Orders are there, but how to grab them

by Apparel Resources

01-September-2018  |  9 mins read

Representative Image, Buyers discussing about products

From the general buzz in the industry picked up from various exhibitions and industry events, it appears that there are many orders in the market and exporters can easily pick up work, yet this is not happening.  What is stopping companies from picking up fresh orders? Is the positivity more perceived than real? Apparel Resources tried to figure out in discussion with various stake holders and some interesting points emerged.

Philomena John, Owner, Cotton Blossom India, Tirupur is a well-known exporter and has been working with many top global brands. She shares her experience on current business scenario, “Business is really-really tough, prices are very low and there is no margin at all. We are forced to work only on turnover. The market itself is looking for very-very cheap garments. One has to be very competitive. People talk about compliance, ethics and all that, but ultimately one can see that how the price is being fixed and matched, none of these things feature with regard to price, so we can’t compete.” She further adds that somebody somewhere has to absorb the cost; most of the time pressure is on manufacturers. All stakeholders need to introspect where the cost and margins are going. We at our own level are investing in technology and training as these are the only ways out, but the Government should pitch in and support.

Some exporters are not only expanding but are also adding new product categories in their offering. They have their own logics. Nimish Shah, Director, Amber Home, Mumbai told, “Orders are there in the market but not much. We are into home furnishing as well as into apparels and for us home segment has comparatively fewer orders than apparel. The corporates in home segment do have good orders while in apparel segments corporates as well as SMEs, both have orders.” Nimish claims that he is able to match the price as the strong dollar is in his favour, the cotton price is also little down and towards stability so the price is not a major issue. “Medium or small level buyers at least don’t argue on the point of the strong dollar as they have small orders and don’t want to take any risk regarding quality or timely delivery,” he added.

Some other exporters believe that orders are there as product development, sampling is on the peak but to match price, investment in technology/automation is a must. Sanjay Anand, Operation Head, Bloomcraft Apparels, Bangalore is of the opinion, “The garment industry is not doing so well, but it is being said that after four-five months, things will improve. A lot of designers are being hired by many exporters so it means the future is positive. Since designers are there, a lot of sampling is also going on which is again a positive indication.” Bloomcraft Apparels is known for shirt manufacturing for export as well as for Indian brands.

Sanjay also adds that Indian garment exporters have seen very profitable times in the garment industry and at this moment also, they want the same but it is not possible. “Most of the exporters want all readymade solutions for everything so they can make money within a very short span of time. It is true that in India, return on investment are not so good, so the industry as a whole is not much interested to invest in advance technology, and instead they rather think of shifting their factories in those areas, where labour is cheaper and Government subsidies are being provided.” He adds, “I feel industry should strongly invest in technology, training and should involve industrial engineering. Without these, exporters can’t achieve the required productivity and control cost.”

Talking about his organization, Sanjay shared that as a company, they are also facing challenges like worker absenteeism, especially in a festival season so they try to grab those kinds of orders where savings is more. “We take such small orders which require more typical operations so that SAM (standard allowed minutes) can be increased, and we can get more money from it,” he added.

Stakeholders of the industry who represent yarn and fabric segment are strongly of the view that fluctuation in fabric or yarn price is a big obstacle for apparel exporters and due to the same, they can’t take orders. Such an industry professional Hitesh Thakkar, Director, Imperial Textiles, Tirupur gives an example, Last month Rayon yarn’s price was Rs. 206 per kg, while this month, so far it is somewhere around Rs. 218 per kg. So, such uncertainty and hike in yarn prices are somewhere forcing apparel exporters to hesitate as far as order booking is concerned. Recently, we felt that prices are coming down a little bit but again all of a sudden it is up.” Hitesh agrees that the orders are there in the market but to take them on right price is something that does not seem possible in this condition. Whenever this kind of sentiment prevails that orders are good, or have started coming to India, immediately spinners start maintaining the price very strictly.

He also shared another perspective, “We often hear that to some exporters (spinners) give under costing. They quote one price but below the table, they charge lesser. All this is affecting the business of fabric suppliers like us and apparel export too.” Industry experts feel, the solution which is stability of yarn prices, is only in the hands of Government. In case, yarn prices get stabilized, business will definitely grow. There is no other way as buyers are not supporting.

Many are asking if the weakening rupee can change the situation in the favour of apparel exporters. Pavan Kapoor, MD, IIGM, Delhi who is perplexed that why exports are down, agrees with this opinion. “I feel that sign of weakening rupee is a good thing for this industry and this can actually change the equation. So, I am very hopeful regarding exports now.  if you look at today’s environment, especially the weakening rupee, it is putting Indian exporters in a reasonably good position as 5 to 6 per cent is a critical difference. This kind of weak rupee is strong support for exporters; strong rupee earlier became a big challenge for them. I am hopeful that if rupee remains weak, it will end up at 75. So, this will be an interesting story for Indian apparel exporters. I think that the Indian rupee has been too strong for too long,” he says.

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