Report On Metiabruz Cluster Study
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1 Report On Metiabruz Cluster Study Submitted by: Smt. Chandrima Chatterjee, Advisor Shri. Waqas Ekramullah, Sr. Executive Apparel Export Promotion Council, Gurgaon 1
2 December, 2016 Content Section Particular Page No. Executive Summary Background 5 2 Introduction 5 3 Objective of the Study 5 4 Methodology 6 5 Product Profile 6 6 Nature of Operation Garment Production Process of Metiabruz Cluster Sourcing of Raw material Marketing Channels Stock Size and Unit Value Logistics and Transport SWOT Analysis of the Metiabruz Cluster Constraints faced by Metiabruz Cluster AEPCs Observations and Recommendation s
3 Executive Summary Kolkata has held its position as number one production hub in undergarments and in Kids wear. It is is birthplace of hosiery industry in India. Additionally it is the only center for work wear. The garment sector is mainly concentrated in the clusters of Metiabruz, Maheshtala etc. who sells all the garments in the domestic market. Approx manufacturing units around Metiabruz, 3000 units around Maheshtala and around 5 lakh job workers spread across the Metiabruz, Maheshatala and nearby villages. The Production is around 10 to 15 cr. pieces annually, with average unit value of Rs per piece, though products worth Rs 1000 or above are also sold. Average machine size was machines, though there are some units with over 100 machines also. The Turnover of Metiabruz cluster is approximately Rs 5000 cr per year. However, the estimates can be higher, if indirect transactions are also considered. The nature of production of garments of Metiabruz cluster consist of manufacturers and jobbers. The manufacturers cut, pack and sell the garment while jobbers stich the garment. The cluster has witnessed nearly 25% growth in the last 5 year AEPCs Observation and Recommendation s Realizing the potential of Metiabruz in sensitizing them to undertake exports, AEPC needs a deeper engagement in this cluster. It is recommended that the institutional arrangement for cluster development we stared in association with State Government. It is recommended that for deeper engagement it may be undertaken in two phases phase I and II. Details of phase I and II recommendations in report. 3
4 Under Phase I - The Metiabruz cluster be provided information with a view to bring the entrepreneur in exports environment. - Metiabruz cluster be invited to our all EP programmes as invitees. - Awareness seminar on export procedure and documentation in association with DGFT. - AEPC and State Government of West Bengal sign an MOU for understanding the needs of the cluster. Opportunity for signing up of MOU can be during the WB Global Summit scheduled on 20-21, January, A Kolkata pavilion can be made in IIGF to project the cluster. Under Phase II - Under phase II AEPC may implement the MOU to consider a Common Facility Center. - It is recommended that due to AEPCs this intervention, the level of garment export from Kolkata region be taken to Rs. 6,000 cr.in next 3 years. - It is recommended that an international fair on the similar lines of holding IIGF be explored particularly for performance & Kids Wear on annual basis. - State govt may support a delegation from the cluster to visit IIGF in New Delhi for understanding India s garment product profile. Upon adoption, the same project would be extended to Indore and Jabalpur. Till such time any other clusters are identified. 4
5 1. Background Secretary General, AEPC has deputed Smt. Chandrima Chatterjee, Advisor and Shri Waqas Ekramullah, Sr. Executive under the supervision of Shri Vijay Mathur, ASG, AEPC for Metiabruz Cluster Study in line with AEPCs strategy of engagement with State Government and cluster development. The study was under taken for the period 5 Days from 20-24, December, The study includes field surveys, meeting with state officials, CHA, Banks and various stake holders. 2. Introduction Metiabruz cluster is located at the bank of the river Hoogly in Kolkata. It is a 15 km stretch beginning from Garden Reach area and ending in Maheshtala is one of the oldest garment clusters in India. Places that are an integral part of this cluster are Garden Reach, Akra, Santoshpur, Chatta and Maheshtala. It is estimated that Metiabruz cluster is one of the largest garment production centres in terms of the raw material consumed and quantum of the goods manufactured. Metiabruz cluster is specialized in manufacturing of all types for garments for Kids wear. Kids wear manufactured at the cluster are: baba suits, frocks, pants, shirts, skirts, jeans, shirts, T-shirts, shorts etc. Some of the manufacturer in the cluster also manufacturing men s and women s wear like shirts, pants, jeans, T-shirts etc. Metiabruz cluster is not directly exporting its products to international market. Some of the units is catering to UAE buyers through agents. Domestic Buyers from all over the country particularly from the states like Bihar, Orissa, UP, AP, TN, Assam and Kerala, MP, Karnataka, Maharashtra and Punjab buy products from the cluster. 3. Objective of the Study 3.1. Validate the study done by the state government on Metiaburz cluster for possible interventions towards increasing exports from this cluster Also study the cluster independently for better understating their needs, networking with the association representatives and other stakeholders Establish the need for a common facility center at the cluster as also marketing support by way of a dedicated product fair. 5
6 4. Methodology The present study is combination of secondary level information and cluster level primary data through survey of 15 units based in Metiabruz cluster. Industry level information was collected from various sources like Trade associations, Government Departments, publications and websites. 5. Product Profile Manufacturing of Kids wear is main product of manufacturing in the cluster. Accordingly 87% of the sample units were covered under Kids wear category, 13% are manufacturing Men s & women s wear. Kids Wear includes: - - T shirt - Shorts - Pants - Shirt Jeans - Frock - Baba Suit - Skirt Men's Wear - Shirt & Jeans 6
7 6. Nature of Operation There are two types of manufacturing operations within Metiabruz cluster: Manufacturers: Controlling manufacturing operation including purchase of raw materials, design developments, cutting operation, folding & ironing, packaging and marketing of products in local hats/other markets. Integrated units are very few in the cluster, which undertake all other operations like stitching, fixing of accessories and packaging in house. 7
8 Jobbers: Involved in stitching, accessory fixing, ironing, processing. They supply to local Ostagors/Darjis. However, sometimes even Ostagors/Darjis undertake jobbing operation for Kolkata based traders/exporters who supply fabric and designs to them. The rate Job work is on the piece basis, the range of Job work is from Rs Garment Production Process of Metiabruz Cluster More than 90% of the manufacturers does not have in house cut to finish of garment process. So, they are majorly dependent on jobbers for stitching of the garments. Manufacturers specializing in different types of products prefer to outsource the processes to jobbers located in different places. Nandigram, Chatta, mannipur, ulberia, basheer haat, barasat, diamond harbour etc. 8
9 Activity based production process is given below: Design and Sampling Cutting Manufacturers Manufacturers Stitiching Majorly are Jobbers Embroide ry Majorly are Jobbers Accessory Fixing/fini shing Manufacturers and Jobbers Ironing Manufacturers Finishing & Packaging Manufacturers 7.1. Design and Sampling Matiabruz cluster manufacturers does not have its own designers and product development team. Design and Sampling has been done through catalogue and retail products. Manufacturers visit Mumbai monthly, buys catalogue and products from retailers/wholesalers. They modify a little in the products and manufacture them in their units for selling. Some of the manufacturers also travel overseas yearly for collecting retail garments to develop the products. 9
10 7.2. Cutting All the manufacturers have the in house cutting facility. They cut the fabrics on lay table, floor from hand fabric cutting machine. 10
11 7.3. Stitching After cutting the fabrics they give the jobbers to stich the garments Finishing After getting the stitched fabrics from the jobbers, they iron and fold the products. 11
12 7.5. Packaging The folded garments are packed in boxes and ready sell. 8. Sourcing of Raw material Sourcing of raw material, especially fabric, for garment making is crucial as cost of fabric comprises 50%-60% of the total value of garment. Other raw material like accessories cost 15-20% and sewing thread cost 1-2%. 12
13 8.1. Major Fabric Used at Metiabruz Cluster 100% Cotton Knitted 100% Cotton Woven Polyester Fabric Viscose Fabric Acrylic Fabric 8.2. Types of Fabric used Most manufacturer s uses yarn dyed and piece dyed fabric for manufacturing. Some of the them uses grey fabric also Raw Material Sourcing Place Sourcing of fabric is done from both Kolkata and Other states. In Kolkata, Bada Bazar, the famous wholesale market, controls the supply chain of crucial raw materials like fabric, accessories, dyes and chemical. Wholesale suppliers in Bada Bazar have opened shops for fabric & accessories inside the cluster for receiving small lot orders. As a result accessories are purchased from local shops also. There are also a majority of manufactures who are sourcing fabrics from other cities like Surat, Mumbai, Ahmedabad, Ludhiana, Bhilwara etc. 13
14 9. Marketing Channels The marketing channels of Metiabruz cluster is very strong. They sell their products through the following marketing channels:- Commission Agents Wholesaler Retailer Haats Export Sourcing Agent Commission Agents Export Sourcing Agent Manufacturers Wholesaler Haat Retailers 9.1. Haats Manufactured garments are marketed through various weekly markets called as Haat. There are two days haat in every week i.e. on Saturday and Sunday. The multi storied buildings are used for the said haat accommodating about entrepreneurs/traders. There are shops in each haat contributing to shops. 90 percent of the manufacturers sell their products themselves. It is estimated that majority of the products of the cluster gets sold in these Haats. Few such Haats are Harisha Haat, Jabbar Hat, ABM Hat, Janata Hat, Express Hat, Khan Hat, VIP Hat etc. Small, medium and large manufacturers bring their products in these Haats and the customers 14
15 from all over the country particularly from the states like Bihar, Orissa, UP, AP, TN, Assam, Karnataka, Chattisgarh, MP, Punjab, Kerala, Punjab buy products from these Haats for catering to the needs of domestic market. These Haats are wholesale markets. There is bulk selling with minimum quantity of sale. The sellers of the products selling in these weekly Haats are the manufacturers themselves who carry their weekly stocks of goods to these Haats for sale. The buyers are wholesalers or traders or retailers from various states who purchase these products for sale in their states. There is absence of middlemen on the selling side and hence the manufacturers have been able to offer their products at a competitive price 10. Stock Size and Unit Value Manufactures in Metiabruz cluster maintains an average stock size of pieces of every samples. The unit value of each products are in the range of Rs Logistics and Transport Majority of the units use warehouse facility for keeping inventory. These warehouses are entirely owned by the units as these are nothing but an extension of their factories or houses The transportation of domestic goods takes place in through road transport One Truck may carry goods from more than one manufacturers but going in the same destination From exporters point of view: Kolkata port does not have the Mother vessel facility and does not go directly to main exporting countries i.e EU and UAE. It goes through transshipment via Colombo & Singapore and through Mumbai port Exporting through Mumbai increases the cost by almost 100%. This is one of the biggest constraints for Kolkata garment exporters. This also increases the time of shipment. 15
16 12. SWOT Analysis of the Metiabruz Cluster Strength - Abundant supply of skilled labour at a very low cost - Competitive Price - Strong Marketing Channel - Huge capacity of production. - Hoistorical experience of garment. Weakness - Lack of education - Unorganized - Backward in Technology - Currently no export orientation - Poor infrastructure - No design and product development team. SWOT Analysis Threats - Catering to only domestic market. - The market is very low end. - No value added products. - Not proactive in diversifying. Opportunites - Can diversify in export market. - Can diversify in other products like women's wera and men's wear. - Can take the leadership advantage of Kolkata im work wear. 16
17 13. Constraints faced by Metiabruz Cluster 13.1 Due to lack of awareness, the units do not avail of any policy support for technology upgradation hence product quality is low (in majority cases) and it is difficult to switch over to value added products Export oriented units are facing the keen competition due to lack of modern design, lack of hi-tech machines and non-availability of laboratory facility for necessary certification for export quality goods about free from Azo, metal, plastic materials etc Non availability of quality raw materials at moderate price becomes a problem to the entrepreneurs. This is largely because of unorganized channels of procurement which keeps them away from availing any policy support for importing fabric & accessories Manufacturers are not able to diversify in exports market due to following reasons:- - Lack of market information - Lack of awareness about export procedures - Have no contacts with the buyers - Lack of awareness about product feasible for exports - Do not have required compliances - Do not have required licenses 13.5 Infrastructure is very poor Bad road connectivity Limited access to testing facilities & quality accreditation which is necessary for starting export. 14. AEPCs Observation and Recommendation s Realizing the potential of Metiabruz in sensitizing them to undertake exports, AEPC needs a deeper engagement in this cluster. It is recommended that the institutional arrangement for cluster development be started in association with State Government. It is recommended that for deeper engagement it may be undertaken in two phases. Under Phase I - The Metiabruz cluster be provided information through s with a view to bring the entrepreneur in exports environment. In this phase the basic requirement for exports namely benefits to exporters, direction of exports, 17
18 major markets, procedures to export and import, compliance requirement, garment package details and other information be provided. - In the same Phase I Metiabruz cluster be invited to our all EP programmes as invitees. - Awareness seminar on export procedure and documentation in association with DGFT. - Under Phase I AEPC may request the cluster to obtain AEPC membership. - In this phase AEPC in association with State Government of West Bengal sign an MOU for understanding the needs of the cluster. The first opportunity for signing up of MOU can be during the WB Global Summit scheduled on 20-21, January, A separate Haat of export market may be set up. - A Kolkata pavilion can be made in IIGF to project the cluster. Under Phase II - Under phase II AEPC may implement the contours in MOU and at appropriate time consider a Common Facility Center (CFC) for the Metiabruz cluster. In this phase identification of venue/space, services, to be given, cost implications and anticipated benefits to the Metiabruz cluster be finalized. - It is recommended that due to AEPCs this intervention the current level of garment export from Kolkata region of Rs cr. be taken to be Rs. 6,000 cr.in next 3 years. - It is recommended that an international fair on the similar lines of holding IIGF be explored particularly for performance & Kids Wear on annual basis. - State govt may support a delegation from the cluster to visit IIGF in New Delhi for understanding India s garment product profile, interact with exporters as also Buyers. AEPC can facilitate a special session with the buyers to understand the exporting needs. Upon adoption, the same project would be extended to Indore and Jabalpur. Till such time any other clusters are identified. ******* 18
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