Apparel Online India Magazine December 1st Issue 2018 | Page 20

LEAD STORY
Richard D’souza, Director of Projects and CMD, First Steps Babywear, Bangalore
want to lose any of our customers. Our
strategy is to do volume production
in Indonesia and value addition
garments in India.” He further added
that Indonesia is a professional
country and things are managed
properly in a systematised way, in fact
it is the professionals who are running
the units very well. “If we get an
opportunity, we will again increase our
capacity there but it depends on our
clients,” said Lalit, who is expecting
overall growth of 5 to 10 per cent from
the combined efforts of the Indian and
Indonesian operations.
Ethiopia continues to
attract…
In the last few years, post the
extension of the AGOA, Ethiopia is
being heavily marketed as a place
where one can go from fibre to factory,
cheap and plentiful labour at US $ 21
a month, inexpensive power, vast land
ripe for cultivation of cotton which
will serve as a source of raw material
and a Free Trade Agreement with US;
all of which augments the country’s
business case. Big retailers like H&M,
PVH, Tesco, Gap, Belk and Walmart
are supporting development of the
industry in Ethiopia, encouraging
their suppliers to make the move.
Boosted by the investments that are
happening, the country has set a US
$ 30 billion target from textile and
apparel exports by 2025.
Though big names like Arvind,
Raymond, Velocity and Indorama,
are already in Ethiopia, one of the
first garment companies to move
to Ethiopia from India is Best
Corporation from Tirupur. The
company has invested US $ 6 million
for a unit that employs 1,000 workers.
“They provide all the infrastructure
Animesh Saxena, MD, Neetee Clothing, Gurgaon
ESSENTIALS
One of the
exporters who also
has a factory outside
India and is into the
process to start a
factory in one of the
strongly emerging
Indian states, shared
on the request of
anonymity, “Despite
strong promises,
our experience
with the state is
not as good as it
should have been.
We are still waiting
to get land and
allied formalities.
On the other hand,
in overseas, such
administrative or
official things are
taken care of quite
fast.”
with plug and play facilities. The
labour is cheap, and significantly,
Ethiopia enjoys duty-free export
access to both Europe and the US,
two major markets for garments,’’
said R Rajkumar, MD of Best
Corporation (P) Ltd., adding that
worker strength could be scaled
up to 4,000 in future. Except the
management staff, all workers are
from Ethiopia.
However, many challenges still
remain, the most significant being
production inefficiencies and lack
of a competent local sourcing
network rather than the widespread
perception of being from a corrupt
nation and not being as dexterous
as other Asians. In fact, despite
positive experience of apparel giants
in Ethiopia Pooja International,
a Noida-based company has a
completely different view. With
more than 950 machines in India
with specialisation in kidswear,
the company’s top management
explored Ethiopia but had a negative
takeaway. Rajat Kumar, CEO of the
company said, “If you keep running
to a low-cost area, where will they
go after five years? The same is
happening in Ethiopia. We spent a
month over there and everything
was done from our side. Then we
saw the ground reality. Export might
rise there but to survive, the factory
must have at least Rs. 1,000 crore
turnover. So, it is viable for only a
few big exporters. Small players
have no place, we faced some
really hardcore difficulties – like
for nearly three weeks, they don’t
issue containers, either outgoing or
incoming. So how can we keep our
products waiting for shipment for
such a long time?”
20 Apparel Online India | DECEMBER 1-15, 2018 | www.apparelresources.com
He further added that they went to
a training centre and were shocked
to see the atmosphere. Most of
the trainee there don’t even know
how to use washrooms. It will take
somewhere around 2 months to just
develop soft skills in them. So, the
entire training period for one worker
takes around 5 months in Ethiopia.
“Training cost is massive there. If
your factory is running on 39 per cent
capacity then the buyers will not give
you prices according to your capacity.
The production gap is also going from
your own pocket. Addis Ababa is still
having some infrastructure but there
is no proper airport in cities like
Mekelle, Hawassa, so India is by far
the best country for us,” stated Rajat.
India is still the
place for many…
Though many mid-level exporters, who
are closely associated with the giants
setting up factories overseas, see this
movement as a wise decision, yet they
feel that they are better paced in the
country itself. “Looking from the global
perspective, India is competitive only
to one-third of the business which is
cotton Spring/Summer business. We
lack the skill sets and also the proper
raw material to make the balance of
the business which is A/W and MMF.
So, having a factory outside India is
a wise decision. In India, we don’t
see situation changing, at least in the
coming few years as nothing has been
done so far that we can compete with
the countries where fellow exporters
are investing. In India, this business
has almost saturated,” stated Animesh
Saxena, MD, Neetee Clothing,
Gurgaon. He however added, that for
mid-level and smaller players, it is wise
to play on the strengths rather than
develop new capabilities.
It is pertinent to mention here that
Matrix Clothing, though looking
outward for some categories, is also
investing very aggressively in Ranchi
(Jharkhand). Excluding working
capital, the company is investing
nearly Rs. 26 crore in the city which
will be increased further in the future.
So far, the company was running
a training unit there and the pilot
plant for production has just started.
By late 2019, the Ranchi facility
will be fairly large with around 500
machines. “I hope we will work there
in two shifts, so that the factory will
produce apparels equivalent of 1,000
machines,” concluded Gautam.