The textiles and garments exports sector is one of the biggest earners for India and employs lakhs of weavers, artisans and workers all over the country. When the COVID-19 pandemic struck the world, the garment export sector in India suffered humongous losses due to the global lockdowns that caused many factories to shut down or go slow just to make ends meet. The scenario in 2020 was extremely bleak, and in 2021 exporters are considering all options to revive their balance sheets.
Amit Goyal, Managing Director, Sarju International Ltd / Saltlake Shirts Pvt Ltd
Sarju International Ltd specialises in manufacturing high-quality branded fashion apparel for the international market. The company has a strong infrastructure and a very dynamic management team, with special emphasis on meeting customers' commitments of quality and deliveries. Sarju International was incorporated in 1990 with a small office in Mumbai and a production unit in Tiruppur employing only 50 workers. Saltlake Shirts Pvt Ltd was established in 1970.
Sarju today is one of India's oldest and most reputed companies and enjoys enormous goodwill in the international market. We have now grown into a full-fledged corporate office in Mumbai spread over 10,000 sq ft with 50 people and a state-of-the-art production unit in Tiruppur employing over 250 workers. Our aim has been to globally market and also source our products so that we can offer to our customers the best quality at the most reasonable prices. The team at Sarju is synergising all its energy towards meeting these challenges. For this, the company plans to make additional investments in people, technology and infrastructure as needed to maintain competitive advantages.
The first three months (from March-end to June-end) was a complete disaster with three lakh pieces and ₹5 crore worth of orders cancelled. All payments were deferred for a minimum of nine months' credit. Our exports are mainly to the US in the men's shirts and t-shirts categories.
Our company Saltlake Shirts Pvt Ltd has just launched its own brand 'Summer Somewhere' which is all about sustainable clothing using organic fabrics and recycled materials, including packing material.
We use only Indian fabrics and do not import any from China as India produces the finest cotton. So, we have not been at all impacted by the recent political developments.
We manufacture close to three lakhs t-shirts and one lakh shirts every month. We do not accept anything below 2400 pcs per print/style and the maximum is not more than 48,000 pcs per colour/style. Wovens are in the range of $3.50-4.50 and knits are $1.70-3.00. Our lead time is 90-120 days.
We don't foresee any major changes in production in 2021; only the assembly lines have had to be slightly altered keeping in view the social distancing norms announced by the government.
Since our main sourcing is from Tiruppur which is working at a 90 per cent capacity and the woven is from Mumbai which is at a 65 per cent-we do hope that once the lockdown is completely lifted, we should be able to achieve the same turnover as last year and production will definitely increase.
The exports business is an extremely high-risk business, and the fashion/clothing industry is just like a perishable industry because the moment you put the buyer's brand label on the garment and if that order is cancelled for any reason (pandemic in this case), the $5 garment will have to be sold for 50 cents, which is at 10 per cent of the cost. With today's competitive market, the margins are very small; what you are dealing with here is a high risk and low returns business model.
Our biggest loss has been the non-completion of the India-EU FTA, as most of the business advantage has gone to Bangladesh and Sri Lanka; we can benefit tremendously if this FTA is inked. We need to ensure steady and regular supply of raw materials and steady prices of cotton. Also, there is a huge gap between spinning and weaving and the processed fabric. We still do not have good and huge processing units which can supply at competitive prices; in the last decade or so, we have not seen any major investment in the processing Industry.
Annou Iyer, Founder/Director, TrendLAB Fashion Solutions
Annou Iyer founded TrendLAB in 2010. In 2011-12, she entered into an association with her principal partners in the EU. Currently, the company operates with senior fashion professionals who come with a direct experience in the fashion, design and textiles industry and on the basis of these skills are able to identify the needs of the fashion industry.
TrendLAB is a fashion consulting company operating offices out of India and Italy, and provides hands-on solutions and services to fashion companies both in India and Europe. Through our fashion solution services of creative consulting, buying/sourcing as well as private label development business, we fill gaps that are present for clients dealing with fashion and design.
TrendLAB's aim is to break the habit of a traditional design set-up and offer more targeted tools. Our technical content is meant for style and design operators, designers, creative directors, buyers, clothing companies, producers and exporters and especially those companies breaking out into the newly emerging international domestic market in India, including both offline and online retail. We represent trend application methods for all professionals who are in search of new products and creative tips-from trend analyses, trend application reports, tech pack development season, and line planning to sampling and commercialisation.
The COVID-19 pandemic has affected the export market drastically, but we believe that a close association with clients help you in the long run. We've always been focusing on the European and American markets. Orders have been cut short, collections have become smaller but sharper with target prices; there's an edginess in the market with buyers and it is not easy to handle them. But we are trying our best; just like our fellow industry members.
We produce womenswear and we have always focused on westernwear. We have done some menswear in the past. Also, childrenswear. We have started some good projects in accessories-shoes, bags, jewellery, etc. We strictly follow very tight cut-and-sew plans so that we do not end up buying more extra fabric than required. Wastage is sent off to handicraft manufacturers who are able to use the fabric wastage. We source all our requirements from various wholesale markets across India as well as Asian countries. The production capacity depends on the styling of the garments. It is not possible to give an approximate figure even for average purposes. We do not have minimums or maximums.
However, so far in our work experience, we have done a minimum of 100/200 pieces per style. The price range again depends on the target prices received from the buyers. Starting from €10 onwards, it can be anything that the brand or client has visualised in their collection. Our lead time is typically 60 days from the time of the PO. In 2021, our production will become sharper, focused, limited and target-driven.
After the lockdown, we plan to provide 100 per cent safety to all workers in the factory with regular health check-ups. We feel multitasking is an ability which can take us far. This helps us remain connected to each stage of the production and we are able to find solutions for any problem that may occur. Besides, flexibility and humility have become very important for us. I think, overall, the lockdown has made us more sensitive towards our environment, our workers and our staff. The lessons learnt as far as business is concerned are the same as before. But the most important lesson has been to genuinely take care of your people-whether workers or clients. Always be there for your community.
Business goes on as usual. Exporters are not waiting for FTAs either. We have had no problem with our operations in India. I personally think that the ministry of textiles does offer enough rebate and discount to its exporter members. Like all sectors, it is important to study the rules wherever applicable and operate accordingly. Once you start operating your business, by the rulebook and exporters guidelines, you realise that these guidelines do help you understand the business legalities as per the government policies. The government has made enough provisions for a sincere company to operate in a healthy manner. The steps India needs to take to emerge as a viable sourcing destination for the world is to organise the wholesale market and to be more accessible. As of now, the sourcing markets still run on networks. Unorganised players need to be organised for easy access.
Shabbir Sadik Ladak, Proprietor, S&Z Inc
Shabbir Sadik Ladak studied textile chemistry at SASMIRA (Silk and Art Silk Mills Institute of Research Association), Mumbai, and started trading and selling shirts to local stores and boutiques. He later joined his father's company, procured orders and started exporting. In 2012, he started his own S&Z.
The pandemic has affected businesses all over the world. Due to the slowdown in the economy, people are not finding clothing to be a necessity and therefore are not spending. So, sales have dropped everywhere. Overall, it has affected all retail.
We are currently exporting to Saudi Arabia and Yemen, and recently started with Panama. We export mainly men's garments and specialise in casual and formal shirts, blazers and some casual trousers too. Some of these garments are also made for boys. Right now we do not use any sustainable fabrics. We are currently sourcing all our fabrics and accessories from India and will continue to do the same.
We do not have our own factory, but we get contract manufacturing done. These factories are small to medium sized and can produce about 15,000-1,00,000 units a month. The minimum orders accepted are about 500 units per style and the maximum is 3,000 but could be more too. The price range of our garments is around $4-9. We require about 120 days for shipment, to develop from fabric stage; but sometimes when the fabrics are ready, we can ship within 60 days too. We will try and find more fabrics which have a shorter lead time to produce. This will help us to reduce the shipping cycle. Currently, we are still trying to analyse the business scenario-if it's worth taking part in exhibitions, etc.
The lessons learnt are to reduce our shipping cycle and maintain good relationships with customers, so that they can grant us that extra lead time to supply in case of unforeseen circumstances.
The fact that the FTAs are working out is because our cost of production is higher compared to Bangladesh and China. So, people are using their export capacity for the domestic market. India will have to scale up infrastructure and get lots of support from government bodies. Subsidies on real estate costs, electricity rates, and minimum skilled and unskilled worker wages have to be looked at.
Vishal Thakkar, Partner, JAL Exports
Started in 1976, JAL Exports is a family-run business founded by Prakash Thakkar. His sons Vishal and Chirag Thakkar now run the company's day-to-day business. The head office of the company is in Lower Parel Mumbai while the factory is located in Bengaluru.
The export business has taken a dip of 50-60 per cent in revenues and the domestic business is down 100 per cent. Our main markets are the EU and US; both are very slow in buying at the moment.
The main categories we deal in are men's casual fashion shirts, which comprise 90 per cent of our production with in-house design facilities. Then, we have a small fraction of the business in boy's shirts and ladies' tops. As of now, a very small percentage of our turnover is in sustainable business and we are bound by our buyer's requirements. At the end of the day, it is about pricing. Even today, many buyers are unable to buy sustainable fashion due to the price issues.
As far as procurement of fabrics is concerned right now, we are using only 100 per cent made in India fabrics. Our Bengaluru factory produces almost 70,000-80,000 shirts per month and we also outsource 30,000-40,000 during the peak months from October to January. Our minimum quantities are 1,500 pieces per colour per style and the maximum we accept is up to 15,000 pieces in the price range of $4.50-7.50 with a lead time of 75-days. Revenues are down significantly, and as a result we are working only three days a week and trying to take orders just to be able to sustain ourselves through these trying times. As we move into an uncertain 2021, we will look to reduce production capacity by 30-40 per cent and optimise output with the least overhead expenses.
Our approach as of now is very conservative and we need to ascertain the buyer's capacity and capabilities as we hear more companies may file for Chapter 11 (Forever 21, one of our major buyers, has already filed for bankruptcy). Also, the apparel industry has been hard hit with people not shopping so much in malls, which is affecting the sales of the brands. One major factor is that the "factoring companies" are not very confident and not willing to finance this sector. The labour laws and banking are not very inclined to support the export business even during these testing times. In spite of the RBI reducing bank repo rates, borrowing rates remain very high making things extremely difficult.
When it comes to FTAs, Bangladesh has been one of our biggest competitions to the EU and with more nations added to this list, a lot of volume business has shifted out of India. The GSP benefit talks have been going on for years, but I feel although the garment sector provides maximum employment, this has been given a stepmotherly treatment. For India to emerge as a viable sourcing designation, there has to be an ease of finance, flexible labour laws and result-oriented steps to get GSP benefits, which will help India compete in the international markets.
Shishir Goyal, Managing Partner, Ram International
Ram International was started in 1993 as a merchant exporter for high-end knitwear from their socially compliant factory with 159 machines and 300 workers.
There is a major reduction in the quantum of business due to the buyers holding stocks and also due to unsold goods. The bankruptcy of a few buyers has resulted in losses due to money not being received and ready stock not picked up. In addition, the cost of doing business has gone up due to the shortage of labour, higher cost of raw materials, and higher cost of transport internationally. Our main market is Europe for high-end kids and ladies' knitwear, but now we are looking at the US as a new market. Our fabrics are sourced from all over India, but our accessories come mainly from China; but now due to the political developments, there have been inordinate delays here. Therefore, we are trying to source from India now.
Our capacity is 60,000 pieces per month, and we accept a minimum of 1,000 and maximum of 15,000 in the price range of €5-10. When it comes to (a change in) production in 2021, we don't see anything changing in the near future. Ever since the lockdown, business has been so slow; so, we will be in slow gear for a while. We have realised during this lockdown that the export business in India is very brittle. Since India has not inked any FTAs, our neighbours are taking advantage in the low and middle segments. Besides that, we need a change in labour laws and reduction in transaction costs. Also, we need better incentives to build better mills for better fabrics so that exports can succeed.
Rajeev Mansukhani, Partner, Eden Garden Exports
Eden Garden Exports, founded in 1991, is a family business. Rajeev Ram Mansukhani, a partner in the company, is involved in the multiple tasks of marketing, sales and production. He also spends considerable time in crafting some of the most exclusive beachwear in the world.
After several trials with different businesses of retailing and wholesaling, we stumbled over by accident on to an opportunity of exports. And since then, we have not looked back. At this juncture, I would like to give all credit to our customers, vendors and the entire Eden Garden Exports team. The pandemic has been a learning experience for us. In these uncertain times, conveniences that were taken for granted have been completely done away with. Scattered breakdown in supply chains added to the continual delays in deliveries. To add to the problems, the country and specially Mumbai had a crippled transport system. A lot of our staff has gone back to the villages and so we were also under-staffed.
In any case, things have started to improve with the staff returning and purchase patterns improving across the globe. We are confident of reaching a 75 per cent turnover compared to last year. Currently, given the grim global outlook, we would rather stay with and service the customers that we currently have. Besides, we have called off our international travel until March 2021.
We export mainly to Europe, Australia and parts of South America. We specialise in medium to high-end resortwear. We pride ourselves in working with some of the most prestigious beachwear/resortwear companies in the world.
The sustainable path is a very important part of the business, which we had begun to explore right before the COVID-19 pandemic. Unfortunately, adding a sustainability quotient to our offering quite under-weighed our need of survival and servicing clients at more inexpensive price points. I understand it is our global responsibility as a market leader. And therefore, we will continue to pursue the sustainability story based on requirements of our customers.
Frankly, we have never been dependent on China. Our fabrics and raw material sourcing are from Surat, Bhiwandi, Coimbatore and Tiruppur. The beauty of India is that textile and manufacturing are unorganised. Along with the accompanying grief, it also presents great resources and opportunities to explore, adapt and grow in terms of creativity, product offerings and flexibility on the scalability front. The artisans and the kind of uniqueness that India adds to our products are unparalleled. So, we have always looked inwards for all our sourcing instead of looking at other countries.
Our product capacity is 3,00,000 pieces. Different garments have different MOQs. For example, for garments in cotton/polyester printed on rotary would have a minimum of 1,500; whereas an expensive garment over $20 could have a minimum of just 200. Our price range is from $6 upwards. Our lead time is 75 days; however, in these uncertain times, we have moved up the lead time to 90 days.
I don't think anything will change in 2021 as far as the production of our company is concerned. I think after March 2021, we will start extensive travel to meet customers, and also travel across India to improve our product offerings.
I don't think 2020 has taught much, since business was not as usual. Except that it was lovely to spend uninterrupted time with my family. As an exporter, we have been quite accustomed to unforeseen circumstances. What other businesses think as a normal has always been a calamity for us. Some examples include sub-standard raw materials, delayed in supply chains, etc. We may have lost business this year, but we think that next year we will do a lot more business and in the exact same ways that we did earlier. The ones who have survived the storm are the ones who will strive.
India has not been able to ink FTAs, but it has not impacted business. As a viable sourcing destination for the world, India needs to take the following steps: have a hire and fire policy across India; get rid of redundant labour laws and do not have state-wise law; do not have any reservations or prioritise based on caste or gender. However, you could incentivise to hire for the specially abled. I think everything else will fall in place once this has been implemented. Personally, the one big thing I would particularly be interested in would be that the government pushes the whole sustainability story: streamline certifications and have a single point procurement platform. Along with transparency, the economies of scale will kick in and will make the whole sustainable story accessible and affordable to international markets. Frankly enough, we would be very interested in being a part of the process of reducing the carbon footprint created by the textiles and garment industry.