35$Garment Cl Edata

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Fashion, apparel, textile, merchandising, garments

Fashion, apparel, textile, merchandising, garments

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  • 1. 35$ Leather Garment : An Opportunity Area in Export trade B. Chandrasekaran CLAD, CLRI
  • 2. Indian Leather Garment Industry: Current Scenario
    • In the global import-export trade on leather garments, India's share has varied in the range of 8-10.5%
    • India is the Second largest producer of leather garments with a production of about 10 million pieces per year
    • Other major players in leather garments sector are China 42.36% , Italy 8.96%, Turkey 5.73%, Germany 3.80% , France 2.60%, Korea 2.28% etc
    • Leather garment export from India during April 2002-January 2003 is estimated at US$ 225 million
    • A fall by 34% in leather garment exports compared to last year has been estimated.
    • The fall in garment export is attributed to an economic slowdown in India's markets, US and Europe
    • The market is currently price driven. Chinese leather industry with high production capacity has captured >70% of the low-priced "volume" segment of the market.
  • 3. Some Facts and Figures of Global Leather Garment Trade
    • Estimated at 120 million pieces/ year
    • Valued at about US $ 4 billion/ year
    • Generally the value of global trade on leather garments is either stagnant or decreasing
    • Market is seasonal and dominated by economies of US and Europe
    • Value of global leather trade on leather garments is influenced by buoyancy of economy in US and Europe.
    • Average price realization from leather garments in the global trade is estimated at US$35 per garment currently.
    • It is currently buyers market and driven by price factors
  • 4. Indian Garment Industry: Ground Realities in a competitive environment
    • India exports 9-10 million garment pieces (installed capacity = 18 million) in the global trade of about 120 million pieces
    • Export realization is about 415 million USD (Rs 1971 crores) during 2001-02
    • Average unit cost of garment in US $ has varied during the last three years: 1999-2000(38.5); 2000-01 (38.3); 2001-02 ( 44); 2002-03 (54)
    • India is being squeezed out of low priced (38 US$) segments mostly by China. At higher end is doing reasonably well.
    • There is an increase in the price realization from Indian finished leather industry, which has priced itself out of low priced leather garment sector of India.
    • Indian leather garment manufacturers of higher priced segments are able to source internally but not low priced segments.
  • 5. China Factor in Leather Garment Trade
    • China is the largest producer of leather garments in the world. Their share of US market is about 70% valued at about US $ 1.5-1.8 billion of the total trade of about US $ 4-4.5 billion per year.
    • Average price realization from leather garments in US trade is about US $ 32-35 with a simple price strategy of the US with leather plus US $ 8 for the product.
    • China is probably able to produce garment for US$ 25-35 due to
        • Advantage of large economies of scale with high system and money productivity
        • Strategic sourcing of sheep skins from New Zealand and other countries
        • Higher productivity with about 4-5 per worker in comparison to India of 2.2-2.8 resulting in a net cost per worker advantage of 30-35%
        • Admixing of low value pig skins with other leather types. Nearly 80% of the garments from China are based on low cost materials inclusive of pig skins
  • 6. India’s Export Performance of Leather Garments Projected for 12 months The trend indicates that a vast section of Indian leather garment industry is unable to compete with other market forces for finished leather from India on cost considerations. The percentage of finished leather export in low price segment is decreasing.
  • 7. Garment Export During Last 3 Years Quantity FOB
  • 8. Region Wise India’s Export Performance During 1999-2002 Quantity in Million Pieces FOB in Million US$ 415 9.39 404.7 10.52 284 7.37 Total 17.4 0.370 16.5 0.364 14.6 0.31 West 3.44 0.115 3.02 0.097 2.04 0.09 Central 20.1 0.846 19.4 0.81 13.6 0.63 East 249.0 5.65 246.4 6.50 167.5 4.38 North 124.9 2.41 119.5 2.75 86.6 1.96 South FOB Quantity FOB Quantity FOB Quantity 2001-2002 2000-2001 1999-2000 Region
  • 9. Region Wise India’s Export Performance 2001-02 Export Performance USD 415 million Total of 383 units Number of Units
  • 10. Export Trend in 2001-02: Various Garment Types Quantity FOB
  • 11. Export Trend in 2001-02: Targeting Countries Quantity FOB
  • 12. Export Trend in 2001-02: Market segmentations of North/South regions of India North = 249 million US$ with a Peak value of about US$ 85 million To USA and Germany US $ 40 million South = 125 million US$ with peak value of US $ 32 million to Italy and US $ 29 million to Germany
  • 13. Average Price Realization (US $) and Market Segmentation of different Regions of India in global trade 44 38.3 38.5 Combined 47 45 47 West 30 31 23 Central 24 24 22 East 52 43 44 South 44 38 38 North 2001-02 2000-01 1999-00 Region
  • 14. Region Wise Export During April-Jan in 2002 and 2003 Values in Million US$ -32.47% 100.00% 218.2 100.00% 323.12 Total -33.45% 7.18% 15.7 7.28% 23.5 Others 2233.33% 0.01% 0.028 0.00% 0.0012 Central -40.73% 32.55% 71.0 37.09% 119.8 Northern -41.17% 5.44% 11.9 6.25% 20.2 Eastern -36.63% 7.65% 16.7 8.15% 26.3 Western -22.74% 47.17% 102.9 41.23% 133.2 Southern               Total Export 2002-03 Total Export 2001-02   % Variation Share in Apr-Jan Share in Apr-Jan Region
  • 15. India and China: Their Growth paths in leather In 1983 export of leather sector of India and China was at par at US$ 1.0 and 0.9 bn respectively. In 2002, India has grown to US 2 bn with the support of all. China’s export has grown from US 9.5 to 19 bn in seven years since 1995. Exclusive of non leather shoes, this increase is 4.9 billion since 1995. How has this happened? We chose different paths for growth. China turned global. We turned inward.China made integrated investments. We spread our efforts thin and wide. FDIs and Large Scale path China chose. We relied on SME route and brand market products without brands
  • 16. Key leather market indicators: China path
    • The export market for leather garments reached at low priced segments reached US$ 1.8 billion
    • Annual growth rates of exports in leather related products registered 12- 27% during the last seven years. When chips are down in global leather garment trade during the last five years, China registers 8% growth during 2002.
    • China chose the path of high system productivity, non- seasonal low value high volume markets, capital intensive production systems and integrated cradle to grave approaches inclusive low cost but quick delivery
    • As a strategy, in China small sizes with non critical investments were phased out. Mass volume and cost conscious market has formed their area of focus.
  • 17. Random path of India in Leather
    • India chose a path of SME and tried to grow in close heels along the grooves of Italy; but without the supporting brand image and permitting to be picky rode by others.
    • In return we gained in technology, strength to shape our own destiny.
    • Our average values of products are high. Value realization path of India is superior to China.
    • We gained neither in cost nor in brand leadership in export trade.
    • We divorced domestic and export segments strongly. This meant a random walk into the WTO world.
  • 18. Strategic positioning of India in leather garment An Area of Need Planning Ahead
  • 19. Planning Ahead
    • India may not be able to sustain the large production capacity for leather garments on products with average price of US $ 54 for long
    • Low price manufacturing sector will graduate into the higher priced segments
    • If India is unable to replace higher priced brand product segments, the country will be squeezed out.
    • China has declared that by 2015, they will have three brands of their own. What will India do?
    • Brand development is expensive business and would demand a market share rather than profit orientation of production systems
    • India needs a mixed model for growth of the sector
  • 20. Positioning in low priced volume segment An important priority: Developing strength in US$ 35 garment
  • 21. Costing for a Climber Gent’s Garment Cost of Garment Rs 2900 (US$ 58) Share of leather 70% 40 sq.ft. Including wastage Rs 50 per sq.ft
  • 22. Venturing for 35$ Garment
    • Attempt is made to develop 35$ garment by
      • Using imported sheep nappa leathers
      • Admixing leather with wool or jute
      • Use of split suedes
      • Use of upgraded leathers (transfer foil)
      • Patch work garments
    • Design selection with minimal changes over few seasons
    • Market study on the developed garments
    • A range of garments would be made using above strategy and the designs would be disseminated to the industry
    • As an initial attempt, six garments have been designed and fabricated
  • 23. 35$ Garment (Manfred formal): Leather
  • 24. 35$ Garment (Manfred formal): Leather 1713.00 Grand Total 60.00 Labor charges 275.50 Overheads (20%) 1377.50 Total 14.00 7.00 2 nos Lining thread (spun poly) j) 32.00 4.00 8 nos Press/snap button i) 6.00 1.00 6” Pocket Zip fastener h) 48.00 2.00 24” Zip fastener g) 10.00 Adhesive f) 15.50 350 m Thread (100% cotton) e) 10.00 10.00 1 pair Shoulder Pad d) 10.00 10.00 1 m Reinforcement (fusing) c) 40.00 20.00 2 m Wadding b) 52.00 26.00 2 m Polysatin Lining a) Accessories II 1140.00 30.00 38 sq.ft. Leather: New Zealand Sheep Nappa (Including wastage 4 sq.ft.) I Amount Rs. Unit Price Rs. Quantity Costing Particulars Sl. No.
  • 25. 35$ Garment (James Dean): Leather + Nylon
  • 26. 35$ Garment (James Dean): Leather + Nylon 1696.80     Grand Total   60.00     Labor charges   272.80     Overheads (20%)   1364.00     Total   6.00 1.00 6” Pocket nylon zip g) 48.00 2.00 24” Metal zip YKK brass f) 10.00 10.00 1 m Fusing material e) 10.00     Adhesive d) 20.00   Cotton thread c) 10.00 10.00 1 pair Shoulder Pad b) 80.00 40.00 2 m Cotton drill Lining a)       Accessories II 100.00 28.60 3½ sq.ft. Nylon Rib   1080.00 30.00 36 sq.ft. Leather: Upgraded New Zealand Sheep Nappa (Including wastage 5 sq.ft.) I Amount Rs. Unit Price Rs. Quantity Costing Particulars Sl. No.
  • 27. 30$ Garment (Manfred Casual): Low grade Sheep Nappa
  • 28. 30$ Garment (Manfred Casual): Low grade Sheep Nappa 1400.80     Grand Total   60.00     Labor charges   218.80     Overheads (20%)   1121.00     Total   32.00 4.00 8 Nos. Press Button 7/7 h) 6.00 1.00 6” Pocket zip g) 48.00 2.00 24” Metal zip YKK brass f) 10.00     Adhesive e) 25.00   500 m Cotton thread d) 10.00 10.00 1 pair Shoulder Pad c) 10.00 10.00 1 m Reinforcement (fusing) b) 80.00 40.00 2 m Cotton drill Lining a)       Accessories II 900.00 25.00 36 sq.ft. Leather: Low grade sheep nappa (Including wastage 4.5 sq.ft.) I Amount Rs. Unit Price Rs. Quantity Costing Particulars Sl. No.
  • 29. 25$ Garment (Jackson): Leather + Wool
  • 30. 25$ Garment (Jackson): Leather + Wool 1194.00 Grand Total 60.00 Labor charges 189.00 Overheads (20%) 945.00 Total 14.00 7.00 2 nos Lining thread (spun poly) k) 10.00 10.00 1 m Elastic tape j) 8.00 4.00 2 pairs Press/snap button i) 6.00 1.00 6” Pocket Zip fastener h) 52.00 2.00 26” Zip fastener g) 10.00 Adhesive f) 15.50 350 m Thread (100% cotton) e) 10.00 10.00 1 pair Shoulder Pad d) 10.00 10.00 1 m Reinforcement (fusing) c) 40.00 20.00 2 m Wadding b) 52.00 26.00 2 m Polysatin Lining a) Accessories II 162.50 9.55 17 sq.ft. Wool 555.00 30.00 18½ sq.ft. Leather: New Zealand Sheep Nappa (Including wastage 1½ sq.ft.) I Amount Rs. Unit Price Rs. Quantity Costing Particulars Sl. No.
  • 31. 21$ Garment (Aviatar): Cow split suede + Jute
  • 32. 21$ Garment (Aviatar): Cow split suede + Jute 1016.00 Grand Total 60.00 Labor charges 159.40 Overheads (20%) 797.00 Total 14.00 7.00 2 nos Lining thread (spun poly) k) 10.00 10.00 1 m Elastic tape j) 8.00 4.00 2 pairs Press/snap button i) 6.00 1.00 6” Pocket Zip fastener h) 52.00 2.00 26” Zip fastener g) 10.00 Adhesive f) 15.50 350 m Thread (100% cotton) e) 10.00 10.00 1 pair Shoulder Pad d) 20.00 10.00 2 m Reinforcement (fusing) c) 40.00 20.00 2 m Wadding b) 52.00 26.00 2 m Polysatin Lining a) Accessories II 93.75 7.20 13 sq.ft. Jute 465.75 23.00 20¼ sq.ft. Leather: Cow split suede (Including wastage 1 sq.ft.) I Amount Rs. Unit Price Rs. Quantity Costing Particulars Sl. No.
  • 33. 13$ Garment (Marvel): Cow split suede
  • 34. 13$ Garment (Marvel): Cow split suede 617.00     Grand Total   20.00     Labor charges   99.50     Overheads (20%)   497.50     Total   40.00 2.00 20” Metal zip YKK e) 7.50 15.00 ½ m Fusing material d) 5.00     Adhesive c) 15.00 Cotton thread b) 39.00 26.00 ¾ m Satin Lining a)       Accessories II 391.00 23.00 17 sq.ft. Leather: Cow split suede (Including wastage 2 sq.ft.) I Amount Rs. Unit Price Rs. Quantity Costing Particulars Sl. No.
  • 35. Positioning in Leather Garment Trade: Some Actions needed
    • US$ 35 garment needs to be a part of portfolio of India, if we need to remain a large player in the global leather garment trade
    • Average price of US $ 54 is sustainable at less than 6 million pieces per year capacity. This capacity needs one plan of modernization
    • Low priced segment needs to innovate in material sourcing and material productivity increase strategies of providing incentives to workers for material saved and defects avoided. Focus on material rather than time productivity for low priced segment is a unique strategy.
    • A mixed model of growth needs to be developed and acted upon. Focus is laid here on low priced segments
  • 36. Suggested Mixed model growth path for market segmentation
    • A mix of 65-70% of export trade at a price of less than US $ 40 is proposed to
      • Increase capacity utilization
      • Gain a larger share of global trade
      • Protect higher priced product market share from competition shake out in a deregulated market environment
    • Committing 30-35% of the installed capacity to medium and high priced segments with a strategy to
      • Build brand images for higher realization
      • JVs for stronger positioning in market
  • 37. Global Market of garment trade – Simulation I with 65% below US$ 40 price Current Production of India ~ 10 million pieces Projected Production of India ~ 18 million pieces (installed capacity) Global Production ~ 120 million pieces 5 5 10 15 30 15 10 10 Global (Assumed) 5.6 7.8 15.6 18.3 18.3 18.9 13.9 5 Suggested for full capacity utilization 10 13 26.2 30 8.14 3.64 2.17 4.87 India (Calculated) >70 60-70 50-60 40-50 35-40 30-35 25-30 < 25 US$/Garment % Share on various price range
  • 38. Global Market of garment trade– Simulation II with 70% below US $ 40 Current Production of India ~ 10 million pieces Projected Production of India ~ 18 million pieces (installed capacity) Global Production ~ 120 million pieces 5 5 10 10 30 20 10 10 Global (Assumed) 5.6 7.8 15.6 18.3 18.3 18.9 13.9 5 Suggested for full capacity utilization 10 13 26.2 30 8.14 3.64 2.17 4.87 India (Calculated) >70 60-70 50-60 40-50 35-40 30-35 25-30 < 25 US$/Garment % Share on various price range
  • 39. Global Market – Simulation III Current Production of India ~ 10 million pieces Projected Production of India ~ 18 million pieces (installed capacity) Global Production ~ 120 million pieces 5 5 10 10 20 30 10 10 Global (Assumed) 5.6 7.8 15.6 18.3 18.3 18.9 13.9 5 Projection 10 13 26.2 30 8.14 3.64 2.17 4.87 India (Calculated) >70 60-70 50-60 40-50 35-40 30-35 25-30 < 25 US$/Garment % Share on various price range
  • 40. India’s Vision for Challenging Global Market – Simulation I, II, III
  • 41. Strategic Sourcing as Likely Solution
    • Analysis of costing of garments reveal that the cost of the leather alone constitutes about 60-75% of the total cost
    • Sourcing of leathers may be from Iran, Africa, New Zealand and other foreign countries apart from indigenous market
    • Studies on various materials, viz. large cow nappa, imported ox leathers for material optimization
  • 42. Likely Solutions – Contd..
    • Possible use of low cost upgraded leathers and their effect on cutting value
    • Combining jute or wool with leather
    • Outsourcing services for different stages of production
    • Consortium marketing for large volume ‘low price’ segments to share cost of delivery and selling and reduction of overhead costs
    • Simultaneous Catering to both EU and USA markets and high and low priced segments at the same time. Not “either or” but “both” is the way forward.
  • 43. Technological Solutions
    • Optimizing for good cutting efficiency in larger area leathers such as cow, splits
    • Effect of upgraded leathers on cutting value
    • Productivity improvement for reducing the cost of production
    • Judicious combination of low grade leathers in one garment
  • 44. Technological Solutions: Materials
    • Development of garment leathers from goatskins – achieving sheep like material
      • Silica based tanning system offers better results
    • Converting cow and buffalo hides/sides into softy garment leathers
  • 45. Technological Solutions: Materials
    • Finishing Techniques
      • Judicious choice of finishing system – cannot afford high cost finishing/upgradation systems
      • Rub off, distressed, worn out effects
      • Foil printing/split finishing
  • 46. Strategic Material Sourcing 10 Million Pieces in 35$ Garment Leather alone Price Range ~25-35 Rs/Sq.ft. Requirement ~33 million sq.ft. Available ~15 million sq.ft. Indigenous sourcing 50% Remaining 50% Sourcing leathers from foreign countries Admixing leather with wool or jute Creating new sources from lower ends/split leathers 35$ = Rs 1750 75% leather = Rs 1310 1 garment = 40 sq.ft. 1 sq. ft. = Rs 33
  • 47. Material : Design Material Optimization Design element Panel sizes Design/ forecast services CLRI/ NID/NIFT CLRI
  • 48. Market Study ITPO CLRI CLE Industry
  • 49. Desirable Actions
    • Projected production would fetch US$ 47 per garment
    • The total export will be 0.846 billion US$
    • By improving the high priced segment, it is possible to achieve 1 billion US$ export from leather garment industry alone
  • 50. Specific Actions for US $ 35 garment
    • Creation of updatable and protected data base on low cost material sources and main global market segments
    • Unit specific product development on consultancy mode by a consortium of CLRI-NIFT
    • Formation of Garment designers club on a membership basis (say Rs 5000 per year)
    • Training of designers and masters on material optimization
    • In plant training of personnel in material saving: National and International experience
    • Industry sponsored project mode action in CLRI for development of garments in the price range of 20-38 US $ at a cost of Rs 20 lakhs for 1000-1200 garments of 10-15 unique designs
  • 51. Sourcing & Indigenous Development of Inexpensive and Right Leathers Way forward for Market positioning and Fuller utilization of capacities
  • 52. Thank You
  • 53. Upgradation of Leather: Costing Total cost/sq.ft. Price Finishing Price Wet finishing Price Raw material
  • 54. India’s Vision for Challenging Global Market – Simulation I Based on a simulated average price of US $ 37-38 per piece and a trade of 120 million pieces
  • 55. India’s Vision for Challenging Global Market – Simulation II
  • 56. India’s Vision for Challenging Global Market – Simulation III