Denim by Square flourishes as purchase orders pour in

The denim unit of Square Group that began full-fledged operations in July last year in Habiganj is thriving on market potential, said a top official of Square Denim.

“The company currently produces 1.2 million yards of denim fabric a month at the Habiganj project, although the company's target is to produce 2.5 million yards in near future,” said Sayeed Ahmad Chowdhury, general manager of Square Denim.

The group opted for denim for its high demand worldwide with changing fashion trends, he said.

Square Group has been producing denim yarn, the raw material for denim fabric, for many years. This is another major reason for going into denim production at the new unit that was set up with Tk 400 crore, Chowdhury said.

“We are a step ahead as we have the backward linkage of ready yarn,” Chowdhury told reporters while they were visiting the denim factory at Habiganj on Saturday.

“Bangladesh turned into a major denim producer as markets for China have been shrinking rapidly. We thought that we can use this opportunity.”

“The group began construction of the denim factory in 2013 on 294 bighas of land. The unit began production in July last year with a full pressure of gas. We chose Habiganj mainly for two reasons -- availability of land and gas with adequate pressure,” he said.

The company will start its next phase of denim production on the same premises in April next to meet the high demand for the fabric, he said.

“We are fully booked with orders from customers. The higher orders from international retailers such as H&M, Next and C&A have inspired us.”

Square Group is also set to open its denim garment factory at Bhaluka in November, looking to utilise the fabric produced in its denim factory, he added.

“We have ready yarn, we have ready fabric and now we need a denim garment factory. We will open our denim garment factory on a small scale from November this year. Later, we have plans to expand operations,” Chowdhury said.

The company also plans to set up a spinning mill in Habiganj starting in February next year.

The denim factory there currently employs 950 workers, 70 percent of whom have dorm accommodation facilities.

The factory that has been set up meeting environmental guidelines of the government and international standards operates an effluent treatment plant (ETP), which has the capacity to treat 70,000 litres of water an hour. The treated water is used to flush bathrooms in the factory, he added.

The treated water is also poured into nearby Suta River through a canal, he said.

The company also harvests rainwater to reduce dependence on ground water, he said, adding that the reservoir's capacity is 162,000 litres, which can meet the factory's requirements of 10 days.

The unit uses LED lights everywhere to reduce consumption of electricity and has its own captive power generation plant, he said. Its eight-megawatt power generation captive power plant currently produces 4.5 megawatts of electricity to meet demand of power.

Chowdhury said the company constructed the factory following guidelines from the Accord and Alliance, two international agencies for factory inspection, and rules of the Bangladesh National Building Code.

“We are in the process of receiving the globally accredited US Green Building Council's Leadership in Energy and Environmental Design,” he said.

On the price of fabric, Chowdhury said the average price of denim varies between $2.5 and $3 a yard in the local markets. However, the price of the same is higher in other countries like Turkey at $7 a yard and Italy at $11 a yard.

Five denim factories came into operation in the last five years, amid rising demand for denim products in the global market, said industry insiders. The total number of denim factories in Bangladesh is 30 now, with five more in the pipeline.

Bangladeshi manufacturers used to produce mainly basic denim products such as trousers, but now they also make shirts, bed sheets, pillow covers, home textiles, aprons and tablecloths, he said.

Production capacity of the denim mills in Bangladesh is more than 40 million yards a month against demand for nearly 70 million yards. The rest of the demand is met through imports from countries like China, India, Pakistan and Turkey.

About Tk 8,000 crore has already been invested in denim business in Bangladesh, said industry insiders. In a few years, the export of denim products will rise to $5 billion, from more than $2 billion a year now.

Global denim sales amount to more than $56 billion a year now; the number is expected to reach $64 billion by the end of 2020.  

In 2015, Bangladeshi denim products had a 22.88 percent market share in the EU and 11.35 percent in the US, according to US Department of Commerce.

Bangladeshi entrepreneurs supply denim products to major global retailers and brands, including H&M, Uniqlo, Levis, Nike, Tesco, Wrangler, s.Oliver, Hugo Boss, Walmart and Gap.