FW
Vardhman Textiles’ consolidated revenue for Q2 registered a 1.9 per cent year on year increase. Ebitda for the quarter fell by 36.6 per cent year on year with a corresponding margin contraction of 789 bps. Ebitda margin for the quarter stood at 13 per cent. This marginal contraction was led by higher cost of material consumed as proportionate to sales.
Profit after tax for the quarter showed a year on year decline of 71 per cent. This was mainly on account of a sharp decline in other income from the corresponding quarter of last year.
Vardhman is among the biggest names in textiles in India, with one of the largest spinning and fabric capacities. This textile giant has rapidly modified its business strategies to carve its own niche regardless of the presence of several small- and medium-level players with the shortest lead times.
The company has been able to sustain its volume by adding new customers and shortening production lead times which was possible due to a big in-house production capacity from yarn to fabric.
The product basket is diversified. It is now not only in cotton but creates blends like cotton tencel stretch, cotton modal super stretch and difficult products like bi-stretch.
Surat has seen a 40 per cent drop in polyester production and over five lakh job losses. Surat is the polyester capital of India. After demonetisation, consumers and businesses drastically reduced their textile purchases and GST saw the tax rates for many textiles vastly increase. The lack of buyers and higher tax rates caused huge numbers of textile manufacturing workers to become unemployed and also slowed down production.
A year ago Surat produced 40 million meters of polyester a day, the figure now stands at only 25 million meters. Most migrant workers have returned to their home states. Factories that once ran for 24 hours a day only have two shifts daily now. The entire polyester value chain from yarns to garments is under pressure. The withdrawal of high-value banknotes put sudden brakes on the disposable income of consumers, with grave consequences.
Textiles have been almost erased from customers’ priority list. Shops which usually gear up for the forthcoming wedding season wear a dull look. Surat ushered in the polyester revolution in the country, offering saris and dress material at Rs 125. Surat boasts of 7,00,000 looms that make the grey fabric bought by 65,000 traders. The grey fabric would go to the 400 dyeing and processing houses and get routed to embroidery units for embellishments for the final garment.
Russia wants to increase exports of technical textile and nonwoven products. Companies are beefing up production capacity accordingly. For example, Leading Russian manufacturer Inmed is building a new facility that will be used for the needs of the technical textile, medical and chemical industries. Total production capacity of the new plant will be 1.5 million linear meters of membrane materials and 6, 00,000 innovative functional materials, based on nanofibres, per year.
Vtor-Com, a leading producer of technical textiles and nonwovens, will increase the production of nonwovens and fibers by 50 per cent. The company aims to increase the annual output of nonwoven needle-punched fabrics up to 18 million sq mts. In addition, the company plans to produce three million running meters of nonwoven fabrics a year and will expand the production of synthetic polyester fibers.
Consumption of technical textiles in Russia has significantly increased, mainly due to an increase in demand from the military, medicine and pharmaceutical industries. In addition, demand for Russian textile materials is also growing abroad. These include the EU, former Soviet countries, including the CIS states, China and the Asia Pacific region.
Russian producers are aiming for higher exports to Germany, where demand for innovative textile materials has been steadily growing since the beginning of the millennium.
Marks and Spencer has shut down six of its larger UK stores. A further 45 are being downsized or converted to food-only. More than 50 loss-making international stores will be shut. The retailer’s half year profits fell 5.3 per cent.
However, total revenue climbed 2.6 per cent year-on-year and overall like-for-likes for the first half was up by two per cent. UK sales and food sales went up by 2.7 per cent and 4.4 per cent respectively. On a quarterly like-for-like basis, UK sales improved from a 0.5 per cent drop to 0.1 per cent, while food remained the same at 0.1 per cent.
As for the clothing and home division, like-for-like sales went down 0.1 per cent in the second quarter – although this was an improvement on the 1.2 per cent drop in the previous quarter. While like-for-like clothing and home sales fell 0.7 per cent overall in the first half, the retailer’s decision to cut the number of clearance sales saw full-price sales surge by 5.3 per cent.
Meanwhile, online revenue lifted 5.7 per cent and international profits trebled as a result of decisive action to reduce losses in owned markets, as well as favorable currency movements.
For 50 years Lenzing Modal fibers and MicroModal branded fibers have been a permanent feature in international collections of fashion industry. They are particularly successful with figure-hugging products such as day and night wear and home wear. Baby and children’s clothing could be a future market for Lenzing Modal fibers.
These fibers are produced using beech wood and are bio-degradable. Lenzing has an eco-friendly production site with high recovery rates of process ingredients and low air emissions. The advantages of adopting the Modal production process are clear. Customers benefit from the very good processability which makes it easier to produce high quality yarns. Different climatic zones, which can lead to problems with processing, play a less important role. Even different spinning technologies play a lesser role when processing the new Lenzing modal fibers. Moreover higher production efficiency could be reached in the spinning mill.
Lenzing is aiming for specialty fibers to make up 50 per cent share of their turnovers by 2020. Lenzing continues to be one of the technological leaders in the field of Modal production even after 50 years. The company is working continuously on improvements to its processes and has set further benchmark in Modal production.
Global Organic Textile Standard (GOTS) was held as a precursor event to the Organic World Congress (OWC), being held in New Delhi, November 9 to 11, 2017. Issues such as labor rights, living wages and land grabs were on the agenda at GOTS.
Delegates agreed wage equality was a vital key towards textile standards including a need for living wages and collective bargaining, but it was stressed that most standards still focus on minimum criteria only. Only a third of organic standards make even vague references to living wages and the question was raised if the low prices paid for organic textiles will ever allow for supply chain actors to pay living wages in certain regions.
Debates on the value of certifications and auditing at the GOTS event were intense, with information on how non-conformity is covered and dealt with from an auditor’s perspective. Audits were described as a diagnostic tool for what is wrong.
This led back to a discussion on the value of due diligence to go beyond the limitations of standards in addressing and mitigating problems, and to bring apparel brands into taking more responsibility than simply checking they have the correct certificates. The event concluded with the observation that social criteria in sustainability standards help improve workers’ situations, but social standards need to be improved with measurable criteria as a diagnostic tool.
India’s textile sector is likely to touch $250 billion in the next two years. Right now it is worth $150 billion. The textile and apparel sector is the second largest employment provider in the country and employed nearly 51 million people directly and 68 million people indirectly in 2015-16. The sector accounts for 10 per cent of the country’s manufacturing production, five per cent of its GDP and 13 per cent of export earnings.
However, demonetization and GST have hit smaller players hard. The number of workers affected due to closure of cotton and manmade fiber textile units (bigger units that comprise the non-SSI segment of the industry) during 2016-17 was 4,356 on account of the closure of 18 units.
During the previous two years, the numbers were 7,938 workers affected by the closure of 27 units in 2015-16 and 5,384 workers affected from the closure of 21 units in 2014- 15, taking the cumulative figure to over 17,600 workers impacted by the closure of 67 units in the last three years.
GST has hit small and medium players in textile hubs such as Surat, Bhiwadi and Ichalkaranji. Moreover capital goods firms are struggling as most of the downstream sectors are saddled with excess capacity and low demand.
The textile and handicrafts industry constitutes an important segment of the Indian economy. It is one of the largest employment generators after agriculture. The sector employs about seven million people. The sector is strategic from the point of view of low capital investment, high ratio of value addition, and high potential for export and foreign exchange earnings for the country.
It is estimated that out of the total number of persons employed in handlooms, handicrafts, and sericulture, about 50 per cent are women. There are more women in the household industry than in the registered small scale or cottage units. However, in the organised sector, the percentage of women workers is extremely low, with the exception being garmenting.
Handlooms and handicrafts are a major source of income for rural communities in general and for rural women in particular. Efforts are being made to revitalize the cottage based traditional sectors like handlooms, handicrafts, jute and wool through an integrated approach covering the entire value chain. To provide encouragement to textile manufactures and farmers of raw materials, incentives are being provided like a minimum support price for cotton farmers, upgrading the technology for handloom weavers and providing centers for trade facilitation.
Morocco is working hard to become a sourcing hub for Europe’s fast fashion industry. The North African country has expertise in denim, wovens and knitwear. The textile and clothing industry is an important one for Morocco, employing over 1,83,000 people, representing 26 per cent of the country’s industrial jobs, and produces 1.1 billion garments every year.
European retailers are interested in sourcing from Morocco, particularly as prices in Asia have increased. Morocco is already a key sourcing market, along with Portugal and Turkey, for Spanish giant Inditex, which is renowned for its ability to get trend-led product into stores quickly.
As part of an ambitious strategy to build the industry up by 2020, leading Moroccan manufacturers have been chosen to act as locomotives, guiding and advising smaller companies on how to modernise and improve production capabilities. The sector has also been divided into a series of specialist areas known as eco-systems, which include fast fashion, knitwear and denim. Each area has a different focus – denim, for example, has been set the task of creating 14,800 new jobs by 2020. However, there is more to Moroccan sourcing than speed. Manufacturers have technical expertise, there’s a lot of knowhow. The quality of the product is good, as is the level of social compliance, which is very important for retailers.
Birla Cellulose has emerged number one in a ranking of 11 global viscose rayon producers. The ranking has been done by the NGO Canopy from the sustainability angle. These 11 viscose rayon producers represent 70 per cent of global viscose production.
Birla Cellulose uses sustainably sourced fiber for its pulp operations. It adheres to strict standards of global fiber sourcing, which focus on protection of high conservation value and ancient and endangered forests. The company engages with the entire textile value chain and plans to further support traceability, certifications and sustainable innovations.
Canopy found Birla Cellulose’s current supply chains indicate that the risk of sourcing wood from ancient and endangered forests or other controversial sources is low. Canopy works for the conservation of ancient and endangered forests, in particular, high conservation value forests. It ranked the world's top viscose producers on their progress on eliminating endangered forests from their supply. This year the ranking features five new criteria, including priorities on conservation solutions and transparency.
The report is highly anticipated by over 105 global brands, retailers and designers that are part of the Canopy Style initiative. It has become a go-to resource for fashion brands since it was first published in 2016
