FW
Mumbai based textile manufacturer, Century Textiles has declared its unaudited financial results for the quarter ended on December 31, 2016. Following are the excerpts from the Q3 results:
Net profit stands at Rs 13.9 cr vs loss of Rs 8.5 cr (YoY); Total income recorded is down by 7.2 per cent at Rs 1962 cr vs Rs 2114.4 cr (YoY); EBITDA is up by 36.5 per cent at Rs 214 cr vs Rs 157 Cr (YoY); and EBITDA margins stand at 10.9 per cent vs 7.4 per cent (YoY). The stock is trading flat with mixed sentiments after the Q3 results, witnessing spurt in volume by more than 1.41 times in Tuesday’s trading session.
Century Textiles & Industries Ltd is currently trading at Rs 857, up by Rs 0.5 or 0.06 per cent from its previous closing of Rs 856.5 on the BSE. The scrip opened at Rs 860.4 and has touched a high and low of Rs 870 and Rs 841.9 respectively. So far 2282464(NSE+BSE) shares were traded on the counter. The current market cap of the company is Rs 9566.73 crore.
The BSE group 'A' stock of face value Rs 10 has touched a 52 week high of Rs 1037.25 on 01-Nov-2016 and a 52 week low of Rs 403.8 on 29-Feb-2016. Last one week high and low of the scrip stood at Rs 862.8 and Rs 817 respectively. The promoters holding in the company stood at 47.75 per cent while Institutions and Non-Institutions held 23.21 per cent and 29.03 per cent respectively. The stock is currently trading above its 100 DMA.
The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) has urged factory owners not to display photos of the workers sacked or suspended for their alleged involvement in labour unrest. It may be remembered that in December last, factory owners fired or suspended 1,600 workers for their alleged links to unrest in the manufacturing hub of Ashulia.
Some companies posted pictures of those employees on factory walls for easy identification, claimed Siddiqur Rahman, president of BGMEA. This suspension and subsequent identification of those workers were later heavily criticised by rights groups both at home and abroad. The BGMEA chief was speaking at an emergency press conference at the association's office in Dhaka to discuss the current situation as a volatile global situation and some domestic challenges are having an impact on the sector.
Rahman requested the concerned factory owners not to display the photos of terminated or suspended workers as the law doesn't support this practice. As the units resumed operations after two weeks of deadlock, all suspended and sacked workers have been given their dues and salaries as per the labour law, he observed.
The growth of garment exports from Bangladesh declined 3.53 per cent year-on-year in December last year due to a volatile global situation coupled with domestic challenges including the chronic crisis of gas and power. Additionally, Brexit, currency swings and the US elections did impact apparel exports from Bangladesh, Rahman said.
In July-December this fiscal year, garment exports grew only 4.37 per cent year-on-year to $13.7 billion; at least 12.25 per cent annual growth is required to achieve the export target of $50 billion by the end of 2021. Garment shipments to the UK, the third largest export destination for Bangladesh decreased 5.19 per cent as demand weakened in early signs of Brexit's impact on the British economy.
"The draft proposal of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Version 2.0 also includes ‘Sustainable Development Goals’ as a part of a bigger agenda in the RMG landscape with the help of development partners. ‘Version 2.0’ comprising of the government, BGMEA, ILO, trade unions and global brands, is likely to replace the two buyers’ groups Accord and Alliance when their readymade garment sector safety initiatives expire in July next year."
The draft proposal of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Version 2.0 also includes ‘Sustainable Development Goals’ as a part of a bigger agenda in the RMG landscape with the help of development partners. ‘Version 2.0’ comprising of the government, BGMEA, ILO, trade unions and global brands, is likely to replace the two buyers’ groups Accord and Alliance when their readymade garment sector safety initiatives expire in July next year.
The new initiative, however, will delete the terminology ‘legally binding’ from the present article of Accord and Alliance when it comes into force. The BGMEA formed a five-member committee in October last year to develop a strategy to cope with the situation following the expiry of the Accord on Fire and Building Safety in Bangladesh, the platform of European buyers, and the Alliance for Bangladesh Worker Safety, the platform of North American buyers, in 2018.
Work in progress
The committee recently prepared some articles of association for new initiative saying that the steering committee of Version 2.0 would be constituted with representations of BGMEA, ILo, Department of Inspection For Factories and Establishments, trade unions and brands. The steering committee will appoint a qualified CEO to oversee the operations of Version 2.0.
Under the new initiative, factory assessment would be done on an individual basis and due to failure of remediation in any particular unit would not impact other production units belonging to the same group. Laws of land will be applicable regarding closure of factories, compensation to the workers and penalty to the factory owners, the draft strategy said. As per the BGMEA draft, Version 2.0 will be registered in Bangladesh under the relevant act.
Slated timelines
It proposed that for the initial period (June 2018–June 2020) signatory buyers will continue their contributions but at a reduction of 50 per cent of the annual dues that they have been paying in to the Accord and the Alliance since 2013 as the vast majority of remediation will have been completed and only some follow up would be pending. From 2021, Version 2.0 will become fully self-financing and contributions by brands would be discontinued, the draft said.
Enhancing safety
The BGMEA committee proposed that third-party auditors, having prior experience on audit and certification with the Accord and the Alliance, will be hired for conducting all structural, fire and electrical audit and the new factories will have to pay for their inspections based upon the square footage of their facility. Through credible safety inspections of the new factories and monitoring of the old ones would be carried out by skilled personnel based on internationally recognised workplace safety standards and national standards.
It may be recalled that after the Rana Plaza building collapse, which killed more than 1,100 people, mostly garment workers, in April 2013, North American retailers, including top brands Walmart and Gap, formed the Alliance and European retailers formed the Accord undertaking a five-year plan, which set timeframes and accountability for safety inspections and training and workers’ empowerment programmes.
The Accord has so far conducted initial inspections at 1,600 factories while the Alliance inspected 759 factories. At the same time, under the National Action Plan (NAP), the Bangladesh Government with the collaboration of the International Labour Organisation (ILO) inspected around 1,500 factories.
During the inspections, 148 factories were sent to a government-set review panel for the decision as the inspection teams found critical safety issues in the units. Of the 148 factories, the review committee, which is comprised of representatives from the government, Accord, Alliance, Bangladesh University of Engineering and Technology and the BGMEA, shut down 37 factories while closed 42 units partially.
Marking the best rally of cotton in six months, Chinese buyers have, this year, committed to purchase almost five times more American cotton than at this time last year, the US government has said in a report. With the pledge, the price of the commodity is heading for its biggest monthly advance since July last year. Hedge funds are positioned for more gains, holding the second-most bullish wager ever.
American growers are expected to ship the most cotton since 2013, data from the USDA reveal. Sales growth is being driven by purchases in Indonesia and Vietnam as well. While rising demand has sparked two straight years of rallies, futures in New York are still trading about 65 per cent below a record set in 2011, leaving the fiber at affordable levels for consumers.
The net-long position in cotton rose 3.2 per cent to 87,341 futures and options in the week ended January 24, a data published by the U.S. Commodity Futures Trading Commission three days later show. That was just shy of an all-time high of 90,215 contracts set on January 10, according to the figures, which go back to 2006.
Cotton traded on ICE Futures U.S. in New York climbed 2.5 percent last week. Prices added 0.3 per cent to 75.06 cents a pound on Monday and are up 6.2 per cent this month. Futures touched 75.37 cents on January 5, the highest since August.
Consumption will probably outstrip production by 1.24 million metric tons this year, Cotlook, a Birkenhead, England-based research company, said last week. That can help to erode global stockpiles, which the USDA estimates at 90.6 million bales, each weighing 480 pounds (218 kilograms).
The third edition of the Gallery held at Areal Bohler drew to a close with a positive response. The exhibition held from January 28 to 30 saw more than 600 visitors at the venue during the weekend. With satisfactory results, the Igedo Company can take positive stock of the CPD order weekend.
Visitors browsed the 750 international brands spread over 11,150 metres. Particularly noticeable was the high quality of visitors that contribute to the overall positive rating of the event. Ulrike Kähler, Project Director of Gallery said they were delighted to continue positioning the Gallery as a hub for the international fashion industry with their staging at Areal Böhler Düsseldorf. The various segments offered by Gallery and the resulting, constantly revised and inspiring brand mix comprising strong quality brands and new collections is what makes the show so attractive, she claimed.
For the first time, the biggest segment Gallery Evening and Occasion also kicked off concurrently with the other segments. The Gallery Evening and Occasion welcomed visitors with a broad-based international portfolio viz evening and occasion wear, dresses, shoes and handbags.
The three-day with extended opening hours also received praise. With high hopes the organizers have decided to conduct the next edition of Gallery in the same manner in summer 2017 from July 22 to 24.
The Union Textiles Minister Smriti Irani inaugurated the first ever Apparel and Garment Making Centre in Meghalaya, near Ampati in South West Garo Hills. She was accompanied by the state’s chief minister Mukul Sangma in the presence of Union Minister of state for Home affairs Kiren Rijiju.
Dedicating the centre to the people of Ampati in particular and to the state as a whole, the minister said that the project was testimony to the true convergence of efforts of Central and State governments. She said that Centre will create employment opportunities for both men and women of the region, thereby empowering them economically.
Irani informed said her ministry is implementing projects worth Rs 70 crores in sericulture and weaving sectors for Meghalaya alone. The minister said that around Rs 32 crores has already been sanctioned for the state of Meghalaya, for promotion of handlooms. She appealed to the youngsters, particularly women, to leverage their handloom legacy and become enterprising entrepreneurs. As the region is well-known for regional dyes, the minister urged the weavers of the state to register with India Handloom Brand, which she said can directly connect the weavers with big multinational companies.
The sprawling Apparel and Garment Making Centre, covering an area of 45,000 sq. ft, has been set up at Hatisil near Ampati, at a cost of approximately Rs 14.26 crore under the North East Region Textiles Promotion Scheme (NERTPS) of the Ministry of Textiles. The centre has three units, two of them housing 105 sewing machines each and the third one having seventy machines.
GSP helped Pakistan’s exports to the European Union soar 37 per cent during the last three years. Export of machinery, chemicals and dyes from Europe to Pakistan rose 14 per cent. These products are required to meet the growing demand for Pakistani products, particularly textiles and garments, in the European markets.
In December 2013, the EU awarded GSP Plus status to Pakistan, giving zero tariffs to 20 per cent and preferential rates to 70 per cent of the country’s exports to the region. The status is valid till 2017. The GSP Plus status is expected to boost Pakistan’s exports to $2 billion in addition to creating jobs opportunities. The biggest beneficiary of the tax concessions is the textile and clothing industry, constituting over 60 per cent of Pakistan’s exports. The country’s rivals Bangladesh and Sri Lanka are also enjoying duty-free access to the 28-member EU bloc.
Annual bilateral trade between Pakistan and the EU is more than $7 billion. The balance of trade is nearly equal. Pakistan’s main exports to the EU consist of textile and leather products and medical equipment. Under GSP Plus, Pakistan has to comply with all the 27 United Nations conventions on human rights and labor and environmental laws.
In its zest to establish a textile park, the regional office of Maharashtra Industrial Development Corporation's (MIDC) has acquired 113 hectare land at Sayane near Malegaon. A proposal for infrastructural development has been sent to the head office for approval, it is learnt. Once the approval comes in, the MIDC will float tenders for developing infrastructure. The proposed park is expected to attract investment and provide job opportunities to the youths.
Briefing about the same, a senior official from the MIDC said the Corporation has already acquired 113 hectares at Sayane near Malegaon that will house only textile units. The proposal has been sent to our head office in Mumbai for approval. The Corporation is in the process of developing infrastructure. A proposal worth Rs 15 crore to develop infrastructure like roads, water supply, streetlights, among others is already in place.
Apart from this, the MIDC is also mulling building a Common Effluent Treatment Plant (CETP) project for the textile units. The CETP project is estimated to cost Rs 10 crore.
To spur growth of local fashion and tailoring industry, a traders’ lobby group in Kenya has urged the government to waive duty on all textile material imports. Kenya Traders and Importers Association chairman Benson Mutahi said local players in the sector were at a disadvantage because they buy textiles with a 16 per cent value-added tax as well as a 25 per cent import duty making up 41 per cent in taxes.
Mutahi said Chinese clothes dealers were selling readymade clothes from Chinese factories cheaply and directly to Kenyans, thereby short-changing the taxman. Chinese dealers buy clothes from their factories where they enjoy 40 per cent tax rebates but when Kenyans go to buy clothes in China, we are made to buy through agents at a higher cost including taxes, he observed. This has made it difficult for local tailors and dressmakers to compete effectively against cheap imports.
However, the call is unlikely to sit well with local textile manufacturers, spinners and cotton growers in a bid to revive the ailing industry. A recent move by Treasury secretary Henry Rotich to encourage textile factories in the export processing zones (EPZs) to use 20 per cent window to sell their products in Kenya has also hit local clothes-making business. EPZ factories enjoy the 41 per cent tax rebate and now the government has allowed them to sell 20 per cent of their products locally. But since the Association cannot access EPZ factories, it has left dressmakers and tailors at the mercy of importers, he said.
The Indian textile industry could generate 50 million jobs by 2025, a large majority of them for women. The domestic market could account for a 2.5 times jump and even foreign exchange earnings could go up to a similar size by 2025.
Challenges in meeting these targets include small scale, fragmented clusters, restrictive labor laws and unpredictable wage movements, high operating costs due to taxation and subsidy structures, market access barriers in key markets such as the EU and the US, poor infrastructure, logistics delays, and lack of product development and process improvement.
States could promote infrastructure with plug and play facilities. Different operating models can be built, such as the hub and spoke model, or notified apparel parks. The China model of VAT rebates can be adopted. The exempt-credit-offset method of carrying forward unadjusted rebates can encourage hybrid domestic-export models. Logistics support is essential, especially integration with Bangladesh through single-day transit. Shipping turnaround times must be improved and adequate hinterland connectivity built with key textile parks.
The free trade agreement with the EU would be of considerable benefit. An added provision could be to treat the poor states of India on a similar basis as least developed countries.
