Home > Women Clothing > Indian exporters finally back in business

The visitation at the recently concluded CISMA in Shanghai is anything to go by, then it can be said with confidence that the mood of the global apparel industry is definitely upbeat. Capacities are being built and investment in productivity improvement technologies is on the rise, all indicating that manufacturers are anticipating good business over the next few years. Exporters who have been running facilities at less than full capacity are suddenly looking at new units and those who claim to have always ‘been in business’ despite the slowdown are suddenly more visible and accessible… the smiles are back and the air of optimism is palpable.

Team AO talks to various sections of the industry from buyers and exporters to accessory and machine suppliers to feel the pulse… the verdict, India is back in business.

The cyclic movement of any business is always unpredictable and with the economy of two major global markets struggling to remain healthy, the impact is bound to be felt on the retail front. The slowdown in consumer buying is felt first by what most economists call ‘unessential products’ like clothing and home fashion. In the past three years buyers have followed a very cautious and conservative sourcing pattern with focus on smaller quantities and either ‘value for money’ products or ‘high-end luxury’ items that survived the recession. Exporters were compelled to look for ways to stay afloat and the two main ways that they went about this difficult task was exploring new and emerging markets, and working internally for better efficiencies and reducing overheads/costs.

[bleft] “A big player in technology IIGM has already surpassed its target for the year in five months flat… companies like Sheen India, Permeshwar Creations, and SM Exports, all from Delhi-NCR are reportedly jacking up capacities in a big way” [/bleft]

Much has been written and debated on the strategies for survival, and the slowdown has taken its toll with many companies downsizing and many others just shutting down, unable to meet even basic cost, let alone earn profits. “Earlier we could get away with working in a relaxed manner, there were retailers which were growing everyday and we could go in the market and get orders from many sources. But now there is so much order shortage that you have to literally run for orders, and buyers in reality want you to work ‘on time’ because of all-round pressure which everyone is facing. And if buyers don’t get their orders on time, they ask for discounts, Air PP shipment or they would cancel part of the order as the sales are not good anywhere,’ said Gautam Nair, MD, Matrix Clothing, Gurgaon in July last year in conversation with Apparel Online.

With even the big exporters admitting that the situation was critical, there was a general air of doom and year after year exporters eagerly awaited for the tide to subside and ‘buying’ to return as before. To the joy of everyone, the situation has finally taken a turn as the US economy finally wades out of the waters and the EU crises subsiding considerably. Though the situation is certainly not like it was post-2009 and the reality is that sourcing has changed forever, orders are back in the market. Both the exporters and buying offices are upbeat and at this point of time, many buying teams are in India talking business. “We are seeing a revival of interest in buying from India and even those buyers who were out from the market for sometime have started sending feelers,” says Sudarshan Sharma, Director, CD Lifestyles. His sentiments are echoed by many buying agencies.

[bleft] “Encouragingly, Shahi, Matrix, Shivalik, Richa, SPJ Group, all big garment exporters by Indian standards have gone in for additional capacities, few companies from Bangalore like Voltas Fashions, Four Creations and Snow White and even ITS Creations from Mumbai are also going in for new units or taking on expansions in their existing unit”. [/bleft]

Also interesting is the fact that buying offices admit that in these ensuing years exporters have changed for the better. “I think the industry has finally awakened to the fact that they cannot function like before, they have learned a hard lesson and those who have stuck on are now remodelling their factories for competition. We can actually see the difference in the attitude,” says Manish Bharati, VP, LF Fashion, India. Exporters too agree that the slowdown has made them more aware of the need to change. “Almost every company is spending on getting its factory lean, because reducing cost is almost as important as reducing dependency on labour, which if going forward is going to be a major concern,” says Mohit Singhal, Director, Creative Clothex. The young company hired a Sri Lankan consultant last year to implement lean systems in the factory. Earlier the company had three units with 100 to 150 machines in each but now all have been consolidated and brought under one roof for attracting bigger buyers who are not very comfortable with smaller setups and also to fetch better efficiencies through lean.

The urge to change is so overriding that many companies in Jaipur have joined hands with their buyers to retool their systems to remain preferred suppliers. A classic example is that of India Today Fashions which is going for upgradations with an investment of Rs. 1.5 crore with backing from its Japanese buyer who has committed to help in the complete process. “A team from Japan will come to our unit, guide us and train our staff for about six months on various technical issues so that we can give them best result in terms of costing, quality, timely delivery and productivity. Our planning is to install specialized machines like blind stitch, bartack machines and conveyor systems,” informs Rajendra Bhatia, MD, India Today Fashions.

[bleft] “This is a very exciting time for technology providers, and after a temporary setback with the devaluation of the rupee we are witnessing huge increase in ‘real demand’ from the industry as many big projects that were on hold for 2-3 years have commenced work” [/bleft]

A feel of how the retail industry in the US, in particular is improving was witnessed by the delegation of exporters who participated at the recently concluded BSM in New York. “There is no doubt from the response of visitors who come to the event that the US economy is revising. The buyers were very encouraging, quite a few were chain stores and the rest were importers and we got a good number of orders for woven ladies dresses. I was very happy to see cotton coming back; there were demand for more of cotton and chiffon dresses with sequins, beads, laces and embroidery. In terms of price, US has always been very price-sensitive, but now the things are improving and if economy remains the same then we can expect the situation to continue upward. I am not the only one who was happy with the event, every participant/exhibitor was satisfied,” says Sanjay Nayyar, Chairman, Indus Gartex.

Added Arun Jain, Partner, Jain Shawls, another satisfied participant, “With holiday buying going on in the US, we got good number of enquiries and negotiations are underway. They are demanding more of jacquards and printed scarves. The US economy has started moving and we witnessed majority of buyers from chain stores from New York itself.” A strong indicator from the fair was the uncompromising attitude of the buyers on issues of compliance. “Earlier the importers never asked us if we have compliant factories, but now no negotiation starts unless the factory is compliant. India can take advantage of this mood, as the country is known to be among the most compliant countries in Asia with companies even at the lower end are getting compliant,” says Rajiv Kapoor, MD, Affordable Exports.

[bleft] “With the rising labour wages in China and increasing compliance norms in Bangladesh, the influx of orders has definitely come to India and it will be there for the coming three years. But the question is can we sustain this influx of business and in my belief it can only be possible if the apparel manufacturers are prepared with the right setup and systems.” [/bleft]

However, Meghna Karthykeyan, Director, Lata Exports Apparels, also a participant while agreeing that the market had improved, suggested that to take advantage of such initiatives the timing should be better, as many buyers who came though appreciated her products but they have already done their booking for S/S ’14. The general perception today is that orders are aplenty in the market and buyers are even willing to pay a few cents extra if the exporter is reliable. “Our capacities are completely booked and we are in a position to quote our price because buyers know that the type of products we are capable of giving is not easy to source from other centres. After many years it is the buyer who is seeking capacities and not the other way round,” says Vinit Sethi, Director, Orient Fashions. Seeing to the growing market opportunities, Orient Craft has committed to spend Rs. 125 crore to Rs. 175 crore over the next three years for capacity building and other auxiliary trades such as printing and retailing. With 23 manufacturing facilities in Delhi, Gurgaon, Noida and Rajasthan, OC already holds capacity to produce 1.5 lakh apparel pieces per day. “Post completion of expansion plans, we are positive on striking a turnover of Rs. 1,400 crore,” informs Sudhir Dhingra, CMD, Orient Craft.

Many smaller companies too are now going ahead with investments put on hold for the last few years. Also interesting is the fact that a lot of investment is going in to bring processes which were earlier being outsourced, in-house from embroidery to printing.

What is noteworthy is that there are many factors contributing to the boom and it is not only the improving market conditions. Summing up the reasons, A. Sakthivel, Chairman, AEPC who strongly feels that India could emerge as the largest hub for sourcing of apparel and knitwear garments in the next five years says, “With China showing more interest in engineering and IT sector and Bangladesh being looked at as a non-compliant country, global players, both in traditional and non-traditional markets are eyeing India’s potential for outsourcing with great interest.” The buzz of increased business is reflected in the export statistics of the first five months of this fiscal, which has shown a 14 per cent increase in dollar terms. Industry watchers predict that with this growing trend, apparel exports can easily cross the targeted US $ 17 billion export this fiscal… a major breakthrough no doubt.

The positivity is not confided to the north and even Tirupur which has been seeing a dull phase is back in business. With an export turnover of between Rs. 12,500 to Rs. 13,000 crore last year, the centre has already clocked business of Rs. 6,500 crore till August. Companies are finally going for expansion. Among them is SRG Apparels (PRIME TEX Group of Company), which already had 1,000 machines but has recently come up with a new factory of 200 machines for existing buyers. “Market is tough, but our buyers from the US and UK have given us positive feedback, so we went for expansion. Our total investment is almost Rs. 2 crore,” says R. Govindaraju, MD, SRG Apparels.

A relatively young company, T Labs, which is just five years old in exports and having 80 machines, is adding another 80 new machines. Ravi Chandran P, Director, T Labs is enthusiastic with the local conditions and also improving condition in Europe which is the main market for him. “Business is quite good compared to the last few years and existing buyers are giving satisfactory orders. We were very dependent on job workers as due to the uncertainty of orders we could not install complete in-house capacity, but now we are going ahead with the investment,” said Ravi. Accessory and machine suppliers both confirm that there is a revival in the industry. “For the past few years, the Tirupur market has been really bad, but at the 2013 edition of Knit Show the same flow of visitors that used to be there earlier has come back once again,” opines Kapil Lalwani, Director of JV Plastic Industries.

At the national level too, accessory manufacturers have confirmed a revival in business. “The market is improving and the buyers/exporters have become very much quality-conscious. They are willing to pay premium price if they get the desired service level. The demand for high quality product is more from Delhi-NCR while coarse yarn/thick yarn is the current demand from Tirupur market,” says Tanuj Goel, Director, ATM Exports, and adds that buyer is looking for more of fine crochet and innovative embroidery like tapping, coding; besides they are also inquiring about neck plates.

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