Training Presentation

Analysis of Fluctuation in Prices of Raw Cotton & Cotton Yarn
Presented by:
Prabhjot Kaur
94972238294

Textile industry is one of the India’s oldest industry.
It is the second largest employment generator .
The industry uses a wide variety of fibers .
India contributes to around 12 percent of the world's production of cotton yarn and textiles.
Introduction to Textile Industry

Contributes about 34% of total exports.
India is the second largest producer of raw cotton & cotton yarns and fifth in production of synthetic fibers.
Cont…

Set up: 1965
Steel:1973
Sewing thread:1982
Fabric weaving:1990
Acrylic fiber: 1999
VARDHMAN Group

“TO BE GLOBALLY RECOGNIZED AS A LEADING SUPPLIER OF QUALITY PRODUCTS.”
Vision

“BEING WORLD CLASS SPINNERS BY PROVIDING HIGHEST QUALITY PRODUCTS WITHIN MINIMUM COST”.
Mission

Flame
Stick
V
Logo of Vardhman Group

Largest exporter of cotton yarns.
Largest range of textile products.
Second largest producer of sewing thread in the country.
First in Indian textile industry to get ISO certification in yarns and sewing thread.
Major Highlights

Group Units

Yarn
Fabric
Sewing thread
Acrylic fiber
Steel
Products

MIS
Exports
Finance
Marketing
HR
Taxation
EDP & IT
Projects & Planning
Functions of departments

STRENGTHS
Good Brand Equity.
Good technological base with Foreign Collaboration.
High Quality Standards.
Increasing Production Capacity.
Own Research and Development department.
SWOT Analysis

WEAKNESSES
Comparatively high prices.
Lesser degree of promotional activity.
Long Hierarchy.
Cont…

OPPORTUNITIES
As quality is good and prices are comparatively high, Vardhman can always easily liquidate stock pressure by slight reduction in prices.
Strict payments are strengths at times as well as weakness. If a moderate policy, as per present conditions are adopted, the dealers and customers shall be attracted to buy more and regularly.
Shortened hierarchy shall provide hope for better customer service.
Cont…

THREATS
Smaller players in the market are using Vardhman’s process as a shield to push their product at lower prices.
Capacity of Yarn Spinning is increasing rapidly in comparison to increase in market size, resulting into the addition of new players. This would result in price cuts, liberalization of payment, terms and conditions etc. the various functional areas.
Cont…

TITLE
“Analysis of Fluctuation in Prices of Raw Cotton & Cotton Yarn”

To understand the domestic and international market of raw cotton and cotton yarn.
To analyze the fluctuations in prices of raw cotton and cotton yarn.
To find out the basic reasons for the fluctuations in prices of raw cotton.
To determine the impact of price on the demand of cotton.
Objectives

Research design: Descriptive
Data collection: Primary & Secondary
Universe: All the suppliers who supply raw cotton.
Population: All the suppliers who supply raw cotton to Vardhman.
Sampling design: Convenience.
Sampling unit: Any respondent who is working with Vardhman as supplier of raw cotton.
Sample size: 10
Research Methodology

Data collection error may be there due to wrong response from respondents as some time they are not the right person who takes actual decisions.
Some of the respondents can hide the real information.
Sample size cannot always represent the whole populationas sample size is 10 only.
Limitations of the study

Data Analysis&Interpretation

World cotton balance sheet

World cotton production

Top 10 cotton producers

World cotton export

World cotton consumption

World cotton imports

Area, Production & Productivity of cotton in India

Annual average prices of Shankar-6

Rates of domestic cotton(S-6) throughout the year 2009-10

State wise area coverage

State wise production of cotton

Rates of the international cotton yarn

Rates of the domestic cotton yarn

World Demand & Supply Situation

Effects on raw cotton prices after Govt. restrictions on raw cotton exports to stabilize prices-9/4/10

Effects on prices after ban on export

the Government withdrew the 7.67% concession (exports benefit) given to cotton yarn exporters under the Duty Entitlement Pass Book (DEPB) scheme vide notification dated 21.04.2010.
the Government withdrew the 4% concession (exports benefit) given to cotton yarn exporters under the Duty Drawback Scheme vide notification dated 29.04.2010.
Govt. decisions to control cotton yarn exports

the prices of cotton yarn in the domestic market will be reduced by at least Rs. 5/- per kg. in the short run and Rs. 10-15/- in the long run.
Cont….

Graph: shows the source of supply of raw cotton

Table: shows, whether prices are manipulated by the farmers or not.

Graph: shows the causes of fluctuation in raw cotton prices

Graph: shows prices are fallen below minimum support price

Graph: shows environment which affects on cotton prices

Graph: shows basis on which customer buys the product

Graph: shows demand of raw cotton in current season.

Graph: shows time period of maximum supply of raw cotton.

Graph: shows whether the cotton development programs are conducted.

Graph: whether cotton development programs are beneficial for promoting the cotton industry.

Table: shows whether recession affect on cotton prices

Table: shows to what extent recession affected the prices of cotton

Table: shows the opinion of suppliers in context of fluctuation of cotton price in future.

Cotton exports are freely allowed, and rightly so, this makes domestic cotton prices follow international prices. Cotton accounts for 65-70 per cent of the yarn cost and a 35 per cent increase in cotton prices means a 20 per cent increase in yarn prices.
Power constitutes the second most important element of cost; this has gone up by 30- 40 per cent due to power cuts and the need to buy power from the open market or generate it using liquid fuels. For mills that pay the full cost of power, it accounts for 15 per cent of the yarn cost in normal conditions; in today's situation, it is as high as 20-21 per cent.
Findings

There is going to be an increased shortage of yarn in days to come, as the per consumption is increasing day by day in India.
Biological factors are considered as the most important factors which influence cotton prices.
Demand is fluctuating as the prices are not stable and in future prices are lightly to rise.
Cont…

From the study it is concluded that government restrictions played a vital role in controlling the cotton and cotton yarn prices.
In order to control the rising in international export of cotton yarn, government had to impose restrictions, which resulted in fall in price.
Study also concludes that there will be rise in cotton prices in future as well. Biological factors and other factors have also been responsible for fluctuation in prices of cotton.
Conclusion

THANK YOU!
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by Nikku Gharial on Sep 17, 2010

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