1. A
GLOBAL COUNTRY STUDY REPORT
ON
“COTTON INDUSTRY OF UZBEKISTAN”
Name of Students Enrollment No.
ISHAN PAREKH 127550592073
DARSHAN PARMAR 127550592074
JAGRUTI PARMAR 127550592075
MAYA PARMAR 127550592076
MITTAL PARMAR 127550592077
MONICA PARMAR 127550592078

2. NO. PARTICULAR
1. Summary of Cotton Cultivation sector of Uzbekistan
2. Summary of Comparison of cotton industry in India and
Uzbekistan
3. Introduction & SWOT analysis of Birla Cotsyn
4. Introduction & SWOT analysis of Hennes & Mauritz
5. Market opportunities for export import trade
6. Policies & norms of India for import & export to the Uzbekistan
7. Winning strategy for the company
8. Resources required to tap the business opportunity
9. Business Development strategy

3.  Uzbekistan, officially the Republic of Uzbekistan has an area of
447,400 square kilometers (172,700 square miles).
 Bordering Turkmenistan to the southwest, Kazakhstan and the Aral
Sea to the north, and Tajikistan and Kyrgyzstan to the south and
east.
 Population
 28 mln people ( 28.1% younger than 14)
 Language
 Official state language is Uzbek.
 Education
 Basic public education consists of two levels
 9-year primary
 secondary school and 3-year college.

4.  India was recognized as the cradle of cotton industry for over 3000
years (1500 BC to 1700 AD).
 India produces 75 number of varieties in cotton cultivation, but 98%
of the production is contributed by about 25 varieties.
 The textile industry accounted for 14.4% of the country’s export
earnings as of 2013.
 Language
 Official state language is HINDI
 Education
Basic public education consists of three levels,
 10-year primary
 2-year secondary school
 5-year college

5.  Cotton production and export have a long history in Uzbekistan. The
production of cotton, also called “white gold”
 Uzbekistan is the 7th largest global cotton producer and 3rd largest cotton
supplier for world markets.
 Uzbekistan had been one of the poorest republics of the Soviet Union;
much of its population was engaged in cotton farming in small rural
collective farms.
 The stakeholders of cotton production in Uzbekistan—the government,
farmers, the textile industry, and the rural population.
 Uzbekistan constitutes approximately 40 percent of total export
revenues and taking up 1/3rd of agricultural land.

6. CONTINUED….
 Uzbekistan only exporting cotton it does not importing from other
countries because it has surplus of production of cotton.
 Uzbekistan's economy has continued its strong performance, registering
8.1% growth in 2009.
 In Uzbekistan, as of today the government has already modernized more
than 45 cotton gins and closed 25 old cotton gins in big cities.
 In Uzbekistan, basic public education consists of two levels – 9-year
primary and secondary school and 3-year college.
 Approximately 75-80% of the raw cotton processing plants currently
function with outdated technology.
 The government has often stated that it would like to process more of
Uzbekistan’s cotton production domestically, Nowadays around 30
percent of all cotton is consumed domestically.

7.  The Indian Textiles Industry has been a concurrent presence in the
economic life of the Country.
 The Indian authorities believe that the technical textile sector is another
potential area for foreign investment.
 India is highly competitive in spinning sector and has presence in almost
all processes of the value chain.
 The readymade garment segment will be the principal driver of growth
even in the domestic industry of India.
 India is a growing source of supply of textiles and apparel to
the world market

8. CONTINUED….
 Uzbekistan, unlike other competing countries, does not have adequate
manufacturing capacities for the production.
 Uzbek textile manufacturers cannot follow evolving fashion trends and
move up the market.
 The government Of Uzbekistan generally welcomes investors and
investment projects.
 Uzbekistan’s import-substitution and export-oriented industrialization
policy.
 Uzbekistan appears to be slowly approaching a full open economy.
 Annual investment capacity of Uzbek market amounts for 5-6 billion US
dollars of foreign investments.
 Forced child labour in cotton production is a problem in Uzbekistan.

9. PARENT COMPANY Birla Cotsyn
Established 1932
Founders Sun Flag group and Yash Birla Group
Headquarters Mumbai, India
Area served Worldwide
Key people P.B Bhardwaj (Chairman) ,
Yash Birla , (Co-Chairman) ,
Suresh Gupta (Managing Director)
Joint venture Sunflag Group in the year 2007

10.  Khamgaon
 19040 spindles (Synthetic Division)
 1728 Open end spinning Rotors on
Cotton
 Malkapur (Cotton Division)
 36000 spindles on cotton
 114 Airjet weaving machines under
installation
 Process house with a capacity of
50000 meters per day under progress
 Cotton Ginning & Pressing
 60000 Shirts per annum
 60000 Trousers per annum
 Retail
 Own showrooms under progress
 Infrastructure
 Having acquired 100 acres of land at
MIDC, Malkapur, we are expanding
current capacities from 21000 spindles
to 36,000 spindles. With a proposed
1728 rotors and 114 looms,

11.  Ring Spinning Cotton (100% Cotton)
Ring Spun yarn from Count Ne 20' to Ne 60's.
1. Combed Compact Weaving & Knitting yarn.
2. Combed Weaving & Knitting Yarn.
3. Carded Weaving & Knitting Yarn.
Any Other count according to Customer need.
 Cotton Open End
1. Weaving Yarn - From Count Ne 6s to Ne 30s.
2. Knitting Yarn- From Count Ne 6s to Ne 30s.
Any Other count according to Customer need.

12. CONTINUED….
 Synthetic Division
Ring Spinning Dyed Yarn (Synthetic Div- Polyester/ Viscose / Acrylic/ Silk etc..)
Count:- Ne 6's to 40's
1. Polyester / Viscose yarn(Dyed)
2. 100% Polyester Yarn.
3. Polyester / Acrylic Yarn.
4. 100% Acrylic Yarn.
5. 100% Viscose Yarn.
6. Polyester / Viscose Melange Yarn.
7 Fancy Effect Yarn i.e Injection Slub / Slub / Neps. Neps Slub in Grey & Dyed.
All above are available in Raw White , Melange and Dyed .
Contact us for any other specific count .

13.  India has rich resources of raw
materials of textile industry. It is
one of the largest producers of
cotton in the world and is also
rich in resources of fibers like
polyester, silk, viscose etc
 Indian garment industry is very
diverse in size, manufacturing
facility, type of apparel produced,
quantity and quality of output,
cost, and requirement for fabric
etc.
 Labour force giving low
productivity as compared to other
competing countries.
 Low bargaining power in a
customer-ruled market.
 India seriously lacks in trade pact
memberships, which leads to
restricted access to the other
major markets.
STRENTH WEAKNESS

14. CONTINUED….
 Domestic market extremely
sensitive to fashion fads and this
has resulted in the development
of a responsive garment industry.
 India’s global share is just 3%
while China controls about 15%.
In post-2005, China is expected to
capture 43% of global textile
trade.
 Companies need to concentrate
on new product developments.
 Competition in post-2005 is not
just in exports, but is also likely
within the country due to cheaper
imports of goods of higher quality
at lower costs.
 Alternative competitive advantages
would continue to be a barrier.
 Standards such as SA-8000 or
WARP have resulted in increased
pressure on companies for
improvement of their working
practices.
OPPORTUNITY THREATS

15. PARENT COMPANY H & M Hennes & Mauritz AB
Established 1947 in Sweden
Existence 53 countries
CATEGORY Apparel and Accessories
SECTOR Lifestyle and Retail
TAGLINE/ SLOGAN Who’s next; Get ready to do some serious shopping; You
look nice today
COMPETITORS 1.Zara
2.Forever21
3.Gap
TARGET GROUP Women, Men , Teenagers who have medium to high
purchasing power and have a completely vibrant and
rebellious attitude.

16. LOCATION OF COMPANY BRANCHES IN WORLD
 Turkey
 Middle East
 Philippines
 China
 Hong Kong
 Indonesia
 Japan
 Malaysia
 Singapore
 South Korea
 Ireland
 Lithuania
 Tashkent
 Croatia
 France
 Mexico
 Australia
 India
 The design team in the company’s Sweden office controls the steps of
production, from merchandise planning to establishing specifications,
and production is outsourced to approximately 800 factories in
Europe and Asia.

17.  They are the one of the largest
global clothing retailer.
 The store offers quality and
trendy clothing at affordable
price, we can say designer clothes
at department store prices.
 They also keep the prices
affordable by using few middle-
men and buying large volumes
cost consciously
 Buying large volumes could lead
to overstocking and later on lead
to lowering of the already
affordable prices.
 They have put in a lot of capital
and maintenance fee for all the
different types of machines
required to produce clothes for
each target segment.
STRENTH WEAKNESS

18. CONTINUED….
 Online shopping is gaining a lot of
importance
 Emerging economies will support
H & M’s expansion plans.
 They are well positioned to tap
the niche organic apparel market.
 Weak competitive situation as the
prominence of value retailers and
premium luxury brands increases.
 Their newest business line home-
ware has not been able to click in
Europe and hence is leading to
lowering sales.
 Unemployment is also continuously
pressurizing their target segment to
discretionary spending.
OPPORTUNITY THREATS

19.  The Indian Textiles Industry has been a concurrent presence in the
economic life of the Country, since the Industrial revolution has come
in, Its overwhelming presence can be felt, through its contribution to
industrial output.
 At present, exports constitute around 20 per cent of Birla Cotsyn India
ltd’s revenues and the company expects the export share to touch 50
per cent after it starts exporting yarn to South America, UK and
Nigeria.
 In China, India and Pakistan today, the preparation of an industrial
piece with accessories and ornaments takes 7-10 days. In Uzbekistan
this process can take up to 20-30 days

20. COTTON IN
UZBEKISTAN
2011/2012 2012/2013
USDA OFFICIAL NEW POST USDA OFFICIAL NEW POST
Area planted 0 1330 0 1340
Area Harvested 1310 1320 1350 1315
Beginning Stock 1148 1148 1498 1198
Production 4200 4450 4500 4500
Total Supply 5348 5598 5998 5698
Import 0 0 0 0
Export 2500 3050 3000 3000
Use 1350 1350 1500 1400

21.  Between 2004–2008, exports of Uzbekistan increased by 76.1%
from USD 213 million to USD 375.5 million.
 Uzbekistan is 5th in the world for cotton output, only 20.4–21.5% of
total cotton output was consumed domestically in 2005–2007, In
2008, this figure increased to 39.6%, but went down to 28.2% in
2009.

22.  Uzbekistan does not importing cotton from other countries because
Uzbekistan producing cotton more than their consumption level.
 Uzbekistan exporting its surpluses of production of cotton to China,
Kazakhstan, Russia. For exporting cotton to other countries,
producer of cotton require special license. However there is not
requirement of any type of exporting license for exporting goods in
Kirghizstan and Kazakhstan.
 Export of cotton 2003-2010, Thousand US$
Year Thousand US$
2003 925243
2004 1062780
2005 1189938
2006 126987
Year Thousand US%
2007 1371648
2008 1292057
2009 1278128
2010 2019430

23. COTTON AREA AND YIELD
 The area under cotton production in the world are estimated at
around 30-31 million hectares. The major cultivators of cotton in the
world are America, India, China, Egypt, Pakistan, and Eastern Europe.
India has the largest area under cotton production. China is the largest
producer of cotton in the world, whereas India is the second largest.
COUNTRY
Area ( million 1000 HA ) Yield ( Kg. Per Hectare )
2011-12 2012-13 2011-12 2012-13
INDIA 9.41 10.26 523 505
UZBEKISTAN 1.42 1.3 705 737

24.  H&M is engaged in the design, manufacture and marketing of
clothing items and related accessories.
 The Company outsources product manufacturing to around 700
independent suppliers through its local production offices in Asia
and Europe.
 H&M started using organic cotton in 2004, incorporating it into a
selection of garments, Organic cotton has a market share of little
less than 0.2% today and the area under organic cotton cultivation
is close to 0.76% of the total cotton production.
 H&M, has get permission from the Foreign Investment Promotion
Board to invest Rs 720 crore (approx 100 million) in India to start a
fully-owned company that will open 50 H&M stores in India.

25. COTTON SUPPLY,USE AND TRADE (MILLIONS
OF METRIC TONS)
COTTON PRODUCTION
COUNTRY 2009-10 2010-11 2011-12 2012-13
INDIA 4.7 5.2 4.9 5.2
UZBEKISTAN 1.2 1.2 1 1
COTTON EXPORT
INDIA 1 1.5 0.5 1.5
UZBEKISTAN 1 0.9 0.7 0.9
COTTON CONSUMPION
INDIA 3.9 4 3.9 4.1
UZBEKISTAN 4.7 4.2 3.9 4

26. UZBEKISTAN IMPORTS FROM AND EXPORTS TO INDIA
YEAR Imports from India
(in US$ million)
Exports to India
(in US$ million)
2005 29.7 11.3
2006 16.4 5.7
2007 25.9 12.9
2008 14.45 10.85
2009 15.9 17.5
2010 15.4 25.1
2011 18.2 90.4
2012 27.2 122.9
2013 35.8 25.3

27. INVESTMENT OPPORTUNITIES IN INDIA
 Foreign direct investment (FDI) of up to 100% is allowed in the
textiles sector through the automatic route.
 The sector is targeting US$ 6 billion foreign direct investment (FDI)
by 2015 to be invested in textiles machinery, fabric and garment
manufacturing, as well as technical textiles.
 The expected growth of Indian textiles industries will be worth
about $220 billion by in the year 2020.
 The investment scenario is becoming rise day by day, India is a
growing source of supply of textiles and apparel to the world
market, the exports are growing rapidly as more and more buyers
around the world turn to India as an alternative to China.

28. INVESTMENT OPPORTUNITIES IN UZBEKISTAN
 The government Of Uzbekistan generally welcomes investors and
investment projects that are in line with its import-substitution and
export-oriented industrialization policy.
 The Government has adopted more than 40 laws regulating
processes of privatization and attraction of investments.
 Depending on the extent of foreign participation, a business may be
considered an “enterprise with foreign capital” (less than 30%
foreign-owned) or receive special status as an “enterprise with
foreign investment” (more than 30%, with a minimum charter
capital).
 Annual investment capacity of Uzbek market amounts for 5-6 billion
US dollars of foreign investments.

29. Import Policy
 The economic needs of the Birla Cotsyn, effective use of foreign
exchange and industrial as well as consumer requirements.
 On the import side the policy has three objectives:
 To make necessary imported cotton clothes more easily
available.
 To simplify and streamline procedures for import licensing.
 To promote efficient import substitution and self-reliance.
 Imports are allowed free of duty for export production under a
duty exemption scheme.
 There is an Export Promotion Capital Goods (EPCG) Scheme under
which exporters are allowed to import capital goods (including
computer systems) at concessionary customs duty.

30. EXPORT POLICY
 Exports are the major focus of Birla Cotsyn trade policy and a thrust
area is exports involving higher value additions.
 Export profits are exempt from income tax.
 Higher royalty payments of 8% (net of taxes) are permitted on
export sales as compared to 5% on domestic sales.
 Inputs required to be imported for export production are exempted
from the basic customs duty.
 Export Oriented Units (EOUs) and Export Processing Zones (EPZs)
enjoy special incentives such as duty free import of capital goods
and raw materials for the purpose of export production.

31. TAXATION POLICY
 Current tax of Birla Cotsyn ltd is determined at the applicable rates
based on assessable income.
 Deferred tax is determined using the rates and tax laws that have
been enacted or substantively enacted by the Balance Sheet date.
 However in case of carried forward losses and unabsorbed
depreciation under the Income Tax Act, 1961, the Deferred Tax
Asset is recognized only if there is virtual certainty backed by
convincing evidence of its realizations.

32. Licensing policy
 The most common instruments of direct regulation of imports (and
sometimes export) are licenses and quotas.
 The main 2 types of licenses,
 General license that permits unrestricted importation or
exportation of goods included in the lists for a certain period of
time.
 One-time license for a certain product importer (exporter) to
import (or export).
 In particular, these agreements include some provisions of the
General Agreement on Tariffs and Trade and the Agreement on
Import Licensing Procedures, concluded under the GATT (GATT).

33. Global strategy problems of H & M
company, Uzbekistan
 H&M takes steps to stop complicity in Uzbek forced labour.
 H&M requires direct suppliers to sign a commitment to not use
Uzbek cotton.
 H&M has asked its 300 most important fabric suppliers to stop
sourcing Uzbek cotton.
 H&M has made a commitment to stop doing business with direct
suppliers and strategic fabric mills that do not stop sourcing Uzbek
cotton.
 Global Fashion Company H&M tackles business and environmental
risk with cutting-edge water strategy.

34.  BIRLA COTSYN
Birla Cotsyn having Winning Strategy based on following question,
 Is it getting harder for your company to deliver profitable growth?
 If so, you are not alone.
 Birla Cotsyn draws up Rs 500-crore Capex plans for expansion
There would be Rs 200-crore investment in retail foray, Rs 150-crore in
yarn processing and Rs 75 crore each in expansion of existing yarn
capacity and manufacturing of garments.

35.  Training youths to wean them away from terrorism
Birla Cotsyn has embarked upon a project to impart basic
vocational training to youths in Reasi district of Jammu and Kashmir
to wean them away from terrorism.
 Manage what matters
In the world of strategy, there is this big war between the
capabilities-orientated people, who have a resourced-based view of
a firm, and the positioning people, who focus more on the “where
to play” and “how to win”.
 Where to play- It is a question of what business you are really
in. It is a choice about where to compete and where not to
compete.

36.  How to win – To determine ‘how to win’, any organization must
decide what will enable it to create unique value and sustainably
deliver that value to customers in a way that is distinct from its
competitors.
 Building capabilities
 Capabilities are the map of activities and competencies that critically
underpin specific ‘where to play’ and ‘how to win’ choices.
 This question relates to the capabilities cotton needed to have in place
in order to win where they had chosen to play, and to meet their
winning aspirations.
 In that case we had to develop some capabilities on producing better
active ingredients that allowed us to compete with the prestige
brands.

37.  Winning aspirations
 Means, is the heart of any strategy and sets the frame for all the
other choices.
 A company must seek to win in a particular place and in a particular
way. If it doesn’t seek to win, it’s wasting its resources. But to be
most helpful, the abstract concept of winning should be translated
into defined aspirations: statements about the ideal future.
 Playing to win
 The purpose is to make strategy simple, fun, and effective.
 I don’t want strategy to be complicated, and that is why you’ll see
phrases like “Where to Play” and “How to Win”.

38. H & M HENNES & MAURITZ AB
 Identify the Big Issues
 Excessive costs
 Bureaucracy and complexity
 Ineffective listening to customers
 Poor value projection
 Inadequate store environment
 Unclear product offer
 Be Distinctive
 What makes you unique to your target customers.
 Company chose to reassert the retailer’s traditional values like,
Quality, Value, Service, Innovation and Trust.

39.  Create A Compelling Vision
 Identifying how you are distinctive is a start, but, for most
organizations a clear sense of direction is required.
 Company response was to go back to the M&S tradition,
 Offering customers, under the Company’s brand name a
selected range of high quality
 Well-designed and attractive merchandise at reasonable prices
which represent outstanding value
 A Focused Agenda For Action
 An early action by company is to cut 31 strategic projects
 Learn and understand
 No one has ever advanced in any career field without seeking to
understand their role and responsibility in that field

40.  Investment opportunities in India
 The Indian authorities believe that the technical textile sector is
another potential area for foreign investment due to the rapid
growth of the demand for industrial and technical textiles in the
nation.
 The sector is targeting US$ 6 billion foreign direct investment (FDI)
by 2015.
 The expected growth of Indian textiles industries will be worth
about $220 billion by in the year 2020.
 In Indian textile market there is emergence of mall culture and
retail expansion. So there are opportunities for foreign companies
to enter in Indian textile market in retail segment.

41.  Raw Material
 The basic raw materials for the cotton textile industry are Cotton
fiber , Viscose staple fiber , Polyester staple fiber (PSF) Polyester
filament yarn (PFY), and Acrylic fiber Cotton is a natural fiber.
 The production of cotton in 1980-81 was 78 Lakh bales, which is
doubled to 156 Lakh Bales in 1999-2000.
 Technology
 Two basic technologies are being used in the cotton textile industry
- mechanical processing for the conversion of fiber into yarn and
yarn into gray fabrics and chemical processing for converting gray
fabrics into finished fabrics.

42.  Investment opportunities in Uzbekistan
 The government Of Uzbekistan generally welcomes investors and
investment projects that are in line with its import-substitution and
export-oriented industrialization policy.
 The GOU prefers ‘strategic’ investors with long-term technical
assistance commitments and usually does not welcome portfolio
investors.
 The lack of transparency and predictability has deterred many
potential investors.
 A foreign investor may participate in a variety of legal
forms of business, ranging from partnerships to joint-stock
companies to wholly-owned enterprises.

43.  Natural Resources and Energy
 Minerals and mining also are important to Uzbekistan's economy
 Uzbekistan has an abundance of natural gas, used for production
consumption.
 oil used for domestic consumption; and significant reserves
of copper, lead, zinc, tungsten, and uranium.
 Land for cotton production
 The area under cotton plantation was about 1.3 million hectares
and the yield of lint reported was 752 kg/hectare.
 Okdare 6, Namangan 77 and Tashkent 6 are the common varieties
of cotton planted in the country.

44.  TECHNOLOGY
 The ginning outturn is lower and losses at the ginneries are much higher
than in the countries using modern cotton-gins.
 In many developing countries the ginning outturn is on average 39%,
whereas in Uzbekistan it has been below 32%.
 The modernization of existing cotton plants is estimated to cost $50
million.
 financing for this modernization through credits or investments can only
be assured if cotton plants are privatized and face competition.

45. H & M BUSINESS MODEL

46. BUSINESS DEVELOPMENT STRATEGY
 Product range
 H&M offers a broad and varied range that allows customers to find
their own personal style.
 H&M is aimed at everyone with an interest in fashion.
 The collections are extensive and new items come into the stores
every day.
 Idea and Design
 In this work it is incredibly important to understand what customers
want –from the idea, through the creation of a new product to the
customer buying it.
 Getting the right item to the right store at the right time is the key
to H&M customers always finding something new and exciting.

47.  Always with a focus on the customer
 H&M’s collections always emerge with the customer in focus. To
meet demand from customers of all ages, each with their own
particular style.
 H&M offers many different concepts. Trends and influences are
adapted to styles and models that will suit the customers.
 Planning the range
 H&M builds up its range by putting together a balanced mix of
modern basics, current fashions and high fashion within each
concept.
 The aim is that the range should reflect what customers want at all
times.
 Customer demand in different markets and in different stores
determines the mix of the product range.

48. BUSINESS PLAN ASSESSMENT
Particular Amount
Initial Investment $100 Million
Tax Rate@30% $13.93 Million
Export-Import Tax $15.72Million
State Tax Rate $1.35 Million
Total Investment Requirement $131 Million
The Assessment of the business plan H&M investment is high but in
compare to expenses it may tap the higher profit from Indian market.

49. FINDINGS AND SUGGESTION
 From the research and then find India is one of the leading
producers of organic cotton in the world.
 India is highly competitive in spinning sector and has presence in
almost all processes of the value chain.
 Exports constitute around 20 per cent of Birla Cotsyn India
ltd’s revenues.
 Domestic market extremely sensitive to fashion fads and
this has resulted in the development of a responsive
garment industry.
 Competition in post-2005 is not just in exports, but is
within the country due to cheaper imports of goods of
higher quality at lower costs.
 As per the Assessment of the business plan H&M
investment is high but in compare to expenses it may tap
the higher profit from Indian market.

50. CONCLUSION
 Cotton is an important agricultural commodity, heavily traded in
more than 150 countries.
 In many developing and underdeveloped countries, cotton exports
are not only a vital source for generating foreign exchange earnings.
 H&m Company outsources product manufacturing to around 700
independent suppliers through its local production offices in Asia
and Europe.
 Organic cotton still only accounts for a very small percentage of
world cotton production.
 The Indian authorities believe that the technical textile sector is
another potential area for foreign investment .