The Hindu Business Line : EU's low inventory leaves Tirupur exporters in pricing dilemma

Trimmed inventories
The lead-time for delivery of supplies slashed to 60 days from 90 days for fashion garments.
In basic (intimate) garments, it is halved to 30 days from 60 days.

Coimbatore , Oct. 4

Tirupur knitwear exporters are brimming with orders with most of their capacities booked to meet supplies for the 2007 summer collection for the European market.

But most garment shippers are troubled by the shrinkage in lead-time insisted on by their European importers who, aided by the quota-free import regime, prefer to work on low warehouse inventories to cut costs on their side of trade, Tirupur exporters say.

Earlier, European garment supply chains used to work with a minimum 35-45 days' stocks in their warehouses. Now they do not want to keep that much stocks. The tight inventory controls exercised by the importers have led to their slashing the lead-time for the delivery of supplies by the shippers to 60 days from the earlier 90 days for fashion garments.

In the case of basic (intimate) garments, it is further halved to 30 days from 60 days, said Mr R. Sivaram, Executive Director of Royal Classic Mills, one of the major knitwear exporting companies from Tirupur.

Knitwear traders admit to rise in exports this year, thanks to the shifting businesses from Pakistan and China. But the pouring work orders have also made the Tirupur manufacturer-exporters cautious about accepting all the orders as they are not sure where they stand in terms of cost and pricing of their products.

Price control

`When you used to work with smaller orders during the quota regime, they could have a better control over the costs and pricing of their products. But the same can't be said now when they are faced with huge orders', said Mr Navin Chander, Chief Executive Officer of T-Mart, belonging to the Tirupur-based garment exporting group, Prem Group Company. The elasticity of taking commercial risk in fashion garments diminishes considerably while accepting huge orders. of, say 10 lakh pieces, particularly now because scaling up production is fraught with risks like such as shortage of manpower, some of the exporters feel.

`With our existing production infrastructure, we are comfortably placed to work on a compounded annual growth rate of 20-25 per cent and we can continue for the next three years. I feel the ideal growth is only at 25 per cent and beyond that, it will be difficult to sustain', feels Mr P. Sundar Rajan, Chief Executive Officer of SP Apparels.

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