Tough measures to cure garment sector’s Re woes

Mumbai: These days, it is easy to get an appointment with chief executives of garment manufacturing firms. They want to talk at length of their woes, mainly due to the declining dollar and even large firms have been forced to send home workers. Two large Mumbai firms, which have been in the business for over two decades, claim they have sent home 600 workers. Coming in the back of a year when the garment industry received record orders from foreign buyers, the reversal seems to suggest that something is seriously amiss. Says Vijay Agarwal, chairman, Apparel Export Promotion Council, and owner of Mumbaibased Creative Garment: ‘‘The sudden depreciation of the rupee hit the industry like a tsunami. A short term relief is much in need to stem the closure of units.’’ apparel manufacturer Agarwal paints a grim picture. He shows statistics that the export has actually declined in the first few months this year. Though he is unwilling to talk about his company, as the chief of the industry association, he laments that many firms across the country have shut shop. In fact, firms in Tirupur have given their employees extended holidays in the festive season as Indian orders have been diverted to Bangladesh and China, where the local currencies have not appreciated like in India. The change in the attitude of garment manufacturers is quite dramatic. As early as 2004, they wouldn’t want to talk about their business. wholesale apparel manufacturers Mostly family-owned, garment manufacturers were then making money hand over fist, thanks to firms quotas they held to export to developed countries like the US, Europe and Japan. Larger firms broke down their business into smaller ones and ran them under different names to benefit from government regulations. A large manufacturer in Tirupur, who spoke at length at his current problems, had then said: ‘‘We have nothing to say to the media.’’ apparel manufacturers india What changed? The WTO abolished quota in 2005, making it a free-for-all. Existing players had a head start, but months into the free market the cracks began to show. Bought up in a tame environment, Indian companies were highly inefficient in managing capital and manufacturing productivity. An Indian worker made 40% fewer shirts than their Chinese and Thai counterparts. Says a Delhi-based consultant: ‘‘Margins in the quota era was 30% plus, there was no incentive to be efficient.’’ Again as an export industry, the industry was pampered by the government with further tax and credit concessions. Even today, textile and garment firms wanting to expand their business can get a 5% special discount on the interest rates available to other industries.

Dell plans to sell computer plants worldwide

Dell Inc is seeking to sell all of its manufacturing plants worldwide and has approached contract computer manufacturers, the Wall Street Journal reported on Friday, citing people familiar with the matter. The proposed factory sales, intended to slash costs, mark a significant shift from Dell’s long-standing strategy of making its own products, the Journal said. Instead, Dell plans to have contract manufacturers make all its computers, the paper reported. Dell, the world’s second-biggest maker of personal computers, is seeking to raise profitability after reporting earnings that missed analysts’ estimates as it cut prices to take market share from industry leader Hewlett-Packard Co. computer parts suppliers Selling its production sites to focus on sales and marketing may aid efforts by the Round Rock, Texas-based company to expand its product range. “As the company moves away from its direct sales business model, it needs to offer a wider range of products and respond more quickly to market demand,” said Wang Wanli, a technology analyst at HSBC Holdings Plc in Taipei. computer parts suppliers “Outsourcing production to third-party manufacturers will help them become more flexible.” Dell would ensure that any contract manufacturer who purchased a factory would agree to make hardware for the company, according to the Journal report. indian manufacturersDell may sell all of its plants within 18 months, the newspaper said. Last month, Dell introduced new notebooks with longer battery life aimed at business users. The company also started selling a slimmer laptop weighing 2.2 pounds (1 kilogram) after Hewlett-Packard offered a similar model in June. Now available in stores Dell, which in 2007 abandoned selling PCs only via telephone and the Internet, has forged agreements to sell its computers through retailers including Wal-Mart Stores Inc in the US, Gome Electrical Appliance Holdings in China, Carrefour SA in Europe, Bic Camera in Japan, and the Croma chain of electronics stores of India’s Tata group. T R Reid, a Singapore-based Dell spokesman for Asia Pacific and Japan, declined to comment on the report, citing company policy not to comment on speculation. “We have said repeatedly there are opportunities to use third-party manufacturers to reduce costs and increase efficiency,” Reid said. Determining “how best to do that is something that is in process now.” Dell increased PC shipments 21% in the quarter ended June 30, compared with Hewlett-Packard’s 17%, and 15% for the market overall, according to research company IDC. BLOOMBERG

Small is big: SMEs on overseas drive

What kind of a paradigm shift are you planning in India? First, we think that the Indian market is going to witness a strong and sustainable growth for the next 10 years. This market should reach six million cars a year in 10 years down the road. This means we are going to move to six million cars from two million. Somebody has to build the four million capacity. You need more cars and you need more taste. We want to bring in the Nissan and Renault taste. Second, a product like Micra is a very modern and very sophisticated one. You will see it big from inside compared with any car in this category. It is probably a champion in terms of fuel efficiency and emission, it is already a champion in Europe and Japan. It is going to come at amazingly low cost because it is localised in India. indian manufacturer Thirdly, Indian entry is a paradigm shift for us. We think the ‘A’ segment that exists in India is unique to the Indian market. I don’t think there is any market in the world which has a ‘A’ segment like here. This ‘A’ segment might be migrating to other emerging markets. The best place to learn how to make these cars is India. What are your plans with Indian partners? indian manufacturers The multiple partnership in India is something we feel at ease with. Each partner is working on a different project. M&M is working on the Logan with Renault, Ashok Leyland is working on an LCV (light commercial vehicle) with Nissan, Bajaj is working with Renault and Nissan on ultra low cost (ULC) cars. We don’t have partners with whom we do competing projects. India is a very sophisticated market, very specific market. A global manufacturer is not going to learn India by sending a bunch of expatriates to India. Having multiple partners help us understand what is going on, learn and compare the practices of one partner with the other. It can help us to have, maybe, multiple practices instead of one. We came to India to learn more about frugal engineering and frugal product planning. If we are to mature and the day we become ‘Indian’, the day Nissan and Renault have an extensive understanding of India, maybe then we can say we don’t need so many partners. We are the fourth largest car marker with a 10% market share. We are less than 1% in India. So in order to move from 1 to 10, we need the help of partners. Each partner can bring something to the table. We will give something to them. It will be a collaborative effort. How frugal or cheap is India compared with other locations? indian suppliers India is not the cheapest country in the world. One can always find cheaper countries than India. What India offers is a low-cost market model. The Indian mindset is embedded with frugality. Not all the countries are like this. The attractiveness for us is not the low cost. I had a meeting with one of the partners. He came with his engineer for the product. I brought mine. I asked both the engineers how much investment is needed. I was shocked by the difference. What my Indian partner promises to do it with one, my engineer tells me we need five to complete this project. The difference is huge. It is a completely different approach. That’s is why we think Indian engineering and product planning is such an important thing. We want this spirit to conquest other markets.

‘Denotify SEZ, convert it into apparel park’

The <a href="http://www.way2trading.com/companies-category/apparel-fashion.html">apparel manufacturers india</a>in south Gujarat’s first Special Economic Zone (SEZ) for garment and textile are at the receiving end as the denotification of apparel park hangs in balance.
apparel manufacturers india While the unit owners in SEZ are willing to wind up their manufacturing facilities following the steep decline in export orders from key markets like US, Europe, Germany and Japan, the concerned departments in central and state government are yet to take any decision.<a href="http://www.way2trading.com/companies-category/apparel-fashion.html">usa wholesale clothing</a>
The Surat Apparel Park Association (SAPA), apex body of garment manufacturers in SEZ, has urged the central and the state governments that SEZ should be denotified and converted into a regular apparel park so that the units can face the onslaught of dwindling demand from key export markets by selling their garments in domestic market.
According to the data released by Apparel Export Promotion Council (AEPC), India exported garments worth $ 2.41 billion in the quarter that ended on June 30 as compared to $ 2.85 billion it earned in the previous year. In June, garment exports fell 10.15 per cent from $ 968 million to $ 870 million due to the dwindling demand from key foreign markets and the trend continued in the first quarter of 2010.
apparel manufacturers india Secretary, SAPA, Nilesh Mehra told TOI, “About 41 stakeholders in SEZ have sent letters to the concerned departments seeking de-notification of the apparel park from SEZ. In the last few months, around 20 per cent of the garment workers have lost their jobs due to the cut in production of garments.” <a href="http://www.way2trading.com/companies-category/apparel-fashion.html">fashion wholesale
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According to Mehra, Surat Apparel Park in Sachin was converted to SEZ in 2006. Out of the 128 demarked plots inside the SAP-SEZ, developed by GIDC, only 66 plots are sold to 42 unit holders. Only 11 units have started so far employing more than 3,000 workers from nearby villages, while the construction of other eight units are going on. There are some 23 units owners who are not ready to invest in the park following the low sustainability.
“The total investment by 11 units so far is around Rs 195 crore and the export in the last three years since August-2006 is hardly Rs 60 crore. This shows that the Apparel SEZ in Surat is a loss making venture and thus, we are not interested to continue in it for long,” said managing director, Saffari Apparels, Kirti Patel said.

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It’s Touch-and-Go for PC Makers as Sales Go South

Leading personal computer makers are attempting to win back consumer attention that has lately shifted to tablets and smartphones by betting on a new breed of devices that respond to touch. Computer System Manufacturers
From US-headquartered Hewlett Packard and Dell to Asian majors Acer and Lenovo, top PC makers see touch-based laptops and hybrid devices that double up as tablets as a means to counter the slowing sales of desktops and laptops.
The change in tactic is also a tacit admission by these companies that emerging markets like India may not be able to throw them a lifeline in the wake of shrinking PC sales in United States and Europe. “On one side the PC market is not expanding, while on the other side more and more people are getting used to the touch interface. The question is, ‘Do you want to complain or do something about it?’” P Krishnakumar, executive director and head of consumer business at Dell India, says.
In 2012, India’s PC market grew at a tardy 3.5% to 11 million units from 10.5 million units in the previous year. During the same period, smartphone shipments in the country grew 48% to 16.3 million units. The Round Rock, Texas-based Dell, which counts India as one of its fastest growing markets, is now running a marketing campaign in schools in the country’s smaller towns to push touch-screen laptops to students and parents. Last month, Palo Alto, California-based HP launched six new touch-responsive computers in India making it the new battleground for PC vendors.
“We expect to see a growing trend towards a multi-use environment where customers want access to multiple devices, form factors, operating systems and ecosystems,” Ketan Patel, director of HP’s consumer products business in India, says.Computer System Manufacturers He says the Indian PC market is going through a phase of “form factor flux” where the dominant form factor of future is yet to emerge. Analysts say they expect touch-screen usage to increase in emerging markets such as India, Indonesia and Brazil where PC penetration is low and that these devices will give tablets such as Apple’s iPad a run for their money even though the overall PC sales would not soar.
“Touch will bring interest back to the PC market but overall volumes will not increase but steady the decline,” says Ranjit Agarwal, research director at technology research firm Gartner’s global forecasting team in the UK. He says emerging markets will not have any problem in adopting touch as many users are yet to experience premium phones like an iPhone yet.
Component and chipmakers too have spotted this trend.laptop manufacturer. The world’s largest chipmaker Intel, which recently cut its sales outlook following weak PC sales, said the distance between devices traditionally meant for content creation (laptops/desktops) and consumption (smartphones/tablets) is blurring in markets like India. “We feel touch is at a tipping point,” Ramaprasad Srinivasan, a director at Intel India, said last month. In May, Intel started a nation-wide campaign in schools to raise awareness about PCs among students, hoping to push sales.
Device makers are also particular about launching their new touch-based computers at affordable prices to make them accessible to a broader base of consumers.

MONDAY MUSINGS RAVNEET GILL CHIEF EXECUTIVE, DEUTSCHE BANK INDIA

 has done what it could. When we talk to MNCs with a set up in India, all of them say they would like to buy back floating stocks in the Indian market. They believe in India’s economic potential and would like to capture as much of the economic upside. The only reason why they are not being able to buy back is because of high valuations. So you have a very strange situation, people are believing in the long-term India story, you think the economy is going to hold on but still saying that the valuations are too rich.
Isn’t there a disconnect somewhere?
indian manufactrers That’s precisely the point. As a nation what is India’s expectation of itself? No point lamenting over the last thirty months, what is more important is what we are going to do. Everybody used to put aside India from the rest of the world on the basis that India had supply-side constraints which are surmountable. The demand side is still there, it has not disappeared, may be it has shrunk a little. Why is it that an FMCG giant has recently put in fresh money to buy back equity?
Is it that the consumer story and the investment story are differing?
The demand is coming from demographics and will determine more enlightened policy-making. The fact is that 10 million Indians come into the work stream every year, just to find 10 million jobs, you need to grow at 8%. Political leaders are increasingly recognising that it is all about job creation. I think India’s demographics are a strong force and will compel our policy makers to believe that good economics will be good politics.
Investors are getting jittery and there seems to be neither good politics nor good economics? Some policy makers even believe that hiking FII limit in debt is the cause of the rupee fall?
I don’t think the recent FII redemptions have been exacerbated by increased limits. It was more of a yield play vis-a-vis the US markets. At the end of the day, the entire redemption was about $7-8 billion, which is immaterial. In addition to cultivating different constituencies of investments, India needs to now go back to building a more manufacturing DNA. India has made a name globally in the services sector. However, we need to bring back manufacturing in a big way so that employment generation gets accelerated and the economy picks up all over again.
How do you get it back? indian manufactrer For instance, look at the DMIC project. It will not just be a trade corridor. The project envisages 7 new cities, each having national manufacturing zones, with a lot of incentives to encourage companies to set up manufacturing facilities. So work is happening already. So far we have gone overseas and looked for capital… we now need to look for manufacturers to come and set shop here. We need to provide an ecosystem that is much more efficient and where people can get off the starting blocks more quickly than they have so far.
Investments from Japan or any other region have not been really big. And even the DMIC project seem to be facing issues?
indian manufactrers .We need to recognise that the world has changed post the crisis. Maybe it is time to relook at where we are investing our rupees, dollars and where are we attracting foreign investment from. Historically, our capital has come from the West, maybe now it is time to look at Japan and the Middle East as well. We need to open up our thinking and build more strategic relationships

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