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Explained | Kitex Garments controversy: Why the company pulled its proposal to invest Rs 3,500 crore in Kerala

The global garments company’s political ambitions may have scuttled its investment plans in Kerala and Kitex is now looking at setting up its projects in other states

July 06, 2021 / 06:48 PM IST
Close-up needle of white industrial sewing machine. (Representative image. Source: ShutterStock)

Close-up needle of white industrial sewing machine. (Representative image. Source: ShutterStock)

 
 
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Kitex Garments chairman Sabu M Jacob recently withdrew plans to invest Rs 3,500 crore to build apparel and industrial parks in Kerala, alleging continuous harassment through multiple raids and inspections on his company. However, state industries minister P Rajeev said all enquiries into Kitex Garments were carried out only in response to complaints filed against the company.

When was Kitex Garments started?

Kitex Garments is the flagship company of the Rs 1,200 crore Anna-Kitex Group founded by MC Jacob at Kizhakkambalam in Kochi in 1968. The group began by making aluminium products and later ventured into producing curry powder, textiles and school and travel bags.

Also Read: ‘Sheer harassment’ forced withdrawal of Kerala investment plan: Kitex Garments MD

Kitex Garments was started by Sabu M Jacob, the founder’s son, in 1992. The company exports cotton and organic cotton garments, especially infant wear, to the US, the European Union and other countries. It went public in 1995 and the promoters now hold 55.57 percent of its shares.

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How big is the company?

Kitex Garments posted a record turnover of Rs 783.57 crore in 2019-20 before Covid-19 hit the market. Its net profit touched a new high of Rs 108.67 crore. However, turnover and net profit plunged to Rs 465 crore and Rs 60 crore, respectively, in the wake of COVID-19.

The company claims to be the second-largest infant wear manufacturer globally, with customers including Walmart, Target, Gerber and Carter’s.

It employs 11,000 workers, including those at its children’s wear wing. A majority of them are from other states. The Kitex Group employs 15,000 people.

How much tax does the company pay?

The Kitex Group pays about Rs 205 crore in tax to the government, of which Rs 150 crore to Rs 160 crore comes from Kitex Garments.

What investment proposal has the company withdrawn?

At the ‘Ascend Kerala’ global investor meeting organised by the Kerala government in Kochi in January 2020, Kitex Garments proposed to invest Rs 3,500 crore to create an apparel park and three industrial parks in Kochi, Thiruvananthapuram and Palakkad. The proposed project was expected to generate jobs for 35,000 people. The company acquired land and prepared the plan and project report for the apparel park to be set up in Kochi and the entire project was expected to be completed in 2025. Sabu Jacob now says he’s not willing to go ahead with the project in Kerala, alleging harassment by the authorities.

What has the company done for social development?

The group’s corporate social responsibility initiative, known as Twenty20, is spearheaded by Sabu Jacob and his brother Boby M. Jacob. The social work it does ranges from providing basic necessities like housing, food security and water conservation to women and child care, education and sanitation.

Also Read: Kerala badly needs investments from businesses, and not just from Kitex Garments

Started in a small way, the programme now embraces the entire development spectrum in Kizhakkambalam and nearby panchayats. A team of skilled social workers, engineers, doctors, nurses, project managers and veterinary and agriculture experts ensure the projects are implemented in a systematic and scientific manner. The CSR spend was Rs 6.76 crore in FY20.

How did the group get involved in local elections?

Sabu Jacob floated Twenty20 in 2013 as a non-profit entity for the betterment of Kizhakkambalam panchayat. But continuous opposition from political parties compelled Twenty20 to contest local body elections in 2015. It not only won 17 of the 19 seats in Kizhakkambalam panchayat but also retained power in the 2020 local body elections. It was also able to secure wins in three nearby panchayats of Aikkaranadu, Kunnathunadu and Mazhuvannur.

Twenty20’s efforts to scale up its political influence received a setback when it lost in all eight seats it contested in the assembly elections in Ernakulam district in 2021.
PK Krishnakumar is a journalist based in Kochi.
first published: Jul 6, 2021 05:52 pm

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