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Tirupur Export Knitwear Printers Association (TEKPA) Raw Material Bank Safe Garments

The Need

Tirupur Cotton Knitwear Cluster is a well recognised and reputed international hub for cotton knitwear of all kinds. The cluster exports more than Rs.20,000 crores worth of knitwear to countries all over the world. In the supply chain printing of cotton, knitwear is an important value added activity done by more than 300 printing units catering to the needs of exporters. TEKPA formed in 2004 as a Society under the Societies Act has a membership of 200 export knitwear printers. TEKPA has been giving lot of focus on quality of printing because international buyers insist on high quality of printing and emphasising on two major and critical aspects, namely, no colour bleeding and no hazardous chemical as casual wear is normally worn close to the body. But export knitwear printers of Tirupur were finding it difficult to achieve the technical specifications on the above two aspects due to the poor and often adulterated quality of printing dyes and chemicals available from the dealers and traders in the market.

 

                            Figure 1 A most modern knitwear printing machine

 

Project Development for Responsible Production
In the beginning of 2012, the Office bearers of the association felt that some concrete action need to be taken to supply quality dyes and chemicals to the members and hence proposed the establishment of a common Raw Material Bank (RMB) for purchase of dyes and chemicals directly from reputed manufacturers and supply to members. TEKPA promoted a special purpose vehicle (SPV), TEKPA Dyes and Chemicals Ltd., and registered it as a Public Limited Company to establish the RMB. The association committee also outlined the objectives of the proposed company shown in figure 2.

 

Project Funding
TEKPA decided to set up the dyes and chemicals store by raising funds from members and bank finance. 58 members contributed Rs.11.10 million as share capital for the project. No member holds more than 5% shares in the company. The SPV approached Oriental Bank of India and obtained sanction of Rs.11.10 million as working capital loan for the project.

 

 

 

 

Project Execution  

  • A suitable building was taken for rent. 
  • The internal modifications required to accommodate office and storage facilities were made.
  • Direct contact with manufacturers of dyes and chemicals, most of them in Gujarat, were established and tie-up arrangements for regular supply at whole sale prices were finalised. 

RMB commenced sale of dyes and chemicals to members in January 2013.

 

           Figure 3 Entrance to RMB

   

       Figure 4 Dyes and Chemicals in RMB

 

Project Completion and Sustainability

Since January 2013, when the store was started, till date over 250 members and non-members have purchased dyes and chemicals from the store. The RMB made a turnover of more than Rs.35 million since its establishment. The RMB is becoming popular and hence business is poised for substantial growth.

 

Benefits 

The members derive the following indirect and direct benefits as under:

  • Assured quality of dyes and chemicals
  • Assured supply
  • No need for members to stock dyes and chemicals and incur inventory expenses.  Any quantity can be purchased from the store to meet the day-to-day requirements,  that is, JIT facility to members
  • Prices atleast 5% cheaper than market prices
  • Profit ploughed back to expand the services for the benefit of industry as a whole
  • Market prices stabilised as dealers and traders have been forced to match the store  prices.