Vinodrai Engineers Pvt. Ltd., 12 Km. Stone, Jalna-Aurangabad Road, Village Dawalwadi, District : Jalna Jalna – 431 203 ( India ) Ph: +91-2482-262000 Fax: +91-2482-262400 Web: vinodrai.com , E-Mail : email@example.comA miracle called Tirupur!By: Shobha Warrier in TirupurOne look at the unruly traffic, the noise, the pollution and the dusty, dug-up roads andyou could be forgiven for wondering if you are in one of the many such small towns thatdot the Indian landscape. But you couldnt be more wrong. This place is pretty special, although there is no indication to the fact that it is one of the largest foreign exchange earners for India. Or that the biggest global brands get their garments made in this small city and that the garments made here are sold in the largest retail stores across the world. Welcome to Tirupur (occasionally spelled Tiruppur), a city of around 600,000 people in Tamil Nadu. It has a population of over a million in the urban agglomeration and has been registering an annual growth of 30 per cent since 1998.This city exports knitwear worth Rs 11,000 crore (Rs billion) (Rs 110 billion) a year butit has no airport -- the nearest one is in Coimbatore (50 km away) and the nearest seaportis in Chennai.The first stop for any international buyer of Indiangarments is Tirupur. Buyers from 35 countriesfrequently visit Tirupur. Tirupur can delivercustomised samples in less than 12 hours; half amillion pieces in a matter of days.There is a nondescript railway station at Tirupur andall the trains that go to Coimbatore stop here for lessthan 10 minutes. However, there is an inland railcontainer depot at Tirupur.How it all beganThe amazing growth of Tirupur as the Indian hub of garment exports started only in thelate seventies. Before that, this small town was the manufacturing hub of white knit innerwear (the first knitwear unit in Tirupur was set up in 1925 and it emerged as thePursuing excellence in rotational moulding.
Vinodrai Engineers Pvt. Ltd., 12 Km. Stone, Jalna-Aurangabad Road, Village Dawalwadi, District : Jalna Jalna – 431 203 ( India ) Ph: +91-2482-262000 Fax: +91-2482-262400 Web: vinodrai.com , E-Mail : firstname.lastname@example.org centre for knitwear in South India in the 1940s) thanks to the Noyyal river andthe cotton belt all around the city. With the Manchester of India -- Coimbatore -- next toTirupur, it was only natural that the city should evolve as the garment manufacturingpowerhouse of the country.Initially, knitwear from Tirupur went to suppliers and exporters in Kolkata and Mumbai.But in the late seventies, Italian garment importer Verona chose to go directly to Tirupurto buy white T-shirts, and that was the beginning of the rise of a new Tirupur.In short, Verona was the man who brought European business directly to Tirupur. In1981, European retail chain C&A also came to Tirupur. In no time, other internationalstores too started approaching the garment manufacturers in Tirupur. Only a handful of manufacturers exported garments then and the total garment export turnover was about Rs 15 crore (Rs 150 million) in 1985. By 1990, exports had shot up to Rs 300 crore (Rs 3 billion). Today, almost 80 per cent of Indias cotton knitwear exports happen from Tirupur. There are 6,250 units involved in various operations of the textile industry here. And the exports stand at Rs 11,000 crore (Rs 110 billion)!Initially, direct garment exports from Tirupur were only to Europe. The market in theUnited States always demanded huge volumes which most of the exporters in Tirupurwere scared to touch. The European market was more fashion-conscious and demandedgoods in only thousands of pieces that Tirupur could comfortably serve.Those who made Tirupur the export hubThe yarn going around the town is that the very air in Tirupur turns everyone into, first, agarment manufacturer and then an exporter.Take for example, Rajan of Rajsujee International, who was a banker once. The successof many exporters that he dealt with while being in the bank made him set up his ownunit in 1995 with only Rs 200,000 by way of capital and 20 employees. In the first year,his turnover was Rs 650,000. Today it is Rs 20 crore (Rs 200 million) and 450 peoplework for him now. This is not an isolated case; there are many, many such amazingtransitions and rags-to-riches stories in Tirupur.S Dhandapani of Sreenidhi Apparels Pvt Ltd, a native of Tirupur, decided to start thecompany in 1991 because he saw everyone getting into garments exports! "So I alsojumped into this," he reminisces.Pursuing excellence in rotational moulding.
Vinodrai Engineers Pvt. Ltd., 12 Km. Stone, Jalna-Aurangabad Road, Village Dawalwadi, District : Jalna Jalna – 431 203 ( India ) Ph: +91-2482-262000 Fax: +91-2482-262400 Web: vinodrai.com , E-Mail : email@example.com He started operations with Rs 400,000, 15 employees and 10 machines. He was first a garment supplier to an exporter and then began exporting directly to Canada, France, Spain and the United States. Today, his turnover is Rs 20 crore (Rs 200 million) and 300 employees work for him. Raja Shanmugam, another native of Tirupur, started Warsaw International in 1989 with a capital of Rs500,000 and 20 people. In the first year, he did not go for direct exports. And the turnoverafter the agents cut was Rs 20 lakh (Rs 2 million). Next year, he doubled his turnover. In1993, he decided to venture into the European market directly and the turnover grew toRs 2 crore (Rs 20 million). Today, Warsaw International has a turnover of Rs 60 crore(Rs 600 million) and employs 1,500 people.According to Shanmugam, there is no way a manufacturer cannot turn in a profit. "This isthe only industry which has a 60- to 90-day cycle. So we can turn our investment overfour to six times a year."Haresh N Badani of Paras Apparels was one whoentered the fray as early as in 1989. He started hiscompany with Rs 200,000, six sewing machines and20 workers. The market was so good that he had aturnover of Rs 30 lakh (Rs 3 million) in the firstyear. In ten years, he grew at a rate of 70 per centannually, and by 2008, his turnover had touched Rs8.5 crore (Rs 85 million).Another success story is that of Vijaya Kumar, whostarted CBC Fashions. He started his company in2004 with Rs 1 crore (Rs 10 million), 50 machinesand 60 employees as an exporting unit though hisfathers parent company had been manufacturingand supplying innerwear to some of the majorbrands in India for 34 years.His first customer was an importer from Belgium, and in the first year, his turnover wasaround Rs 4 crore (Rs 40 million) which grew to Rs 6 crore (Rs 60 million) the next year.Today, CBC Fashions deals directly with retailers in seven countries in Europe and alsoin the United States. The current sales are Rs 40 crore (Rs 400 million). Almost 600people work for the company.Pursuing excellence in rotational moulding.
Vinodrai Engineers Pvt. Ltd., 12 Km. Stone, Jalna-Aurangabad Road, Village Dawalwadi, District : Jalna Jalna – 431 203 ( India ) Ph: +91-2482-262000 Fax: +91-2482-262400 Web: vinodrai.com , E-Mail : firstname.lastname@example.org Since there are many manufacturers in Tirupur, there also are many trading agents who act as intermediaries between the importers and the manufacturers. Vishal Kumar of International Trading Inc has seen only growth ever since he came from Delhi to Tirupur to start his trading office 14 years ago. Soon after college, he decided to shift base to Tirupur because "it was the place where the lastword in textiles was." If it was 20-25 per cent annual growth till recession hit the globaleconomy; it has been moderated down to 5-10 per cent now.V S Balraj, managing director of Lea Cool India, has been a buying agent in Tirupur forthe last 20 years. His clients are based in Finland, Sweden, Germany and a fewScandinavian countries.The US market and the recessionIf Tirupur was growing at 30 per cent every year, the exporters too were growing at anannual rate of 20-25 per cent. Then recession hit the global economy and exportsearnings to the tune of Rs 11,000 crore in 2007 dropped to Rs 9,500 crore (Rs 95 billion)the next year, a drop of more than 10 per cent. Almost 40 per cent of Tirupurs exportsare to the US, 30 per cent to Europe and the rest to other parts of the world.Unlike the fashion-conscious European market, theUS market is voluminous and imports cheapgarments in millions of units. However, the marginfrom the European market is double that of the USmarket. Buying agent Balraj says that the USmarket is as big as Europe and the United Kingdomtogether.With exports dropping, many a textile unit inTirupur started to gasp for survival. Thousands of people lost their jobs and returned totheir native places. Those who decided to remain had to work on sharply reduced salaries,and production was down in many units by almost half.There is unanimity in the opinion is that units that suffered the most were the companiesthat exported only to the US as compared to those who had European customers.Pursuing excellence in rotational moulding.
Vinodrai Engineers Pvt. Ltd., 12 Km. Stone, Jalna-Aurangabad Road, Village Dawalwadi, District : Jalna Jalna – 431 203 ( India ) Ph: +91-2482-262000 Fax: +91-2482-262400 Web: vinodrai.com , E-Mail : email@example.comShaktivel, president, Tirupur Exporters Association (TEA), corroborates that recession inthe global economy affected exports from Tirupur by around 30 per cent. "There werehuge job losses and there were few enquiries from the US. But now, slowly, we aregetting queries for garments. Things are getting better."But one mans poison is another mans meat. So it was with Tirupur and the global economic slowdown as well. Take, for example, people like Rajan of Rajsujee International. Rajan benefited a great deal from the recession. As he was exporting mainly to a discount store in the UK, his turnover actually went up as during a recession times, people prefer to shop in discount stores! Rajan believes that the global market has recovered by 40-45 per cent already.Another exporter who saw his turnover increase by as much as 50 per cent, when manyother units were facing closure due to the recession, was Badani of Paras Apparels. As hewas involved in supplying cheap garments to the US, he never felt the impact ofrecession. "Because my garments were as cheap as two to three dollars apiece, they werein real demand. Recession was a good time for me. The US market is huge and the priceis low. If you dont achieve the target, you are finished, but business with the US can bailyou out. Thats for sure!"On the other hand, Dhandapanis business profits went down by 25 per cent during therecession although his turnover grew.Two years ago, 40 per cent of the turnover of RajuShanmugams CBC Fashions was from onecustomer in the US market. If he had exported700,000-800,000 pieces annually in the last twoyears, the orders came down to 500,000 last year.There was a more than 20 per cent dip in therevenues in 2008-09. "Now business has slowlystarted to pick up. Enquiries are coming in but whatis worrying the exporters is the strengthening of therupee and the weakening of the Euro and theDollar," said he.Cheap goods demand, but Tirupur is getting costlyAlthough the recessionary trend is now abating and things have begun to look up, what isworrying the exporters in Tirupur most is the spiralling cost of production. With the hikePursuing excellence in rotational moulding.
Vinodrai Engineers Pvt. Ltd., 12 Km. Stone, Jalna-Aurangabad Road, Village Dawalwadi, District : Jalna Jalna – 431 203 ( India ) Ph: +91-2482-262000 Fax: +91-2482-262400 Web: vinodrai.com , E-Mail : firstname.lastname@example.org prices of yarn, electricity and the dyeing cost, the huge increase in the labour cost hasmade the garments from Tirupur costlier.Vijayakumar of CBC Fashions admits that the orders are coming from the US but therates they offer are very low which do not offer him, and others like him, much profitmargin.While the cost of making a garment in India has doubled, the US importer offers thesame price that he had offered three years ago! Even the buyers in Europe who were notbothered about the price till recently and looked only for quality and fashion want onlycheap goods now. Badanis advice to those eyeing the US market is, "Innovate on cheap garments and you will be a winner." Labour shortage Apart from the rising costs, the biggest challenge Tirupur faces today is labour shortage. On lamp posts, tree trunks, gates, walls, almost everywhere,you see handwritten posters asking for people towork in garment factories.Perhaps you see these images only in Tirupur andnowhere else in India. There is a labour shortage ofalmost 40 per cent, which is alarming!Textiles is one industry that is so labour-intensivethat to make one garment, you need the services often people. After agriculture, the textile sector isthe second largest employer in India. On the gate of the S Dhandapanis Sreenidhi Apparels, you can see a board asking for people to join as workers. "Now we have a 20 per cent labour shortage which will go up to 30-40 per cent once the recession gets over fully," says Dhandapani. Most of the exporters feel that a majority of their workforce who used to come from the southern part of Tamil Nadu have gone back to their villagesbecause of the NREG scheme and the Re 1 pre kilo rice that the ruling Dravida MunnetraPursuing excellence in rotational moulding.
Vinodrai Engineers Pvt. Ltd., 12 Km. Stone, Jalna-Aurangabad Road, Village Dawalwadi, District : Jalna Jalna – 431 203 ( India ) Ph: +91-2482-262000 Fax: +91-2482-262400 Web: vinodrai.com , E-Mail : email@example.comKazagham government offers. "With free TVs given to all, most of them have becomelazy," S Dhandapani adds.Bangladesh, the competitorThe next formidable challenge facing Tirupur is Bangladesh which is snatching awaymost of the bulk orders from the US. India faces tough competition from Vietnam andCambodia, too. Almost 60 per cent of the worlds cotton garment market has been takenover by Bangladesh as their products are 30 per cent cheaper and qualitatively, they areas good as what India produces!The underdeveloped tag of the country gives them the additional advantage of the waiverof import duty in Europe. Van Raffaini, sales manager of MCS Group of Italy, has been doing business with Tirupur for the last ten years. His job is to supply dyeing and finishing machines. He also does business with Bangladesh. "There is a quality difference in the machines that India and Bangladesh use. They (Bangladesh) use better, technologically advanced machines. So they produce more garments faster. They have the desireto get new machines unlike many in India."Balraj, who also buys goods from Bangladesh, has seen the changes that have taken placein 20 years. "The golden period for India was the nineties. At that time, we wereexporting mainly to Europe, and we had only China as our competitor. There was no talkof Bangladesh then. Almost 60 per cent of worlds cotton garments were exported fromIndia, while China dominated the synthetic garment scene. Nobody was price-consciousthen; quality was more important. But price is the major factor today, and Indiasdominance is over. Every country now prefers to buy from Bangladesh."Sensing the importance of Bangladesh, VishalKumar of International Trading Inc has opened anoffice there and started sourcing from there too."Labour is cheap. Energy is cheap. All the machinesare run by gas. They have advanced technologybecause the government concentrates on textilesexports."Unless Indian companies add more value to theirproducts, it will be tough for them to survive, Vishal Kumar feels.Pursuing excellence in rotational moulding.
Vinodrai Engineers Pvt. Ltd., 12 Km. Stone, Jalna-Aurangabad Road, Village Dawalwadi, District : Jalna Jalna – 431 203 ( India ) Ph: +91-2482-262000 Fax: +91-2482-262400 Web: vinodrai.com , E-Mail : firstname.lastname@example.org"Textile exports being the major industry in the Bangladesh, the government there hasgiven all the facilities to exporters by technologically upgrading all the machines andsetting up huge establishments. Though textile is the second-largest job provider in Indiaafter agriculture, we dont get focussed attention from the government as textiles exportsis only one of the many businesses in India," he adds.Cost of cottonAlthough India is the second largest producer of cotton in the world, the country has lessthan 3 per cent share in the textile market internationally. Indian textiles also account for38 per cent of the countrys total exports, but Bangladesh which is dependent on India forcotton has 6 per cent market share. China, meanwhile, enjoys a 26-28 per cent in theworld market.Many people feel that if India had worked on its strengths, it could have had a 10-12 per cent share in the international market. They also complain that the Indian government exports most of the cotton that is produced in the country and that the minimum support price of cotton has gone up by 30 per cent in the last two years. Consequently, the manufacturing price of yarn too went up by 30 per cent and dyeing costs went up by 20 per cent. On the whole, there is a 20 per cent increase in the cost of a garment.Another problem that exporters face is the firming up of the Indian rupee against the USDollar and the Euro.Future of TirupurSo is the future of Tirupur bleak? Yes, according to some exporters like Vijayakumar."Tirupur will be wiped out if the cost in producing garments increases like this," he says.According to Badani, "Tirupur grew because of the hard working skilled labour force andif the labour shortage continues like this, I see the importance of Tirupur waning."Dhandapani and S Sreethar add their support to this view.But Tirupur Exporters Association chief Shaktivel sees no challenge to the supremacy ofTirupur in the near future as he expects exports of around Rs 10,000-20,000 crore (Rs100-200 billion) this year too, despite the competition from China and Bangladesh, thedearth of workers, and the escalating costs of making garments.Pursuing excellence in rotational moulding.
Vinodrai Engineers Pvt. Ltd., 12 Km. Stone, Jalna-Aurangabad Road, Village Dawalwadi, District : Jalna Jalna – 431 203 ( India ) Ph: +91-2482-262000 Fax: +91-2482-262400 Web: vinodrai.com , E-Mail : email@example.comRaja Shanmugam and Vishal Kumar also see only growth for Tirupur. "Tirupur is onlygoing to grow. There is no doubt about it. Products coming from here will change; value-added items with stress on fashion will become Tirupurs strength."Like Rajan says, the recession has filtered the all-and-sundry in the field and only thetoughest survived. "So I see only bright future for Tirupur."For Indias sake, one hopes the miracle of Tirupur continues to dazzle the world inthe future too.Pursuing excellence in rotational moulding.