Kitex success

SPECIAL: Kitex outwits Tiruppur to stitch big success
Sreekumar Raghavan/Commodity Online
KOCHI: In every game champions are sometimes outwitted by relatively unknown wild card entries. In the garments business nobody could challenge the combined might of Tiruppur industry with an annual export turnover of Rs 11,000 crore. The best strategy for a new player in a new location would have been to invest in capacity building using the state-of-the art technology and make inroads into markets not touched by Tiruppur.

That is what Kitex Garments Ltd (KGL) did and the company, aiming for a Rs 500 crore turnover, is certainly on a high growth path. Sabu M Jacob, Managing Director of the firm, told Commodity Online in an exclusive interview that the export of knitted garments to USA totaled $925 million last fiscal of which KGL’s share was $48 million or five per cent of the market share. In 2007 April-September, KGL has already achieved $25 million exports to USA.

“Tiruppur units cannot do more than 20,000 pieces at a time. One US order is more than 2-3 million pieces. In November, we have orders for 7.2 million pieces. Therefore, Tiruppur has to contend with more business for Europe and Middle East where order volumes are in the range of 20,000 pieces,” Sabu M Jacob said. For KGL, established in 1992, getting out of the shadow of Tiruppur and outwitting them in niche markets has come as a sweet revenge. “In the initial years, until the year 2000 we had to struggle hard in the face of lobbying against us by Tiruppur industry in the international markets,” Sabu Jacob said.

US-based leading garments manufacturer ‘Fruitof the Loom’, which is setting up four outlets in India soon, is keen on partnering with KGL for the supply of garments. The idea is to create garments with the intention of selling in the domestic market as well as export, Sabu Jacob said.

Situated on the outskirts of Kochi at Kizhakkambalam, KGL is now on an ambitious expansion drive through backward integration, setting up of an export-oriented children’s wear company and upgrading its fashion technology institute. The company has stopped production and export of adult garments and will focus exclusively on children’s garments for which a new company is being floated — Kitex Children’s Wear Ltd.

The company had gone in for backward integration by installing the most modern German machinery to produce yarn because suppliers from Tiruppur suffered on quality and late delivery. KGL is the first garment unit to go for backward integration using the modern German equipments. “Now the entire process form yarn to garments will be undertaken at our integrated facility which will lead to a profitability increase of 10-15 per cent,” the KGL MD said.

Kitex Children’s Wear Ltd will commence knitting operations in February and will be full commissioned by December 2008. KGL is the only company manufacturing specification ‘222’ for children’s wear. “As such, there is no competition for us in India. We have also obtained A-Level certification from World Wide Responsible Apparel Production (WRAP), which is a federation of 21 American apparel and footwear associations.” Only two companies have achieved this certification in India.

Export requirements for children’s garments to US are stringent in terms of quality of buttons, labels free of chemicals, buttons should not be easily torn, colour used should be of superior quality and the child should not accidentally swallow anything from the garment.

KGL would also expand its Institute of Fashion Technology by setting up a 75,000 sq ft residential school at its manufacturing facility at Kizhakkambalam. “Our students are trained hands-on in all aspects of garment industry from kinnting, warping, cutting, inventory control, cargo management apart from emphasis on character building, communication skills and personality development,” Sabu Jacob said. This makes the course different from university courses in fashion technology.

KGL, which has plans to export fabric, however would not integrate one step backward into spinning yarn as it is not very profitable and only depreciation benefits can be availed of, Sabu said. KGL at present has an employee strength of 3,500 which would be expanded to 7,000 once the new facilities are operational. “We have set up the infrastructure with a vision for expansion for the next 100 years. KGL campus has set up the roads, underground electricity and communication cables with this vision in mind,” the company chief said.

KGL belongs to the Anna Aluminum group established by M C Jacob, father of Sabu M Jacob in 1968. The group’s flagship company Anna Aluminum produces household aluminium utensils and products for domestic markets and export. Another group company Kitex manufactures lungies, dhotis, bed-sheets and school bags under the brand name of Scoobee Day. http://www.commodityonline.com/news/topstory/newsdetails.php?id=3296

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CIAL takes wings !!

Cochin Airport to start cargo airline P R Sanjai / Mumbai June 20, 2007 The Cochin International Airport (CIAL), the first international airport in the country outside the ambit of the union government, is planning to launch a dedicated international cargo airline service.

The airport management is currently in talks with a leading international player and a domestic partner for launching the freighter service that will connect West Asian destinations.

CIAL is also exploring possibilities to partner with national carrier Indian Airlines for converting old passenger aircraft into cargo planes.

The cargo services will be operated under the brand name Air Kerala, which was floated to launch an international low-fare carrier to the Gulf destinations.

“The project will supplement our proposed state-of-the-art centre for perishable cargo, which can handle 40,000 metric tonnes a year. With this centre and freighter service, we can facilitate the export and import of perishable cargoes such as vegetables, fruits, flowers, fish and meat products to different parts of the country and the world, including West Asia,” S Bharath, managing director, CIAL, told Business Standard.

This is the first time that an airport is working towards launching cargo airline business. CIAL is a novel venture in the Indian aviation history, where the Kerala government, travelling public, financial institutions, airport service providers and others have joined hands.

Asked about the Air Kerala project, Bharath said, “We have already registered the company for starting Air Kerala. If the ministry of civil aviation (MoCA) gives us permission to fly to Gulf destinations, we will immediately start the services. We are also in talks with aircraft leasing companies, and the airline will offer low fares to Gulf travellers.”

The revival of Air Kerala concept comes at a time when the union government is planning to allow start-up airlines to fly overseas on a case-to-case basis.

However, the union civil aviation minister Praful Patel said Air Kerala would not be allowed to fly to the Gulf. Air Kerala had plans to reserve 20 seats in each aircraft for poor non-resident Indians (NRIs) unable to return for more than five years and charge them only one-fourth of the fare.

CIAL IT park facility to accomodate 30,000

Talks with Cusat on aviation course progressing

M.P. Praveen

CIAL to offer degree and diploma studies in aircraft maintenance

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Contract given for setting up aviation academy
First phase of IT park to be ready within 2 years

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KOCHI: Shriram Bharath, Managing Director of Cochin International Airport Ltd. (CIAL), said here on Saturday that talks with the Cochin University of Science and Technology (Cusat) on the aviation course, proposed to be launched by the CIAL, were in an advanced stage and would be finalised within a few months.

Talking to TheHindu Mr. Bharath said the CIAL plans to offer aviation related degrees and diplomas at its proposed aviation academy. He said diploma in aircraft maintenance and aeronautical engineering and B.Tech. in aircraft maintenance were among the proposed courses.

He said the contract for setting up the aviation academy and two hangars, capable of handling Boeing 737 and Airbus 320, had already been awarded. This will cost about Rs. 30 crore.

The airport proposed to set up a full-fledged Maintenance Repair and Overhaul facility in due course. Already many national and international players had evinced interest in the project and the evaluation of bids was under way, he said.

Regarding the proposed Information Technology Park, Mr. Bharath said the first phase of the project would be completed within two years. It envisaged generating 5,000-6,000 job opportunities. A consultant would soon be appointed to conduct a feasibility study on the project. In the first phase, two state-of-the art buildings and related supporting infrastructure would be built at an estimated cost of Rs.200 crore, he said.

When fully implemented, the IT Park will spread over 33 acres and would cost around Rs. 600 crore, creating 25,000-30,000 job opportunities. The idea is to create a world-class facility for IT, IT-enabled services and even nanotechnology, he explained.

He said the CIAL would prefer to hold 51 per cent stake, or at least 49 per cent in the project. He said the primary motto of the project was to provide employment to the educated youth in the State. The partnering agency in the project should be prepared to give preference to the qualified youth of the State, he said.

Mr. Bharath said the construction of a new state-of-the-art departure block was progressing, which, when completed, would take the total built-up area of the international terminal to 4,80,000 sq.ft. Mr. Bharath said the new block was likely to be ready by this year-end.

The cargo movement through the airport was set to grow by 15 per cent in the ongoing fiscal. At present, the airport has a cargo handling capacity of 150 metric tonnes a day. This handling capacity would touch new heights once the Cargo Processing Centre is commissioned, he said.

Kochi must set right its infrastructure
Monday October 16 2006 08:31 IST

KOCHI: Kochi is poised to become a booming city in South India coming
closely behind Bangalore, Chennai and Hyderabad.

The upcoming mega projects in the port sector, a booming airline segment
besides its ever-increasing prospects in IT and ITES, the city has made rapid
strides in the past few years and its economy has been growing resulting in
large gains in real estate.

In fact, Kochi is rated as one of the better spots for real estate investment in
the country. No wonder the city and its suburbs are expanding only to witness
multiplication of real estate values.

Kochi will be the first and, perhaps, the only city in Kerala, if at all, to be
considered by the authorities concerned to confer a Metro title in future.

But Kochi has to equip and reposition itself to make things go in its favour.
Kochi lacks a few things of serious nature without which it would be
near-impossible for the city to cope with the changing economic and social
scenario.

They include proper and wider roads, drainage and sewage, footpaths,
inter-linking lanes, parking facilities, drinking water and public utility stations
and, of course, dwellings for the mid and lower income category.

These may collectively be termed civil infrastructure, municipal infrastructure,
or simply public works. The concept is that infrastructure provides structure and
support for system and city.

But, opposition by public, for political and social reasons, against acquisition
for paving way for development, is something unique of Kerala, vis-a-vis Kochi.

But, this has to change and it is the Government, like its counterparts in Karnataka,
Tamil Nadu and Andhra Pradesh, to ensure that things move and move fast as to
chase the pace of development.

The current growth momentum of the Kochi economy can not be sustained unless
and until the bottlenecks created by the infrastructure sectors are swiftly and
adequately addressed.

The immediate requirement of Kochi is to create a professional and transparent
environment which helps establish real estate as a sound investment option.

With smart living becoming the norm, emerging cities like Kochi will also
aggressively pitch for better infrastructure from local governments for better
roads, adequate electricity and water supply.

While traditionally it was the public sector facilitating infrastructure, the
focus in recent years has been shifting to private sector with the government
taking the role of a facilitator.

Kerala has grown dramatically in the telecom sector. However, the state lagged
much behind in the power sector, especially in developing alternate energy
resources like wind and solar power.

In transportation too, the growth has been confined to aviation, leaving much
to be desired in road, rail and water transport - the low-cost carrier.

Though Railways continued to gain from the robust growth of the economy, the
state was denied its due share.

The approach should be through a professional assessment of drinking water,
sewage and drainage requirements of Kochi city with a futuristic view.

Roads, the backbone of any city, give the first impression to any investor. The
traffic congestions on the city’s main arterial roads will come down if
inter-connections are provided to reach different parts of the city without touching
the arterial roads.

Sewage and drainage are other two areas which require immediate attention.

City and district councils can provide information on sewerage and waste water
systems, including septic tanks.

Councils are responsible for managing local sewerage and waste water systems to
ensure that they meet the needs of the existing and future population and are well
maintained.

They must also ensure that interested parties have access to accurate information
and advice to make things better.

Only if proper and timely infrastructural development coincides with housing and
other facilities will development give the real impetus to Kochi to attract investment
and, thereby, sustain the ongoing economic prosperity and boom witnessed in the
city agglomeration.

Cochin Port sets sights on cargo through Colombo
K P Narayana Kumar in New Delhi

September 28, 2006 02:57 IST

Sri Lanka's bustling Colombo Port could soon face a serious
challenge from India's Cochin Port, which is being developed
into an international trans-shipment hub.

Port authorities said Cochin Port would in eight years handle
around 15 times the number of containers that it processes
today, thanks to the Vallarpadam International Trans-shipment
Container Terminal project being constructed by Dubai Ports.

And in order to woo away international shipping liners that
usually dock at Colombo, it is offering an attractive 50 per cent
discount on vessel-related charges to mainline vessels from
September 1.

According to Cochin Port Chairman N Ramachandran, with
the Vallarpadam Container Terminal project being implemented,
Cochin Port will handle around 4 million twenty-foot equivalent
units in 2014 from the current 250,000 TEUs.

A huge chunk of cargo from India is now moved to Colombo
using feeder vessels, from where it is shifted to mother vessels
that carry the goods to their final destinations across the globe.

International liners carrying containers from West Asia to Europe,
the US and to South East Asia, for instance, also avail the trans-shipment
facility offered by the Colombo Port.

However, once the Vallarpadam terminal comes into existence,
these international shipping liners can choose between Colombo
and Cochin.

Indian exporters would save about a fortnight's transit time once
they start trans-shipping containers from Cochin instead of Colombo,
said Ramachandran.

Colombo Port has the capacity to handle around 4 million TEUs.
Cochin Port, on the other hand, handled only around 202,000 TEUs
of container cargo last year.

Ramachandran said with Cochin Port being developed into a
trans-shipment hub, it would become the preferred port for cargo
from anywhere in the country.

"We expect that a good deal of container traffic will head straight to
Cochin Port," he said, playing down the stiff competition that is
expected to ensue between Colombo and Cochin.

"Ours is the only port that has surplus capacity. Most ports in
India are congested," he added.

Some of the cargo that is now handled by ports such as Tuticorin
and Chennai may end up being re-routed through Cochin Port.

According to Ramachandran, the port is also preparing to receive
mother vessels with the draught being further deepened to 14 metres
from 12.5 metres.

This will enable the port to handle ships that can carry more than
8,000 TEUs, whereas the largest vessel to be serviced at Cochin Port
now is a mainline vessel that can carry around 3,000 TEUs.

Almost as if to gear up for the competition, the Sri Lankan government
has entered into a memorandum of understanding with the Asian
Development Bank for financing the expansion of Colombo Port.

Stage I of the port facility with one 1,200 m long terminal having
the ability to berth at least three container ships is expected to be
completed by 2009. This will enhance Colombo Port's capacity
by 2.4 million TEUs.

More about Smart City Pact

Draft agreement on Smart City
Wednesday August 16 2006 14:18 IST

THIRUVANANTHAPURAM: A draft agreement to set up
the Smart City in Kochi will be sent to the Dubai Technology
and Media Free Zone Authority (TECOM) after a Cabinet
meeting on Wednesday.

TECOM will have the freedom to develop buildings and other
support infrastructure and amenities on the land and market
the buildings for IT, ITES and related use.

The price fixed for 210 acres of schedule 1, 2 and 4 land is
fixed at Rs 80.72 crore. Even if the handing over of schedule
3 land would take much more time, the lease agreement for the
same would cease to exist as and when the agreement for
schedule 1, 2 and 4 lands expires.

TECOM would have to complete at least five percent of the
civil construction of the phase 1 of the approved project in
phase 1, 2 and 4 lands in a period of six months after the
registration of the lease deed. Similarly, TECOM shall be
responsible for obtaining all necessary approvals and
clearance for building construction even though it can expect
necessary assistance from Infopark for the same.

In case of any delay in obtaining approval for electricity
and water connection, the six- months period time set for
completing at least five percent of the construction can be
extended on a mutual consent. However, in case the delay
occurs solely because of the reasons which can be directly
attributed to TECOM, they will have to pay Rs 1 lakh per
acre for every month of delay.

At the same time, TECOM will be entitled to create lien, charge
or mortgage or sub-lease the leasehold in favour of any of the
banks or other financial institutions for availing financial
assistance, and Infopark would give necessary no objection
certificate for the same.

The draft agreement also proposes to give the TECOM the right
to purchase the land on an outright purchase basis on the expiry
of the lease agreement period. If TECOM fails to purchase the
land in one month after the agreement becomes null and void,
it should surrender the same free of structures without raising
any further claim over the land and the structures erected upon,
sources said.

The draft agreement, which would be sent to TECOM after more
deliberations and consent from finance and law departments, also
maintains that in case of any dispute between the lessee and lessor,
the jurisdiction for the same will be the courts of Ernakulam alone.

Smart City Pact - New Ind. Xpress

Smart City pact in the offing
Wednesday August 16 2006 14:15 IST

THIRUVANANTHAPURAM: The CPM-led LDF government in
the state is all set to propose an agreement between Infopark in
Kochi and Dubai Technology and Media Free Zone Authority
(TECOM) for a period of 25 years on a lessor and lessee basis to
set up the proposed Smart City project in Kochi.

A special Cabinet and high-level meeting of department officials
concerned would be held on Wednesday before the draft agreement
would be sent to TECOM, sources said.

According to sources, as per the draft, the Infopark would lease
out to TECOM an approximate of 377 acres of land in four
categories such as 100 acres of schedule 1 land, 10 acres of
schedule IV land, 100 acres of schedule II additional land and
167 acres of schedule III future land.

As part of this, the government would transfer the ownership of
the above said land to Infopark before the government and
TECOM reach a consensus point on the agreement. The draft
agreement also stipulates that TECOM should ensure a total of
90,000 job opportunities in a period of 10 years, or else Infopark
can take possession of the leased land and property by giving
a 30-day prior notice.

TECOM will have the freedom to develop buildings and other
support infrastructure and amenities on the said pieces of land
and market the buildings for IT, ITES and related use.

While the schedule 1, 2 and 4 lands would be leased out to
TECOM immediately, 167 acres of the schedule 3 land would
be given to them in a phased manner as and when the land
acquisition process get completed, in accordance with the land
value fixed by the government.

Any revision in the price of the land in future due to possible
intervention of courts will have to be met by TECOM itself.