Albeit at a mere 5 per cent as on date, the $1.7-billion textile-to-retail conglomerate Arvind is preparing for a boom in its domestic garmenting business by adding capacities across states in India.
After adding 36 million garments per annum capacity in Gujarat, making it the largest hub in the state last month, the company has now announced a 16-million annual garment manufacturing facility in Ranchi, Jharkhand, at an investment of Rs 3 billion.
The announcement is part of Arvind’s plans to set up large garmenting hubs in Gujarat, Jharkhand, and Andhra Pradesh, with each of the clusters employing nearly 10,000 workers.
The company is anticipating its domestic garment business, where it services international brands and retailers for the Indian market, to flourish in the near future. According to Sanjay Lalbhai, chairman and managing director of Arvind, while exports to its overseas clientele comprises over 90-95 per cent of its garment business, the domestic share is set to rise, with brands and retail business doing well in India.
“Currently, our garmenting business is largely export oriented. But we also service brands and retailers for the Indian market, which is set to grow in the near future. Also, unlike buying fabrics earlier, almost everyone is looking for a complete fabric-to-finished garment solution. Hence, these additional garment capacities are expected to feed this future demand in the domestic market as well,” Lalbhai told Business Standard.
At 16-million annual capacity, the Ranchi facility will not only employ 7,500 people at optimal capacity but also generate additional revenue of Rs 7 billion for Arvind. According to Lalbhai, while it currently converts only 10 per cent of fabrics produced by it into garments, the company aims to convert 50 per cent of its fabrics into garments over the next five years.
Last month, Arvind had announced adding another 36 million garments per annum capacity to its existing garmenting operations. The hub will generate additional revenue of Rs 10 billion for the flagship Arvind.
Employing 12,000 people, the facilities have been set up at an investment of Rs 3.5 billion in Gujarat. While the Gujarat garment facilities manufacture anything from jeans, knitted garments, and athleisure, the Ranchi facility will focus on shirts.
Arvind also runs a garmenting facility in Ethiopia which, at full capacity, can produce up to 50 million garments per annum in the form of innerwear, jeans, and T-shirts.
The garmenting capacity additions are part of its new verticalisation and asset-light strategy for better profitability, wherein Arvind aims to become a strategic end-to-end partner for global fashion houses by deeply integrating into their supply chains.
Recently, the company received approval from the National Company Law Tribunal for its scheme of demerger of its branded apparel and engineering businesses into separate entities. Arvind plans to invest Rs 5 billion per annum in the next four-five years, with an aim to double revenue from its textile business to Rs 120 billion.
Arvind currently employs over 45,000 people. Once these clusters are fully operational at optimum capacity, the employment numbers of the organisation are expected to more than double.