At Nassa Group a lot of thought process goes into where and how much to invest to ensure overall value to the business. In fact, it was a very careful study of the opportunities presented by manufacturing denim fabric that propelled the group to invest in this area in a joint venture with a Taiwanese mill which provided the technical know-how. Today Nassa, an integrated denim manufacturer, produces 18 million yards per annum of denim fabric besides garmenting and running a mill to manufacture fleece fabric, and it is in denim that the company sees a good future. “Denim is the only fabric where you can get something different just by changing the wash or yarn, so the vistas of growth are much higher,” says Ranjan Chowdhary, MD, Nassa Group. The group generates a turnover of US $ 270 million from its textile division.
Compliance was and is a big concern and though Chowdhary admits that big changes cannot happen overnight, he is confident that the direction is positive. “There are many factories including ours where more than expansion the focus is on renovation and compliance, especially in the area of fire safety,” says Chowdhary. He adds that the most stringent on compliance today is Walmart and many companies have stopped working with them as their requirements are difficult to meet and also impractical at times. He points out that the way the industry and Government has come forward to speed up the process of change is unprecedented and the global community should recognize the intent and continue to have faith in the capabilities of the country, as a major garmenting hub.
Another area of concentration for the group is to practically work out how to give higher wages to workers while maintaining margins. “The average salary increase is 42 per cent; this is besides other factory expenses which have also gone up. Luckily, the buyer today is sensitive to the situation and since costing has become very transparent, there is no hidden agenda and buyers are cooperating. I think there are two reasons for this support, one because of the whole ethical issue which has grabbed international attention and also because in the past Bangladesh has supported the buyers to keep their retail prices down, especially during the recession and now they feel it is their duty to help us move away from the CM production format for further growth,” reasons Chowdhary.
Interestingly, even while moving away from the CM approach to business, the focus is to support the buyer for competitive retail prices. “There was a time when we were importing everything and we were getting only CM, but now our people know how to source the fabric and accessories; also backward linkages in Bangladesh is growing. There is a big opportunity there and the way we learned how to make a success of the FOB business we should now work on a complete package to buy the fabric at competitive prices and support buyers, because if my price is less, the customer will be happy as their retail price will also be less and the ultimate consumer will be benefited,” reasons Chowdhary.
Indeed, moving up the value chain is a major thrust area for most of the bigger companies and Nassa, is looking to upgrade quality and also introduce new techniques for better price; rope dyeing is the next target in denim. Using 80 per cent of yarn that is manufactured in-house, 30-40 per cent of the denim fabric produced is captive capacity for its garment division. “Our vision is to go for value added garments. Nowadays, we are into bulk items running continuously for months wherein we are making money in the production not in the price. So we are now changing the focus and for that we have to develop our factories with modern machines and modern technologies to make high-value garments,” concludes Chowdhary.
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