Bangalore-based garment manufacturer and exporter Gokaldas Exports Ltd has decided to expand its presence in Tier-II cities, a top official of the company said. The company is looking at Tier-II cities to save labour cost and rentals, Gokaldas executive director Rajendra Hinduja said.
?Today, rentals in Bangalore are sky-high. It?s Rs 15 per square feet for industrial sheds. (It is) far too expensive. It should be Rs 7-8 per square feet to sustain costs,? he said.
Gokaldas, which currently operates units in Bangalore, Chennai, Mysore and Tumkur, would establish garment-manufacturing facilities in Hubli and Mangalore in Karnataka soon.
The company would set up production centres with 1,000 sewing machines by pumping in an investment of Rs 10-15 crore each in Hubli and Mangalore during the financial year 2008-09, Hinduja said. The proposed plants in Hubli and Mangalore would have a production capacity of 2-million garments each per annum.
He said the company?s manufacturing unit that is coming up in Hyderabad would commence production in April this year with an annual capacity of 2-million garments.
The current production capacity of Gokaldas stood at 24 million garments per annum, which would go up to 26 million garments per annum after the Hyderabad unit commissioned production this year.
While declining to provide year-on-year projection for 2007-08, he said, ?It will be little improved compared to last year?s performance.?
He said the Indian apparel exports was growing at 10-15% every year, but this year the export will not even touch last year?s figures due to rupee appreciation. During 2006-07, the apparel exports touched $9.5 billion but this financial year it would hardly touch $8.5 billion.
In addition to stronger rupee, he said the industry was also hit due to service tax on rentals, as 80% of the industry is rental based.