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Presentation On Aarti International Ltd Presentation Transcript

  • 1. Summer Training Project on Organic Cotton: An Opportunity for Ludhiana textile industry to trade in Global textile market   Undertaken at AARTI INTERNATIONAL LIMITED Presented by: Nitin Goel MBA-IB (2B) Roll No. 94972238291
  • 2. Indian Textile Industry
    • Second largest in the world
    • Second largest employment generator- 38 million
    • Segments:
        • Readymade garments
        • Cotton textiles
        • Man made textiles
        • Silk textiles
        • Woolen textiles
        • Handicrafts
        • Jute
    • Main markets: USA, UAE, UK, Germany, France, Russia , Canada
  • 3. Major players
    • Arvind Mills
    • Raymonds
    • Vardhaman Spinning
    • Welspun India
    • Alok Industries Ltd
    • Madura Garments
  • 4. Future Outlook
    • Will grow at an annualized rate of 16% between 2007 and 2012
    • Expected to reach a level of $115 billion by 2012
    • Share in world textile trade to increase from current 3% to 7%
    • Exports projected to increase from $19.24 billion in 2006-2007 to $55 billion in 2012
    • 17.37 million new jobs will be created in next five years - 12.02 direct and 5.35 indirect
  • 5. Introduction to Aarti Group
  • 6. Group Profile
    • Registered office/Corporate office : G.T. Road, Millar Ganj, Ludhiana
    • Year of Incorporation : 1977
    • The Aarti Group comprises of:
    • Aarti Steels Limited
    • Aarti International Limited
    • Aarti Theatre
    • Deepak hospital
  • 7. Brief History
    • Incorporated in 1977 in the name of Aarti Steels Limited at Ludhiana
    • Steel Plant with a capacity of 1.25lacs tones per annum
    • Steel Plant in Orissa (India) with the capacity of 0.5 million tons per annum
    • Diversified into yarn manufacturing in 1996 with the installe d capacity of 27000 spindles
    • Deepak Memorial Hospital located in Ludhiana is a multi specialty Hospital with 24*7 medical emergency facilities
    • Cinema which has been a constant source of joy to the residents
  • 8. Mission & Vision
    • Mission
    • “ Providing efficient & reliable services to the customer by adding genuine value to the product”
    • Vision
    • “ To be globally recognized as a supplier of choice in this highly competitive global economy”
  • 9. Business Portfolio
    • SHARE OF EACH BUSINESS IN GROUP TURNOVER
  • 10. Product Range
    •  
    • Yarn
    • Single yarn in count range of Ne 16s/1 to Ne 80s/1
        • 100% Cotton- Combed
        • Compact Yarn
        • Hosiery Yarn
    • Double yarn in count range of Ne 16s/2 to Ne 80s/2
        • 100% Cotton- Combed
        • Compact Yarn
        • Hosiery Yarn
  • 11.
    • Steel
    • Carbon
    • Spring Steel
    • Low Alloy Steels
    • Wire Rods
    • Wires drawn and galvanized
    • Coal Washer
    • Sponge Iron
  • 12. Introduction to Aarti International Ltd.
  • 13. Aarti Yarn Range
    •  
    • Single yarn in count range of Ne 16s/1 to Ne 80s/1
    •  
    • 100% Cotton- Combed Yarn
    •  
    • 100% Cotton-Compact Yarn
    •  
    • 100% Cotton-Hosiery Yarn
    • Double yarn in count range of Ne 16s/2 to Ne 80s/2
    • 100% Cotton- Combed Yarn
    •  
    • 100% Cotton-Compact Yarn
    •  
    • 100% Cotton-Hosiery Yarn
  • 14. Philosophies 
    •  
    • Focus on Value Added Yarn
    • Improvement in Capacity Utilization
    • Focus on high value customers
    • Focus on improving yields
  • 15.
    • Quality policy
    • Committed to meet the customer expectations by continuous efforts to improve process & technology
    • Quality objectives
    • To provide better human resources
    • To achieve maximum utilization of resources
  • 16. Departments
    • Production Department
    • Research & Development Department
    • Maintenance & Engineering Department
    • Human Resource Department
    • Stores & Purchase Department
    • Excise & Dispatch Department
    • Marketing Department
    • Finance Department
  • 17. Markets
    • Major export destinations are as follows:
    • Hong Kong
    • China
    • South Korea
    • Taiwan
    • Bangladesh
    • European Union
  • 18.
    • Major domestic market destinations are as follows:
    • Gujarat
    • Mumbai
    • Uttar Pradesh
    • Delhi
    • Haryana
    • Punjab
  • 19. Accolades & awards
    • USTERIZED quality certificate from USTER, Switzerland.
    • Supima Licence
    • Cotton USA Licence from Cotton Council International.
    • Spirituality at Workplace Award
  • 20.  
  • 21. Strengths
    • Good brand equity
    • Good technological base
    • High Production Capacity
  • 22. Weaknesses
    • Comparatively high prices
    • Lesser degree of promotional activity
    • High labor turnover
  • 23. Opportunities
    • Favorable demand conditions-large, growing domestic & international market
    • India - Ban on Cotton exports
    • The government allows 100 per cent FDI in the textiles sector under the automatic route
  • 24. Threats
    • Cotton prices soar
    • Growing competition from yarn producing units in the unorganized sector
    • Competition from other established groups like Nahar, Vardhman, Anshupati Textiles, Malwa etc.
  • 25. Ratio Analysis of Aarti International Ltd.
  • 26. Liquidity Ratios
  • 27. Current ratio ( Fig. In Crores ) Year 2006-07 2007-08 2008-09 Current assets 167 193 186 Current liabilities 85 93 87 Current ratio 1.96:1 2.07:1 2.14:1
  • 28. Quick Ratio ( Fig. In Crores ) Year 2006-07 2007-08 2008-09 Quick assets 71 62 76 Current liabilities 85 93 87 Quick ratio 0.84:1 0.67:1 0.87:1
  • 29. Activity Ratios
  • 30. Inventory turnover ratio ( Fig. In Crores ) Year 2006-07 2007-08 2008-09 Cost of goods sold 284 218 278 Average inventory 98.5 115 121 Inventory turnover ratio ( in times) 2.88 1.89 2.3 Inventory holding period ( in days) 126.7 192.3 158.7
  • 31. Debtor turnover ratio ( Fig. In Crores ) Year 2006-07 2007-08 2008-09 Net credit sales 275 276 345 Average debtors 64 61 64 Debtors turnover ratio 4.24 4.49 5.43 Debtor conversion period 86.1 81.3 67.2
  • 32. Creditor turnover ratio ( Fig. In Crores ) Year 2006-07 2007-08 2008-09 Net credit purchases 248.5 190.7 187.9 Average creditors 10.57 11.43 11 Creditor turnover ratio ( in times ) 23.51 16.68 17.08 Average payment period ( in days ) 15.52 21.88 21.37
  • 33. Capital structure ratios
  • 34. Debt –equity ratio ( Fig. In Crores ) Year 2006-07 2007-08 2008-09 Debt 256 368 362 Equity 163 170 162 Debt equity ratio 1.57:1 2.16:1 2.23:1
  • 35. Proprietary ratio ( Fig. In Crores ) Year 2006-07 2007-08 2008-09 Shareholder fund 162 170 162 Equity 444 238 536 Proprietary ratio 37% 71% 30%
  • 36. Solvency ratio Year 2006-07 2007-08 2008-09 Proprietary 37% 71% 30% Solvency ratio 63% 29% 70%
  • 37. Profitability ratios
  • 38.   Gross profit ratio ( Fig. In Crores ) Year 2006-07 2007-08 2008-09 Gross profit 73 58 68 Net sales 275 276 345 Gross profit ratio 26.6% 20.9% 19.6%
  • 39. Net profit ratio ( Fig. In Crores ) Year 2006-07 2007-08 2008-09 Net profit 14.35 12.4 10.97 Net sales 275 276 345 Net profit ratio 5.2% 4.49% 3.96%
  • 40. Operating profit ratio ( Fig. In Crores ) Year 2006-07 2007-08 2008-09 Operating profit 56 41 35 Net sales 275 276 345 Operating ratio 20.34% 15% 9.08%
  • 41. Return on shareholders’ equity ( Fig. In Crores ) Year 2006-07 2007-08 2008-09 Net profit after taxes 14.35 12.4 10.97 Shareholders’ fund 275 170 170 Return on shareholders’ equity 5.22% 7.3% 6.45%
  • 42. Trend analysis
  • 43. Trend of Turnover Years Sales (Rs. In Crores) Trend ( In %) 2004-05 143.68 100 2005-06 154.28 107.38 2006-07 274.92 191.34 2007-08 276.09 192.16 2008-09 345.43 240.42
  • 44. Trend of Net Profit / Loss Years Net Profit (Rs. In Crores) Trend ( In %) 2004-05 17.49 100 2005-06 18.61 106.4 2006-07 14.35 82.05 2007-08 12.41 70.95 2008-09 10.97 62.72
  • 45. Trend of EPS Years EPS (Rs.) Trend (In %) 2004-05 25.98 100 2005-06 25.29 97.34 2006-07 16.61 63.93 2007-08 14.03 54 2008-09 11.47 (31.25)
  • 46. Introduction to the Project
  • 47. Organic cotton
    • Originates from organic agriculture
    • Certified ‘organic’ by certification bodies
    • Aims for an optimum and sustainable use of local natural resources
    • No application of external inputs like pesticides, chemical fertilizers, herbicides and chemically treated or genetically modified (GM) seed
    • External ‘organic’ inputs may be used
    • More labour intensive
    • Yields are lower
  • 48. Standards
    • Global Organic Textile Standard (GOTS)
        • To be labelled “organic” requires fiber to be at least 95% organic. (The remaining 5% can be conventional fiber, but not of the same fiber as the organic portion)
    • OE 100 and OE Blended
        • OE 100 only allows a minimum of 95% organic fiber (exclusive of threads or non-textile accessories). The remaining 5% cannot be cotton.
        • OE Blended requires at least 5% organic cotton content for the blended standard allowing the remaining fiber to be any fiber, including conventional cotton.
  • 49. Global Organic Cotton Market
    • Retailers
      • C&A (Belgium)
      • Nike, Inc. (Oregon, USA)
      • Walmart (Arkansas, USA)
      • Williams-Sonoma, Inc. (California, USA and recorded last year as Pottery Barn)
      • H&M (Sweden)
      • Knitwear (New York, USA)
      • Coop Switzerland
      • Green source Organic Clothing Co. (Washington, USA)
      • Levi Strauss & Co. (California, USA)
      • Target (Minnesota, USA)
      • Adidas (Germany)
      • Nordstrom
  • 50.
    • Manufacturers
    • Organic cotton yarns, fabrics, and finished goods producing regions includes:
        • China
        • Southeast Asia
        • Indonesia
        • India
        • Pakistan
        • Bangladesh
        • Turkey
        • Mexico
        • United States
  • 51.  
  • 52. Global retail sales of organic cotton products Source: Organic Exchange 2009 Market Report
  • 53. Future outlook
    • According to OE forecasts:
        • Global organic cotton market will grow 20 to 40 percent in both 2010 and 2011
        • Reaching about $5.1 billion market in 2010 and $6.0 billion market in 2011
  • 54. Title of the Research Organic cotton: An opportunity for Ludhiana textile industry to trade in global textile market
  • 55. Objectives of the research
    • To know the trend of export of organic cotton textile products from Ludhiana & the reasons for such trend.
    • To know the companies’ integration with valid operational certificate for manufacturing & trading organic cotton textile product.
    • To know the factors considered while procuring raw material for organic cotton textile product.
    • To know the factors influencing people to enter into organic cotton textile industry.
  • 56. Research Methodology
  • 57.
    • Research Design
    • The research design of the project is descriptive as it describes data and view points of the organic cotton textile products manufacturers & exporters in Ludhiana.
  • 58.
    • Universe
    • All the manufacturers & exporters of organic cotton textile products
    • Population
    • All the manufacturers & exporters of organic cotton textile products in Ludhiana
    • Sampling Unit
    • Any single individual or firm who manufactures & exports organic cotton textile products
    • Sampling Technique
    • Convenience sampling technique and Snowball technique
    • Sample size
    • 40
  • 59. Limitations of the study
    • Elements of biasness might have crept in
    • Only 40 respondents have been contacted due to time constraint
    • Generally the respondents were busy in their work and were not interested in responding
    • Respondents were reluctant to disclose complete and correct information about themselves and their organizations
  • 60. Data Analysis and Interpretation
  • 61. Table 5.1-No of organic cotton textile products manufacturers & exporters in Ludhiana (N=40) Products Yarn Fabric Garment Knitted Woven Knitted Woven Knitted Woven No of responses 12 6 16 4 19 4 No of respondents 40 40 40 40 40 40 Percentage 30% 15% 40% 10% 47.5% 10%
  • 62. Fig. 5.2- Annual turnover of the manufacturers & exporters in the year 2009-10 (N=40)
  • 63. Fig 5.3- Proportion of export of organic cotton products out of total sales (N=40)
  • 64. Fig 5.4-Export trend of organic cotton textile products since manufacturers have started making (N=40)
  • 65. Fig 5.5-Factors resulting in an increasing demand of organic cotton textile products (N=40)
  • 66. Fig 5.6-Factors resulting in decreasing & constant demand of organic cotton textile products (N=40)
  • 67. Fig 5.7-No. holders of valid operational certificate applicable for the production/ trade of organic cotton textile products (N=40)
  • 68. Fig 5.8-Holders of different types of operational certificate (N=40)
  • 69.
    • Consideration of various parameters while procuring raw material for organic cotton textile products
    Table 5.9(a)-Rating of payment terms factor (N=40) Rating No. of respondents Product Most considered (+2) 23 46 More considered (+1) 8 8 Neutral (0) 8 0 Less considered (-1) 1 -1 Least considered (-2) 0 0 Total 40 53 Mean 1.325
  • 70. Table 5.9(b)-Rating of price factor (N=40) Rating No. of respondents Product Most considered (+2) 26 52 More considered (+1) 13 13 Neutral (0) 1 0 Less considered (-1) 0 0 Least considered (-2) 0 0 Total Mean 40 65 1.625
  • 71. Table 5.9(c)-Rating of quality factor (N=40) Rating No. of respondents Product Most considered (+2) 16 32 More considered (+1) 14 14 Neutral (0) 9 0 Less considered (-1) 1 -1 Least considered (-2) 0 0 Total 40 45 Mean 1.125
  • 72. Table 5.9(d)-Rating of lead time factor (N=40) Rating No. of respondents Product Most considered (+2) 4 8 More considered (+1) 14 14 Neutral (0) 14 0 Less considered (-1) 6 -6 Least considered (-2) 2 -4 Total 40 12 Mean 0.30
  • 73. Table 5.9(e)-Rating of long term relationship factor (N=40) Rating No. of respondents Product Most considered (+2) 12 24 More considered (+1) 12 12 Neutral (0) 8 0 Less considered (-1) 3 -3 Least considered (-2) 5 -10 Total 40 23 Mean 0.575
  • 74. Table 5.9(f)-Rating of reputation of supplier factor (N=40) Rating No. of respondents Product Most considered (+2) 7 14 More considered (+1) 12 12 Neutral (0) 11 0 Less considered (-1) 7 -7 Least considered (-2) 3 -6 Total 40 13 Mean 0.325
  • 75. Fig 5.10-Combined result of various parameters while procuring raw material
  • 76. Factors influencing people to enter in to organic cotton textile products business Table 5.11(a)-Rating of increasing basket size factor (N=40) Rating No. of respondents Product Most influencing (+2) 17 34 More influencing (+1) 11 11 Neutral (0) 5 0 Less influencing (-1) 4 -4 Least influencing (-2) 3 -6 Total 40 35 Mean 0.875
  • 77. Table 5.11(b)-Rating of Highly profitable factor (N=40) Rating No. of respondents Product Most influencing (+2) 4 8 More influencing (+1) 18 18 Neutral (0) 14 0 Less influencing (-1) 2 -2 Least influencing (-2) 1 -2 Total 40 22 Mean 0.55
  • 78. Table 5.11(c)-Rating of Necessary for survival factor (N=40) Rating No. of respondents Product Most influencing (+2) 3 6 More influencing (+1) 16 16 Neutral (0) 14 0 Less influencing (-1) 7 -7 Least influencing (-2) 0 0 Total 40 15 Mean 0.375
  • 79. Table 5.11(d)-Rating of to remain competitive factor (N=40) Rating No. of respondents Product Most influencing (+2) 11 22 More influencing (+1) 18 18 Neutral (0) 6 0 Less influencing (-1) 4 -4 Least influencing (-2) 1 -2 Total 40 34 Mean 0.85
  • 80. Table 5.11(e)-Rating of helps in branding or differentiation factor (N=40) Rating No. of respondents Product Most influencing (+2) 1 2 More influencing (+1) 12 12 Neutral (0) 9 0 Less influencing (-1) 13 -13 Least influencing (-2) 5 -10 Total 40 -9 Mean 0.225
  • 81. Table 5.11(f)-Rating of global demand factor (N=40) Rating No. of respondents Product Most influencing (+2) 19 38 More influencing (+1) 10 10 Neutral (0) 7 0 Less influencing (-1) 3 -3 Least influencing (-2) 1 -2 Total 40 43 Mean 1.075
  • 82. Combined result of factors influencing people to enter into organic cotton textile products business Fig 5.12-Factors influencing people to enter into organic cotton textile products business
  • 83. Table 5.13-Steps that government should take to boost the sales of organic cotton textile products in the global textile market (N=40) Steps Regulate prices Favourable global policies Create awareness of eco-friendly products Encourage farming of organic cotton Incentives to farmers to grow organic cotton Others No of responses 24 7 17 9 6 1 No of respondents 40 40 40 40 40 40 Percentage 60% 17.5% 42.5% 22.5% 15% 2.5%
  • 84. Findings
    • There are 30% knitted & 15% woven organic cotton yarn manufacturers & exporters, 40% knitted & 10% woven fabric manufacturers & exporters & 47.5% knitted & 10% woven garments manufacturers & exporters in Ludhiana out of 40 respondents.
    • Maximum no. of respondents exporting organic cotton textile products are having annual turnover above 40crores.
    • The maximum no of respondents export less percentage of organic cotton textile products of their total sales where as only few respondents are exporting 30% to 40% & above 40% organic cotton textile products of their total sales.
  • 85.
    • An increasing demand of organic cotton textile product in the overseas market has resulted in an increase in the exports of organic cotton textile products.
    • High prices & availability of substitutes are the most important factors which have resulted in constant & decreasing exports of their organic cotton textile products.
    • All the respondents have valid operational certificate for the production & trading of organic cotton textile products.
    • Maximum no of respondents dealing in organic cotton textile products hold both GOTS & OE certificates & there are 35% of total respondents who holds only GOTS certificate & 2.5% of total respondents hold only OE certificate.
  • 86.
    • Price is the most important factor which is most considered at the time of purchase of raw material for organic cotton textile products.
    • Global demand, competition & increasing basket size has more influenced the respondents to enter into organic cotton textile products business.
    • Government should more regulate prices of organic cotton textile products, create awareness of eco-friendly products, encourage farming of organic cotton & make favourable policies so as to boost the sales of organic cotton textile products in the global textile market.
  • 87. Conclusion and Suggestions
  • 88. Conclusion
    • Demand for organic cotton textile products is increasing in the global textile market because it is of better quality & skin friendly.
    • Very less percentage of organic cotton textile products are exported from Ludhiana.
    • High prices & availability of substitutes can lead to decrease in the demand of organic cotton textile products.
    • All the manufacturers & exporters hold valid operational certificate for manufacturing & trading organic cotton textile products.
  • 89.
    • Price, payment terms & quality factors are more considered at the time of procurement of raw material for organic cotton textile products.
    • Increasing global demand, high profit margin & increasing competition are attracting more people to enter into organic cotton textile products business.
    • There is less government support in promoting export of organic cotton textile products from Ludhiana.
  • 90. Suggestions and Recommendations
    • Awareness should be created among the consumer towards environment friendly & skin friendly products.
    • The manufacturers & exporters of organic cotton textile products should be more cautious while purchasing raw material & should consider lead time.
    • The manufacturers & exporters of organic cotton textile products should try to maintain strong relationship with the supplier so that their own supply should not get affected.
  • 91.
    • Government should regulate the prices of organic cotton textile products because products of organic cotton are more costly than its substitutes.
    • Government should provide incentives to the farmers to encourage organic farming.
    • There is more scope of export of organic cotton textile products in U.S. & European markets.
  • 92. THANK YOU