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Textile players give garmenting business a miss
24
Mar '11
Despite high operating margins, textile mills that ventured in to producing clothing, are now contemplating exiting those businesses.

The latest being Arvind. The decision to quit the business is attributed to shortage of skilled labour and the cyclical nature of business, as Arvind had a workers attrition rate of around 35 percent in the apparel manufacturing sector.

According to Mr Rajendra Hinduja, MD – Gokuldas Exports, a top-notch garment exporter based in Bangalore, “Very little risk is involved in producing say around 1,000 meters of fabrics per day for a textile mill”.

“However, a garment producer faces the risk of rejects in case of a delay in dispatch or defective items. One needs to have a high-risk appetite to be in the garment production business”, he added by saying.

Mr Rajiv Dayal, MD - Mafatlal Denim is of the opinion that, the business of manufacture of garments is challenging for fibre-to-fabric producers as; “first, it requires a significantly larger permanent workforce for conversion of fabric into styled and finished garments.

“Second, it is a cyclical business, where the percentage utilization of the factory could fluctuate leading to higher business risks and inconsistent profitability.

“Third, in India, there are large turnovers in the garmenting workforce and re-training is a time consuming process and this could lead to a drop in productivity and quality, which are critical for the success of this business.

“Finally, due to its very nature, the garment business, could defocus the fibre-to-fabric producers from their core businesses”, he said.

“However, a vertical business model (fibre-garments) is always preferred by brands and retailers. There could be several other options for textile fabric producers to work in collaboration with garment producers for providing garmenting-supply chain solutions to brands and retailers”, he concluded by saying.

Fibre2fashion News Desk - India

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