A slowdown is not necessarily a time for businesses to cut production or to shelve expansion. There is a counter-intuitive view that suggests ramping up production in the lean times to be better prepared for the highs of the business cycle.
Apparel and textile manufacturers in West Bengal appeared to be following this dictum as they plan expansion in the current year.
Turtle Ltd, the Rs 50 crore mens-wear major, is investing around Rs 85 lakh to set up a trousers manufacturing unit in West Bengal, adjacent to its existing factory.
“We are investing Rs 85 lakh to take our total factory space to 50,000 sq ft. We are setting up a separate trousers manufacturing unit which will initially make 10,000 pieces a month. So far, trousers manufacturing was outsourced,” Amit Ladsaria, director, Turtle, said.
“Our total capacity for 2009-10 will be 2 million pieces of shirts and trousers per annum, which is a 30 per cent increase over last year,” informed Ladsaria.
The company is also adding a new warehouse of 20,000 sq ft to take the total warehouse space to 55,000 sq ft by end of this year.
Turtle is also setting up 15 new stores this year to take the total count to 50 stores. The company is also in the process of hiring 30 more people for its office and about 70 for its factory.
Eastern Silk, the Rs 500-crore silk fabrics exporter, is investing Rs 80 crore to increase production of velvet and jacquard fabrics in its unit. The company is attempting to get into value-added and fashion products. The idea is also to move into the high-end space of the furnishing market.
The company expects the investment to lead to 10-15 per cent higher sales. Eastern Silk is into the manufacturing of silk yarn, fabrics and made-ups, fashion fabrics, handloom fabrics, belts and embroidered fabrics.
The investment will also ensure that the company’s production capacity of autoloom fabrics increases to 1.85 million metre per annum, from the current capacity of 2.5 lakh metre.
G Venkatesh, president, Eastern Silk, said: “The investments are into our Bangalore plant and production should start from May 2009. We plan to get into high-end furnishings range.” Thrust on value-added fabrics is also expected to ensure that Eastern Silk earns $19 per metre, up from $16 a metre at present.
“Economy will start looking up from 2010 and we want to invest now to ensure we can meet the demand boom once recession is over,” Venkatesh pointed out.
Chand Mal Ladha, president, West Bengal Garment Manufacturers and Dealers Association, said that infrastructure and availability of raw materials hampered the growth of garment industry in West Bengal. The readymade garments turnover in the state was at Rs 12,000 crore in 2007-08. Nearly 60 per cent of the raw material is procured from the local market, while 40 per cent is imported from the other states.
“The cost of raw materials is high because of the higher proportion of imports, thereby, increasing the cost of finished goods,” said Vijay Kariwala, secretary, West Bengal Garment Manufacturers and Dealers Association.
“The labour cost in other states is 25-30 per cent higher than that in West Bengal. However, the quantity and quality of work is not good because of the poor work culture here,” he added.
