Sir David Alliance points proudly to the red building in one of the Lowry paintings that adorn his office at Coats Viyella head office in Savile Row.

"This is a factory I worked in," he says in his husky, heavily-accented English - which some competitors say he plays up after 50 years in Britain to win advantage in negotiations.

But the man who built Coats Viyella into one of the world's greatest textile companies - only to watch it founder as the British industry declined - was not sweating over a loom. He owned it.

He admits sheepishly that his only experience as an employee was "four years working for people in Tehran in the bazaar" in his mid-teens.

When he stood down as chairman of Coats Viyella at the annual meeting last week it was an emotional, but not a celebratory, farewell.

The thread and clothing group, for so long the predator in a consolidating industry, is now more likely to be a break-up target. And the market value, which has fallen sharply from its peak of £2.2 billion sterling as a FTSE 100 company in 1987, slid 7 per cent on the day of the annual meeting. The move left the shares worth just £302 million (€455 million).

While Coats is not alone in suffering the textile downturn, it has underperformed the sector by 50 per cent in the past five years. Some say this is because Sir David is a dealmaker, not a manager - citing Coats' slowness in moving manufacturing to cheaper off-shore locations.

"His strength is in putting the businesses together, not leading and managing them," says Mr Neville Bain, formerly chief executive of Coats and now chairman of the Post Office.

"He would have a very clear vision (for the business) in his mind . . . Unfortunately he did not always communicate it well."

Lord Rothschild, an adviser to Sir David in his early career, says he is "highly intelligent and a brilliant negotiator".

Sir David (67) is elusive on the plight of Coats and the rest of the British textiles industry - which has been in decline since the turn of the century - saying: "I had to be there to take Coats through its difficult times. It will come out stronger."

It is typical of his enigmatic style. A slight, intelligent man, he keeps his cards close to his chest, avoiding questions gracefully while exuding charm. One competitor from the industry described him as "pretty inscrutable and pretty impossible", and, in the same breath, "very warm and kind, and a great defender of the industry".

Born to a family of traders in the Iranian city of Kashan - famous for its carpets - Sir David had textiles in his blood.

He came to his adopted home of Manchester aged 17 because "it was the home of textiles". "I came over to buy goods to ship to Iran, and I'm still here," he says. "I didn't come with any knowledge of English or a pot of gold."

He begun shipping textiles back to his trading father in Iran. But after buying Thomas Houghton from the verge of receivership in 1956 - his first and favourite deal - he embarked on a wave of transactions, including Spirella in 1968, Carrington Viyella in 1983, Coats Patons in 1986 and Tootal in 1991.

His heart remains that of a market trader in the souk. After decades of infuriating opponents with his unhurried negotiating, poker face and success in knocking every last penny off a price, he says: "I always overpaid and always will overpay."

But his business aims are more complex than just making money. He points to his close family and Jewish background as giving him a loyalty to people: "in a company, your employees all become like your kids, brothers and sisters."

"I have closed many factories, sacked many people, but always I put myself in their place." It is deeply felt. Among his art collection are three pieces entitled: Short Time, Out of Work and Application for Work. "Money is a by-product of what you do. If you go to make money, you never do," he says.

His entrepreneurial flair has given him recognition in his adopted country - a CBE in 1984 and knighthood for services to the textile industry in 1989. And the by-product has been significant.

Although he only retains a small stake in Coats, his family has about 60 per cent of N Brown, the catalogue retailer, which he developed alongside better known Coats and is now worth more than £500 million. Sir David has no plans to stop working. "How can you retire when you have been in business for 50 years?" He will retain his chairmanship at N Brown, and plans to spend more time "filling up my heart". Like many of his cryptic comments - including "Never steal a fireplace, unless you have a chimney" - it requires some elaboration.

He plans to pursue his interest in science and education - by sponsoring chairs in bio-ethics, modern Jewish studies and textile technology at the University of Manchester. There is also the Alliance Family Foundation, which contributes to a wide variety of causes, to oversee.

But deals are likely to remain a part of his life. One of his latest successes was encouraging the merger of three business schools in Manchester to form the Federal School of Business and Management about two years ago.

"I want to enjoy whatever I do," he says. "If I don't enjoy it I can't see how I can give it my best."