For making inroads into target markets by leveraging basic synergies

Anil Sasi

Stitch in time


Spreading out

manufacturing to become `full-service providers'

To beat

the practice of global players' bid to cut down vendor base

New Delhi, July 2

The `speed to market' concept is gaining currency with Indian textile export firms as they try to leverage cross-country synergies to set up bases closer to target markets of the US and the EU with a view to bringing down export lead-time.

Spreading out the manufacturing base across a number of countries to become `full-service providers' is also being attempted to win over big global buyers, who are drastically cutting down vendor base to selectively source from a smaller number of niche suppliers with diversified production facilities.

One of the players gaining turf in the major markets using the diversification plank is House of Pearls, an integrated textile player with a chain of manufacturing facilities and offices across India, the UK, Bangladesh, Indonesia, the US and China. The firm procures, designs, processes and warehouses apparel items through a cluster of 10 of his own units and 150 partner factories across the globe.

Through the diversified model, it is able to leverage this advantage to ramp up production at short notice when it gets enlarged orders. The company has also invested in warehouses in the UK and the US to move packaged, ready-to-sell goods at short notice after processing them. Supplying to big retailers such as Wal-mart, JCPenney, GAP, Banana Republic, George Kohls, M&S, Espirit, Liz Clairborne and Next, the company has a team of in-house designers based out of the US who work on material sourced from the firm's supply outposts in line with changing global trends.

The company has clocked revenues of over Rs 800 crore last fiscal, with a topline target of Rs 1,000 crore for the current year. "We put our eggs in many baskets, leading to a very scalable model," says the Group Chairman, Mr Deepak Seth.

Others taking the `speed to market' route include the Rs 150-crore Zodiac Clothing Company Ltd that had earlier acquired a shirt manufacturing facility in the UAE, mainly with a view to leveraging supply chain efficiency in its target EU markets. Zodiac retails its brand in the high-end chains such as Bijenkorf in Holland and Globus in Switzerland and has been eyeing markets such as Germany and France.

The Ludhiana-based integrated denim solutions provider Malwa Industries Ltd is also toying with the same strategy. It acquired Third Dimension Apparels in Jordan, which has duty-free access to the US and Europe for a consideration of $6 million. The company has also picked up a majority stake in an Italian firm.

Textile firm GHCL recently announced taking over Rosebys, a leading retail home-textile chain in the UK. GHCL had earlier acquired home textile company Dan River in the US, a move that enabled it to utilise the firm's existing marketing arrangements of around $250 million.

Related Stories:
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`Textile exports to US, EU show big growth'
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Textile exports up 26 pc in first year of post-quota regime

(This article was published in the Business Line print edition dated July 3, 2006)
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