Textile industry of india case & analysis of siyaram silk mill ltd

Textile industry of India case &analysis of siyaram silk mill ltd
Surendra .c. saroj 1
KANDIVALI EDUCATION SOCIETY’S
B.K. SHROFF COLLEGE OF ARTS
AND
M.H. SHROFF COLLEGE OF
COMMERCE
Bhulabhai Desai Road, Kandivali (West), Mumbai – 400067
CERTIFICATE
This is to certify that SURENDRA .C. SAROJ of
TY.BMS has successfully completed a project on TO STUDY
“TEXTILE INDUSTRY OF INDIA - CASE &
ANALYSIS OF SIYARAM SILK MILL LTD.” for the
semester under the guidance of the PROF. UMADEVI
KOKKU during the Academic year 2011-2012.
Project Guide
Co-ordinator Principal
Internal Examiner External
Examiner
College Seal

KANDIVALI EDUCATION
SOCIETY’S
AND
M.H. SHROFF COLLEGE OF
COMMERCE
DECLARATION
I SURENDRA .C. SAROJ from KES Shroff College Of
Arts & Commerce and a student of T.Y. BMS here submit my
project on TO STUDY “TEXTILE INDUSTRY OF
INDIA - CASE & ANALYSIS OF SIYARAM SILK
MILL LTD.” .
I also declare that the project which has been in the
partial fulfillment of the requirement of the Mumbai University is the
result of my efforts.

KANDIVALI EDUCATION
SOCIETY’S
AND
M.H. SHROFF COLLEGE OF COMMERCE
PROJECT REPORT ON
“textile industry of india case analysis of siyaram silk mill ltd.
SUBMITTED BY
SURENDRA.C.SAROJ
TY.BMS
SEMESTER V
SUBMITTED TO
UNIVERSITY OF MUMBAI
PROJECT GUIDE
PROF. UMADEVI KOKKU

ACADEMIC YEAR
2011 - 2012
ACKNOWLEDGEMENT
The joy of ingenuity!!! This is doubtlessly what this
project is about. Before getting to brass tacks of things. I would like to
add a heartfelt word for the people who have helped me in bringing out
the creativeness of this project.
To commence with things I would like to take this
opportunity to gratefully and humbly thank Prof.Umadevi kokku, who
has giving me an opportunity to undertake this project in textile industry
of India.
I also thank Mr. Sanjay patil to give knowledge on this topic
My parents need special mentions here for their constant
support and love in my life. I also thank my friends and well wishers,
who have provided their whole hearted support to me in this exercise. I
believe that this Endeavour has prepared me for taking up new
challenging opportunities in future.

Table Of Contents
Chapter No. Topic Pg. No.
1 INTRODUCTION 6-11
2 Indian Textile Industry 12-22
3 Global Scenario 23-27
4 GLOBAL TRADE VOLUME AND TRENDS 28-32
5 INDIA’S COMPETITIVENESS 33-37
6 INDIAN SUPPLY DEMAND SCENARIO 38-39
7 FASHION APPAREL INDUSTRY OVERVIEW 39-47
8 MAJOR PLAYERS 48-66
9 INDUSTRY AVERAGE 67-87
10 FUTURE SCENARIO 88-97
11 CHALLENGES FACED BY INDUSTRY 98-99
12 SIYARAM’S SILK MILL LTD 100-107
13 SWOT Analysis of textile industry 108-112
14 FUTURE PROSPECTS 113
15 CONCLUSION 114-115
16 Bibliography 116

CHAPTER – 1
INTRODUCTION

HISTORY OF TEXTILE
No one knows when exactly the spinning and weaving of textile began. It
has been said that people knew how to weave even 27000 years ago. This
was even before humans were able to domesticate animals. The oldest
actual fragment of cloth found was in southern Turkey.
People used fibers found in nature and hand processes to make fibers into
cloth. Even though high technology was not available, skilled weavers
created a wide variety of fabrics. Dyeing of fabrics was done to satisfy
the universal human need for beauty. Within time, more complex social
and political organization of people evolved. With the growth of cities
and nations, improvements in technology came into place and there was a
substantial development in the international trade, both of which involved
textiles.
Chinese textile was considered to be the most significant in international
trade. Historians have claimed that silk from China has reached ancient
Greece and Rome along a trade route called the Silk Road in the latter
part of the second century B.C. and Egypt in 1000 B.C. The Romans also
imported cotton from nearby Egypt and from India. Archeologists have
found facilities for dyeing and finishing cotton fabrics in settlements
throughout the Roman world. During the middle ages, the production and
trading of the plant called ‗woad‘, an important source of dye, was a

highly developed industry. During the fifteenth century, Trade Fairs in
southern France provided a place for the active exchange of wools from
England and silks from the Middle East. The economic activities
surrounding these events gave rise to the first international banking
arrangements. Even the discovery of America was a result of the desire of
Europeans to find a faster route not only to the spices but also to the
textiles of the Orient. Textile trade quickly took root in America, as
colonists sold native dyes such as indigo and cochineal to Europe and
bought cottons from India. Although advances were being made in the
technology of textile production, the manufacture of cloth in Western
Europe in 1700 was still essentially a hand process. Yarns were spun on a
spinning wheel and fabrics were woven by hand-operated looms.
A major reorganization of manufacturing of a variety of goods occurred
during the latter half of the 1700s in Western Europe. These changes,
known as the ‗Industrial Revolution‘, altered not only technology, but
also social, economic, and cultural life. The production of textiles was the
first area to undergo industrialization during the seventeenth and
eighteenth centuries as the result of an economic crisis. Good quality
textile products, produced inexpensively in India and the Far East, were
gradually replacing European goods in the international market. In
Britain, it became imperative that some means be found to increase
domestic production, to lower costs, and to improve the quality of
textiles. The solution was found in the substitution of machine or
nonhuman power for hand processes and human power.
Many important inventions, most importantly spinning machines,
automatic looms, and the cotton gin, improved the output and quality of
fabrics. These inventions provided the technological base for the
industrialization of the textile industry. Each invention improved one step
of the process. For example, an improvement that increased the speed of

spinning meant that looms were needed that consumed yarn more rapidly.
More rapid yarn production required greater quantities of fiber. The
growth of the textile industry was further hastened by the use of machines
that were driven first by waterpower, then by steam, and finally by
electricity. The textile industry was fully mechanized by the early part of
the nineteenth century. The next major developments in the field were to
take place in the chemist‘s laboratory. Experimentation with the synthesis
of dyestuffs in the laboratory rather than from natural plant materials led
to the development and use of synthetic dyes in the latter half of the
nineteenth century. Other experiments proved that certain natural
materials could be dissolved in chemical solvents and re-formed into
fibrous form. By 1910, the first plant for manufacturing rayon had been
established in the United States.
The manufacture of rayon marked the beginning of the manufactured
textile fibers industry. Since that time, enormous advances have been
made in the technology for every field in the textile industry. Today, the
textile industry utilizes a complex technology based on scientific
processes and vast economic organizations.
With the application of advanced technology to the textile field, textile
use has expanded from the traditional areas of clothing and home
furnishings into the fields of construction, medicine, aerospace, sporting
goods, and industry. These applications have been made possible by the
ability of textile scientists to utilize textile fibers, yarns, and fabrics for
specific uses. At the same time that textile technology is making strides in
new directions, the fabrics that consumers buy for clothing and household
use also benefit from the development of new fibers, new methods of
yarn and fabric construction, and new finishes for existing fibers and
fabrics.

Today, a huge international industrial complex encompasses the
production of fiber, spinning of yarns, fabrication of cloth, dyeing,
finishing, printing, and manufacture of goods for purchase. Consumers
purchase many different products made of textiles. The story of the
journey that these products make as they progress from fiber to yarn to
fabric to finished product is not just the story of spinning yarns, weaving
or knitting fabric, or constructing the end product. It is also the story of a
complex network of interrelated industries.
HISTORY OF INDIAN TEXTILE INDUSTRY
The history of textiles in India dates back to nearly five thousand years to
the days of the Harappan civilization. Evidences that India has been
trading silk in return for spices from the 2nd century have been found.
This shows that textiles are an industry which has existed for centuries in
our country. Recently there has been a sizeable increase in the demand
for Indian textiles in the market. India is fast emerging as a competitor to
China
In textile exports. The Government of India has also realized this fact and
lowered the customs duty and reduced the restrictions on the imported
textile machinery. The intention of the government‘s move is to enable
the Indian producers to compete in the world market with high quality
products. The results of the government‘s move can be visible as Indian
companies like Arvind Mills, Mafatlal, Grasim; Reliance Industries have
become prominent players in the world. The Indian textile industry is the
second largest in the world-second only to China. The other competing
countries are Korea and Taiwan. Indian Textile constitutes 35% of the
total exports of our country.
The history of apparel and textiles in India dates back to the use of
mordant dyes and printing blocks around 3000 BC. The foundations of

the India's textile trade with other countries started as early as the second
century BC. A hoard of block printed and resist-dyed fabrics, primarily of
Gujarati origin, discovered in the tombs of Fostat, Egypt, are the proof of
large scale Indian export of cotton textiles to the Egypt in medieval
periods.
During the 13th century, Indian silk was used as barter for spices from the
western countries. Towards the end of the 17th century, the British East
India Company had begun exports of Indian silks and several other cotton
fabrics to other economies. These included the famous fine Muslin cloth
of Bengal, Orissa and Bihar. Painted and printed cottons or chintz was
widely practiced between India, Java, China and the Philippines, long
before the arrival of the Europeans.
India Textile Industry is one of the largest textile industries in the world.
Today, Indian economy is largely dependent on textile manufacturing and
exports. India earns around 27% of the foreign exchange from exports of
textiles. Further, India Textile Industry contributes about 14% of the total
industrial production of India. Furthermore, its contribution to the gross
domestic product of India is around 3% and the numbers are steadily
increasing. India Textile Industry involves around 35 million workers
directly and it accounts for 21% of the total employment generated in the
economy.
Strengths of Indian Textile Industry are as follows -
Huge textile production capacity
Efficient multi-fiber raw material manufacturing capacity

Large pool of skilled and cheap work force
Entrepreneurial skills
Huge export potential
Large domestic market
Very low import content
Flexible textile manufacturing systems
Weaknesses of Indian Textile Industry are as follows -
Increased global competition in the post 2005 trade regime under
WTO
Imports of cheap textiles from other Asian neighbors
Use of outdated manufacturing technology
Poor supply chain management
Huge unorganized and decentralized sector
High production cost with respect to other Asian competitor
INDIAN TEXTILE INDUSTRY
INTRODUCTION
The textile industry is the largest industry of modern India. It accounts
for over 20 percent of industrial production and is closely linked with the
agricultural and rural economy. It is the single largest employer in the
industrial sector employing about 38 million people. If the employment
in allied sectors likes ginning, agriculture, pressing, cotton trade, jute, etc.
are added then the total employment is estimated at 93 million. The net
foreign exchange earnings in this sector are one of the highest and,
together with carpet and handicrafts, account for over 37 percent of total

export earnings at over US $ 10 billion. Textiles, alone, account for
about 25 percent of India‘s total forex earnings.
India‘s textile industry since its beginning continues to be predominantly
cotton based with about 65 percent of fabric consumption in the country
being accounted for by cotton. The industry is highly localized in
Ahmadabad and Bombay in the western part of the country though other
centers exist including Kanpur, Calcutta, Indore, Coimbatore, and
Sholapur.
The structure of the textile industry is extremely complex with the
modern, sophisticated and highly mechanized mill sector on the one hand
and the hand spinning and hand weaving (handloom) sector on the other.
Between the two falls the small-scale power loom sector. The latter two
are together known as the decentralized sector. Over the years, the
government has granted a whole range of concessions to the non-mill
sector as a result of which the share of the decentralized sector has
increased considerably in the total production. Of the two sub-sectors of
the decentralized sector, the power loom sector has shown the faster rate
of growth. In the production of fabrics the decentralized sector accounts
for roughly 94 percent while the mill sector has a share of only 6 percent.
Being an agro-based industry the production of raw material varies from
year to year depending on weather and rainfall conditions. Accordingly
the price fluctuates too.
The Ministry of Textiles under the Government of India has taken some
significant steps to arrest these problems. It has framed "The National
Textile Policy 2000" to address the aforesaid issues. This policy aims at
negating these problems and increasing the foreign exchange earnings to
the tune of US$ 50 billion by the year 2010. It includes rational road-

maps for the development and promotion of all the sectors involved
directly or indirectly with the textile industry of India. Further, the policy
also envisages to bring the unorganized decentralized textile sector
(which accounts for 76% of textile production) at par with the organized
mill sector. Furthermore, the policy also aims at introducing odern and
efficient manufacturing machineries and techniques in the Indian textile
sector
INDUSTRY SUPPLY CHAIN
The apparel industry supply chain can be broadly categorized into six
major components - raw materials, textile plants, apparel plants, export
chains, retail stores and customers.
Diagram No: 4.1 Supply Chain of the Textile Industry
CURRENT INDUSTRY SCENARIO:
Close to 14% of the industrial output and 30% of the export market share
is contributed directly by the Indian textile industry. Indian textile
industry is also the largest industry when it comes to employment that
generates jobs not just within but also in various support industries like
agriculture. As per a recent survey the textile industry is going to
contribute 12 million new jobs in India by 2010 itself.

Indian textile industry is as old as the word textile itself. This industry
holds a significant position in India by providing the most basic need of
Indians. Starting from the procurement of raw materials to the final
production stage of the actual textile, the Indian textile industry works on
an independent basis.
The final phase-out of the Multi-fiber Arrangement (MFA) and the
system of quotas that has governed the global trade in textiles and
apparel for the last forty-two years has significantly altered the
institutional rules of trade in the textile and clothing industry. With the
elimination of all remaining quotas on apparel from January 1 2005, the
textile and clothing sector is now fully integrated into the regulatory
framework of the General Agreement on Tariffs and Trade (GATT) of the
World Trade Organization (WTO). Buyers are now free to source textile
and apparel in any amount from any country; suppliers are similarly free
to export as much product as they are able, subject only to a system of
national tariffs. As global competition intensifies under the new quota-
free trading regime, countries are bracing for major changes in the
structure of sourcing and apparel supply worldwide. With the removal of
the quotas, it was expected that the developing countries, which have a
major play in the textile industry will benefit themselves as they have
stable supply network, experience in networking, capacities for scaling
up and the ability to offer a full bundle of services. It was also expected
that smaller countries, which enjoyed the restriction on trade will fall
out from the picture.
The textile sector has increased their investment in projects to upgrade
their equipment amid fierce market competition and to meet the growing
demand for more textile products. Total investment in the textile industry

between 2004 and 2008 was around Rs.65, 478 crore in India, which is
expected to reach Rs.1,50,600 crore by 2012. This enhanced investment
would generate 17.37 million jobs-- 12.02 million direct and 5.35 million
indirect—by 2012.
Investments in the textiles sector can be accessed on the basis of three
factors:
Plan schemes such as the Techno Up-gradation Funds Scheme
(TUFS), Technology Mission on Cotton, Apparel Parks, etc.
Under the TUFS scheme, a total of Rs 916 billion has been
disbursed for technology up gradation. There are around 26
Apparel Parks in eight states in India, with a total estimated
investment of Rs 134 billion
Industrial Entrepreneurship Memorandums implemented from
1992 to Aug 06, amounting to Rs 263 billion
Foreign Direct Investments inflows worth US$ 910 million have
been received by the textile industry between Aug 91 and May 06,
which account for 1.29% of total FDI inflows in the country.
Though significant investments are being made in the textiles segment,
the bulk of them are in the spinning and weaving segments. A cumulative
total of US$ 6.67 billion in investment was done in 2008. Of this, more
than two-thirds is in the spinning and weaving segments, while only 25%
is in processing and garment units
The elimination of global textile quotas is expected to drive garment
production to China, benefiting consumers in North America and Europe
at the expense of developing nations where apparel manufacturing has
become a bridge to an industrial economy. Africa received record high
foreign direct investment (FDI) inflows in 2005 of US$31 billion, but this

was mostly concentrated in a few countries and industries. The textile
sector has increased their investment in projects to upgrade their
equipment amid fierce market competition and to meet the growing
demand for more textile products.
The global fiber industry will continue to shift to the Asia/Pacific region,
particularly China, South Korea and Taiwan. Textile trade in the world is
estimated to be around US$ 300 billion currently. Industry experts predict
that by 2014 the facilities in the west will close down and they will source
their textiles from more efficient areas of the world resulting in the trade
volume of around US$ 800 billion. The Indian textile industry, which has
accelerated to an annual growth of 9-10 per cent, is expected to grow at a
rate of 16 per cent in value terms and reach a level of USD 115 billion by
2012. With 8.6% growth rate, Turkey also recorded a very strong average
annual growth rate of its textiles and clothing exports but from a much
lower basis. It could increase its exports from 8.6 to 17.6 billion US-
Dollars. Pakistan exports amounted to 9.9 billion US-Dollars in 2005
which translates into an average annual growth rate of 5.4%.
As of now, the general impression any individual would get about the
Indian textile industry leaders in the past few months is that it is in a
major decline state. The following could be the reasons that attribute to
this decline.
Global recession
Less export orders due to reductions in inventories by global retail
giants like Wal-Mart
Rising price of raw materials like cottons
Infrastructure bottlenecks such as power, particularly in Tamil
Nadu

In the times of adversity, like what we are facing right now, it is an
immediate task for all stake holders to pause for a moment and take stock
of the difficulties and chart plans for sustainability and growth of the
Indian textile industry.
With the opening of world markets and the abolition of textile quotas
since 2005, there came a negative situation as well. But, hindsight is
always 20-20. Indian textile industry should have focused on all major
sectors right from fiber to fashion and planned for an organized growth
across the supply chain so as to compete with China and even countries
such as Pakistan, Vietnam and Thailand, which are also growing from the
textile perspective. Instead, the industry had put majority of its stock in
the spinning sector. This is clearly evident in the utilization of
Technology Up gradation Fund Scheme effectively by the spinning
sector. Although it is a positive outcome, the industry did not focus on
many other value adding segments such as weaving and finishing. Indian
power loom sector, which enables value-addition is a highly unorganized
industry and needed major up gradation. As of now, the power loom
segment is also picking up where in many of the unorganized power
looms are becoming organized. Technical textiles sector is still in its
infancy and a tangible growth will be highly visible by 2035 when the
growth in this sector will be exponential.
The weak links in the Indian conventional industry such as weaving and
finishing have to be strengthened. There must be consolidated efforts by
Indian Textile Machinery Manufacturers Association, end-users and the
Government to undertake a major step and come-up with alternatives to
European Machinery, which the Indian weaving sector can afford. This
should be put into practice within the next five years, if dedicated efforts
are undertaken with the financial support for R & D by the Government

through its various schemes. Technical textiles sector must transform
from a non crawling phase to at least a crawling industry in the next three
years. General awareness on nonwoven and technical sectors has been
created with the recent marathon training workshops and conferences
such as, "Advances in Textiles, Nonwoven and Technical Textiles",
organized for the past five years in Coimbatore by Texas Tech
University, USA and those such as the Texcellance and IIT's Technical
Textiles conferences. These have put India on the international map in
technical textiles. These conferences are of less use if they do not
translate into investments and new projects.
TEXTILE INDUSTRY BENEFITS OTHER INDUSTRIES
TOO
The pursuit of a better fiber and a better fabric is yielding products used
in medicine, aeronautics, astronautics, seawater desalination, and
construction of buildings and roads. The new kinds of textiles possess
characteristics that make them useful in numerous formerly unexpected
applications. Although textiles are still the major component of the
clothes we wear and of many furnishings in our homes and offices, they
are also used widely in medicine, aeronautics, astronautics, pollution
abatement, and numerous other fields. Innovation in textile technology
continues and more unusual products will almost surely emerge
MEDICAL
Certain fibres and textile materials are especially suitable for use in
building synthetic body parts and medical scientists are steadily
expanding the types of body parts whose function can be mimicked. The
artificial kidney is made from 7,000 hollow fibres, each of which is about
the size of a human hair. Patients whose kidneys no longer function

normally must have their blood freed by dialysis of metabolic wastes and
excess water about every three days. This is accomplished by pumping
the blood through a textile, hollow-fibre module while clean-sing solution
rinses the blood free of urea. Patients with diabetes have a tendency to
suffer from cholesterol blockage of arteries leading to their feet. If not
corrected, poor circulation can lead to gangrene and loss of limbs.
Artificial arteries that look like pencil diameters are surgically inserted to
bypass the blockages, thus restoring circulation and saving limb
functions. These implants require crucial textile technology to prevent
clotting and rejection. It is estimated that more than 150,000 people in the
United States have now had these artificial arteries for over five years.
SPACE
NASA space suits for launch and for space walks require zero-defect
performance. The launch suits are made from PBI non-flammable high-
performance fibres. The space-walk suits have different requirements.
They require air-purifying, cooling, and pressurizing systems. Each suit is
tailor-made for a particular astronaut and costs $1-1.5 million. Since the
astronaut is under an oxygen pressure of eight pounds per square inch in
this suit, special flexibility is needed to allow him or her to bend an elbow
or grasp an article. Rocket exhausts and nose-cone covers for space
shuttles are made of carbon and other high-performance fibres. These
protect the vehicles from heat from air friction during launch and re-
entry. The flames generated on the launch pad do not ignite the rocket
because of the flame-resisting properties of graphite carbon-fibre-textile
exhaust shields. Similarly on re-entry, the white-hot temperatures from
atmospheric friction do not consume the shuttle because high-
performance fibre and ceramic structures provide protection

AERONAUTICS
Airplane parts, other than body construction, are also made of textiles. All
U.S. commercial jets have brakes made from carbon composites. These
are the only materials that can withstand the extreme high temperatures
generated if takeoff is aborted. Stopping a plane weighing many tons in a
short distance generates temperatures high enough to melt metals, making
carbon brakes indispensable for heavy jets. Kevlar non-woven felt liners
are now used as fire barriers to cover the urethane foam seats on all
aircraft to prevent the production of highly toxic cyanide gases when such
foams burn during airplane accidents.
PURIFICATION OF WATER AND AIR
Whole-body gas suits are required to protect soldiers from the chemicals
used in gas warfare today. These chemicals can kill by absorption into the
bloodstream through skin. The suits allow for transport of perspiration
moisture to prevent soldiers from being overcome internally as would
occur from a non-permeable film covering. It is well known to chemists
that a cube of activated charcoal powder measuring one inch on each side
has an adsorptive capacity equal to a football field. It was therefore
believed that properly constructed porous carbon fibres could exhibit
superior gas-adsorption capability. Drinkable sea water is now available
through properly prepared hollow fibre reverse osmosis modules. Sea
water is forced through these modules under a pressure of 400 pounds per
square inch. Pure drinking water passes through the hollow fibre wall
while concentrated salt water exudes out of the end. Concentration of
liquids that normally deteriorate from heating is possible with reverse
osmosis fibres and membrane systems. Many liquids, including orange
juice and tomato juice, can be concentrated by pressure without heat to

preserve the thermally unstable flavour ingredients. Most orange-juice
concentrate on the market today is prepared this way. Similarly
concentration of gases can be achieved by proper use of membrane and
fibre composition. Gas-separation systems are currently in use at most
U.S. petroleum refineries.
CONSTRUCTION MATERIALS
Super domes and stadiums are being constructed with roofs of silicone-
coated fibreglass. This is particularly important in northern areas where
heavy snowfall has caused the collapse of heavy concrete roofs. At the
Hubert Humphrey dome in Minnesota, 800,000 square yards of such
material in two layers allow warm air to be circulated to melt the snow.
At an air terminal in Saudi Arabia, a multi-funnel design allows
circulation by convection of the air up through hollow top ports. Many
shopping malls are turning to these flexible composites to allow for more
freedom in architectural design, improved aesthetics, better air
circulation, and better light transmission.
Rapid technological advances in the textile industry have opened now
opportunities for many technical disciplines, but have resulted in a
shortage of textile chemists, textile engineers, and textile-management
executives. Some U.S. colleges with textile-engineering programs report
that they could place nearly three times as many students in well paying
jobs as they are currently graduating. Together with a bright outlook for
further rapid advances and new products with unusual but useful
properties, this shows that textiles remain among the most dynamic
contemporary sectors in technology.

GLOBAL SCENARIO
The textile and clothing trade is governed by the Multi-Fiber Agreement
(MFA) which came into force on January 1, 1974 replacing short-term
and long-term arrangements of the 1960‘s which protected US textile
producers from booming Japanese textiles exports. Later, it was extended
to other developing countries like India, Korea, Hong Kong, etc. which
had acquired a comparative advantage in textiles. Currently, India has
bilateral arrangements under MFA with USA, Canada, Australia,
countries of the European Commission, etc. Under MFA, foreign trade is
subject to relatively high tariffs and export quotas restricting India‘s
penetration into these markets. India was interested in the early phasing
out of these quotas in the Uruguay Round of Negotiations but this did not
happen due to the reluctance of the developed countries like the US and
EC to open up their textile markets to Third World imports because of
high labour costs. With the removal of quotas, exports of textiles have
now to cope with new challenges in the form of growing non-tariff / non-
trade barriers such as growing regionalization of trade between blocks of
nations, child labour, anti-dumping duties, etc.
Nevertheless, it must be realized that the picture is not all rosy. It is now
being admitted universally and even officially that the year 2005 AD is
likely to present more of a challenge than opportunity. If the industry
does not pay attention to the very vital needs of modernization, quality
control, technology up gradation, etc. it is likely to be left behind.

Already, its comparative advantage of cheap labor is being nullified by
the use of outmoded machinery.
With the dismantling of the MFA, it becomes imperative for the textile
industry to take on competitors like China, Pakistan, etc., which enjoy
lower labour costs. In fact the seriousness of the situation becomes even
more apparent when it is realized that the non-quota exports have not
really risen dramatically over the past few years. The continued
dominance of yarn in exports of cotton, synthetics, and blends, is another
cause for worry while exports of fabrics are not growing. The lack of
value added products in textile exports do not augur well for India in a
non-MFA world.
Textile exports alone earn almost 25 percent of foreign exchange for
India yet its share in global trade is dismal, having declined from 10.9
percent in 1955 to 3.23 percent in 1996. More significantly, the share of
China in world trade in textiles, in 1994, was 13.24 percent, up from 4.36
percent in 1980. Hong Kong, too, improved its share from 7.06 percent
to 12.65 percent over the same period. Growth rate, in US$ terms, of
exports of textiles, including apparel, was over 17 percent from 1993-94
to 1995-96. It declined to 10.5 percent in 1996-97 and to 5 percent in
1997-98. Another disconcerting aspect that reflects the declining
international competitiveness of Indian textile industry is the surge in
imports in the last two years. Imports grew by 12 percent in dollar terms
in 1997-98, against an average of 5.8 percent for all imports into India.
Imports from China went up by 50 percent while those from Hong Kong
jumped by 23 percent.
CHINA:

China's investment spending in the textile industry slumped 20 percent in
the first two months of this year from the same period in 2008, the
National Bureau of Statistics said. Textile industry spending accounted
for 0.9 percent of the nation's overall investment of 1.03 trillion Yuan,
down 0.5 percentage point from a year earlier, the statistics bureau said.
China's garment and textile exports tumbled 15 percent to $21.9 billion in
the two months from a year earlier, customs data show. Exports of yarn,
fabrics and textile products totaled $7.29 billion, down 21 percent, while
apparel exports fell 11 percent to $14.6 billion, the Beijing-based
Customs Bureau said on March 11.
Textile firms, once an export engine of China, are fighting for their
survival this year with rising costs and dismal overseas market hit by the
subprime crisis. Those firms wooing foreign buyers at the 103rd China
Import and Export Fair, the largest trade fair in the country also called the
Canton Fair, felt the pinch. Few buyers visited their exhibition stall, and
fewer still signed contracts. Chinese product competitiveness was not
much as it was. The reduction in tax rebates and the devaluation of the
dollar have made Chinese products 20 percent higher than what it was.
The Chinese currency has ventured below the seven Yuan mark since the
government loosened the unit‘s peg to the dollar in 2005. The Yuan has
gained about 18 percent since then. This has made Chinese textile
products more expensive and its price advantage has almost vanished
compared with products from Vietnam and India. The Yuan appreciation,
together with the rising material and labor costs, has driven some textile
firms to the brink of bankruptcy.
BANGLADESH:
Swedish Firms have Expanded Outsourcing in Bangladesh. Swedish firm
engaged in outsourcing home textiles and home furnishing items is

planning to expand its operations in Bangladesh. RMG Exports is
expected to Surge despite global recession. The readymade garment
sector, one of the pillars of the Bangladesh economy, is definitely in a
positive mode despite global financial meltdown. The three-day
Bangladesh Apparel and Textile Exposition (BATEXPO) wooed foreign
buyers to buy apparel products.
CAMBODIA:
Cambodia's garment industry is the country's biggest industrial employer,
and is now struggling against stiffer global competition and slowing
demand. Many Chinese and Korean companies have established a
presence in Cambodia for years. Now, more than 10 Chinese-owned
factories have moved to cheaper markets, leaving hundreds of thousands
of garment workers from the provinces facing destitution, reported
Phnom Penh Times in early 2008.The garment industry earns 80 percent
of Cambodia's foreign exchange earnings and employs an estimated
350,000 people in more than 300 factories. The industry began to grow
after a the country passed a new labor laws encouraging labour unions
and allowed the International Labour Organization (ILO) to inspect
factories and publish its findings. In turn, the United States agreed to cut
tariffs on Cambodian garment exports, buying 70 percent of all of the
country's textiles in the 1990s.
Cambodia maintained its higher working conditions after the deal expired
in 2005, and garment-making has made the national economy one of the
fastest growing in the region.
The World Bank reported that the industry grew only 8.0 percent in 2007
compared to the growth of up to 20 percent previously. The Cambodia
Ministry of Commerce said that the apparel exports had declined since
October 2007, mainly due to the US economic slowdown. Exports to the

United States slipped 1.44 percent in the first quarter of 2008, compared
with the same period in 2007. Predicted Trend .The Cambodia's Free
Trade Union (FTU) said that the factory owners are looking abroad for
greater productivity and lower costs. Kaing Monika, Manager at the
Garment Manufacturers Association of Cambodia, commented that many
manufacturers could move to Vietnam, Bangladesh or India if they could
get lower costs. Production costs, oil and power, are high in Cambodia,
and the demand for higher wages also put the country's garment industry
in danger, he said. Factory owners are also facing a proliferation of labor
unions and illegal strikes. Experts predict that in 2009 Cambodia would
even see more competition when US restrictions on Chinese textile
exports are scheduled to end. China and Vietnam are still Cambodia's
direct competitors. Cambodia's labor ministry said that to counter this
competition, Cambodia must increase productivity, quality and extend
their reputation as having high labor standards.
MAJOR MANUFACTURERS AND THEIR MARKET
SHARE
In 2006, the largest apparel manufacturers and exporters were countries
from the Asia-Pacific region which included countries like China, Hong
Kong, Philippines, Malaysia, Indonesia, Bangladesh, Srilanka, Pakistan,
Thailand and India. The other major apparel manufacturing nations were
USA, Italy, Germany and Mexico.

Diagram No: 3.1 Country wise Market Share
Source: www.fashionproducts.com (http://www.fashionproducts.com/fashion-apparel-overview.html)
GLOBAL TRADE VOLUME AND TRENDS
As the apparel manufacturing industry has become more labour intensive
and requires less capital investment, its concentration is shifting more
towards the developing countries and even constituting large amount of
their exports. They are concentrating more on developing countries as the
labour cost is very less in such countries. This can be analyzed by the fact
that the apparel production in industrialized countries decreased between
1980 and 1996, where as the production increased in developing
countries during the same period. Similar trend was seen in exports, the
apparel exports of developing countries increased six times between 1980
and 1997, and that of developed economies rose by 150%.
The global apparel industry‘s total revenue in 2006 was US$1,252.8
billion, which was approximately 68% of the overall industry value. Asia
Pacific constitutes the largest amount of production and trade in the
apparel industry worldwide.

Table No: 3.1 Region wise Share of Total Trade Revenue (2006)
Region % Share
Asia Pacific 35.40%
Europe 29.40%
USA 22.30%
Rest of the world 12.90%
China had captured 65% of the global market share towards the end of
2006 in total apparel exports. The other major apparel exporting nations
include USA, Germany, Hong Kong, Italy, Malaysia, Pakistan, Thailand
and India. Some of the apparel trade statistics are presented below.
Table No: 3.2 Exports of Apparels in 2006
Country US $ Billion
China 8,260.921
Hong Kong 1,723.210
Italy 1,353.586
Malaysia 1,255.069
Germany 669.130
Pakistan 618.830
Thailand 597.758
USA 595.171
India 522.463

GLOBAL FACTORS INFLUENCING TEXTILE
INDUSTRY
The history of the textile and clothing industry has been replete with the
use of various bilateral quotas, protectionist policies, discriminatory
tariffs, etc. by the developed world against the developing countries. The
result was a highly distorted structure, which imposed hidden costs on the
export sectors of the Third World. Despite the fact that GATT was
established way back in 1947, the textile industry, till 1994, remained
largely out of its liberalization agreements. In fact, trade in this sector,
until the Uruguay Round, evolved in the opposite direction.
Consequently, since 1974 global trade in the textiles and clothing sector
had been governed by the Multi-fibre agreement, which was the sequel to
an increasingly pervasive quota regime that began with the Short-term
arrangement on cotton products in 1962 and followed by the Long-Term
arrangement. After the successful conclusion of the Uruguay Round in
1994, the MFA was replaced by the Agreement on Textiles and Clothing
(ATC), which had the same MFA framework in the context of an agreed,
ten year phasing out of all quotas by the year 2005. The section that
follows takes a brief look at the history of these protectionist regimes as
also a more detailed look at the MFA and the ATC.

CHAPTER-2
REVIEW OF LITERATURE

CONTRIBUTION TO ECONOMY:
With 3.9 million handlooms, India is the highest handloom producing
country in the World. 30% of the total export income is generated by
textile alone; it is second largest Employer industry after agriculture. The
textile industry constitutes approximately 14% of country's total
industrial production.
THE WORLD MARKET SHARE
In spite of the Chinese dominance, India has a fair opportunity to grab a
substantial stake in the projected garment market share. According to
PHD Chamber of Commerce and Industry (PHDCCI), post-MFA, India's
market share in the US is expected to go up to 15 per cent from the
present 4 per cent. In the EU, the market share increase is expected to be
50 per cent from the current 6 per cent to 9 per cent
Table showing the India’s Competitiveness with Other Country
There is no denying India is competitive enough and will become even
more competitive once its infrastructure issues are sorted out. China has
probably already reached its peak and further improvements may not be
as dramatic, henceforth

Table No: 5.1 Countries and their positive and negative aspects with regard to
textiles
Key countries /
regions
Key positives Key negatives
China Efficient, low cost,
vertically integrated
Growth at the cost of
profits
India, Pakistan Vertically integrated,
low cost
Lacks economies of
scale and
infrastructure support
Mexico (NAFTA),
Turkey
Proximity to market,
duty and quota free
Lack China and Indias
degree of
competitiveness
ASEAN (Vietnam,
Cambodia, Indonesia)
Cheap labor No other cost or
locational advantage
AGOA (African)
countries, Bangladesh
Quota and tariff free,
cheap labor
Lacks integration and
China and Indias
degree of
competitiveness
Hong Kong, Korea,
Taiwan
Trading hubs
proximity to China
No cost advantage,
protected currently by
quotas
USA and EU Non-quota barriers
likely to prove irritant
to imports
US$ 400 bn trade loss
likely ov
Source - Industry, I-SEC Research

Indian Textiles targets- 11th
Five year Plan (2007-2012)
Market size of US$ 115 Billion
Export target US$ 55 Billion
Domestic market US$ 60 Billion
India‘s market share in world textiles trade to grow from 3% to 8
%
12 Million additional jobs
Investment Rs.150,600 Crs
Table No: 5.2 Textiles Export Target (In Billions)
Year ( April March) Target Achievement
2006-07 19.73 19.62
2005-06 15.565 17.80
2004-05 15.16 13.04
2003-04 16.31 13.16
2002-03 15.05 12.41
2001-02 13.72 10.76
Source: Textile India Progress

Top 10 Exporters (Textile)
Country 1990 1997
Billion US$ % share Billion US$ % share
Hong Kong 7.99 7.68 14.6 9.42
China 7.10 6.82 13.83 8.92
South Korea 6.04 5.81 13.35 8.61
Germany 14.00 13.46 13.05 8.42
Italy 9.80 9.43 12.9 8.32
Taiwan 6.13 5.90 12.73 8.21
USA 5.03 4.83 9.19 5.93
France 7.21 4.65 5.86 5.64
Belgium-
Luxembourg
6.54 6.29 7.01 4.52
Japan 5.88 5.65 6.75 4.35

Top 10 Exporters (Apparel)
Country 1990 1997
Billion US$ % share Billion US$ % share
China 9.41 9.14 31.8 21.06
Hong Kong 15.37 14.92 23.11 15.30
Italy 12.07 11.72 14.85 9.83
USA 2.57 2.49 8.68 5.75
Germany 7.82 7.59 7.29 4.83
Turkey 3.44 3.34 6.7 4.44
France 4.65 4.51 5.34 3.54
UK 3.08 2.99 5.28 3.50
South Korea 8.11 7.87 4.19 2.77
Thailand 2.86 2.78 3.77 2.50
Total (top 10) 69.38 67.36 111.01 73.52
World 103.00 100.00 151.00 100.00

Multifibre Arrangement (1974-94) under which countries whose markets
are disrupted by increased imports of textiles and clothing from another
country were able to negotiate quota restrictions. The MFA was
introduced in 1974 as a short-term measure intended to allow developed
countries to adjust to imports from the developing world. The textiles and
clothing industry was, until recently, the only major manufacturing
industry that was not subject to the rules of the General Agreement on
Tariffs and Trade (GATT). Instead, it was subject to extensive use of
quotas by the major importing countries. The quota system started with
the Long Term Agreement Regarding International Trade in Cotton
Textiles (LTA) under the auspices of the GATT in 1962. In 1974 the
LTA was extended to cover other materials than cotton, and became
known as the Multi-Fiber Agreement (MFA). At the end of the Uruguay
Round of negotiations it was agreed that t countries wishing to retain
quotas would commit themselves to phasing them out gradually over a 10
year period, with the last quotas being lifted 1st of January 2005, as stated
in the Agreement on Textiles and Clothing (ATC).Developing countries
have a natural advantage in textile production because it is labor intensive
and they have low labor costs. According to a World Bank/International
Monetary Fund (IMF) study, the system has cost the developing world 27
million jobs and $40 billion a year in lost exports. At the General
Agreement on Tariffs and Trade (GATT) Uruguay Round, it was decided
to bring the textile trade under the jurisdiction of the World Trade
Organization. The textiles and clothing (T&C) industry is considered to
be an opportunity for the industrialization of developing countries in low
value added goods. The industry is labor intensive and thus requires a
large number of unskilled workers, including a high share of female
workers. The end of the MFA in 2005 will change international trade
significantly and lead to a restructuring of the sector worldwide. This

restructuring process will result in major employment shifts within and
between countries. However, the last three decades have seen various
changes in the clothing and textile sector, thus forcing many countries to
adjust to a constantly altering environment. Now, a number of countries
fear that a new wave of cheap textile and clothing products will flood
their markets, threatening their domestic industries that are not adequately
prepared to face the new challenge. There are also those countries that
hope for new export opportunities as a result of a free quota trade
environment and a third set of countries that will lose their preferential
access to the US or EU markets, thus facing higher competition for their
exports to them. However, large tariffs remain in place on many textile
products. However, the last three decades have seen various changes in
the clothing and textile sector, thus forcing many countries to adjust to a
constantly altering environment. Now, a number of countries fear that a
new wave of cheap textile and clothing products will flood their markets,
threatening their domestic industries that are not adequately prepared to
face the new challenge. There are also those countries that hope for new
export opportunities as a result of a free quota trade environment and a
third set of countries that will lose their preferential access to the US or
EU markets, thus facing higher competition for their exports to them.
INDIAN SUPPLY DEMAND SCENARIO
Textile engineering enjoys good growth in the country. The business in
2004-05 amounted to Rs 1,650 crore, which was a Rs-250 crore increase
from the year-ago level.
Despite the Bull Run, textile industry is running short of machinery.
Today, textile companies have to wait one or two year for delivery of
machines, whereas, orders are completed within 10-12 months. This
growing demand is a tough challenge to cope with for Lakshmi Machine

Works (LMW), Coimbatore. It takes 18 months to fulfill new orders, but
R. Rajendran, spokesperson for LMW, expects the delivery time to be cut
down to 10-12 months in 2006-07 with its new capacities. Two reasons
forwarded for the delay in delivery of machines: textile companies are
expanding capacities rapidly and pace of supply of machinery not in tune
with the current demand.
Second reason is the Technology Up gradation Fund Scheme (TUFS) of
the Textile Ministry is likely to end by March 2007. As a result, textile
companies wishing to make the most of the scheme are rushing to place
orders for the machines, says C V Radhakrishnan, Advisor, Textile
MachineryManufacturersAssociation.
Considering the development of textile industry, India would need 12
million spindles in the next five years, whereas only 10 million spindles
would be provided by domestic textile engineering industry.
In 2008, the Indian textile industry suffered from overcapacity. There was
talk that a consolidation in the local industry would inevitably have to
take place if India is to remain competitive in textiles, but there was also
talk that the government may offer a U.S.-styled bailout of the Indian
textile industry in order to keep employment levels high. These
conflicting signals continue to make an assessment of the Indian textile
sector difficult to make.
FASHION APPAREL INDUSTRY OVERVIEW
The global fashion apparel industry is one of the most important sectors
of the economy in terms of investment, revenue, and trade and
employment generation all over the world. Apparel industry has short
product life cycles, tremendous product variety, volatile and
unpredictable demand, long and inflexible supply processes. The industry

has been in a transition over the last 20 years. Some of the major
contributors are significant consolidation in retail, increasing use of
electronic commerce in retail and wholesale trade.
The clothing and apparel industry produces finished clothing products
made from both natural and manmade fibers like cotton, silk, wool, linen,
polyester, rayon, Lycra and denim. The important segments covered in
apparel industry includes children clothing, men‘s clothing, clothing for
women, bridal wear, men‘s wedding wear and intimate apparel. The
apparel is sold through three major channels, which are brick & mortar,
catalog and through internet.
Table No: 7.1 Apparel Sales by Channel
Category Sales in $ Billion Market Share (%)
Brick and Mortar 169.256 92.9
Catalog 7.177 3.9
Online/ Internet 5,873 3.2
Total 182.306 100.00
INDUSTRY CHALLENGES:
The Apparel Industry is growing at a very high rate but still there are
some barriers, which are hindering the growth of this industry. Some of
them are:
• Though the demand for garments is increasing day by day but the
production rate has still not been able to match with the ever rising
demand. More production facilities are needed to meet the demand

• Most of the raw material needed for apparel manufacturing is available
in the developing or under developed countries and these countries do not
have enough resources and manpower to explore them. These countries
also do not have finance to set up factories for clothing and garment
production
• Globalization has helped the trade in many ways but due to
globalization the competition has increased and so it is not very easy for
the firms to cope up with so much competition, as they have to meet the
deadlines and also maintain quality
• The importers of developed economies are facing very stiff competition
as countries like China are producing good quality products in low prices
due to availability of very cheap labour
• Some trade laws still are very much in favor of developed countries and
they need to be reviewed, to facilitate imports from the developing
countries
• As apparel industry is fashion driven, and fashion keeps changing, the
firms have to cope with the changing apparel industry trends and still
complete orders in time. Thus they usually have to work under pressure
National Textile Policy 2000:
ON NOVEMBER 2, the Government announced the New Textile Policy
(NTP), outlining measures to make India a global player in textiles and
readymade garments by raising exports from $11 billion to $50 billion by
2010. Of this, the share of readymade garments will be half. The
Government has decided to de reserve the garment industry from the SSI
category to make the former internationally more competitive. Till now,
the garment sector was under SSI reservation, with an investment ceiling

of Rs 3 crore, and the maximum foreign direct investment limit of 24 per
cent.
There are two more modifications. First, the FDI limit of 24 per cent has
been removed, and foreign companies will be able to make 100 per cent
investments through the Foreign Investment Promotion Board (FIPB)
route. Second, the 50 per cent export obligation on firms with foreign
equity has been done away with.
The Government intends to implement, in a time-bound manner, the
Technology Up gradation Fund Scheme covering all manufacturing
sectors of the industry. According to the Textiles Minister, Mr. Kashiram
Rana, response to this scheme is improving, and proposals worth Rs
11,000 crore were received.
According to the RBI, exports of readymade garments in the 11 years
from 1987-88 to 1998-99 rose from $1,430 million to $4,444 million --
more than threefold. The annual average growth rate readymade exports
during this period were 10.9 percent, against the overall export growth
rate of 9.7 percent.
Exports of readymade to the developed countries are improving. Against
exports of $427 million to the US, in 1987-88, they touched $1,503
million -- again, more than threefold-- in 1998-99. There have been
similar increases in dispatches to the UK, Germany, France, Canada,
Italy, Japan and the Netherlands. There was a decline in exports to the
Commonwealth of Independent States (CIS) because of the unstable
conditions.
India was also able to capture markets in developing countries, especially
the UAE. The rising trend of readymade garment exports, even to the

most developed countries, proves beyond doubt the competitive ability of
the small sector.
TECHNOLOGY UPGRADATION FUND SCHEME
(TUFS):
Government of India, Ministry of Textiles has launched a Technology Up
gradation Fund Scheme (TUFS) for the Textile and Jute Industries, which
is in operation since 01.04.1999 for 5 years i.e. up to 31.03.2004. There is
no cap on funding under this scheme. It is an open-ended scheme
depending on the capacity of the industry to absorb funds in bankable and
techno-economically feasible proposals.
The main features of the TUFS are given below: -
i) The scheme provides a reimbursement of 5% point on the Interest
charged by the lending agency on a project of Technology Up gradation
in conformity with the scheme.
ii) The identified sectors in the textile industry viz. Cotton ginning and
pressing, spinning/silk reeling and twisting/wool scouring and combing/
synthetic filament yarn text rising, crimping and twisting, manufacturing
of viscose filament yarn (VFY) / Viscose Staple Fiber (VSF),
weaving/knitting including non woven and technical textiles,
garments/made-ups, Jute industry are eligible to avail of these
concessional loan for their technology up gradation requirements.
Investments in common infrastructure or facilities owned by the
association, trust or co-operative society of the units participating in the
TUF Scheme and other investments specified are also eligible for funding
under the scheme.

iii) Technology levels are benchmarked in terms of specified machinery
for each sector of the textile industry. Machinery with technology levels
lower than that specified will not be permitted for funding under the TUF
Scheme.
iv) General eligibility condition and sector specific eligibility conditions
have also been specified in the scheme.
v) Nodal agencies for the scheme are as follows: -
For the Textile Industry (excluding SSI sector) – IDBI
For the SSI Textile Sector (Cotton Ginning & Pressing, Weaving,
Knitting, Processing & Garmenting Manufacturing) - SIDBI
For Jute Industry - IFCI
vi) The interest @5% would be reimbursed to the respective nodal agency
through the budget (plan) provisions of the Ministry of Textiles.
vii) The functioning of the scheme is being periodically monitored by
TAMC Chaired by Textile Commissioner and Inter-Ministerial Steering
Committee, Chaired by Secretary (Textiles).
viii) A special cell has been set up in the financing institutions for
expeditiously processing loan application received under the scheme.
ix) All the 18 SFCs, 17 SIDCs and 11 Twin function IDCs, EXIM Bank
and NCDC have been co-opted by SIDBI and IDBI. Further SIDBI has
co opted 81 commercial banks, 12 coop. banks and NSIC and IDBI has
co-opted 36 commercial banks, 1 co-operative bank and 4 AIFIs (IFCI,
ICICI, IIBI and LIC) have also been co-opted by IDBI. IFCI has co-opted
3 SFCs, 1 SIDC, 6 commercial banks, 3 AIFIs and Exim Bank for
financing jute industry under the scheme.

x) An option has also been provided to the Small Scale Textile and Jute
Industries to avail of either 12% Credit Linked Capital Subsidy (CLCS)
or the existing 5% interest reimbursement under the TUFS. CLCS-TUFS
will be in operation from 1st Jan., 2002 to 31st March, 2004. There is no
distinction between public sector, co-operative sector or private sector
mills under the scheme, if project proposal is bankable and techno
economically feasible.
Indian textile industry should have focused on all major sectors right
from fiber to fashion and planned for an organized growth across the
supply chain so as to compete with China and even countries such as
Pakistan, Vietnam and Thailand. Instead, the industry had put majority of
its stock in the spinning sector. This is clearly evident in the utilization of
Technology Up gradation Fund Scheme effectively by the spinning
sector. Although it is a positive outcome, in my opinion, the industry
turned a blind eye on value-adding sectors such as weaving and finishing
TEXTILEWORKERS’REHABILITATIONFUNDSCHEM
E (TWRFS):
Textile Workers‘ Rehabilitation Fund Scheme came into force with effect
from 15th Sept. 1986.The objective of TWRFS is to give interim relief to
the workers rendered jobless due to permanent closure of the mills.
Another reason also was to curtail the widespread disguised employment
in the textile industry. Relief under the scheme is available only for 3
years on a tapering basis, 75% of the wage equivalent in the first year,
50% in the second year and 25% in the third year.
The government has established various research associations for the
textile industry like

Ahmadabad Textile Industry Research Association,
Ahmadabad
Bombay Textile Research Association, Mumbai
South India Textile Research Association, Coimbatore
Northern India Textile Research Association, Ghaziabad
Silk and Art Silk Mills Research Association, Mumbai
It has a few export promotion councils also like
o Handloom Export Promotion Council, Madras
o Apparel Export Promotion Council, New Delhi
o Cotton Textile Export Promotion council, Mumbai
o The Synthetic and Rayon Textiles Export Promotion
Council, Mumbai
o Indian Silk Export Promotion Council, Mumbai
o Wool and Woollens Export Promotion council, New Delhi
o Carpet Export Promotion Council, New Delhi
o Export Promotion Council for Handicrafts
o Power loom Development & Export Promotion Council

CHAPTER -3
Research methodology

COLLECTION OF data
The research method which I had chosen to collect information is the case
study method
I had choose one company related to this topic the company is siyaram
silk mill ltd
I had collected the information by referring many magazines newspaper
and so on
Objective:
The objective is to get a brief knowledge on this topic and related that
information to the siyaram‘s.
As there is also a disadvantage that on the basis of one company I cannot
give brief knowledge about the textile industry.
MAJOR PLAYERS
India being one of the fastest growing economies of the world, which has
both positively and negatively, affected the Indian apparel industry. On
one hand it has become a major retailing hub and a host for various
multinational companies on the other hand this has a negative effect on
the domestic players. The emergence of mall, brand slavery, fashion
awareness, rise in the income level has further reinforced the competition
among the multinationals and the domestic players and has lead to
opening of number of retail outlets in India.
The introduction of VAT and the growth of organized retail industry are
also likely to push up growth in the textiles and apparel sector

domestically too. While the garments business will pose its own set of
challenges in terms of providing flexibility in operations and dealing with
labor productivity issues, an increasing contribution to revenues from the
garments business, which is less capital-intensive and margins-accretive,
would augur well for earnings growth.
GOKALDAS EXPORTS
Incorporated in 1979, based in Bangalore, it‘s one of India's largest
manufacturers and designer of garments for men, women and children
and caters to the needs of several international fashion brands and
retailers. Gokaldas Exports has been a major player in the readymade
garment industry across the globe.
In the present Indian fashion retailing, Gokaldas has grabbed a
distinguished place for itself in the form of "The Wear house" catering to
the specific fashion needs of the people. The Wearhouse has high profile
outlets in Bangalore, Chennai, Hyderabad and Coimbatore.
An ISO 9001:2000 Certified Company has a capacity to produce and
export 2.5 million garments a month.
The Group's products include coats, suits, jackets, parkas, windcheaters,
ski wear; warm-ups, surf wear, swim wear; trousers, shorts; casual wear
shirts, ladies blouses and dresses for customers in international market. It
mainly operates in India but exports its products to countries like the
United States of America, Canada, Mexico, United Kingdom, Germany,
Austria, Spain, Italy, France, Netherlands, Middle East, South Africa,
Japan, Denmark, Taiwan and Hong Kong. A few of the manufacturing
units are 100% export units with capabilities of mass production. They
have the license to import duty-free fabrics and accessories from all over

the world for re-export. It has over 48,000 employees who work in
around 48 fully equipped, modern, manufacturing factories.
ARVIND BRANDS
Arvind Mills Ltd. was incorporated in 1931 with share capital
Rs.2525000 ($55000) in Ahmadabad by the Lalbhai group. The
Company's operations are divided into the Textile Division, telecom
division and garments division. We will be majorly concentrating on the
garments division. Products manufactured are dhotis‘, sarees, mulls,
dorias, crepes, shirtings, coatings, printed lawns & voiles cambrics, twills
gabardine etc. Arvind Brands is part of the Lalbhai Group, which holds
licenses for leading international brands such as Arrow, Lee, Wrangler,
Gant and Tommy Hilfiger for retail and wholesale sales in the local
market. Its mainstream brands are Excalibur and Flying Machine.
In addition, it owns an array of casual sportswear and denim brands
marketed in India, including Flying Machine, Newport and Ruf & Tuf
jeans and Excalibur shirts along with licensed relationship with various
international brands like Nautica, Jansport, Kipling, Hero by Wrangler,
Lee Riders and Tommy Hilfiger, and joint ventures with VF Corporation
and Diesel.
But the company is facing severe competition from major brands like
Louis Philippe, Park Avenue and small brands like Trigger and
Blackberry‘s.
It produces about 110 million meters of denim every year and the
garment section is doing extremely well because of the customer loyalty
it enjoys. The demand for jeans, in particular, is expected to rise, as
manufacturing companies in the US have shut operations.

KOUTONS
The winner of ― best retailer leadership award 2008‖ organized by retail
congress, Mumbai, Koutons Retail India Limited engages in the design,
manufacture, and retail of men‘s wear and integrated apparel in India. It
currently sells its apparel using the ―Koutons‖ and ―Charlie Outlaw‖
brands. Mr. Kohli along with his brother in law Mr. Sawheny partnered to
set up Charlie's Creation.
In 1997 the Company diversified its business by introducing non-denim
trousers in the existing product range of denim apparel. The company has
inaugurated its 89th family Store in Hyderabad, which it claims to be its
largest store in the country. Koutons India has an annual finishing and
manufacturing capacity of 22.92 million pieces and 12.36 million pieces
of apparel, respectively. The capacity utilization for the same was 41.21%
and 21.99% respectively at the end of FY2007.Koutons has 18
manufacturing/finishing units and 14 warehouses spread across various
locations in and around Gurgaon. The company's strategy is to have
small, but more stores. This helps to save costs and at the same increase
reach of the company. The company has a phenomenal growth record.
ZODIAC
Zodiac Clothing Company Ltd manufactures, exports and imports
garments, textiles accessories etc. Zodiac has been in the apparel business
for a period of 50 years by now and is known for its quality shirts.
Zodiac, is today, the largest selling shirts & tie brand at Shopper's Stop
according to Brand Equity (The Economic Times)
The Company started business in 1954 and export of readymade garments
to Europe started in early '60s, which included mainly ties and shirts. For
many decades, Zodiac has been synonymous with ties. The business of

ties is a high fashion business and Zodiac has taken this to new highs in
India and across the globe. In fact, one can say that in India Zodiac is
generically associated with ties. Following Zodiac's huge success with
ties, the company entered the arena of men's accessories with Cuff links,
Belts, Wallets and Handkerchiefs.
In 1973, Zodiac had a stand-alone exclusive shirt shop in Hotel Taj in
Mumbai. The company then entered the domestic shirt segment in late
'80s.It employs around 3500 people in 7 manufacturing units in 16 offices
located in UK, US, Germany, UAE etc. Each manufacturing unit is
spread over 35000 sq.ft and has modern equipment to spread 60 yards of
cloth at a time. All the manufacturing units are same in design and layout.
Quality is maintained throughout the 40 stages of assembly line. All the
units have their own power generating units in order to be efficient. It has
its own 80 exclusive outlets and around 2000 multibranded outlets. Its
continuously showing profit and has a consistently growing export
business.
HOUSE OF PEARL
House of Pearl Fashions Limited is a multinational ready to wear apparel
manufacturing company. The company also provides supply chain
solutions for the fashion industry globally along with warehousing &
distribution networks in the UK & US. It operates in 11 strategic
locations in six continents. It has two brands Kool hearts, DCC in the
United States of America. The brand Kool hearts focuses on the young
fashion, where as the focus of DCC is more towards the Missy segment
It basically deals with 3 streams which are manufacturing to Retailers,
souring solutions for retailers, Marketing, Distribution & Branding for
Retailers. It takes care of the whole process from design & development,
manufacturing or sourcing till offering a range of pre retailing services,

warehousing to delivering at the door step on a call off basis. It
manufactures a broad range of products comprising of knits, woven,
sweaters and bottoms in basic as well as complex designs.
It has a good manufacturing capacity; the present in-house manufacturing
capacity of the company is twenty million pieces. Per annum spread over
more than 725,000 sq feet of built up area with efficiently designed
layouts to ensure smooth flow of materials. The company is planning to
double the capacity by expanding the operations in Chennai, Bangladesh
& Indonesia. It intends to have a capacity of 30million pieces by the end
of 2009.
The company adopts integrated marketing techniques and has
merchandising teams in Canada, Europe, HK, UK, and US, closely
interacting with existing and potential customers at their doorstep.
The Company shares were listed on the stock exchanges first time in Feb,
07. It recently went for a joint venture with LERROS, a premium apparel
brand from Germany.
HARIA EXPORTERS
Haria Exports Ltd. is a leading garment exporter in the country for the
last twenty four years. It is a Star Trading Company and has won the
golden status certificate in the year 1999. This company occupies a
unique place in the industry of the by its contribution to Industrial output,
employment generation and Foreign exchange earnings. Even though the
textile industry has the distinctive advantage in respect of raw material
and skilled labor, the industry is suffering from technology
obsolescence which in turn affects the quality, productivity and cost
effectiveness. The high capital cost is impeding the process of Hi- Tech
up gradation. Therefore, the Government of India, Ministry of Textile

has launched Technology Up gradation Fund Scheme for Textiles &
Jute Industries of Rs.25000.00 crores at a concessional rate of interest
of appx.5%. In order to compete with the outside world, the company is
paying attention to the application of technology, closely following up the
fashion trends and improved product quality. In order to be more cost
efficient the company has acquired latest machinery which ascertained
exact material consumption depending upon the style and pattern. The
Government policies, interest rates, export incentives etc may also affect
the overall performance of the company, but even then the company is
optimistic about its revenue and growth.
EVINIX
The company started in 1996 with the manufacture of headgears, baseball
caps and high altitude jackets, using cotton textile and leather, mainly for
exports. The company was incorporated on 1st May 1996 as Evinix
Fashion Accessories Private Limited under the Companies Act, 1956.
Mr. Sanjay Taneja, brother of Mr. Raujeev Taneja (the original promoter
of the company) joined the Company as a Promoter replacing
Mrs.Anuradha Taneja, who disassociated herself from the company. The
name of the company was changed to Evinix Accessories Private Limited
from Evinix Xsesryz and a fresh Certificate of Incorporation dated 20th
March 2003 was taken. In March 2005, M/s Ambrose Exports Private
Limited took equity stake in the company.
The apparel category constitutes men and women‘s shirts, trousers, skirts
and tops, kids wear and nightwear. Organic cotton wear for expecting
mothers and infants is an additional strength. They use Organic cotton
and its products through its brand name ―Othentix‖- Authentic

Sustainable Textiles, lends a unique personality to each garment
manufactured and supplied by Evinix.
The company came out with a principle of Rapid Retail suggesting that
every merchandise has a limited shelf life at CUT stores; CUT is an
acronym for Comfortable, Urban and Trendy. Evinix is setting up CUT
stores (averaging 4000-5000 sq feet) in fast urbanizing young Indian
towns. It recently launched the CUT youth style store in Rajkot. The
Rapid Retail business concept embraces the e.t.o.a.d concept i.e. the exact
time of awaited departure when the product will move out to the next best
price bracket.
PEARL GLOBAL
Pearl Global Limited was incorporated on 23rd October, 1979 under the
name Pearl Agencies Private Limited. The Company became a Deemed
Public Company with effect from 1st July, 1991 The name of the
Company was change to PEARL GLOBAL LIMITED (PGL) on 2nd
September, 1993 in terms of Section 21 of the Companies Act, 1956 as
per fresh Certificate of Incorporation issued by the Registrar of
Companies, Delhi & Haryana. PGL manufactures, sells, and exports
ready to wear apparel in India. The company primarily produces
garments in woven and knitted fabrics. Its products include casual wear
dresses, ladies‘ blouses, and bottoms. The company is based in Gurgaon,
India. PGL is a subsidiary of House of Pearl Fashions Limited.
BANG OVERSEAS LTD
Bang Overseas limited‘s principal activity is to manufacture and market
textiles and apparels. The Group's textile includes readymade garments,
under garments and hosiery. It markets with a brand name of Thomas

Scott. The Group operates only in India. It was incorporated in the year
1992 and is presently providing fashion fabrics and meeting ready to
wear requirements of the customers in apparel, textile and Retail segment.
The company started the business from trading in textile and since 1998,
they are conceptualizing and designing fashion fabrics and outsourcing
the manufacturing process of the same from countries like Turkey,
Portugal, Mauritius and other European Countries. In the same year, they
launched our seasonal fabric collections in textile under the name "Body
waves", marketed through their own distribution channel to different
brands and retailers. They have ventured into ready-to-wear men‘s'
segment in 2000 by outsourcing manufacturing process and in turn selling
to various international brands. They launched ready-to-wear men‘s'
garments under our brand name "Thomas Scott" in 2002. They started
their own first apparels manufacturing unit in Bangalore in the year 2005
in the name of Reunion Clothing Company with an installed capacity of
350,000 pieces per annum and in the year 2006 then they started the
second manufacturing unit in the name of Formal Clothing Company
with an installed capacity of 360,000 pieces per annum. At present they
have installed capacity of 720,000 and 540,000 pieces per annum at their
Reunion Clothing Company and Formal Clothing Company. Their
products are presently retailed through 157 point of sales comprises of
our own Retail outlets, Large format stores (LFS) like Shoppers' Stop,
Pyramid, Globus, the LOOT, SAGA and Multi Brand Outlets (MBO)
spread all over India. They cater to the demand of various other apparel
manufacturer and brands also. They have centralized warehousing and
logistics centre at Kalher Village near Bhiwandi to facilitate our supply
chain management as well.
BCG MATRIX

BCG Matrix is also called the Boston Matrix because it was created by
Bruce Hendeson for the company Boston Consulting Group in 1970. The
BCG matrix method is based on the product life cycle theory that can be
used to determine what priorities should be given in the product portfolio
of a business unit.
Star
The high growth and high market share brands that exist in Indian market
and are the market leaders. This category consists of the companies like
Zodiac, Du Pont etc. These companies are regularly investing in R&D
and gaining market share as time passes. These stars try to become the
cash cows of the future and want to remain in the market.
Cash Cows
The companies which have low business growth and high
market share are the cash cows that generate milk continuously
with the small investment to be as the mature company in the
market.
Question marks (also known as Problem Childs)
The companies that have high growth rate and lower market share are the
question mark as they could be new ventures started or they are
companies that do not have liquidity enough to increase their share in the
market. But these companies have potential to be the star in the market
due to good growth rate and thus they could invest more into their
business to expand as the star and then becoming the cash cows.
Dogs

The dogs are more charitable pets that exist in the market and have the
low market share and low growth rate so these companies are better to get
out of the market or much cash is required to set them up. These
companies have the cash traps which ties up the money in a business with
the lower potential.
GOKALDAS
In the present Indian fashion retailing, Gokaldas has grabbed a
distinguished place for itself in the form of "The Warehouse" catering to
the specific fashion needs of the people. It mainly operates in India but
exports its products to countries like the United States of America,
Canada, Mexico, United Kingdom, Germany, Austria, Spain, Italy,
France, Netherlands, Middle East, South Africa, Japan, Denmark, Taiwan
and Hong Kong. This means the company has a high growth rate since its
inception. Therefore we put it in star.
ARVIND BRANDS
Arvind Brands is part of the Lalbhai Group, which holds licenses for
leading international brands such as Arrow, Lee, Wrangler, Gant and
Tommy Hilfiger for retail and wholesale sales in the local market. Its
mainstream brands are Excalibur and Flying Machine.
In addition, it owns an array of casual sportswear and denim brands
marketed in India, including Flying Machine, Newport and Ruf & Tuf
jeans and Excalibur shirts along with licensed relationship with various
international brands like Nautica, Jansport, Kipling, Hero by Wrangler,
Lee Riders and Tommy Hilfiger, and joint ventures with VF Corporation
and Diesel. Its enjoys good market share as its customers are loyal to it.
But its rate of growth is not significant. So we put it in cows.

KOUTONS
The winner of ― best retailer leadership award 2008‖ organized by retail
congress, Mumbai, Koutons Retail India Limited engages in the design,
manufacture, and retail of men‘s wear and integrated apparel in India.
The company's strategy is to have small, but more stores. This helps to
save costs and at the same increase reach of the company. The company
has a phenomenal growth record. Its market share is excellent. So we put
it in stars.
ZODIAC
Zodiac Clothing Company Ltd manufactures, exports and imports
garments, textiles accessories etc. Zodiac has been in the apparel business
for a period of 50 years by now and is known for its quality shirts.
Zodiac, is today, the largest selling shirts & tie brand .The company then
entered the domestic shirt segment in late '80s.It employs around 3500
people in 7 manufacturing units in 16 offices located in UK, US,
Germany, UAE etc. Its continuously showing profit and has a
consistently growing export business.Market share is not that significant
as it is famous only in tie and shirt.So we place it in question mark.
HOUSE OF PEARL
It operates in 11 strategic locations in six continents. It has two brands
Kool hearts, DCC in the United States of America. The company adopts
an integrated marketing technique and has merchandising teams in
Canada, Europe, HK, UK, and US, closely interacting with existing and
potential customers at their doorstep. Both its growth and market share is
high. Therefore it is placed in stars.
HARIA EXPORTERS

It is a Star Trading Company and has won the golden status certificate in
the year 1999. This company occupies a unique place in the industry of
the by its contribution to Industrial output, employment generation and
Foreign exchange earnings. Even though the textile industry has the
distinctive advantage in respect of raw material and skilled labor, the
industry is suffering from technology obsolescence which in turn
affects the quality, productivity and cost effectiveness. In order to be
more cost efficient the company has acquired latest machinery which
ascertained exact material consumption depending upon the style and
pattern. Considering these it is placed in dog.
EVINIX
The apparel category constitutes men and women‘s shirts, trousers, skirts
and tops, kids wear and nightwear. Organic cotton wear for expecting
mothers and infants is an additional strength. Evinix is setting up CUT
stores (averaging 4000-5000 sq feet) in fast urbanizing young Indian
towns. It recently launched the CUT youth style store in Rajkot. The
Rapid Retail business concept embraces the e.t.o.a.d concept i.e. the exact
time of awaited departure when the product will move out to the next best
price bracket. But market share is not that significant. So we put it in
question mark.
BANG OVERSEAS LTD
The company started the business from trading in textile and since 1998,
they are conceptualizing and designing fashion fabrics and outsourcing
the manufacturing process of the same from countries like Turkey,
Portugal, Mauritius and other European Countries. In the same year, they
launched our seasonal fabric collections in textile under the name "Body
waves", marketed through their own distribution channel to different

brands and retailers. They started their own first apparels manufacturing
unit in Bangalore in the year 2005 in the name of Reunion Clothing
Company with an installed capacity of 350,000 pieces per annum and in
the year 2006 then they started the second manufacturing unit in the name
of Formal Clothing Company with an installed capacity of 360,000 pieces
per annum. At present they have installed capacity of 720,000 and
540,000 pieces per annum at their Reunion Clothing Company and
Formal Clothing Company. Their products are presently retailed through
157 point of sales comprises of our own Retail outlets, Large format
stores (LFS) like Shoppers' Stop, Pyramid, Globus, the LOOT, SAGA
and Multi Brand Outlets (MBO) spread all over India. They cater to the
demand of various other apparel manufacturer and brands also. Taking
into account their market share and growth, we put it in stars.
Government Regulations:
 Historically the textile industry in India has been reserved for the
small scale sector, which has been exempted from taxes, thus
discouraging investments in increasing scale
 The government, through its various Budget announcements has
sought to rationalize taxes
 Budget 2002-03: Textiles brought under the ambit of Cenvat
(credit for duties paid on inputs or capital goods) and
introduced on all yarns
 Budget 2003-04: Cenvat extended across the entire textile
chain to include fabrics, made-ups and apparel; excise duty
exemptions on many sectors and processes, specially SSI
removed; excise duty rates reduced

 Budget 2004-05: Cenvat made optional - every manufacturer
allowed to choose between a complete exemption from
payment of excise duty or adopt the Cenvat route; excise
duties lowered to 4% on cotton textiles and 8% on non
cotton textiles (except manmade fibers, polyester filament
yarn, nylon filament yarn) for those claiming Cenvat credit
Always government regulations aimed at improving competitiveness of
industry to face a post quota regime
Several government initiatives targeted to attract
investments:
Technology up gradation fund scheme:
 Scheme launched in 1999 to provide firms access low interest
loans for technology up gradation and setting up new units with
state-of-art technology
 Scheme has disbursed INR 91.61 bn till 31st December 2005
Policy related to foreign investment:
 Up to 100% foreign direct investment allowed in textile and
apparel manufacturing industry, with approval of the Foreign
Investment Promotion Board (FIPB)
 USD 1.02 bn of FDI in the sector approved between 1991 and 2004
 Companies free to set up fully-owned sourcing (liaison) offices, as
well as marketing operations
Upgrading Infrastructure:

 ―Scheme for Integrated Textile Parks‖ (SITP), based on public-
private partnership model to build world class infrastructure
facilities
 Product specific ―Cluster Approach‖ targeting development of 100
additional clusters in textiles
 Technology Mission on Cotton (TMC), focusing on cotton R&D,
dissemination of technology to farmers, improvement of market
infrastructure and modernization of ginning and pressing sector
I. The extent of rivalry among established firms
1. Industry competitive structure:
Since this industry is highly fragmented there is always high probability
during the boom phase that many new players could enter this industry
which would lead to a price war and ultimately end up with the
bankruptcy of some players or consolidation of industry. So, this is a treat
to the existing players.
But also the existing players work a lot on cost efficiencies therefore the
treat of new entrant is negated by the cost efficiencies of existing players
2. Industry Demand:
In the current scenario textile exports have declined drastically and even
in domestic demand there is a little slowdown. Due to which textile
companies are working on reducing cost by ways of reducing the work
force, decrease in operation cost etc. Also this will evoke more rivalry
among the existing players as they all will like to maintain their market
share in spite of the slump in industry
3. Exit Barrier:

This is not just a labour intensive industry but even the cost involved in
plant setup is very high along with that with the invent of many new
technologies many companies have adapted to modern techniques to
remain competitive in industry as well as to produce better products for
their customers in lesser time and with lesser cost.
Therefore because of high involvement and emotional attachment with
the business as it has been a traditional business for generations for many
companies they still prefer to stick and continue with the business. But in
the current scenario many textile mills have closed down because of deep
cut in demand and high operational cost due to severe global crisis
II. The bargaining power of buyers
Indian textile companies are facing a tough competition from
Chinese, Brazilian and South Korean companies as they are able to
produce at a lower cost compared to Indian companies
This industry is fragmented and there are large number of players
in the industry, therefore buyer get the option of choosing from
many suppliers
Indian textile industry is no more just a mass producer of textile
rather it has moved into niece segment and has developed
capability to produce finest quality of fabric which provides them
distinctive competencies against other countries as well as small
players who could cater to mass consumers only.
Therefore overall buying power of buyer will defer from company to
company. Companies like Arvind mill, Raymond, aditya Birla group have
achieved certain degree of distinctive competencies therefore with them
buying power of buyer is negated to large extent against their
competencies.

But many small companies who are mass producer of textile face a strong
buying power of buyer.
III. The bargaining power of supplier
Here again bargaining power of supplier dictated by the segment that they
are targeting to, for a niece players and companies who have achieved
operational excellence can dictate terms to buyers but for small players
who just produce for mass consumption do not have much say in the
business deal and the prices are mostly dictated by the buyer.

IV. The threat of substitute product
Textile itself is a very broader term and is a solution to a very basic need
of any human being therefore there is as such no substitute to this but
within the textile industry there are many substitutes to different category
of textiles. In India there are various types of textile produced from
cotton, silk, synthetic etc.
There is always a risk of substitution of one type with the other type also
there is constant research carried out to develop new types of textiles but
combining different textiles in different proportion. But in broader
perspective there is no substitute to textile.

Chapter -4
INDUSTRY AVERAGE

The textile readymade and apparel industry has been increasing its
operating revenues year on year at a brisk rate. The number of companies
that are in this industry has increased three folds from around 33
companies in 2008 to around 90 companies recently. This increase in the
number of companies can be attributed to the rise in the sales revenue.
Table No 9.1 Industry Average various Financial Indicators
(Rs in Crs)
Year Latest 2008 2007 2006 2005 2004
Companies No. 90 33 44 47 53 48
Sales Turnover 7,419.89 5,606.93 5,050.62 4,235.84 2,837.85 2,235.28
Operating Profit 1,026.91 834.69 780.71 611.91 272.65 184.65
Reported Net Profit 416.8 361.08 361.1 299.76 100.88 54.17
Source: Capitaline Database
The industry average of the key financial ratios is as follows
Table No 9.2 Industry Average of ratios
Year Latest 2006 2005 2004
Debt-Equity Ratio 1 0.99 1.19 1.02
Current Ratio 1.58 1.43 1.64 1.83
Fixed Assets Turnover Ratio 2.95 2.54 3.16 2.15
Inventory Turnover Ratio 4.44 3.77 4.54 3.35
Interest Coverage Ratio 3.97 5.56 2.97 2.77
We find that the capital Structure of the Industry has reached a position
wherein the companies are raising capital through debt and equity in the
same ratio of 1:1 the current ratio is also moving slowly up recently
despite the fall in 2006 towards the optimum ratio of 2:1. At present it is
at 1.58:1 the two turnover ratio‘s namely Fixed Assets Turnover Ratio

and the Inventory Turnover Ratio are becoming high. This is a positive
sign if the turnover ratio is high. The interest coverage ratio has dropped
notably but this can be attributed to the expansion plan of companies.
Ratio Industry Average
ARVIND BRANDS
Arvind Brands which is the largest producer of Denim clothing is one of
the most famous names in the apparel industry the company is known for
its huge expansion plans in future
0
1
2
3
4
5
6
Debt-Equity
Ratio
Current Ratio Fixed Assets
Turnover Ratio
Inventory
Turnover Ratio
Interest
Coverage Ratio
LATEST
2006
2005
2004

Table No: 9.3Arvind Clothing Financial Performance
(Rs in Crs)
ARVIND CLOTHING 2004 2003 2002 2001 2000
Sales Turnover 64.71 61.24 52.41 49.13 47.45
Operating Profit -1.91 2.68 0.75 5.38 6.3
Adjusted Net Profit -4.51 -0.18 -1.45 1.69 3.39
Arvind Clothing Faced a loss in the year 2004 this led to the company
deciding to sell one of its Business Units in 2006. Arvind Clothing
expansion plans and the launch of Denim products for the Indian market
can be quoted as reasons for this loss.
Table No 9.4 Arvind Clothing Cash Flow Statement
(Rs in Crs)
ARVIND CLOTHING Mar-04 Mar-03 Mar-02 Mar-01
Cash Flow Summary
Cash and Equivalents at Beginning of the year 1 0.94 0.75 1.76
Net Cash from Operating Activities 2.69 2.56 2.41 -1.54
Net Cash Used in Investing Activities -2.24 -1.21 -0.32 -0.79
Net Cash Used in Financing Activities -0.07 -1.29 -1.92 1.32
Net Inc/(Dec) in Cash and Cash Equivalent 0.38 0.06 0.17 -1.01
Cash and Cash Equivalents at End of the year 1.38 1 0.92 0.75
The cash flow clearly indicates that the loss in the year 2004 is mainly
due to the heavy cash outflow for investing activities. Company‘s
accounts revealed that approximately 2.38 crores worth of fixed assets
were purchased as a part of the expansion plan.

Table No 9.5 Arvind Clothing Key Financial Ratios
ARVIND CLOTHING LTD Mar-04 Mar-03 Mar-02 Mar-01 Mar-00
Debt-Equity Ratio 2.62 1.89 1.59 1.35 0.91
Current Ratio 1.54 1.31 1.22 1.47 1.35
Fixed Assets Turnover Ratio 3.78 3.92 3.54 3.45 3.54
Inventory Turnover Ratio 2.95 2.7 2.54 2.74 3.43
Interest Cover Ratio -1.1 1.01 -0.03 1.71 3.39
The company has a very high debt ratio. This is dangerous as the
company is also spending a lot on the procurement of fixed assets. The
current ratio is however 1.58 and shows that the company has good
liquidity. The fixed assets turnover has reduced in 2004 this is
understandable as the company has purchased a lot of new assets. The
Inventory turnover however is growing at a stable pace. The interest
coverage ratio is in the negative as the company is facing losses. The
company has to depend on reserves for interest payment.
Arvind Clothin Key Financial Ratios
BANG OVERSEAS LTD
Bang Overseas is a company which depends on high specialization. It
also recently issued an IPO for raising the required capital. It only
-2
-1
0
1
2
3
4
5
Debt-Equity Ratio Current Ratio Fixed Assets Inventory Interest Cover
Ratio
ARVIND CLOTHING LTD
2004
2003
2002
2001
2000

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