From yarn to runway: How chairman K.P. Ramasamy made KPR Mill into one of the largest knitwear garment manufacturers

Chairman K.P. Ramasamy stitched up KPR Mill, much like piecing together a T-shirt—one step at a time. First, the front and back pieces were sewn together with its yarn and fabric businesses; the sleeve attachment came next with the garment business; the addition of fabric processing, printing, and embroidery capacities reinforced it like the side seams and neckline; and the sugar and ethanol business to fulfil power requirements served as the hem for a good finish.

“We didn’t bring in everything suddenly. We went step by step,” says Ramasamy, the patriarch of one of India’s largest vertically integrated knitwear garment manufacturers, which exports to top global fashion brands like Marks & Spencer, H&M, and Primark. The profitable family-driven business generates more than Rs 6,000 crore in revenues annually. Founded four decades ago by Ramasamy and his brothers, it had evolved into a yarn-and-fabric maker by 2010, catering to both domestic and international markets, with a small garment export business churning out 50 million pieces. Given the low profit margins on yarn and fabric, it made sense to broaden the scope of garment exports.

Initially, KPR Mill outsourced washing, dyeing, printing and embroidery due to a lack of crucial fabric processing capabilities in-house. But 5% of the consignment would get rejected by buyers due to damages. “When we tried it in-house, the rejects fell to 1% and we saved money,” explains Ramasamy. This led them to focus on integrating spinning, knitting, processing and garmenting during 2010-15. KPR Mill now has 15 factories to spin cotton into yarn, knit yarn into fabric, process the fabric, and produce 150 million garments for export annually. It ships more than 140 million pieces, mostly to Europe, North America, Australia and the rest of Asia. Now, garment exports account for 40% of its revenues, or about Rs 2,400 crore, up from Rs 230 crore in FY10.

Noting an impressive 25% CAGR in their garments exports business in a 10-year span, Sandeep Raina, Executive Vice President-Research at wealth management firm Nuvama Professional Clients Group, says KPR Mill’s vertical integration provides it advantages such as higher profits and swifter shipping. “In the fashion business, if you miss a deadline, the product becomes redundant.” He says it has moved into high-yield products, bolstered with more capacity and capital. The firm added a greenfield factory in March 2022 to produce 42 million pieces and a Rs 100-crore viscose yarn spinning mill in 2023.

Nothing about Ramasamy reveals that he is one of India’s 100 richest people, with a staggering net worth of Rs 19,000 crore; not his no-frills office; not the plain white shirt he is mostly seen in. Under him—a farmer’s son who was forced to drop out of high school—the company has become adept at turning challenges into opportunities.

He pioneered free education up to Class 12 for factory workers, mainly women dropouts. Over 27,000 women workers have successfully completed their studies, with some even obtaining MBAs. Many have now taken up positions in various industries, such as nursing and IT, while others are advancing in their careers at KPR Mill. In an industry grappling with skilled-labour shortages, Ramasamy, fondly known as “Appa” (or father) to his vast workforce, has earned immense goodwill.

A cyclical textile-and-garment business doesn’t always adhere to capacity expansion plans. If you start building a new factory when the demand is good, chances are that the scenario will have reversed when you finish it. “The right time to start a project is during the dull phase—that’s our plan,” Ramasamy quips. The rationale is that when the project is completed, demand may have returned, allowing the market to readily absorb the extra production—a sound logic that requires impeccable execution.

And KPR Mill has a war-footing strategy in place for it, too, to build operational factories within six months, a much quicker timeline than the usual 1-1.5 years. Step 1: Order machinery once the board approves the project. “Machinery can take even a year to reach us. We voluntarily pay a 10% advance to get it on a certain date,” he says. Step 2: If the norm for factory construction is to get quotations from four contractors before assigning them to one, get quotations from 10 and assign them to four. Lapsing into Tamil, he says: “When there’s a sudden downpour in the village, everybody in the household drops whatever they are doing to rush outside and bundle up all the grains left to dry. If it is a core task, our people will be fully on the job.”

For steps 3 and 4, ensure sufficient orders from buyers and trained labourers to execute them. One without the other can prove costly, he warns. If the new factory requires 1,000 labourers, hire and deploy 500 on training in existing factories two months before D-Day. “So, order-ready, trained people-ready, machinery has arrived on time. If we do a pooja on the target date, the factory can be commissioned by starting production on Day One itself,” he beams. Then, it is just a question of ramping up production. “Once commissioned, the road is clear; we just have to drive straight.”

The most crucial aspect for this plan to work to the hilt is finance. Ramasamy’s youngest brother and Managing Director P. Nataraj says the company has never embarked on a project relying entirely on bank loans, neither do they have the intention of doing so in the future. “In such a situation, we prefer postponing the project until we can create surplus funds from existing businesses. We are always very conscious of this.” Nataraj, a chartered accountant by training, says poor financial planning for big projects is how even large companies find themselves drowning in hefty loan repayments and interest.

But over the past 18 months, the global textile and garments industry has experienced a slowdown, especially with the Russia-Ukraine war denting exports to Europe, which accounts for 60% of the company’s garment exports. Even KPR Mill, known to leverage downturns, is focussed on adding sewing machines in factories with space to spare instead of greenfield expansions. “This year, we started adding capacity to boost production by another 30 million pieces, which is as good as a large factory. Less investment, same increase in production,” Ramasamy adds.

Ramasamy says the vision is to continue growing year after year. It’s quite possible, says Nuvama’s Raina, especially as the proposed India-UK Free Trade Agreement could potentially unlock a $1-billion export opportunity for India. “The firm has guided an incremental 10-15% revenue growth if the deal goes through, apart from the 10-12% at which they have been growing,” says Raina.

As the business has welcomed the second generation into the fold, Ramasamy’s prayer is for continued teamwork in the 30,000-employee-strong company. “That is what got us here. I hope the next generation also takes this from us.”

@SaysVidya