Saturday, August 23, 2014

Indian Textile company Arvind Limited eyeing Ethiopia as the destination for its Africa foray

Leading integrated textile player, Arvind is planning to up a dormitory-based manufacturing facility in Dehgam, Ahmadabad where it will house up to 10,000 women who will be employed in an apparel manufacturing facility. This is part of its plan to scale up manufacturing to capitalize on the huge opportunity arising from a shift in apparel manufacture from China. “Although a clear leader, China’s increasingly high costs and restrictive import policy, presents an opportunity for players like us,’’ Sanjay Lalbhai, Chairman & Managing Director, Arvind, told The Hindu.

"As they will be housed on the premises, there will be no issue of absenteeism or attrition. The women will be hired from all over and not only surrounding areas,’’ Mr. Lalbhai said. Arvind has already procured 42 acres of land and the project can come up in 2-3 months. When ready, it will be able to make 15 million garments annually and would entail an investment of around Rs. 400 crore. The first phase with an investment of Rs. 130 crore, could make 6 million jeans. ``I do not think India can have facilities to house 30,000 workers as in China because it is too risky. This model will have to be replicated as 15 million garments is not really a large enough scale,’’ he said.

The company is awaiting government approval. “Of the 49 companies who had applied for infrastructure support for projects, 25 will be shortlisted and we will know very soon,’’ Mr. Lalbhai said adding that Arvind expects around Rs 40 crore in the form of government support.

Arvind plans Africa foray

Meanwhile, in a bid to capitalize on the huge manufacturing opportunity in Africa, Arvind is entering that market by setting up a unit there “very soon”, and is eyeing Ethiopia as the destination. According to Mr. Lalbhai, Africa will remain very competitive on labour costs and is going to emerge as a large domestic play.

“Besides, they have duty-free bilateral treaties with Europe, USA and several countries. They also have low energy costs and excellent governance standards.” He said the move was in response to customers pushing Arvind to enter the continent. “Initially, it will not entail significant investment as we will set up a small facility and scale up gradually. We plan to supply fabric from India and export finished garments from there to Europe and USA.’’