Small join hands to become big

As sun sets on quotas, apparels rise

Apparel hub Tirupur is set to see its first round of consolidation. Post the dismantling of quotas in January, exporters will shed several firms and business cards from their portfolio and instead focus on one or a few integrated large entities.

The result, Tirupur's landscape will suddenly have several Rs 100 crore plus privately-held companies instead of a plethora of loosely knit small firms.

At the last count, the banian town with garment exports worth over Rs 5,000 had over 630 recognised exporters controlling about 7,000 units.

Top exporters, who now run anywhere between 10-25 firms each to grapple with the quota restrictions, have already initiated efforts to merge units or, to put it simply, abandon those that were purely fronts to corner quotas.

This consolidation will free firms from administrative legacies, and also allow them to showcase larger enterprise before buyers. The latter are not only cost conscious but are also known sticklers for social compliance, reliability and ability of firms to meet tight delivery schedules.

The first to tread the path in Tirupur will be the top 10 exporters with turnovers ranging between Rs 80 crore and Rs 350 crore turnover. R Shivaram, director, Royal Classic Mills said, "We have already merged four firms with our flagship Royal Classic Mills (P) Ltd to form a Rs 250 crore entity."

Others in the line include the town's largest exporter "" Rs 350 crore Eastman Exports (22 firms), Poppy's (6 firms), Centwin (around 10), SP Apparels and Prem Exports. An Eastman Exports spokesperson said, "Post quotas, several group firms set up just for the quota's sake will not be needed. They will show no turnover and thus will be eased out."

The next round though promises to be hectic. With several big brothers around, the main action will be that of the mid-sized firms (around Rs 50 crore revenue) defending their turf. Industry players predict, some medium scale firms will need to unify, share infrastructure and put up a co-operative front.

A few are sampling this, through the UNIDO assisted cluster approach, in which firms share strengths to procure orders, produce and market.