The Coimbatore-based KPR Group has announced its first overseas investment by setting up a garment plant in Ethiopia. The group will invest $5 million with a capacity of 10 million units, providing employment for nearly 750 people.
An Ethiopian Government delegation recently visited KPR’s garment unit in Coimbatore. Quite impressed with the sophisticated facility they extended an invitation to KPR to establish an apparel manufacturing unit in Ethiopia by offering various incentives and concessions. Considering the core competence prevailing there, the Board of Directors soon decided to set up a unit for manufacture of apparels at the Mekelle Industrial Park set up by the Ethiopian Investment Commission.
Empowered with strong textile exposure and core technical competence, KPR is venturing into a global investment. The Ethiopian textile industry is fast catching up with the other textile countries like Vietnam and Cambodia with low cost of labor (around 50% of the labour cost in India). Duty-free import of garments from Ethopia to the US and Europe, availability of trainable workforce, proactive Government support, growing economy, special industrial zones and duty-free import.
Another big advantage in Ethiopia is that the Government is already having the land and building readily available. So it is just a plug and play model. All that KPR needs to do is to install a few machines and start production. This also saves considerable time in terms of construction. Also there is an option to lease the facility which will cut down on the capex.
KPR is planning to incorporate a separate subsidiary company in Ethiopia to establish and run the said apparel unit. Discussions with the authorities are in progress.
Retail segment
After a prolonged and prudent study and analysis of the market perspective, KPR is also embarking on retail business. Initially, the company proposes to target the knitwear segment of the domestic market introducing premium inner wear. Primary steps have been taken, and once it is finalised the company will announce its launching plans.
In fact, the garment segment revenue of KPR crossed Rs. 1,000 crores and the consolidated revenue has crossed Rs. 3,000 crores for 2017-18. This stellar performance is despite the challenges for the textile industry caused by the initial hiccups of GST and demonetisation. KSR’s strategic and timely plans for expanding its value-added segments have started yielding results.