Two decades ago, Pubudu De Silva left a management role in a leading apparel manufacturing firm to join a new fabric manufacturing plant as an understudy at the start-up phase at Textured Jersey in the Dyeing and Finishing department. Moving up the ranks, De Silva is now the Group Chief Executive at that company, now known as Teejay Lanka Plc, a listed company, and together with his management team, he is steering it through the pandemic storm towards rapid growth.
- How do you define your role, and what is your vision for Teejay Lanka?
We are in an unprecedented global crisis as governments here and abroad struggle to contain the Covid-19 pandemic. Everywhere, markets are in a whirl and businesses under Murphy’s Law! Where anything that can go wrong will go wrong. As I see it, any leader has no option but to navigate his team safely through a storm and reach the desired destination as quickly as possible. Incorporated two decades ago, Teejay Lanka took 14 years to reach the $100 million revenue milestone. But we doubled revenue and became a $200 million company in just the last five years via strategic acquisitions and organic growth. The vision now is to breach the $300 million revenue mark by 2023 by ensuring we execute our strategic plans despite the disruptions caused by the pandemic.
We have identified new customers and are working closely with them to facilitate the expanded capacity to reach our aspirational goal of $300 million and beyond
- What was the impact of the Covid-19 pandemic, and what is your strategy for growth?
The 2020 lockdowns here and the challenging conditions for our customers abroad impacted our performance. Profits fell sharply in the first quarter, but we had planned early, pivoted quickly, maintained relationships, and invested in capacity, allowing us to close the financial year with a marginal decline in revenue and a 10% fall in profits. I think the management team at Teejay can be proud of this achievement and be confident in our growth plans.
Looking ahead, I must note that even before the pandemic, we had shattered earnings records for nine consecutive quarters, and we will continue with the long-range plan we set for ourselves because this is what we do. First, we will enhance our capacity. We achieved $200million in revenue with a daily production capacity of 75 tonnes: 40 in Sri Lanka and 35 in India. We operate one fabric plant each in Sri Lanka and India, in addition to a fabric printing facility in Sri Lanka. We hope to increase daily capacity to 105 tonnes by outsourcing capacity from a plant within Sri Lanka and investing $26 million to expand capacity in the India plant. We are also exploring new opportunities in Bangladesh and Africa. We have mapped out the destinations we want to enter based on our customers and vendor partner requirements. Nearshoring is another option for us.
The second part of our growth strategy is to proactively introduce new products with a sustainability focus, and these new products generate 60% of revenue at the moment. Apart from that, we are working on a new front end business. We plan to bring closer to $50-100 million from a new customer base. We have identified new customers and are working closely with them to facilitate the expanded capacity to reach our aspirational goal of $300 million and beyond. In recent years, we onboarded two new customers bringing the total to eight of some of the top global clothing brands in Europe, the US, and Asia.
- What are some of the factors shaping the fabric industry?
Consumers are demanding more sustainable clothing. The fashion industry is one of the five most polluting industries in the world. We are consistently looking for ways to reduce our carbon footprint and improve sustainability across everything we do, from sourcing raw materials to designing new products, processors, and packaging. The Industrial Revolution 4.0 is also changing clothing manufacturing, increasing the dependency on machines. Process innovation is also moving fast; we have started trials in developing waterless dying that reduces the impact on the environment and it shows successful progress in achieving similar output.
Demand for smart clothing and synthetic wear is increasing, and we are building expertise and capacity in these areas. Right now, we are doing more on cotton but shifting towards synthetic fabrics because the opportunity is tremendous, opening up the high-end of the market for us and will deliver better margins and growth. The local apparel industry imports $630 million worth of synthetic textiles annually, while domestic suppliers produce about $50 million, so the opportunity is tremendous.
- What was perhaps the hardest leadership lesson you had to learn?
Aligning people to a common cause and striving towards a goal no matter what the challenges are. Teejay Lanka has had challenges from day one. We all worked hard to build a profitable, cash-rich business from scratch. Teejay later acquired and then turned around a loss-making production facility in India. All this gave us a wealth of experience to get us through the worst economic crisis of our times. In 2020, we had periods where manufacturing was at a standstill because our clients in Europe and the US did not have orders for us, but that did not stop us from investing in our people, capacity improvements, and client onboarding. It all starts by believing in yourself, and then you help others believe in themselves.
Investing in growth ingredients
A discussion with Salman Nishtar, Chief Financial Officer at Teejay Lanka Plc, on enabling innovation
- How do you define your role?
I am responsible for finance, commercial, and IT and sit on the management committee, so I have a 360-degree view of the company and keep an eye on its trajectory. The role I play is primarily concerned with keeping the company stable, ensuring that enough resources are available to drive innovation and market growth and that processes are in place to deliver on the promises we make to our clients. Our focus as a finance team is the future, so it is less to do with historical accounting and more to do with forecasting, setting the course, and monitoring our journey as a company.
- What about your job excites you the most?
I joined Teejay Lanka in 2013 as its financial controller. The company was turning a corner, and a few years later acquired two plants, one in fabric printing and a textile mill in India. I have seen the company grow from a $100 million revenue firm to $200 million, and we have set ourselves a $300 million target by 2023. What excites me the most is the opportunity for myself and my teams to be a part of this growth.
Frequent external market shocks best the industry, from raw material price fluctuations, oil price volatility, currency instability and economic cycles, and now fast-changing consumer preferences. What we do in finance is to bring enough clarity and stability during difficult times. Covid-19 brought challenges at an unprecedented scale, yet we had the processes in place and financial strength to pivot and grow. The growth trajectory of the company depends on process enhancements, sustaining the right team structures, product innovation, and capacity expansion: to enable all that and show results is a profoundly satisfying experience.
A 360-degree approach to innovation
Pamoda Kariyawasam, Senior General Manager for Sales & Marketing, and Supply Chain at Teejay Lanka Plc talks about his role as unifier
- Tell us about the division you lead and its role in harnessing innovation to drive growth?
The division plays a pivotal role that brings everything together, anchoring the frontend and backend operations in the group. It is about creating the right relationships and building long-lasting partnerships with customers and suppliers to add value and offer superior products and solutions to win more business in the marketplace. Innovation is at the core of Teejay Lanka. Our focus is on creating a range of products, including high-end, high-performance fabric, using different yarns, dyes, and chemical processes such as botanical dyed, Amnisoul, and Naturaw.
The sales and marketing team directly collaborates with the innovation pods of our major vendor partners to create concepts and experiences in a joint effort of expanding market share. We also work with our in-house innovation teams to develop novel products and solutions and stay updated on global fashion trends and evolving market needs.
The supply chain team is responsible for establishing and cementing relationships with some of the world’s leading fibre and yarn innovation partners. We try to secure first access to their innovation portfolios to convert them into the fabric and then into final garments together with our vendor partners before being presented to the leading global fashion brands.
- What is your proudest achievement in your leadership role within Teejay Lanka?
I was part of the strategy team that merged Teejay Lanka, Ocean India and Quenby Prints. I was actively involved in designing and executing the merger that made Teejay the first multinational fabric mill in Sri Lanka. Soon after, Teejay made it to the S&P SL20 index of the Colombo Stock Exchange and was awarded the BOI Best Textile Exporter of the Year award in 2018/19. The success story continued with the inclusion of Teejay Lanka in Forbes Asia’s Best 200 Companies Under a Billion Dollars, where I felt proud to be part of this journey.
Stretching the possibilities with innovation
Chief Operating Officer, Production & Engineering, Sanjaya Basnayake tells us how innovation happens at Teejay Lanka
- Can you tell us what you are responsible for at Teejay Lanka?
I lead production, engineering, sustainability and innovation, and my job is to bring these together for growth. Controlling costs and wastage are two of the most significant factors in this industry, and it requires highly focused sustainable solutions across all our plants. Increasingly, consumers care about how we manufacture fabrics. Another aspect is productivity improvements, where we continuously look for process improvements and adaptations of new technologies in a timely manner.
Product innovation is another crucial area. We have always had a dedicated team for product development but introduced a new element, the innovation hub to focus on breakthrough innovations that will help us to sustain a market edge and drive future growth. Together, the two hubs devote themselves to achieve mainly four objectives: 1) Disruptive innovation 2) Improving existing products; 3) Collaboration with external experts and research bodies; 4) Improving and initiating new processes.
- Can you tell us how all this leads to growth?
Product development and Innovation has always been a crucial pillar of success for the company, and it has helped secure and attract new customers during this challenging period.
Let me highlight a few innovations. We introduced a fabric, called Dry Chilled Cotton® 1.0, that dries three times faster than any other fabric and this is a breakthrough innovation used for activewear of some leading global brands. On the process innovation front there is another breakthrough, Teejay Lanka collaborated with a Brazilian research institute to recycle the saltwater used for dying fabric and reduced the usage by 60% and it will drastically reduce the total dissolvable solids in the effluent water.
Textiles have a life cycle of five to six years. We brought this down to two years because we are introducing novel products to the market more frequently. Over the last two years, our new product realisation has been well over 40 %, and this strategy will help us grow revenue by 50% over the next few years to $300 million by 2023.