Date:15/07/2005 URL: http://www.thehindubusinessline.com/2005/07/15/stories/2005071501940200.htm

Back Kitex plans to cash in on dismantling of textile quotas

Vipin V. Nair

Kochi , July 14

THE Kerala-based Rs 500-crore Kitex group is tripling its garment production by next year to meet the increasing export demand following dismantling of textile quotas.

The Kitex group, comprising the BSE-listed Kitex Garments Ltd, Kitex Ltd, Anna Aluminium and Saras Spices, is investing Rs 100 crore in expanding its production capacity.

Mr Sabu M. Jacob, Managing Director of Kitex Garments Ltd, said production would rise to 3.75 lakh pieces a day by April next year from the present 1.25 lakh pieces.

"We had started preparing for the post-quota situation... Now big buyers are hunting for good factories to source garments," Mr Jacob said.

The global quota-regime for textiles came to an end from January 1, 2005, throwing open opportunities for textile industries in countries such as India and China to export to the US and Europe.

Mr Jacob said his company's revenues from exports are expected to jump to Rs 700 crore in 2007 from last year's Rs 175 crore. For the current fiscal, Kitex Garments targets exports worth Rs 250 crore.

The company exports apparels, mostly winter clothes, to big retailers and brands such as Wal-Mart, J.C. Penny, Spencer's, Gerber and Fruit of the Loom.

Two new factories are coming up adjacent to Kitex Garments' existing facility in the outskirts of Kochi as part of the expansion. It currently has 3,000 people on its rolls. "We will have 6,000 new employees in these two factories," Mr Jacob said, claiming that with a total of 9,000 people, Kitex will have the largest apparel making facility under one roof in Asia.

As US and European customers are extremely keen on health, human rights and other social standards in textile making units, the factories are being set up at international standards, he said. The proposed investment of Rs 100 crore would be mobilised from internal resources and loans. Kitex is also considering a rights issue should there be a need to tap the market for funds, Mr Jacob said.

Kitex Garments Ltd's share closed at Rs 64 on Tuesday, down from Monday's close of Rs 65.50.

He said Kitex is also planning to form a joint venture with Singapore-based Ghim Li group to set up an apparel park in Kochi. However, initial talks with the State Government to obtain a 104-acre land to set up the park got bogged down on the price of the land. The venture with Ghim Li group envisages an investment of Rs 350 crore and would provide jobs to 12,000 people.