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A trade fair for micro, small and medium enterprises is being held in Orissa, January 8 to 14, 2016.It had a focus on agriculture, food processing, handicrafts, handloom and textiles, tourism, engineering, chemicals, metallurgy, plastic and polymer, marine processing and packaging.
The fair was organised to provide a platform to entrepreneurs of the state to showcase their products and services and directly interact with buyers.
Apart from proving a platform for micro, small and medium producers, the exhibition is inviting business delegations from foreign countries through their embassies in India for popularisation of Orissa’s products. Attempts are being made to attract overseas entrepreneurs to invest in Orissa in sectors like engineering, chemicals, metallurgical processing, marine processing, agriculture, tourism and textiles.
The popularity of the Orissa trade fair has increased over the years. In 2013 the total foot fall in the fair was around 1.40 lakhs which increased to 2.67 lakhs in 2014 and further to 2.50 lakhs in 2015.
Meanwhile Bangladesh’s readymade garment manufacturers have been invited to invest in Orissa’s textile sector.
Bangladesh sees a lot of scope for business with Orissa, especially in the light of the recently signed shipping agreement between Bangladesh and India.
The stock of Siyaram Silk Mills has jumped 23 per cent in the past three months, a rise that can be attributed to catching up of valuation.
Siyaram is a fabric-to-readymade garment manufacturer.
Even after the sharp run-up in the stock price, it is still trading at 13 times its earnings multiple, when it should trade in the price-to-earnings multiple range of 18 to 20, given its strong financials.
In the past five years, the company has demonstrated a steady 10 to 15 per cent sales growth, consistent operating margin of 12 to 13 per cent, and return on equity of around 20 per cent. Besides it has regularly paid dividends.
Such consistent financial performance can be attributed to a shift in Siyaram’s model over the past few years, which has helped the company move up the textile value chain. From being a pure fabric manufacturer, the company stepped into manufacturing of readymade garments with brands such as Oxemberg and J Hampstead.
At present, its readymade garment segment contributes 16 per cent to the company’s total revenues from 10 per cent in financial year ’11. In the same period, the company’s revenues share from the fabric segment fell to 75 per cent in financial year ’15.
The supply chain of the garment industry in Bangladesh, the country's biggest export earner, is plagued by irregularities and corruption for which global apparel buyers are also responsible, according to a report of Transparency International Bangladesh.
The anti-corruption watchdog detected anomalies at 16 stages -- from order placement to shipment -- in the apparel supply chain. According to the TIB, irregularities and corruption at different stages of the chain have become almost a custom in some cases. And various stakeholders, including factory owners, buyers, auditors and inspectors, are involved in it.
The TIB prepared the report based on information gathered from November 2014 to April last year through interviews of stakeholders, including buyers and global brands or their agents, garment factory owners and exporters, workers, compliance auditors, factory inspectors, merchandisers, shipping agents and bankers. The TIB conducted the study jointly with Transparency International, Germany. The TIB said this is a qualitative study through which it could detect the stages of corruption in the supply chain of garment industry. It didn't quantify the amounts of illegal transactions that take place in the supply chain.
The study found that buyers occasionally take various strategies to cancel orders. Those include imposing new compliance conditions on suppliers, manipulating compliance reports, raising false allegations and cancelling orders at will. Though buyers' representatives or agents monitor the entire production process to ensure product quality, a section of buyers, at times, raises false allegations about product quality after shipments reach the destinations, said the TIB. Sometimes, buyers threaten exporters with cancelling the order and sending back the shipment. In these cases, buyers basically blackmail the production units to get discounts on goods, the TIB added.
The TIB found that a section of buyers manipulates compliance reports on supplier factories when they are not interested in taking delivery of goods. They contact auditors or inspection firms, seeking to manipulate reports to show the suppliers haven't met all conditions. This makes it easier for buyers to cancel orders. According to the TIB, there is prevalence of bribes for influencing purchase decisions of buyers or agents.
To address the issue of irregularities in the supply chain of the garment sector, the TIB has suggested a set of recommendations that include sudden inspection of factories, formulation of a "Moral Code of Conduct” for themselves, the government issuing a specific identification number for each factory to check anomalies.
www.ti-bangladesh.org
Monsanto Company is developing a new, state-of-the-art cotton seed processing facility in Lubbock, Texas. In cooperation with the Lubbock Economic Development Alliance (LEDA), construction of the new facility is expected to begin in March 2016 and be completed in the second half of calendar year 2017.
The new Lubbock site represents a $140 million capital investment and is expected to employ 40 full-time personnel. The site will be established as Monsanto’s primary US hub for all commercial cotton seed processing operations – to include cleaning, treating and bagging of cotton seed – while existing processing facilities will transition to support storage and warehousing, pre-commercial operations and research in various parts of the Cotton Belt.
In October 2015, Monsanto announced a number of strategic actions to help drive greater scale in its business and further enhance its overall operations. Location of the new hub facility, Monsanto’s established relationship with LEDA and the opportunity to leverage new production technology factored into the decision to consolidate and optimize its US commercial cotton seed processing operations.
www.mosanto.com
The Union Agriculture Ministry recently issued the Cotton Seeds Price Control Order for 'uniform regulation' of sale price of cotton seeds with existing and future genetically modified technologies. Though the aim of this order is to control the licence fee, royalty trait fee and licensing terms on which the technology providers make available innovative technologies, the companies feel that the order will make a direct impact on their profit margin.
The seed companies are already in a tussle with their multinational technology partner Monsanto over the royalty issue. Monsanto has taken nine seeds companies to court over non-payment of around Rs 400 crores. In the event of the prices being reduced, the companies want royalty also to be similarly cut. For now, each state fixes its own royalty. Maharashtra last year had reduced the BT cotton seed selling price by Rs 100 to Rs 830 for a packet of 450 gm, in Telangana and Andhra Pradesh, it sells at Rs 930. The seed companies pay royalty in the range of Rs 100-150 to the technology provider.
Seed companies have alleged that the technology they use for BG-I and BG-II has not been upgraded by Monsanto for years now, and this order could further deny any new upgrades in seed technology to the farmers.
At Heimtextil 2016 in Frankfurt, Lenzing is presenting its new marketing approach for its specialty fibres, Tencel and Lenzing Modal. Tencel and Lenzing Modal are already used in a variety of home textile and interior applications. To pave the way for additional applications for the Tencel fibre in the home, Lenzing has developed special fibre types which can be used in carpets and upholstery fabrics.
The fiber's extremely high strength profile stands Tencel in good stead since it allows its use in these hard-wearing applications. Above all, a luxurious sheen, intensive colours, and silky, elegant surfaces can be attained with these fibres. The moisture-regulating fibre property of Tencel benefits the indoor climate and contributes towards well-being.
Optimum sleeping comfort is also of prime importance to business travelers. The concept of 'botanic living' becomes a reality with Lenzing fibres. They allow for a natural indoor climate which is completely in keeping with the current trend in the hotel industry. Lenzing is stepping up market activities to further expand the hotel segment for Lenzing fibres.
www.lenzing.com
China's Ministry of Industry and Information Technology has said that the country’s textile and garment exports continued to decline last year, mainly due to the good performance in the previous year and exchange rate fluctuations.
The sharply depreciated yen and Euro had a direct negative impact on textile exports, as Japan and Europe have been China's main textile export markets. From January to October in 2015, the textile industry saw positive growth in exports to the United States, Africa, South Korea, but exports to other markets dropped during the same period.
China's textile export to the European Union reached $44.86 billion, falling by 10.6 per cent year-on-year, the export to Japan reached $18.8 billion, dropping 12 per cent, and the export to ASEAN countries hit $29.03 billion, slipping 1.7 per cent, according to customs data.
In November, retail sales revenues of clothing of China's 100 key retail enterprises fell by 5 per cent year-on-year. Meanwhile, from January to November, national online sales reached 3.45 trillion yuan, surging 34.5 percent year-on-year, and sales of clothing jumped 23.5 percent, the ministry said. As China is undergoing an economic transformation, high-tech industries are springing up in China's developed coastal regions to replace labor-intensive industries such as the textile industry.
During the same period, the added value of the textile industry increased 6.4 per cent year-on-year, and the sector continued to expand the scale of production. But the decreasing quality of domestic cotton has forced enterprises to largely import cotton from India and Pakistan. In addition, weak domestic consumption, shortage of orders, increasing costs of labor and electricity, and environmental controls have left Chinese textile companies striving to cope with international competition, the ministry added.
www.gov.cn
The UK Fashion & Textile Association (UKFT) has announced it has become the Sector Skills Body for the Fashion & Textiles industry. UKFT has taken over the management of current apprenticeship framework and also the responsibility of both registration and certification of apprentices in England, Scotland and Wales. The Association will work with devolved nation’s stakeholders to ensure that National Occupational Standards and apprenticeship provision for the sector are maintained and developed.
The announcement came as UKFT, Damian Collins MP and Graduate Fashion Week hosted key policy makers, industry influencers, major retailers, leading brands and UK manufacturers at the House of Commons to celebrate the fashion and textile industry.
“With industry skills and training being a huge part of UKFT’s commitment to the sector, this is very welcome news. We are proud to take over from Creative Skillset, which has supported the industry since 2010 and we thank them for the achievements made during that time. It is extremely important to ensure the management and certification of apprenticeships and other vocational qualifications is closely aligned to the needs of the industry,” says Adam Mansell CEO, UKFT.
Mark Froud, MD, Federation for Industry Sector Skills & Standards (FISSS) said, “We look forward to working with UKFT as being close to the employers is critical and they have their trust and respect. UKFT has a strong approach to ensuring that Apprenticeships and training are kept up to date in what is an increasingly fast paced world.”
"While the rupee having depreciated substantially in the past year to trade at about 66.60 to 66.80 against the dollar compared to around 62 a year ago, other emerging markets currencies including the Chinese yuan have weakened much more sharply, which makes it even cheaper for foreign countries to buy products from countries such as China."
India has set a target of $900 billion in exports by 2020, from the $470 million reported in the last financial year. However, according to a report by Crisil Research, “This might prove a tad too ambitious if the current cyclical slowdown lasts and structural issues are not addressed”.
Slow global economy and dwindling competitiveness
India’s merchandise exports fell by 18.5 per cent in dollar terms to $174.3billion in the first eight months of this fiscal year, between March 2015 to April 2016. “Falling competitiveness is one of the structural factors restricting export growth,” the report points out, adding, “For key export items such as gems and jewellery, and textiles, revealed comparative advantage has come down over the years. Non-tariff barriers such as high transaction costs and infrastructure deficit, too, create hindrance as India continues to lag most Asian peers on these parameters.”
“Small wonder India’s export performance has suffered. Export destinations are not doing well, prices of many export items have fallen, and the rupee, too, has appreciated in real terms against a basket of 36 currencies. But our analysis shows the decline in exports is more than that warranted by these factors,” says CRISIL report.
It further points out that while global real GDP growth picked up from 3.2 per cent in 2009-11 to 3.4 per cent in 2012-14, India’s real growth of exports plummeted from 11.1 per cent to 4.1 per cent. “Almost half of all India’s exports are sent to other countries in Asia and the next biggest market for its goods is Europe. Economic weakness in these areas is taking its toll. Country-wise, the biggest contributors to the slowdown in India’s exports have been China, Saudi Arabia, Singapore and Japan, all of which have seen exports contract by double digits in fiscal 2015 and so far in this fiscal,” says Crisil, adding. “These are followed by European markets – the UK, Netherlands, Belgium, Italy and France – all showing continuous decline.”
No sign of revival in sight
Experts feel with official data showing the contribution of exports in India’s GDP falling from 25.2 per cent in the 2013-14 financial year to 21.2 per cent in the first half of the current financial year, there is no hope of a rebound in exports in the near future. While the rupee having depreciated substantially in the past year to trade at about 66.60 to 66.80 against the dollar compared to around 62 a year ago, other emerging markets currencies including the Chinese yuan have weakened much more sharply, which makes it even cheaper for foreign countries to buy products from countries such as China.
Along with reforms in logistics and other sectors and government support in the form of able export policy, India’s exports sector will also have to deal with the threat of being negatively impacted by the Trans Pacific Partnership, a trade agreement which was reached in October 2015 by 12 countries, including the United States, Vietnam, Japan, Mexico, Peru and Australia. “Trans Pacific Partnership countries account for 25 per cent of India’s exports. So by not being a part of TPP, India risks losing out a significant chunk of its export market to rivals,” Crisil warns.
“Clearly, India needs to invest quickly in skilling its large manpower and developing infrastructure to be able to attract foreign investment and become a world-class exporting hub,” the report sums up
www.crisil.com
Pakistan’s readymade garment manufacturers have urged the government to address all issues of the value-added textile sector immediately, as the continued drop in exports may widen further due to the Vietnam-EU free trade agreement, a massive decline in cotton production and a high import duty on yarn.
Pakistan’s export market has already shrunk due to high energy costs and discriminating import duties on industry raw materials. Exports of textiles and clothing have been declining sharply during the last six months along with low cotton yield.
The country’s garment makers want a reduction in all input costs. The textile sector is burdened with multiple taxes with high cost of inputs, tariffs of gas, electricity, raw materials, and is further harassed due to short supply of all these most essential utilities. Pakistan is facing almost a 35 per cent shortfall in cotton production as cotton bales arrivals have registered nine million bales against the set target of 14 million bales. Despite the huge shortfall of cotton, there is a 10 per cent regulatory duty on cotton yarn imports from India. It is feared that this will not only encourage cartelisation but will also squeeze raw material availability in the country.
Vietnam is emerging as a major threat for Pakistan’s textile sector.
