'Do or Die... The New Mantra for Growth in Gar­ment in­dus­try

THE NEW MANTRA FOR GROWTH IN GAR­MENT IN­DUS­TRY

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The di­chotomy of views on gar­ment ex­ports is a study on how dif­fer­ent com­pa­nies work­ing in the same in­dus­try can per­ceive the same sit­u­a­tion as pos­i­tive and neg­a­tive! While some com­pa­nies are talk­ing of all the rea­sons that will spell doom for the in­dus­try, there are oth­ers who have not only come to terms with the sit­u­a­tion, but are ac­tu­ally mov­ing ahead with in­vest­ments and ex­pan­sion plans. It is ob­vi­ous that the in­dus­try has evened out, and only those who are ready to change will re­main and pros­per. Op­por­tu­ni­ties are float­ing, but grab­bing them re­quires a strong mind­set and a com­pet­i­tive man­u­fac­tur­ing set-up.

Enough has been said on the role, or rather on the ab­sence of a role, by the Gov­ern­ment, par­tic­u­larly the Tex­tile Min­istry, about sup­port­ing the in­dus­try in its time of need. The good thing that has come out of all this is that the in­dus­try has fi­nally come to terms with the fact that they have to pave their own road and just wait­ing for things to hap­pen is not a solution. Also, the fact that both the Min­is­ter and the se­nior of­fi­cials who are re­spon­si­ble to in­ter­act with the in­dus­try and pro­vide nec­es­sary sup­port, do not un­der­stand the na­ture of the in­dus­try, is ob­vi­ous. How can the Gov­ern­ment sup­port an in­dus­try that is nei­ther a pri­or­ity in­dus­try nor manned by peo­ple who un­der­stand and ap­pre­ci­ate the im­por­tance of the in­dus­try, as a ma­jor em­ploy­ment gen­er­a­tor?

One ex­porter, who did not wish to be named, in­formed Ap­parel On­line that when draw­backs were be­ing with­drawn, many ex­porters had re­quested that the move should be post­poned for the next buy­ing sea­son as or­ders had al­ready been placed based on cal­cu­la­tion of the ex­pected draw­backs, and pulling the plug at this time could be ‘sui­ci­dal’. But the Min­istry could not ap­pre­hend why it should make a dif­fer­ence… In fact, if sources are to be be­lieved, the Min­is­ter sug­gested that they should dis­cuss with their buy­ers and rene­go­ti­ate!

This only goes to show that the Min­istry does not even un­der­stand how the in­dus­try works… Will a buyer ever rene­go­ti­ate be­cause our duty draw­backs have been with­drawn; even this very thought is per­plex­ing! When the Tirupur Ex­porters As­so­ci­a­tion sug­gested ask­ing for a 10% price hike from its buy­ers to beat the price pres­sures, the in­dus­try was taken aback. Most ex­porters felt that any such move would ac­tu­ally be coun­ter­pro­duc­tive and buy­ers would nat­u­rally move to more com­pet­i­tive man­u­fac­tur­ing des­ti­na­tions. “The sug­ges­tion is very far-fetched and un­fair… How can we ask buy­ers to pay for our in­ef­fi­cien­cies?” rea­soned Vinit Sethi, Di­rec­tor,

Ori­ent Fash­ions, Gur­gaon ad­ding that com­pa­nies now have to make in­vest­ments at the right place if they want to stay in busi­ness.

While the ex­porters found the sug­ges­tion com­pletely bizarre, even buy­ers were sur­prised.

In a note to Ap­parel On­line

An­imesh Chakraborty,

Se­nior Ex­ec­u­tive Sourc­ing & Mer­chan­dis­ing, Benet­ton Asia Pa­cific Lim­ited, Noida said, “TEA’s de­ci­sion for 10% hike on Gar­ment FOB will cer­tainly lead to los­ing up­com­ing busi­ness op­por­tu­ni­ties for Tirupur. In­dia’s tex­tile mar­ket has al­ready suf­fered a lot since a year now (af­ter the GST im­pli­ca­tions). The cur­rent sit­u­a­tion is all about gear­ing up and get­ting the busi­ness back to In­dia. In the present sce­nario, ap­proach­ing for price hike will be a hair-rais­ing sit­u­a­tion for Tirupur’s econ­omy and of course for In­dia too.” He went on to add, “Mak­ing new prop­er­ties is al­ways ap­pre­cia­ble; how­ever, main­tain­ing the old one is even more im­por­tant. Price hike will en­force Buy­ers and Con­cerned Buy­ing Of­fices (Sourc­ing Team) to look for sub­sti­tutes and busi­ness will move to other re­gions like Lud­hi­ana, Ban­ga­lore and NCR or even this will be a big op­por­tu­nity for Bangladesh and China too.”

An­imesh agreed with Vinit that rather than ask­ing for price hike, we should fo­cus on in­creas­ing the ef­fi­cien­cies. “Ap­proach­ing for price hike will lead to loss of busi­ness; so tar­get­ing to in­crease ef­fi­ciency is the only solution to grow and sus­tain in mar­ket,” he opined, sug­gest­ing that the in­dus­try should cur­rently fo­cus on grab­bing the busi­ness as much as they can (at least for 2 more sea­sons) till Spring/ Sum­mer 2020 and then they can go for 2-3% price hike on FOB.

What is heart­en­ing is that the younger gen­er­a­tion of ex­porters un­der­stand this strat­egy and are now fo­cused on change. “There is no point of talk­ing about change un­less we set it rolling; just wait­ing for change to hap­pen, is a strat­egy that losers use,” said em­phat­i­cally Pranab Ma­ha­jan, Di­rec­tor, Ma­ha­jan Over­seas, Pa­ni­pat. His views are shared by many of the younger gen­er­a­tion en­trepreneurs who have grown up see­ing the in­dus­try strug­gle. “In­vest­ment that can make us more ef­fi­cient and also in­crease our value ad­di­tion po­ten­tial­i­ties is im­por­tant be­cause even coun­tries like Bangladesh are catch­ing up on prod­ucts that we al­ways thought were our forte,” rea­soned Aditya Nath, Di­rec­tor, Gen­eral Com­merce Ltd. from the house of Nath Broth­ers. Ad­ding a fresh di­men­sion to the dis­cus­sion, An­imesh Sax­ena, MD, Nee­tee Cloth­ing, Gur­gaon sug­gested

that In­dia has to ex­pand its prod­uct bas­ket. “We are con­fined to Spring/ Sum­mer gar­ments when 65% of the world is fo­cused on Fall/Win­ter. Gov­ern­ment should do some­thing for the lack of tech­nol­ogy and raw ma­te­ri­als,” he said. The op­por­tu­ni­ties that are pre­sent­ing them­selves be­cause of China tak­ing a step back­ward in gar­ment man­u­fac­tur­ing are huge, but the full po­ten­tial can only be re­alised if In­dia in­creases its of­fer­ings. How­ever, many be­lieve that it is not only about the lim­ited prod­uct bas­ket, but also the ca­pac­i­ties. “How can we even think of grab­bing or­ders that are be­ing re-routed from China; we don’t have the ca­pac­i­ties. It is a catch-22 sit­u­a­tion, if we don’t have ca­pac­ity, we can­not ex­plore op­por­tu­ni­ties and we do not want to in­crease ca­pac­ity be­cause of the un­cer­tain­ties,” rued Vikram jit Singh, Di­rec­tor, Fiori Cre­ations, Farid­abad.

Ex­porters ad­ding new buy­ers, ca­pac­i­ties

Not ev­ery­one is wait­ing…; many have started to in­vest be­liev­ing that the fu­ture is bright. Some of the com­pa­nies are ex­pand­ing not only their in­fras­truc­ture but even ad­ding new top brands/buy­ers with them. To grab more bulk or­ders is one of the main rea­sons for their ex­pan­sion. Among such proac­tive com­pa­nies, Tex­port Syn­di­cate, Mum­bai has added 2,000 ma­chines in last three months and now it has 5,500 ma­chines. The ex­pan­sion was done in its unit at Ko­dur (Andhra Pradesh). Ear­lier the com­pany was work­ing with 4 to 5 lim­ited buy­ers like Wal­mart, In­di­tex, C&A and Ralph Lauren but re­cently it also started work­ing with M&S, GAP and Mono­prix. Ab­hay, GM, Wash­ing Di­vi­sion of the com­pany shared, “In cur­rent sce­nario, to sur­vive in busi­ness it is all about vol­ume or­ders; it is not time or ques­tion of mak­ing profit. For profit, we have to wait for fu­ture as slowly pol­icy changes seem to be in gar­ment man­u­fac­tur­ers’ favour.”

Ab­hay fur­ther added that in denim struc­ture, ran­dom bleach and full pig­ment dye­ing are more in de­mand now in the over­seas mar­ket. More ca­sual look and dif­fer­ent at­ti­tude of the gar­ment is the main rea­son for this trend. In wom­enswear, ly­cra is gain­ing mo­men­tum now in over­seas as well as in the do­mes­tic mar­ket. Pro­duc­ing 25 lakh me­tres of fab­ric per month, Good­will Fab­rics, Ban­ga­lore is also pro­duc­ing 3 lakh pieces per month (to­tally wo­ven, 70% bot­tom and 30% tops) for gar­ment ex­port. Re­cently com­pany ex­panded into den­imwear which is a new prod­uct cat­e­gory for the com­pany.

For this, a new unit of 100 stitch­ing ma­chines was re­cently set up at Gwalior (MP) in the mill premises of the com­pany. This gives an edge of hav­ing the en­tire process un­der one roof. Mov­ing fur­ther, the com­pany is set­ting up a laun­dry unit in the same premises also. Suresh Ku­mar, VP – Mar­ket­ing of the com­pany in­formed, “Gar­ments have more growth op­por­tu­ni­ties com­pared to fab­ric as fab­ric busi­ness seems to be sat­u­rated. For us, there is no ex­pan­sion on the fab­ric side but the gar­ment is rapidly ex­pand­ing.” Through jeans, the com­pany is tar­get­ing ex­port as well as do­mes­tic mar­ket. Do­mes­tic is a new seg­ment for the com­pany’s gar­ment di­vi­sion. Apart from this new unit, the com­pany has 4 gar­ment fac­to­ries and is ex­port­ing gar­ments all over the globe. “We are ex­pect­ing at least 20 per cent growth. With the strength of fab­ric, decades’ of ex­pe­ri­ence, con­tin­u­ous im­prove­ment and good con­trol over cost from the be­gin­ning, we are able to de­liver qual­ity prod­ucts at the right price…, so we are ex­pand­ing and grow­ing,” added Suresh. Out of its to­tal fab­ric ca­pac­ity, 10 per cent is be­ing used for in-house gar­ment pro­duc­tion.

SME ad­ding new prod­uct cat­e­gories

Mar­ket forces are also mo­ti­vat­ing medium-level ex­porters to add new prod­uct cat­e­gories. To men­tion

Am­ber Home, Mum­bai, a home fur­nish­ing player which two years ago, en­tered into shirts man­u­fac­tur­ing for ex­port, and is now go­ing to start a unit of the knit­ted gar­ment. This new unit in So­la­pur (Ma­ha­rash­tra) will have an ini­tial ca­pac­ity of 3,000 pieces daily and Polo tees will be the core prod­uct. Nimish Shah, Part­ner of the com­pany told, “Our knit­ted prod­ucts are par­tic­u­larly for African coun­tries. We got this buyer through ref­er­ence and it is our first ever deal with African buyer, but we are hope­ful to get reg­u­lar or­ders from there.” This project is ex­pected to start pro­duc­tion within one month. It has the ca­pac­ity of home fur­nish­ing prod­ucts (mainly kitchen linen 5,000 pieces per day) and shirts and work­wear (2,000 pieces per day). The com­pany works with some top re­tail­ers also.

Job­work­ers ad­ding ca­pac­i­ties too

Though the ma­jor­ity of ex­porters are crit­i­cis­ing some of the de­ci­sions taken by the Gov­ern­ment, but some of the poli­cies are mo­ti­vat­ing gar­ment man­u­fac­tur­ers to ex­pand. Based at Haveri (Kar­nataka), Prab­han­jan In­dus­tries is cur­rently into shirt man­u­fac­tur­ing with its small unit. Mainly do­ing job­work for com­pa­nies like Pra­teek Ap­par­els, Ban­ga­lore,

Prab­han­jan In­dus­tries is now com­ing up with a new fac­tory of jeans man­u­fac­tur­ing. Pa­van Ku­mar of the com­pany shared, “We have enough ex­pe­ri­ence and some re­sources also. Nor­mally banks don’t sup­port projects which are into re­mote ar­eas, but we are get­ting sup­port. So we de­cided to go for a fac­tory which will have 300 to 500 ma­chines.”

In­vest­ing nearly Rs. 3.5 crore, Pa­van fur­ther added that choos­ing jeans as a prod­uct cat­e­gory is more vi­able due to good de­mand. The new fa­cil­ity will also work as a job work­ing unit. The com­pany is also ex­plor­ing the op­tion to in­vest in CAD as cur­rently it does cut­ting man­u­ally.

Fresh start-ups also geared up

Re­cently Team Ap­parel On­line met two pro­fes­sion­als who have built their own start-ups in Ban­ga­lore hav­ing enough ex­pe­ri­ence in the gar­ment in­dus­try. Now they are ex­pand­ing as their ini­tial ex­pe­ri­ence of en­trepreneur­ship proved good.

One of them Har­sha, who has worked as a mer­chan­diser in top ap­parel com­pa­nies like Arvind Ltd., Madura Fash­ion & Life­style, just four months back started his own or­gan­i­sa­tion Seam Works. Hav­ing 200 ma­chines in Ban­ga­lore, his firm of­fers for­mal shirts and is ex­pand­ing fur­ther. “So far our op­er­a­tions are go­ing smoothly and now we are mov­ing for­ward with a new fac­tory. My idea was to come up with mul­ti­ple cat­e­gories, but I started with shirts as there is huge scope in this cat­e­gory,” shared Har­sha. His up­com­ing new unit of 1,000 ma­chines (in phase man­ner) will be in Andhra Pradesh and will be a big sup­port to tar­get pre­mium brands in do­mes­tic and over­seas mar­kets.

What do the num­bers say?

Of all the as­so­ci­a­tions, the Con­fed­er­a­tion of In­dian Tex­tile In­dus­tries (CITI) un­der the lead­er­ship of San­jay Jain, Chair­man, is the most proac­tive in shar­ing re­cent trends and com­ment­ing on poli­cies and their im­pact. Just re­cently San­jay ex­uded con­fi­dence that the worst is over for the Tex­tile & Cloth­ing In­dus­try and it is fi­nally on the verge of a turn­around; and he put the credit for this U-turn on the shoul­ders of the Gov­ern­ment! As per the quick es­ti­mates data by DGCI&S, the ex­ports of tex­tiles and ap­parel has in­creased by 11% in July 2018 over the same pe­riod last year. Ac­cord­ing to San­jay this has been pos­si­ble with con­tin­u­ous sup­port from the Gov­ern­ment with a slew of mea­sures on all fronts. San­jay also stated that over­all growth in ex­ports dur­ing April-July 2018 has been

3%, vis-à-vis same pe­riod last year. Fur­ther, the MMF seg­ment, which is ex­pected to be the growth driver of the in­dus­try in the com­ing years, has seen in­crease in pro­duc­tion. Growth has been ob­served in pro­duc­tion of man-made fi­bre, spun yarn and fab­ric dur­ing April to June 2018.

Another pos­i­tive is that as per RBI Fi­nan­cial Sta­bil­ity Re­port – June

2018, the stressed ad­vance ra­tio of tex­tile sub-sec­tor has also im­proved from 23.7% in Septem­ber 2017 to 22.3% in March 2018, in­di­cat­ing signs of re­cov­ery. It has been pointed out that the main­te­nance of a com­pet­i­tive ex­change rate is an es­sen­tial pre­req­ui­site for labour-in­ten­sive man­u­fac­tur­ing in ma­ture in­dus­tries like tex­tiles. Ac­cord­ing to San­jay, the cur­rency man­age­ment by the Gov­ern­ment has ben­e­fited the ex­ports and is dis­cour­ag­ing im­ports. Sig­nif­i­cantly, this year, the im­ports’ growth has come down. While the im­port of tex­tile and cloth­ing has in­creased from US $ 1.78 bil­lion in April-June 2017 to US $ 1.87 bil­lion in the same pe­riod this year, an in­crease of 5%; it is sig­nif­i­cantly lower than the growth of 16% last year. The mea­sures taken by the Gov­ern­ment to in­crease the im­port duty on var­i­ous tex­tile and ap­parel items will help in fur­ther re­duc­ing the im­ports in com­ing months, feels San­jay. He added that con­tin­u­ous sup­port from the Gov­ern­ment is ex­pected to put the in­dus­try back on track and it is an­tic­i­pated that the tex­tile and ap­parel ex­ports should grow by 7% while im­ports will stay flat in this 2018-19 sea­son.

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