Considered as a basic product but with a demand for a high level of expertise in manufacturing and designing, men’s shirts constitute one of the core products for many exporters in South of India such as Chennai and Bangalore. Over the last few years, market conditions have made this category very challenging, more so as our neighbours such as Bangladesh strengthen their hold on the product. Yet, winners exist and many of them possess integrated units or factories that have great product development support and specialized technology for making a perfect shirt. In the meanwhile, the domestic market too has become upwardly mobile, creating more opportunities for manufacturers.
The global shirt market (as per data from Statista, one of the biggest data management company in US and EU), stood at US $ 51 billion with a total consumption of 2.5 billion pieces in 2016 and is expected to reach US $ 58.5 billion (in terms of value) and 2.83 billion pieces (in terms of volume) by 2020. Though India is a niche and small player in the segment, it has much to offer both in the casual and formal wear category because it has a strong fabric base in both yarn dyed and solid fabric. Despite this benefit, many shirt makers are facing a tough time, primarily due to the reduction in duty drawback.
For many players, the market is stagnant with very little or moderate growth. Ruchit D. Kapadia, Director of DKK Exports, Mumbai who is majorly into shirts shared, “Apart from the fact that the demand from international market is on a decline due to the market slowdown, the major issue for us is the recent change in policies. Earlier with duty drawback and state levies, we were getting nearly 11.5 per cent of the total export turnover from the Government’s side which has now reduced to just 3.5 per cent. We can’t survive in this way.” As a solution, Ruchit is working on fabrics, be it for fabrics of lesser weight or cost-effective blends. “We will see how the buyers take it and move accordingly,” he added. Manufacturing casual shirts, DKK Exports is working with the retailers having 200 or more stores.
Some of the merchant exporters are doing good business in shirts. Cactus Clothing, Bangalore and Sarju International, Mumbai are perfect examples of this category. But all the credit goes to their individual efforts as these exporters are always on their toes. Amit Goyal, MD of Sarju International accepts that buyers don’t want to place all orders to one particular country like China which is the reason that he is getting orders but his costing is almost similar to that of Bangladesh.
Moving forward, many of the shirt manufacturers also shared that more than casual shirts, there is greater expectation of demand for formal shirts in both the export and domestic market, as the majority of young generation use formal shirts for their professional assignments when they are in offices, while they prefer using tees the rest of the time. Hence, the number of men going for casual shirts is much less compared to the bigger crowd who have a greater need of formal shirts.
Expecting a growth of 10-15 per cent in the next fiscal in shirt business, Steps Sourcing India, Coimbatore is working with reputed brands like Peter Werth, Bench, Tesco and BHS etc. The company can do 6,000-7,000 shirts per day, depending upon the style and workmanship involved. “Yes, pressure is very much there, but we reduce our margin and in few styles, we work on the same without profit also, just to retain the client. Some buyers understand the issues we face and support too. We find more demand in formal shirt and have good potential business in countries like UK, US, Germany and France, because population and ratio of adult is more in these countries,” said N Krishna Kumar, CEO of the company.
The company procures twill, canvas, drill, poplin fabric for casual shirts and procures poplin, oxford, jacquard kind of fabric for formal shirts. “We can handle 100% cotton, cotton/polyester, cotton viscose, 100% polyester, tencel kind of fabrics,” adds Kumar. The strength of the organization is in casual as well as formal but right now it is more into the business of formal shirts. The company has its offices in Tirupur, London and Netherlands.
Some other shirt players feel that the domestic market is currently not as strong as it used to be and others feel that the export market might be in a better position in future. “Current scenario will be seeing stagnation in domestic market, but in export, it will grow due to better facilities being created with larger size of units coming into mainstream and also due to China becoming costlier. We expect business to also rise because Bangladesh is no longer as cost-effective as it used to be,” opined Nimish Shah, Partner, Amber Home, Mumbai. The company which was a dedicated home textile MSME, has recently entered into apparel manufacturing and export business, primarily focusing on shirts and is further geared up for the same.
Some of the exporters are managing or growing in the shirt segment due to their strength of having their own infrastructure for yarn dyed fabric which makes them comfortable as well as reasonable cost-wise. This advantage helps them extend their handling capacity in smaller quantities also. Moreover, flexibility of small as well as big orders is a point in favour of Indian exporters but they are not getting its full benefit. Is this due to the labour cost and policies that create hindrances in getting bulk orders or anything else? Reflecting on the same, CK Tirumeni, Managing Partner of the 23-year old Abirami Exports, Coimbatore said, “We, or most of the Indian shirt manufacturers, are doing smaller quantities as buyers prefer China and Bangladesh for bulk orders. One of the main reasons for this is the efficiency of the Chinese or Bangladeshi operators which is nearly double of the Indian workers. If we get the bulk orders consistently, our workers may work with higher efficiency/productivity as they have shown some improvement time to time. But the truth is that we are not getting consistent bulk orders. We will, however, continue approaching buyers for mass orders as there is no other alternative.” He further briefed that his shirt business is performing in an average way and it is difficult at this point of time to predict about its development in future.
Doing 300 to 400 pieces per style and mainly in casual shirts, Abirami Exports is also into in-house fabric production. The company is having 60 per cent share out of its total production dedicated to shirts and is exporting to countries like US, Germany and Fiji. It is further exploring more tourist destinations like Fiji, French Polynesia as newer markets. In smaller orders, fabric procuring is an issue which is being faced by many companies. “To meet the MOQ issue on fabric, to keep the raw material and production cost consistent to quote competitive price to the customer, are the key challenges in this business segment,” adds N Krishna Kumar.
There are many such examples where companies do have comparatively big orders but consistency is missing, while technical experts believe that continuous and big orders of formal shirts is something they prefer. Recently Global Mode & Accessories, Bangalore successfully completed an order of nearly 60,000 pieces of shirts, but at present, they don’t have any orders for shirts. “Due to various reasons like less style changeover time, more automation, less defect in fabric for shirt (as it is mill- made mostly), we can achieve more productivity, efficiency and consistent quality but it is only possible when we have bulk as well as continuous orders,” shared Shashi Bhushan Jha, GM Quality of the company. The company, having 1,000 advanced stitching machines in this unit, is working for top brands and is even into womenswear.
India has 10% share in EU shirt market
• EU imported shirts worth 3,302 million Euro from January to July 2017 which is (-) 2.04 per cent less compared to that in the same period of 2016. But when it comes to overall clothing import, in these six months, value has increased by 0.96 per cent, and quantity has decreased by (-) 0.90 per cent.
• India has just 10 per cent share in this total import of shirts by EU, while Bangladesh has 31.35 per cent, China has 16 per cent and Vietnam just has 5 per cent. Though all four major exporting countries witnessed negativity, China was the biggest loser as its share decreased by (-) 4.85 per cent and India was down by (-) 1.97 per cent. Bangladesh saw a fall of-0.35 per cent and Vietnam lost by (-) 0.93 per cent.
• In terms of quantity, in the same period, there was also fall of (-) 1.88 per cent in total shirt import by EU and all the above mentioned 4 export countries noticed downfall in the same.
• Euro 35.36 will be the estimated average revenue/capita by 2020 in shirts which is currently Euro 34.38.
India gains ground in US shirt market
• US imported shirts worth US $ 2,193.21 million from January to August 2017 which is (-) 6.44 per cent less compared to that in the same period of 2016. But when it comes to overall clothing import, in these eight months, total value decreased by (-) 1.88 per cent, but quantity has increased by 0.90 per cent.
• India has just 8.13 per cent share in this total import of shirts by US, while Bangladesh has 18.16 per cent, China has 21.91 per cent and Vietnam has 11.88 per cent. India and Vietnam gained in this product category by 6.39 per cent and 3.60 per cent for this period, while Bangladesh and China witnessed negativity. Bangladesh noticed fall of (-) 14.77 per cent, while China lost (-) 9.37 per cent.
• In terms of quantity, in the same period, there was also fall of (-) 4.22 per cent in total shirt import by US. Despite that, India gained by 20 per cent and Vietnam by 4.67 per cent. China noticed fall of (-) 7.17 per cent and Bangladesh lost by (-) 11.81 per cent.
Amber Home will expand its capacity by 5 times
Amber Home (India) is further planning to expand its apparel business with more capacity and newer markets. Currently with an in-house set-up for more than 1,000 formal shirts per day, the company wishes to expand it to 5 times more in the next 2 to 3 years as it will target domestic market also. “We were looking to do something new, and found that garment manufacturing and export business has more opportunities, and so far, our experience has been a positive one. Our target is to make 10,000 shirts a day by 2020,” revealed Nimish Shah, Partner of the company. As of now, its entire capacity is being utilized for exports. The company is working with major retailers of the South American market. The average FOB of the shirt is around US $ 4. The company currently has two units in Bhiwandi and Sholapur for shirts manufacturing. Bhiwandi is already an established hub for textile and apparel and is also closer to Mumbai making it beneficial for the company. Easy fabric availability in Bhiwandi is an added support. The company has also selected Sholapur for its operations and its cost-effectiveness. Doing an annual turnover of nearly Rs. 30 crore per year, the company has 50 per cent share in apparel business which will grow more in the coming years. “We will try to add more apparel products in our portfolio like sleepwear, kidswear and womenswear,” says Nimish. It uses blends like cotton-polyester (52-48) 95% modal anti-microbial yarn and 5% spandex, viscose and 95% cotton and 5% spandex.
