Christmas ushers in new ray of hope

Christmas ushers in new ray of hope

Cycle turns: Garments exporters are happy with the order books now

Christmas ushers in new ray of hope

A view of one of the garments factory run by Bangalore-based exporter Gokaldas Exports Limited.

Recuperating from the recessionary spell, the Europeans and Americans are now marching back to the marketplace, cheering up store owners, who are stocking up garments in anticipation of a surge in consumer spending for the Christmas season, while exporters of readymade garments from India are riding piggy-back on the same.

Enveloped by the effects of financial crisis, garment units in Bangalore — were in dire straits — as buyers from abroad had cut orders drastically. However, the festive Christmas season seems to have cleared the clouds of uncertainty with flood of orders coming in its wake. With the result, most exporters are reporting at least a 25 per cent increase in their order books, indicating the sector might be on the revival path.

Expressing similar sentiments, Bangalore-based Gokaldas Exports, number one garment exporter in the country, for example, has announced its new Hyderabad facility — with a production capacity of one lakh garments per month — ready for commissioning later this month.

Refusing to name companies that have placed orders for Christmas, Gokaldas Exports Limited Executive Director Rajendra Hinduja said “The facility was ready over a year now but we did not think it necessary to start operations. Now that our order book is full till February, it’s time we add to our capacity.” He also pointed out that export orders that had declined by around 40 per cent are up by about 20-25 per cent, while adding that the prices have however, stayed 10-15 per cent lower. Similarly, another leading City-based exporter said his firm has received bulk orders from buyers in US, as Christmas is round the corner, and that he is working full seven shifts now.

Asserting that the worse is behind them, Gokaldas Images (one of leading apparel exporters) Managing Director Jagadish N Hinduja said “We are working  with full order books. Gokaldas is booked for Christmas, and we are in fact, producing for next Summer and Spring.” Good order flow means that the firm is doing better, and definitely better than the same period a year ago, he observed.

Fashion must change

Further, Rajendra Hinduja said he has received orders for almost all the categories of garments manufactured by Gokaldas for the western market, attributing it to signs of recovery in the West. With France and Germany posting good results in the last quarter and the US showing signs, he says, things will only be better, while adding that orders have increased by at least 25 per cent compared to the last two quarters.

While veteran exporter Rajendra points out that the turnaround, is in fact, quicker than expected, Texport Industries Director Sashi Shekar, sighting increased orders from the west, notes that brands cannot afford to keep the same line of clothing for too long, and that orders must come by sooner or later.  “These brands can retain the same sets of design for one season may be (like last year), but they cannot go on like that, therefore, they are back now,” he said noting that there has been an increase in orders in the past few months — by 20-25 per cent.

The sector can only welcome this development, after having shed over 75,000 jobs and saw several units shut. In fact, job loss figures had evoked serious responses from many quarters of the economy, with fears of complete breakdown. However, proving it wrong, Bangalore has bounced back, with growth of at least 20-25 per cent during the September-April period of 2009-10 anticipated as against the same period during 2007-08. Orders during the September-April period of 2008-09, sources say, were down more than 40 per cent.

Small units under pressure

Emphasising that things are brighter now, Apparel Exports Promotion Council (AEPC) Director (South) Balaji revealed that the sector entered the positive territory after April 2009 — with orders going up by around 20-25 per cent compared to the previous two quarters. GO GO International Managing Director S S Goyanka, however, warned that the sector needs to be cautious, as while Christmas season has always been fruitful, the real picture will be visible only after that. Despite these signs, things however, are not hunky-dory as is being projected. While premier exporters opine the worst is over, smaller players though aver the lull still prevails, even as they too see early signs of a turnaround. Sources indicate that small-scale apparel units, particularly those who do not export directly, are still struggling, coupled with both external and internal problems.

Peenya Industrial Association Treasurer D T Venkatesh said the revival is not uniform and that feedback from 52 garment units in Peenya (over 60 per cent invovled in exporting) suggests only an improvement of 5-7 per cent, unlike represented by bigger players. “People with brand name are the ones that are seeing the chunk of this turnaround, while small units are still struggling,” he added.

Echoing the same, the Garments Workers Union Vice-President N M Muthappa said that feedback from the associations’ members did not indicate that the worse is over, but nevertheless, there are signs of improvements, especially with the festive season about to begin in the US and EU markets. Though there are signs of recovery here, regional markets like Bangladesh and Vietnam are growing at a much higher rate.  The exporting fraternity has warned of the same. They say, that the sector cannot get carried away as yet, as India losing market share to countries like Vietnam and Bangladesh, is posing severe threat. Accounting for about 30 per cent of India’s garment exports (about $9 billion) Bangalore like other avenues in the country is facing severe competition from Bangladesh and Vietnam.

While sources indicate that former has managed to double its exports in the last year or so, a study by Business Monitor International (BMI), a market surveyor, shows that Vietnam could obtain the garment export turnover of $10 billion this year, $900 million more than in 2008. Further, if this trend were to continue, AEPC feels that exports in the current fiscal would be below $9 billion, declining by about 9.4 per cent over 2007-08, and that India as a country may not meet the target of $25 billion.

All said and done, the time now is to rejoice, but not to relax, for we need that spirit of taking work forward –— that business of butter and bread, of cloth and thread.