The textile industry in India is constantly kept on its toes with the value chain finding it difficult to take long-term decisions for cotton products as cotton yarn prices swing in tandem with cotton price fluctuation, upsetting ‘costing’ and margin calculations. The major reason for fluctuating prices is attributed to exports of raw cotton or cotton yarn. Though the yarn manufacturers have reservations on putting restrictions on cotton yarn exports, other players in the textile chain strongly feel that the Government needs to restrict exports of cotton yarn and should also try to make yarn excise-free, VAT-free and CST-free. It is only then that cotton yarn will become available at reasonable prices for domestic consumption…
Together, knits and bottoms account for more than 40% of the country’s apparel exports and are the largest two categories exported from and manufactured by the country today. This is very astonishing, considering that formal shirts were the key product for exports until the early 1990s. The first organized apparel manufacturing firm based out of Chittagong, the Desh Garments Ltd., sent a team of fresh graduates and young professionals to Daewoo Corp., South Korea for training, and among them was Emdadul Islam, presently the Director of Babylon Group. “Before visiting Korea, we thought that fabrics would be fed from one end of the machine and finished shirts come out from the other end in an ‘apparel factory’. But were really disappointed to see thousands of workers sitting on sewing machines and doing each and every operation individually,” reminisces Emdadul Islam, who left Desh Garments to start Babylon Garments in 1984 with a setup of just 86 sewing machines. “I was trained to make shirts and that is what I knew… I still remember the nightmare our first order was, but it also gave us the maximum learning. We were sub-contracting for one of the bigger factories at that time,” recalls Emdadul Islam, who now owns a US $ 132 million annual turnover company with his four partners and has since diversified into knits and bottoms like many other companies.
In fact, as the business grew, the country attracted more and more buyers from all over the world and competition within the country also grew, resulting from the rise of shirt facilities in Bangladesh. This was the time, in the late 1990’s when Emdadul Islam realized the need to upgrade his product and move beyond the basic to offer more value-added shirts. “We took the challenge of product upgradation sincerely,” said Emdadul Islam, who has been working with brands like Tesco, Sainsbury, River Island, Burtons and Topman.
Around the same time, Chittagong-based BSA Group started as a 100% dedicated supplier of casual shirts to Walmart and presently has a vast setup of 7000 sewing machines, producing more than 1.5 million shirts per month only for the American giant. “The reason why Walmart has been taking our entire production for the past two decades is due to our performance in terms of on-time delivery and quality of the end product,” avers Sarwaruzzaman Khan, Managing Director, BSA Group. The casual shirts manufactured are the least value added shirts in terms of embroidery, printing and additional stitching, which can be fathomed by the FOB of the shirts at just US $ 1. Although manufacturing shirts as a major product category, BSA Group also manufactures woven bottoms for Walmart and has an annual turnover of US $ 60 million.
A company like Dressman, who has expertise in formal shirts, has now integrated the quality of formal shirts into casual shirts for higher FOBs. “My father started the company in 1984 and since then we acquired a niche in formal shirts. Though we did try our hand with our products, we found shirts as our real strength,” asserts Maashed Abdullah, Director, Dressman, who manufactures shirts for brands like US Polo, Nautica, Dockers, Target, Chaps, Sears and M&S, with an annual turnover of US $ 35 million. The shirts manufactured by Dressmen are an amalgamation of embellishments done in a casual shirt, while using the fabrics of formal shirts. “In terms of stitching, our shirts are casual with taped seams, embroideries and prints as per the buyer requirements, but there is no compromise on the fabrics. We source fabrics made of compact yarns from China, Malaysia and Thailand, along with 100% wrinkle-free fabrics,” added Maashed.
As an expansion, SQ Group, an already established name in sweaters and stitch-free lingerie products, ventured into formal shirts in 2008 in a joint venture with a British company, manufacturing high-quality formal shirts for M&S. “When our joint venture with the British partners ended in 2010, we thought of closing our shirt operations as it was much smaller compared to other businesses, but our customers at that time asked us not to do so, that is when we realized our strength in shirts as our factory was built specially for M&S,” avers Aruna Muthumuni, Chief Executive Officer, SQ Group. Manufacturing 2,50,000 shirts per month, SQ Group does not manufacture any casual shirts as of now but would certainly like to do that. “It is a wrong notion that formal shirts do not offer volumes. There are companies in Bangladesh who are making shirts for brands like Hugo Boss and even PVH, and we would like to develop our shirt business in the same direction,” adds Aruna, who would like to manufacture both dress shirts and casual shirts in the future.
While Babylon and Dressmen are content with their present scale of operations in shirts, the smallest among the four, SQ Group, with 8 sewing lines and 250 sewing machines, will add another 12 lines by the end of 2014. “Today we are very small in shirts but we are going to grow big in shirts, targeting a turnover of US $ 100 million in shirts alone. To achieve this, our entire shirting facility would be shifted to the new upcoming green facility, in our SQ station and later down the line an additional 40 sewing lines would be setup, with a capacity of one million shirts per month,” shares Aruna. Since the focus is on doing high-end formal shirts, SQ Group is in the process of designing and planning new sewing lines with quick response abilities, for which the company is working with an Indian consultant and various machinery suppliers.
The biggest company of the four in terms of the number of machines, the BSA Group, would be setting up a new facility with 1,500 sewing machines which will be ready in the coming 2-3 months as the company has completely stopped outsourcing shirts from any other company and has also shut down its rented facilities. “When you are working with Walmart you have to be very precise in terms of the compliance requirements and after these recent incidents, we completely changed our mode of operations and factory layouts,” added Sarwaruzzaman Khan. BSA Group has invested Tk. One crore in adhering to the recent changes Walmart has asked all its vendors to comply with.
All the companies agree to the fact that the high value formal shirts manufactured in parts of Europe and more specifically Eastern Europe, are using fabric which is majorly of Italian and German make, which is actually the key differentiator in cost, as the variation in the manufacturing setups and the technique may not be as much.