Bangalore-headquartered apparel exporter Gokaldas Exports is planning to slash production in its manufacturing units in Bangalore on the back of a shortage of labour force and higher wages.
Rather, the company is slowly relocating its units to tier-II and tier-III cities like Mysore, Hubli among others to tide over this labour shortages in and around the city.
“It is becoming difficult for industry in Bangalore to survive due to the unavailability of labour and cost factors. So, we are relocating to smaller towns like Mysore and Hubli,” Rajendra Hinduja, MD, Gokaldas Exports Ltd, said.
Presently, India’s largest apparel exporter employs around 44,000 workers in 44 factories in the state.
While the company employs 38,000 workers in Bangalore, the rest are at its Mysore facility. “The number of factories will be reduced to 32 from the present 38 in Bangalore in the next one and half years,” Hinduja said.
Referring to the capital expenditure plans of the company, he said, the investment would be around Rs 15 crore in this relocation.
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Apparel exports from India had taken a hit during recession on the back of falling demand from the United States and European Union. However, things are looking up with tangible signs of economic revival though the sector is yet to be out of the woods.
Apparel exports from the country, after signs of recovery, dipped during the April-July period of this year. Exports declined by 8 per cent to $3.46 billion during this period.
Most exporters are of the opinion that though the order flow has increased over last year, the average realisation may fall on the back of high raw material cost. According to them, rising cotton prices is a matter of concern.
“Our order book is sound with better price recovery as of now. But, average realisations may be under constraint in future due to the rising cotton prices,” Hinduja said.
Gokaldas Exports, controlled by global private equity giant Blackstone, reported a net loss of Rs 17.7 crore during the April-June period against a net profit of Rs 2.8 crore in the corresponding period last year.
The company’s revenue posted a marginal rise to Rs 228 crore during this period from Rs 223 crore in the same period last year.
Gokaldas Exports supplies apparel to global biggies like Adidas, Reebok, Nike, Puma along with couple of domestic apparel brands.
The company is hopeful of registering profit in the coming quarters on the back of favourable global environment.