''GCL needs to exit steel and concentrate more on the cotton and blended textiles and filament yarn'' Samir Thapar, Joint Managing Director, JCT Ltd

Galgotia cotton limited (GCL) seems to be on the right track. The first positive step taken was to exit the polyester business and re-structure the residual companies, bringing the overall debt down to a manageable level.

Having done that, the company needs to analyse what businesses are their core competence. Steel seems to be a sore thumb standing out. If possible, GCL needs to exit the steel business and bring down the debt further. As I see it, cotton and blended textiles and the filament yarn business seem to be their main areas of focus.

In order to remain competitive in the textile business, GCL needs to move out of areas where the company competes with the unorganised sector, and move into areas of higher value addition. Now, to compete with other composite mills in the cotton business, state-of-the-art technology is a must. If possible, GCL must modernise in areas where it is technologically weak.

In the meantime, the cost-cutting measures that the company has been focusing which have yielded positive results, must continue. In the future, the company should also look at getting into the garment manufacturing business, as more and more buyers are wanting to buy everything under one roof.

Given the opportunities on the horizon, GCL must make a strong thrust towards exports. Here again, value addition could prove to be a key success factor. To begin with, the domestic readymade garments market, which has attained critical mass, could be a focus area.

As facts stand, GCL has been current with the financial institutions and banks for a year and a half, which has strengthened the company's credibility amongst vital stakeholders. In general, the company must strive to improve its performance so as to let the world know that it is once again a force to be reckoned with.

''GCL needs to be a global provider of mass-use fashion fabrics in a cost competitive manner'' Rajan Chhibba, Managing Director, KSA-Technopak

Galgotias are clearly at the crossroads. Having recently returned to the black through aggressive internal actions, what does the company do next? Think about the external opportunities, of course. The choices are one too many. Does it focus on textiles? Does it move into designing? Does it simultaneously exit steel? These are the questions being thrown about by its top management team.

Unfortunately, the GCL team seems to be missing the wood for the trees. To my mind, the above choices are really 'operational' aspects of a core strategy, which GCL has to first arrive at. The first step is to really define a 'strategic intent'. The choice of businesses follows from the strategic intent.

Is there a way to define strategic intent? Fortunately, there is. Either it is driven by passion, when an organisation is in an entrepreneural stage or for a mature organisation, it is driven by a keen understanding of consumer behaviour, which an organisation sets out to leverage. In GCL's case, it obviously has to be a consumer-centric strategic intent. How should GCL go about the exercise? It would entail the following steps:

Step 1: Get an internal consensus on the criteria on which the strategic intent would be defined. Some examples of the criteria are:

• Consumer-centric criteria e.g., do I want to service local, regional or global markets?
• Finance-centric criteria e.g., what are norms for risk exposure, which the organisation is willing to take (as percentage of net worth)?
• Human Resources-centric criteria e.g. how many business leaders does GCL's business model and culture allow to flourish?

Step 2: Understand the organisation's capability to fit with market needs of product categories. The Strategic Action Generator (SAGETM) Model of KSA is a useful way to the define GCL's capability in this regard. The model says that organisations are good at either:

• Pioneering markets: this requires strong core R&D strengths and institutional framework for sustaining innovations, or
• Expanding market boundaries: this requires an ability to take existing product ideas to new markets, or
• Commercialisation of existing ideas into existing markets: this entails an ability to execute in a superior fashion compared to competitors to tap existing markets, or
• Competitive attrition: this requires an organisation to be a cost warrior

The strategic intent has to recognise the relevant organisational strength and leverage it to actually translate market opportunities into a workable business.

Step 3: Define the strategic intent.

Let us apply these steps to GCL. In GCL's case, it would seem that the firm has to think global markets, will have a limited financial leverage (by global standards) and will have a limited set of true business leaders within the organisation. Further, its capabilities seem to centre around either "expanding market boundaries" or "commercialisation".

Given this scenario, one possible strategic intent for GCL would be "GCL will develop into a global provider of mass-use fashion fabrics based on commercialising emerging technologies in a cost competitive manner".

If this is the 'strategic intent', the 'operational intent' would become GCL exiting steel business and investing in a system for identifying global opportunities for mass fashion fabrics.

''GCL needs to focus on investing in product innovation, value engineering and quality to steam ahead in textiles''' B. Hyma, Business Head (Wrangler & Ruggers), Arvind Brands

Anurag Galgotia certainly has another green ribbon ahead.... the key to winning this race lies in looking closely at two key questions.

What are the emerging opportunities that GCL can exploit with its current capability and equity in textile industry? What is the long-term view of the steel business?

Let us look at the first question. There is little doubt that given 50 years of vast experience in the industry, GCL has built some fine capabilities in the textile industry. This is invaluable, and the focus should now be to look ahead and see if there is any low hanging fruit, which can be plucked.

Firstly, exports, as rightly pointed out by Anurag, is one such area. There is immense potential waiting to be tapped in this area. With winds of globalisation sweeping all the industries, outsourcing has become the norm. In such a scenario, GCL should quickly identify focus territories, understand the needs of these markets and develop products to cater to them.

Secondly, there lies tremendous opportunity in innovations on fabrics. I disagree with Pradhan in this respect. Value addition lies even today as much with fabric as with styling. In an era of undifferentiated products, new innovations in fabric will go a long way in driving salience and sale.

GCL should immediately invest in building capacibility in this area. By focusing on value added fabrics, performance fabrics, superior quality and specialised textiles and hybrid yarns (cotton/non-cotton), GCL can drive its sale through sheer product brilliance. Through value engineering they can drive not just sales but also higher margins and profits.

This also requires GCL to link up closely with international trends, which are as much driven by fabric as by styling. GCL can therefore assume the role being the market leader in manufacturing cutting-edge fabrics.

Thirdly, given the initial success in thermoplastic and engineering grade nylon, GCL should look at strengthening this division so as to exploit any further opportunities, which exist. This would help them consolidate and grow in this emerging new area of operation.

GCL needs therefore focus on investing on product innovation, value engineering and quality so as to help them grow aggressively in their textile business.

Though it is not uncommon for businesses to integrate forward, the route of creating a consumer brand is time-consuming and expensive. Building a strong brand in the consumer's mind is a complex task, especially given the existing high clutter levels in the market. I feel that GCL should focus on its existing role as the supplier of fabric in the current scenario.

In steel, GCL should evaluate whether it can focus adequate resources to survive and grow in this complex and highly competitive environment. If possible, it should explore any opportunity which might exist in making specialised products in steel so as to lift itself out of the mass market dynamics, thereby driving margins and profits.

In conclusion, Anurag has another green ribbon, but only this time it is no 100 metre dash...it is a marathon.