Official Opening Of The New Garment Making Unit

Of Star Knitwear Ltd At Argy, Flacq

Thursday 7 September 2006

The Hon Dr. Navinchandra Ramgoolam,

Prime Minister, Minister of Defence & Home Affairs,

Civil Service & Administrative Reforms,

Rodrigues & Outer Islands

Mr. Ali Parkar, Chairman & Chief Executive Director

Of Star Knitwear Group

Distinguished Guests

Ladies and Gentlemen

1. It is indeed an immense pleasure to be associated with the official opening of the new garment making unit of Star Knitwear Group at Argy, Flacq by the Hon. Prime Minister of the Republic of Mauritius. I am delighted for the opportunity given to me to address you.

2. As you are all aware, the birth of a new enterprise is always an event worth celebrating. The significant expansion of an enterprise through the setting up of a new garment making unit in a different location viz in Flacq is equally important. This testifies to the faith the investors of Star Knitwear Ltd have in our investment climate, their readiness to capitalize on economic opportunities and their commitment to consolidate their operations. It comes at a crucial time when our textile and clothing industry is undergoing restructuring and where Government is taking major steps to re-orientate the industry to face the daunting challenges of the new global trading rules and environment.

3. The EPZ sector as one of the main pillars of the economy has registered negative growth rates of 6%, 6.8%, and 12.3% respectively in 2003, 2004 and 2005. This has been marked by the closures of a number of large enterprises concomitant with reduction in employment. This situation was the result of both external and domestic factors.

4. On the external front, trade liberalization, in particular of textile and clothing following the dismantling of the MFA, has generated fierce competition in the main markets. A small country like Mauritius has to battle to maintain its market share as low-cost countries have put enormous pressure on the prices of textile and clothing.

5. On the domestic front, there are several weaknesses viz the rise in production cost not matched by productivity increase and inability of enterprises to restructure on a timely manner to face competitiveness. These have adversely impacted on the performance of the sector. Lack of local inputs makes turn-around time longer, when lead time to deliver goods in distant markets has become shorter. The sector is not able to attract workers in adequate numbers as it still suffers from an image deficit.

6. All these factors from an holistic perspective may lead certain investors to be timid or to shun taking calculated risks. However, this has not reduced the spirit of enterprise in the promoters of Star Knitwear Ltd who have confidence in what they do and in what Government of the day is providing in terms of business facilitation environment. In fact, no two entrepreneurs are alike. While one may view a particular situation as difficult, the other may see it as a golden opportunity.

7. While many enterprises have stagnated or even contracted, the Star Knitwear Group comprising five firms has been expanding and generating higher output and exports annually. In testing times, this is the type of enterprise I would like others to emulate. It is good to trace back the trajectory of a successful enterprise. The Star Knitwear Ltd which started in 1987 with 200 workers in garment making is now employing some 1300 persons. It has developed into the Star Knitwear Group with other sister companies such as City Textiles Ltd and Sunline Ltd. The Group is now fully integrated with knitting, printing, embroidery, fabric dyeing and finishing. From a mere Rs 30 m turnover in the first year of operation, the Group’s turnover now exceeds Rs 1 bn with skilled workforce of some 2500 employees.

8. The Parkar family as the main shareholders of the Star Knitwear Group has been consolidating its operations by investing substantially in modernization, scaling up and skills upgrading. It also operates a Total Quality Management System which is regularly reviewed to adapt to new business requirements. The result is that Star Knitwear Group has been able to face challenges, capitalize on opportunities and prepare itself to face the future with confidence.

9. Some months ago, I visited the Star Knitwear Ltd at Riviere du Rempart and I was really impressed by what I have seen there. The emphasis is no more on basic T-shirts but on a spectrum of sports and fashionable items made from a variety of knitted fabrics. A conducive working environment with sophisticated production technology, creativity and high productivity together with a dedicated and motivated workforce under a leadership with a clear vision to face challenges and forge successfully ahead. The Group like other successful enterprises has relied on quick flexibility and reactivity in terms of short response time in delivery, high quality and open account transactions with buyers.

10. Successful enterprises have something in common, namely that they innovate and do not rest on their laurels. They are not complacent with what they have but are always in search of niche markets, design, variety of fabrics and products and sophisticated equipment. They are fully conscious that if they do not progress within attainable limits and realistic targets, they may regress when compared to competitors who have moved forward. In fact, in business we have to constantly adapt, innovate and, if not, … perish.

11. I am also delighted to know that the Star Knitwear Group is fully involved in supporting local community based organizations, social and sporting activities. I wish to highlight that there are now mounting pressures from NGOs, apparel buyers and other quarters for social and environmental compliance. And it is good to know that many leading apparel companies in Europe and the US have integrated corporate social responsibilities policies and programes in their mission and objectives. In other words, an enterpise needs to make profits whilst being also socially compliant. Profit motive is therefore not the only desideratum in the objectives of an enterprise. Mauritius can carve out a competitive advantage over other countries in being socially compliant.

Ladies and Gentlemen

12. Competitiveness continues to be a compelling agenda for the textile and clothing industry. Whilst the enterprises will have to restructure their operations and capitalize on opportunities, Government will continue to provide the necessary support. It is sparing no effort in offering good leadership and governance, social and political stability. In the first place, Enterprise Mauritius has elaborated a three year action plan to revitalize the textile and clothing sector. And a number of measures have been proposed with respect to market development, production, financial restructuring, management development, access to finance, migration towards higher value-added and fashionable products and logistics. Just to enumerate a few actions being implemented: the setting up of a team of marketing people to find orders for enterprises in difficulties and assist them to outsource and manage these orders, the promotion of Mauritius as a source of lingerie, swimwear, technical wear and baby wear, and the development of the tailoring industry to serve the tourist industry. There is also the Entreprise Development Fund aimed at supporting the textile and clothing sector. Up to now 18 companies have benefited from Rs 5.3 m from the EDF, and four new projects are being considered. To enable the textile and apparel sector to move up market and to capture niche markets, and hence to be more competitive, we are seriously examining the setting up of a Design and Fashion Institute.

13. There are signs that the sector is stabilizing in view of the high level of investment to the tune of some Rs 8 bn in the next four years. And in comparison with the previous years, less job reduction is expected for this year. We must raise our level of preparedness to meet the challenges. It is truism that the textile and clothing sector is not homogeneous. Different enterprises may perform differently. The weaker ones should continue to restructure, raise productivity and quality and focus on niche markets where competition is less fierce. The relatively stronger ones have to sustain the efforts as, in business, the way to success depends on relentless efforts and perseverance.

Ladies and Gentlemen

14. I am confident that the battle for integrating our textile and clothing sector into the global market and liberalization process can be and will be won. Despite the dismantling of the Multi Fibre Arrangement in January 2005 and the end of the derogation for third country fabrics on the US market, the Mauritian textile and clothing sector will progress. With the massive investment being undertaken by existing spinning plants and construction of new plants, it is expected that we will be self-sufficient in cotton yarn in two years’ time.

15. Mauritius therefore is developing a strategy to become a regional hub for the production of cotton yarn and fabric, and why not for the textile and clothing sector as a whole. The regional market provides avenues for diversifying export markets. In this context, EM is organizing a study tour in the region to assist enterprises in marketing and in developing a clear approach.

Ladies and Gentlemen

16. I am confident that the textile and clothing sector has bright years ahead in Mauritius. I am sure that while Government will play its role of facilitator, the enterprises themselves will spare no effort to undertake restructuring, move up-market and adapt to meet the changing requirements of the market place.

17. The success story of the Star Knitwear Group should inspire others to emulate. It is only in hard times that the real strength of an enterprise is best tested. The Start Knitwear Group has proved it. I, therefore, wish continued success to the Group with assurance of the strong continued support of my Ministry and its support institutions.

Thank you for your attention.