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Special series : INDIA/Bangalore-Chennai - Top interview
Key to Growth is Reduction in Cost, Quality and Lead Time
AMBATTUR CLOTHING LTD : VIJAY MAHTANEY, Managing Director
Front view of the plant
The new plant under construction. Expansion is made at full speed to meet the yearly growth of the business.
BRICs real India has been drawing attention as World Economy Leader of 21st century. Since independence in year 1947, Socialist Economy System of Soviet Union was adopted as model by then Prime Minister Late Pandit Jawahar Lal Nehru until year 1991 when Prime Minister Mr. Narsimha Rao assumed office. He executed reforms by taking daring decision on Economic Liberalization. As a result inefficient dead government enterprises were abolished, principle of free competition was introduced and private enterprises were encouraged. Thus economy of the country on the verge of bankruptcy was pushed up to economic power positioned at No.5 in the world.
Since reforms, India has been retaining its high economy growth rate. During these 18 years this healthy condition is being maintained and not even once it has recorded negative GDP growth. Major factor supporting Indian Economy has been the Abundance Work Force. Though various countries have shown their candidature ship as China +one but it is India which is seen as a promising country. Area wise it is the 7th largest country in the world, and is the 2nd largest populated behind China with population of 110 Crores. In near future India is expected to be the country with best available people leaving behind China which is following extensive measures to curb birth rate. Peculiar feature of population of India is the availability of young working force in abundance.
As per legal norms in India, working age is minimum 18 years. Every year 1crore 20 lac (120, 00000) people reaching the age of 18 years are added. Even if higher study students are there, every year fresh working force also is born which is a major attraction for the industry. However, on the contrary, it would be highly risky for India if this work force won’t be given a chance to work.
Recently India is being known for supporting IT Industry worldwide. Even if IT Industry grows, it can absorb mere 200000 to 300000 people. Therefore labor intensive industry absorbing a large quantity of work force becomes indispensable. It is considered that Indian Garment Industry would play an important role in providing employment to abundance work force available.
India has been driving South Asia Economy. Apparel Industry here is evaluated high technically. OF late it has entered aggressively into surrounding countries including Bangladesh too. With abundance man power availability, India is being considered as the most potential manufacturing base for apparel industry.
This time we visited the garment factories in Bangalore, Chennai in south of India; most sought destination for garment industry.
Realizing high quality, high technical skill and thorough machine management
Caliber of the Company
Company produces all items in fabric. It caters to various brands like Ann Taylor, Armani Jeans, Banana Republic, Bass pro, Croft & barrow, Diesel, Dockers, Eddie Bauer, Esprit, Gap, JJill, Kohls, Levis, Mexx, s.Oliver, Talbots...etc. Production percentage of bottom is 65% whereas tops contributes to 35%. Production is done for almost four seasons in a year. Average lot size consists of 8000 pieces.
Two units in Chennai are flexible and can produce all items depending upon the requirement. Rests of the units are dedicated ones producing various items like Men,s Wear, Ladies, Wear, Formal, Casual Top or Bottom.
We visited the factory in collaboration with manufacturing partner "MINTAY" of Turkey, a brand known for its high quality, producing men,s and ladies, shirts.
Working environment inside factory was bright and tidy with Seiri, Seiton of 5S embedded into the culture. One can visualize high level of 5S from the photographs shown too. This proof is good enough to understand trust leading brands of Europe and America has in the company.
Managers, training/education is the secret of high technical skill
In the company approx 300,000 shirts per annum are being produced. Sewing machines are mainly standard single needle machines- DDL-9000. According to General Manager- Mr.I Golhan Iscen, "Indian operator,s learning of technology is fast, operation is stable and quality is high. We are satisfied with the production being carried out here".
By just having a look at the factory, one can visualize stringent, high level environment control being followed. To attain this, education programs are being conducted on weekly basis;like every Monday 7:00 is the time for Supervisors Training Program, Thursday 7:00 is the time for Line Chief, and Friday 7:00 has been fixed for Supervisor,s weekly meeting means extensive communication is also carried out.
Although speed of growth of an Indian apparel factory does not match China but potentially it is not inferior to China either. "China witnesses rapid growth, whereas India grows slowly" was the accent of Mr. VIJAY, Managing Director, reaffirming the technical caliber of Indian Apparel Factory.
Mr. I Golhan Iscen,s (General Manager - MINTAY (Turkey)) evaluation about Indian operators is high. "Mastering of systems by Indian operators is extremely fast. And quality also is consistent" said he.
nside factory is bright. Machines also have been kept in good condition
Two Button Hole Machines being used together LBH-1790
Mainly DDL-9000 series on production line
spread across Chennai, Dhaka and Bahrain.
- You started this company in year 1981, isn,t it? According to the information we have, originally your father was into Apparel business in Mumbai and from there Mr. VIJAY, you, moved to Chennai to establish your own company“Ambattur Clothing Limited”. Is it correct that initially you started with One Production Line of just 50 Machines?
- Yes, that,s right. At start, we were very small with manpower of less than 200 nos. in all.
- Since then around 30 years have passed. At present not only in India but in neighboring countries like Bangladesh also you have incorporated your company.
Every time I ask, there is an increase in number of factories, I am not able to grasp the speed with which no. of factories is increasing. (Laughs!) By the way, how many factories you have at present?
- In India we have 8 units in Chennai employing approx 8000 people, one each in Bahrain and Dhaka -Bangladesh with manpower of 1500 people and 2000 people respectively. In totality, we have about 4500 machines and a work force of 12000 people.
- You started with 100% export. Do you still maintain the same?
- Yes, presently also it is 100 % export oriented. Actually in the past I launched my own brand and was producing products for the domestic market. A client approached me and wanted me to sell that label to them. Five years ago I sold that brand. Therefore, right now, it is 100% export only.
- Is it so? It is unfortunate. But please correct me if I am wrong, "you have not yet lost interest in the domestic market isn,t it?"
- Exactly, in India, I feel apparel products in Domestic market have bright future. It is enjoyable market so I am interested.
When I sold my previous brand, commitment was there that I would not be conceptualizing new competitive brand for next five year. Very soon that restriction would be over and I am again working on launching my new brand in near future.
Key to Survival is---
Delivery (Lead Time),Cost,Quality
- Very soon you will be completing 30 years in this business. You have been making almost all types of items in fabric.
All these years, India also has witnessed drastic changes in the atmosphere pertaining to apparel industry, what changes, according to you, have taken place?
- Exactly! Things are changing, particularly in the last three years there have been stupendous changes. Scenario is altogether different. Customers have become tougher pertaining to cost and for quality also as well. Expectation level is very high. Lead-time has reduced by almost 35% during these three years.
- Labor charges in India are lower compared to China. And working force is available in abundance. Still then you find difficult to cope up with?
- Yes, Compared to China, wages are little cheaper here but customers, needs are becoming stringent day by day. We need to find out for how long we can continue with low cost maintaining high level of quality.
- Do you mean to say venturing into Bangladesh is a solution to this? How about the situation in Bangladesh?
- Factories within India have technology. To some extent creativity also is here. In order to utilize the skill available here in India, we studied about low cost manufacturing facilities in neighboring countries and conducted a survey in Vietnam, Bangladesh, Sri Lanka, and Pakistan etc. Considering factors like technology, cost, work force availability etc, we adjudged Bangladesh to be at the Top. It has advantage of being a part of India before independence and we are acquainted with its culture too.
- Do you have any plans to shift manufacturing base to Bangladesh in future?
- yes, in future, India will become the Creative Management Center and we are thinking of having production at Pakistan, Bangladesh and Myanmar. People of Bangladesh have high level of technical skill and are very fast in mastering the systems. Apparel Production in Bangladesh has already surpassed India in terms of value and quantity. Government is also promoting exports . Garment production has bright future in Bangladesh.
We would enhance level of creativity so
that proposals to the clients can be made.
- For India to focus on Creative tasks rather than production requires upbringing of management level people and endeavors for enhancing level of planning and designing. Isn,t it?
- There is no problem as far Managers are concerned. In this company we have 10 directors at present. All are highly professional. In addition, since last three years, we have a design team too. We are able to design 20 % of the products right from concept stage. In future, we have plans to design 100% products at our end in next five years.
- You are procuring fabric and accessories like buttons etc on your own, and if designing capability is also achieved, good proposals to the clients can be made. A while ago, you mentioned that lead time has reduced by 35%, do you have repeat orders also?
- As our customers are retailers we hardly have repeat orders. However, in Europe, trend is gradually changing. Initial orders are in small quantity and if sale continues, repeat orders are also there. In addition, recently under Vendor Management Inventory, instead of customers, stocks are maintained by the vendors. 5 Years ago, there was nothing of this sort. Right now VMI level is 20% and is expected to grow up to 50% in future.
- In this case, factory will have to serve partially as distribution channel also. For getting repeat orders will you be required to maintain stocks at your end?
- To hold inventory and maintaining stock for fashion items is risky. Therefore i t ,s difficult. However, for so called standard items it is possible to stock raw material.
Future plans include expansion of factory
in Bangladesh, developing domestic
brand, launching knit ware.
- During these last 30 years, your company, representing south India, has become the face of Apparel Industry. How about your future plans?
- As I just told you, foremost plan is to launch my own domestic brand. Besides, I have plans to set up another manufacturing unit in Bangladesh. Bangladesh is known for low cost, low quality, operators, technical level is good. In Bangladesh unit, operators are taught in the factory premises itself. Learning is fast. There are many young operators and can upgrade level of quality. In addition one more thing I would like to do which is knit products. So far I had been making apparel with fabric only. Also I am gearing up for cutting - sewing facility.
- We have been told that in knit too you would have plans to go for complex and high-grade ladies item. It will be a new challenge, isn,t it?
- Sometime back I planned for this and now I am ready with the preparations. As per plan we shall be able to start mass production within six months.
- Last but not the least; you have been patronizing us by using JUKI Machines. If you have any specific requirement or demand, kindly let us know.
- Right from the beginning when my father started business, we have been using JUKI Machines. Of course, there have been machines from other manufacturers also but 70% of the machines are from JUKI Brand. Above all, technically these machines are superior and quick service also is extremely good. Juki machines are reliable. In Sewing Machine Manufacturers Mr. NIHEI is the only person whom I know directly. I have not met other machine manufacturers personally.
- Thank you very much. We look forward to your support and cooperation in coming years too.