Apparel manufacturer and exporter, Pearl Global Industries Limited (PGIL) is undertaking capacity expansion in South India at a total investment of around Rs 17-20 crore, funded through internal accruals and a TUFS loan.
PGIL plans to install 450 new machines in Bangalore, thereby adding capacity of 150,000 garment pieces per month. Of these, 250 machines will become operational in February 2015, while remaining 200 will be made operational by May 2015.
At Chennai, it is installing additional capacity of 800 new machines, which will be commissioned by December 2015. PGIL has acquired a contiguous land parcel measuring 4.72 acres in Chennai, on which it has built a facility to manufacture an additional 200,000 pieces a month.
The Chennai facility provides PGIL the ability to keep adding on capacity into the future with minimal investment. Benefits of the increased expansion in Bangalore are expected to positively impact the company's books by FY2015-16, while the Chennai expansion benefits will reflect in FY2016-17.
The capacities are expected to generate incremental revenues of Rs. 100-150 crores, which will further enhance its EBIDTA margin. Before this expansion, PGIL's existing production capacity stood at 5 million pieces a month with 8,500 machines spread across India, Bangladesh and Indonesia.
The new facilities are expected to be instrumental in helping the company raise its cumulative production capacity by about 7 per cent to 5.35 million pieces per month, through the addition of 1,250 machines to reach a total of 9,750 machines.
"We are hopeful that this capacity increase, along with future ones, will significantly improve our industry ranking within the top seven manufacturers out of India. With this capacity enhancement, we are poised to be a leading player within garment manufacturing," Pulkit Seth, MD at PGIL pointed out.
He added, "Creating direct employment for an additional 3,000 skilled workers, the expansion is in keeping with our long-term commitment to 'Make in India'. We are readying ourselves for an improving demand flow of orders from leading brands in advanced markets.”
“We aim to leverage our new 'lean manufacturing' capability over our existing fixed marketing and design overheads to further improve our EBITDA margins and return-on-capital ratios," he observed.
Global market trends are in favour of such a move by Pearl Global. With China's advantage in the garment business gradually eroding due to escalating wages and overheads, apparel manufacturing units in South Asia stand to gain from a natural shift of business towards them.
This provides India a good business opportunity to improve its share of the global garment manufacturing business. Currently, India exports 25-30% per cent of the textile goods to the global market and enjoys only 3.7 per cent of the global apparel exports market share. (AR)
