 "Pearl Global to expand capacity in South India")
The Gurgaon-based apparel manufacturer and exporter Pearl Global Industries Limited (PGIL) is expanding capacity in South India with an investment of around Rs 17-20 crore, funded through internal accruals and a TUFS (Technology Upgradation Fund Scheme) loan.
“Creating direct employment for an additional 3,000 skilled workers, the expansion is in keeping with our long-term commitment to ‘Make in India’ as encouraged by our Prime Minister Narendra Modi. We are readying ourselves for an improving demand flow of orders from leading brands in advanced markets. We aim to leverage our new ‘lean manufacturing’ capability over our existing fixed marketing and design overheads to further improve our EBITDA margins and return-on-capital ratios,” said Pulkit Seth, vice chairman and managing director, Pearl Global Industries.
With South India fast emerging as the new garment manufacturing hub of India, the proposed capacity expansion is expected to help Pearl Global to reduce its geographic concentration risk by diversifying operations across North and South India. Another significant reason to move south is to gain a competitive edge to meet complex and diverse product design requirements of leading global retailers. “The Southern marketplace is known for certain fabrics. Besides, it has skilled and disciplined labour, higher output, lower wage cost, low attrition levels, low rejection and special expertise in wovens,” Seth added.
The new facilities are expected to be instrumental in helping the company raise its cumulative production capacity by about 7 percent to 5.35 million pieces per month, through the addition of 1,250 machines to reach a total of 9,750 machines.
Before this expansion, PGIL’s existing production capacity stood at 5 million pieces a month with 8,500 machines spread across India, Bangladesh and Indonesia. It plans to install 450 new machines in Bangalore, adding 150,000 garment pieces per month. Of these, 250 machines will become operational in February 2015, while remaining 200 will be made operational by May 2015. At Chennai, Pearl Global Industries is installing additional capacity of 800 new machines, which will get commissioned by December 2015. Pearl Global Industries has taken a 60,000 sq ft facility in Peenya, Bangalore, on long term lease, while in Chennai it has acquired a contiguous land parcel measuring 4.72 acres, on which it has built a facility to manufacture an additional 200,000 pieces a month.
The Chennai facility provides PGIL the ability to keep adding on capacity into the future with minimal investment. Benefits of the increased expansion in Bangalore are expected to positively impact the company’s books by FY2015-16, while the Chennai expansion benefits will reflect in FY2016-17. The capacities are expected to generate incremental revenues of Rs 100-150 crores, which will further enhance its EBIDTA margin.
Global market trends are in favour of such a move by Pearl Global. “With China’s advantage in the garment business gradually eroding due to escalating wages and overheads, apparel manufacturing units in South Asia stand to gain from a natural shift of business towards them. This provides India a good business opportunity to improve its share of the global garment manufacturing business. Currently, India exports 25-30% of the textile goods to the global market and enjoys only 3.7% of the global apparel exports market share,” said Pearl Global Industries in a press release.
“Creating direct employment for an additional 3,000 skilled workers, the expansion is in keeping with our long-term commitment to ‘Make in India’ as encouraged by our Prime Minister Narendra Modi. We are readying ourselves for an improving demand flow of orders from leading brands in advanced markets. We aim to leverage our new ‘lean manufacturing’ capability over our existing fixed marketing and design overheads to further improve our EBITDA margins and return-on-capital ratios,” said Pulkit Seth, vice chairman and managing director, Pearl Global Industries.
With South India fast emerging as the new garment manufacturing hub of India, the proposed capacity expansion is expected to help Pearl Global to reduce its geographic concentration risk by diversifying operations across North and South India. Another significant reason to move south is to gain a competitive edge to meet complex and diverse product design requirements of leading global retailers. “The Southern marketplace is known for certain fabrics. Besides, it has skilled and disciplined labour, higher output, lower wage cost, low attrition levels, low rejection and special expertise in wovens,” Seth added.
The new facilities are expected to be instrumental in helping the company raise its cumulative production capacity by about 7 percent to 5.35 million pieces per month, through the addition of 1,250 machines to reach a total of 9,750 machines.
Also Read
Before this expansion, PGIL’s existing production capacity stood at 5 million pieces a month with 8,500 machines spread across India, Bangladesh and Indonesia. It plans to install 450 new machines in Bangalore, adding 150,000 garment pieces per month. Of these, 250 machines will become operational in February 2015, while remaining 200 will be made operational by May 2015. At Chennai, Pearl Global Industries is installing additional capacity of 800 new machines, which will get commissioned by December 2015. Pearl Global Industries has taken a 60,000 sq ft facility in Peenya, Bangalore, on long term lease, while in Chennai it has acquired a contiguous land parcel measuring 4.72 acres, on which it has built a facility to manufacture an additional 200,000 pieces a month.
The Chennai facility provides PGIL the ability to keep adding on capacity into the future with minimal investment. Benefits of the increased expansion in Bangalore are expected to positively impact the company’s books by FY2015-16, while the Chennai expansion benefits will reflect in FY2016-17. The capacities are expected to generate incremental revenues of Rs 100-150 crores, which will further enhance its EBIDTA margin.
Global market trends are in favour of such a move by Pearl Global. “With China’s advantage in the garment business gradually eroding due to escalating wages and overheads, apparel manufacturing units in South Asia stand to gain from a natural shift of business towards them. This provides India a good business opportunity to improve its share of the global garment manufacturing business. Currently, India exports 25-30% of the textile goods to the global market and enjoys only 3.7% of the global apparel exports market share,” said Pearl Global Industries in a press release.