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Textile industry of India case &analysis of siyaram silk mill ltd

KANDIVALI EDUCATION SOCIETYS


B.K. SHROFF COLLEGE OF ARTS
AND
M.H. SHROFF COLLEGE OF COMMERCE

Bhulabhai Desai Road, Kandivali (West), Mumbai 400067

CERTIFICATE
This is to certify that SURENDRA .C. SAROJ of
TY.BMS has successfully completed a project on

TO

STUDY

TEXTILE INDUSTRY OF INDIA - CASE & ANALYSIS OF


SIYARAM SILK MILL LTD. for the semester under the
guidance of the PROF. UMADEVI KOKKU during the Academic
year 2011-2012.
Project Guide

Co-ordinator

Principal

Internal Examiner
Examiner

External

College Seal

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Textile industry of India case &analysis of siyaram silk mill ltd

KANDIVALI EDUCATION SOCIETYS


B.K. SHROFF COLLEGE OF ARTS
AND
M.H. SHROFF COLLEGE OF COMMERCE

Bhulabhai Desai Road, Kandivali (West), Mumbai 400067

DECLARATION

I SURENDRA .C. SAROJ from KES Shroff College Of


Arts & Commerce and a student of T.Y. BMS here submit my project
on

TO STUDY

TEXTILE INDUSTRY OF INDIA - CASE &

ANALYSIS OF SIYARAM SILK MILL LTD. .


I also declare that the project which has been in the
partial fulfillment of the requirement of the Mumbai University is the
result of my efforts.

Surendra .c. saroj

Textile industry of India case &analysis of siyaram silk mill ltd

KANDIVALI EDUCATION SOCIETYS


B.K. SHROFF COLLEGE OF ARTS
AND

Bhulabhai Desai Road, Kandivali (West), Mumbai 400067


M.H. SHROFF COLLEGE OF COMMERCE

PROJECT REPORT ON
textile industry of india case analysis of
siyaram silk mill ltd.
SUBMITTED BY
SURENDRA.C.SAROJ
TY.BMS
SEMESTER V
SUBMITTED TO
UNIVERSITY OF MUMBAI
PROJECT GUIDE
PROF. UMADEVI KOKKU
ACADEMIC YEAR
2011 - 2012

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Textile industry of India case &analysis of siyaram silk mill ltd

ACKNOWLEDGEMENT
The joy of ingenuity!!! This is doubtlessly what
this project is about. Before getting to brass tacks of things. I would like
to add a heartfelt word for the people who have helped me in bringing out
the creativeness of this project.

To commence with things I would like to take this


opportunity to gratefully and humbly thank Prof.Umadevi kokku, who
has giving me an opportunity to undertake this project in textile industry
of India.
I also thank Mr. Sanjay patil to give knowledge on this topic

My parents need special mentions here for their constant


support and love in my life. I also thank my friends and well wishers,
who have provided their whole hearted support to me in this exercise. I
believe that this Endeavour has prepared me for taking up new
challenging opportunities in future.

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Textile industry of India case &analysis of siyaram silk mill ltd

Table Of Contents
Chapter No.

Topic

Pg. No.

INTRODUCTION

6-11

Indian Textile Industry

12-22

Global Scenario

23-27

GLOBAL TRADE VOLUME AND TRENDS

28-32

INDIAS COMPETITIVENESS

33-37

INDIAN SUPPLY DEMAND SCENARIO

38-39

FASHION APPAREL INDUSTRY OVERVIEW

39-47

MAJOR PLAYERS

48-66

INDUSTRY AVERAGE

67-87

10

FUTURE SCENARIO

88-97

11

CHALLENGES FACED BY INDUSTRY

98-99

12

SIYARAMS SILK MILL LTD

100-107

13

SWOT Analysis of textile industry

108-112

14

FUTURE PROSPECTS

113

15

CONCLUSION

114-115

16

Bibliography

116

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Textile industry of India case &analysis of siyaram silk mill ltd

CHAPTER 1
INTRODUCTION

HISTORY OF TEXTILE
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Textile industry of India case &analysis of siyaram silk mill ltd

No one knows when exactly the spinning and weaving of textile began. It
has been said that people knew how to weave even 27000 years ago. This
was even before humans were able to domesticate animals. The oldest
actual fragment of cloth found was in southern Turkey.
People used fibers found in nature and hand processes to make fibers into
cloth. Even though high technology was not available, skilled weavers
created a wide variety of fabrics. Dyeing of fabrics was done to satisfy
the universal human need for beauty. Within time, more complex social
and political organization of people evolved. With the growth of cities
and nations, improvements in technology came into place and there was a
substantial development in the international trade, both of which involved
textiles.
Chinese textile was considered to be the most significant in international
trade. Historians have claimed that silk from China has reached ancient
Greece and Rome along a trade route called the Silk Road in the latter
part of the second century B.C. and Egypt in 1000 B.C. The Romans also
imported cotton from nearby Egypt and from India. Archeologists have
found facilities for dyeing and finishing cotton fabrics in settlements
throughout the Roman world. During the middle ages, the production and
trading of the plant called woad, an important source of dye, was a
highly developed industry. During the fifteenth century, Trade Fairs in
southern France provided a place for the active exchange of wools from
England and silks from the Middle East. The economic activities
surrounding these events gave rise to the first international banking
arrangements. Even the discovery of America was a result of the desire of
Europeans to find a faster route not only to the spices but also to the
textiles of the Orient. Textile trade quickly took root in America, as
colonists sold native dyes such as indigo and cochineal to Europe and

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Textile industry of India case &analysis of siyaram silk mill ltd

bought cottons from India. Although advances were being made in the
technology of textile production, the manufacture of cloth in Western
Europe in 1700 was still essentially a hand process. Yarns were spun on a
spinning wheel and fabrics were woven by hand-operated looms.
A major reorganization of manufacturing of a variety of goods occurred
during the latter half of the 1700s in Western Europe. These changes,
known as the Industrial Revolution, altered not only technology, but
also social, economic, and cultural life. The production of textiles was the
first area to undergo industrialization during the seventeenth and
eighteenth centuries as the result of an economic crisis. Good quality
textile products, produced inexpensively in India and the Far East, were
gradually replacing European goods in the international market. In
Britain, it became imperative that some means be found to increase
domestic production, to lower costs, and to improve the quality of
textiles. The solution was found in the substitution of machine or
nonhuman power for hand processes and human power.
Many important inventions, most importantly spinning machines,
automatic looms, and the cotton gin, improved the output and quality of
fabrics. These inventions provided the technological base for the
industrialization of the textile industry. Each invention improved one step
of the process. For example, an improvement that increased the speed of
spinning meant that looms were needed that consumed yarn more rapidly.
More rapid yarn production required greater quantities of fiber. The
growth of the textile industry was further hastened by the use of machines
that were driven first by waterpower, then by steam, and finally by
electricity. The textile industry was fully mechanized by the early part of
the nineteenth century. The next major developments in the field were to
take place in the chemists laboratory. Experimentation with the synthesis
of dyestuffs in the laboratory rather than from natural plant materials led
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Textile industry of India case &analysis of siyaram silk mill ltd

to the development and use of synthetic dyes in the latter half of the
nineteenth century. Other experiments proved that certain natural
materials could be dissolved in chemical solvents and re-formed into
fibrous form. By 1910, the first plant for manufacturing rayon had been
established in the United States.
The manufacture of rayon marked the beginning of the manufactured
textile fibers industry. Since that time, enormous advances have been
made in the technology for every field in the textile industry. Today, the
textile industry utilizes a complex technology based on scientific
processes and vast economic organizations.
With the application of advanced technology to the textile field, textile
use has expanded from the traditional areas of clothing and home
furnishings into the fields of construction, medicine, aerospace, sporting
goods, and industry. These applications have been made possible by the
ability of textile scientists to utilize textile fibers, yarns, and fabrics for
specific uses. At the same time that textile technology is making strides in
new directions, the fabrics that consumers buy for clothing and household
use also benefit from the development of new fibers, new methods of
yarn and fabric construction, and new finishes for existing fibers and
fabrics.
Today, a huge international industrial complex encompasses the
production of fiber, spinning of yarns, fabrication of cloth, dyeing,
finishing, printing, and manufacture of goods for purchase. Consumers
purchase many different products made of textiles. The story of the
journey that these products make as they progress from fiber to yarn to
fabric to finished product is not just the story of spinning yarns, weaving
or knitting fabric, or constructing the end product. It is also the story of a

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Textile industry of India case &analysis of siyaram silk mill ltd

complex

network

of

interrelated

industries.

HISTORY OF INDIAN TEXTILE INDUSTRY


The history of textiles in India dates back to nearly five thousand years to
the days of the Harappan civilization. Evidences that India has been
trading silk in return for spices from the 2nd century have been found.
This shows that textiles are an industry which has existed for centuries in
our country. Recently there has been a sizeable increase in the demand for
Indian textiles in the market. India is fast emerging as a competitor to
China
In textile exports. The Government of India has also realized this fact and
lowered the customs duty and reduced the restrictions on the imported
textile machinery. The intention of the governments move is to enable
the Indian producers to compete in the world market with high quality
products. The results of the governments move can be visible as Indian
companies like Arvind Mills, Mafatlal, Grasim; Reliance Industries have
become prominent players in the world. The Indian textile industry is the
second largest in the world-second only to China. The other competing
countries are Korea and Taiwan. Indian Textile constitutes 35% of the
total exports of our country.
The history of apparel and textiles in India dates back to the use of
mordant dyes and printing blocks around 3000 BC. The foundations of
the India's textile trade with other countries started as early as the second
century BC. A hoard of block printed and resist-dyed fabrics, primarily of
Gujarati origin, discovered in the tombs of Fostat, Egypt, are the proof of
large scale Indian export of cotton textiles to the Egypt in medieval
periods.
During the 13th century, Indian silk was used as barter for spices from the
western countries. Towards the end of the 17th century, the British East
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Textile industry of India case &analysis of siyaram silk mill ltd

India Company had begun exports of Indian silks and several other cotton
fabrics to other economies. These included the famous fine Muslin cloth
of Bengal, Orissa and Bihar. Painted and printed cottons or chintz was
widely practiced between India, Java, China and the Philippines, long
before the arrival of the Europeans.
India Textile Industry is one of the largest textile industries in the world.
Today, Indian economy is largely dependent on textile manufacturing and
exports. India earns around 27% of the foreign exchange from exports of
textiles. Further, India Textile Industry contributes about 14% of the total
industrial production of India. Furthermore, its contribution to the gross
domestic product of India is around 3% and the numbers are steadily
increasing. India Textile Industry involves around 35 million workers
directly and it accounts for 21% of the total employment generated in the
economy.

Strengths of Indian Textile Industry are as follows Huge textile production capacity
Efficient multi-fiber raw material manufacturing capacity
Large pool of skilled and cheap work force
Entrepreneurial skills
Huge export potential
Large domestic market
Very low import content
Flexible textile manufacturing systems

Weaknesses of Indian Textile Industry are as follows Surendra .c. saroj

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Textile industry of India case &analysis of siyaram silk mill ltd

Increased global competition in the post 2005 trade regime under

WTO
Imports of cheap textiles from other Asian neighbors
Use of outdated manufacturing technology
Poor supply chain management
Huge unorganized and decentralized sector
High production cost with respect to other Asian competitor

INDIAN TEXTILE INDUSTRY


INTRODUCTION
The textile industry is the largest industry of modern India. It accounts
for over 20 percent of industrial production and is closely linked with the
agricultural and rural economy. It is the single largest employer in the
industrial sector employing about 38 million people. If the employment
in allied sectors likes ginning, agriculture, pressing, cotton trade, jute, etc.
are added then the total employment is estimated at 93 million. The net
foreign exchange earnings in this sector are one of the highest and,
together with carpet and handicrafts, account for over 37 percent of total
export earnings at over US $ 10 billion. Textiles, alone, account for about
25 percent of Indias total forex earnings.
Indias textile industry since its beginning continues to be predominantly
cotton based with about 65 percent of fabric consumption in the country
being accounted for by cotton.

The industry is highly localized in

Ahmadabad and Bombay in the western part of the country though other
centers exist including Kanpur, Calcutta, Indore, Coimbatore, and
Sholapur.
The structure of the textile industry is extremely complex with the
modern, sophisticated and highly mechanized mill sector on the one hand
and the hand spinning and hand weaving (handloom) sector on the other.
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Textile industry of India case &analysis of siyaram silk mill ltd

Between the two falls the small-scale power loom sector. The latter two
are together known as the decentralized sector.

Over the years, the

government has granted a whole range of concessions to the non-mill


sector as a result of which the share of the decentralized sector has
increased considerably in the total production. Of the two sub-sectors of
the decentralized sector, the power loom sector has shown the faster rate
of growth. In the production of fabrics the decentralized sector accounts
for roughly 94 percent while the mill sector has a share of only 6 percent.
Being an agro-based industry the production of raw material varies from
year to year depending on weather and rainfall conditions. Accordingly
the price fluctuates too.
The Ministry of Textiles under the Government of India has taken some
significant steps to arrest these problems. It has framed "The National
Textile Policy 2000" to address the aforesaid issues. This policy aims at
negating these problems and increasing the foreign exchange earnings to
the tune of US$ 50 billion by the year 2010. It includes rational roadmaps for the development and promotion of all the sectors involved
directly or indirectly with the textile industry of India. Further, the policy
also envisages to bring the unorganized decentralized textile sector
(which accounts for 76% of textile production) at par with the organized
mill sector. Furthermore, the policy also aims at introducing odern and
efficient manufacturing machineries and techniques in the Indian textile
sector

INDUSTRY SUPPLY CHAIN


The apparel industry supply chain can be broadly categorized into six
major components - raw materials, textile plants, apparel plants, export
chains, retail stores and customers.

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Textile industry of India case &analysis of siyaram silk mill ltd

Diagram No: 4.1 Supply Chain of the Textile Industry

CURRENT INDUSTRY SCENARIO:


Close to 14% of the industrial output and 30% of the export market share
is contributed directly by the Indian textile industry. Indian textile
industry is also the largest industry when it comes to employment that
generates jobs not just within but also in various support industries like
agriculture. As per a recent survey the textile industry is going to
contribute 12 million new jobs in India by 2010 itself.
Indian textile industry is as old as the word textile itself. This industry
holds a significant position in India by providing the most basic need of
Indians. Starting from the procurement of raw materials to the final
production stage of the actual textile, the Indian textile industry works on
an independent basis.
The final phase-out of the Multi-fiber Arrangement (MFA)
and the system of quotas that has governed the global
trade in textiles and apparel for the last forty-two years
has significantly altered the institutional rules of trade in
the textile and clothing industry. With the elimination of all
remaining quotas on apparel from January 1 2005, the

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Textile industry of India case &analysis of siyaram silk mill ltd

textile and clothing sector is now fully integrated into the


regulatory framework of the General Agreement on Tariffs
and Trade (GATT) of the World Trade Organization (WTO).
Buyers are now free to source textile and apparel in any
amount from any country; suppliers are similarly free to
export as much product as they are able, subject only to a
system of national tariffs. As global competition intensifies
under the new quota-free trading regime, countries are
bracing for major changes in the structure of sourcing and
apparel supply worldwide. With the removal of the quotas,
it was expected that the developing countries, which have
a major play in the textile industry will benefit themselves
as they have stable supply network, experience in
networking, capacities for scaling up and the ability to
offer a full bundle of services. It was also expected that
smaller countries, which enjoyed the restriction on trade
will fall out from the picture.
The textile sector has increased their investment in projects to upgrade
their equipment amid fierce market competition and to meet the growing
demand for more textile products. Total investment in the textile industry
between 2004 and 2008 was around Rs.65, 478 crore in India, which is
expected to reach Rs.1,50,600 crore by 2012. This enhanced investment
would generate 17.37 million jobs-- 12.02 million direct and 5.35 million
indirectby 2012.
Investments in the textiles sector can be accessed on the basis of three
factors:

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Textile industry of India case &analysis of siyaram silk mill ltd

Plan schemes such as the Techno Up-gradation Funds Scheme


(TUFS), Technology Mission on Cotton, Apparel Parks, etc. Under
the TUFS scheme, a total of Rs 916 billion has been disbursed for
technology up gradation. There are around 26 Apparel Parks in
eight states in India, with a total estimated investment of Rs 134
billion
Industrial Entrepreneurship Memorandums implemented from
1992 to Aug 06, amounting to Rs 263 billion
Foreign Direct Investments inflows worth US$ 910 million have
been received by the textile industry between Aug 91 and May 06,
which account for 1.29% of total FDI inflows in the country.
Though significant investments are being made in the textiles segment,
the bulk of them are in the spinning and weaving segments. A cumulative
total of US$ 6.67 billion in investment was done in 2008. Of this, more
than two-thirds is in the spinning and weaving segments, while only 25%
is in processing and garment units
The elimination of global textile quotas is expected to drive garment
production to China, benefiting consumers in North America and Europe
at the expense of developing nations where apparel manufacturing has
become a bridge to an industrial economy. Africa received record high
foreign direct investment (FDI) inflows in 2005 of US$31 billion, but this
was mostly concentrated in a few countries and industries. The textile
sector has increased their investment in projects to upgrade their
equipment amid fierce market competition and to meet the growing
demand for more textile products.

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Textile industry of India case &analysis of siyaram silk mill ltd

The global fiber industry will continue to shift to the Asia/Pacific region,
particularly China, South Korea and Taiwan. Textile trade in the world is
estimated to be around US$ 300 billion currently. Industry experts predict
that by 2014 the facilities in the west will close down and they will
source their textiles from more efficient areas of the world resulting in the
trade volume of around US$ 800 billion. The Indian textile industry,
which has accelerated to an annual growth of 9-10 per cent, is expected to
grow at a rate of 16 per cent in value terms and reach a level of USD 115
billion by 2012. With 8.6% growth rate, Turkey also recorded a very
strong average annual growth rate of its textiles and clothing exports but
from a much lower basis. It could increase its exports from 8.6 to 17.6
billion US-Dollars. Pakistan exports amounted to 9.9 billion US-Dollars
in 2005 which translates into an average annual growth rate of 5.4%.
As of now, the general impression any individual would get about the
Indian textile industry leaders in the past few months is that it is in a
major decline state. The following could be the reasons that attribute to
this decline.
Global recession
Less export orders due to reductions in inventories by global retail
giants like Wal-Mart
Rising price of raw materials like cottons
Infrastructure bottlenecks such as power, particularly in Tamil
Nadu
In the times of adversity, like what we are facing right now, it is an
immediate task for all stake holders to pause for a moment and take stock
of the difficulties and chart plans for sustainability and growth of the
Indian textile industry.

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Textile industry of India case &analysis of siyaram silk mill ltd

With the opening of world markets and the abolition of textile quotas
since 2005, there came a negative situation as well. But, hindsight is
always 20-20. Indian textile industry should have focused on all major
sectors right from fiber to fashion and planned for an organized growth
across the supply chain so as to compete with China and even countries
such as Pakistan, Vietnam and Thailand, which are also growing from the
textile perspective. Instead, the industry had put majority of its stock in
the spinning sector. This is clearly evident in the utilization of
Technology Up gradation Fund Scheme effectively by the spinning
sector. Although it is a positive outcome, the industry did not focus on
many other value adding segments such as weaving and finishing. Indian
power loom sector, which enables value-addition is a highly unorganized
industry and needed major up gradation. As of now, the power loom
segment is also picking up where in many of the unorganized power
looms are becoming organized. Technical textiles sector is still in its
infancy and a tangible growth will be highly visible by 2035 when the
growth in this sector will be exponential.
The weak links in the Indian conventional industry such as weaving and
finishing have to be strengthened. There must be consolidated efforts by
Indian Textile Machinery Manufacturers Association, end-users and the
Government to undertake a major step and come-up with alternatives to
European Machinery, which the Indian weaving sector can afford. This
should be put into practice within the next five years, if dedicated efforts
are undertaken with the financial support for R & D by the Government
through its various schemes. Technical textiles sector must transform
from a non crawling phase to at least a crawling industry in the next three
years. General awareness on nonwoven and technical sectors has been
created with the recent marathon training workshops and conferences
such as, "Advances in Textiles, Nonwoven and Technical Textiles",
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Textile industry of India case &analysis of siyaram silk mill ltd

organized for the past five years in Coimbatore by Texas Tech University,
USA and those such as the Texcellance and IIT's Technical Textiles
conferences. These have put India on the international map in technical
textiles. These conferences are of less use if they do not translate into
investments and new projects.

TEXTILE INDUSTRY BENEFITS OTHER INDUSTRIES


TOO
The pursuit of a better fiber and a better fabric is yielding products used
in medicine, aeronautics, astronautics, seawater desalination, and
construction of buildings and roads. The new kinds of textiles possess
characteristics that make them useful in numerous formerly unexpected
applications. Although textiles are still the major component of the
clothes we wear and of many furnishings in our homes and offices, they
are also used widely in medicine, aeronautics, astronautics, pollution
abatement, and numerous other fields. Innovation in textile technology
continues and more unusual products will almost surely emerge

MEDICAL
Certain fibres and textile materials are especially suitable for use in
building synthetic body parts and medical scientists are steadily
expanding the types of body parts whose function can be mimicked. The
artificial kidney is made from 7,000 hollow fibres, each of which is about
the size of a human hair. Patients whose kidneys no longer function
normally must have their blood freed by dialysis of metabolic wastes and
excess water about every three days. This is accomplished by pumping
the blood through a textile, hollow-fibre module while clean-sing solution
rinses the blood free of urea. Patients with diabetes have a tendency to
suffer from cholesterol blockage of arteries leading to their feet. If not
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Textile industry of India case &analysis of siyaram silk mill ltd

corrected, poor circulation can lead to gangrene and loss of limbs.


Artificial arteries that look like pencil diameters are surgically inserted to
bypass the blockages, thus restoring circulation and saving limb
functions. These implants require crucial textile technology to prevent
clotting and rejection. It is estimated that more than 150,000 people in the
United States have now had these artificial arteries for over five years.

SPACE
NASA space suits for launch and for space walks require zero-defect
performance. The launch suits are made from PBI non-flammable highperformance fibres. The space-walk suits have different requirements.
They require air-purifying, cooling, and pressurizing systems. Each suit is
tailor-made for a particular astronaut and costs $1-1.5 million. Since the
astronaut is under an oxygen pressure of eight pounds per square inch in
this suit, special flexibility is needed to allow him or her to bend an elbow
or grasp an article. Rocket exhausts and nose-cone covers for space
shuttles are made of carbon and other high-performance fibres. These
protect the vehicles from heat from air friction during launch and re-entry.
The flames generated on the launch pad do not ignite the rocket because
of the flame-resisting properties of graphite carbon-fibre-textile exhaust
shields. Similarly on re-entry, the white-hot temperatures from
atmospheric friction do not consume the shuttle because highperformance fibre and ceramic structures provide protection

AERONAUTICS
Airplane parts, other than body construction, are also made of textiles. All
U.S. commercial jets have brakes made from carbon composites. These
are the only materials that can withstand the extreme high temperatures

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Textile industry of India case &analysis of siyaram silk mill ltd

generated if takeoff is aborted. Stopping a plane weighing many tons in a


short distance generates temperatures high enough to melt metals, making
carbon brakes indispensable for heavy jets. Kevlar non-woven felt liners
are now used as fire barriers to cover the urethane foam seats on all
aircraft to prevent the production of highly toxic cyanide gases when such
foams burn during airplane accidents.

PURIFICATION OF WATER AND AIR


Whole-body gas suits are required to protect soldiers from the chemicals
used in gas warfare today. These chemicals can kill by absorption into the
bloodstream through skin. The suits allow for transport of perspiration
moisture to prevent soldiers from being overcome internally as would
occur from a non-permeable film covering. It is well known to chemists
that a cube of activated charcoal powder measuring one inch on each side
has an adsorptive capacity equal to a football field. It was therefore
believed that properly constructed porous carbon fibres could exhibit
superior gas-adsorption capability. Drinkable sea water is now available
through properly prepared hollow fibre reverse osmosis modules. Sea
water is forced through these modules under a pressure of 400 pounds per
square inch. Pure drinking water passes through the hollow fibre wall
while concentrated salt water exudes out of the end. Concentration of
liquids that normally deteriorate from heating is possible with reverse
osmosis fibres and membrane systems. Many liquids, including orange
juice and tomato juice, can be concentrated by pressure without heat to
preserve the thermally unstable flavour ingredients. Most orange-juice
concentrate on the market today is prepared this way. Similarly
concentration of gases can be achieved by proper use of membrane and
fibre composition. Gas-separation systems are currently in use at most
U.S. petroleum refineries.
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Textile industry of India case &analysis of siyaram silk mill ltd

CONSTRUCTION MATERIALS
Super domes and stadiums are being constructed with roofs of siliconecoated fibreglass. This is particularly important in northern areas where
heavy snowfall has caused the collapse of heavy concrete roofs. At the
Hubert Humphrey dome in Minnesota, 800,000 square yards of such
material in two layers allow warm air to be circulated to melt the snow.
At an air terminal in Saudi Arabia, a multi-funnel design allows
circulation by convection of the air up through hollow top ports. Many
shopping malls are turning to these flexible composites to allow for more
freedom in architectural design, improved aesthetics, better air
circulation, and better light transmission.
Rapid technological advances in the textile industry have opened now
opportunities for many technical disciplines, but have resulted in a
shortage of textile chemists, textile engineers, and textile-management
executives. Some U.S. colleges with textile-engineering programs report
that they could place nearly three times as many students in well paying
jobs as they are currently graduating. Together with a bright outlook for
further rapid advances and new products with unusual but useful
properties, this shows that textiles remain among the most dynamic
contemporary sectors in technology.

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GLOBAL SCENARIO
The textile and clothing trade is governed by the Multi-Fiber Agreement
(MFA) which came into force on January 1, 1974 replacing short-term
and long-term arrangements of the 1960s which protected US textile
producers from booming Japanese textiles exports. Later, it was extended
to other developing countries like India, Korea, Hong Kong, etc. which
had acquired a comparative advantage in textiles. Currently, India has
bilateral arrangements under MFA with USA, Canada, Australia,
countries of the European Commission, etc. Under MFA, foreign trade is
subject to relatively high tariffs and export quotas restricting Indias
penetration into these markets. India was interested in the early phasing
out of these quotas in the Uruguay Round of Negotiations but this did not
happen due to the reluctance of the developed countries like the US and
EC to open up their textile markets to Third World imports because of
high labour costs. With the removal of quotas, exports of textiles have
now to cope with new challenges in the form of growing non-tariff / nontrade barriers such as growing regionalization of trade between blocks of
nations, child labour, anti-dumping duties, etc.
Nevertheless, it must be realized that the picture is not all rosy. It is now
being admitted universally and even officially that the year 2005 AD is
likely to present more of a challenge than opportunity. If the industry
does not pay attention to the very vital needs of modernization, quality
control, technology up gradation, etc. it is likely to be left behind.
Already, its comparative advantage of cheap labor is being nullified by
the use of outmoded machinery.
With the dismantling of the MFA, it becomes imperative for the textile
industry to take on competitors like China, Pakistan, etc., which enjoy
lower labour costs. In fact the seriousness of the situation becomes even

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Textile industry of India case &analysis of siyaram silk mill ltd

more apparent when it is realized that the non-quota exports have not
really risen dramatically over the past few years.

The continued

dominance of yarn in exports of cotton, synthetics, and blends, is another


cause for worry while exports of fabrics are not growing. The lack of
value added products in textile exports do not augur well for India in a
non-MFA world.
Textile exports alone earn almost 25 percent of foreign exchange for
India yet its share in global trade is dismal, having declined from 10.9
percent in 1955 to 3.23 percent in 1996. More significantly, the share of
China in world trade in textiles, in 1994, was 13.24 percent, up from 4.36
percent in 1980. Hong Kong, too, improved its share from 7.06 percent
to 12.65 percent over the same period. Growth rate, in US$ terms, of
exports of textiles, including apparel, was over 17 percent from 1993-94
to 1995-96. It declined to 10.5 percent in 1996-97 and to 5 percent in
1997-98.

Another disconcerting aspect that reflects the declining

international competitiveness of Indian textile industry is the surge in


imports in the last two years. Imports grew by 12 percent in dollar terms
in 1997-98, against an average of 5.8 percent for all imports into India.
Imports from China went up by 50 percent while those from Hong Kong
jumped by 23 percent.

CHINA:
China's investment spending in the textile industry slumped 20 percent in
the first two months of this year from the same period in 2008, the
National Bureau of Statistics said. Textile industry spending accounted
for 0.9 percent of the nation's overall investment of 1.03 trillion Yuan,
down 0.5 percentage point from a year earlier, the statistics bureau said.
China's garment and textile exports tumbled 15 percent to $21.9 billion in
the two months from a year earlier, customs data show. Exports of yarn,
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Textile industry of India case &analysis of siyaram silk mill ltd

fabrics and textile products totaled $7.29 billion, down 21 percent, while
apparel exports fell 11 percent to $14.6 billion, the Beijing-based
Customs Bureau said on March 11.
Textile firms, once an export engine of China, are fighting for their
survival this year with rising costs and dismal overseas market hit by the
subprime crisis. Those firms wooing foreign buyers at the 103rd China
Import and Export Fair, the largest trade fair in the country also called the
Canton Fair, felt the pinch. Few buyers visited their exhibition stall, and
fewer still signed contracts. Chinese product competitiveness was not
much as it was. The reduction in tax rebates and the devaluation of the
dollar have made Chinese products 20 percent higher than what it was.
The Chinese currency has ventured below the seven Yuan mark since the
government loosened the units peg to the dollar in 2005. The Yuan has
gained about 18 percent since then. This has made Chinese textile
products more expensive and its price advantage has almost vanished
compared with products from Vietnam and India. The Yuan appreciation,
together with the rising material and labor costs, has driven some textile
firms to the brink of bankruptcy.

BANGLADESH:
Swedish Firms have Expanded Outsourcing in Bangladesh. Swedish firm
engaged in outsourcing home textiles and home furnishing items is
planning to expand its operations in Bangladesh. RMG Exports is
expected to Surge despite global recession. The readymade garment
sector, one of the pillars of the Bangladesh economy, is definitely in a
positive mode despite global financial meltdown. The three-day
Bangladesh Apparel and Textile Exposition (BATEXPO) wooed foreign
buyers to buy apparel products.

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Textile industry of India case &analysis of siyaram silk mill ltd

CAMBODIA:
Cambodia's garment industry is the country's biggest industrial employer,
and is now struggling against stiffer global competition and slowing
demand. Many Chinese and Korean companies have established a
presence in Cambodia for years. Now, more than 10 Chinese-owned
factories have moved to cheaper markets, leaving hundreds of thousands
of garment workers from the provinces facing destitution, reported
Phnom Penh Times in early 2008.The garment industry earns 80 percent
of Cambodia's foreign exchange earnings and employs an estimated
350,000 people in more than 300 factories. The industry began to grow
after a the country passed a new labor laws encouraging labour unions
and allowed the International Labour Organization (ILO) to inspect
factories and publish its findings. In turn, the United States agreed to cut
tariffs on Cambodian garment exports, buying 70 percent of all of the
country's textiles in the 1990s.
Cambodia maintained its higher working conditions after the deal expired
in 2005, and garment-making has made the national economy one of the
fastest

growing

in

the

region.

The World Bank reported that the industry grew only 8.0 percent in 2007
compared to the growth of up to 20 percent previously. The Cambodia
Ministry of Commerce said that the apparel exports had declined since
October 2007, mainly due to the US economic slowdown. Exports to the
United States slipped 1.44 percent in the first quarter of 2008, compared
with the same period in 2007. Predicted Trend .The Cambodia's Free
Trade Union (FTU) said that the factory owners are looking abroad for
greater productivity and lower costs. Kaing Monika, Manager at the
Garment Manufacturers Association of Cambodia, commented that many
manufacturers could move to Vietnam, Bangladesh or India if they could

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Textile industry of India case &analysis of siyaram silk mill ltd

get lower costs. Production costs, oil and power, are high in Cambodia,
and the demand for higher wages also put the country's garment industry
in danger, he said. Factory owners are also facing a proliferation of labor
unions and illegal strikes. Experts predict that in 2009 Cambodia would
even see more competition when US restrictions on Chinese textile
exports are scheduled to end. China and Vietnam are still Cambodia's
direct competitors. Cambodia's labor ministry said that to counter this
competition, Cambodia must increase productivity, quality and extend
their reputation as having high labor standards.

MAJOR MANUFACTURERS AND THEIR MARKET


SHARE
In 2006, the largest apparel manufacturers and exporters were countries
from the Asia-Pacific region which included countries like China, Hong
Kong, Philippines, Malaysia, Indonesia, Bangladesh, Srilanka, Pakistan,
Thailand and India. The other major apparel manufacturing nations were
USA, Italy, Germany and Mexico.

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Textile industry of India case &analysis of siyaram silk mill ltd

Diagram No: 3.1 Country wise Market Share

Source: www.fashionproducts.com (http://www.fashionproducts.com/fashion-apparel-overview.html)

GLOBAL TRADE VOLUME AND TRENDS


As the apparel manufacturing industry has become more labour intensive
and requires less capital investment, its concentration is shifting more
towards the developing countries and even constituting large amount of
their exports. They are concentrating more on developing countries as the
labour cost is very less in such countries. This can be analyzed by the fact
that the apparel production in industrialized countries decreased between
1980 and 1996, where as the production increased in developing
countries during the same period. Similar trend was seen in exports, the
apparel exports of developing countries increased six times between 1980
and 1997, and that of developed economies rose by 150%.
The global apparel industrys total revenue in 2006 was US$1,252.8
billion, which was approximately 68% of the overall industry value. Asia
Pacific constitutes the largest amount of production and trade in the
apparel industry worldwide.
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Textile industry of India case &analysis of siyaram silk mill ltd

Table No: 3.1 Region wise Share of Total Trade Revenue (2006)
Region
Asia Pacific
Europe
USA
Rest of the world

% Share
35.40%
29.40%
22.30%
12.90%

Source: www.fashionproducts.com (http://www.fashionproducts.com/fashion-apparel-overview.html)

China had captured 65% of the global market share towards the end of
2006 in total apparel exports. The other major apparel exporting nations
include USA, Germany, Hong Kong, Italy, Malaysia, Pakistan, Thailand
and India. Some of the apparel trade statistics are presented below.

Table No: 3.2 Exports of Apparels in 2006


Country
China
Hong Kong
Italy
Malaysia
Germany
Pakistan
Thailand
USA
India

US $ Billion
8,260.921
1,723.210
1,353.586
1,255.069
669.130
618.830
597.758
595.171
522.463

Source: www.fashionproducts.com (http://www.fashionproducts.com/fashion-apparel-overview.html)

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Textile industry of India case &analysis of siyaram silk mill ltd

GLOBAL

FACTORS

INFLUENCING

TEXTILE

INDUSTRY
The history of the textile and clothing industry has been replete with the
use of various bilateral quotas, protectionist policies, discriminatory
tariffs, etc. by the developed world against the developing countries. The
result was a highly distorted structure, which imposed hidden costs on the
export sectors of the Third World. Despite the fact that GATT was
established way back in 1947, the textile industry, till 1994, remained
largely out of its liberalization agreements. In fact, trade in this sector,
until the Uruguay Round, evolved in the opposite direction.
Consequently, since 1974 global trade in the textiles and clothing sector
had been governed by the Multi-fibre agreement, which was the sequel to
an increasingly pervasive quota regime that began with the Short-term
arrangement on cotton products in 1962 and followed by the Long-Term
arrangement. After the successful conclusion of the Uruguay Round in
1994, the MFA was replaced by the Agreement on Textiles and Clothing
(ATC), which had the same MFA framework in the context of an agreed,
ten year phasing out of all quotas by the year 2005. The section that
follows takes a brief look at the history of these protectionist regimes as
also a more detailed look at the MFA and the ATC.

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Textile industry of India case &analysis of siyaram silk mill ltd

CHAPTER-2
REVIEW OF LITERATURE

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Textile industry of India case &analysis of siyaram silk mill ltd

CONTRIBUTION TO ECONOMY:
With 3.9 million handlooms, India is the highest handloom producing
country in the World. 30% of the total export income is generated by
textile alone; it is second largest Employer industry after agriculture. The
textile industry constitutes approximately 14% of country's total
industrial production.

THE WORLD MARKET SHARE


In spite of the Chinese dominance, India has a fair opportunity to grab a
substantial stake in the projected garment market share. According to
PHD Chamber of Commerce and Industry (PHDCCI), post-MFA, India's
market share in the US is expected to go up to 15 per cent from the
present 4 per cent. In the EU, the market share increase is expected to be
50 per cent from the current 6 per cent to 9 per cent
Table showing the Indias Competitiveness with Other Country
There is no denying India is competitive enough and will become even
more competitive once its infrastructure issues are sorted out. China has
probably already reached its peak and further improvements may not be
as dramatic, henceforth

Table No: 5.1

Countries and their positive and negative aspects with regard to


textiles

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Textile industry of India case &analysis of siyaram silk mill ltd

Key countries /
regions

Key positives

Key negatives

China

Efficient, low cost,


vertically integrated

Growth at the cost of


profits

India, Pakistan

Vertically integrated,
low cost

Lacks economies of
scale and
infrastructure support

Mexico (NAFTA),
Turkey

Proximity to market,
duty and quota free

Lack China and


Indias degree of
competitiveness

ASEAN (Vietnam,
Cambodia, Indonesia)

Cheap labor

No other cost or
locational advantage

AGOA (African)
countries, Bangladesh

Quota and tariff free,


cheap labor

Lacks integration and


China and Indias
degree of
competitiveness

Hong Kong, Korea,


Taiwan

Trading hubs
proximity to China

No cost advantage,
protected currently by
quotas

USA and EU

Non-quota barriers
US$ 400 bn trade loss
likely to prove irritant
likely ov
to imports

Source - Industry, I-SEC Research

Indian Textiles targets- 11th Five year Plan (2007-2012)


Market size of US$ 115 Billion

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Textile industry of India case &analysis of siyaram silk mill ltd

Export target US$ 55 Billion


Domestic market US$ 60 Billion
Indias market share in world textiles trade to grow from 3% to 8 %
12 Million additional jobs
Investment Rs.150,600 Crs

Table No: 5.2 Textiles Export Target (In Billions)


Year ( April March)

Target

Achievement

2006-07

19.73

19.62

2005-06

15.565

17.80

2004-05

15.16

13.04

2003-04

16.31

13.16

2002-03

15.05

12.41

2001-02

13.72

10.76

Source: Textile India Progress

Top 10 Exporters (Textile)

Country

1990
Billion US$

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% share

1997
Billion US$

% share

34

Textile industry of India case &analysis of siyaram silk mill ltd


Hong Kong

7.99

7.68

14.6

9.42

China

7.10

6.82

13.83

8.92

South Korea

6.04

5.81

13.35

8.61

Germany

14.00

13.46

13.05

8.42

Italy

9.80

9.43

12.9

8.32

Taiwan

6.13

5.90

12.73

8.21

USA

5.03

4.83

9.19

5.93

France

7.21

4.65

5.86

5.64

6.54

6.29

7.01

4.52

5.88

5.65

6.75

4.35

BelgiumLuxembourg
Japan

Top 10 Exporters (Apparel)

Country

1990

1997

Billion
US$

% share

Billion
US$

% share

China

9.41

9.14

31.8

21.06

Hong Kong

15.37

14.92

23.11

15.30

Italy

12.07

11.72

14.85

9.83

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Textile industry of India case &analysis of siyaram silk mill ltd


USA

2.57

2.49

8.68

5.75

Germany

7.82

7.59

7.29

4.83

Turkey

3.44

3.34

6.7

4.44

France

4.65

4.51

5.34

3.54

UK

3.08

2.99

5.28

3.50

South Korea

8.11

7.87

4.19

2.77

Thailand

2.86

2.78

3.77

2.50

Total (top

69.38

67.36

111.01

73.52

103.00

100.00

151.00

100.00

10)
World

Multifibre Arrangement (1974-94) under which countries whose markets


are disrupted by increased imports of textiles and clothing from another
country were able to negotiate quota restrictions. The MFA was
introduced in 1974 as a short-term measure intended to allow developed
countries to adjust to imports from the developing world. The textiles and
clothing industry was, until recently, the only major manufacturing
industry that was not subject to the rules of the General Agreement on
Tariffs and Trade (GATT). Instead, it was subject to extensive use of
quotas by the major importing countries. The quota system started with
the Long Term Agreement Regarding International Trade in Cotton
Textiles (LTA) under the auspices of the GATT in 1962. In 1974 the LTA
was extended to cover other materials than cotton, and became known as
the Multi-Fiber Agreement (MFA). At the end of the Uruguay Round of
negotiations it was agreed that t countries wishing to retain quotas would

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Textile industry of India case &analysis of siyaram silk mill ltd

commit themselves to phasing them out gradually over a 10 year period,


with the last quotas being lifted 1st of January 2005, as stated in the
Agreement on Textiles and Clothing (ATC).Developing countries have a
natural advantage in textile production because it is labor intensive and
they have low labor costs. According to a World Bank/International
Monetary Fund (IMF) study, the system has cost the developing world 27
million jobs and $40 billion a year in lost exports. At the General
Agreement on Tariffs and Trade (GATT) Uruguay Round, it was decided
to bring the textile trade under the jurisdiction of the World Trade
Organization. The textiles and clothing (T&C) industry is considered to
be an opportunity for the industrialization of developing countries in low
value added goods. The industry is labor intensive and thus requires a
large number of unskilled workers, including a high share of female
workers. The end of the MFA in 2005 will change international trade
significantly and lead to a restructuring of the sector worldwide. This
restructuring process will result in major employment shifts within and
between countries. However, the last three decades have seen various
changes in the clothing and textile sector, thus forcing many countries to
adjust to a constantly altering environment. Now, a number of countries
fear that a new wave of cheap textile and clothing products will flood
their markets, threatening their domestic industries that are not adequately
prepared to face the new challenge. There are also those countries that
hope for new export opportunities as a result of a free quota trade
environment and a third set of countries that will lose their preferential
access to the US or EU markets, thus facing higher competition for their
exports to them. However, large tariffs remain in place on many textile
products. However, the last three decades have seen various changes in
the clothing and textile sector, thus forcing many countries to adjust to a
constantly altering environment. Now, a number of countries fear that a

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Textile industry of India case &analysis of siyaram silk mill ltd

new wave of cheap textile and clothing products will flood their markets,
threatening their domestic industries that are not adequately prepared to
face the new challenge. There are also those countries that hope for new
export opportunities as a result of a free quota trade environment and a
third set of countries that will lose their preferential access to the US or
EU markets, thus facing higher competition for their exports to them.

INDIAN SUPPLY DEMAND SCENARIO


Textile engineering enjoys good growth in the country. The business in
2004-05 amounted to Rs 1,650 crore, which was a Rs-250 crore increase
from

the

year-ago

level.

Despite the Bull Run, textile industry is running short of machinery.


Today, textile companies have to wait one or two year for delivery of
machines, whereas, orders are completed within 10-12 months. This
growing demand is a tough challenge to cope with for Lakshmi Machine
Works (LMW), Coimbatore. It takes 18 months to fulfill new orders, but
R. Rajendran, spokesperson for LMW, expects the delivery time to be cut
down to 10-12 months in 2006-07 with its new capacities. Two reasons
forwarded for the delay in delivery of machines: textile companies are
expanding capacities rapidly and pace of supply of machinery not in tune
with the current demand.
Second reason is the Technology Up gradation Fund Scheme (TUFS) of
the Textile Ministry is likely to end by March 2007. As a result, textile
companies wishing to make the most of the scheme are rushing to place
orders for the machines, says C V Radhakrishnan, Advisor, Textile
MachineryManufacturersAssociation.
Considering the development of textile industry, India would need 12
million spindles in the next five years, whereas only 10 million spindles
would be provided by domestic textile engineering industry.
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Textile industry of India case &analysis of siyaram silk mill ltd

In 2008, the Indian textile industry suffered from overcapacity. There was
talk that a consolidation in the local industry would inevitably have to
take place if India is to remain competitive in textiles, but there was also
talk that the government may offer a U.S.-styled bailout of the Indian
textile industry in order to keep employment levels high. These
conflicting signals continue to make an assessment of the Indian textile
sector difficult to make.

FASHION APPAREL INDUSTRY OVERVIEW


The global fashion apparel industry is one of the most important sectors
of the economy in terms of investment, revenue, and trade and
employment generation all over the world. Apparel industry has short
product

life

cycles,

tremendous

product

variety,

volatile

and

unpredictable demand, long and inflexible supply processes. The industry


has been in a transition over the last 20 years. Some of the major
contributors are significant consolidation in retail, increasing use of
electronic commerce in retail and wholesale trade.
The clothing and apparel industry produces finished clothing products
made from both natural and manmade fibers like cotton, silk, wool, linen,
polyester, rayon, Lycra and denim. The important segments covered in
apparel industry includes children clothing, mens clothing, clothing for
women, bridal wear, mens wedding wear and intimate apparel. The
apparel is sold through three major channels, which are brick & mortar,
catalog and through internet.

Table No: 7.1 Apparel Sales by Channel


Category
Brick and Mortar
Catalog

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Sales in $ Billion
169.256
7.177

Market Share (%)


92.9
3.9

39

Textile industry of India case &analysis of siyaram silk mill ltd

Online/ Internet
Total

5,873
182.306

3.2
100.00

Source: www.fashionproducts.com (http://www.fashionproducts.com/fashion-apparel-overview.html)

INDUSTRY CHALLENGES:
The Apparel Industry is growing at a very high rate but still there are
some barriers, which are hindering the growth of this industry. Some of
them are:
Though the demand for garments is increasing day by day but the
production rate has still not been able to match with the ever rising
demand. More production facilities are needed to meet the demand
Most of the raw material needed for apparel manufacturing is available
in the developing or under developed countries and these countries do not
have enough resources and manpower to explore them. These countries
also do not have finance to set up factories for clothing and garment
production
Globalization has helped the trade in many ways but due to
globalization the competition has increased and so it is not very easy for
the firms to cope up with so much competition, as they have to meet the
deadlines and also maintain quality
The importers of developed economies are facing very stiff competition
as countries like China are producing good quality products in low prices
due to availability of very cheap labour
Some trade laws still are very much in favor of developed countries and
they need to be reviewed, to facilitate imports from the developing
countries

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Textile industry of India case &analysis of siyaram silk mill ltd

As apparel industry is fashion driven, and fashion keeps changing, the


firms have to cope with the changing apparel industry trends and still
complete orders in time. Thus they usually have to work under pressure

National Textile Policy 2000:


ON NOVEMBER 2, the Government announced the New Textile Policy
(NTP), outlining measures to make India a global player in textiles and
readymade garments by raising exports from $11 billion to $50 billion by
2010. Of this, the share of readymade garments will be half. The
Government has decided to de reserve the garment industry from the SSI
category to make the former internationally more competitive. Till now,
the garment sector was under SSI reservation, with an investment ceiling
of Rs 3 crore, and the maximum foreign direct investment limit of 24 per
cent.
There are two more modifications. First, the FDI limit of 24 per cent has
been removed, and foreign companies will be able to make 100 per cent
investments through the Foreign Investment Promotion Board (FIPB)
route. Second, the 50 per cent export obligation on firms with foreign
equity has been done away with.
The Government intends to implement, in a time-bound manner, the
Technology Up gradation Fund Scheme covering all manufacturing
sectors of the industry. According to the Textiles Minister, Mr. Kashiram
Rana, response to this scheme is improving, and proposals worth Rs
11,000 crore were received.
According to the RBI, exports of readymade garments in the 11 years
from 1987-88 to 1998-99 rose from $1,430 million to $4,444 million -more than threefold. The annual average growth rate readymade exports

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Textile industry of India case &analysis of siyaram silk mill ltd

during this period were 10.9 percent, against the overall export growth
rate of 9.7 percent.
Exports of readymade to the developed countries are improving. Against
exports of $427 million to the US, in 1987-88, they touched $1,503
million -- again, more than threefold-- in 1998-99. There have been
similar increases in dispatches to the UK, Germany, France, Canada,
Italy, Japan and the Netherlands. There was a decline in exports to the
Commonwealth of Independent States (CIS) because of the unstable
conditions.
India was also able to capture markets in developing countries, especially
the UAE. The rising trend of readymade garment exports, even to the
most developed countries, proves beyond doubt the competitive ability of
the small sector.

TECHNOLOGY

UPGRADATION

FUND

SCHEME

(TUFS):
Government of India, Ministry of Textiles has launched a Technology Up
gradation Fund Scheme (TUFS) for the Textile and Jute Industries, which
is in operation since 01.04.1999 for 5 years i.e. up to 31.03.2004. There is
no cap on funding under this scheme. It is an open-ended scheme
depending on the capacity of the industry to absorb funds in bankable and
techno-economically feasible proposals.
The main features of the TUFS are given below: i) The scheme provides a reimbursement of 5% point on the Interest
charged by the lending agency on a project of Technology Up gradation
in conformity with the scheme.

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Textile industry of India case &analysis of siyaram silk mill ltd

ii) The identified sectors in the textile industry viz. Cotton ginning and
pressing, spinning/silk reeling and twisting/wool scouring and combing/
synthetic filament yarn text rising, crimping and twisting, manufacturing
of viscose filament yarn (VFY) / Viscose Staple Fiber (VSF),
weaving/knitting

including

non

woven

and

technical

textiles,

garments/made-ups, Jute industry are eligible to avail of these


concessional loan for their technology up gradation requirements.
Investments in common infrastructure or facilities owned by the
association, trust or co-operative society of the units participating in the
TUF Scheme and other investments specified are also eligible for funding
under the scheme.
iii) Technology levels are benchmarked in terms of specified machinery
for each sector of the textile industry. Machinery with technology levels
lower than that specified will not be permitted for funding under the TUF
Scheme.
iv) General eligibility condition and sector specific eligibility conditions
have also been specified in the scheme.
v) Nodal agencies for the scheme are as follows: For the Textile Industry (excluding SSI sector) IDBI
For the SSI Textile Sector (Cotton Ginning & Pressing, Weaving,
Knitting, Processing & Garmenting Manufacturing) - SIDBI
For Jute Industry - IFCI
vi) The interest @5% would be reimbursed to the respective nodal agency
through the budget (plan) provisions of the Ministry of Textiles.

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Textile industry of India case &analysis of siyaram silk mill ltd

vii) The functioning of the scheme is being periodically monitored by


TAMC Chaired by Textile Commissioner and Inter-Ministerial Steering
Committee, Chaired by Secretary (Textiles).
viii) A special cell has been set up in the financing institutions for
expeditiously processing loan application received under the scheme.
ix) All the 18 SFCs, 17 SIDCs and 11 Twin function IDCs, EXIM Bank
and NCDC have been co-opted by SIDBI and IDBI. Further SIDBI has
co opted 81 commercial banks, 12 coop. banks and NSIC and IDBI has
co-opted 36 commercial banks, 1 co-operative bank and 4 AIFIs (IFCI,
ICICI, IIBI and LIC) have also been co-opted by IDBI. IFCI has co-opted
3 SFCs, 1 SIDC, 6 commercial banks, 3 AIFIs and Exim Bank for
financing jute industry under the scheme.
x) An option has also been provided to the Small Scale Textile and Jute
Industries to avail of either 12% Credit Linked Capital Subsidy (CLCS)
or the existing 5% interest reimbursement under the TUFS. CLCS-TUFS
will be in operation from 1st Jan., 2002 to 31st March, 2004. There is no
distinction between public sector, co-operative sector or private sector
mills under the scheme, if project proposal is bankable and techno
economically feasible.
Indian textile industry should have focused on all major sectors right
from fiber to fashion and planned for an organized growth across the
supply chain so as to compete with China and even countries such as
Pakistan, Vietnam and Thailand. Instead, the industry had put majority of
its stock in the spinning sector. This is clearly evident in the utilization of
Technology Up gradation Fund Scheme effectively by the spinning
sector. Although it is a positive outcome, in my opinion, the industry
turned a blind eye on value-adding sectors such as weaving and finishing

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Textile industry of India case &analysis of siyaram silk mill ltd

TEXTILEWORKERSREHABILITATIONFUNDSCHEME
(TWRFS):
Textile Workers Rehabilitation Fund Scheme came into force with effect
from 15th Sept. 1986.The objective of TWRFS is to give interim relief to
the workers rendered jobless due to permanent closure of the mills.
Another reason also was to curtail the widespread disguised employment
in the textile industry. Relief under the scheme is available only for 3
years on a tapering basis, 75% of the wage equivalent in the first year,
50% in the second year and 25% in the third year.
The government has established various research associations for the
textile industry like
Ahmadabad Textile Industry Research Association,
Ahmadabad
Bombay Textile Research Association, Mumbai
South India Textile Research Association, Coimbatore
Northern India Textile Research Association, Ghaziabad
Silk and Art Silk Mills Research Association, Mumbai
It has a few export promotion councils also like
o Handloom Export Promotion Council, Madras
o Apparel Export Promotion Council, New Delhi
o Cotton Textile Export Promotion council, Mumbai
o The Synthetic and Rayon Textiles Export Promotion
Council, Mumbai
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Textile industry of India case &analysis of siyaram silk mill ltd

o Indian Silk Export Promotion Council, Mumbai


o Wool and Woollens Export Promotion council, New Delhi
o Carpet Export Promotion Council, New Delhi
o Export Promotion Council for Handicrafts
o Power loom Development & Export Promotion Council

CHAPTER -3
Research methodology

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Textile industry of India case &analysis of siyaram silk mill ltd

COLLECTION OF data
The research method which I had chosen to collect information is the case
study method
I had choose one company related to this topic the company is siyaram
silk mill ltd
I had collected the information by referring many magazines newspaper
and so on

Objective:
The objective is to get a brief knowledge on this topic and related that
information to the siyarams.
As there is also a disadvantage that on the basis of one company I cannot
give brief knowledge about the textile industry.

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Textile industry of India case &analysis of siyaram silk mill ltd

MAJOR PLAYERS
India being one of the fastest growing economies of the world, which has
both positively and negatively, affected the Indian apparel industry. On
one hand it has become a major retailing hub and a host for various
multinational companies on the other hand this has a negative effect on
the domestic players. The emergence of mall, brand slavery, fashion
awareness, rise in the income level has further reinforced the competition
among the multinationals and the domestic players and has lead to
opening of number of retail outlets in India.
The introduction of VAT and the growth of organized retail industry are
also likely to push up growth in the textiles and apparel sector
domestically too. While the garments business will pose its own set of
challenges in terms of providing flexibility in operations and dealing with
labor productivity issues, an increasing contribution to revenues from the
garments business, which is less capital-intensive and margins-accretive,
would augur well for earnings growth.

GOKALDAS EXPORTS
Incorporated in 1979, based in Bangalore, its one of India's largest
manufacturers and designer of garments for men, women and children
and caters to the needs of several international fashion brands and
retailers. Gokaldas Exports has been a major player in the readymade
garment industry across the globe.
In the present Indian fashion retailing, Gokaldas has grabbed a
distinguished place for itself in the form of "The Wear house" catering to
the specific fashion needs of the people. The Wearhouse has high profile
outlets in Bangalore, Chennai, Hyderabad and Coimbatore.

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Textile industry of India case &analysis of siyaram silk mill ltd

An ISO 9001:2000 Certified Company has a capacity to produce and


export 2.5 million garments a month.
The Group's products include coats, suits, jackets, parkas, windcheaters,
ski wear; warm-ups, surf wear, swim wear; trousers, shorts; casual wear
shirts, ladies blouses and dresses for customers in international market. It
mainly operates in India but exports its products to countries like the
United States of America, Canada, Mexico, United Kingdom, Germany,
Austria, Spain, Italy, France, Netherlands, Middle East, South Africa,
Japan, Denmark, Taiwan and Hong Kong. A few of the manufacturing
units are 100% export units with capabilities of mass production. They
have the license to import duty-free fabrics and accessories from all over
the world for re-export. It has over 48,000 employees who work in
around 48 fully equipped, modern, manufacturing factories.

ARVIND BRANDS
Arvind Mills Ltd. was incorporated in 1931 with share capital
Rs.2525000 ($55000) in Ahmadabad by the Lalbhai group. The
Company's operations are divided into the Textile Division, telecom
division and garments division. We will be majorly concentrating on the
garments division. Products manufactured are dhotis, sarees, mulls,
dorias, crepes, shirtings, coatings, printed lawns & voiles cambrics, twills
gabardine etc. Arvind Brands is part of the Lalbhai Group, which holds
licenses for leading international brands such as Arrow, Lee, Wrangler,
Gant and Tommy Hilfiger for retail and wholesale sales in the local
market. Its mainstream brands are Excalibur and Flying Machine.
In addition, it owns an array of casual sportswear and denim brands
marketed in India, including Flying Machine, Newport and Ruf & Tuf
jeans and Excalibur shirts along with licensed relationship with various

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international brands like Nautica, Jansport, Kipling, Hero by Wrangler,


Lee Riders and Tommy Hilfiger, and joint ventures with VF Corporation
and Diesel.
But the company is facing severe competition from major brands like
Louis Philippe, Park Avenue and small brands like Trigger and
Blackberrys.
It produces about 110 million meters of denim every year and the
garment section is doing extremely well because of the customer loyalty
it enjoys. The demand for jeans, in particular, is expected to rise, as
manufacturing companies in the US have shut operations.

KOUTONS
The winner of best retailer leadership award 2008 organized by retail
congress, Mumbai, Koutons Retail India Limited engages in the design,
manufacture, and retail of mens wear and integrated apparel in India. It
currently sells its apparel using the Koutons and Charlie Outlaw
brands. Mr. Kohli along with his brother in law Mr. Sawheny partnered to
set up Charlie's Creation.
In 1997 the Company diversified its business by introducing non-denim
trousers in the existing product range of denim apparel. The company has
inaugurated its 89th family Store in Hyderabad, which it claims to be its
largest store in the country. Koutons India has an annual finishing and
manufacturing capacity of 22.92 million pieces and 12.36 million pieces
of apparel, respectively. The capacity utilization for the same was 41.21%
and 21.99% respectively at the end of FY2007.Koutons has 18
manufacturing/finishing units and 14 warehouses spread across various
locations in and around Gurgaon. The company's strategy is to have

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small, but more stores. This helps to save costs and at the same increase
reach of the company. The company has a phenomenal growth record.

ZODIAC
Zodiac Clothing Company Ltd manufactures, exports and imports
garments, textiles accessories etc. Zodiac has been in the apparel business
for a period of 50 years by now and is known for its quality shirts.
Zodiac, is today, the largest selling shirts & tie brand at Shopper's Stop
according

to

Brand

Equity

(The

Economic

Times)

The Company started business in 1954 and export of readymade


garments to Europe started in early '60s, which included mainly ties and
shirts. For many decades, Zodiac has been synonymous with ties. The
business of ties is a high fashion business and Zodiac has taken this to
new highs in India and across the globe. In fact, one can say that in India
Zodiac is generically associated with ties. Following Zodiac's huge
success with ties, the company entered the arena of men's accessories
with

Cuff

links,

Belts,

Wallets

and

Handkerchiefs.

In 1973, Zodiac had a stand-alone exclusive shirt shop in Hotel Taj in


Mumbai. The company then entered the domestic shirt segment in late
'80s.It employs around 3500 people in 7 manufacturing units in 16 offices
located in UK, US, Germany, UAE etc. Each manufacturing unit is
spread over 35000 sq.ft and has modern equipment to spread 60 yards of
cloth at a time. All the manufacturing units are same in design and layout.
Quality is maintained throughout the 40 stages of assembly line. All the
units have their own power generating units in order to be efficient. It has
its own 80 exclusive outlets and around 2000 multibranded outlets. Its
continuously showing profit and has a consistently growing export
business.

HOUSE OF PEARL
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House of Pearl Fashions Limited is a multinational ready to wear apparel


manufacturing company. The company also provides supply chain
solutions for the fashion industry globally along with warehousing &
distribution networks in the UK & US. It operates in 11 strategic
locations in six continents. It has two brands Kool hearts, DCC in the
United States of America. The brand Kool hearts focuses on the young
fashion, where as the focus of DCC is more towards the Missy segment
It basically deals with 3 streams which are manufacturing to Retailers,
souring solutions for retailers, Marketing, Distribution & Branding for
Retailers. It takes care of the whole process from design & development,
manufacturing or sourcing till offering a range of pre retailing services,
warehousing to delivering at the door step on a call off basis. It
manufactures a broad range of products comprising of knits, woven,
sweaters and bottoms in basic as well as complex designs.
It has a good manufacturing capacity; the present in-house manufacturing
capacity of the company is twenty million pieces. Per annum spread over
more than 725,000 sq feet of built up area with efficiently designed
layouts to ensure smooth flow of materials. The company is planning to
double the capacity by expanding the operations in Chennai, Bangladesh
& Indonesia. It intends to have a capacity of 30million pieces by the end
of 2009.
The company adopts integrated marketing techniques and has
merchandising teams in Canada, Europe, HK, UK, and US, closely
interacting with existing and potential customers at their doorstep.
The Company shares were listed on the stock exchanges first time in Feb,
07. It recently went for a joint venture with LERROS, a premium apparel
brand from Germany.

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HARIA EXPORTERS
Haria Exports Ltd. is a leading garment exporter in the country for the
last twenty four years. It is a Star Trading Company and has won the
golden status certificate in the year 1999. This company occupies a
unique place in the industry of the by its contribution to Industrial output,
employment generation and Foreign exchange earnings. Even though the
textile industry has the distinctive advantage in respect of raw material
and

skilled labor,

the

industry

is

suffering

from technology

obsolescence which in turn affects the quality, productivity and cost


effectiveness. The high capital cost is impeding the process of Hi- Tech
up gradation. Therefore, the Government of India, Ministry of Textile
has launched Technology Up gradation Fund Scheme for Textiles &
Jute Industries of Rs.25000.00 crores at a concessional rate of interest
of appx.5%. In order to compete with the outside world, the company is
paying attention to the application of technology, closely following up the
fashion trends and improved product quality. In order to be more cost
efficient the company has acquired latest machinery which ascertained
exact material consumption depending upon the style and pattern. The
Government policies, interest rates, export incentives etc may also affect
the overall performance of the company, but even then the company is
optimistic about its revenue and growth.

EVINIX
The company started in 1996 with the manufacture of headgears, baseball
caps and high altitude jackets, using cotton textile and leather, mainly for
exports. The company was incorporated on 1st May 1996 as Evinix
Fashion Accessories Private Limited under the Companies Act, 1956.

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Mr. Sanjay Taneja, brother of Mr. Raujeev Taneja (the original promoter
of the company) joined the Company as a Promoter replacing
Mrs.Anuradha Taneja, who disassociated herself from the company. The
name of the company was changed to Evinix Accessories Private Limited
from Evinix Xsesryz and a fresh Certificate of Incorporation dated 20th
March 2003 was taken. In March 2005, M/s Ambrose Exports Private
Limited took equity stake in the company.
The apparel category constitutes men and womens shirts, trousers, skirts
and tops, kids wear and nightwear. Organic cotton wear for expecting
mothers and infants is an additional strength. They use Organic cotton
and its products through its brand name Othentix- Authentic
Sustainable Textiles, lends a unique personality to each garment
manufactured and supplied by Evinix.
The company came out with a principle of Rapid Retail suggesting that
every merchandise has a limited shelf life at CUT stores; CUT is an
acronym for Comfortable, Urban and Trendy. Evinix is setting up CUT
stores (averaging 4000-5000 sq feet) in fast urbanizing young Indian
towns. It recently launched the CUT youth style store in Rajkot. The
Rapid Retail business concept embraces the e.t.o.a.d concept i.e. the exact
time of awaited departure when the product will move out to the next best
price bracket.

PEARL GLOBAL
Pearl Global Limited was incorporated on 23rd October, 1979 under the
name Pearl Agencies Private Limited. The Company became a Deemed
Public Company with effect from 1st July, 1991 The name of the
Company was change to PEARL GLOBAL LIMITED (PGL) on 2 nd
September, 1993 in terms of Section 21 of the Companies Act, 1956 as
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per fresh Certificate of Incorporation issued by the Registrar of


Companies, Delhi & Haryana. PGL manufactures, sells, and exports
ready to wear apparel in India. The company primarily produces
garments in woven and knitted fabrics. Its products include casual wear
dresses, ladies blouses, and bottoms. The company is based in Gurgaon,
India. PGL is a subsidiary of House of Pearl Fashions Limited.

BANG OVERSEAS LTD


Bang Overseas limiteds principal activity is to manufacture and market
textiles and apparels. The Group's textile includes readymade garments,
under garments and hosiery. It markets with a brand name of Thomas
Scott. The Group operates only in India. It was incorporated in the year
1992 and is presently providing fashion fabrics and meeting ready to
wear requirements of the customers in apparel, textile and Retail segment.
The company started the business from trading in textile and since 1998,
they are conceptualizing and designing fashion fabrics and outsourcing
the manufacturing process of the same from countries like Turkey,
Portugal, Mauritius and other European Countries. In the same year, they
launched our seasonal fabric collections in textile under the name "Body
waves", marketed through their own distribution channel to different
brands and retailers. They have ventured into ready-to-wear mens'
segment in 2000 by outsourcing manufacturing process and in turn
selling to various international brands. They launched ready-to-wear
mens' garments under our brand name "Thomas Scott" in 2002. They
started their own first apparels manufacturing unit in Bangalore in the
year 2005 in the name of Reunion Clothing Company with an installed
capacity of 350,000 pieces per annum and in the year 2006 then they
started the second manufacturing unit in the name of Formal Clothing
Company with an installed capacity of 360,000 pieces per annum. At
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present they have installed capacity of 720,000 and 540,000 pieces per
annum at their Reunion Clothing Company and Formal Clothing
Company. Their products are presently retailed through 157 point of sales
comprises of our own Retail outlets, Large format stores (LFS) like
Shoppers' Stop, Pyramid, Globus, the LOOT, SAGA and Multi Brand
Outlets (MBO) spread all over India. They cater to the demand of various
other apparel manufacturer and brands also. They have centralized
warehousing and logistics centre at Kalher Village near Bhiwandi to
facilitate our supply chain management as well.

BCG MATRIX
BCG Matrix is also called the Boston Matrix because it was created by
Bruce Hendeson for the company Boston Consulting Group in 1970. The
BCG matrix method is based on the product life cycle theory that can be
used to determine what priorities should be given in the product portfolio
of a business unit.

Star
The high growth and high market share brands that exist in Indian market
and are the market leaders. This category consists of the companies like
Zodiac, Du Pont etc. These companies are regularly investing in R&D
and gaining market share as time passes. These stars try to become the
cash cows of the future and want to remain in the market.

Cash Cows
The companies which have low business growth and high
market share are the cash cows that generate milk continuously
with the small investment to be as the mature company in the
market.
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Question marks (also known as Problem Childs)


The companies that have high growth rate and lower market share are the
question mark as they could be new ventures started or they are
companies that do not have liquidity enough to increase their share in the
market. But these companies have potential to be the star in the market
due to good growth rate and thus they could invest more into their
business to expand as the star and then becoming the cash cows.

Dogs
The dogs are more charitable pets that exist in the market and have the
low market share and low growth rate so these companies are better to get
out of the market or much cash is required to set them up. These
companies have the cash traps which ties up the money in a business with
the lower potential.

GOKALDAS
In the present Indian fashion retailing, Gokaldas has grabbed a
distinguished place for itself in the form of "The Warehouse" catering to
the specific fashion needs of the people. It mainly operates in India but
exports its products to countries like the United States of America,
Canada, Mexico, United Kingdom, Germany, Austria, Spain, Italy,
France, Netherlands, Middle East, South Africa, Japan, Denmark, Taiwan
and Hong Kong. This means the company has a high growth rate since its
inception. Therefore we put it in star.

ARVIND BRANDS
Arvind Brands is part of the Lalbhai Group, which holds licenses for
leading international brands such as Arrow, Lee, Wrangler, Gant and

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Tommy Hilfiger for retail and wholesale sales in the local market. Its
mainstream brands are Excalibur and Flying Machine.
In addition, it owns an array of casual sportswear and denim brands
marketed in India, including Flying Machine, Newport and Ruf & Tuf
jeans and Excalibur shirts along with licensed relationship with various
international brands like Nautica, Jansport, Kipling, Hero by Wrangler,
Lee Riders and Tommy Hilfiger, and joint ventures with VF Corporation
and Diesel. Its enjoys good market share as its customers are loyal to it.
But its rate of growth is not significant. So we put it in cows.

KOUTONS
The winner of best retailer leadership award 2008 organized by retail
congress, Mumbai, Koutons Retail India Limited engages in the design,
manufacture, and retail of mens wear and integrated apparel in India.
The company's strategy is to have small, but more stores. This helps to
save costs and at the same increase reach of the company. The company
has a phenomenal growth record. Its market share is excellent. So we put
it in stars.

ZODIAC
Zodiac Clothing Company Ltd manufactures, exports and imports
garments, textiles accessories etc. Zodiac has been in the apparel business
for a period of 50 years by now and is known for its quality shirts.
Zodiac, is today, the largest selling shirts & tie brand .The company then
entered the domestic shirt segment in late '80s.It employs around 3500
people in 7 manufacturing units in 16 offices located in UK, US,
Germany, UAE etc.

Its continuously showing profit and has a

consistently growing export business.Market share is not that significant


as it is famous only in tie and shirt.So we place it in question mark.
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HOUSE OF PEARL
It operates in 11 strategic locations in six continents. It has two brands
Kool hearts, DCC in the United States of America. The company adopts
an integrated marketing technique and has merchandising teams in
Canada, Europe, HK, UK, and US, closely interacting with existing and
potential customers at their doorstep. Both its growth and market share is
high. Therefore it is placed in stars.

HARIA EXPORTERS
It is a Star Trading Company and has won the golden status certificate in
the year 1999. This company occupies a unique place in the industry of
the by its contribution to Industrial output, employment generation and
Foreign exchange earnings. Even though the textile industry has the
distinctive advantage in respect of raw material and skilled labor, the
industry

is

suffering

from technology obsolescence which in turn

affects the quality, productivity and cost effectiveness. In order to be


more cost efficient the company has acquired latest machinery which
ascertained exact material consumption depending upon the style and
pattern. Considering these it is placed in dog.

EVINIX
The apparel category constitutes men and womens shirts, trousers, skirts
and tops, kids wear and nightwear. Organic cotton wear for expecting
mothers and infants is an additional strength. Evinix is setting up CUT
stores (averaging 4000-5000 sq feet) in fast urbanizing young Indian
towns. It recently launched the CUT youth style store in Rajkot. The
Rapid Retail business concept embraces the e.t.o.a.d concept i.e. the exact
time of awaited departure when the product will move out to the next best

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Textile industry of India case &analysis of siyaram silk mill ltd

price bracket. But market share is not that significant. So we put it in


question mark.

BANG OVERSEAS LTD


The company started the business from trading in textile and since 1998,
they are conceptualizing and designing fashion fabrics and outsourcing
the manufacturing process of the same from countries like Turkey,
Portugal, Mauritius and other European Countries. In the same year, they
launched our seasonal fabric collections in textile under the name "Body
waves", marketed through their own distribution channel to different
brands and retailers. They started their own first apparels manufacturing
unit in Bangalore in the year 2005 in the name of Reunion Clothing
Company with an installed capacity of 350,000 pieces per annum and in
the year 2006 then they started the second manufacturing unit in the name
of Formal Clothing Company with an installed capacity of 360,000 pieces
per annum. At present they have installed capacity of 720,000 and
540,000 pieces per annum at their Reunion Clothing Company and
Formal Clothing Company. Their products are presently retailed through
157 point of sales comprises of our own Retail outlets, Large format
stores (LFS) like Shoppers' Stop, Pyramid, Globus, the LOOT, SAGA and
Multi Brand Outlets (MBO) spread all over India. They cater to the
demand of various other apparel manufacturer and brands also. Taking
into account their market share and growth, we put it in stars.

Government Regulations:
Historically the textile industry in India has been reserved for the
small scale sector, which has been exempted from taxes, thus
discouraging investments in increasing scale

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The government, through its various Budget announcements has


sought to rationalize taxes
Budget 2002-03: Textiles brought under the ambit of Cenvat
(credit for duties paid on inputs or capital goods) and
introduced on all yarns
Budget 2003-04: Cenvat extended across the entire textile
chain to include fabrics, made-ups and apparel; excise duty
exemptions on many sectors and processes, specially SSI
removed; excise duty rates reduced
Budget 2004-05: Cenvat made optional - every manufacturer
allowed to choose between a complete exemption from
payment of excise duty or adopt the Cenvat route; excise
duties lowered to 4% on cotton textiles and 8% on non
cotton textiles (except manmade fibers, polyester filament
yarn, nylon filament yarn) for those claiming Cenvat credit
Always government regulations aimed at improving competitiveness of
industry to face a post quota regime

Several

government

initiatives

targeted

to

attract

investments:
Technology up gradation fund scheme:
Scheme launched in 1999 to provide firms access low interest
loans for technology up gradation and setting up new units with
state-of-art technology
Scheme has disbursed INR 91.61 bn till 31st December 2005
Policy related to foreign investment:
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Up to 100% foreign direct investment allowed in textile and


apparel manufacturing industry, with approval of the Foreign
Investment Promotion Board (FIPB)
USD 1.02 bn of FDI in the sector approved between 1991 and 2004
Companies free to set up fully-owned sourcing (liaison) offices, as
well as marketing operations
Upgrading Infrastructure:
Scheme for Integrated Textile Parks (SITP), based on publicprivate partnership model to build world class infrastructure
facilities
Product specific Cluster Approach targeting development of 100
additional clusters in textiles
Technology Mission on Cotton (TMC), focusing on cotton R&D,
dissemination of technology to farmers, improvement of market
infrastructure and modernization of ginning and pressing sector

I. The extent of rivalry among established firms


1. Industry competitive structure:
Since this industry is highly fragmented there is always high probability
during the boom phase that many new players could enter this industry
which would lead to a price war and ultimately end up with the
bankruptcy of some players or consolidation of industry. So, this is a treat
to the existing players.
But also the existing players work a lot on cost efficiencies therefore the
treat of new entrant is negated by the cost efficiencies of existing players

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2. Industry Demand:
In the current scenario textile exports have declined drastically and even
in domestic demand there is a little slowdown. Due to which textile
companies are working on reducing cost by ways of reducing the work
force, decrease in operation cost etc. Also this will evoke more rivalry
among the existing players as they all will like to maintain their market
share in spite of the slump in industry
3. Exit Barrier:
This is not just a labour intensive industry but even the cost involved in
plant setup is very high along with that with the invent of many new
technologies many companies have adapted to modern techniques to
remain competitive in industry as well as to produce better products for
their customers in lesser time and with lesser cost.
Therefore because of high involvement and emotional attachment with
the business as it has been a traditional business for generations for many
companies they still prefer to stick and continue with the business. But in
the current scenario many textile mills have closed down because of deep
cut in demand and high operational cost due to severe global crisis

II. The bargaining power of buyers


Indian textile companies are facing a tough competition from
Chinese, Brazilian and South Korean companies as they are able to
produce at a lower cost compared to Indian companies
This industry is fragmented and there are large number of players
in the industry, therefore buyer get the option of choosing from
many suppliers
Indian textile industry is no more just a mass producer of textile
rather it has moved into niece segment and has developed
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capability to produce finest quality of fabric which provides them


distinctive competencies against other countries as well as small
players who could cater to mass consumers only.
Therefore overall buying power of buyer will defer from company to
company. Companies like Arvind mill, Raymond, aditya Birla group have
achieved certain degree of distinctive competencies therefore with them
buying power of buyer is negated to large extent against their
competencies.
But many small companies who are mass producer of textile face a strong
buying power of buyer.

III. The bargaining power of supplier


Here again bargaining power of supplier dictated by the segment that they
are targeting to, for a niece players and companies who have achieved
operational excellence can dictate terms to buyers but for small players
who just produce for mass consumption do not have much say in the
business deal and the prices are mostly dictated by the buyer.

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IV. The threat of substitute product


Textile itself is a very broader term and is a solution to a very basic need
of any human being therefore there is as such no substitute to this but
within the textile industry there are many substitutes to different category
of textiles. In India there are various types of textile produced from
cotton, silk, synthetic etc.
There is always a risk of substitution of one type with the other type also
there is constant research carried out to develop new types of textiles but
combining different textiles in different proportion. But in broader
perspective there is no substitute to textile.

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Textile industry of India case &analysis of siyaram silk mill ltd

Chapter -4
INDUSTRY AVERAGE

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The textile readymade and apparel industry has been increasing its
operating revenues year on year at a brisk rate. The number of companies
that are in this industry has increased three folds from around 33
companies in 2008 to around 90 companies recently. This increase in the
number of companies can be attributed to the rise in the sales revenue.
Table No 9.1 Industry Average various Financial Indicators
(Rs in Crs)
Year

Latest

2008

2007

2006

2005

2004

Companies No.

90

33

44

47

53

48

Sales Turnover

7,419.89

5,606.93

5,050.62

4,235.84

2,837.85

2,235.28

Operating Profit

1,026.91

834.69

780.71

611.91

272.65

184.65

416.8

361.08

361.1

299.76

100.88

54.17

Reported Net Profit

Source: Capitaline Database


The industry average of the key financial ratios is as follows
Table No 9.2 Industry Average of ratios
Year
Debt-Equity Ratio

Latest

2006

2005

2004

0.99

1.19

1.02

Current Ratio

1.58

1.43

1.64

1.83

Fixed Assets Turnover Ratio

2.95

2.54

3.16

2.15

Inventory Turnover Ratio

4.44

3.77

4.54

3.35

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Interest Coverage Ratio

3.97

5.56

2.97

2.77

Source: Capitaline Database

We find that the capital Structure of the Industry has reached a position
wherein the companies are raising capital through debt and equity in the
same ratio of 1:1 the current ratio is also moving slowly up recently
despite the fall in 2006 towards the optimum ratio of 2:1. At present it is
at 1.58:1 the two turnover ratios namely Fixed Assets Turnover Ratio
and the Inventory Turnover Ratio are becoming high. This is a positive
sign if the turnover ratio is high. The interest coverage ratio has dropped
notably but this can be attributed to the expansion plan of companies.
Ratio Industry Average

Source:
Capitaline Database

ARVIND BRANDS
Arvind Brands which is the largest producer of Denim clothing is one of
the most famous names in the apparel industry the company is known for
its huge expansion plans in future

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Table No: 9.3Arvind Clothing Financial Performance


(Rs in Crs)
ARVIND CLOTHING

2004

2003

2002

2001

2000

Sales Turnover

64.71

61.24

52.41

49.13

47.45

Operating Profit

-1.91

2.68

0.75

5.38

6.3

Adjusted Net Profit

-4.51

-0.18

-1.45

1.69

3.39

Source: Capitaline Database

Arvind Clothing Faced a loss in the year 2004 this led to the company
deciding to sell one of its Business Units in 2006. Arvind Clothing
expansion plans and the launch of Denim products for the Indian market
can be quoted as reasons for this loss.
Table No 9.4 Arvind Clothing Cash Flow Statement
(Rs in Crs)
ARVIND CLOTHING

Mar-04

Mar-03

Mar-02

Mar-01

Cash and Equivalents at Beginning of the year

0.94

0.75

1.76

Net Cash from Operating Activities

2.69

2.56

2.41

-1.54

Net Cash Used in Investing Activities

-2.24

-1.21

-0.32

-0.79

Cash Flow Summary

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Net Cash Used in Financing Activities

-0.07

-1.29

-1.92

1.32

Net Inc/(Dec) in Cash and Cash Equivalent

0.38

0.06

0.17

-1.01

Cash and Cash Equivalents at End of the year

1.38

0.92

0.75

Source: Capitaline Database

The cash flow clearly indicates that the loss in the year 2004 is mainly
due to the heavy cash outflow for investing activities. Companys
accounts revealed that approximately 2.38 crores worth of fixed assets
were purchased as a part of the expansion plan.
Table No 9.5 Arvind Clothing Key Financial Ratios
ARVIND CLOTHING LTD

Mar-04

Mar-03

Mar-02

Mar-01

Mar-00

Debt-Equity Ratio

2.62

1.89

1.59

1.35

0.91

Current Ratio

1.54

1.31

1.22

1.47

1.35

Fixed Assets Turnover Ratio

3.78

3.92

3.54

3.45

3.54

Inventory Turnover Ratio

2.95

2.7

2.54

2.74

3.43

Interest Cover Ratio

-1.1

1.01

-0.03

1.71

3.39

Source: Capitaline Database

The company has a very high debt ratio. This is dangerous as the
company is also spending a lot on the procurement of fixed assets. The
current ratio is however 1.58 and shows that the company has good
liquidity. The fixed assets turnover has reduced in 2004 this is
understandable as the company has purchased a lot of new assets. The
Inventory turnover however is growing at a stable pace. The interest
coverage ratio is in the negative as the company is facing losses. The
company has to depend on reserves for interest payment.

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ARVIND CLOTHING LTD


5
4
3
2

2004

2003

2002

2001

2000

1
0
Debt-Equity Ratio

Current Ratio

Fixed Assets

Inventory

Interest Cover Ratio

-1
-2

Arvind Clothin Key Financial Ratios

Source: Capitaline Database

BANG OVERSEAS LTD


Bang Overseas is a company which depends on high specialization. It
also recently issued an IPO for raising the required capital. It only
manufactures and exports mens formal and casual wear to a restricted
number of clientele. As it depends on the business with a few clients the
company has been hit hard by recession lately. Delayed payments on
credit deliveries have eroded the operating profits of the company.
However the other non-operating income has provided some relief to
their share holders.

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Key Financial Indicators of Bang Overseas LTD


Table no. 9.6
Latest Results (Rs Cr)
Period-Ended

Dec-08

Dec-07

Variance [%]

Sales

28.98

29.88

-3.01

Other Income

0.74

170.27

PBIDT

2.13

4.02

-47.01

PBDT

0.83

2.65

-68.68

PBIT

1.59

3.72

-57.26

PBT

0.29

2.35

-87.66

Source: Capitaline Database

It is pretty evident from the above financial indicators that the company is
facing the brunt of recession. The sales have come down by about 3% and
this has pulled the profit before tax (PBT) by around 87%. This is very
huge considering the companys interest to expand by way of issuing
shares through its IPO. A look at the cash flow statement in Table No:
will provide an insight about the liquidity position of the company. Cash
Inflow is prominent only from financing activities and that is because of
the IPO. These are not good signs for the share holders because the
company is failing to raise cash from the operating activities and is
dependent on financing activities for its needs.

Table No9.7 Cash Flow of Bang Overseas LTD

(Rs in Crs)
Bang Overseas LTD
Particulars

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Mar07

Mar06

Mar05

Mar04

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Textile industry of India case &analysis of siyaram silk mill ltd


Cash Flow Summary
Cash and Cash Equivalents at Beginning of the
year

1.13

1.04

0.3

0.41

0.33

Net Cash from Operating Activities

-1.5

1.54

-1.58

-2.54

0.39

Net Cash Used in Investing Activities

14.73

-5.72

-7.24

-0.23

-0.12

Net Cash Used in Financing Activities

70.99

4.27

9.56

2.66

-0.19

Net Inc/(Dec) in Cash and Cash Equivalent

54.76

0.09

0.74

-0.11

0.08

Cash and Cash Equivalents at End of the year

55.89

1.13

1.04

0.3

0.41

Souce: Capitaline Database

Share market Woes


The inability to provide positive signs to the shareholder has reflected in
the share prices of Bang Overseas LTD. The share value pummeled down
along with the sensex due to recession.
However recently the company due to its high quality products is
recuperating well and the stock prices are going up.
Bang Overseas Scrip Performance Details

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Source: http://money.rediff.com/companies/bang-overseas-ltd/16070099

Key Financial Ratios


The key financial ratios of Bang Overseas are given below. The Debt
Equity ratio has gone down notably because of the IPO issue in Jan 2008.
The company current ratio is well above the 2:1 ratio and is at a
comfortable 2.83:1 ratio. The liquidity position is very favorable. The
Fixed ratio is also becoming better and the fixed assets which were
purchases by the company are useful in earning operating income.
Table No 9.8 Key Financial Ratios of Bang Overseas
BANG OVERSEAS LTD

Mar-08

Mar-07

Mar-06

Mar-05

Mar-04

Debt-Equity Ratio

0.49

2.03

2.32

1.81

2.22

Current Ratio

2.83

2.2

3.14

3.35

3.19

Fixed Assets Turnover Ratio

8.26

6.87

8.65

24.84

25.92

Inventory Turnover Ratio

5.75

6.03

4.61

3.23

2.66

Interest Cover Ratio

4.54

5.11

3.03

2.73

1.73

Source: Capitaline Database

The inventory turnover ratio has gone down this is also understandable as
the company is design specific company which purchases goods only on
demand or on order. The interest coverage ratio has come down because
of the decrease in sales during 2008.

GOKALDAS EXPORTS

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The vision of Gokaldas exports is to set a precedent in the global garment


manufacturing industry through continuous innovation, exceptional
products, focused services and enhanced customer satisfaction. In the
First Quarter of 2008-09 (Q1), Gokaldas Exports Ltd. has achieved total
revenue of Rs.272 crores which is 12% higher than the Q1 of last year
(2007-08). The stand alone EBIDTA achieved in this Quarter is Rs.30
crores as against last years of Rs.25.96 crores. An increase in EBIDTA of
16% is achieved in spite of the fact that Rs.8.30 crores of Foreign
Exchange notional losses. The PAT stands at Rs.11.05 crores as against
Rs.10.52 crores of last year thereby showing the increase of 5%. This
increase in PAT could have been much higher but for the impact of Forex
volatility which have been accounted to the extent of Rs.18 crores (loss).
Both the EBIDTA and the PAT would have been much higher if the
performance would have not been impacted by the rupee volatility.
The apparel industry as a whole went through a challenge in the first
quarter of 2008 due to the thrust of recession in our major markets, rising
crude prices and unfavorable economic environment across the world.
The rising cotton prices and chemical dyes prices pose a big threat to
Indias competitiveness, in addition to the impact of inflation on wages.
Gokaldas despite being the largest exporter of garments in the country
has been impacted.

Table No.9.9 Key Financial Indicators Gokaldas Exports


Latest Results (Rs Cr)
Period-Ended

Dec-08

Dec-07

Var [%]

Sales

273.56

281.13

-2.69

Other Income

17.18

10.53

63.15

PBIT

-2.24

27.52

-108.14

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PBT

-15.28

19.31

-179.13

Source: Capitaline Database

Share Market Situation


The share market position is very grim because of the huge forex losses it
suffered due the strengthening of the rupee against the dollar the scrip
value has pummeled notably in the last six months to one year because of
recession

Table No: 9.10 Cash Flow Statements of Gokaldas Exports (Rs Cr)
Gokaldas Exports LTD

2008

2007

2006

2005

2004

Cash and Cash Equivalents at Beginning of the year

3.66

1.63

19.6

28.49

4.15

Net Cash from Operating Activities

8.66

27.6

-11.83

-6.02

33.35

Net Cash Used in Investing Activities

-34.08

-81.32

-145.09

-65.76

-22.02

Net Cash Used in Financing Activities

21.99

55.75

138.95

62.89

8.5

Net Inc/(Dec) in Cash and Cash Equivalent

-3.43

2.03

-17.97

-8.89

19.83

Cash and Cash Equivalents at End of the year

0.23

3.66

1.63

19.6

23.98

Source: Capitaline Database

The company is generating cash from operating sources despite forex


woes; the company has however taken a lot of debt to finance its
purchase of fixed assets. Unlike other exporters Gokaldas depends on mass
production and so is in direct competition with the Chinese counterparts. The

company is forced to invest in fixed assets to maintain its clientele as


their mission is to make deliveries on time.

Key Ratios
The key financial ratios of Gokaldas denote that the companys capital
structure is depended more on equity rather than debt. For a company
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which depends on foreign exchange and which is prone to exchange rate


fluctuations having less debt is very helpful.
Table No 9.11 Key Ratios of Gokaldas Exports
Key Ratios

2008

2007

2006

2005

2004

Debt-Equity Ratio

0.75

0.69

0.8

1.76

2.18

Fixed Assets Turnover Ratio

3.11

4.06

5.18

7.58

0.82

Inventory Turnover Ratio

2.71

3.31

3.87

4.94

0.45

Interest Cover Ratio

2.94

4.55

5.75

4.7

6.39

Current Ratio

1.51

1.6

1.73

1.36

1.31

Source: Capitaline Database

The Fixed asset turnover has also reduced due to the purchase of fixed
assets. The inventory turnover is decreasing the company is making bulk
orders rather than small orders to avoid rupee fluctuations. The interest
coverage ratio is low as the company at present is at losses. The current
ratio is reducing as the company cannot recuperate its debts from its
clients.

Key ratios of Gokaldas Exports

Source: Capitaline Database


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EVINIX ACCESSORIES LTD


Evinix Accessories is a company which was started with an aim of
exporting sports bags to the US market later it diversified and started its
own retail outlets apart from exporting apparel to the foreign markets. Its
key financial indicators state that the company despite a reduction in sales
is able to generate profits from the operating activities. Unlike other
companies it is not dependent on other income for posting profits.

Table No 9.12 Key Financial Indicators of Evinix Accessories


Latest Results (Rs Cr)
Period-Ended

Dec-08

Dec-07

Var [%]

Sales

25.32

28.18

-10.15

Other Income

0.35

0.46

-23.91

PBIDT

1.9

5.72

-66.78

PBDT

1.31

5.02

-73.9

PBIT

1.56

5.51

-71.69

PBT

0.97

4.81

-79.83

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Source: Capitaline Database

Share Market Situation


The scrip value is recovering thanks to the retail business of Evinix Accessories
Evinix Scrips Performance Details

Source: http://money.rediff.com/money/jsp/company.jsp?companyCode=16490229

Unlike other players of the fashion apparel industry who are dependent
heavily on foreign clients, Evinix has its own retile outlets and this
flexibility of gaining from domestic production has helped the company
to not face the plight of huge losses due to recession which other
companies are facing.

Chart No 10.14 Evinix Scrips Performance at BSE for the last one year

Source:http://money.rediff.com/money/jsp/company.jsp?companyCode=16490229

Key Ratios

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The key financial ratios of Evinix are given below. Thanks to the equity
capital raised in 2007 by the way of an IPO the Debt equity ratio is
coming down such a capital structure will ensure that the risk is shared by
all the share holders. This is utmost necessary in the times of downturn.
The current ratio and interest coverage ratio are favorable to the
shareholders and the return on assets has also considerably increased over
the previous years. The company however is going back to bulk orders
and so inventory turnover is reducing
Table No 9.13 Key Ratios of Evinix Accessories
EVINIX

2008

2007

2006

2005

2004

Debt-Equity Ratio

0.33

0.17

0.46

9.07

9.83

Current Ratio

2.31

2.62

1.28

0.89

1.2

Interest Cover Ratio

7.71

7.73

14.59

6.98

-2.46

Fixed Assets

5.69

5.45

7.21

9.14

1.86

Inventory

4.03

6.26

9.66

8.98

1.84

Source: Capitaline Databas

HARIA EXPORTS
Haria Exports comparatively is a small player in the apparel industry. The
impact of recession is quite evident in the key financial indicators of the
company. The sales have come down by around 75% and have almost
come to one fourth of the previous year.
The company has recorded a profit of just 7 lacs in the last year and this
profit also was due to the earnings from the non operating activities.
Table No 914 Key Financial Indicators of Haria Exports

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Latest Results (Rs Cr)
Period-Ended

Dec-08

Dec-07

Var [%]

Sales

0.42

1.69

-75.15

Other Income

0.27

0.19

42.11

PBIDT

0.22

-0.38

-157.89

PBDT

0.21

-0.71

-129.58

PBIT

0.09

-0.58

-115.52

PBT

0.08

-0.91

-108.79

Source: Capitaline Database

Share Market Situation


In February 2008 the company issued a notice to its shareholders about
the rights issue of shares. This increased the share prices in that month
but later the share prices came down drastically. Haria Exports Ltd has
informed the market that the ratio for the issue of Equity Shares on Rights
Basis is 3 : 2 shares

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Scrip

Performance

of

Haria

Ex

Source: Capitaline Database

Key Ratios
The key ratios of Haria suggest that the capital structure is on dependent
on Thick equity. The current ratio is however only 1.83 but the ideal ratio
is 2:1. The Asset turnover is also very less and this is not a good sign. The
Inventory turnover ratio is very less which indicates that the company
buys supplies at once a not when required. The interest coverage is at 7
and has improved thanks to the companys increased income from non
operating income

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Table No 9.15 key Financial ratios of Haria Exports LTD


Haria Exports

2008

2007

2006

2005

2004

Debt-Equity Ratio

0.71

0.57

0.29

0.29

0.31

Current Ratio

1.83

1.25

1.17

1.23

1.35

Fixed Assets

0.13

0.02

0.03

0.69

4.1

Inventory

0.4

0.04

0.06

1.22

7.58

Interest Cover Ratio

-18.85

-4.3

-0.96

KOUTONS
Koutons Retail India Ltd is the leading retailer of readymade and stylish
fashion wear brand in the country today. A company which is not only
dependent on foreign clients but is also dependent on domestic
consumption and hence the company has recorded good profits and also
an increase over the last year. Arguably this is one of the best performers
in the industry despite recession and other apparel manufacturers
suffering.

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Table No 9.16 Koutons Financial Indicators


Latest Results (Rs Cr)
Period-Ended

Dec-08

Dec-07

Var [%]

Sales

228.96

173.1

32.27

Other Income

13.35

1.7

685.29

PBIDT

43.79

31.19

40.4

PBDT

23.78

21.51

10.55

PBIT

40.14

26.95

48.94

PBT

20.13

17.27

16.56

Source: Capitaline Database

Share Market Position


Koutons has its retail logistics in place appropriately to suit the market
needs and track the key areas which are future business opportunities.
Therefore the share market has also reacted positively to the Koutons
scrip the percent increase is more than that of the Sensex. These are
positive signs for a company in an industry plagued with falls in scrip
prices.

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Chart No 10.5 Scrip Performances of Koutons at BSE

Source: Capitaline Database

Key Ratios
The company relies more on debt rather than equity capital. The company
being in the retail business has very good liquidity as the customers in the
retail shops provide CASH ON DELIVERY (COD), this is quite evident
as the current ratio is almost ideal at 1.96:1. The company has a return on
assets ratio at around 12.7:1 and hence the company is making very good
use of the assets that it has procured.
Table No 9.17 Koutons Key Financial Ratios
Koutons

2008

2007

2006

2005

2004

Debt-Equity Ratio

1.23

1.42

2.52

2.75

2.67

Current Ratio

1.96

1.54

1.37

1.38

1.31

Fixed Assets Turnover

12.7

12.7

16.93

21.72

10.88

Inventory Turnover

1.73

1.71

2.71

5.69

2.96

Interest Cover Ratio

3.51

4.53

6.91

2.97

1.87

Source: Capitaline Database

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ZODIAC CLOTHING COMPANY


Zodiac Clothing is another company which has notched an increase in the
sales due to the domestic orientation. But unlike Koutons due to the high
expenses that the company has zodiac has made profits only to the tune of
4.39 crores before taxation despite making a sales of approximately 72
crores. The rest 68 crores are operational and non operational expenses of
the company. It is very interesting that the company has notched up 20
percentage increase in sales. The company has to apply cost cutting
measures and it will become a leader in the fashion apparel industry.
Table No 9.18 Key Financial Indicators of Zodiac Clothing Company
Latest Results (Rs Cr)
Period-Ended

Dec-08

Dec-07

Var [%]

Sales

71.86

59.42

20.94

Other Income

5.62

-11.03

PBIDT

5.86

9.99

-41.34

PBDT

5.53

9.57

-42.22

PBIT

4.72

9.11

-48.19

PBT

4.39

8.69

-49.48

Source: Capitaline Database

Share Market Position


The zodiac scrip is valued at around 192 Rs and the scrip has been
moving quite incessantly in the BSE. The stock is frequently traded one
and the volatile movements can be attributed to this reason. Feb 08 was a
time when investors expected a lot from the company when the quarter
FY1 results showed that the sales increased despite slowdown.
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Zodiac has 16 offices across the world in USA, UK and Germany apart
from India. It is not only a mere exporter but it sells its brand of products
in various countries with self outlets.
Scrip Performance of Zodiac Clothing at BSE

Source: Capitaline Database

Key Ratios
Zodiac has one of the best interest coverage ratios in the industry at
around 13:1. The capital structure however is on thick equity and debt
forms a small portion of the capital this enables the company to payback
interest. The fixed assets turnover ratio and the Inventory turnover ratio
have reduced this is something the company management has to look out
for and maintain according to the interest.

Table No 9.19 Key Financial ratios of Zodiac Clothing

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Zodiac

2008

2007

2006

2005

2004

Debt-Equity Ratio

0.24

0.27

0.21

0.22

0.29

Current Ratio

1.6

1.57

1.45

1.33

1.39

Fixed Assets

4.13

4.22

4.42

5.48

7.37

Inventory

5.52

5.81

5.6

6.16

6.11

Interest Cover Ratio

13.95

10.59

6.61

7.13

Source: Capitaline Database

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Chapter-5
FUTURE SCENARIO

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Despite not being the market leader there are a few advantages that India
has over its competitors. These strategies will help India gain Supremacy
over other countries in specific exports.

DESIGN
Design has emerged as a source of competitive advantage in Indian
apparel exports in recent yearsespecially given the relatively young
export history of Indian apparel and the general image of low quality
often associated with some Indian apparel exports. As one firm who is a
major supplier for several European and US specialty stores such as Nike
explained, When items have complicated designs with complex patterns,
many fabrics, a variety of colours -- you have to break them down. Many
different operations and techniques are required; you have to figure them
out (Gokuldas Exports Interview 2005). When buyers have such items,
many of them tend to come to India, this firm said, rather than going to
Bangladesh or China. A Chinese firm would probably refuse the order.
In their system, the more complicated the design, the more complicated
the line gets, and lower the efficiency. This complicates the bottom line. It
is not worth their while especially if the volumes are small (Gokuldas
Exports, Interview, 2005). The Chinese produce similar products and try
to exploit the economies of scale that it achieves through mass
production.
According to experts this is mainly because of the legacy of the sectors
industrial organizationthe historically small average scales of operation
in Indian apparel created the conditions for the preservation of generalist
skillsof the master tailorat the heart of the Indian apparel industry.
These general purpose skills allow complexity to be handled costeffectively and flexibly given that the rigidities of too narrow a division
of labour are absent The firm mentioned above explained that Indian
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firms are used to handling small-runs, and In India We have skilled


manpower available cheaply, we have tailors who have the ability and the
willingness to do complex designs. They have been doing it for years. In
China the line workers are industrial workers not tailors, their
production line needs relatively simple designs that can be easily broken
down and mass produced (Interview, Gokuldas, 2005). The flatter
division of labour associated with small operations, short runs and
variable designs, has both, created a demand for general-purpose skills at
the core of the work organization, as well helped maintain craft-like skills
and a generalized design sensibility within a key segment of the apparel
workforce. (Meenu Tewari, Working Paper 2005) This is the reason why
high customization is possible in designs. In the future most of the
apparel industry will be ruled by customized products so India has a
chance to gain supremacy.

SCALING
A growing number of Indian textile and apparel firms are leveraging their
traditional capacity to handle small runs and variable designs to move
toward the flexible production of higher value, customized products, does
not mean that Indian textile and apparel firms are not scaling up, or
producing for volume-buyers like Wal Mart, or facing the growing
pressure on margins by ramping up production volumes. Despite the
assumed reluctance of Indian textile and apparel firms to scaling up in the
face of Indias rigid labour laws and lack of an exit policy, they have
invested over $700 million in new equipment, new mills and products
and expected to spend $2.5 billion more by the end of 2005 (Business
Week Online, 2004).
The average scale of production in the Indian textile and garment industry
has been rapidly inching upward in the decade leading up to the removal

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of quotas. Three features are striking in this regard: (Meenu Tewari,


Working Paper 2005)
First, it was aided by the progressive liberalization of restrictions on
capacity increases by the government starting in the mid-1980s and
continuing through the 1990s and early 2000s.
Second, there has been significant forward integration by yarn-makers
and spinning mills into garments. For example, Arvind Mills, the largest
producer of blends and denim in the country and the 3 rd largest denim
producer globally till recently supplied fabric to virtually every major
clothing brand in the world Levis, Gap, Dockers and so on. Three years
ago it, integrated forward into jeans and T-shirts, investing more than $30
million in 10 new factories to increase its apparel sales (Interview,
Ahmadabad 2005, Business India 2005). The firm has set up several joint
ventures in the area of blended fabrics, and has introduced its own brands
in the domestic and export market including Ruf-and-Tuf jeans for the
mass domestic market. Raymonds, a Mumbai-based firm, and one of the
oldest and largest producers of suiting and shirting fabric in the country,
invested in two large, highly sophisticated, state of the art formal suit and
bottoms factories in Bangalore in 2003-4. Even before the plants were
fully commissioned, Japanese retailers had placed orders for their entire
capacity for two years (an unusual development given the low levels of
penetration of Indias suppliers in the Japanese apparel marker).
Third, there is a growing trend of backward integration by small and
medium knitwear and garment exporters into yarn making, and
significant investments in the adoption of new technologies by firms at
every segment of the value chain. For example, Tirupur, which has been
celebrated for the past two decades as a vibrant small-firm based knitwear
export cluster can no longer be considered a predominantly small scale

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cluster, as the Chairman of the Tirupur Exporters Association once noted.


Firms have been aggressively modernizing in the last five years,
investing in the latest stitching, pattern making, cutting, embroidery, and
dyeing machines. If I buy one CAD machine today it costs me Rs.12.5
million; this itself is me well beyond the investment limit for small scale
units. At least 30 garment exporters have set up their own yarn-making
mills. The equipment is state of the art, and costly. None of the mills are
small in scale. So, Tirupur is no longer a town of small scale producers
except perhaps some job-working garment converters. (Interview, Mr.
Subramanian, Tirupur Exporters Association, April 25, 2005).
Finally, firms are investing in what some have called manufacturing
services (Berger et. al. 1997). Many firms are adopting IT-driven
production process control systems, as well as productivity enhancing
auditsparticularly energy audits. Noting that energy costs generally add
up to 11-12% of total production costs, compared with 6-7% in direct
labour costs, many firms reported in field interviews that the
rationalization of energy consumption was often the first, and most
important step to cutting costs (Interviews by Meenu Tiwari, Bangalore
2005, Tiruppur 2002, 2005). Some firms reported savings of up to 3040% in energy costs as a result of these measures (Interview Precot Mills,
2002). Many firms have turned to captive gas-fired plants (especially the
larger firms such as Gokuldas, Karle, Orient Crafts, Raymonds,
Interviews by Meenu Tiwari, 2005) while clustered firms such as in
Tiruppur, especially in industrial parks, have set up captive and dedicated
sources of power.
Rationalization of energy use and attempts to lower energy costs are
closely related to automation. Automation, and the deployment of
extensive electronic production tracking systems as well as statistical

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process control systems to monitor work flows, is associated with efforts


by apparel and textile firms to raise productivity and lower wastage, cut
down-time, reduce rejection rates, as well as to ensure consistency.
Automation seems to be as important to firms that produce high volumeslow-margin customers as to those who are investing in design-intensive
operations (Meenu Tiwari, 2005)

CUSTOMIZED MASS PRODUCTION


Customised mass Production has crept slowly into the Indian textile
Industry. Arvind Mills for example is the largest producer of Denim
materials. There are two famous examples of customised mass production
according to Meenu Tiwari they are
Himmatsingka Seide Limited and Welspun India Limited.
HSL has a narrow focus it focuses predominantly on home furnishings
(curtains and upholstery) of silk for the high end export market. It is
almost entirely vertically integrated - apart from filament yarn and silk
waste which are imported from China, every aspect of the production
process from the processing of the yarn, to designing and weaving and
finishing of the fabric is carried out in-house in a two-million-meters-perannum capacity plant with 115 computerized looms (the largest silk
manufacturing facility in India). It is almost entirely vertically integrated
- apart from filament yarn and silk waste which are imported from China,
every aspect of the production process from the processing of the yarn,
to designing and weaving and finishing of the fabric is carried out inhouse in a two-million-meters-per- annum capacity plant with 115
computerized looms (the largest silk manufacturing facility in India). The
design and rapid delivery of small batches of highly customized homefurnishing fabric that fetches high realization rates.

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With typical runs of 120m to 150m per customer, HSLs unit


values of its custom-designed products are about $US 20 per meter on
average about 60% higher than the industry mean (Interview, HSL,
2005 and HSL company documents). These $20/m products are retailed
at $100-$120 by its clients in the EU and US. Ninety percent of these
designs are done in-house in what the firm calls its highly technically
sophisticated design kitchen where the company uses sophisticated
process control systems and computerized facilities to mix and match and
develop its finely detailed and finished products. The company, with 650
employees, and huge market capitalization of $160 million (nearly 5
times its annual sales of $34 million) HSL has a portfolio of 20,000
products, and introduces 2000 new products per year, on average.
(Interview by Meenu Tiwari, HSL, Bangalore, 2005) HSL strenuously
distinguishes itself from the Wart Mart model Their Philosophy we dont
sell to Wal Mart; we sell to Ralph Lauren Home
Another vertically integrated company is Welspun India Limited
(WIL) Asias largest, and the worlds fifth largest, Terry towel producer.
WILs aim is to be the largest mass manufacturer of made-ups. It wants to
replace US home-textiles giants Pillowtex and West Point Stevens as the
largest home-furnishing manufacturers and is committed to making the
investments that it will take to do so (Asian Textiles Journal, 2005). It is
already one of Wal Marts largest Indian suppliers. A supplier to 12 of the
top 20 retailers of the world, its primary buyers are Wal Mart, K-Mart,
Target, J.C. Penny, Tommy Hilfiger, Shopko, Calvin Klein
The niche markets are where large volume producers like China
and Bangladesh are not threats. The theme of leveraging small production
runs, incorporating design, and technology, especially IT-based
production services, while scaling up are some of the patterns that cut

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across the emerging firm strategies in the textile and apparel industry
today.
To sum up several common patterns run across the recent
trajectories of top performers in Indian textiles and apparel exports: (a) a
background in textiles, (b) recent forward integration into value added
apparel or value added fabrics (technical textiles), (c) strong use of
technology, especially software based systems monitoring protocols, and
other production and process tracking systems to streamline production,
(d) an emergent focus on design (and in some cases product
development), (e) and institutional investments in western markets
especially in the strategic purchase of small design and distribution
networks in the major markets in the US and EU.

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GROWTH JOURNEY WELLSPUN INDIA LTD

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CHALLENGES FACED BY INDUSTRY


Textile supply chains compete on low cost, high quality, accurate delivery
and flexibility in variety and volume. Several challenges stand in the way
of Indian firms before they can own a larger share of the global market
(Pankaj Chandra, 2005)
Cycle Time: Cycle time is the key to competitiveness of a firm as it
affects both price and delivery schedule. Cycle time reduction is strongly
correlated with high first pass yield, high throughput times, and low
variability in process times, low WIP and consequently cost. Indian firms
have to dramatically reduce cycle times across the entire supply chain
which is currently quite high (Chandra, 2004). Customs must provide a
turnaround time of day for an order before Indian firms can they expect
to become part of larger global supply chains. Indian firms need a strong
deployment of industrial engineering with particular emphasis on cellular
manufacturing, JIT and statistical process control to reduce lead times on
shop floors. Penetration of IT for improving productivity is particularly
low in this sector.
Innovation & Technology: A review of the products imported from
China to USA during JanuaryApril 2005 reveals that the top three
products in terms of percentage increase in imports were Tire Cords &
Tire Fabrics (843.4% increase over the previous year), Non-woven
fabrics (284.1% increase) and Textile/Fabric Finishing Mill Products
(197.2% increase) (FICCI, 2005). None of these items, however, figure in
the list of imports from India that have gained in these early days of postMFA. Entry into newer application domains of industrial textiles, nanotextiles, home furnishings etc. becomes imperative if we are to grow
beyond 56% of global market share as these are areas that are projected
to grow significantly. Synthetic textiles comprise about 50 per cent of the

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global textile market. Indian synthetic industry, however, is not well


entrenched. The Technology Up gradation Fund of the government is
being used to stimulate investment in new processes. However, there is
little evidence that this deployment in technology has accompanied
changes in the managerial regimes a necessary condition for increasing
productivity and order winning ability (Chandra, P, 2004)
Domestic Market: The Indian domestic market for all textile and apparel
products is estimated at $26 bn and growing. While the market is very
competitive at the low end of the value chain, the mid or higher ranges
are overpriced (i.e., dollar pricing). Firms are not taking advantage of
the large domestic market in generating economies of scale to deliver cost
advantage in export markets. The Free Trade Agreement with Singapore
and Thailand will allow overseas producers to meet the aspirations of
domestic buyers with quality and prices that are competitive in the
domestic market (FICCI, 2005). Ignoring the domestic market, in the
long run, will peril the export markets for domestic producers. In
addition, high retail property prices and high channel margins in India
will restrict growth of this market. Firms need to make their supply chain
leaner in order to overcome these disadvantages.
Institutional Support: Textile policy has come long ways in reducing
impediments for the industry sometimes driven by global competition
and, at other times, by international trade regulations. However, few
areas of policy weakness stand out labour reforms (which is hindering
movement towards higher scale of operations by Indian firms), power
availability and its quality, customs clearance and shipment operations
from ports, credit for large scale investments that are needed for up
gradation of technology, and development of manpower for the industry.

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These are problems facing several sectors of industry in India and not by
this sector alone.
In conclusion, competitive strategies are developed by sector level firms
and its their individual and collective initiatives that secure higher
market share in global trade. While one has to be ever vigilant of nontariff barriers in the post MFA world, the new market will be won on the
basis of capabilities across the supply chain. Policy will need to facilitate
this building of capabilities at the firm level and the flexible strategies
that firms will need to devise periodically.

SIYARAMS SILK MILL LTD.


The Company manufactures synthetic fibers. The Company was
incorporated on 29th June, 1978 as a Private Limited Company and was
converted into a Public Limited Company on 16th April 1980. It was
promoted by Mahabir Prasad Poddar, Dhara Prasad Poddar and
Purushottamdas S.Mahasaria.
The Company commenced manufacturing activities in November, 1978.
Siyaram Finance Limited is a subsidiary of the company. 2000 Oxemberg, the readymade garment division of Siyaram Silk Mills Ltd,
the flagship company, Siyaram Poddar group, has set up a research and
development laboratory equipped with state-of-art technology and
imported machinery.
- The Board has approved the issue of 11,20,368 No. of equity shares at
Rs 49 per share aggregating Rs 5.48 crore on preferential allotment basis
to the promoters, their relatives, friends and their group as per the SEBI
guidelines and subject to the approval of members.
2001 - The Company has opened 216 fashion galleries in the Telangana

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Textile industry of India case &analysis of siyaram silk mill ltd

region of Andhra Pradesh.


2009 - Siyaram Silk Mills Ltd has informed BSE that the Board of
Directors of the Company at its meeting held on January 30, 2009, inter
alia, has appointed Shri. Dileep H Shinde and Shri. Pramod Jalan as
Additional Directors of the Company in the capacity of Non Executive
and Independent Directors

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Products & Brands of siyarams

S
D
S
o
M
m
L
e
s
t
i
c

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PRODUCTS

Suit, Trouser and Shirt Fabrics

Manufacturing capacity of over 50


million metres annually
Largest manufacturer of poly-viscose
fabric in India

One stop

100% Wool, woolen blends, linen, and


cotton blends

Specialized in custom finishes for


Uniform Fabrics

Single and bi-way stretch fabrics


HOME FURNISHING
(Lycra approved)

Vishal Furnishing is complete home furnishing div. Of Siyaram Silk Mills


Ltd.
Dyeing, Weaving, Processing and Made-UPS units are under
Yarn Garments
one roof for better
and quality
control.shirts
productivity
Formal and
casual

and trousers

Poly-cotton,
Uniforms
100% Polyester,
Jacquards, dobby and upholstery fabrics are
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the strength of the company. We can supply furnishing fabrics as well as


made-up as per the design required by the customer.

Home Textiles
Specialize in the Design and Manufacture of
Yarn Dyed and Piece Dyed Curtain and Upholstery
Fabrics
Jacquard, Dobby and Embroidered designs
Available in wider width (up to 3.2 meters)
Flame-retardant and water-repellent finishes
Supplier to over 300 retail stores across the country
Regular exporter to Europe and Middle East
Sourcing partner for Grand Hyatt, Ramada, The HNI
Corporation (U.S.A.)

INFRASTRUCTURE
AND TECHNOLOGY

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. YARN DYED
Expanding capacity to dye up
to 8500 Tonnes
per annum from existing
4000 T.p.a.
Specialized in Fancy and
Space Dyed Yarns
Multi-fiber processing
capabilities
Machines from Fongs, Weavetex and Pilot

WEAVING
Largest weaving infrastructure in India
Capacity to weave over 50 million metres annually
Over 500 looms from Japan and Europe
Somet Rapiers, Toyoda
Airjets,
SulzeDornier,Picanol

Somet and Dornier


machines equipped with
Staubli Jacquards
PROCESSING

Dying and processing capacity of 50 million metres annually

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The most versatile process house in India


Multi-fiber processing capability
Capable of providing the widest variety of finishes
DuPont accredited Lycra testing lab
Certified Effluent treatment facility
Ultra modern machines including Mezzera open width scouring
Biancalani AIRO Quattro
Lafer Peaching and Sueding
Biella and TMT Kier Decatising
M.Tech Super Finish
Remmish Klanwaffer and Gurnerri Calendering
Purbang Open Width Tumble Dryer
Airflow, ATYC and Dilmenler Jet Dyeing machines

QUALITY
Highly trained team for Quality Control at every stage
Yarn testing at procurement
Grey fabric checking
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Midway process checking


Finished fabric checking
Follow the international 4 point checking system
Modern yarn and fabric checking labs
Live by the culture of Kaizen for lean operations
Workflow management through SAP

Commitment to Environment
Heavy preference on physical processes
Minimize use of water and effluents
Use only environmentally safe chemicals and dyes
Certified Effluent Treatment facilities

SWOT Analysis of textile industry


Strengths
Removal of quota restrictions to give a major boost to
the exports.
Export target in textiles in 2010 at USD is 50 billion.

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Low per capita consumption of textiles in India as the


world consumption is 6.8, India only consume 2.8 of it.
Thats why there is large scope of manufacturing and
exports.
Availability of the cheap labour in India would help the
development of the textiles at the lower cost.
Cost competition is not much in India as majority of
Indian population is not dependent on the big brands like
Armani, United Colours of Benetton etc, so India itself
does not hold much competition with these brands.
The large cotton production in India would lead to the
development of the textile mills in the better way, as
India does not have to import the raw material from
outside.
There are well established production bases for made
ups export as well as for domestic purpose.

Weakness
The most serious problem of the industry is the lack of
adequate processing facilities; there is over-dependence
on hand processors and traditional items.
The Indian textile industry is fragmented. Most of the
SMEs are tiny and cottage type units without sufficient
capital back-up.
The government policies in India for the textile
industries are traditional as they are not upgraded like
the up gradation of the policies for the IT industries.
The quality of wider-width fabrics for meeting the
export demand is lacking in many respects, which is
acting as a disadvantage to the growth of the industry.

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The technology used in the most of the textile mills is


old enough that they cant be modified, but there have to
be new machineries imported to give the edge in
technological advancements in this sector.

Opportunities
As per available information, the market for processed
cotton fabric will increase in the European and other
markets and, therefore, the power loom industry may
benefit and expand substantially. Further the growth in
the export segment will be mainly from cotton made-ups
and garments along with processed fabrics.
Grey fabric export is continuing to grow and will show
increasing trends.
Value added products will have greater demand and,
therefore, processing will play an important
role.
India with traditional designs and craftsmanship can
command a greater market share for niche

products in

made-ups and garments.


Indian companies need to focus on the product
development and this could easily be possible as there is
the greater scope in the Indian Market.
As the new generation is keen towards the western
culture the training for especially textiles could be
provided to them and they could be encouraged to
develop the efficient sector of India.
Increased use of computer aided designing to develop
the designing capabilities of the textile. Using new
technologies and softwares ease the use of virtual
design on the computer and then choosing from various
alternatives.
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Threats
Increased competition in the domestic market yield to
the development of the more SMEs which invest more to
survive in the market.
The working area of most of the industries in the textile
industries is not hygienic enough to give the workers
more comfortable area to work in. so this condition has
to be improved.
Need to revamp consumer consciousness
Chinese goods are cheap as well as the machinery
provided by them is also cheap. So the threat for the
export and designing is the Chinese Aggression over the
International market.
Continuously quality improvement is needed to make
sure that people would rely on Indian goods not on the
foreign goods.
Traditional items like terry towels are manufactured in
EOUs all over the country with superior quality. This has
been eroding the traditional markets for power loom and
handloom products forcing them to go for product
diversification.

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CHAPTER 6

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CONCLUSION&SUGGESTION

FUTURE PROSPECTS
The global apparel manufacturing industry is expected to grow more than
ever in times to come. According to an estimate, the global apparel
industry will reach a value of US$ 1,781.7 billion by the end of 2010. The
apparel manufacturers are now adopting new techniques to increase their
trade. New business models and competitive strategies are used to
enhance profits and growth. The consumer is more aware and more
demanding with the development of media like television and Internet.
They have more choices in quality, price and design. This is the reason
why apparel chains all over the world are focusing more on improving the
quality of the product and offering in varied range of fashion designs.
Apparel manufacturers are developing methods to keep up with the pace

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of change like offering on wholesale prices to survive in the global


competition.
Though the above trends show a very positive picture but according to
some experts, the dilution of MFA (Multi Fiber Agreement) 1 will make a
lot of apparel workers to loose their jobs, in many regions of USA, Asia,
Central and Latin America and these jobs will shift to China. The World
Bank report says, this will be one of the largest short-term transfers in
history. Despite these developments the apparel industry is estimated to
grow at very high pace and will provide employment to a large number of
people all across the world.
The Textiles Ministry headed by Union Textile Minister Shankersinh
Vaghela has set an ambitious cumulative annual growth rate (CAGR) of
over 20 percent to be achieved by the year 2010. This will be achieved
through aggressive exports of textile from $50 billion to $130 billion.

CONCLUSION
India is now a fast emerging market inching to reach half a billion middle
income population by 2030. All these factors are good for the Indian
textile industry in the long run. Even though the global economic crisis
seams to be worsening day-by-day, as long as economies are emerging
and growing as those in South and South East Asia, textile industry is
here to grow provided it takes competition and innovation seriously.
India has been repeatedly cited as a major potential beneficiary of the
post-quota regime. The implementation of the ATC, meant as a transition
period to full integration of the T&C sector, occurred in a back-loaded
fashion. Before the ATC took effect, a significant portion of textile and

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clothing exports from developing countries to the industrial countries was


subject to quotas under a special regime outside normal rules of the
General Agreement on Tariffs and Trade (GATT). These former MultiFiber Agreement (MFA) quotas, when carried over into the ATC on
January 1, 1995, represented the starting point for an automatic
liberalization process. Liberalization was to be in four stages, with half of
the integration to take place in the first three stages (1995-2005) and the
second half to take place in the final phase in 2005.Famously inwardlooking till the 1980s, the Indian textile and clothing industry has become
increasingly integrated into global markets since the late-1980s and
1990s, emerging as one of the top ten global exporters of textiles and
clothing after 1998. Indias apparel exports grew at an average compound
rate of 22% per year throughout the 1980s (Chatterjee and Mohan 1993),
and by about 13% in the 1990s (United Nations Statistical Division,
2005). By 2003, India exported more than $13.5 billion worth of textile
and apparel, up fifteen-fold from the $0.9 billion it exported in 1985,
when apparel exports were just taking off (United Nations Statistical
Division, 2005). This export growth, though slow in comparison to
exporters like China, is impressive because it occurred despite the
persistence of many of the factors that observers have cited as shackling
Indian productivity in textiles and apparel: technological obsolescence,
fragmented capacities, low scales of operation, lack of an exit policy, and
rigid labor laws. The domestic reforms of the mid-1980s were critical in
triggering growth in the apparel and textile sector. Their initial focus on
investment and technical upgrading in the textile and apparel sector
created a tier of strong domestic firms in the spinning and apparel sector
that increased investment, modernized their technical base, diversified
their product mix and over time emerged as leading exporters. Trade
liberalization of the 1990s deepened the processes that had the process of

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deregulation had already begun in 1985 and thus Indias textile and
apparel industry went through many transitions and in the present context
is impressive.

Bibliography
WWW.Fiber fushicn.com
WWW.Siyaram.com
WWW.Hindustan timesnews.com
Magazine: hrm review

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