Tirupur exporters see surge in demand

My recommended SEL Manufacturing Company Ltd touches Rs.86.25 on Thursday's trade.  

The New Year has brought good news for the textile exporters in Tirupur, Tamil Nadu. Exporters here say their order books have started showing recovery, but margins continue to be narrow. They said while the country’s apparel exports were likely to decline, exports from Tirupur would remain flat at Rs 10,500 crore. The town, one of the country’s biggest textile-apparel hubs, witnessed a 15 per cent drop in exports till November.

To address the cost pressure and labour issues, these units are planning to invest around Rs 500 crore during the next financial year in automation and have brought in 25,000 people from Bihar and Orissa to address the tailors’ shortage.

“The order book has started recovering for the units across Tirupur and order enquiry is also good in the last few weeks. We estimate to close the current fiscal with Rs 10,500 crore, similar to last year’s level,” president, Tirupur Exporters’ Association and the Federation of Indian Export Organisations, A Shaktivel, told Business Standard.

It may be noted that recently Apparel Export Promotion Council (AEPC) Chairman Rakesh Vaid said that the country’s apparel export was likely to drop by 7-9 per cent during this financial year, compared to last year’s $10.13 billion (Rs 47,104 cr approx).

According to AEPC, Indian apparel exports to the US declined by 6.46 per cent to $2.27 billion (Rs 10,555 cr approx) between January and September 2009 from $3.07 billion (Rs 1,427 cr approx) in the corresponding period last year.

However, Chinese exports gained by 1.95 per cent, rising to $17.23 billion (Rs 80,119 cr approx) and Bangladesh’s were up 2.35 per cent to $2.66 billion (Rs 12,369 cr approx). In October alone, the country’s apparel exports were hit severely and declined by 17.62 per cent to $603 million (Rs 2,803 cr approx) in the corresponding period last year, said the apex textile body, according to reports.

Exporters could see the recovery in the American apparel market, as orders have started flowing due to which the capacity utilisation has increased to 80 per cent from 50-60 per cent earlier. However, pricing aspect continues to remained a big challenge, added industry representatives. “We have good order enquiry but pricing continuous to be in pressure at around 10 per cent,” A Selvaraghavan, an apparel exporter to Europe said. Margins dropped to 1-2 per cent from 4-5 per cent two to three years ago.

Exporters attributed this mainly to increase in raw material cost, diesel cost (power cut continues for 3-4 hours a day) and logistics cost. They noted cotton prices had gone up by 20 per cent in the last three months to Rs 164 from Rs 135. The industry has asked the Centre to immediately intervene to regulate cotton exports and save the textile industry.