FW
Alok Industries has reported a 77.64 per cent fall in its net profit at Rs 9.72 crores for the quarter ended June 30, 2015, as compared to Rs 43.48 crores for the same quarter in the previous year. The company’s total income decreased by 8.33 per cent to Rs 3,446.62 crores for the quarter under review from Rs 3,759.96 crores for the corresponding quarter of the previous year.
Alok Industries evolved from a small trading business into India’s largest integrated textile player. It has a dominant presence in the cotton and polyester segments. It is present across various verticals of the textile value chain - from yarn manufacturing to garmenting.
Over the years, it has expanded into weaving, knitting, processing and home textiles. To ensure quality and cost efficiency it has integrated backward into cotton spinning and manufacturing partially oriented yarn through the continuous polymerisation route. It also provides embroidered products.
The company was established in 1986. The first polyester texturising plant was set up in 1989. The company sells directly to manufacturers, exporters, importers, retailers and to some of the world’s top brands.
A significant portion of Alok’s products is cotton based-manufactured from both organic cotton and regular cotton. There are blended and polyester yarn offerings as well.
Lakshmi Machine Works income from operations slipped marginally to Rs 564.19 crores at the end of the first quarter of the current fiscal compared to Rs 571.51 crores during the corresponding quarter of the earlier year. Its net profit also dipped from Rs 48.57 crores a year ago to Rs 43.86 crores at the end of the just concluded quarter.
Notwithstanding the dull investment climate LMW’s order book stood at over Rs 2,650 crores (excluding export orders). Funding is an issue and high interest costs are forcing mills to keep away from investing in a big way. Lakshmi is a textile machinery manufacturing major. It feels the south is an attractive market for its range of products. More than 40 per cent of its textile machinery sales happen in the southern zone. While the south topped in sales, inflow of new orders was primarily from the west, followed by the south and the north. The company’s capacity utilisation levels have, for some time, hovered around 65 to 70 per cent and that is expected to continue for this quarter.
Meanwhile LMW is planning to roll out new products. In the next four years, LMW plans to offer the entire range of machinery from blow room to ring frame.
www.lakshmimach.com/
Sales and exports of Indonesia’s textile products are expected to remain sluggish in the second half of the year. The textile industry started to slow down in 2014 following a decline in global oil prices and an increase in gas and electricity rates in January this year. Imported products, particularly from China, have crushed the market share of local textile products. In the first half of this year, domestic industry’s market share reached 30 per cent but is expected to decline to 16.6 per cent in the second half.
Many businesses choose to be traders by importing products from China. Another competitor is Vietnam. Indonesian textile products cannot compete with Vietnamese products pricewise. Indonesia’s electricity costs are higher than Vietnam, which affects production costs. Indonesian textiles are charged an import duty of 11 to 30 per cent while entering the US market. Free trade agreements with the European Union and the US can help boost exports three times.
The industry has urged the government to lower electricity rates and help domestic players compete with foreign-made products. Indonesia has set an export target of $12.7 billion this year, the same as last year.
Unions are furious with Cambodia’s garment factories as they have shown inclination towards meeting worker’s demands for increasing the minimum wage next year. As per a survey among members of the Garment Manufacturers Association in Cambodia (GMAC), 63 per cent do not want a raise and 26 per cent support only marginal hike of $1-$5. The GMAC represents the country’s more than 500 factories. The factories and unions are to hold talks next month regarding the demand for a hike from the current monthly $128 minimum to $177 in 2016. A final decision will be made in October.
Ken Loo, Secretary General, GMAC says they asked members how much hike they could afford, but the members stated that could not afford any rise in wages. The garment industry is the largest economic sector in the country. However, it seems it’s going to be hard to sustain the $5 billion sector now. An increase in wages could placate workers, but will make the country uncompetitive, while protests by unions could scare investors away.
The garment industry in Cambodia has created 600,000 jobs that sustain rural families and has grown phenomenally through the years. However, strikes by increasingly assertive and politicised unions have become troublesome. The unions were outraged and threatened to go on strike if factories were unwilling to revise the wages.
Chea Mony, President of Free Trade Union said that if factories don’t hike pay, they could face problems of having no workers. Pav Sina of the Collective Union Movement of Workers, agreed with Mony saying that their workers would not be quiet as there would be no choice left for them.
A strategic cooperation agreement was signed regarding the purchase of polyester fibre produced by Dinh Vu PetroVietnam Petrochemical and Textile Fibre JSC (PVTEX) was signed by Petrovietnam oil and gas group (PVN) and Vietnam National Textile and Garment Group (Vinatex). After over a year of commercial operation Dinh Vu Polyester plant, they signed this agreement.
Vinatex committed to purchasing as much fibre products as possible from Dinh Vu PVTEX and also to use no less than 50 per cent of that purchased in its production. Meanwhile, PVN would direct Dinh Vu PVTEX to provide polyester fibre products of good quality and competitive prices for Vinatex. Besides, as per the agreement when Vinatex uses polyester fibre products of Dinh Vu PVTEX as inputs for export production lines, they would would work closely in the development of markets.
Its products have been domestically and internationally credible so far and the quality too has improved to be on par with imported goods. PVN said that now, the background was stable for close and comprehensive relation between the two groups in various fields such as polyester provision, export market extension cooperation, staff training and product evaluation. Also, they could work closely on other aspects for the mutual benefit and enhancement of trademark value for both.
With this cooperation, the product competitiveness would increase, as well as the market extension for Vinatex enterprises. However, besides this, the cooperation would also help Vietnam garment trademark promotion and wouldincrease domestic rate of textile industry to 60 per cent.
Pakistan's textile sector has been struggling to stay afloat as it battles high costs and high electricity surcharges. The country could lose billions in export orders if moves aren’t made to reverse the downward trend.
Pakistan’s exports for July have declined 17 per cent. The Pakistan rupee is overvalued, and that, coupled with a harsh tax regime (electricity surcharges alone can run as much as 45 per cent more than regional competitors pay), has what has killed the country’s competitiveness. A gas infrastructure development tax plus taxation on export-oriented goods has added to the burden.
The government has the option to either devalue the rupee by 12 per cent to 15 per cent or remove the additional taxes on export industries to make them zero-rated.
The government has promised to remove the bottlenecks in the way of exports. It would address the high costs and surcharges by the end of this month.
The textile sector in Pakistan has an overwhelming impact on the economy, contributing 57 per cent to the country’s exports. In today’s highly competitive global environment, the textile sector needs to upgrade its supply chain, improve productivity, and maximise value addition to be able to survive.
Todd Buchholz, former Director for Economic Policy at the White House and a leading expert on the US and global economy, will take charge at the forthcoming ‘San Francisco 2015’ trade event, scheduled to be held on October 30 and 31. The event is expected to attract over 600 delegates from across the world.
After serving under George HW Bush, Todd was Managing Director of the $15 billion Tiger hedge fund and an award-winning economics teacher at Harvard. He is a regular columnist for the Wall Street Journal, the New York Times and NBC and is the author of a number of best-selling books.
Speaking ahead of the event, Todd said, “The ICA’s San Francisco trade event presents a perfect opportunity to think about how the world economy fits together, from farmers in the fields to designers in Milan to fast retailers competing for consumer spending across the globe.”
Todd’s address will provide delegates with an in-depth view of global politics, economics, society and culture – looking at where the world is, where it is going and what it means for businesses and individuals.
The spinning and garment industry is worried with the recent devaluation of the Yuan by China.
Spinning industry is plagued by worry about further slowdown in demand when players are over-dependent on China. While apparel exporters are worried that competition will intensify with China. As spinning industry is already in crisis because of the growing dependence on China and addition of capacities is another cause for getting panicked.
Dwindling demand from the Chinese market have affected yarn export form India, while some apparel orders shifted to India because of slowdown in China. However, according to industry players feel it was too early to estimate the extent of impact by the devaluation. Yet, they say that the textile industry could get worse due to the deliberate devaluation of Yuan, giving an example of competition in apparel exports with China, which could get worse.
This also could be a sign of increased competition from China, feel garment manufacturers, industry believes that this move by China was completely unexpected, this will result in merchandise exports getting severely affected, if the rupee remained overvalued.
The total textile export from China is $150 billion per year, which is 10 times bigger than India, so, industry feels that the Indian government should think seriously about improving India’s global participation.
The garment industry accounts for almost 80 per cent of Bangladesh's total exports. Bangladesh intends to double its apparel exports to $50 billion by 2021. To this end, the country is setting up garment villages. These villages are aimed at making conditions safer for workers. Currently factories in Bangladesh tend to spread around in an unplanned manner, which makes them hard to monitor, and they spring up wherever space is available, including in decrepit, unsafe buildings.
Factories that don’t comply with regulations will be moved to villages, where workplace, health, and fire safety regulations can be enforced. There will be facilities for medical treatment, proper waste disposal, and day care. A village can have several hundred factories.
The US, which is the largest importer of garments from Bangladesh, will help the country build garment villages. The US will reportedly join two Bangladeshi banks in offering a $22 million credit guarantee on loans to help improve safety in garment factories. The rapid growth of Bangladesh’s garment industry has been a blessing and a burden to the country. Even as it has provided jobs to millions and helped Bangladesh reduce its poverty rate, it has also exploited the nation’s poorest and most desperate, leading to the deaths of thousands.
Garment manufacturers and exporters of Bangladesh have undertaken ‘Branding Bangladesh’ initiative. This involves organising visits to factories for foreign diplomats, donor representatives and dignitaries with stakes in the sector. The purpose is to highlight the progress the sector has made since the Rana Plaza tragedy two years ago and the fact there are many garment factories in the country that do practice international standards.
Visitors from the United States, the European Union, Canada, the Netherlands, Germany, France, Spain, Australia and Denmark will be shown the situation inside factories including working conditions, workers’ rights, safety and compliance standards and other good practices.
In turn, these visitors as stakeholders are expected to help brand the image of the local garment sector through sending out the right message to their respective countries. Many changes have taken place in Bangladesh’s garment sector and many more are in the process following inspections by western retailers.
The image of the country’s apparel sector was hit badly following some tragic incidents. Bangladesh had to undertake a damage control exercise, put its house in order and reassure its buyers that safety measures were being implemented in earnest and that its garment factories were committed to safe and responsible production practices.
