Bharat Apparel - Apparel Portal

SRI LANKA: Local apparel businesses are investing abroad

COLOMBO: Some businesses, particularly in the apparel and leisure sector, in a bid to minimize the risk of unfriendly business environment and uncertain climate are taking their expertise abroad and capitalising on large markets available for their products. Labour costs, infrastructure constraints and inconsistent policies are also reasons for Sri Lankan companies to venture out.

Principal researcher at the Point Pedro Institute for Development, Dr. Muttukrishna Sarvananthan says “The loss to Sri Lanka is that capital is moving out and the country is losing out on new employment generation and quite possibly, we may also be losing existing employment. On the flip side, although companies are going abroad, they may repatriate the profits made which may also lead to increased remittances”.

Hussein Esufally, Chairman, Hemas Holdings Ltd (HHL) said that due to both the political and the business risk, local businesses look to diversify their portfolios overseas. “The main reason for us to venture out is that a large part of our business is in fast moving consumer goods and the local market is very small compared to other markets such as neighbouring India,” he explained. He said the uncertainty in the country has also prompted HHL to venture abroad.

Feroze Omar, Director, Brandix said that countries such as India have better economies of scale than in Sri Lanka. “We went to India mainly for the economies of scale,” he said, adding that the decision was based on building a supply chain solution which added to the company’s profitability. “If you wanted 10,000 sewing personnel, there is no way Sri Lanka can provide that in a hurry, but India has the capacity to do that,” he said. He said that Brandix is in the process of setting up a textile and apparel park in Andhra Pradesh. “The government of India made arrangements for the infrastructure which was a very encouraging move,” he said.

This week Emerald International, one of Sri Lanka’s biggest shirt manufacturer’s, said it wants to go global with the launch of a production facility in India.

The Indian plant under the name Emerald Creations (Pvt.) Ltd, with specialised machinery for manufacture of high quality shirts, was commissioned in June this year and is currently engaged in manufacturing for high quality labels in the Indian market. Very soon, it will be launching its line of shirts under the Emerald label. The JV plans to go in to the T-shirt and trouser manufacturing, in the next stage, the company said.

Source: Agencies • News Courtesy: BharatTextile.com