The document discusses the ready-made garments industry in India. It provides an overview of the industry, including business models, distribution channels, demand trends, financial performance, exports, manufacturing process, and policies. It analyzes factors influencing competitiveness such as labor costs, scale of operations, and trade agreements. While India is a major garment exporter, its market share has stagnated as countries like China and Bangladesh have more competitive cost structures and preferential trade agreements. To increase exports, the document recommends diversifying products and markets, expanding scale, improving labor costs through reforms, and entering new trade agreements.

1. READYMADE
GARMENTS
By,
Mario Allen
Ashbin Jose
Sam Texeria
Anusha
Sribhasyam
Tinoj V Thomas
Rohit C
1

2. AGENDA
 Ready Made Garments Industry
 Business Model
 Distribution Channels
 Demand In India
 Industry Financial
 Exports
 Manufacturing Process
 Policies for the Industry
 Competitiveness Framework
 World Market
 Crisil Analysis
 Conclusion
2

3. READY MADE
GARMENTS
 India is the fourth largest manufacturer of garments after
China
 Indian Garment Industry earned a reputation
 Durability
 Quality
 Beauty
 Changing consumer preferences - buying branded
apparel
 Approximately 45% of India's total textile exports.
 Indian consumer is increasingly taking to ready-mades.
3

4. BUSINESS MODEL
Distribution
Stage
Branding
Stage
Manufacturing
Stage
• Own Stores
• Others
• Brand name
• Sell/Purchase
• Outsourcing
• Own1
2
3
4

5. Own Manufacturing - Own
Brand - Own/Other Stores
Own Manufacture - Purchased
brand - Own/Other Stores
Own manufacture
Sell to other brands
Outsource Manufacture -
Own brand - Own/Other
Outsource Manufacture
Purchased brand
Own/other Stores
5

6. DISTRIBUTION
CHANNELS
A network of outlets through which a product is
sold.
one or more distribution channels.
key strategies – decides the costs and revenues
Types of channels
 Own stores
 Retailers
 Shopping malls or MBOs
 Distributors
 Factory outlets
 Exports
Distributio
n
Own stores
Retailers
Discount
stores
Distributo
rs
Factory
outlets
Multi-brand
outlets
Exports
Direct exports
Overseas buying
office
6

7. DEMAND IN INDIA
 Key determinants
 Size of the population
 Favorable demographics
 Rising income levels
 Consumers' preference
 Marketing strategies
 Consumers' preference
 Instant availability
 Brand consciousness
 Credit facility (use of credit card)
 Fashion cycles (time factor)
63%
37%
Market size
Domestic Exports
1088
1151
1322
1488
1585
1688
2009 2010 2011 2012 2013 2014
Growth (Rs In Billion)
7
Men, 824
Women,
733
Kids, 129
Market Size (Rs in Billion)
Jeans
6%
T-Shirt
11%
Trousers
25%
Shirts
32%
Others
26%
Men’s Wear
7.8
13.6
7.6 8.1 7.7
9.8
Shirts Trousers Saree Salwar Kameez Jeans T-Shirts
CAGR (2009-2014)
% increase
Saree
39%
Salwar-
Kameez
21%
Innerwear
16%
T-Shirts
3%
Others
21%
Women’s Wear

8. INDUSTRY FINANCIAL
 Garment industry players can be classified into
 Manufacture garments for the domestic market.
 Manufacture for the export market.
 Domestic players enjoy better operating & net margins.
 Exporters face intense competition from other Countries.
 Growth in the domestic market was driven by rural
demand.
 Key cost components of companies
 Material costs – 55% (Domestic) 60% (Exporters)
 Employee costs – 12% - 13%
 Selling and distribution expenses – 6% (Domestic) 1%
(Exporters)
 Power costs -
 Other operating costs – 15% (Operating Income)
8
Raw Materials
54%
Other Operating Costs
15%
Employee Costs
13%
Tax provision and
Depreciation
10%
Others
8%
Domestic Cost Structure
Raw Materials
68%
Other Operating Costs
18%
Employee Costs
2%
Tax provision and
Depreciation
8%
Others
4%Exporters Cost Structure
14.8
16.3
17.1
15.9 16.6 17
-11.1
7.4 7.9 8.2 8.5
10.7
2008-09 2009-10 2010-11 2011-12 2012-13 2013-14
Operating Profit margins
Domestic Margin Exporter Margin
8.1
9.7 10 10 9.6 9.7
-17.5
0.4
-3.7
1.6
2.7
5.6
2008-09 2009-10 2010-11 2011-12 2012-13 2013-14
Net Profit Margin
Domestic Margin Exporter Margin
26.1
16.2 17
19.5 20.3
23.2
-14.7
7.4
1.8
12.7
10.4
17.3
2008-09 2009-10 2010-11 2011-12 2012-13 2013-14
Return On Capital Employed
Domestic Margin Expoters Margin 3.9
1.6
1.3 1.2 1.1 1.1
3.7
2.3
1.9
3.5
2.7
3.1
2008-09 2009-10 2010-11 2011-12 2012-13 2013-14
Asset Turnover Ratio (times)
Domestic Margin Expoters Margin

9. EXPORTS
 EU imports growing at 8 per cent y-o-y in first half of 2014
 India's exports to EU expected to grow by 9-10 per cent y-
o-y,
 India's export are expected to grow by 7-8 per cent in 2015
 US imports expected to grow by about 3 per cent in 2014
 India's exports to US are projected to grow by 5 per cent y-
o-y
 Economic recovery resulting in demand growth in US and
EU
9
26
20
5253
36
32
21
43
10
2009 2014 2019(p)
Break up of Exports(%)
US EU Others
8.6 9.5
-3.6 1.7
6.5 5.5
2.8
10.3
-13.6
2.6
9
8
2010 2011 2012 2013 2014e 2015p
Imports vs Exports (EU)
EU's Imports India's Exports
13.1
8.8
-1.1 3.9 3
3.5
9.3
6.6
-8.3
5.6
5.1
5
2010 2011 2012 2013 2014e 2015p
Imports Vs Exports (USA)
US's Imports India's Exports

10. MANUFACTURING
PROCESS
Natural Fibers Synthetic Fibers
Spinning Spun
Yarn
Weaving/Knitting Grey Fabric
Processing
Processed Fabric
Garment
Manufacturing
Distributio
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11. POLICIES FOR THE
INDUSTRY
 Foreign trade policy for the period 2015 to 2020
 1st April 2015 for the period 2015 to 2020.
 A framework for increasing exports of goods and services.
 Provides a framework for increasing exports of goods and services.
 Policy introduced two new schemes :
 Services Exports from India Scheme (SEIS)
 Merchandise Exports from India Scheme (MEIS)
 Granted duty scrips of 2 % for cotton textile and 5 % for
handloom.
 2% inc.entive for man-made fiber yarn and woven and knitted
fabric.
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12. COMPETITIVENESS
FRAMEWORK
 CRISIL Research has identified and analysed 10
factors.
 Broadly divided into three broad parameters:
 Policy parameters.
 Market parameters.
 Efficiency parameters.
 Garmenting is a labor intensive process.
 Second largest cost head.
 Exports also depends on factors
 Market diversification.
 Product diversification.
Factors Considered and weights assigned
Weightage
Policy Parameters 25
FTA and other access policies 15
Supportive govt policies 10
Market Parameters 25
Export markets' diversification 5
Product diversification 10
Growth in key markets 10
Efficiency Parameters 50
Labour cost 20
Scale of operations 10
Infrastructure 10
Availability of raw material 10
Total 100
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13. WORLD MARKET
 Indian exporters have not benefited from quota
elimination
 55 per cent of overall readymade garments
 China
 Bangladesh
 Vietnam
 India
 Indonesia
 Turkey
 Cambodia
475.8
177.5
22.9 18.7 15.4 14.6 7.7 5.8
Country - Wise exports (2013)
Exports($ billion)
13

14. CRISIL ANALYSIS
 China leads RMG trade export trade – 1/3rds of exports
 India's market share has stagnated
 Competitive cost structures
 Labour costs
 Preferential trade agreements
 Labour cost, preferential trade agreements are key factors
 India less competitive than Asian peers
 Does not have free trade agreements
 Small scale of operations is a big drawback
 Archaic labour laws prevailing in the country
 Not able to cater to varying demand through the seasons
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15. CONCLUSION
 India is blessed with ample raw materials
 Only garment exporter in the world that is cotton surplus.
 India has gained exposure to some of the growing markets.
 In 2013 and 2014, orders shifted from Bangladesh to India.
 Enabled a 12 per cent recovery in India's exports.
 India should focus on the following
 Diversify its products across fabrics.
 Expand the scale of operations.
 Improve labour cost structure.
 Reform labour laws.
 Entering into favorable trade agreements with its major export
markets.
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