. China offers greater flexibility in buying smaller quantities. Brands looking to experiment therefore find it difficult to do so in India because nobody wants to commit to large quantities right from the beginning.
China gives brands the opportunity to start small, test the waters and, if a product works, scale it quickly. These are just some examples. India has many strengths as well, but these are some of the challenges we currently face.
You saw a sharp improvement in the first-quarter results. How sustainable are these margins, and how do you plan to maintain this momentum?
If we compare the year-on-year and quarter-on-quarter numbers, we have improved over time. However, a major part of the improvement has come from the other-income segment. We have had mark-to-market gains from investments as well as foreign-exchange gains. These are not traditional operating line items and can vary through the year depending on market conditions.
At the same time, if you compare our performance with last year, there has been an improvement in our operational income as well. That has been driven by process optimisation, raw-material optimisation and internal cost-control exercises.
We are confident that we are on track to return to the profitability ratios we were achieving before the tariff-related impact.
Our profitability in the corresponding quarter last year was affected by tariff-related issues. Otherwise, the profitability of our general business model is very different. It is a gradual process, and we expect it to improve again.
So, while the improvement has partly been driven by mark-to-market gains in other income and forex gains, we have also improved our raw-material ratio and implemented operational efficiency measures. These have contributed significantly to the improvement in operating income.
Quarter one is normally a slightly slower quarter, and we expect to see more benefits from the efforts we have undertaken as the year progresses.
You mentioned cost-cutting measures. Could you elaborate on these so that our readers can also learn from them?
We have made improvements in our raw-material purchases and overheads.
When the order book shrinks because of tariffs and the discounts that you have to provide due to tariffs, some of those benefits also need to come from different participants in the supply chain. Our mills, for example, have partnered with us in this regard, and we have been able to derive some benefit by procuring fabric at lower prices.
We have also created efficiencies by using shared resources across different departments and have reduced certain expenses in selling and distribution.
At the same time, we continue to focus heavily on R&D and marketing, particularly when exploring markets outside the US. For example, we are pushing strongly into Europe.
One of the other measures we implemented was centralising our stores and procurement. All our factories now buy through a centralised procurement system. This allows us to negotiate better rates and benefit from economies of scale.
We have also improved inventory control. We are making sure that we buy only as much as we require and avoid unnecessary inventory accumulation.
On the operational side, we have worked on reducing wastage and strengthening quality control. These initiatives have also helped us.
You mentioned Vietnam and Bangladesh as competitors. Where must Indian apparel manufacturers improve to compete with them more efficiently?
Shubhang Goenka: I would not say Bangladesh and Vietnam are our only competitors. We also compete with European and South American nations. Countries such as Portugal and Turkey, as well as Mexico and Guatemala, are significant competitors for us.
Our intention is to capture the kind of production that has historically been done in these countries. One advantage they have traditionally offered is higher quality standards and greater innovation. We often see business move to us from countries such as Turkey and Eastern European nations.
When it comes to Bangladesh and Vietnam, Bangladesh’s advantage has always been labour costs. It has a lower minimum wage. The only way to compete against that is by improving our own efficiencies.
Our endeavour has always been to improve production efficiency and focus on value-added products that Bangladesh may not be able to manufacture as effectively. Bangladesh is typically very strong in basic products, while we are stronger in several value-added categories.
Our washes, for example, are a competitive edge. Customers appreciate the handwriting we bring to the wash, as well as the look and feel of the garment. It is not a flat product.
These are areas where we can confidently say that we are competitive with our global peers, whether that is Bangladesh or even Turkey. At present, we are quite strong in terms of our product offering.
Sustainability has become a major priority globally. How is Meenakshi India making its products and overall product lifecycle more efficient and sustainable?
Sustainability has been part of our day-to-day working for many years.
The first thing I would highlight is that we have been generating and consuming wind energy for well over 15 years. Even before sustainability became such a fundamental industry requirement, we were already consuming renewable energy.
We have now also shifted significantly towards solar, and a large portion of our energy requirements is fulfilled through solar power.
In our day-to-day operations, we continuously undertake improvement measures. For example, we have reduced our energy dependency by switching to HVLS fans, installing LED lights across our factory floors, moving from clutch motors to servo motors in our machinery, and replacing traditional compressors with screw-type compressors.
All of this has reduced our energy requirements, and whatever energy we still require, we try to fulfil through renewable sources.
We also recycle the water generated through our washing processes. Around 90 per cent of it is recycled and reused for domestic purposes. We operate electric vehicles between our plants to reduce direct fossil-fuel dependency.
We are also registered on the Higg Index, which tracks various sustainability parameters, including factory emissions and pollutants such as noise, air and light pollution. These measures are verified by an external agency, and we score quite well. However, we are always looking to improve.
A significant portion of our raw materials is also sustainable. We use several lakh metres of organic cotton and a considerable volume of regenerative cotton. Almost all our cotton purchases are, at the very minimum, Better Cotton Initiative (BCI) cotton. Even when customers do not specifically ask for it, we often purchase BCI cotton on our own accord.
Similarly, wherever we use polyester, we try to use recycled polyester. Our overall polyester consumption is quite limited. Across different aspects of the business, we try to embed sustainability into the way we operate.
Has the company benefited from any government policies or schemes, such as PM MITRA Parks or the PLI Scheme? Have you applied for any such schemes recently?
Shubhang Goenka: We have not participated in those particular schemes, but we regularly take advantage of schemes such as TUFS, the Technology Upgradation Fund Scheme, which supports technology-related investment through financial incentives.
We have also undertaken an energy audit under a government-supported scheme where the cost of such audits is subsidised.
In addition, we utilise schemes that encourage companies to onboard new workers. The government wants to bring more first-time workers into the industry, and new entrants can receive certain one-time incentives. We try to promote these benefits among eligible employees.
There are several such government schemes that are continuously available, and we try to utilise the relevant ones.
Could you briefly explain how the company performed financially last year and outline Meenakshi India’s long-term plans for the next five years
Last year was a little challenging for the industry overall. We had to provide certain discounts to our US customers to retain them and continue those relationships. The tariff situation has also remained uncertain, with developments occurring from time to time, and that had some impact on profitability.
If we look at the earlier years, our ROE has been very good compared with peers across the industry.
Going forward, we have been diversifying our customer base. Earlier, it was more concentrated towards the US, whereas now we have more customers from the UK as well. The business is becoming more evenly distributed geographically.
That diversification should help us increase our capacity, and over the next few years, we are also planning to establish new factories.