Wal-Mart, GAP to market Indian T-shirts in US

Royal Classic Mills, the Tirupur-based textile group dealing in yarns to garments, has tied up with the global retail super stores Wal-Mart and GAP in the United States to market its Classic Polo T-shirts and casuals in North America and Canada.

The Rs 220-crore (Rs 2.2 billion) knitwear firm has tied up with Kitaro GmbH of Germany for technical collaboration and buyback facility to promote its Tee's and casuals in the European Union market through a consortium of retail importers.

Royal Classic executive director R Sivaram told rediff.com in Bangalore on Monday that the marketing tie-up with the leading US retail chains such as Wal-Mart would increase its export sales by 15 per cent to 90 per cent from the current fiscal year (2003-04).

"In spite of the country quota restrictions and stiff competition from the Chinese goods, we have been able to push our Polo brand of knitwear garments in the US and European markets on account of our high quality and commitment to delivery the goods on schedule," Sivaram said.

"The popularity of our brands in the US and European Union through Kitaro chains has made other super markets such as C&M in the US and Lord & Taylor in the United Kingdom to place orders for our products," Sivaram claimed.

In the run-up to the free trade regime from 2005 when country-wise quota restrictions expire under the multi-fibre agreement of the World Trade Organisation member nations, the company is expanding its production capacity, including a spinning mill to integrate the supply chain from yarn to readymade garments.

Other international brands such as Giorgio, Sinn Leffers, Clipper and Frenzi Golf outsource their T-shirts, casual shirts and lingerie from Royal Classic.

"Though we may face constraints of export limits in the next two years due to the prevailing quota regime, unlike our counterparts in Pakistan and Bangladesh, we are gearing up to increase our share in these markets from 2005 onwards by tying up with other retail chains, which outsource their global requirements from China and the South Asian region," Sivaram stated.

The technical tie-up with Kitaro has enabled the company access the latest designs and colors preferred by international buyers of T-shirts and casuals. The buy-back facility with the euro 15-million Munich firm has resulted in firm orders annually from the latter's consortium and an exemption to pay back royalty on brand specifications.

"The tie-ups with Wal-Mart, Kitaro and others will push our export target to Rs 100 crore (Rs 1 billion) by the end of the current fiscal from Rs 60 crore (Rs 600 million) registered during the last fiscal (2002-03). We are aiming to double it in the free-quota regime during 2005-06," Sivaram disclosed.

Around 60 per cent of its export revenue is generated from the US market, 30 per cent from the European Union and the balance from the Middle East and the South East Asian region.

With Rs 45 crore (Rs 450 million) investment in infrastructure and machinery at Tirupur in south Tamil Nadu, the company is utilising about 80 per cent of its installed production capacity of 15,000 T-shirts and 25,000 pieces of casuals and lingerie per day.

Having entered the domestic market two years ago, the company has leased a readymade garment unit for Rs 1 crore (Rs 10 million) in Bangalore to produce 10,000 casual shirts per day for the domestic and export markets.

As part of its backward integration plan, the company is setting up a spinning facility in Tirupur with an investment of Rs 20 crore (Rs 200 million) to complete the supply chain from yarn to fabric and garments.

Despite the domination of regional and local brands, the branded Tee's market is growing by 10-15 per cent annually. Out of the total Rs 500 crore (Rs 5 billion) T-shirts market, the share of the branded products is in the range of Rs 100-150 crore (Rs 1-1.5 billion), while that of the unorganised sector is about Rs 350-400 crore (Rs 3.5-4 billion).