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GST has many weavers and handloom organisations worried. Traditionally, the handloom sector has largely been exempt from taxation in India but that changed since GST came into effect last year. Under the new GST rules, all input materials used in handloom production, in addition to the finished cloth, attract a tax of five per cent to 18 per cent, which is a significant burden on weavers.
Earlier, the tax only applied to finished cloth. Now, everything is charged, the cloth, the thread. Besides the obvious financial burden of GST, many weavers are upset about other provisions under the new tax law. The existing transport services are now demanding a GST number for transporting their cloth anywhere within the country; even if the weavers choose to transport the cloth themselves, they have to produce an e-way bill, which is generated digitally. Individual weavers are also required to maintain regular accounts and file tax returns.
A small weaver in a village, with little education, who has known nothing but weaving all his life, is supposed to get an e-way bill done, having little computer smarts. Many weavers and artisans are finding it difficult to migrate to the new GST system or don’t have an income that would justify the effort it would take to comply with it.
"With annual sales of $12.4 billion, VF Corp has the potential to bring in dramatic shift not just in its operations but across the value chain. In order to do so, the company created a complex initiative called ‘Made for Change’, outlining aspirations for advancing environmental and social improvements across its business, portfolio of brands, global supply chain and communities worldwide. Letitia Webster, VP-global corporate sustainability at VF Corp, opines the mission began in 2011 when Eric Wiseman, then chairman of VF, asked her to start the corporate sustainability program for the company. Initial goals were set and achieved."
With annual sales of $12.4 billion, VF Corp has the potential to bring in dramatic shift not just in its operations but across the value chain. In order to do so, the company created a complex initiative called ‘Made for Change’, outlining aspirations for advancing environmental and social improvements across its business, portfolio of brands, global supply chain and communities worldwide. Letitia Webster, VP-global corporate sustainability at VF Corp, opines the mission began in 2011 when Eric Wiseman, then chairman of VF, asked her to start the corporate sustainability program for the company. Initial goals were set and achieved. The company set a carbon reduction goal of 5 per cent in five years and they actually reduced carbon footprint to about 12.5 per cent, saving millions of dollars.
With sustainable thought process in mind, VF, with brands such as Wrangler, Lee, Vans, The North Face and Timberland, came to the conclusion that in order to truly become a much more sustainable company and industry three things needed to be achieved: moving the linear model to the circular business model, understanding the material impacts that were driving and impacting the business and getting all of VF’s 65,000 associates and the millions of consumers who buy its products to help in moving in the right direction. Webster assed sustainability and responsibility became value driver and by creating a value, facilitating responsibility in the marketplace, VF will then create transformational impact. That is really fundamentally at the core of this strategy.
Made for Change
Fundamentally, VF Corp believes environmental waste is financial waste. They have set out a goal that by 2020 all of their distribution centers will be zero waste. The company is saving significant amounts of money at every single distribution center that moves to zero waste. They want to bring these results to the ultimate consumers as well. In order for us to move as an industry, as a planet, as a world—and everything that is important to us—if we are going to move in that direction, it has to make business-sense, Webster said. This can’t be a philanthropic effort, it absolutely has to fundamentally be embedded into business strategy and business plans and help drive the business—and help it be more efficient and reduce risk. Overall, VF has committed to reducing its global environmental footprint by 50 per cent from farm to door by 2030, which is about science-based targets.
VF is working closely with supply chain partners and our suppliers to announce something next year. The second aspect is focussed on materials. VF was a founding member of Sustainable Apparel Coalition, which developed the Higg Index, a standardised methodology for measuring the environmental impact of materials. According to Webster, the company integrated that into its material selection process and is now using it to help brands identify more sustainable materials.
Circular business models
The company is planning to enhance the use of used clothing or renting clothes. The company itself is looking at renting, since it does have products that are high value that consumers don’t need to buy because they use them one or two times a year. A number of pilots are being explored and could be launched in the next few months. The second area of focus of the Made for Change initiative, dubbed Scale for Good, looks at what’s really impacting the business and where VF has some of the greatest impacts. In addition, VF is looking at sustainable agriculture practices, reforestation and conservation efforts. On the materials end, a key is the use of recycled materials following the Higg model. The company has a goal to increase the amount of recycled materials, specifically nylon and polyester, by 50 per cent.
The third pillar, according to Webster, is around work and wellbeing, noting that the apparel industry is often not recognised as the best when it comes to work and wellbeing and VF is in a better position to bring a change. Through its responsible sourcing efforts, they are making tremendous headway in trying to create and share best practices in the industry and improve the way that workers are treated and elevate those best practices through supply chain.
The Cotton Association of India (CAI) has lowered its estimates for cotton crop for the ongoing 2017-18 crop year at 367 lakh bales. The association has released its January 2018 estimate of the cotton crop for the year 2017-18 beginning from October 1, 2017. CAI has lowered its estimate for the ongoing season by eight lakh bales. The reason is severe pink bollworm infestation.
In accordance with the advise of scientists, farmers in several areas, particularly in Maharashtra and Telangana, have uprooted their cotton crop without waiting for further pickings. The projected balance sheet drawn by the CAI estimated total cotton supply for the season at 417 lakh bales of 170 kg each, including the opening stock of 30 lakh bales at the beginning of the season, and the imports which CAI estimated at 20 lakh bales for the 2017-18 crop year.
Domestic consumption is estimated to be at 320 lakh bales while CAI estimates exports for the season to be 55 lakh bales. The carryover stock at the end of this season on September 30, 2018, is estimated to be 42 lakh bales. CAI estimates cotton arrivals up to January 31, 2018, at 211 lakh bales compared to 157.75 lakh bales during the same period last season.
Production of raw cotton in Iran during the ongoing year is expected to touch 1,60,000 tons. This would yield between 45,000 and 50,000 tons of ginned cotton. In the current Iranian year beginning March 21, 2017, around 1,24,550 tons of raw cotton had already arrived in the market and bought by ginning factories.
Last year, Iran’s ginned cotton production was around 40,000 tons. Iran’s domestic textile industry needs around 90,000 to 1,00,000 tons of cotton annually, and more than half of this demand is met through imports. In the first 10 months to January 20, 2018, Iran imported nearly 56,000 tons of cotton. Currently, there is a 10 per cent tariff on cotton imports.
Iran turned from being a cotton exporter to an importer during 2001-16, when the area under cotton cultivation declined more than 75 per cent to 70,000 hectares from 3,00,000 hectares. The low price of cotton compared to other agricultural products is one of the reasons for the drop in cotton cultivation. However, land under cotton cultivation has grown by six per cent in the current year. Iran’s apparel exports in the last fiscal year were up 2.6 per cent in volume and 3.9 per cent in value when compared to the previous year.
Wool auction markets in Australia saw a positive trend. The key driver behind the week’s push was new demand from China. Australian dollar exchange rate against all major currencies, particularly the US dollar, was also a factor. US dollar strengthened relative to Australian dollar by nearly three per cent.
While the price rise during the week was widely expected among the trade, the velocity and magnitude of the gains were not forecast and surprised most. It was common knowledge around the show floors pre-sale that new business had been written and many orders remained unfulfilled, as exporters were reticent to expose themselves to an open short position. As the week progressed, and buyers’ stocks moved back into positive territory, some profit taking did occur and new orders were concluded mid-week, somewhat satisfying prompt demands.
Better wools across all wool types were still being well sought after and it was only the average to inferior descriptions and lots showing hard to place test measurements that displayed this nervousness. It was a staggering week of good fortune for wool growers who were selling. The price rises were in many cases extraordinary especially for those ultra fine types finer than 16.5 micron.
Discussing the company’s profile and product, Saurabh Bihani, Director, RIT says “RIT stands for RI Texsolutions. We provides solutions from knitting to finishing of the garment. We have a tie up with about 13 big brands internationally. In essence, we are a one stop destination for providing all garmenting relates solutions.” The company is into day to day consumables used from knitting through to garmenting. This year, they came up with products from Wayken. We showcased our products at GTE expo.”
Discussing GTE, Saurabh says, “GTE has been a good platform for new launches. We are penetrating deep into the domestic market with Wayken this year. We have knives, cutters, cutting machines and much more. The brand is from Taiwan. We have been with Groz Beckert since 1961 when it first launched in India.”
Evaluating the country’s garmenting sector Bihani says, “With China becoming expensive and the Indian market becoming more organised post the introduction of reforms, we see extensive growth outlook for the country in 2018. The share of the organised market will increase and only people who are doing right things in a right manner will survive. This will promote high quality standards in all aspects. We expect more companies to purchase branded machinery. This will help in efficiency and productivity.”
He says, “We deal with imported machinery only because they cannot be matched in quality. India can’t match the level of foreign R&D. The good thing is many big global companies are setting up their production units in India. Groz Beckert has setup their plant here. So it is a good sign. Indian manufacturers enter tie up with companies which are planning to set up their base here.”
Discussing Make In India he says, “India is a trading country. We lack discipline like Western countries. They conduct extensive R&D and get equal support from their government. This ecosystem promotes growth. Fortunately in India we have people who are capable of bringing about this change, but they do not get help for their growth. Besides there are mind-set issues.”
Lamenting the need for skilled labour Saurabh says, “This is one of the major issues the sector is facing currently in India. This can be sorted only if the government and industry work together towards bringing about an improvement in labour laws.”
Discussing their future plans he says, “Bringing quality machinery to India has been our primary focus. We are doing that and will keep doing so in future.We believe in providing exceptional services too because selling machinery alone does not help the manufacturer and us. We try to sensitise people as much as possible.”
Last year was very successful for Hanes — driven by a strong active wear segment, acquisition integration and growing international businesses. Hanes is a global marketer of basic apparel. In 2017, Hanes focused on diversifying its business to be able to consistently deliver annual top line growth.
Hanes also announced Q4 sales growth of four per cent. Two per cent was from organic growth, barring sales accrued from acquisitions. This was the second successive quarter of organic growth for the company across each segments viz. innerwear, active wear and international segments.
Broad-based active wear demand was up three per cent for the full year, and has continued to drive the company’s top line. Organic active wear sales increased four per cent in Q4, while the acquisition of Alternative Apparel in October 2017 contributed $18 million in sales. Segment operating profit increased two per cent in Q4 and one per cent for the full year.
Segment net sales were up 34 per cent for the full year, driven by new store openings and strong consumer demand across all geographies. Global online sales increased 22 per cent in Q4, up in every geography. The company expects another strong year in 2018.
Supreme, an American yarn manufacturer has unveiled a yarn called Volt. It specializes in covering yarns and has evolved considerably over the decades. It began as an elastic-covering operation and changed over the years due to the raw materials used. In the late 1980s, Supreme started working with high-strength yarns and eventually moved into cut-resistant yarns.
The core of Volt is a highly engineered composite yarn. It evolved from working with military contractors and now is moving into a variety of areas, including healthcare and sportswear. The idea for Volt came from a bonded-thread product sold for flame-resistant mattresses.
The smart yarn got a huge response from various industries, including computer chip makers, car manufacturers, clothing manufacturers, hospitals and healthcare companies. It is gaining the attention of companies that want to move into smart fabrics and wearable technology.
The first products using Volt yarns are going into military garments that track the health of soldiers. The next round may move into the greater health sector with the innovation being used in hospitals and by doctors to monitor patients’ health, perhaps even alerting them to a spike in body temperature. Supreme is now partnering with several companies that want to incorporate Volt into their product lines for 2020 or 2021.
For the fourth quarter American brand Skechers posted a revenue of $970.6 million. Store base grew to 2,570 locations at year-end and saw impressive growth across the globe. Company-owned global retail sales in Q4 increased 25.8 per cent, with a comparable same store sale increase of 12 per cent globally. International wholesale sales increased 40.2 per cent.
The company reported profits of $179.2 million for the full year 2017. Record revenue was reported at $4.16 billion, an increase of over $600 million from the previous year’s sales. This was led primarily by a 23 per cent increase in the company’s international wholesale business and a 21.9 per cent increase in global retail business. Domestic wholesale grew 4.1 per cent. Gross margins for the year were up from 45.9 per cent to 46.6 per cent, although operating margins dropped a percentage point because of increased selling expenses primarily to support growth in Skecher’s international markets.
In the United States, Skechers is the number one casual lifestyle and casual dress footwear brand and the number second casual athletic footwear brand. The company’s outlook for the first quarter of 2018 is enthusiastic.
A Sakthivel has been elected vice chairman of the Apparel Export Promotion Council (AEPC) for 2018-19. Earlier, he was chairman in 1998, 2004 and 2012. He has steered projects like the Knitwear Technology Mission, the Sector Skill Council for Apparel, a national social compliance project for the apparel sector and several other initiatives for holistic development of the sector.
He is the founder president of the Tirupur Exporters’ Association (TEA). For his role in placing Tirupur on the world map as the main cluster for sourcing knitwear supplies from India, and his contribution to the apparel industry, he was awarded the Padma Shri in 2009. A guide and mentor to the Tirupur knitwear Industry, Sakthivel steered growth of exports from Tirupur from a mere Rs 15 crores in 1984-85 to more than Rs 27,000 crores in 2016-17.
He has also served as president of the Federation of Indian Exports Organisations (FIEO) and currently holds the position of FIEO chairman for the southern region. He is the first chairman of the Sector Skill Council for Apparel, Made-ups and Handlooms, which has the mandate to develop skills repository standards, evaluation criteria, and an accreditation system for creating employability in the apparel sector.
