SUMMER TRAINING PROJECT at

OSWAL WOOLLEN MILLS LTD

Factors Affecting Indian Cotton Textile Exports

Presented By: Amit Chawla - MBA (IB) Roll No :-94972238258

Current Scenario - INDIAN Textile Industry

y Textile exports are targeted to reach $50 billion

by 2010.
y $25 billion of which will go to the US , other

markets include UAE, UK, Germany, France, Italy, Russia, Canada ,Bangladesh and Japan.
y Today textile sector accounts for nearly 14% of

the total industrial output.

y Indian Textiles export have almost 30% share in

Overall exports from the country.

Current Scenario - INDIAN Textile Industry

y Because of the lifting up of the import restrictions of

the multi-fibre arrangement (MFA) since 1st January, 2005 under the World Trade Organization (WTO) Agreement on Textiles and Clothing, the market has become more competitive.

Current Scenario - INDIAN Textile Industry

y Textile industry is undergoing a substantial

re-orientation towards other then clothing segments of textile sector, which is commonly called as technical textiles. y The processes in making technical textiles require costly machinery and skilled workers

Segments of Textile Industry

y Readymade Garments y Cotton Textiles including Handlooms y Man-made Textiles y Silk Textiles

Segments of Textile Industry

y Woollen Textiles y Handicrafts including Carpets y Coir y Jute

Indian Cotton Textiles - Key Facts

Year 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 Quantity (Lakh bales) 16.82 3.50 1.01 0.65 0.60 0.50 0.83 12.11 9.14 47.00 58.00 85.00 50.00 Value (.Cr) 1655.00 313.62 86.72 52.15 51.43 44.40 66.31 1089.15 657.34 3951.35 5267.08 8365.98 N.A.

Textile Exports - Segmentation

Process Description

Textile Value Chain

INDIAs Competitive .vs. Other Nations

Key countries / regions China Key positives Efficient, low cost, vertically integrated India, Pakistan Vertically integrated, low cost Lacks economies of scale and Key negatives Growth at the cost of profits

infrastructure support Mexico (NAFTA), Turkey Proximity to market, duty and quota free ASEAN (Vietnam, Cheap labor Lack China and Indias degree of competitiveness No other cost or location advantage

Cambodia, Indonesia) AGOA (African) countries, Bangladesh Hong Kong, Korea, Taiwan Trading hubs proximity to China Quota and tariff free, cheap labor Lacks integration and China and Indias degree of competitiveness No cost advantage, protected

currently by quotas USA and EU Non-quota barriers likely to US suffers loss every year

prove irritant to imports

Oswal Woollen Mills Ltd. @ Glance

y Group turnover is over Rs 2500 crore y No strike/accident situation and no zero staff

turnover
y Brand names Monte Carlo & Canterburry

OWM were the proud recipient of the BEST EXIBITED PRODUCTS award from the international wool secretariat

y Social upliftment at every level :-

 

Jawahar Lal Oswal Public Charitable Trust Mohan Dai Oswal Memorial Hospital

Vision & Mission

y Vision

Success is the ongoing journey not destination

y Mission

Stepping Ahead into realm of New Challenge

Board Of Directors
y y y y y y y y y y

Mr. Jawahar Lal Oswal Mr. Amarjeet Singh Mr. Dinesh Oswal Mr. Kamal Oswal Mr. Sandeep Jain Mr. Dinesh Gogna Dr. (Mrs.) H.K. Bal Mr. O.P. Sahni Mr. K.S. Maini Dr. Suresh Kumar

Chairman-Cum-Managing Director Director Director Director Executive Director Executive Director Additional Director Additional Director Additional Director Additional Director

Organization Structure

OWM Product Portfolio

y Wool / acrylic top y Yarns y Textile fabrics y Hosiery knitwear products

Export Market:
y U.S.A. y UNITED KINGDOM y Germany y Russia y Japan y Australia y New Zealand y Holland y Thailand y Hong Kong

y Singapore y Taiwan y South Africa y Canada y Egypt y Israel y Bangladesh

Various departments
y Quality control y Human Resource Department y Finance Department y Marketing Department y Export department

SWOT Analysis @ OWM

Strength
Extensive Experience of Promoters Brand equity of MC, CC & Canterbury. Loyal & old Employee base. Premium range of Pullovers.

Weakness
Lack of Professionalism. Dependence on foreign producers for greasy wool. Hierarchy Structure too long. 3rd party dependence for Sales & Distribution.

Opportunities
Booming Retail Sector Foreign players entering Indian Lands as FDI norms are relaxed to 49%. Kid Garments Range Job-Work / Fabrication fro various Brands.

Threats
Small Hosieries coming up in Ludhiana Seasonal demand of Pullovers. Temp has been rising these days so winter season is getting shorter YOY.

Current Ratio

Particular

2006-07

2007-08

2008-09

Current Assets 20543.67 Lacs Current Liabilities 11185.67 Lacs 9044.30 Lacs 9897.32 Lacs 30129.28 Lacs 30422.64 Lacs

Current Ratio 1.84 3.33 3.07

Acid test ratio/Quick Ratio

Particular

2006-07

2007-08

2008-09

Quick Assets 9060 Lacs

17328 Lacs

17506 Lacs

Current Liabilities

11185 Lacs

9044 Lacs

9897 Lacs

Quick Ratio 0.81 1.915 1.7688

Absolute Liquid or Cash Test Ratio

Particular

2006-07

2007-08

2008-09

Absolute Liquid Assets

556 Lacs

2930 Lacs

3277 Lacs

Current Liabilities

11185 Lacs

9044 Lacs

9897 Lacs

Cash Ratio

0.049

0.324

0.33

Turnover / Activity Ratio

Particular 2006-07 2007-08 2008-09

Cost of sales

32200.67 Lacs

44213.51 Lacs

53814.35 Lacs

Average Inventory

10467.04 Lacs

12141.98 Lacs

12858.36 Lacs

I.T.R (times)

3.07

3.64

4.18

I.H.P ( in days)

118

100

87

Debtor Turnover Ratio

Particulars 2006-07 2007-08 2008-09

Net credit sales

32200.67 Lacs

44213.51 Lacs

53814.35 Lacs

Average debtors

4527.23 Lacs

3387.42 Lacs

6957.81 Lacs

D.T.R (times)

7.11

13.05

7.73

D.C.P ( in days)

51

28

47

Creditors Turnover Ratio

Particulars 2006-07 2007-08 2008-09

Net credit purchase

18246 Lacs

24384 Lacs

28500 Lacs

Average. Creditors

2944 Lacs

3298 Lacs

4155 Lacs

C.T.R (times)

6.19

7.39

6.86

C.P.P ( in days)

59

49

53

Net Profit Ratio

Particulars

2006-07

2007-08

2008-09

Net profit

1402 Lacs

2127 Lacs

2368 Lacs

Sales

32200 Lacs

44213 Lacs

53814 Lacs

N.P. ratio (%)

4.35

4.81

4.41

Debt Equity Ratio

Particulars 2006-07 2007-08 2008-09

Total Debt

18220 Lacs

29466 Lacs

27416 Lacs

Shareholders Fund

9497 Lacs

11625 Lacs

13994 Lacs

Debt Equity Ratio

1.918

2.534

1.959

Proprietary Ratio

Particulars

2006-07

2007-08

2008-09

Shareholders Fund

9497 Lacs

11625 Lacs

13994 Lacs

Total Assets

20543 Lacs

49731 Lacs

51386 Lacs

Proprietary Ratio

0.46

0.23

0.27

Earning Per Share

Particulars Net profit available

2006-07 1402 Lacs

2007-08 2127 Lacs

2008-09 2368 Lacs

Number of shares

249 Lacs

249 Lacs

249 Lacs

EPS

5.63

8.54

9.51

Operating Ratio

Particulars

2006-07

2007-08

2008-09

Operating Cost

22631 Lacs

31277 Lacs

38026 Lacs

Sales

32200 Lacs

44213 Lacs

53819 Lacs

O.P. ratio

70.28

70.74

70.66

Trend of Turnover
60000 53814.35 50000 44213.51 40000 30000 20000 10000 0 2006-07 2007-08 2008-09 32200.67 Turnover

Title

Factors Affecting Indian Cotton Textile Exports

Objectives
y To study the different problems related to cotton textile

industry in Ludhiana
y To study the Government role in cotton textile exports y To analyze the competition faced by Indian cotton

textiles industry in International market

y To study the role of export promotion council in

promoting exports.

Research Methodology

y Research Design  Descriptive y Data Collection  Primary - Schedule  Secondary Internet , E-Journals, E-Papers

Sampling Plan
Universe Population Sampling Unit Sampling Frame All exporters of Cotton Textile products in world All exporters of Cotton Textile Product in the City of India Any Cotton Textile Product exporter in the City of Ludhiana List of all Cotton Textile exporters from where samples are selected. 30 Cotton Textile Product Exporters Multistage Sampling technique

Sampling Size Sampling Technique

Statistical Tools
y Simple tabulation of data using tally marks. y Calculating the percentage of the responses. y Formula used: Percentage= (Number of responses/Total

responses)*100
y Graphical analysis by means of bar graphs, pie charts y Average method to calculate the average of particular

schemes.

Limitations of the Study

y The conceptual framework and research questions have

bound the study, keeping it focused, yet simultaneously limiting the method and topic of the research.
y The recognized limitations of this study deal with the topic,

the sample size, and the lack of existing literature.

y The number of participants, their location, and the quantity

and amount of time spent in getting the schedules filled were constraints balanced by the quality of the data gathered.

Limitations of the Study

y Many of the respondents were busy in their work so they

have not given proper time to answer the questions. Sometime they give false information while answering questions.
y There might be chances of ambiguities in the analysis of

data.

Limitations of the Study

y Best efforts were made to consider all important

variables of the study. Chances of some of the variable not appearing in the study are also there.
y Some calculations have to be done with the statistical

measures which are the biggest constrained for the research work because only percentage, Mean is being used in the research.

Limitations of the Study

y There was very less of respondents to prove the validity.

Among the lot of exporters , only 30 filled the Schedules.

y Shortage of time & reach is also reason for

incomprehensiveness.
y Many of the concerned persons contacted are very busy in

their schedule that they dont give away their 5 minutes to it. So the sample size remained small.

DATA ANALYSIS & INTERPRETATION

Profile of the Respondents (Figure 4.1)

10% 20% Fabric Garments Garments & Yarns Yarns 63%

7%

Export Content in Overall Turnover (Figure 4.2)

10% 33% 1-25% 26 -50% 51-75% 76-100%

17%

40%

Raw Material related Issues faced by the Respondents (Figure 4.3)

23% Price Variations Quality Seasonality

57% 20%

Labour related issues raised by Respondents (Figure 4.4)

10% 10% 3% Availability Education Performance Skills set 77%

Marketing related issues raised by the Respondents (Figure 4.5)

27% Competition Price variations Unorganized

56% 17%

Response towards Government (Figure 4.6)

17%

40%

Dissatisfied Neutral Satisfied

43%

Major Competitors to Indian Cotton Textile Industry (Figure 4.7)

20 18 16 14 12 10 8 6 4 2 0 18

7 5 5 1 1 2 Respondents

Major Hurdles faced in the Trade: - (Figure 4.8)

13%

7%

30% 50%

Product placing Product Prices Product Quality Promotion of product

Restriction Imposed by Government on the Sector (Figure 4.9)

25 20 15 10 7 5 0 Yes No Respondents 23

Special Incentives by the Government (Figure 4.10)

30 26 25 20 15 10 5 0 Yes No 4

Respondents

Schemes which could Benefit Textile Sector (Figure 4.11)

4 3.5 3 2.5 2 1.5 1 0.5 0 TUFFS Scheme DEPB Scheme SEZ Scheme Average 2.8 2.73 3.53

EPC support to the Industry (Figure 4.12)

40% 47%

Always Never Sometimes

13%

Findings
y Most of the exporters are of garments (63%) in Ludhiana.

Then after that the exporters of yarn ie (20%) and after it comes the fabric and others

y Mostly the companies which export their cotton textile

products range up to 50 %. Rests are only domestic sales and here are only few export houses which fall in range of 76 100% exports which are complete export house. raw material as a major concern for the trade as there are lot of fluctuation in the cotton crop prices which may be due to many factors such as Seasonality, Monsoon etc.

y 57% of the respondents had rated Price variations in the

Findings
y Major issue related to the Labour is the Availability

aspect as major part of the Hosiery or Spinning business is dependent upon the labour but since Bihar Govt is providing a lot of retention schemes for native people so rather coming to Ludhiana for a job of Rs 5000-7000, they prefer to stay back.
y Major problem faced by the respondents related to

the Marketing are Competition that contributes to the tune of 56% as there are small players in the Garment manufacturing

Findings

y Most of the Companies are dissatisfied (40%) from the

Government as government has withdrawn DEPB incentives, TUFS scheme etc & maximum companies are neutral (43%) on the government support in helping the exports wit only 17% satisfaction level.
y CHINA have been the arch rivals for India in various

sectors & there is no difference in Textile sector

Findings
y The cost of producing is very cheap because of

economies of scale & moreover the cost of wages is higher for the labour but if we compare it with the efficiency of the labor which is 8 times higher in China than India.
y 50% of the people feel that the Product prices are a

major hurdle in the industry which might be due to the fact in case of spinning the bigger players have the capacity to procure Cotton at cheaper rates.

Findings
y Most Companies do not face any restrictions by the

government in exporting their product to other countries i.e. 23 respondents out of 30 which is nearly 77% of the respondents.
y Respondents are of the view that there are also some

special incentives which have been provided from time to time by the government to boost up the Textile trade in the country & internationally.

Findings
y TUFFS & DEPB were almost ranked on the similar scale so

now it is up to State & Central Govt to work in tandom so that the sector could reap maximum benefits & hence could contribute further in bringing in more foreign reserves into the sector.
y There was more of mixed response coming in from the

respondents regarding the support provided my Export Promotion Council as 40% of the respondents had entered ALWAYS & 47% of them responded Sometimes.

Conclusion & Suggestions..

y Technology Up-gradation Fund Scheme to be

pursued till next five years

y Liberalization of FDI Policy with up to 100 per

cent foreign equity participation.

y TUFFS & DEPB