Garment exporter Ambattur Clothing is increasingly moving away from India as it finds better prospects outside the country. The company, which has an established manufacturing base in Bahrain, Jordan and Bangladesh, is scouting for acquisitions in Myanmar.

Ambattur Clothing, which has been in garment exports for over 30 years, once had 14 manufacturing facilities in the industrial area of Ambattur (Chennai), employing 13,000 people. Over a period of time, this has dwindled to four plants with 4,000 employees. Ambattur today contributes only about 25 per cent of the company's total annual production of 15 million pieces.

“We are slowly exiting India because we can't get people to sit in our factories. While the brains of our business (sampling, design and development) will still be located here, we see a very insignificant portion of manufacturing being done in India, simply because it is difficult to get good labour into a garment factory anymore,” says Mr Vijay Mahtaney, Managing Director.

Several years ago, Ambattur was considered to be far-flung. Today, Ambattur is an integral part of Chennai – with real estate and urbanisation taking over. There are many IT and auto companies here, all vying for the same labour pie, says Mr Mahtaney.

Moving to other parts of Tamil Nadu will not help, he says. “If you go down south, eventually that labour will also migrate to other industries.”

The exporter made a turnover of Rs 500 crore last year. A chunk of this came from Bangladesh and Bahrain; India contributed just Rs 150 crore – a steep fall from Rs 650 crore in 2008-09.

“Turnover from India will continue to fall. Profits here are just about 2-4 per cent; whereas abroad we enjoy 8-10 per cent. We see the overseas markets as the vehicle for growth.”

Ambattur Clothing set shop in Bangladesh in 2007, while it has been in Bahrain for 10 years now. The company has two manufacturing units in Bangladesh (through acquisitions) and a greenfield plant in Bahrain. It also recently started operations at a greenfield facility in Jordan.

“West Asia enjoys duty-free import status to America; imports from Bangladesh to Europe are duty-free entry,” says Mr Mahtaney.

While labour in West Asia may be more expensive than India, productivity is high. “It is chiefly expat labour from Bangladesh, Sri Lanka and India. They work longer hours and get paid more. Labour is disciplined; attendance and productivity are much higher.”

Ambattur Clothing employs around 9,000 people in its overseas factories.

“Myanmar is also a potential source of production. It is under-developed as it has shut itself off from the world. Therefore, labour is cheap and trainable. We are looking to buy factories here,” says Mr Mahtaney. “We could be there in 15 months.”

Hotel debut

Ambattur Developers, the real-estate interest of the company, expects to make its hotel debut in May next year with the launch of The Park Hyatt in Chennai.

The Rs 250-crore project is coming up at the corner of Velachery and Sardar Patel road.

While Ambattur Developers will own the 210-room premium hotel, it will be managed by Hyatt.

Ambattur Clothing ventured into the real estate and hotels business in 2007 with the formation of Ambattur Developers Pvt Ltd. It has already developed an IT park in Ambattur and a residential project in the city with Ceebros.

Ambattur Clothing also owned the apparel brand ColorPlus, which it sold to Raymond in 2002. On hindsight, Mr Mahtaney feels this was a wrong move. But he does not see Ambattur Clothing re-entering branded garments.

Related Topics