The Hindu Business Line : Arvind plans Rs 150-cr push to garment export

THE Sanjay Lalbhai-controlled Arvind Mills is pumping in Rs 150 crore to boost its garment manufacturing business as the quota system unravels from January next year. The company has commissioned a new shirt manufacturing plant and is in the midst of setting up a new jeans plant and a laundry unit as it develops Bangalore as the hub for its garment export business.

The planned expansion will increase Arvind's annual garment manufacturing capacity, meant for export, to roughly 30 million pieces from the existing 5.5 million pieces, and significantly bolster Mr Lalbhai's business verticalisation moves, a top company official told Business Line. "We expect this expansion in garmenting to account for nearly 25 per cent of our total fabric capacity," the official added. The company, which is the world's third largest denim supplier and a key fabric maker in the region, is ramping up the garment production to drive its topline growth as apparel exports from India is expected to zoom in the wake of quota dismantling. "The garment business is likely to spur our topline as earnings from it is more significant compared with fabrics," official said.

Arvind with annual revenues of over Rs 1,500 crore, recently commissioned a new shirt plant with daily production of 7,000 pieces augmenting its existing production base of 2.2 million shirts annually and is about start work on another factory for denim jeans and trousers. At present, the company's garment export business is heavily skewed towards shirts which rakes about Rs 60 crore annually. Arvind had commissioned a jeans plant in Mauritius with an annual capacity of one million pieces more than a year ago. The laundry facility is in anticipation of a major upswing in the bottomwear manufacturing - both jeans and trousers.

The company, which had initially looked at Hyderabad to locate its garmenting expansion plans, later decided to consolidate operations in Bangalore from where it already carries out domestic branded apparel business. Apart from the opportunities thrown up by quota dismantling, Arvind's focus on garmenting is also driven by the fact that it needs insulation from the cyclic depressions that normally accompanies fabric business. Arvind's cumulative annual fabric capacity is estimated at 120 million metres with denim alone accounting for 90 million metres. "Ramping up garment production to 30 million pieces is an ambitious move and the company's skills in execution and stabilising the operations will be under scanner," an analyst tracking the sector said.

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