FW
Amir Fayyaz Sheikh Chairman All Pakistan Textile Mills Association (APTMA), at the time of the press conference stated that textile industry contributed 60 per cent in total exports of the country, which was considered backbone of the economy.
He welcomed Rs 180 billion “Export enhancement package” stating that this package would give huge relief to the textile sector for improving the exports in the sector.
According to him availability of energy at regionally competitive price was important and that budget for the 2017-18, Rs 4 billion will be allocated for “Export enhancement package”.
The Chairman APTMA stressed for the implementation of this package which also gave relaxation on the import of textile machinery for the modernization and enhance the capacity of the sector. The package would strengthen the country’s economy by increasing the country’s exports and that the that energy is the important element of cost of production particularly for spinning, weaving and processing industry, says Amir and he wishes to compete with regional competitors including India, Bangladesh and Vietnam for improving the country’s exports.The Chairman APTMA urged for proving ease of doing business in the country.
CMAI’s Apparel Index for Q3 (Oct-Dec FY 2017-18) gives out positive signals about the market as there is a clear growth recovery at 2.71 points, which is much higher than the same quarter previous year Q3 (Oct-Dec FY 2016-17) with overall Index Value at 1.4 points, market had registered the lowest growth, in the quarter that faced the implementation of demonitisation.
Giant Brands remain resilient
One year post-demonization and a few months after GST’s implementation, despite the push and pulls, Giant Brands have remained resilient and buoyant. In Q3, they maintained their lead with an index value of 11.25 points, growing multiple times compared to other brand groups. Large Brands on the other grew at 5.56 points; Mid Brands clocked in 3.69 points growth; while Small Brands grew least at 1.3 points. Compared to previous quarters, Giant Brands are growing much faster than others, as their rate of growth in the previous quarter was 8.72 points. Large Brands growth rate was 6.65; and 1.25 points for Mid and 0.29 for Small Brands respectively.
Indeed, all brand groups across the board have recorded higher growth this quarter. Except, Large Brands (growth dropped this quarter to 5.56 from 6.65 earlier). Surprisingly, Large Brands grew 7.23 points in the same quarter previous year. A closer look at Large Brands’ performance during Q3 and Q2 of FY 2017-18, reflects in both these quarters, Sales Turnover growth is same but Sell Through grew better in previous quarter compared to this quarter; Inventory Holding too increased this quarter compared to previous quarter impacting negatively. Giant Brand’s remarkable growth improvement is on account of better Sales Turnover growth compared to previous quarter and better Sell Through growth.
Q3 Apparel Index once again indicates Giant Brands have outdone Large, Mid and Small Brands. Being more organized and networked with organized retail through MBOs, EBOs and Large Format Stores Giant and Large Brands managed their business and sales turnover better. Moreover, they increased sales turnovers significantly at 8.0 points and 4.4 points respectively.
Inside Story: Sales Turnover rise and so do fresh Investments
In Q3, Sales Turnover reflected an Index growth of 1.52. Nearly, 49 per cent brands or almost half reported an increase this quarter. However, it seems, the festive season didn’t bring much cheer to all brands, as many reported a dip in sales turnover. And a significant 30 per cent reported a loss this quarter. Incidentally, maximum number of respondents who reported a loss in sales turnover were in the Mid Brands bracket. In fact, no Giant Brands indicated a loss in turnover in Q3.
Explaining the dip in sales turnover, Narendra Shah, Proprietor, Vogartino says “The dip in sales turnover is partly due to us changing location and majorly due to the pattern of business followed by corporate brands. End of season sale hit not only us as a brand but also MBO’s, small industries and manufacturers. Big corporate brands gave away goods at throwaway prices which has had a great impact on our business hence, the dip in sales turnover.” Nearly 45 per cent brands indicated an improvement in Sell Through. But for the other 44 per cent, Sell Through remained the same “The increase in sell through is connected, if sales turnover increases automatically sell through will increase as sales have been managed well,” explains Sameer Patel, Proprietor, Deal Jeans.
Almost 46 per cent respondents across all brand groups said their Inventory Holding went up this quarter. Patel opines, “Inventory holding increased as fashion is fast changing and the inventory is managed and controlled well at our end.” The higher value in Inventory Holding indicates a negative impact. The increase in inventory could be a carryover of inventory from previous quarters and less than expected sales during the festive season. Rajesh Giani, Proprietor, Toffy House points out, “Last quarter was for winter wear, hence, demand was good and stocks were stored for winter. We had some previous stocks and with late production of fresh stocks, we were able to meet demand. This is why inventory holding went up.”
Fresh Investments went up by 1.30 points overall with nearly 59 per cent respondents reporting a rise in investments. As Seema Mehta, Proprietor, Exile explains, “The reason behind an increase in investment is a government scheme which helped us with a bank loan to enhance business. We opted for it and infused money to increase our investments.” Agrees Ketan, Owner, Goof who goes on to explain “We increased our investments by opting for a bank loan to widen our horizons.”
As for outlook for the next quarter around 48 per cent brands say it is ‘Average’, while 38 per cent believe the outlook is ‘Good’. Generally, Q4 of the financial year, is seen as quarter that has EOSS in January and only a small period of fresh and growth in sales that is second half of March when exams are over and holidays start and summer season picks up. Looking for fresh goods, post first quarter of GST, consumers too are expected to return to stores. GST and new processes would be settled especially by last quarter of this financial year and this could augur well for growth in Q1 of FY 2018-19.
CMAl's Apparel Index
CMAl's Apparel Index aims to set a benchmark for the entire domestic apparel industry and helps brands in taking informed business decisions. For investors, industry players, stakeholders and policymakers the index is a useful tool offering concrete and credible information, and is an excellent source for assessing the performance of the industry. The Index is analysed on assessing the performance on four parameters: Sales Turnover, Sell Through (percentage of fresh stocks sold), number of days of Inventory Holding and Investments (signifying future confidence) in brand development and brand building. The Apparel Index research is conducted by DFU Publications.
Apparel imports by the US decreased 1.71 per cent during January to April 2017 as against the corresponding period last year.
China, Vietnam, Bangladesh, Indonesia and India were the top five apparel exporters in value terms to the US during the review period. Honduras, one of the major apparel exporters to the US – has now come down to the seventh spot.
However, among all top five exporters, only Vietnam grew in values as the country saw a rise in exports by 8.16 per cent during the first four months of the year. China, Bangladesh, Indonesia and India were down by 3.45 per cent, 6.30 per cent, 2.99 per cent and 3.27 per cent respectively.
China is the largest source of US apparel imports. Vietnam is in the second place followed by Bangladesh. All nine out of ten top apparel exporting nations of the world experienced negative growth in shipment to the US in 2016. Only Vietnam's apparel exports increased 0.30 per cent year-on-year in 2016.
Bangladesh’s readymade garment exports to the United States fell by six per cent in the first three months of the current calendar year. Bangladesh now faces an export duty of 15.62 per cent under America's most favored nations' category.
Garment items account for 95 per cent of the goods exported from Bangladesh to the US market.
James Brett is chief executive officer of apparel retailer J Crew. Brett has had more than 25 years of retail experience. He most recently served as president of specialty home furnishing company West Elm, a unit of Williams-Sonoma.
Sales at J Crew, whose ballet flats and cashmere cardigans were once a staple of middle-class US wardrobes, have been declining, as it struggles to keep abreast of changing tastes and faces fierce competition from cheaper online retailers.
J Crew has been an institution since 1983. It is renowned for its fresh, luxurious take on everyday staples.
America’s favorite basics store is known for its lace jogging pants, skirts, tank tops, tees, dresses, fine Italian cashmere sweaters, sequin and lace-detailed skirts and playful jewelry.
Following a six per cent sales slump in 2016, the company is investing in retuning J Crew’s identity as an affordable and accessible brand for everybody — not just the fashion-forward crowd.
J Crew is now trying to compete without marking everything down by 40 per cent every other week. It has created an analytics team to research and optimize the cost of each item. It also plans to switch up its supply chain beyond China so that clothing will arrive in stores faster.
Being the 11th largest producer and 6th largest exporter of cotton, EU is the largest market for textiles in the world and the important trade and research institutions in the world of cotton are headquartered in the EU. The membership of the EU in the ICAC is of premeditated significance as there are 150 million people involved in cotton production, marketing and processing each season. The European Union itself, and many individual countries and companies within the EU, are significant providers of cotton-specific development assistance in recipient countries.
On May 16, the Council of the European Union approved the accession of the EU to the ICAC on May 18, 2017. H.E. A formal Instrument of Accession to Minister (Trade) Ali Tahir of the Embassy of Pakistan and ranking member of the ICAC Standing Committee on May 24, 2017 was presented. The membership of the EU today at its 549th Meeting was confirmed by the Standing Committee confirmed the European Commissioner for International Cooperation and Development, NevenMimica, commented on this that Cotton is important both to the EU's economy also the EU's accession to the International Cotton Advisory Committee is significant step. As a member, the committee will work for a sustainable and inclusive cotton sector.
Started in 1939, ICAC is one of the oldest organizations within the architecture of intergovernmental bodies. It is the International Commodity Body representing cotton and cotton textiles. The mission of the ICAC is to assist governments in fostering a healthy world cotton economy. The role of the ICAC is to raise awareness of emerging issues, provide information relevant to the solving of problems and to foster cooperation in the achievement of common objectives. By bringing together producing, consuming and trading countries and all segments of the cotton industry and serving as an objective statistical observer, the ICAC serves a unique role as a substance for an overall positive change.
Ministry of Textiles plans to draft guidelines of National Textiles Policy which will be further forwarded to the union cabinet for approval next month.
Pushpa Subramanyam, secretary of Textiles Ministry says that the Centre is awaiting a formal request from the Telangana Government also the draft is almost ready.
She further added that after the Textiles India-2017, the document will be deepened with the more inputs from the event and it will be approved by the cabinet in July 2017. The policy aims to achieve $300 billion of textile exports by 2024-25 and create an additional 35 million jobs.The event is expected to be inaugurated by the Prime Minister Narendra Modi and attended by several union ministers and chief ministers of various states.
On the proposed Textile Park in Warangal, Pushpa Subramanyam mentioned that there is no dearth of funds for the project and there is 7 per cent growth in the textile and garment exports from India between July 2016 and April 2017 and in 2016 the total exports stood at $40 billion however, the Ministry is targeting $45 billion in 2017.
The officials are further waiting for the proposal from the state government to soon sanction it In a bid to boost textile industry
Philip Yeung Kwok-wing is the president of the Society of Dyers and Colorists.
He has been a SDC member for 50 years. He is an active member of SDC’s Hong Kong region. The Hong Kong region was established in 1972 and has the highest number of chartered colorists outside the UK.
Philip Yeung Kwok-wing graduated from the Hong Kong Technical College with a higher diploma in dyeing, printing and finishing in 1968.
He is currently executive director of the Clothing Industry Training Authority in Hong Kong.
The coloration industry is facing environmental, health and safety issues.
SDC, established in 1884, is the world’s leading independent, educational charity dedicated to advancing the science and technology of color worldwide. SDC is a professional, chartered society. It has an international network of regions and activities.
Its mission is to educate the world about the science of color. It does this by maintaining professional standards and improving the skills of coloration professionals, enabling them to deliver exceptional results for their organisations. This is delivered through membership, qualifications, training, consultancy, publications, events and access to knowledge and expertise. SDC provides tried and trusted practical support services focused on implementing best practice in textile color management, resulting in improved efficiency and cost savings.
Cotlook discarded anticipation of a further fall in world cotton inventories next season, quoting the prospects of a strong US harvest. Starting in August Cotlook forecast a rise of 44000 tonnes in world inventories of the fibre in 2017-18.The estimate contrasted with a previous expectation of a small decrease in stocks, of 47,000 tonnes. And it placed Cotlook at chances with an idea from the US Department of Agriculture of a 520000-tonne decreased in world cotton stocks next season.
On the other hand the International Cotton Advisory Committee estimates to fall by 960000-tonne.
Talking about the firm prices Cotlook's raised inventory estimate reflected an increased forecast for world production, upgraded by 91000 tonnes to 24.5 million tonnes, to improved ideas for the US harvest. Cotlook also stood by expecting for output in top grower Indian, seeing the country's harvest at 6.29 million tonnes, ahead of the USDA's 6.10 million tonne figure, and a forecast from the ICAC below 6 million tonnes.
According to the group the Global raw cotton production may rise by 1.78 million tonnes, which has increased to 4.18m tonnes its forecast for the US crop, putting its figure in line with that of the US Department of Agriculture. The group also highlighted a "difference" in inventory moves, with China's stocks seen dropping by nearly 2m tonnes over 2017-18, as the country extends a sell-down of government inventories swollen by a now-reformed guaranteed pricing scheme for growers. In the rest of the world, "an addition of similar magnitude is foreseen" cotton in inventories.
It is surprising to know that the govt still thinks polyester is a fibre for high class and cotton is for poor class, that is the reason growth is restricted. Soon a day will come when govt will have to think independently, if it wants to grow at bigger pace like Bangladesh/Vietnam etc, says R K Vij, Advisor, Indorama Synthetics
The manmade textile industry wants the government to lower the levy for manmade fibre (MMF) products. MMF fabric and yarn, dying and printing units as well as embroidery items would attract 18% GST. This would result in an increase in input costs and adversely affect the entire textile value chain, industry officials said.
"Keeping the GST at this rate (for MMF products) will undoubtedly cripple hundreds of small and medium synthetic textile manufacturers," said J Thulasidharan, chairman, Confederation of Indian Textile Industry (CITI). "The 18% GST rate levied on manmade fibre and synthetic yarn would have inverted duty structure problem as the fabric would attract only 5% GST rate," said M Senthilkumar, chairman, Southern India Mills' Association. "Garment units may find it difficult to offset input tax credit (for synthetic fibre and fabric)," said Raja M Shanmugham, president, Tirupur Exporters' Association (TEA). The government should reconsider the rates on MMF products and bring it to 12%, Thulasidharan said. "India is already suffering a huge competitive disadvantage in the global textile market as the MMF-based textile products are attracting higher rates of import duty," he pointed out.
India is facing stiff competition from textile producing countries such as Bangladesh, Vietnam and China, he said. "Keeping the tax rates high will not only escalate textile inflation but will lead to cheap imports from these countries," the CITI chairman said. "The textile sector is suffering from various disadvantages like high energy costs and infrastructure bottlenecks. Keeping the rates of key inputs at a higher level will further affect the competitiveness of the sector," he said.
Industry officials also urged the government to exempt textile jobs from service tax as it would benefit the predominantly decentralised micro, small and medium enterprises, especially in the powerloom, knitting, processing and garmenting sectors.
About 80% of garment units in Tirupur do their business on a job working basis and the 18% service tax on textile jobs would hit them hard, Raja Shanmugham said. The GST rates for all natural fibres including cotton, cotton yarn, fabrics and readymade garments valued below Rs 1,000 has been fixed at 5%, which has been in line with the expectations of the textile industry.
R K Vij, Advisor, Indorama Synthetics adds some more pertinent points, raising issues related to accumulated Cenvat and other, “Manmade fibre sector is not placed well. Since last so many years, the whole textile industry has been demanding fibre neutrality, if we have to grow in line with world pace. Textile cloth producers small or big will accumulate Cenvat credit. It is surprising to know that the govt still thinks polyester is a fibre for high class and cotton is for poor class, that is the reason growth is restricted. Soon a day will come when govt will have to think independently, if wants to grow at bigger pace like Bangladesh/Vietnam etc.
He further adds, “Man made Textiles cloth and garments will become costly because no producer will adjust the accumulated CENVAT credit while selling their goods. Import of manmade fabric will increase because garments producer will get cheaper imported fabric. Blended yarn producers may sell their blended yarns misrepresenting them as cotton yarn. Only efficient producer and composite mill will be able to compete in the markets. Spinners will have to add value, adding fabric manufacturing in their units to utilise the accumulated Cenvat. Govt should consider these facts and rethink their secessions of GST percentage of 12% if not the 5% on Manmade fibres and yarn including on raw material PTA and MEG.
In his opinion, 18 per cent tax on job work will require a lot of compliance. Also fabrics import price now with removal of cvd n sad but GST input credit to importer need to be looked into. Man made fabrics may have some impact as recycled polyester is same duty as 18 per cent, as earlier it was 2 percent only.
The recent levies of taxes under new GST regime had brought big benefits to the composite textile units as compared to the independent textile manufacturing units. Manufacturers who are getting their goods manufactured on job basis are the worst sufferers.
They have to pay GST @18%on yarn or 5%in case of cotton , 18%on job weaving charges and also 18% on job processing charges whereas composite units are not required to pay any GST at these stages. No textile manufacturer is entitled for any refund. Means GST paid on all inputs are higher since their conversion cost is very less than payable on fabrics then no refund will be allowed. This would lead to cost escalation and make their fabrics costlier than composite units. This is for sure under the current tax regime job manufacturers who are not owning their industries will be left with no alternative other than to close their operations.
A composite manufacturer will have to pay tax only at fiber stage and then finally on fabrics against which duty paid on fiber will be set of. As against this merchant manufacturer will have to pay tax at yarn stage, weaving stage and processing stage and this altogether is more than the GST payable on fabrics. This is against the basic principal of GST that full input credit is not allowed since it results into refund.
This differentiation between composite units, weaving units and finally manufacturers on job basis would be substantial and will lead to closure of the business by job manufacturers. Government's policy had been always to safeguard the interest of the small and less resourceful merchant manufacturers whereas their this step has gone drastically against the small manufacturers and traders.
Strong representation is being contemplated to be made to the finance ministry/GST council to save this section of manufacturers from this anomaly. This is possible only if the textile services like weaving, processing should be exempted from the preview of GST. If at all this is not possible then these services should not be taxed at a rate more than the rate of output that is 5%. Small weaving units and merchant manufacturers are catering largely to the clothing needs of the poor and economically weaker section of the country.
