Eight months after the announcement of Kitex Garments Limited’s decision to abandon its `262 crore expansion plans in Kerala, the company has said that owing to the ‘unsafe business atmosphere in the state’ it does not have further plans to invest in the state. The company is planning to invest up to `500 crore, half of that amount in the first phase, for its expansion plans by 2015. The company is looking at states like Gujarat and Tamil Nadu for expansion. Kitex is even mulling opportunities in China and Sri Lanka but not in Kerala.
“If we were to consider the labour and land costs in the state, we would realise that it would be profitable to operate in any other state apart from Kerala, even if we utilise the services of a generator full time”, opined Sabu M Jacob, Managing Director, Kitex Garments Limited.
In September last year, Kitex had given up on its plans to invest `262 crore in Kerala, owing to alleged political issues. The apparel park project would have provided employment to around 4,000 people. “As part of Kitex Garments’ plans to achieve `1500 crore turnover by 2015, we plan to invest around `500 crore. We are not going to set up the plant anywhere in Kerala, as the business environment is not very conducive here. At present we are facing power disruption problems which are affecting the company’s day-to-day activities. Power scarcity is going to be a major problem in the state for industries in the near future,” said Sabu Jacob.
He added that the expansion plans and the location for setting up the factory will be officially announced in two months. The projected employment is around 10,000.
Kitex Garments has a turnover of `700 crore and employs around 8,000 people. The company is the third largest infant garment manufacturer in the world and has a production capacity of 6.5 lakh garments per day, with plans of scaling up to 11 lakh in two years.
Commenting on the controversy generated over the shelving of expansion plans, Sabu said that the “actual problem disappeared along with the controversy”.