Kitex Garments managing director Sabu M Jacob recently said he is withdrawing a proposed Rs 3,500 crore investment for building apparel and industrial parks in Kerala, alleging harassment by the authorities. The company is a leading exporter of children’s wear and employs thousands of workers. Jacob spoke about the controversy in a phone interview.
Are you firm on withdrawing the Rs 3,500 crore investment in Kerala?
I have said I am not going to implement it in Kerala but I am open to taking it to other states. The project will be completed in five years and promises employment for 35,000 people. So far, there has been no follow-up from the government though ours was the biggest investment proposal at the investor meet.
What do you think is the motive behind the raids on your company?
There have been 11 raids on the factory in the space of a month. It is sheer harassment. Officials from various departments such as labour, health, factory and boilers, pollution control, besides the police and the collector have conducted inspections. They come in hordes and question the workers including women and ask for their names and addresses. They didn’t find any discrepancy.
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Soon after I announced that I was withdrawing from the Rs 3,500 crore investment proposal, the labour department gave me notice that we have not implemented the new minimum wage rules in the company. But the implementation of the new rules announced in 2019 has been stayed by the Kerala High Court on March 26, 2021. Asking us to follow it is contempt of court.
What about allegations of pollution and dumping of waste in the nearby river?
The pollution control board has given a report to the District Industries Centre that Kitex has world-class technology in the treatment of waste and that it has been operating with the board’s licence for the past 26 years. It also says that the board has not issued even one notice against Kitex during the period.
Your CSR arm, Twenty20, has won in several panchayats in local body elections. Do you think there could be a political vendetta behind the raids as the entry of Twenty20 into politics has provoked the ire of political parties?
Yes, I suspect that the newly elected MLA is giving leadership to these activities.
(PV Sreenijin of the CPM is the MLA of Kunnathunadu constituency under which Kizhakkambalam falls).
Kerala chief minister Pinarayi Vijayan and industries minister P Rajeev have said that the state is business friendly. Rajeev has also said that you are projecting the state in a false light. Your take on that?
They say that I am presenting a bad image of the state. But is it my fault that Kerala has slipped from 18th position to 28th in the ease of doing business rankings? In the last 40 to 50 years, around 61 large private companies have left the state. If it was trade union problems earlier, now the issues that vex the companies are political and bureaucratic, besides the activities of some sham environmentalists.
On July 5, Rajeev said the raids were conducted as per complaints of an MP, MLA and others. How do you react to the statement?
It is just a political justification. Before conducting a raid, they have to assess the genuineness of the complaint, which they haven’t done. Anybody can raise an allegation against anyone, but one should check whether it is valid. We are planning to go to court on the issue of raids.
You have received invitations from many states to put up the new project. Have you decided where to invest?
The Tamil Nadu government has officially asked me to invest there. As per their invitation, I would get back around Rs 1500 crore out of the proposed Rs 3,500 crore through incentives and concessions. These include 40 percent subsidy on the total investment, 100 percent concession on stamp duty, 5 percent interest subvention for six years, power at low rates for five years, 25 percent subsidy for environment protection measures, 100 percent GST concession on capital assets and provision of 20 percent of the salary of workers for 10 years. They have said they will also consider if there are any other demands.
Also Read: Kerala badly needs investments from businesses, and not just from Kitex Garments
Telangana is also aggressively wooing us. Besides, we have invitations from Andhra Pradesh, Karnataka, UP, MP and even Bangladesh. We will take a decision after discussions with each state.
Your financials have taken a beating in FY21, understandably due to Covid-19. How do you assess the market prospects in the current year?
We didn’t fare too badly during the year despite lockdowns, travel restrictions and a sluggish economy. We could maintain 68 percent of the turnover of FY20. Our profit before tax in FY21 was 18.23 percent of the total revenue, which is only 0.04 percent less than what it was a year ago. PBT in FY21 fell to Rs 84.84 crore from Rs 143.17 crore a year ago.
In the current year, our order position is full till December and we are confident of surpassing the record turnover and profit made in 2019-20 as the US, our main market, has recovered and is going strong with 75 percent vaccination completed. Our Q1 turnover is more than the revenue in Q1 of FY20.