CP

A
COMPREHENSIVE PROJECT REPORT

ON
INCLUSIVE STUDY OF COTTON TEXTILE INDUSTRY

Submitted to
C K SHAH VIJAPURWALA INSTITUTE OF MANAGEMENT
IN PARTIAL FULFILLMENT OF THE
REQUIREMENT OF THE AWARD FOR THE DEGREE OF
MASTER OF BUSINESS ADMINISTRATION
Under
Gujarat Technological University

UNDER THE GUIDENCE OF
Faculty Guide
Ms. RANJITA BANERJEE
Assistant Professor
Submitted By
Dimpal R. Ramoliya
Samkiti .B. Gandhi
Enrollment No: (0970952024)
Enrollment No: (0970952056)
M.B.A-SEMESTER IV
M.B.A-SEMESTER IV
C K Shah Vijapurwala Institute Of Management

MBA PROGRAMME
Affiliated to Gujarat Technological University
Ahmedabad
April 2011
PREFACE
MBA is a professional course. The main aim of doing MBA is developing the
managerial skills, which helps us to become a good manager in the life. In the
management field one cannot create success stories if he is not a good
learner. One needs to be a good learner to sharpen his knowledge in the
particular field to achieve and attain desired goals and heights.
It gives us an immense satisfaction to study about the Textile Industry. This
precious time of project is fruitful to correlate theoretical concept and industrial
practices. We have tried to highlight the present scenario of the industry and
the aspects related to the textile industry.
This particular project gave us an opportunity to implement what we learnt
within the four walls of classroom. This project analysis not only enabled us to
focus firmly on the current trend but also helped to focus on future changes.
This report is divided in two parts. The first part gives the basic information
about the project, the industry and the second part gives the same for
company within the same industry.
ACKNOWLEDGEMENT
No work is a work of individual. This project is not an exception to it. We owe
a sense of gratitude to the co-operation and support of all those people who
have let me understand what is needed from time to time for completion of
this project. It is very difficult to prepare a project especially when someone is
new for this experience.
Without any help or guidance it is not easy to achieve this given task. So we
would thank all the patrons of this project.
We are thankful to Dr. RAJESH KHAJURIA (Director CKSVIM Institute of
Management) for providing all the necessary facilities in bringing out this
project report.
We are also grateful to Ms. RANJITA BANERJEE, Faculty CKSV Institute of
Management - VADODRA for her continuous and deliberate discussion on the
topic and indeterminable burden taken by her in helping us during the project.
We would also like to thank our parents and all our friends who have helped
us, though indirectly, throughout the project duration and always have been a
source of encouragement.
DECLARATION
We, Dimpal .R. Ramoliya & Samkiti .B. Gandhi, hereby declare that the report
for Comprehensive Project entitled Inclusive Study of Cotton Textile
Industry is a result of our work & my indebtedness to other work publications,
references, if any, have been duly acknowledged.
Place: Vadodara
Date: 30th April, 2011
DIMPAL .R. RAMOLIYA
SAMKITI .B. GANDHI
EXECUTIVE SUMMARY
The main objective of industrial analysis is to assess the prospects of various
industrial groupings. At any stage in the economy there are some industries
which are growing while others are declining. The performance of companies
will depend, among other things, upon the state of the industry as a whole and
the economy. If the industry is prosperous, the companies within the industry
may also be prosperous although a few may be in bad shape. The share price
of the company is empirically found to depend up to 50% on the performance
of the industry and economy.
Indian Textile Industry is one of the leading textile industries in the world.
Indian textile industry largely depends upon the textile manufacturing and
export. It also plays a major role in the economy of the country. India earns
about 27% of its total foreign exchange through textile exports. Further, the
textile industry of India also contributes nearly 14% of the total industrial
production of the country. It also contributes around 3% to the GDP of the
country. India textile industry is also the largest in the country in terms of
employment generation. It not only generates jobs in its own industry, but also
opens up scopes for the other ancillary sectors. Indian textile industry
currently generates employment to more than 35 million people.
Our data is based on the secondary data analysis of the cotton textile
industry, with the help of some published textile journals, articles, textile
institutions and textile related websites.
Further, we have undertaken a detailed study of Arvind Limited, being one of

the leading companies in the industry.
Some of the recommendations given are like Government interventions for
the improvement of the textile sector, improvement of the infrastructure for the
increase in exports, coping up with the challenges faced due to lack of capital
and technology and actions for labor reforms.
Also we have made a comparative study of the strategies implemented by two

major players in the textile industry to achieve the highest market position.
We hope that our study and recommendations may be helpful for further
research/ study in the future to come.
TABLE OF CONTENTS
SR NO.
1
2
3
PARTICULARS
PART- I INDUSTRY STUDY
INTRODUCTION TO TEXTILE INDUSTRY
GROWTH AND EVOLUTION OF COTTON
TEXTILE INDUSTRY IN INDIA
PRODUCT PROFILE OF COTTON TEXTILE
PAGE NO.
1-2
3-10
11-16
INDUSTRY
4
DEMAND DETERMINATION OF THE COTTON
17-43
TEXTILE INDUSTRY
5
MAJOR PLAYERS IN THE INDUSTRY
44-48
DISTRIBUTION CHANNEL OF THE TEXTILE
49-51
INDUSTRY
7
KEY ISSUES AND CURRENT TRENDS IN THE
52-63
COTTON TEXTILE INDUSTRY

8
PESTEL ANALYSIS FOR TEXTILE INDUSTRY
64-67
FINANCIAL ANALYSIS OF THE TEXTILE
68-71
INDUSTRY
10
TEXTILE INDUSTRY ANALYSIS:MICHAEL
72-75
PORTERS FIVE FORCE MODEL

11
FUTURE OUTLOOK OF THE TEXTILE INDUSTRY
76-77
12
RECOMMENDATIONS AND CONCLUSION
78-81
PART-II COMPANY STUDY OF ARVIND LIMITED

13
COMPANY INFORMATION
82-91
14
PRODUCT PROFILE OF ARVIND LIMITED
92-95
15
FUNCTIONAL DEPARTMENTS AT ARVIND
96-132
LIMITED
16
S.W.O.T ANALYSIS
133-134
17
COMPARATIVE ANALYSIS OF TWO MAJOR
135-139
TEXTILE PLAYERS
18
RECOMMENDATIONS AND CONCLUSION
140-141
LIST OF TABLES
PARTICULARS
SR.
No.
TABLE
PG.NO.
NOS.
Price of Cotton Fabric
4.1
24
Income Of Targeted Customer
4.2
27
Major Players Of Textile Industry
5.1
44
Shareholding Pattern Of Arvind Ltd.
15.1
113
Margin Improvement
15.2
114
Current Ratio
15.3
116
Quick Ratio
15.4
118
Cash Ratio
15.5
119
Net Working Capital Ratio
15.6
120
10
Inventory Turnover Ratio
15.7
121
11
Debtors Ratio
15.8
122
12
Total Assets Turnover Ratio
15.9
123
13
Gross Profit Margin Ratio
15.10
124
14
Net Profit Margin Ratio
15.11
125
15
Operating Expense Ratio
15.12
126
LIST OF DIAGRAMS
PARTICULARS
SR.
No.
DIAGRAM PG.NO.
NOS.
Structure Of Textile Industry
1.1
Contribution of Textile Industry in Indian Economy
2.1
The Textile Value Chain
2.2
10
Major World Producer As Cotton Yarn & Fabric
4.1
18
INDIA: Exports Of Textile & Clothing By Use
4.2
18
Net Exports Of Textile & Clothing By Global Region
4.3
19
Exports Of Textile & Clothing By Fiber Type
4.4
20
INDIA: Per Capita Cloth Availability By Type
4.5
21
Cotton Share Of Fiber Use By Global Region
4.6
21
10
Deflated Wholesale Price Index For Textile Products Of India
4.7
25
11
Excise Taxes For Man Made & 100% Cotton Products
4.8
25
12
Share Of Household Income Spent On Textile Of India
4.9
26
13
Supply Chain Of Cotton Textile Industry
6.1
39
14
INDIA: Yarn Production By Type
7.1
60
15
INDIA: Export By type
7.2
60
16
INDIA: Capacity End Use Of Cotton Spinning Center
7.3
61
17
INDIA: Cloth Production By Sector
7.4
62
18
Porters Five Force Model
10.1
72
LIST OF GRAPHS
SR
PARTICULARS
NO.
GRAPH
PG
NO.
NO.
Graphical Presentation Of No. of Share Holders
15.1
114
Comparison Of Current Ratio
15.2
116
Comparison Of Quick Ratio
15.3
118
Comparison Of Cash Ratio
15.4
119
Comparison Of Net Working Capital
15.5
120
Comparison Of Inventory Turnover Ratio
15.6
121
Comparison Of Debtors Ratio
15.7
122
Comparison Of Total Assets Turnover Ratio
15.8
123
Comparison Of Gross Profit Margin Ratio
15.9
124
10
Comparison Of Net Profit Margin Ratio
15.10
125
11
Comparison Of Operating Expense Ratio
15.11
126
10
11
INTRODUCTION
TO
TEXTILE INDUSTRY
12
'Textile' is a Latin word originated from the word 'texere' which means 'to
weave'. Textile refers to a flexible material comprising of a network of natural
or artificial fibres, known as yarn. Textiles are formed by weaving, knitting,
crocheting, knotting and pressing fibres together.
The textile industry is a group of related industries which uses a variety of
natural fibres such as Cotton, kapok, fique, sisal, banana, agave, flax, jute,
kenaf, hemp, ramie, rattan, vine, wool, coir, asbestos, sheep's wool,
cashmere goat hair, mohair goat hair, alpaca hair, horse hair, silk etc. and/or
synthetic fibres such as polyamide nylon, PET or PBT polyester, phenolformaldehyde (PF), polyvinyl alcohol fibre (PVA), polyvinyl chloride fibre
(PVC), polyolefin (PP and PE), acrylic polyesters, aramids, polyethylene (PE),
elastomers, spandex, polyurethane etc.
Subdivision of the textile industry into its various components can be
approached from several angles. According to reference, the classical method
of categorizing the industry involves grouping the manufacturing plants
according to the fibre being processed, that is, cotton, wool, or synthetics. The
modern approach to textile industry categorization, however, involves
grouping the manufacturing plants according to their particular operation such
as crocheting and pressing the fibres, spinning, weaving, knitting, knotting,
apparel making, etc.
13
STRUCTURE OF INDIAN TEXTILE INDUSTRY

DIAGRAM 1.1
14
GROWTH AND EVOLUTION

OF COTTON TEXTILE
INDUSTRY
15
2.1 EVOLUTION OF TEXTILE INDUSTRY

Indian textile traditions are reputed all over the world and admired for their
beauty, texture and durability. India has a diverse and rich textile tradition. The
origin of Indian textiles can be traced to the Indus valley civilization. The
people of this civilization used homespun cotton for weaving their garments.
India had numerous trade links with the outside world and Indian textiles were
popular in the ancient world. Indian silk was popular in Rome in the early
centuries of the Christian era.
Cotton, Muslin, silk and other Indian textiles were some of the most traded
products from India. Each Indian region has its own textile characterizing it
in terms of designs, weaving patterns and techniques, colors and texture.
India is a traditional textile -producing country with textiles in general, and
cotton in particular, being major industries for the country. India is among the
worlds top producers of yarns and fabrics, and the export quality of its
products is ever increasing.
Textile Industry is one of the largest and oldest industries in India. Textile
Industry in India is a self-reliant and independent industry and has great
diversification and versatility.
The textile industry can be broadly classified into two categories, the
organized mill sector and the unorganized decentralized sector.
The organized sector of the textile industry represents the mills. It could be a
spinning mill or a composite mill. Composite mill is one where the spinning,
weaving and processing facilities are carried out under one roof.
The decentralized sector is engaged mainly in the weaving activity, which
makes it heavily dependent on the organized sector for their yarn
requirements. This decentralized sector is comprised of the three major
segments viz., powerloom, handloom and hosiery. In addition to the above,
there are readymade garments, khadi as well as carpet manufacturing units in
the decentralized sector.
16
2.2 GROWTH OF TEXTILE INDUSTRY
1. First Cotton Mills: The first Indian cotton cloth mill was established in
1818 at Fort Gloaster near Kolkata, albeit this mill was a failure.
The second mill which was established by KGN Daber in 1854 is called
the true foundation of modern cotton industry in India. Its name was
Bombay Spinning and weaving Company, Bombay.
2. Bad Effects of Partition: Partition of India in 1947 affected Indian
cotton industry badly. Most of the weavers who were Muslims migrated
to Pakistan. There were 394 cotton mills in India before partition , out of
this 14 mills went to Pakistan. Remaining 380 mills which were left in
India. However 40 % cotton producing area became area of Pakistan.
Thus India was forced to import raw cotton to keep the mills alive.
3. Development Starts: Till the year 1985, development of textile sector
in India took place in terms of general policies. In 1985, for the first
time the importance of textile sector was recognized and a separate
policy statement was announced with regard to development of textile
sector.
In 1993, Govt. of India made this industry license free by its Textile
Development and regulation Order 1993.
4. Cotton Association of India: Cotton Association of India was

established in the year 1921 with a view to facilitate cotton trade and
regulate cotton futures in Mumbai. Since then, CAI has been playing a
pivotal role in development and promotion of cotton across India. In
1952, CAI was granted permanent recognition for conducting futures
trading in cotton throughout India.
5. Cotton Price Index: Cotton Price Index was launched by Cotton

Association of India on the lines of ICE futures in US and Cotlook in
UK. It will be an independent index of cotton prices in india.
17
6. Main Competitors of India: The main competitors of India in the

textile exports are China, Pakistan & Bangladesh.
7. Meera Seth Committee was related to development of Handloom

sector
which
submitted
its
report
in
1997.
This
committee
recommended the establishment of national handloom fund of Rs. 500

crore.
10. TUFS: The Government of India (GOI), Ministry of Textiles (MOT),
introduced Technology Upgradation Fund Scheme (TUFS) for
Textile and Jute Industries on April 1, 1999, for a period of 5 years,
subsequently extended by 3 years to cover sanctions up to March 31,
2007. The Budget for FY 2007-08 has announced further extension of
the Scheme by five years i.e to last til, FY 2011-12. Post-extension, the
Scheme is under revision and sanctions w.e.f April 1, 2007, have been
kept in abeyance under TUFS. Rs. 3140 crore have been alloted in
Union Budget 2009-10 for this scheme.
11. Scheme for Integrated Textile Park (SITP): To provide the

industry with world-class infrastructure facilities for setting up their
textile units, the Scheme for Integrated Textile Park (SITP) was
approved in July 2005 to create new textile parks of international
standards at potential growth centres. As per the target for the 10th
Five Year Plan, 30 Textiles projects have been approved. There has
been overwhelming response to the scheme. Taking into consideration
the response to the scheme and the opportunities for the growth of
textile industry in the quota free regime, the Government of India have
decided to continue the SITP in the 11th Five Year Plan. This will
facilitate additional investment, employment generation and increase in
textiles production. In the Union Budget 2009-10 , Rs. 397 crore
were provided for this scheme.
18
12. National Textile Policy: In the year 2000, National Textile Policy
was announced. Its main objective was: to provide cloth of acceptable
quality at reasonable prices for the vast majority of the population of the
country, to increasingly contribute to the provision of sustainable
employment and the economic growth of the nation; and to compete
with confidence for an increasing share of the global market. The policy
also aimed at achieving the target of textile and apparel exports of US
$ 50 billion by 2010 of which the share of garments will be US $ 25
billion.
13. Strengths of Indian textile Industry: India has rich resources of

raw materials of textile industry.
14. Technology Mission on Cotton: In order to consolidate the
strength in raw material especially the cotton sector and to remove
contamination, the Government had set up the Technology Mission on
Cotton (TMC) on 20th February 2000. The Mission, consisting of four
Mini-Missions, was intended to run for a 5-year term, commencing from
1999-2000. It has since been extended by 3 years to cover the entire
Tenth Plan period, ending with 2006-07
15. Some important Schemes for Handloom Development: Deen
Dayal Hathkargha Protsahan Yojna , Workshed cum housing scheme ,
Weavers welfare Scheme , Health Insurance Scheme for handloom
weavers , The Mahatma Gandhi Bunkar Bima Yojna , The integrated
Handloom Cluster development Scheme
16.Apparel Export Promotion Council: AEPC was incorporated 1978

and is the official body of apparel exporters in India that provides
invaluable
assistance
to
Indian
exporters
as
well
as
importers/international buyers who choose India as their preferred

sourcing destination for garments. Sponsored by the Ministry of Textiles to
monitor garment exports and quotas APEC also provides online trading,
19
news,
quota
circulars,
EXIM.
Twice a year, AEPC showcases the best of India's garment export

capabilities through the prestigious India International Garment Fair,
playing host to over 350 exhibitors displaying the exotic, the haute, the
prt, the contemporary and much more.
17. Decade of manufacturing: The decade 2006-2015 is the decade of
manufacturing for India. The National Manufacturing Competitive Council
(NMCC) has emphasized on the need for focused attention to the
specified sectors of the manufacturing which are labor intensive and also
enjoy competitive advantage. The textile and clothing industry is identified
as one such sector. The Working Group has suggested a plan of action
including higher plan outlay to enable this industry to realize its full
potential during this Plan period.
18. Objectives of the Eleventh Plan for Textile Industry:

1. Build up world class state-of-the-art manufacturing capacities to
attain and sustain predominant global standing in manufacture
and export of textiles and clothing.
2. Facilitate Indian textile industry to grow at the rate of 16 percent
in value terms to reach level of US$ 115 billion (comprising of
US$ 55 billion of exports and US$ 60 billion of domestic market).
3. Attain the 7 percent share in global textile trade by the terminal
year of the Plan period.
20
2.3 CONTRIBUTION OF TEXTILE INDUSTRY IN INDIAN

ECONOMY
Indian textile industry is second largest after China, in terms of spindleage,

and has share of 23% of the worlds spindle capacity. India has around 6% of
global rotor capacity. The country has the highest loom capacity, including
handlooms, and has a share of 61% in world loomage. The Apparel Industry
is one of largest foreign revenue contributor and holds 12% of the countrys
total export.
The Indian Textile Industry has an overwhelming presence in the economic
life of the country. It is the second largest textile industry in the world after
China.
India is the largest producer of Jute, the 2nd largest producer of Silk, the 3 rd
largest producer of Cotton and Cellulosic Fibre / Yarn and 5th largest
producer of Synthetic Fibers/Yarn.
Textile Industry contributes around 4% of GDP, 9% of excise collections, 18%
of employment in industrial sector, and has 16 % share in the countrys
export. The Industry contributes around 25% share in the world trade of cotton
yarn. India is the largest exporter of yarn in the international market and has a
share of 25% in world cotton yarn export market. India contributes for 12% of
the worlds production of textile fibers and yarn.
Contribution of Textile industry in Indian Economy

DIAGRAM 2.1
INDUSTRIAL
PRODUCTIO
N, 14%
GDP, 4%
EMPLOYMEN
T IN
INDUSTRIAL
SECTOR, 18%
COUNTRY'S
EXPORT, 16%
EXCISE
COLLECTION,
9%
Source: Indian Ministry of Textiles
21
2.4 GUJARAT TEXTILE INDUSTRY

Gujarat is one the leading industrial states in India and textile industry in India
in particular had contributed in big way to the industrialization of the state. In
fact,
development
of
the
many
industries
like
dyestuff,
chemicals
Engineering/foundry and cotton farming is solely dependent on these sectors.

The state is well known for development of hybrid cotton, ginning, power
looms, composites mills, spinning units and independent processing houses.
In Gujarat, textile manufacturers use cotton based fabrics in mill sector, major
reason being the availability of the basic raw materials in the state, i.e. cotton.
Similarly many spinning units producing more conservative yarns were
established in the state. The state happened to be more conservative with
cotton textile products mainly in the organized sector, weaving and synthetic
textile in decentralized sector. Surat art silk manufacturers are only exception.
Similarly, independent processing units process synthetic blended and cotton
fabrics. Clusters of processing units are located in Surat, Ahmedabad and
Jaipur, though these production units have good capacity of processing wide
range of fabric.
Ready-made Garment manufacturing and hosiery knitwear unit also exists in
SSI categories. In early 1990s Gujarat saw dramatic change in its textile
industry scenario where quite a few textile mills started manufacturing Denim.
The Arvind Ltd., Ashima Textiles, Soma Textiles, Modern Denim, and Arvee
denim started manufacturing denim. So many mills at a time fetched a new
name for Ahmedabad Denim city of India whereas city of Surat became Silk
city of India.
22
The Textile Value Chain

DIAGRAM 2.2
23
The products of the textile industry can be classified into four

main categories
FIBRES
YARN
FABRIC
COTTON
COTTON
COTTON
FABRIC
WOOL
WOOL
WORSTED/
WOOLLEN
FABRIC
SILK
SILK
SILK CLOTH
SYNTHETIC
SYNTHETIC/
MANMADE
SYNTHETIC/
MANMADE
FABRIC
GARMENT
TECHNICAL
TEXTILES
Indian textile industry can be divided into several segments, some of which
can be listed as below:
Cotton Textiles
Silk Textiles
Woolen Textile
Synthetic/ Manmade Textiles
Technical Textile
Readymade Garments
Hand-crafted Textiles
Jute and Coir
From the above mentioned products we are going to focus on the Cotton
Textiles for the industry study which has the largest share in the Indian textile
industry.
24
PRODUCT PROFILE
OF
COTTON TEXTILE
25
PRODUCT PROFILE OF COTTON FABRIC/TEXTILES

Introduction
Cotton fabric is made from the cotton fibres. Cotton is a soft, fluffy
staple fiber that grows in a boll, or protective capsule, around the seeds of
cotton plants of the genus Gossypium. The plant is a shrub native to tropical
and subtropical regions around the world, including the Americas, Africa,
India, and Pakistan.
The fiber most often is spun into yarn or thread and used to make a soft,
breathable textile, which is the most widely used natural-fiber cloth
in clothing today.
There are some unique fibre properties which makes the cotton fabric most
preferable fabfic for a broad range of customers. Some of them are as
described below:
Fiber properties
Property
Evaluation
Fairly uniform in width, 12-20 micrometers; length

Shape
varies from 1 cm to 6 cm ( to 2 inches); typical

length is 2.2 cm to 3.3 cm ( to 1 inches).
Luster
Tenacity
high
(strength)
Dry
3.0-5.0
g/d
Wet
3.3-6.0 g/d
Resiliency
low
26
Density
Moisture
raw:
1.54-1.56 g/cm
absorption
conditioned 8.5%
saturation
mercerized:
15-25%
conditioned 8.5-10.3%
saturation
15-27%+
Dimensional stability
good
Resistance
to
acids
damage,
alkali
resistant;
organic
solvents high
weaken
no
harmful
effects
to
most
weakens
fibers.
resistance
sunlight
Prolonged
microorganisms
Mildew and rot-producing bacteria damage fibers.
insects
Silverfish damage fibers.
Thermal
reactions Decomposes after prolonged

heat temperatures of 150C or over.
to
exposure
fibers
exposure
to flame
Burns readily.
Examples of Items Made from Cotton:

All types of apparel in 100% cotton and in blends with other fibers
Bedding products
Draperies and Curtains
Upholstery fabrics
27
to
Rugs
Wall coverings
Medical, surgical and sanitary supplies
Industrial abrasives
Book bindings
Handbags and luggage
Shoes
Tobacco cloth
Wiping cloth
Different types of cotton cloth require different type of the fibre, which is based
on the count of the fibre and the process used to convert fibre into yarn.
Cotton Grading: There are several major types of cotton such as American
Pima cotton, China, Egyptian, Indian and Sea Island.
Yarn Grading: Cotton yarn may be distinguished based on the yarn count,
e.g. 10s, 20, 30s, 36, 40s etc. Also cotton yarn may be classified as carded
yarn and combed yarn, and based on the yarn used the fabric may be cotton
fabric and the combed fabric.
Different Cotton Fabric Types
Cotton is a natural fiber that's fundamental to the textile industry because it is
so versatile. It is absorbent, resistant to high temperatures and can be dyed
easily. Different manufacturing methods can alter the appearance and texture
of the fabric.
Types of Cotton Fabric
Harvested cotton fiber is taken to mills, spun into yarn and made ready for
fabric manufacturing. Cotton fabric comes in three types: knitted, woven and
non-woven.
Woven Cotton
A loom and shuttle weave yarn into a piece of fabric. Yarn that is strung
vertically on the loom is the warp. The yarn that passes in and out horizontally
28
using the shuttle is the weft. Machines mimic this action to produce large
sheets of fabric in a short period.
Types of Weave
Cotton
weaves
come
in
three
types:
plain,
twill
and
satin.
Plain weave fabric is made by taking the weft and threading it over and under
each
warp.
Gingham
and
chambray
are
produced
that
way.
Twill weave is made by weaving the yarns to form a raised, diagonal pattern.
This fabric is strong and sturdy. Denim, gabardine and herringbone are
produced that way.
Satin weave is made using less yarn, leaving only the warp or the weft to
stand out on one side of the fabric. The fabric is smooth, with a shiny surface
on one side and a matte surface on the other like cotton sateen.
Knitted Cotton
Knitted cotton is made by machines with needles that grasp the yarn to create
a series of stitches that form the fabric. Cotton fabric made using this method
is soft and stretchable and is used for T-shirts.
Non-Woven Cotton
Non-woven cotton fabric such as felt is created using chemicals or heat to

hold the fibers together. This method is used to create cotton pads, bandages,
diapers and filters.
Characteristics of Cotton
Aesthetics
Cottons aesthetics vary depending on the applied treatments, the fiber
blend (if blended) and the grade of the fiber. A typical 100% untreated
cotton fabric has a pleasant matte luster, a soft drape and a smooth
hand.
Comfort
Cotton fabrics are very comfortable to wear due to their soft hand and
other
characteristics.
Cotton
29
fabrics
have
excellent
absorbing
capabilities. Cotton garments absorb perspiration, thus keeping the

person more comfortable.
Appearance Retention
Cotton wrinkles very easily. However, there are many cotton garments
on the market that have been treated with wrinkle resistant finishes.
These finishes reduce the need to iron cotton clothes. Consequently,
our fast paced society can look good in cotton garments without
investing a lot of time in preparing them.
Care
Always read the care label in the product. Cotton products can typically
be machine washed and dried. Colored cotton garments retain their
color longer if they are washed in warm or cool water. Cotton fabrics
can be bleached but too much bleaching could weaken the fibers.
Acids harm cotton fabrics; consequently, juice stains should be treated
immediately with cold water. Sunlight does harm cotton by causing it to
oxidize and turn yellow. Fabrics that are 100% cotton do shrink if they
have not been treated with a durable-press or a shrinkage-resistant
finish.
30
DEMAND DETERMINATION
OF THE
31
DEMAND
Demographic trends in India are changing, with increase in disposable
income levels, consumer awareness and propensity to spend.
According to NCAER data, the Consuming Class, with an annual
income of US$ 980 or above, is growing and is expected to constitute
over 80 per cent of the population by 2009-10.
There is a change in the consumer mindset that has led to a trend of
increased consumption on personal care and lifestyle products as well
as branded products. These trends offer great growth opportunities for
companies across various sectors, including textiles.
Supporting the increasing demand for consumption is the revolution
taking place in Indias retail sector. Organized retail is playing a key
role in structuring the Indian domestic market, reinforced by the rapid
rise of supermarkets, malls, theme stores and franchises across urban
India.
India thus presents a large and vibrant market for textiles and apparels,
with a potential for sustained growth.
Market of cotton textile is very wide because products of cotton textile are
demanded throughout the country. Also as India is agricultural country where
cotton is cultivated in various states and places, demand for cotton is very
high in India.
India is one of the largest consumers of cotton in the world, ranking
second to China in production of cotton yarn and fabrics and first in
installed spinning and weaving capacity (dia. 4.1).
Although
domestic
demand
accounts
for
most
Indian
cotton
consumption, growth in textiles and clothing exports is outpacing

domestic demand and is an increasingly important determinant of
overall cotton and fiber demand in India.
Relatively strong recent growth in the domestic use of manmade fibers
is also shaping demand for cotton.
In addition, government policy interventions that influence raw material
and product prices, industry structure, and technology significantly
32
affect both the growth in domestic demand for cotton and the
competitiveness of Indias textile export sector. These policies are
being reformed, with potentially large impacts on growth in Indian
cotton demand.
DIAGRAM 4.1
Trends in Export Demand

Exports of yarns, textiles, and clothing to the world market are an
increasingly important source of derived demand for Indian cotton.
Since 1992, Indian textile and clothing exports have grown 7.7 percent
annually, reaching $13.4 billion in 2002 and accounting for 4 percent of
global trade in this sector (fig 4.2).
In 2002, India was the fifth-largest global exporter and the second
largest net exporter of textiles and clothing. Indias net exports of $12.1
billion in 2002 were, however, far below those of China ($54.9 billion)
(dia. 4.3).
DIAGRAM 4.2
33
DIAGRAM 4.3
34
Indias exports of textiles and clothing are expanding at nearly twice the
rate of domestic demand.
Export growth is likely to quicken as a result of the recent elimination of
the MFA quotas that served to constrain Indias exports to the United
States and the European Union (EU). The MFA quotas were most
restrictive of trade in clothing, particularly cotton-based clothing, which
accounts for a large share of Indias textile and apparel exports (dia.
4.4).
DIAGRAM 4.4
Indias success in the global textile marketplace hinges greatly on the pace of
internal market reforms and its ability to achieve international competitiveness
in its heavily regulated spinning, weaving, and apparel sectors.
Trends in Domestic Consumption
Domestic fiber demand has accelerated along with stronger growth in
the Indian economy (dia. 4.5). Major reforms in domestic and trade
policies during 1991-93 have led to faster growth in per capita incomes
in India, helping boost annual growth in fiber consumption to 4.9
percent since 1990.
As a result of this rapid growth, manmade and blended fabrics now
account for the bulk of household cloth purchases.
Between 1991 and 2003, the share of manmade and blended products
in household cloth purchases rose from about 38 percent to 54
percent. However, despite the rapid growth in use of manmade fibers,
35
cotton continues to account for a relatively large share of total

consumption in India, compared with other developing countries, as
well as with developed and transition economies (dia. 4.6).
DIAGRAM 4.5
DIAGRAM 4.6
The demand determination of cotton can be recognized with the help of

various factors such as, Price, Income of targeted customers, Penetration
level, Availability of finance, Replacement demand, Promotion schemes, and
Excise duty Structures.
4.1 PRICE OF COTTON FABRICS

The price of cotton fabric depends on the price of the cotton fibres and
cotton yarn.
Again the price of cotton fibre is depended on the type of the cotton
which varies according to the production area and the staple length of
the fibre.
The price of cotton yarn depends upon the process followed for the
manufacturing of the yarn from fibre i.e. carded yarn or combed yarn,
and the count of the yarn.
36
Depending upon these cotton fibre and yarn prices the cotton fabric
prices are depended.
Note: The latest cotton and yarn prices are mentioned in Annexure 1
The fabric prices are also depended on the weave of the fabric, the
construction, the finish of the fabric i.e. dyed or printed and many other
factors.
Some of the examples are based on the characteristic of the fabric are
as followed:
1. Category: 100% Cotton Fabric, 30's Count Fabric, 58 Inch Width Fabric,
Dyed Fabric, Twill Fabric
Technical Specification: C30*30 / 124*64 / 57/58 Inch 2/1 Twill Weave
Product Model Name: 30s Cotton Twill
Material: 100% Cotton
Yarn Type: Combed
Yarn Count: 30*30
Width: 57/58 Inch
Weave: 2/1 Twill Weave
Finish: Regular Soft Finish, Hand Feel
Price Ex-Ahmadabad: 1.85 USD per Meter
2.Category: 100% Cotton Fabric, 40's Count Fabric, 44 Inch Width Fabric,
Dyed Fabric, Liza Finish, Poplin Fabric
Technical Specification: C40*40 / 132*72 / 43/44
Product Model Name: Activa 44 / Peach Poplin
Yarn Type: Combed, Compact
Yarn Count: 40*40
Width: 43/44
Finish: Liza Finish / Peach Finish
37
Dyed Fabric, Poplin Fabric
Technical Specification: C40*40 / 132*72 / 57/58 Inch
Product Model Name: A-star / Compact Cotton Poplin
Yarn Count: 40*40
Width: 57/58 Inch
Finish: Bio Wash / Bio Polish / Bio Finish
Dyed Fabric, Twill Fabric
Technical Specification: C40*40 / 132*72 / 57/58 Inch 2/1 Twill Weave
Product Model Name: i 20 / Fine Cotton Twill
Yarn Count: 40*40
Width: 57/58 Inch
Weave: 2/1 Twill Weave
Finish: Bio Wash / Bio Polish / Bio Finish
Price Ex-Ahmadabad: 2.12 USD per Meter.
These are the prices for export.
38
Some of the other cotton fabric prices for domestic sale are as in the following
table:
PRICE OF COTTON FABRIC
TABLE 4.1
Source: Apparel India 2009
There are variety of cotton fabrics depending upon the type of yarn,
construction and finish applied on them. Hence there are different
ranges of prices in which cotton textiles are available.
These varied ranges in prices of the fabric attract different class of
people.
Role of Prices in Consumer Demand:

Most Indian consumers are highly price sensitive. The average Indian
household spends about 55 percent of its income on food and, as a
result, spends discretionary income carefully.
Declining real prices for yarns and textiles have likely stimulated growth
in demand for textile products since the early 1990s, particularly those
made of manmade fibers (dia.4.7).
Real prices of cotton yarns and textiles have generally declined since
the mid-1990s primarily due to lower prices for raw cotton
39
DIAGRAM 4.7
Policies Affecting Consumer Prices

The principal government policies affecting consumer prices for textile
products are excise taxes charged on products as they leave the
factory and import tariffs charged on raw and intermediate products
used in manufacturing.
Overall, excise tax rates on manmade and blended products have
been reduced nearly 40 percent since the mid-1990s, while taxes on
cotton goods have been reduced about 25 percent (dia. 4.8).
DIAGRAM 4.8
40
Tariff and excise tax policies that have discriminated against manmade
fibers have played a key role in shaping relative consumer prices and
consumption patterns for cotton and manmade products.
4.2 INCOME OF TARGETED CUSTOMERS

Demand is, however, strongest in rural households, which account for
about 78 percent of Indias population.
In rural households, where average incomes are about half those in
urban areas, and in urban low-income households, manmade fabrics
are preferred because of their durability, as well as their generally low
cost.
Overall growth in fiber consumption in India is also affected by the
large share of household income allocated to textile purchases.
According to government data, Indian households spent an average of
17 percent of their income on textiles in 1997, a share that has
increased from 12 percent since 1990 (dia. 4.9). Urban households
spent about 22 percent of income on textiles in 1997, compared with
15 percent for rural households.
DIAGRAM 4.9
41
The higher urban share partly reflects larger purchases of higher value
fabrics and readymade goods in urban households, compared with
rural households.
The demand of the cotton fabrics is very high in India, and hence the
cotton market attracts a large group of customers.
As mentioned earlier there is a broad range of cotton fabrics available
depending upon the quality of the fabric the cotton market has
customers of all level of classes starting from lower middle class
people to higher upper class people.
Depending upon the income level the customers prefer the cloths and
apparels of non branded products, private branded products and
branded products as per shown in the table
INCOME OF TARGETED CUSTOMERS
TABLE 4.2
Consumer Classes
Annual Income in Rs
Types
of
cloths
preferred
The Rich
Rs. 215,000 and more
Branded
and
international
branded
cloths
The Consuming Class
Rs 45- 215,000
Branded cloths
The Climbers
Rs. 22-45,000
Branded
and
private
branded cloths
The Aspirants
Rs. 16-22,000
Private branded cloths

and non branded cloths
The Destitute
Below Rs. 16,000
Non branded cloths
Source: NCAER
The data about the consumer classes is taken from National Council of
Applied Economic Research (NCAER).
42
These five consumer classes differ in their ownership patterns and

consumption behavior of the textile fabric and apparel.
These show that the demand of cotton fabrics is distributed among
almost all level of income customers.
4.3 PENETRATION LEVEL

The penetration of the cotton fabrics in India is spread almost in all
regions including the urban and rural areas as cotton is the primary
fabric in India. Also because of the characteristics of the cotton fabric, it
attracts a large group of customers. Hence it has its presence in whole
of the India.
However, Indias penetration in world major clothing markets is not very
impressive in post quota period in comparison to China and other
South East Asian nations. While India has a strong position in the
entire chain of garment manufacturing with backward linkages contrary
to the other competing countries, it would not be out of context to
mention here that only top twenty clothing items occupies 3/4th of the
world clothing trade. Therefore, there is a need that India devises a
strategy to increase its share in the worlds major markets.
Market Penetration for Enhanced Market Share

The EU and the US are the largest textiles and clothing markets of the
world. Japan, Canada, CIS countries and UAE are the other major
markets. Indias two third textiles and clothing exports go to the EU and
the US markets. However, there are huge potentials to increase Indias
share in these markets.
In addition to achieve the target of 50 billion by 2011 for textiles and
clothing exports, India needs to aggressively penetrate in the other
markets also like Japan, Canada, South Africa, CIS countries, UAE and
other erstwhile non quota countries where there are large potentials.
43
4.4 AVAILABILTIY OF FINANCE

The Ministry of Textiles came into independent existence in 1989 after its
separation from the Ministry of Commerce. Textile Industry occupies a unique
position in our economy and psyche.
The Ministry of Textiles has come up with many schemes which makes
finance availability for the textile industry easy.
MAJOR SCHEMES:
Technology
Upgradation
Fund
Scheme
(TUFS),
Textile
Workers
Rehabilitation Fund Scheme (TWRFS), Scheme for Integrated Textiles Parks

(SITP), Technology Mission on Cotton (TMC), Schemes for Development of
Handlooms, Schemes For Development of Handicrafts, Schemes For
Development of Sericulture, Development of Mega Clusters for Handloom,
Handicraft & Powerloom, Wool, Powerloom, Jute Technology Mission, HRD
Scheme, Technical Textiles etc.
SCHEMES FROM MIN OF TEXTILES
1. Technology Upgradation Fund Scheme (TUFS):
Ministry of Textiles has launched a Technology Upgradation Fund

Scheme (TUFS) for Textile and Jute Industries, w.e.f. 1.4.1999 for a
period of 5 years, i.e., up to 31st March 2004 which was subsequently
extended upto 31.3.2007, i.e., till the end of tenth five year plan.
Benefits under the scheme:
5% interest reimbursement of the normal interest charged by the
lending agency on RTL.
OR
5% exchange fluctuation (interest & repayment) from the base rate on
FCL.
OR
44
15% credit linked capital subsidy for SSI sector.

OR
20% credit linked capital subsidy for powerloom sector (An option for
front ended subsidy provided w.e.f. 1st October, 2005).
OR
5% interest reimbursement plus 10% capital subsidy for specified
processing machinery.
Technology levels are benchmarked in terms of specified machinery.
There is no cap on funding under the scheme.
The identified sectors in the textile industry, including spinning, cotton
ginning & pressing, silk reeling & twisting wool scouring & combing,
synthetic filament yarn texturising, crimping and twisting, manufacturing
of viscose filament yarn (VFY) / viscose staple fibre (VSF),
weaving/knitting including non-woven and technical textiles, garments,
made-up manufacturing, processing of fibres, yarns, fabrics, garments
and made-ups and the jute sector are eligible to avail of these
concessional loans for their technology upgradation requirements.
Investments in common infrastructure or facilities by an industry
association, trust or cooperative society and other investments
specified are also eligible for funding under the scheme. Improved
metal frame hand looms used by the handloom weavers have also
been covered under the scheme.
IDBI, SIDBI and IFCI were the nodal agencies for Non-SSI textile
sector, SSI textile sector and Jute sector respectively. However, w.e.f.
1st October, 2005, 13 additional nodal banks have been appointed
under TUFS for determining eligibility & releasing the subsidy for the
cases financed by them.
Funding Pattern:
The total project cost shall be funded through a mix of Equity/Grant
from the Ministry of Textiles, State Government, State Industrial
45
Development Corporation, Industry, Project Management Consultant

and Loan from Banks/ Financial Institutions.
The Government of Indias (GOI) support under the Scheme by way of
Grant or Equity will be limited to 40% of the project cost subject to a
ceiling of Rs. 40 crore. GOI support under the Scheme will be generally
in the form of grant to the SPV unless specifically decided to be equity.
However, the combined equity stake of GOI/State Government/State
Industrial Development Corporation, if any, should not exceed 49%.
However, GOI support will be provided @90% of the project cost
subject to a ceiling of Rs. 40 crore for first two projects in the States of
Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland,
Tripura, Sikkim and Jammu & Kashmir.
Release of Funds: The following schedule will be adopted for release
of GOI assistance to the SPV:
i) 1st installment of 30% of the total Government of India (GOI) share will be
released in two parts.
1st part of 1st installment representing 10% of the total GOI share will be paid
to the SPV subject to fulfillment of following criteria:a) Establishment of SPV.
b) Inclusion of one representative of Government of India and one
representative of the PMC on the Board of Directors.
c) Land to be in the possession of SPV.
d) Issuance of shares by SPV to members in proportion of area allocable to
them.
e) Execution of share holders agreement.
f) Establishment of escrow account in a nationalized bank.
g) Recommendation of PMC confirming the above points (a) to (f).
h) DPR duly validated by PMC and approved by the PAC.
2nd part of 1st installment representing 20% of the total GOI share will be
paid to the SPV subject to fulfillment of following criteria:-
46
a) Utilization Certificate for the 1st part of the 1st Installment.

b) Details of equity contribution.
c) Sanction Letter for loan Component, in case SPV is taking term loans.
d) Award of contracts worth at least equivalent to 30% of the total project cost
excluding the land cost.
ii) 30% of the total GOI share after the utilization of the 1st installment and
after the proportionate expenditure (i.e. 1.5 times of the GOI share released)
has been incurred by the SPV. Utilization Certificate (UC) of the 1 st Installment
shall be submitted by the SPV at the time of making claim for the 2 nd
Installment.
iii) 30% of the total GOI share after the utilization of the 2 nd installment and
after the proportionate expenditure (i.e. 1.5 times of the GOI share released)
has been incurred by the SPV. Utilization Certificate (UC) of the 2 nd
Installment shall be submitted by the SPV at the time of making claim for the
3rd Installment.
iv) 10% of the total GOI share will be released after successful completion of
the project and after 25% of the units in ITP start their production. The UC of
the 3rd Installment shall also be submitted by the SPV at the time of making
claim for the final Installment.
SPVs would forward their claims to the MOT after verification by PMC
supported by documents such as Utilization Certificate in the format of
GFR 19A, Pre-Receipt Bill, Surety Bond etc., as required under the
relevant rules.
Separate accounts shall be kept by SPV for the funds released by GOI,
which shall be subject to audit by the Comptroller & Auditor General of
India.
In the event of an SPV withdrawing from executing a project before
utilizing the
Government assistance, then the SPV should immediately return the
Government assistance together with the interest accrued thereon, if
47
any. Payment of penal interest by the SPV shall be decided by the

Project Approval Committee (PAC) on case to case basis.
User charges would be fixed for various facilities and services by SPV.
There shall be full recovery of Operational & Maintenance (O&M) costs
through user charges.
The recovery by way of lease rentals shall accrue to the SPV for
plough back for future expansion.
Budget provision of not exceeding Rs.1 Crore per annum shall be
made for administrative expenditure, evaluation, studies, research &
seminars, information dissemination, publicity, and for putting in an IT
enabled monitoring mechanism, etc
Schemes for Decentralized Powerloom Sector
1. 20%Credit Linked Capital Subsidy Scheme for powerloom sector under

TUFS
Weaving is a thrust area and occupies a special place under the Technology
Upgradation
Fund Scheme. TUFS helps the small scale powerloom units by providing an
additional option of availing credit linked 20% capital subsidy upto a cost of
Rs. 1.00 crore with the facility to obtain credit from an enlarged credit network
that includes all cooperative banks and other genuine non-banking financial
companies (NBFCs) recognized by the Reserve Bank of India.
2. Powerloom Service Centres (PSCs)

44 Powerloom Service Centres (PSCs) are located in major powerloom
concentration areas in different States and provide a variety of technical
services that include training, testing facilities, technical consultation, design
development and diversification etc to powerloom units and weavers.
48
3. Support to Computer Aided Design Centres

Similar to the PSCs, the CAD Centres also play an important role in
developing new computer generated textile designs. At present there are 17
such Centres to give support to the powerloom sector all over the country.
Financial assistance in the form of a grant-in-aid of Rs. 6.75 lakh per CADC
per annum is provided by the Ministry.
4. Group Work shed Scheme

With a view to improve the working environment and enable powerloom
workers to obtain higher productivity, the Central Government has approved a
Group Work shed Scheme, to provide subsidy for construction of worksheds,
limited to 25% of the unit cost of construction subject to a maximum of Rs.80/per. sq. ft. In order to improve other infrastructure facilities the scheme
envisages a link with the Textile Centre Infrastructure Development Scheme
(TCIDS), which provides central assistance for improving critical infrastructure
in existing or emerging textile centers.
5. Group Insurance Scheme for Powerloom Weavers

A Group Insurance Scheme for Powerloom Weavers has been introduced in
association with the Life Insurance Corporation of India since July 2003. This
Scheme has two components-Janashri Bima Yojana & Add on GIS for Death. Under Janashri Bima Yojana
powerloom workers aged between 18 to 59 years and below the poverty line
(BPL) or marginally higher than the BPL are eligible for an insurance
coverage of Rs. 50,000 on accidental death / permanent disability; Rs. 25,000
on permanent partial disability; or Rs. 20,000 on natural death / partial
disability. The annual premium of Rs. 200 would be shared by the Central
Government, the Beneficiary, and LIC in the ratio of Rs. 60, 40 and 100
respectively. Under the Add on Scheme, additional insurance coverage of Rs.
30,000 on natural as well as accidental death is made available at annual
premium of Rs. 180, which would be shared equally by Central Government
and Beneficiary. On paying, a weaver can avail cumulative benefits of both
the Schemes.
49
Also the big companies in the industry helps with financial aid to other small
companies by outsourcing their products from them by initially giving them
some financial aid hence helping them to sustain and grow in the industry.
Hence there is a good amount of Finance availability to the textile industry
which is attracts more entrepreneurs to start textile business and hence
increase the demand of the textiles in India.
4.5 REPLACAMENT DEMAND

A demand representing replacement of items consumed or worn
out which already exist in the market is known as the replacement
demand.
The major end uses for cotton fibre include wearing apparel, home
furnishings, and other industrial uses (such as medical supplies). The
cotton fibre is made primarily into yarns and threads for use in the
textile and apparel sectors (wearing apparel would account for
approximately 60% of cotton consumption). Cotton is also used to
make home furnishings, such as draperies (eventually the third major
end use) or professional garments (about 5% of cotton fibre demand).
Besides traditional uses and as a result of different finishing processes
that have been applied to the cotton fibre, cotton is made into specialty
materials suitable for a great variety of uses. Cotton fabrics with
specialty applications include, for example, fire-proof (flame resistant)
apparel, which is suitable for professional uses and provides effective
protection against potential risks associated with high temperature and
particularly flashover. Flame resistant cotton fabrics are treated with
chemicals. Without chemical treatment, cotton would burn up releasing
very strong heat, just like the major part of synthetic fibres, which melt
when they are exposed to high temperatures.
Cotton also finds specialty applications in medical and hygienic uses.
Most notably, the fibre is used to manufacture hydrophile cotton (cotton
wool), compress, gauze bandages, tampons or sanitary towels, and
cotton swabs.
50
Cotton fibres and cotton fabric has found its own place in almost all the
areas where it can be utilized effectively.
Also cotton fabrics have replaced the synthetic fabrics in many areas
owing to its strength and unique characteristics.
So cotton has replaced many products and it may prove to be a better
replacement for other products also in coming future because of
advanced technology and Research and Development.
4.6 PROMOTION SCHEMES

Promotion is an attempt to 'Influence'. The promotion of textile goods in the
domestic market is done through:
1.Promotional Activities by the Advertising through, Television Ads, Radio
announcements, telemarketing, newspapers, direct mails, etc.
2. Promotion through the media.
3.Other promotional activities are: Hoardings, Mall promotions, Event
promotion: taking advantage of upcoming festivals, concerts, events,
Promotional activities like gifts, discounts, free offers, coupons.
There are many ways to attract the customers.
But India being a large exporter of the textile goods and products the main
focus is on the export promotion schemes. The Ministry of Textiles have come
up with many schemes for the export promotion of textiles which increases
the demand of textiles in india.
Export Promotion Measures
In order to encourage upgradation of Textiles Sector and to give a fillip to
exports of Textiles products, some of the important facilities available are as
follows:
51
i)
Export Promotion Capital Goods (EPCG) Scheme: The facility to

import capital goods under EPCG Scheme at 5% concessional rate
of duty.
ii) Advance Licensing Scheme: With a view to facilitating

exporters to access to duty-free inputs under the scheme, standard
input-output norms for about 300 textiles and clothing export
products have been prescribed.
iii) Duty Exemption Pass Book (DEPB) Scheme: DEPB credit
rates have been prescribed for 79 textiles and clothing products.
The nomenclature and rates for DEPB entries pertaining to certain
textile products have been rationalized.
iv) Special Import License: The special import licenses (SIL),
which are valid for import of items appearing in ITC (HS)
classification of Export and Import items subject to payment of
normal customs duty, are available to (a) Deemed Exports, (b)
Export Houses, (c) companies holding ISO-9000 series or
equivalent standards; at the fixed rates.
v) 100% EOU/FTZ Scheme: Under the scheme, units undertaking
to export their entire production of goods can be set up. They are
entitled to import of all inputs as well as capital goods on a duty-free
basis. There are now more than 300 EOUs manufacturing textiles
including yarn and clothing. Relaxation from count/domestic cotton
use restrictions to 100% EOUs producing cotton yarn have been
extended for the year 2000.
vi) Technology Up-gradation Fund Scheme:- Under this scheme
an amount of Rs.4201.15 crores involving 803 applications has
been sanctioned up to 31st January, 2001. Out of which, an amount
of Rs.2236.52 crores stands disbursed to 560 applicants.
52
vii) Duty Drawback Scheme:-The objective of the system is to

reduce the burden of indirect taxes on exports and make them more
competitive in the international market.
viii) Duty Free Import of Trimmings and Embellishments: Earlier

seven items of trimming and embellishments namely labels, tags,
stickers, buttons, printed bags, belts and hangers were allowed to
be imported on a duty-free basis by the bonafide garment
exporters. Vide Notification dated 8.11.1999, imports of lining and
inter-lining materials used by exporters have also been allowed duty
free. On a proposal made by Ministry of Textiles, Dept. of Revenue
extended the facility for duty-free imports to 13 more items of
trimming and embellishments subject to value cap of 3% of the FOB
value of textile garments or leather garments exported during the
preceding financial year, vide Notification dated 19.4.2000.
ix) The list of Garment making and processing machineries allowed

for import on concessional rate of 5% duty is available for 159
number of textile machinery items.
x) Cotton Technology Mission on Cotton (TMC): Technology

Mission on Cotton has been launched with objectives of research,
dissemination of technology to farmers, improvement in marketing
infrastructure and modernization of ginning and pressing factories
to increase the productivity and quality of cotton.
xi) Liberalization of FDI Policy: Government has been taking
measures from time to time to liberalize policy for foreign direct
investment inter-alia in the textile sector. Recently, Government has
allowed foreign equity participation up to 100%, through automatic
route, in the textile sector with certain exceptions.
Note: The FDI in recent years is as in annexure 2
53
xii) Human Resource Development: Attention has also been paid

to Human Resource Development in the textile sector.
Towards this end, particular mention deserves to be made of National
Institute of Fashion Technology (NIFT) which is imparting training to Fashion
Designing and Fashion Technologists to cater to the human resource
requirements of garment industry.
Ministry of Textiles is also concerned over the need to improve the quality of
textile training institute in the country. Therefore, a Nodal Centre for
Upgradation of Textile Education has been established at the Indian Institute
of Technology, Delhi with funding from the Ministry of Textiles.
Apparel Export Promotion Council is constructing an Apparel International
Mart at Gurgaon for which partial assistance is being given by the Ministry of
Textiles from Public Deposit Account maintained by the Govt. of India out of
EMD/BG forfeiture from the garment exporters as per the relevant Garment
Exports Entitlement Policy.
xiii) High Powered Export Promotion Board (EPB)

Government has set up a high powered Export Promotion Board (EPB) under
the Chairmanship of the Cabinet Secretary. The basic objective of the EPB is
to co-ordinate efforts of all concerned Ministries so as to create a more
favorable environment for maximizing export earnings.
xiv) Constitution of Exporters Grievance Redressal Cell to co-ordinate

the disposal of complaints/petitions/requests:- The High Level Committee
on the Redressal of Grievances of the exporters met periodically under the
Chairmanship of Secretary (Textiles). The Committee consisting of the
representatives from the Department of Revenue, Ministry of Finance, DGFT/
Ministry of Commerce and the Textile Export Promotion Councils discussed
54
various points raised by exporters. Appropriate decisions on the issues are

being taken by the Committee to resolve the difficulties of the exporters.
The promotion schemes for handicraft and handloom products are also been
developed.
4.7 EXCISE DUTY STRUCTURES

The structure is heavily skewed. Contribution of the industry to total excise
revenue- at 10%- is disproportionately higher than its 4% contribution to the
GDP. Moreover, the excise has a very narrow base, since grey woven fabrics,
knitted fabrics, process houses not using power etc. are all exempted. Both
these features of the excise duty structure of textile industry go against the
tenets of Chelliah Committee reforms that favored "moderate rates with
broader bases".
Moreover, lop-sided excise structure has artificially intervened to keep the
synthetic fabric expensive relative to cotton, since the govt. has all along been
of the view that synthetics are for the richer segment. The fact, however, is
that it is cotton which is a rich man's fabric. As a result, while the international
consumption of synthetics grew to over 50% of all fibres, Indian consumption
has been heavily- at 70%- in favor of cotton fibre. This has also deprived India
from partaking in the rapidly growing area of technical and industrial textiles.
The govt. must therefore, correct this lopsidedness in the excise duty
structure, guided by the principles of Chelliah Committee recommendations.
With a gradual recovery in the global economy, there are indications that
textile industry can return to the growth track. However, this will be contingent
upon a helpful policy framework being provided for the sector.
CITI Recommendations
Confederation of Indian Textile Industry (CITI) - the apex chamber of the
textile and allied industries of India, covering the entire textile value chain from
55
yarn to garments and also textile machinery has hence put forth the industry
suggestions for the Government for its perusal in forthcoming Union Budget
2010.
The Industry requests Government to remove mandatory excise duty of
8% on Man Made Fiber so as to have level playing field and utilization
of man-made fibers.
As the domestic industry is supplying machinery of global standards
only in the case of ring frames for spinning, that too excluding ring
frames for compact spinning; Textile Industry has to import nearly 70%
of the textile machinery and 100% of garment machinery. In such
circumstances Industry suggests abolition of excise and customs duty
on all machinery including ring frames for compact spinning but
excluding other ring frames.
The Textile industry suggests exemption of textile industry from
customs and excise duties for all liquid fuels used by textile and
clothing units for captive power generation, on the back of acute power
shortage in most of the textile producing areas of the country.
As a one-time measure, the industry seeks current accumulated
Cenvat credit of all textile and clothing units may be refunded in cash in
FY11.
The Industry urges Government to fund TUFS backlog amounting to
Rs 2000 crore up to 31 December 09 in the revised estimates for
Current year. Further the industry has also suggests for a provision of
Rs 3000 crore of TUFS loans for meeting the requirements during
January-December 2010.
In order to upgrade the competitiveness of textile exports, it is
requested that export credit for textile and clothing units may be
provided at a uniform rate of 5% interest, both for pre-shipment and
post-shipment credit.
As the textile industry has also been rolling under spike in the raw
material cost like Cotton, polyester etc, working Capital for purchase of
cotton may be provided to mills at 7% interest as against 10% margin
money and for a period of 9 months.
56
On the Service Taxes front, the industry pleads Government to exempt

all export related services to be exempted from service charges. The
industry also requests the government, to treat service tax paid by
textile units for erection and commission as well as repairs and
maintenance of windmills as tax paid on input services under Cenvat
Credit Rules.
FICCI recommendations
On the other hand Federation of Indian Chambers of Commerce & Industry
(FICCI), the largest apex business organization body; on behalf of textile
industry has demanded the following:
FICCI recommends equality in excise duty structure between Synthetic
Fiber and Cotton i.e. 4 % or optional route to be put in place for
ensuring a level playing field. Thus excise duty on all raw materials /
consumables of synthetic fibers and yarns are expected to be slashed
to 4% from current 8%. Also excise duty on the raw material like PTA is
8% can also be brought down to avoid inversion.
It has also recommended excise duty on Furnace oil should be brought
down to 4%, as furnace oil is extensively used by textile manufacturing
units for running their DG sets for augmenting their power
requirements.
On the customs duty front, the apex body has asked for slash in the
customs duty on all textile machinery and their components to 5%.
The Association seeks for 14% customs duty on technical textiles so as
to encourage the indigenous industry.
FICCI has requested for removal of basic customs duty on specialty
yarn and other yarns, which were not manufactured in India.
The association has asked to extend 5% concessional duty to
Automatic shuttle less looms and also value adding machines. In
addition to the above, duty on Machineries required to manufacture
Technical Textiles should be nil.
57
The spare parts for manufacture of textile machinery specified in List

30, 31 and 32 should be permitted to be imported under the
Concessional rate of 5% customs duty.
CII Recommendations
Confederation of Indian Industries on behalf of textile industry has
recommended the Government for the following: .
CII seeks reduction of customs duty from 5% to NIL on imported
components of shuttleless looms. Adding to the above, the association
has asked to reduce excise duty from 8% to 4% on components of 40
specified textiles machinery and equipment; to bring at par with the
excise duty applicable on complete machines/ equipment.
CII has suggested to reduce customs duty from 7.5% to 5% on spin
finish oil, which will is a vital in manufacturing of polyester fibers and
yarns.
It has also recommended reducing customs duty on Nylon 6, 12 Chips
from 10% to 7.5%.
Note: The excise duty on different textile products is different which is
described in annexure 3
The export import data is as in annexure 4
The demand and supply for cotton is as in annexure 5
58
MAJOR PLAYERS IN
THE INDUSTRY
59
MAJOR PLAYERS IN TEXTILE INDUSTRY OF INDIA

TABLE 5.1
60
Profile of Major Players in India:

1 Welspun India Ltd
Welspun India Limited (WIL) is the Flagship company of Welspun
Group with an enterprise value of U.S. $ 3 billion. WIL is ISO
9001:2000, 14001 and SA 8000 certified company. WIL is a composite
textile mill producing Cotton Yarn, Terry Towels and Rugs for
international market.
Welspun India Ltd. is one of the largest Home Textiles producers in
Asia and amongst the top 4 producers of Terry Towels in the world.
WIL is located at village Morai in Valsad district, Gujarat State.
WIL annual sales turnover for year 2009-2010 was Rs. 681.881 crores.
They have presence over 50 Countries, over 24,000 employees &
100,000+ shareholders, Welspun is one of India's fastest growing
conglomerates.
2 Vardhman Group
Vardhman Group was established in 1965 and is a leading textile
conglomerate in India having a turnover of $700 mn. They have over
24 manufacturing facilities in five states across India, the
Group business portfolio includes Yarn, Greige and Processed Fabric,
Sewing Thread, Acrylic Fibre and Alloy Steel.
Vardhman Group manufacturing facilities include over 8,00,000
spindles, 65 tons per day yarn and fibre dyeing, 900 shuttleless looms,
90 mn meters per annum processed fabric, 33 tons per day sewing
thread, 18000 metric tons per annum acrylic fibre and 100,000 tons per
annum special and alloy steel.
3 Alok Industries Ltd

Alok Industries Ltd. is an India-based textile manufacturing company
and was established in1986.
61
Alok Industries is a private textile manufacturing company and has

manufacturing bases spread over 6 locations in Navi Mumbai in Vapi
and Silvassa, situated in Maharashtra.
Its business domain involves weaving, knitting, processing, home

textiles and ready-made garments and its a diversified manufacturer of
world-class home textiles, apparel fabrics, garments and polyester
yarns. Its buyers include manufacturers, exporters, importers, retailers,
and branded apparel manufacturers of the world.
Further, it operates its embroidery business through its sister concern,
Grabal Alok Impex Ltd. Today, Alok Industries is one of the largest
private exporters of textiles in India. Its business operations are spread
across all the continents.
4 Raymond Ltd
Raymond was incorporated in 1925 and has over 60% market share in
worsted suiting in India.
The company has a diverse product range of nearly 20,000 design and
colors of suiting fabric.
They export their products to over 55 countries including USA, Canada,
Europe, Japan and the Middle East. Their suitings are available in India
in over 400 towns through 3,000 retailers as well as over 500 exclusive
retail shops.
Raymond is among the largest integrated manufacturers of worsted
fabrics in the world. Raymond Ltd. owns some of the most highly
respected apparel brands in its portfolio like - Raymond, Manzoni, Park
Avenue, Color Plus, Parx, Park Avenue, Be:, Zapp! And Notting Hill
and GAS. Raymond manufactures and markets brands like Kama
Sutra condoms and even surgical gloves. The Raymond Group also
has an expansive retail presence.
62
5 Arvind Ltd.
Arvind Ltd. Limited is the flagship company of the US$550 million
Lalbhai Group. It is engaged in the production of the widest range of
textiles. It is the worlds largest exporter of denim and Asias largest
denim producer.
The company is also in the garment and mens shirting business under
the brand names of Newport, Flying Machines, Lee, Arrow.
6 Bombay Dyeing
Bombay Dyeing is one of Indias largest producers of textiles. The
company is one of the largest and oldest textile companies in the
country. It manufactures cotton and blended textiles. Product mix
comprises suiting, shirting, sarees, towels and bed linen.
The company was formed on 23 August 1879 by Nowrosjee Wadia, a
dye works near Mahim. This was the mill, which first started dyeing of
yarn in India. Bombay Dyeing Mfg. Co. Ltd. was set up in 1895.
Nowrosjee Wadia & Sons become the managing agents in 1898.
7 Aditya Birla Nuvo Ltd.

Aditya Birla Nuvo Ltd. is Aditya Birla groups most diversified
conglomerate. Earlier it was known as Indian Rayon Ltd. (IRIL), it was
rechristened as Aditya Birla Nuvo in 2005. It is the second largest
producer of viscose filament yarn in India. It is also the largest branded
apparel company in India. It is a diversified company and operates a
wide range of businesses. Its focus areas are viscose filament yarn,
carbon black, branded apparels, textiles and insulators.
8 RELIANCE TEXTILES
Reliance Textiles is one of the major textile Company that is in
business of fully integrated man-made fiber. It has capacity of more
than 6 million tons per year. It has joint venture partners like, DuPont,
Stone & Webster, Since (Italy) etc.
63
Some of the other players in the textile industry are:
CENTURY TEXTILES: (Composite mill, cotton & Man-made)
MORARJEE MILLS: (Fully integrated Composite Mill)
INDO RAMA: (Cotton and Man-made)
GTN TEXTILES: (Cotton Yarn and Knit Fabrics)
GINNI FILAMENTS LIMITED: (Yarn and Fabric)
LNJ BHILWARA GROUP :(Diversified and vertically integrated denim

producer with spinning and weaving capacity)
MAFATLAL TEXTILES: (Fully integrated Composite Mill)
MODERN GROUP :(Diversified, producer of denim, syntax and thread)
ASHIMA LIMITED: (composite mill)
KG DENIM: (Fabrics)
SANGHI POLYESTER LIMITED:. (Manmade Fiber)
NOVA PETROCHEMICALS: (Man-made Fiber)
S.KUMAR SYNFABS LIMITED:. (Home furnishing and Suit Fabrics)
RAJASTHAN PETRO SYNTHETICS: (Diversified)
BSL LIMITED: (Textiles)
GARWARE POLYESTER :(Diversified)
BANSWARA SYNTEX: (Composite)
NATIONAL RAYON CORP.: (Man-made fiber)
GSL INDIA LIMITED: (Threads)
INDIAN RAYON :(Man-Made Fiber)
SHARDA TEXTILES MILLS: (Man-made Fiber)
GOKULDAS IMAGES: (Diversified)
HANIL ERA TEXTILES: (Yarn, Cotton & Man-made Fiber)
OSWAL KNIT INDIA: (Woolen Wear)
NIRVAT SAM APPARELS; (Apparel)
64
DISTRIBUTION CHANNEL
OF THE
TEXTILE INDUSTRY
65
6.1 THE TEXTILE AND APPAREL SUPPLY CHAIN

The Textile and Apparel Supply Chain comprises diverse raw material
sectors, ginning facilities, spinning and extrusion processes, processing
sector, weaving and knitting factories and garment (and other stitched and
non-stitched) manufacturing that supply an extensive distribution channel (see
DIAGRAM ).
This supply chain is perhaps one of the most diverse in terms of the raw
materials used, technologies deployed and products produced. This supply
chain supplies about 70 per cent by value of its production to the domestic
market.
SUPPLY CHAIN OF TEXTILE INDUSTRY
DIAGRAM 6.1
Source: http://texmin.nic.in,
66
It is estimated that there exist 65,000 garment units in the organized sector, of
which about 88 per cent are for woven cloth while the remaining are for knits.
However, only 3040 units are large in size (as a result of long years of
reservation of non-exporting garment units for the small scale sectors a
regulation that was removed recently). While these firms are spread all over
the country, there are clusters emerging in the National Capital Region (NCR),
Mumbai, Bangalore, Tirupur/Coimbatore, and Ludhiana employing about 3.5
mn people. According to our estimate, the total value of production in the
garment sector is around Rs.1, 0501,100 bn of which about 81 per cent
comes from the domestic market. The value of Indian garments (eg. saree,
dhoti, salwar kurta, etc.) is around Rs.200250 bn. About 40 per cent of fabric
for garment production is imported a DIAGRAM that is expected to rise in
coming years.
6.2 DISTRIBUTION CHANNEL

For any industry it is very essential to have a cost effective and efficient
distribution channel that adds value into whole value chain. Effective
Distribution channel and Integrated Supply Chain Management help in growth
of industry and make it more competitive. India has large and diversified
Textile Industry with different segments and sectors; therefore it has
fragmented Sales and Distribution Network.
In Indian Textile Industry products are distributed mainly through following
intermediaries as a part of Distribution Network:
Importers.
Indenting Agents
Distributors.
Wholesalers.
Retailers.
Dealers
Commission Agents.
Products are sold mainly through following marketplaces:
67
Small and Large Retail Outlets

Supermarkets
Retail outlets situated in Malls.
Shopping Websites (Using e-Commerce and Internet)
Company Owned Showrooms and Retail Chains.
The distribution channel comprises wholesalers, distributors and a large

number of small retailers selling garments and textiles. It is only recently that
large retail formats are emerging thereby increasing variety as well as volume
on display at a single location. Another feature of the distribution channel is
the strong presence of agents who secure and consolidate orders for
producers. Exports are traditionally executed through Export Houses or
procurement/commissioning offices of large global apparel retailers.
68
KEY ISSUES AND CURRENT

TRENDS IN THE
69
The Indian textile industry faces a host of constraints:

Fragmented structure with the dominance of the small scale sector
High power costs
Rising interest rates and transaction costs
Unfriendly labor laws
Logistical disadvantages in terms of shipping costs and time pose serious
threats to its growth
Foreign investments are not coming in as the overall factors influencing the
industry are not investment friendly
In many instances Indian export consignments faced non-tariff barriers in the

US market, mainly in the form of shipments being subjected to rigorous
labeling and marking requirements, security parameters and document
verification at US ports and issues relating to compliance with labor and
environmental norms. The main forms of restrictions that have been raised,
with respect to some Indian shipments in the US, are in the form of norms
violating US child labor policies, sanitary measures in the Indian suppliers'
workplace, suspected use of azo-dyes and security checks of consignments.
7.1 CHALLENGES FACING INDIAN TEXTILE AND APPAREL

INDUSTRY
Textile supply chains compete on low cost, high quality, accurate delivery and
flexibility in variety and volume. Several challenges stand in the way of Indian
firms before they can own a larger share of the global market:
Scale:
Except for spinning, all other sectors suffer from the problem of scale.
Indian firms are typically smaller than their Chinese or Thai
counterparts and there are fewer large firms in India. Some of the
Chinese large firms have 1.5 times higher spinning capacity, 1.25 times
denim (and 2 times gray fabric) capacity and about 6 times more
revenue in garment than their counterparts in India thereby affecting
70
the cost structure as well as ability to attract customers with large

orders.
The central tendency is to add capacity once the order has been won
rather than ahead of the demand.
Customers go where they see both capacity and capabilities. Large
capacity typically goes with standardized products. These firms need to
develop the managerial capabilities required to manage large work
force and design an appropriate supply chain.
For the size of the Indian economy, it will have to have bigger firms
producing standard products in large volumes as well as small and mid
size firms producing large variety in small to mid size batches (the
tension between the organized and un-organized sectors will have to
be addressed first, though). Then there is the need for emergence of
specialist firms that will consolidate orders, book capacities, manage
warehouses and logistics of order delivery.
Skills:
Three issues must be mentioned here: (a) there is a paucity of
technical manpower there exist barely 30 programmes at graduate
engineering (including diploma) levels graduating about 1000 students
this is insufficient for bringing about technological change in the
sector; (b) Indian firms invest very little in training its existing workforce
and the skills are limited to existing processes (Chandra 1998); (c)
there is an acute shortage of trained operators and supervisors in
India.
It is expected that Indian firms will have to invest close to Rs. 1400 bn
by year 2011 to increase its global trade to $ 50 bn. This kind of
investment
would
require,
by
our
calculations,
about
70,000
supervisors and 1.05mn operators in the textile sector and at least

112,000 supervisors and 2.8mn operators in the apparel sector
(assuming a 80:20 ratio of investment between textiles and apparel).
The real bottleneck to growth is going to be availability of skilled
manpower.
71
Cycle Time:
Cycle time is the key to competitiveness of a firm as it affects both
price and delivery schedule. Cycle time reduction is strongly correlated
with high first pass yield, high throughput times, and low variability in
process times, low WIP and consequently cost.
Indian firms have to dramatically reduce cycle times across the entire
supply chain which is currently quite high (Chandra, 2004). Customs
must provide a turnaround time of day for an order before Indian
firms can they expect to become part of larger global supply chains.
Indian firms need a strong deployment of industrial engineering with
particular emphasis on cellular manufacturing, JIT and statistical
process control to reduce lead times on shop floors. Penetration of IT
for improving productivity is particularly low in this sector.
Innovation & Technology:
A review of the products imported from China to USA during January
April 2005 reveals that the top three products in terms of percentage
increase in imports were Tire Cords & Tire Fabrics (843.4% increase
over the previous year), Non-woven fabrics (284.1% increase) and
Textile/Fabric Finishing Mill Products (197.2% increase) (FICCI, 2005).
None of these items, however, DIAGRAM in the list of imports from
India that have gained in these early days of post-MFA. Entry into
newer application domains of industrial textiles, nanotextiles, home
furnishings etc. becomes imperative if we are to grow beyond 56% of
global market share as these are areas that are projected to grow
significantly.
The Technology Upgradation Fund of the government is being used to
stimulate investment in new processes. However, there is little
evidence that this deployment in technology has accompanied
changes in the managerial regimes a necessary condition for
increasing productivity and order winning ability.
72
Domestic Market:
The Indian domestic market for all textile and apparel products is
estimated at $26 bn and growing. While the market is very competitive
at the low end of the value chain, the mid or higher ranges are
overpriced (i.e., dollar pricing). Firms are not taking advantage of the
large domestic market in generating economies of scale to deliver cost
advantage in export markets.
The Free Trade Agreement with Singapore and Thailand will allow
overseas producers to meet the aspirations of domestic buyers with
quality and prices that are competitive in the domestic market. Ignoring
the domestic market, in the long run, will peril the export markets for
domestic producers. In addition, high retail property prices and high
channel margins in India will restrict growth of this market. Firms need
to make their supply chain leaner in order to overcome these
disadvantages.
Institutional Support:
Textile policy has come long ways in reducing impediments for the
industry sometimes driven by global competition and, at other times,
by international trade regulations. However, few areas of policy
weakness stand out labor reforms (which is hindering movement
towards higher scale of operations by Indian firms), power availability
and its quality, customs clearance and shipment operations from ports,
credit for large scale investments that are needed for upgradation of
technology, and development of manpower for the industry. These are
problems facing several sectors of industry in India and not by this
sector alone.
In conclusion, competitive strategies are developed by sector level firms and

its their individual and collective initiatives that secure higher market share in
global trade. While one has to be ever vigilant of non-tariff barriers in the post
MFA world, the new market will be won on the basis of capabilities across the
73
supply chain. Policy will need to facilitate this building of capabilities at the
firm level and the flexible strategies that firms will need to devise periodically.
7.2 SEGMENTATION AND POSITIONING

Marketing planning is basically about integrating needs of the customers in
all the activities of the firm in a planned manner. It includes four steps:
a) Understanding market opportunities
Marketing planning starts from understanding the market and the
opportunities it offers. The small apparel firms have to regularly watch
and assess the market environment either in domestic or overseas.
They have to have a strong sense about the fashion cycle which
determines the demand for any apparel product. This is very important
to predict what will happen to the product in future.
A fashion cycle has five distinctive but continuous stages such as
introduction, rise, peak, decline and rejection. The cycle may also recur
after certain number of latent years. Many fashion cycles might behave
like a fad and a few cycles would continue as classics.
Fads are fashions that are adopted quickly with great enthusiasm and
decline very fast. Classic fashions always stay in consumer day-to-day
life. For example, cotton saree is a classic and boot cut jeans is a fad.
Apart from this, the marketers must be vigilant about the competitors
activity. For example, the competitors might come up with innovative
new products to serve a niche market that would be substantial enough
to hold interest. Further, they should also look at the suppliers,
distributors and retailers volume of business and profitability to expand
the business in terms of forward or backward integration. For instance,
the financial strength gathered over the years might encourage the
small manufacturers to go for forward integration which could be in the
form of retailing.
74
b) Segmenting the market

All the customers are not the same. Their needs and wants differ.
Hence, the marketing efforts can not be the same for all the customers.
But there may be similarities among group of customers in terms of
their needs and wants. Segmenting is nothing but identifying such
groups. For a small apparel manufacturer, it may be in terms of export
agents, import agents, retailers and end consumers.
The marketing efforts of the manufacturer should be specifically suited
to the particular segment. The manufacturer can target only one
segment or a few segments that suits its goals and the attractiveness
of the segment.
It can also have a target plan of which segment first, second and so on.
The segmentation may go to the next level called identifying very
narrow segment which is called as niche. The ultimate level of
segmentation is one to one marketing. In this case, the marketing
efforts are suited to the needs and wants of the individual customer.
c) Positioning and differentiating the offer
When the manufacturer is targeting its efforts on a particular segment,
the segment should recognise the manufacturers distinctive offering.
In their minds, consumers associate the popular Raymonds brand for
its premium and high quality suits. This is the position Raymonds has
consciously developed over the years through their complete man
advertisement.
The positions can be created by the benefits that the customers get or
the features that the product has. The small apparel firm can position
itself in terms of the quality certificates that it would have received from
respectable certification agency or it may position itself for offering best
value for money or number of years of existence. The small apparel
manufacturer should also think that how its offer is different from its
competitors.
75
Accordingly, the offer with such difference should be made available to

the customers. Care must be taken to focus on a difference which
cannot be easily copied by the competitors. The firm can differentiate
its offering in terms of product, accompanied services, employees,
distribution channel and image. The firm can focus on a niche segment
and differentiate its offer from competitors in terms of style and
premium platforms. It can also go for competitive price with better
quality as one of the differentiator.
d) Developing marketing mix strategies
Most of the decisions in marketing can be classified into four Ps:
Product, price, place and promotion.
Product means the goods-and-services combination the firm offers to
the target market. It includes decisions related to the quality of the
yarn, fabric, dye, stitching, designs of the fabric as well as apparel,
branding, packaging, and accompanied services.
Pricing includes the decisions related to list price, discounts,
allowances, payment-period and credit terms. Place means the
activities of the firm that make the product available to target
consumers. It includes decisions such as distributor network or having
own retail shops, transportation, logistics and factory locations.
Promotion means activities that communicate the merits of the product
and persuade target customers to buy it. It includes advertising, sales
promotion, personal selling and public relations decisions. All these
decisions can be manipulated for a strategic purpose of entering,
growing and competing in the market. The marketing mix decisions
help the firm to tactically establish a strong positioning in the minds of
the target costumers.
76
7.3 CURRENT TRENDS IN TEXTILE INDUSTRY

The mood in the Indian textile industry given the phase-out of the quota
regime of the Multi-Fibre Arrangement (MFA) is upbeat with new
investment flowing in and increased orders for the industry as a result
of which capacities are fully booked up to April 2005.
As a result of various initiatives taken by the government, there has
been new investment of Rs.500 billion in the textile industry in the last
five years. Nine textile majors invested Rs.26 billion and plan to invest
another Rs.64 billion. Further, India's cotton production increased by
57% over the last five years; and 3 million additional spindles and
30,000 shuttle-less looms were installed.
The industry expects investment of Rs.1,400 billion in this sector in the
post-MFA phase.
The textile industry is undergoing a major reorientation towards nonclothing applications of textiles, known as technical textiles, which are
growing roughly at twice rate of textiles for clothing applications and
now account for more than half of total textile production. The
processes involved in producing technical textiles require expensive
equipments and skilled workers and are, for the moment, concentrated
in developed countries. Technical textiles have many applications
including bed sheets; filtration and abrasive materials; furniture and
healthcare
upholstery;
thermal
protection
and
blood-absorbing
materials; seatbelts; adhesive tape, and multiple other specialized

products and applications.
Trends in Spinning
The spinning industry is the most modern and internationally
competitive segment of Indias textile industry. Yarn production
increased 4.5 percent annually between 1990 and 2004, as rapid gains
by independent spinners more than offset declining production from
composite mills. Reflecting trends in domestic demand, the most rapid
growth has been in the production of blended and 100-percent
manmade yarns (dia. 7.1).
77
DIAGRAM 7.1
The domestic weaving sector absorbed most of the increase in yarn

output, although exports became an increasingly important source of
growth in yarn demand in the 1990s. Expanding from a small base,
yarn exports grew rapidly and peaked at $2.5 billion in 1997 (dia. 7.2).
DIAGRAM 7.2
Yarn output by the composite mills has declined steadily, as has their
share of spinning capacity. By 2003, independent spinning mills
78
accounted for about 75 percent of capacity and 92 percent of

production. Capacity use in the cotton-spinning sector averages near
80 percent, with higher rates among the independent spinners (dia.
7.3).
The performance of the yarn-spinning industry has been less affected
by restrictive labor policies, capacity restrictions, and price controls,
largely because it is inherently capital intensive.
The modern spinning mills first appeared in response to the Textile
Policy of 1985, which removed entry and exit barriers, encouraged the
importation of modern machinery, and lowered duties on synthetic raw
materials (The World Bank).
DIAGRAM 7.3
Although the spinning sector now includes a number of technologically

advanced spinning mills of recent vintage able to compete on international
markets, average plant size and level of modernization remain low by
international standards. In addition to the legacy of past policies promoting
small-scale, labor-intensive enterprises, a number of policies, including the
Hank Yarn Obligation and high excise taxes on manmade fibers, still constrain
the sectors growth and competitiveness.
79
Trends in Weaving
In contrast to the spinning sector, the weaving industry remains highly
fragmented and small scale and characterized by the use of outdated
technology. Growth in fabric output, however, has been strong, with
output expanding about 5.5 percent per year between 1990 and 2003
(dia. 7.4).
The small-scale, independent powerloom sector, which now accounts
for about 78 percent of cloth production, grew about 7 percent annually
and the relatively small hosiery subsector grew nearly 10 percent
annually during this period.
Meanwhile, high growth among powerloom and hosiery units offset a 4percent annual contraction of output from composite mills and the
relatively slow 3- percent expansion of handloom fabric production.
DIAGRAM 7.4
80
The unorganized powerloom sector filled the void created by the

decline of the organized composite mills. The proliferation of
powerlooms stemmed largely from the ability of small-scale operators
to avoid or evade government- imposed labor restrictions and excise
taxes and, in some cases, payment for electrical power.
Over time, however, government regulations, coupled with credit
constraints among small-scale operators, led to a sector characterized
by the use of obsolete technology and the lack of backward or forward
integration with spinning or finishing.
India remains internationally competitive in the production and export of
low- and medium-quality grey (or unfinished) fabrics in relatively small
production runs. Between 1990 and 2000, exports of powerloom cotton
cloth and madeups (items such as household linens that require
minimal manufacturing) grew 27 percent annually in value and became
an increasingly important source of final demand and foreign
exchange.
However, the current small-scale, nonintegrated, low-technology structure is
ill-equipped to compete in high-quality markets or to meet the needs of large
buyers. In recent years, progressive powerloom operators have upgraded
their operations through investment in modern shuttleless looms. Shuttleless
looms 70 percent of which are imported into India as second-hand
equipment from the United States, Italy, and Japanproduce superior-quality
fabric and reduce labor costs by 75 percent, compared with traditional shuttle
looms. However, the powerloom sector currently has about only 15,000
shuttleless looms, accounting for less than 1 percent of loom capacity.
81
PESTEL ANALYSIS FOR

TEXTILE INDUSTRY
82
8.1 POLITICAL FACTORS INFLUENCING THE TEXTILE

INDUSTRY
India is the biggest democracy in the world. The political situation of the
country is more or less stable as the selected government stays for five
years.
The Government is committed to a strong and vibrant Textile Industry
which would contribute significantly to production and employment and
thereby promote economic growth.
Policies and programmes have been formulated to enable the textile
industry to rise to global standards. The industry has been largely freed
from the shackles of controls and regulations to enable it to perform in
a more competitive environment. Foreign Direct Investment (FDI) will
have a critical role in getting world class state-of the art
manufacturing capability even while conforming to environmental
standards.
On January 1, 2005, developed countries removed import quotas on
textile
products
previously
sanctioned
by
the
1974
Multifiber
Arrangement (MFA). This change provides a major opportunity for

India to expand production and exports of textiles and apparel to
developed country markets.
The Agreement on Textiles and Clothing (ATC) is an attempt to correct
the violation of the GATT principles of non-discrimination and
transparency in respect of the Multifibre Agreement (MFA) that
governed textile trade from 1974 to 1994.
The ATC is a transitional agreement that regulates trade in textiles for
10 years after which trade in textiles and clothing is to be completely
integrated into the GATT. The elimination of quantitative restrictions
under the ATC is taking place through a stage-by-stage removal of
existing quotas (integration, as described by the agreement), and
through accelerated expansion of the remaining nonintegrated quotas
(liberalization).
83
8.2 ECONOMIC FACTORS INFLUENCING TEXTILE INDUSTRY

These include interest rates, taxation changes, economic growth,
inflation and exchange rates.
A strong currency may make exporting more difficult because it may
raise the price in terms of foreign currency. But as India is developing
country and and its currency value is not high the export of cotton
textiles is easy.
At present, the Indian textile industry is highly disturbed due to
economic recession in United States. The rupee appreciation has
taken a toll on the existing thin margins of textile players. Due to this
slowdown in the economy they are bearing huge losses. The hardening
of rupee has also affected the overall textile earnings to a great extent.
In India inflation is a major problem which may provoke higher wage

demands from employees and raise costs. Price fluctuation of cotton is
a serious problem not only for cotton farmers but also for mills,
powerlooms and handlooms, because a good part of the fluctuation is
eventually passed from farmers to mills to weavers.
Also the infrastructure development of India plays an important role in

the exports of textiles. There are many exporters who outsource their
raw material and other inputs from outside suppliers. They often face
many problems regarding late deliveries, improper transportation,
which disturbs the entire organization. However, textile parks and SEZs
are in progress, still there exists, huge transportation cost.
84
8.3 SOCIAL FACTORS INFLUENCING THE TEXTILE

INDUSTRY
Changes in social trends can impact on the demand for a firm's
products and the availability and willingness of individuals to work.
India is having 60% of its population as youth. The youth population of
India is very much influence by the new fashion and trends because of
the obsession of Bollywood this is greatly influencing the textile
designers to innovate new textile clothings and apparels, which also
affects the Research & Development in the field of Textiles.
8.4 TECHNOLOGICAL FACTORS INFLUENCING TEXTILE

INDUSTRY
India is technologically sound in textile industry.
Various new innovations in producing new types of fabrics and
fashionable apparels are done in India.
New type of fabrics like water repellent fabrics, wrinkle free fabrics fire
resistant fabrics etc are developed in India.
Also major textile companies uses latest machineries imported from
Switzerland, USA and Japan.
8.5 ENVIRONMENTAL FACTORS

The increasing public awareness and sense of social responsibility
related to environmental issues have led the textile industry to
manufacture products with improved environmental profiles.
Also the companies are trying to develop eco-friendly and herbal dyes
which are not harmfull to the consumers.
The dyeing process of textiles leads to air pollution as well as water
pollution. So textile firms are forced to develop the process which
85
consumes less water and which also leads to less water and air
pollution.
The government takes care of the environmental factors by
implementation of the environmental laws which are mandatory for
textile firms.
8.6 LEGAL FRAMEWORK AND TEXTILE INDUSTRY

The cotton textile industry is frequently plagued by labor problems. The
very long strike of the textile workers caused losses amounting to
millions of rupees not only to the workers and industry but also to the
nation in terms of excise and other taxes and exports.
Even though India has very good labor laws still textile industry faces
highest industrial disputes in India. These are because of strong trade
unionism presence in the textile industry.
Because of these factors Indian textile industry faces many problems.
86
FINANCIAL ANALYSIS OF
TEXTILE INDUSTRY
87
Financial analysis of any firm or industry shows it financial soundness at a

same time risk with that industry. There are main four analysis which helps to
understand Textile Industrys profitability, growth, liquidity, assets &
investments.
1 Return on Investment
2 Du Pont Analysis
3 Leverage Analysis
4 Working Capital Management Analysis
9.1 RETURN ON INVESTMENT (ROI)

The term investment may refer to total assets or net assets. This Ratio
measure the relationship between net profit before interest and tax and capital
employed. The objective of computing this Ratio is to find out how efficiently
the long-term funds supplied by the creditors and shareholders have been
used. This ratio can be calculated by following two formulas.
ROI=Return on Total assets (ROTA) =
EBIT
= 0.048
Total Assets
ROI=Return on Net assets (RONA) =
EBIT
= 0.13
Net Assets
9.2 DU PONT ANALYSIS

Du Pont is a useful system of analysis, which considers important interrelationships between total assets turn over and return on assets. It has been
adopted by many firms in some form or the other. Du Pont chart is return on
assets (ROA), defined as the product f the net profit margin(NPM) and the
total assets turnover ratio(TATR)
88
Formula to calculate DPA

Return On Assets
= Net Profit Margin * Total Assets Turnover

= 3.49% for textile industry
9.3 LEVERAGE ANALYSIS

Leverage arises from the presence of fixed costs in a cost structure. It is
classified as operating, combined & financial.
Types of Leverage
Operating Leverage
Combined Leverage
Financial Leverage
1. Operating Leverage:
In organization there is some fixed cost. Because of this fixed
cost
Percentage change in operating profit is greater than percentage change in

sales. This situation is known as operating leverage.
Formula to Calculate Degree of Leverage:
Degree of Leverage =
Contribution
Earnings before Interest & Tax
89
Where, Contribution = Sales Variable Cost

EBIT = Contribution Fixed Cost
Degree of Operating Leverage (DOL) Of Textile Industry = 4.63
This indicates that about 4% change in EBIT will result into 1% change in
sales of Industry.
2. Financial leverage:
Financial Leverage means, the utilization of fixed burden securities with equity
share capital in the capital structure of the company.
Formula to calculate Financial Leverage.
Degree of Leverage: EBIT
EBT
Where, EBIT = Contribution Fixed Cost
EBT = EBIT Interest
Degree of Financial Leverage (DFL) Of Textile Industry = 1.35
Here, we can see that in Textile Industry degree of financial leverage is there.
So, there is use of fixed burden securities in the industry.
3. Combined Leverage:
Combine Leverage refers to the combination of operating leverage and
financial leverage. Operating leverage is related with operating risk, financial
leverage is related with financial risk while Combined Leverage is related with
Business risk.
Formula to calculate Combine Risk
Degree of Leverage = DOL* DFL = 6.25
As per degree of combine leverage total risk of Cotton Textile Industry is
normal in comparison to the Arvind Ltd..
90
9.4 WORKING CAPITAL MANAGEMENT ANALYSIS

Working Capital (WC) is a financial metric which represents operating
liquidity available to a business, organization, or other entity, including
governmental entity. Along with fixed assets such as plant and equipment,
working capital is considered a part of operating capital. Net working capital is
calculated as current assets minus current liabilities. It is a derivation of
working capital that is commonly used in valuation techniques such as DCFs
(Discounted cash flows). If current assets are less than current liabilities, an
entity has a working capital deficiency, also called a working capital
deficit.
Net Working Capital = Current Assets Current Liability
a. Current Assets: Operating Assets of the company are called as current
assets. Main components of current assets are
Inventory
Cash & Bank
Debtors
Loans & Advances.
b. Current Liabilities: Current liabilities are short term payments company
has to maid. Main components of the current liabilities are
Provisions
Bills Payable.
Working Capital Analysis of Textile Industry
Net WC = Current Assets Current Liabilities = 1536.40
From the above DIAGRAM it is quite clear that Textile Industry having more
liquidity in market & also their performance is financially outstanding.
91
MICHAEL PORTER'S
FIVE FORCE MODEL
92
One of the worst hit sectors during the skyrocketing interest rate scenario in
the late 90s and early 2000s, the debt-laden Indian textile industry has spun
many turn-around stories since then. Aided by lower interest rates,
restructuring packages from financial institutions and the recent dismantle of
quotas, the sector is today well poised to capture growth opportunities. In
2005, the sector contributed 20% to industrial production, 9% to excise
collections, 18% of employment in industrial sector, nearly 20% to the
country's total export earnings and 4% to the GDP. The textile sector employs
nearly 35 m people and is the second highest employer in the country. Infact,
it is estimated that one out of every six households in the country directly or
indirectly depend on this sector. Here we analyse the sector's dynamics
through Porter's five-factor model.
PORTERS FIVE FORCE MODEL
DIAGRAM 10.1
Source: www.texprocil.com
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10.1 BARGAINING POWER OF CUSTOMERS (DEMAND

SCENARIO)
Global textile & clothing industry is currently pegged at around US$
440 bn. US and European markets dominate the global textile trade
accounting for 64% of clothing and 39% of textile market.
With the dismantling of quotas, global textile trade is expected to grow
(as per Mc Kinsey estimates) to US$ 650 bn by 2010 (5 year CAGR of
10%). Although China is likely to become the 'supplier of choice', other
low cost producers like India would also benefit as the overseas
importers would try to mitigate their risk of sourcing from only one
country. The two-fold increase in global textile trade is also likely to
drive India's exports growth. India's textile export (at US$ 15 bn in
2005) is expected to grow to US$ 40 bn, capturing a market share of
close to 8% by 2010.
India, in particular, is likely to benefit from the rising demand in the
home textiles and apparels segment, wherein it has competitive edge
against its neighbour. Nonetheless, a rapid slowdown in the denim
cycle poses risks to fabric players.
10.2
Bargaining
power
of
suppliers (supply scenario)

India is the third largest producer of
cotton in the world after China and
US and has the largest area under
cultivation.
Cotton, a key raw material in the textile and garment industry, accounts
for about 30% of the fabric cost and 13% of the garment cost. India has
an abundant supply of locally grown long staple cotton, which lends it a
cost advantage in the home textile and apparels segments. Other
countries, like China and Pakistan, have relatively lower supply of
94
locally grown long staple cotton. Moreover, low cotton prices due to a
bumper cotton crop would enable India to lower its production cost and
sustain pricing pressure. Further, efforts on improving the yield per
hectare would ensure higher productivity and production, thereby
providing the much-needed security of raw-material supply to textile
producers.
India also enjoys a significant lead in terms of labour cost per hour
(US$ 0.6 in 2004), over developed countries like US (US$ 15.1) and
newly industrialised economies like Hong Kong (US$ 5.1), Taiwan
(US$ 7.1), South Korea (US$ 5.7) and China (US$ 0.9). Also, India is
rich in traditional workers adept at value-adding tasks, which could give
Indian companies significant margin advantage.
10.3 THREAT OF NEW ENTRANTS

In the quota free regime, capacity expansion is the name of the game
in the textile sector. Resultantly, smaller players who cannot venture
into the global markets are flooding the domestic markets with excess
supply, thus weakening the pricing scenario. Be it denim (Arvind Ltd.),
home textiles (Welspun and Alok Industries) or branded apparels
(Raymond), new capex and consolidation with international players is
also not likely to safeguard margins for the larger players, unless they
can tap a significant pie of the overseas markets.
10.4 THREAT OF SUBSTITUTES

Low cost producing countries like Pakistan and Bangladesh (labour
cost 50% cheaper) are also posing a threat to India's exports demand.
Infact, players like Arvind Ltd. have already started feeling the pinch as
overseas buyers have started shifting to 'alternative sources', thus
impacting their incremental volume off-takes.
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10.5 COMPETITIVE RIVALRY

India's logistic disadvantage due to its geographical location can give it
a major thumbs-down in global trade. The country is distant from major
markets as compared to its global competitors like Mexico, Turkey and
China, which are located in relatively close vicinity to major global
markets of US, Europe and Japan. As a result, high cost of shipments
and longer lead-time coupled with lack of infrastructure facility may
prove to be major hindrances.
The fragmented structure of the industry has also stood in the way of
achieving true integration between the various links in the supply chain.
The sector has one of the longest and most complex supply chains in
the world, which the larger players are trying to correct by integrating
their operations and improving efficiency levels.
.As one can comprehend from the above analysis, the potential for the
sector's growth are ample, but the trick lies in competing effectively against
rivals. Consolidation of the industry and delivery of better quality at effective
rates and minimum lead time would certainly help the players surmount all
competitive
pressure.
96
FUTURE OUTLOOK
97
The textile industry in India is one of the prospective divisions of Indian

market. It supplies more than thirteen percent to trade production,
16.63 percent to export revenues and four percent to the nation's GDP.
In the forth coming year, the industry is to make approximately twelve
million career opportunities with a venture of US dollar six billion in the
field of textile tools and structure, and garment manufacturing by the
end
of
2015.
Union ministry of Textiles certified Apparel Export Promotion Council

(AEPC) has taken the reliability to motivate the overseas financiers to
invest in Indian Textile industry by revealing it huge unknown domestic
market.
It has also prepared and authorized the motto of reach the destination,
spend, generate and trade in India.' Under this perceptive, the ministry
has made a decision to send some representatives to Germany,
Switzerland, France, Italy and US. The purpose is to activate the
overseas venture towards textile entity in India by offering several
grants to international financier like low cost employees and intellectual
right fortification.
The government of India has also agreed to the proposals to support
the textile industry by approving hundred percent Foreign Direct
Investment in the market. Owing to the uprights and instantly
incorporated textiles cost sequence (price chain), the Indian textile
industry signifies a tough subsistence in the total value chain from raw
products to finished products. The Synthetic and Rayon Textile
Export Promotion Council (SRTEPC) has taken every required steps to
meet the target of doubling the synthetic textile export in India to US
$6.2 billion by grabbing four percent of market share by fiscal year
2011- 2012.
Taking into consideration the persistent funds in the textile industry, the
Govt. of India may possibly widen the Technology Up gradation Fund
Scheme (TUFS) by the end of the 11th Five Year Plan- in the financial
year of 2011- 2012 in order to protract the industry. Indian textile
industry is extraordinarily providing to meet the targeted production of $
98
85 billion in the year of 2011, intending exports of more than $ 50

billion which was in year 2010.
The assessment for the exports in the current fiscal year is about $
19billion.
The textile industry is undergoing a major reorientation towards nonclothing applications of textiles, known as technical textiles like thermal
protection and blood-absorbing materials; seatbelts; adhesive tape,
and multiple other specialized products and applications. These
technical textiles are an emerging industry with a potential to reach a
size of US $ 127 billion by 2010 and hold a great promise for Indian
textiles industry.
There is significant potential in India's exports of technical textiles
and home textiles, as most European businesses desire to set up
facilities near- by the emerging markets, such as China and India.
So, the future of Indian textile industry is very bright, as it has open up
the market for international business people.
99
RECOMMENDATIONS
AND
CONCLUSION
100
RECOMMENDATIONS
Effective government intervention

Effective government intervention is sought by the exporters in the
process of shipment inspection and certification mechanism. Many
exporters have received unfair treatment from overseas buyers in the
cases related to inspection and certificate for example.
There should be a just and fair decision by government agencies and
industry bodies.
The active representation of at least one government agency is
suggested in foreign certification and standard testing bodies
(wherever Indias case is involved) to protect the interest of domestic
exporters.
Infrastructure
In the textile industry, the companies operating in China are much
more cautious about the production quality, the technology used,
health and education of the employees etc. This is where India needs
to catch up really fast.
Particularly the port facilities in India are extremely disorganized and
have received criticism from all over the world.
Due to poor port infrastructure, the exports of textiles of India are at
10% loss with US as compared to other countries like China, Thailand,
South Korea and Indonesia. Along with this other transportation ways,
such as roadways and railways also needs to be a lot more developed.
Thus India needs to improve its infrastructure.
Labor reforms
The labor reforms in India are extremely stringent which hampers the
growth of Textile manufacturers to a great extent. China as compared
to India has cheap labor, which is why it attracts maximum developed
countries for their manufacturing activities. China also has a history of
extreme employment security which has reformed its labor relations
101
drastically and has created a new labor market, in which workers are
highly mobile (http://www.financialexpress.com)
The government should also take some measures to amend its
inflexible contractual labor laws.
Facilities for the labor force like heath and medical centers, should be
provided for a better labor force.
Focus on skill development and productivity improvement

In the free trade regime when the buyers see that Indian products very
costly, exporters need to concentrate on skill development of
manpower for the quality & productivity improvement and focus on cost
cutting exercises, may be through better technology uses. However,
govt. support in the form of duty drawbacks and duty concession etc
should be extended in equipping industry with better technology.
Lack of capital and technology has always been a big hurdle in
India. Our exporters are suffering badly from this limitation. Though FDI
limits have been raised but the share of textiles sector is not that great.
Yet more capital is required for the sector. We find lots of financial as
well as technical support from the government but the bureaucratic
system spoils everything. Exporters have to face long procedural steps
before availing these benefits.
The US and European markets realized that the China is becoming the
biggest foreign exchange reserve holder because of its large exports in
all sectors. Therefore they imposed import barriers from China to
safeguard their economy. This again is an advantage for Indian export
market to capture in textile sector as it is the second most preferable
destination for textile products after China.
The retail sector related to textile is not much developed in India. The
customers of India are preferring branded cloths but retail stores for
102
branded textiles is not having its presence in many potentially strong

cities of the country. So the textile manufactures need to integrate
vertically in retail sector for better market opportunities.
Very small scale firms find it most difficult to survive in highly
competitive market. They can enlarge their scale either by merging or
amalgamating together.
The Indian exporters need to be more responsive to the market

requirements. There is slow adaptability to the new market situation.
They have to be more vigilant and follow the market trends if they need
to remain in the market for long period as strong players.
All the textiles labs of garments factories should be provided incentives

in getting accreditation from some international body and some
schemes can be introduced for this. This will increase the credibility of
Indian testing facilities.
Streamlining export and document clearance procedures such as

harmonizing working days, providing 24x7 custom clearance facilities.
Rupee appreciation and decline in the value of Euro and US$ reduces
exporters profit margin therefore exporters should be provided some
kind of relief in such cases.
As a promotional measure, government should promote India as a

good souring destination.
103
CONCLUSION
As trade liberalization proceeds the state is not in retreat but is pro-actively
involved in restructuring to make the industry more competitive. This is not
only in terms of tax structure and integration, technology upgradation,
negotiating market access, etc. but also in terms of nudging the various textile
and garment associations to change. Recently for instance the Union Textiles
Ministry has written to the Indian Cotton Mills Federation (ICMF) to take the
initiative and form a representative body.
Considering the global scenario, for Indian textile industry its major
marketplaces are Europe and US. But, India to be the market leader needs to
surpass China, which is its biggest competitor. It also needs to provide an
edge to cater niche market. To cater this type of market, there is a
requirement of continuous innovation process and product differentiation.
Since the Indian industry is dominated by small scale firms, it can optimally
cater small orders, whereas, China is predominantly concentrating only on the
mass production. Another added advantage that India has, is quota
restrictions on China that has been applied by US and other countries in the
European market.
Hence we can conclude that the Indian textile industry is rising with a larger
pace and if some corrective actions will be taken than the draw backs of the
textile industry will be overcome leading to a flourished and booming textile
business in India.
104
105
ABOUT ARVIND LIMITED
106
13.1 INTRODUCTION OF ARVIND LIMITED

THE EVOLUTION
1930 was a year the world suffered a traumatic depression. Companies
across the globe began closing down. In UK and in India the textile
industry in particular was in trouble. At about this time, Mahatma
Gandhi championed the Swadeshi Movement and at his call, people
from all India began boycotting fine and superfine fabrics, which had so
far been imported from England. In the midst of this depression one
family saw opportunity. The Lalbhais reasoned that the demand for
fine and superfine fabrics still existed.
And any Indian company that met this
demand would surely prosper.
The
three
Narottambhai
brothers,
Kasturbhai,
and
Chimanbhai
decided to put up a mill to produce this

superfine fabric. Next they looked
around for state-of-the-art machinery that could produce such high
quality fabric. Their search ended in England. The best technology of
that time was acquired at a most attractive price. And a company called
Arvind Limited was born.
Arvind Limited started with a share capital of Rs 2,525,000 ($55,000) in
the year 1931. With the aim of manufacturing the high-end superfine
fabrics Arvind invested in very sophisticated technology. With 52,560
ring spindles, 2552 doubling spindles and 1122 looms it was one of the
few companies in those days to start along with spinning and weaving
facilities in addition to full-fledged facilities for dyeing, bleaching,
finishing and mercerizing. The sales in the year 1934, three years after
establishment were Rs 45.76 lakh and profits were Rs 2.82 lakh.
Steadily producing high quality fabrics, year after year, Arvind took its
place amongst the foremost textile units in the country.
In the mid 1980s the textile industry faced another major crisis. With
the power loom churning out vast quantities of inexpensive fabric,
107
many large composite mills lost their markets, and were on the verge of
closure. Yet that period saw Arvind at its highest level of profitability.
The Arvind management coined a new word for it new strategy Reno
vision. It simply meant a new way of looking at issues, of seeing more
than the obvious and that became the corporate philosophy.
The national focus paved way for international focus and Arvinds
markets shifted from domestic to global, a market that expected and
accepted only quality goods. An in-depth analysis of the world textile
market proved an eye opener. People the world over were shifting from
synthetic to natural fabrics. Cottons were the largest growing
segments. But where conventional wisdom pointed to popular priced
segments, Reno vision pointed to high quality premium niches.
Thus in 1987-88 Arvind entered the export market for two sections Denim for leisure & fashion wear and high quality fabric for cotton
shirting and trousers.
By 1991 Arvind reached 1600 million meters of Denim per year and it
was the third largest producer of Denim in the world.
In 1997 Arvind set up a state-of-the-art shirting, gabardine and knits
facility, the largest of its kind in India, at Santej. With Arvinds concern
for environment a most modern effluent treatment facility with zero
effluent discharge capability was also established.
Year 2005 was a watershed year for textiles. With the multi-fiber
agreement getting phased out and the disbanding of quotas,
international textile trade was poised for a quantum leap. In the
domestic market too, the rationalizing of the cenvat chain and the
growth of the organized retail industry was likely to make textiles and
apparel see an explosive growth.
Arvind has carved out an aggressive strategy to verticalize its current
operations by setting up world-scale garmenting facilities and offering a
one-stop shop service,
by offering
international and domestic customers.

108
garment
packages to its
13.2 COMPANY PROFILE OF ARVIND LTD.

ORGANIZATIONAL STRUCTURE
Arvind defines its operations in terms of Strategic Business Units (SBUs).
Each product line such as denim, shirting, knits, voiles, etc is designated
as an SBU. Each unit is headed by a president who is able to make
independent decisions on finance and marketing. The president is assisted by
vice-presidents who look after functional divisions.
The concept of SBUs, which was implemented in spring 1995, was adopted
on the advice of McKinsey; mainly to facilitate the companys expansion plans
but also to provide an accurate picture of the performance of individual
product lines.
Each SBU, which is similar to a product division within a corporation, operates
as a profit center. While long-term planning is carried out by the corporate
group in consultation with the management of each SBU, medium and shortterm planning is in the hands of the unit.
Arvind has been successful in attracting high caliber professionals from the
best multinationals and blue chip companies.
109
SUBSIDIARIES
Arvind Ltd. has 11 subsidiaries, of which seven are in textile and related
businesses. They are:
Arvind Clothing limited.
Arvind Fashion limited.
Arvind Worldwide Inc, USA
Arvind Clothing limited (ACL), situated in Bangalore, began commercial

production in April 1994. ACL is the exclusive licensee in India of
CluettPeabody & Co of the USA, which owns the Arrow brand name. It has
the capacity for making 1 million shirts per annum, and has received ISO
9002 certification.
Arvind Fashion limited (AFL) is a licensed user of the brand names belonging
to the US Company VF Corporation, which owns the well-known international
trade marks Lee. The company has a letter of intent from the Indian
government (pending the issue of a license) permitting it to manufacture up to
960,000 garments per annum, provided it exports 50% of the garments
produced.
AFL has invested Rs.160 million in establishing a jeans manufacturing unit at
Bangalore. The state-of-the-art factory, which has a production capacity, of
500,000 pairs of jeans per annum, is equipped with machines made in the
USA, Japan and Europe.
Spring 1995 saw a launch of a wide range of products-including jeans,
jackets, denim shirts, twill shirts, T-shirts and accessories such as belts and
bags under the Lee trade mark. These are sold through exclusive
showrooms located in major cities throughout India.
Although its current turnover is small, AFL is in good position to capture a
significant share of the growing domestic market.
110
BOARD OF DIRECTORS
The top management of the company consists of following members:
Name
Designation
Mr. Sanjay S. Lalbhai
Executive
S/O Mr. Shrenik bhai Lalbhai

Mr. Jayesh k. Shah
Chairman
&
Managing
Director
(Promoter)
Executive Director & Chief Financial Officer
S/O Mr. Kantilal Shah

Mr. G.M. Yadwadkar
S/O Mr. M.A Yadwadkar
Mr. S.R. Rao
S/O Raghunatha Rao
Mr. K.M. Jayarao
Non-Executive, Independent Nominee Director

IDBI Bank limited.
EXIM Bank of India
ICICI Bank limited.
Mr. Sudhir Mehta
Non-Executive, Independent Director
S/O Uttamlal Nathalal Mehta

Mr. Tarun Sheth
S/O Natwarlal Gordhandas Sheth

Mr. Munesh Khanna
S/O Narindra Khanna
111
GROUP OVERVIEW
The Lalbhai group, founded by the 3 Lalbhai brothers in 1908, has grown to
become one of India's most diversified business houses, with a significant
presence in the textiles, ready-to-wear, chemicals, air-conditioners and
telecom industries in India.
Each company in the group, in its own way, pursues a single mission - to be the
benchmark in the industry. To achieve this, they have tied-up with a variety of
companies, all world leaders in their respective fields.
LALBHAI GROUP COMPANIES

TEXTILES/ YARNS
Arvind limited.
Arvind Products limited.
Arvind Fashion limited.
Arvind Brands limited.
Arvind Intex
Arvind Cot spin
Garment Export Division, Bangalore
Arvind Overseas limited., Mauritius
CHEMICALS
Anil Starch Products limited.
Atul limited.
TELECOM
Arvind Telecom
OTHERS
Anup Engineering limited.
Anagram Stock Broking
Lalbhai realty limited.
Amtrex Appliancesm limited.
112
COMPANYS VALUE & VISION

The underlying theme running across the broad spectrum of all business
activities at Arvind is that of enhancing lifestyles of people, across all
diversities and demographics.
To serve that end, the corporate vision for Arvind states: 'We will enable
people to experience a better quality of life by providing enriching and
inspiring lifestyle solutions'.
"To achieve global dominance over various businesses built around our core
competencies, through continuous product and technical innovation, customer
orientation and a focus on cost effectiveness".
COMPANYS MISSION
Arvind limited. has laid down certain aims and objectives to be achieved while
pursuing its corporate activities. These are:
To provide a favorable work environment to the employees to direct their
working towards achievement of corporate goals.
To provide opportunities creating a mechanism for updating the system
To manage the institution as a trust, as empowered leaders and do all that
needs to be done ethically for the purpose of the institution.
To create a vibrant institution for the future of this nation and the world at
large
To be a world leader in an environment fostering innovation and leadership.
To reinforce connections, and catalyze the chemistry that allows connections
to be translated into action which is beneficial for both the organization and
the individual.
113
COMPANYS PHILOSOPHY
WE BELIEVE
In people and their unlimited potential. In content and focus in problem
solving. In teams for effective performance. In intellect & its power.
WE ENDEAVOUR
To select, train and coach people to obtain higher responsibilities. To nurture
talent to build leaders for tomorrow's corporation. To reward, celebrate and
activate all intellectual business contributions.
WE DREAM
Of excellence in all endeavors. Of mutual benefit and prosperity. Of making
the world a better place to live in. We Make Things Happen.
"It is my responsibility as a leader to create an environment where
excellent people would like to come and give their best, to create a
vision, to give freedom for excellence."
- Sanjay Lalbhai (Managing Dir.)
We believe in potential of every human being. Our Human Resource
Development policy reflects this belief
114
13.3 GROWTH OF ARVIND LIMITED

MILESTONES ACHIEVED
1930
Arvind Limited was set up by Lalbhai Brothers.
1934
With sales reaching Rs. 45.76 lakhs and a profit of almost Rs. 3 lakhs,
Arvind establishes itself amongst the foremost textile units in the
country.
1985
First Meter of Denim churned out.
1986
An uninterrupted record of not missing out on paying dividend to its

shareholders.
An established leader in fine & superfine cotton fabrics for Indian
market.
Renovation: First company to bring globally accepted fabrics Denim,
yarn dyed shirting fabrics & wrinkle free gabardines to India.
1987
The largest zero discharge green effluent treatment plant in India.

Commitment to greener world.
First company to bring International shirt brand Arrow to India
First company to start dedicated retail outlets for Arrow brand
Awarded various awards for Highest exports and ISO.
1989
Largest denim & shirting in South Asia.

3rd Largest denim capacity in the world.
115
1990
Introduction of Premium Shirtings Division.
1993
Office set up in New York, London & Hong Kong.
1994
Arvind ventures into BrandsFlying Machine acquired..

BEGINNING OF AN ERA
1995
LEE commenced production. Introduction of Ruf & Tuf, ready to stitch

denim.
1997
Commission
of
State-of-the-art
manufacturing
unit
at
Santej
(Ahmadabad).
First Indian company to detribalize the cotton textile business from
cotton fields to apparel retailing.
1997-
First company to introduce ERP SAP business solutions.
1998
2002
Arvind` does a unique financial restructuring.
2004
Relocation of Mauritius Plant at the end of quota regime.

Company launches 'Mega mart', now India's largest value apparel-retail
2008
chain.
Largest portfolio of International brands: Lee, Wrangler, Nautical, Jan
sport, Kipling, Tommy, Arrow, US Polo, Izard, Pierre Cardin, Palm
Beach, Cherokee, hart Schaffer Marx.
116
PRODUCT PROFILE OF
ARVIND LIMITED
117
The company has very strong product profile with Lifestyle Fabric, Lifestyle
Apparels, and strong brand image.
The product portfolio of Arvind Limited includes:
Denim
There is many delightful features of Arvind denim: An annual capacity
of 110 million meters; the position of 3rd largest producer of denim in
the world; and an export network of 70 countries worldwide. Prominent
products in this category include ring denim, indigo voiles, organic
denim, bi-stretch denim and fair trade certified denim. This is apart
from regular light, medium and heavy weight denims. They come in
various shades of indigo, sulphur, yarn-dyeds, in 100% cotton and
various blends.
With a discerning clientele that includes GAP, VF Corporation, Levi
Strauss, Abercrombie & Fitch, Calvin Klein to name a few, Arvind has
to stay fashionably ahead. Their designers based out of Japan, Europe
and USA create trend setting collections for the season, ensuring that
heads keep turning for the Arvind name. Denim from Arvind offers
reliability, quality and value-addition through services like shrink-film
wrapping, bar-coded labeling of rolls, providing washed and unwashed
shade blankets with every order, besides faster documentation. The
facilities of Arvind Denim are accredited with ISO 9001, ISO 14001,
OEKOTEX 100, GOTS, Organic exchange standard, FLO for fair trade
and Lycra Assured. The labs are accredited by Dupont, Levi Strauss.
Further, theres excellent infrastructure, state-of-art technology and a
dedicated customer counseling team that continuously resolve quality
issues and provide desired wash results. Arvind also has in place an
effluent treatment facility, which recycles waste water and converts
denim waste to denim paper, in keeping with their eco friendly
production process.
As one of the largest denim producers in the world, Arvind caters to
quality markets of Europe, US, West Asia, the Far East and the Asia
Pacific.
118
Shirtings
Arvind Shirting fabric has many aces up its sleeve. It is one of the most
well-known products of Arvind Group, selling at a premium in the
international market. It has an astonishing annual capacity of 34 million
meters. Prominent products within this category include fabrics with
non-iron properties, mechanical finishes, printed fabrics apart from the
cotton and cotton blends in Linen, Lycra, Polyester, Modal, Silk etc.
with varieties in yarn dyeds and solids.
Further, Arvind has a unique plant for manufacturing very light weight
indigo dyed fabrics in yarn dyed and solids for top weights. Arvind
Shirting has a liquid ammonia based fabric processing plant and a
state-of-the-art print house a first for India and one of the few in Asia.
The clientele for the product include names like Polo, Ralph Lauren,
ESPRIT, GAP, FCUK, Zara, Pull & Bear, Louis Philippe, Van Heusen,
Allen Solly, Color Plus, Parx and Park Avenue.
Backed by the latest technology and state-of-the-art equipment, every
stage of the production process, right from spinning of the yarn to final
processing and testing of the fabric, ensures that stringent quality
standards are met and products remain eco-friendly.
The plant is equipped for spinning company, Lycra and super fine yarn
up to 170s count. This is in addition to an existing state-of-the- art yarn
dyeing facility, automatic drawing in unit and an automated fabric
inspection and packing facility. And if that wasnt enough, the division
has the largest sampling plant in India for speedy churning out of desk
looms and yardages for customers. Plus, theres additional support
from an in-house design studio and a team of designers, who in turn
get continuous inputs on latest international trends from designers
based in Italy and the UK.
119
Khaki
The many virtues of Arvind Khaki merit your undivided attention: An
annual capacity of 21 million meters which facilitates the launch of two
new collections annually; and the distinction of being the only khakis
division in South East Asia to do so.
The division provides the finest fabrics in the variants of 100% Cotton,
Cotton Rich Polyester Blend, Cotton Lycra, Cotton Tencel, Cotton
Linen, etc to name a few. The division has an integrated plant with
weaving and processing facilities. The most prominent products in this
range include Chinos, Canvas, Ribstop, HBT, Tussore, Cavalry,
Structures and Dobbies. Its easy to see why the most discerning
customers flock here: The exalted list includes GAP, J Crew, Polo
Ralph Lauren, Abercrombie & Fitch, Banana Republic, Ann Taylor, Liz
Clairborne,(US), Marks and Spencer, Pull & Bear, Benetton, Grotto
Gas, Diesel, Debenhams, (UK), Madura Garments, and Color Plus
(India).
To satisfy such quality conscious customers, the khaki division has a
testing and Quality Control Laboratory, and a Product Development
Cell, which not only undertakes value-engineering of the existing
products but is also involved in creating new weaves, blends and
dyeing and processing techniques. The plants are certified by OEKO
TEX, Lycra, Teflon. Laboratory accredited by Marks and Spencers,
Next, Dupont, Levis, INVISTA.
Knits
Arvinds knits department has an annual knitting capacity of 10,000
tons. Apart from the basic knitting capabilities (jersey, pique, rib, and
interlock), Arvind has mastered specialty knitting techniques such as
yarn-dyed autostripers, jacquards, and stretch fabric. The knits vertical
has a fabric dyeing capacity of 6500 tons per annum and yarn dyeing
capacity of 3500 tons per annum. It has the ability to process both
tubular and open-width fabric and offer specialty finishes like
mercerization, singing and various forms of brushing and peaching.
120
The department also boasts of a state-of- the art print shop equipped
with fully automatic placement printing capabilities.
Voiles
Arvind is the uncontested market-leader in the manufacture of voiles,
with a production capacity of 33 million meters per annum. Arvinds
voiles are primarily used as blouse material and are sold in the
domestic market through an impressive network of 150 dealers,
reaching over 5000 retail outlets throughout India. High quality Swiss
voiles are exported to Switzerland, Sri Lanka and countries in the
Middle East.
121
FUNCTIONAL DEPARTMENTS
AT
ARVIND LIMITED
122
FUNCTIONING OF THE ORGANIZATION

Each Strategic Business Unit is headed by a Business Head. There
are also small garment units at Asoka and Retail outlets at Naroda.
The organization has adopted a Hybrid Structure to be more
responsive to the changing markets in which the Functional and the
Divisional structures are combined together. As the organization grew
larger with several products and markets, it typically organized into
self-contained divisions. Functions like marketing, which is important to
each product or market are decentralized to the self-contained units.
However, some functions like Finance, MIS, Legal and Secretarial,
Taxation and Services that are stable and require economies of scale
and in-depth specialization are centralized at Naroda Corporate
headquarters. Each of these departments provides services for the
entire organization.
Each product Line Head is in charge of all functions of that product
such
as
marketing,
planning,
supply
and
distribution,
and
manufacturing. There is no Matrix reporting, which means that they

follow one-to-one reporting. The Supervisors will report to the
Functional Heads or Managers and the managers in turn will report to
the Managing Director who is the apex of the organization.
EMPLOYEES
The company in all is operating on strength of nearly 3000 managerial
cadder employees and approximately 15000 first line managers.
Employees are all qualified and technically efficient to serve its clients.
Employees are given training of all the products and services so that
they can serve its clients better. Company has a healthy incentive
structure for its employees.
TURNOVER
The approximate turnover of the company was Rs. 2344.99 crores (as
per current financial year 2008-2009).
123
GEOGRAPHICAL SPREAD
Arvinds worldwide network facilitates Global account management for
the leading brands and local customers. With offices in New York,
London, Bangladesh, Delhi, Ahmedabad, Mumbai, and Bangalore,
Arvind has made itself ready to attend to its customers anywhere on
the Globe. Besides their global offices, they have independent and
devoted sales force for all locations and dedicated resources for key
accounts.
BRIEF ABOUT OPERATIONS

Arvind Limited has carved out an aggressive strategy to verticalize its
current operations by setting up world-scale garmenting facilities and
offerings a one-stop shop service, by offering garment packages to its
international and domestic customers such as Lee, Wrangler, Arrow
and Tommy Hilfiger and its own domestic brands such as Flying
Machine, Newport, Excalibur and Ready to Stitch (RTS) previously was
Ruff & Tuff. It has now become the largest producers and Exporters of
Denim Fabric in the World.
Talking about the Operations Arvind Limited is,purely focus on
Customer Centric Approach i.e. Customer gives a Samples of Fabric to
Marketing Department according to their Requirements and then after
working of departments such as Spinning, Dyeing and Sizing,
Weaving, Quality Assurance, Inspection, ISO starts.
The Management Staff and Workers are well trained to handle each
process and the Machines for operations are workers friendly i.e.
Workers know their part, which machines indicate.
The worthwhile thing here is Companys total dedication on Quality
Management by having departments such as Quality Assurance and
Development and New Technology Group. Not only this but also they
take samples after each processes which will be explained in detail
hereafter.
124
The manufacturing process starts from Spinning, Weaving, Dyeing,

Finishing, Quality Assurance, DNTG, Inspection, ISO + EMS.
The Major Functional Departments Includes:
Production Department
Marketing Department
Finance Department
Human Resource Department
125
15.1 PRODUCTION DEPARTMENT

The production department includes Spinning, Weaving, Dyeing,
Finishing, Quality Assurance, DNTG, Inspection, ISO + EMS.
The production for different fabrics requires different processes.
The woven fabrics are weaved on the weaving powerlooms where as
the knitted fabrics are manufactured through the knitting machine.
As denim production plant at Arvind Limited is the biggest and has best
of the technologies for production and produces quality denims, we will
focus on the Denim Production Plant of the company.
SPINNING
Procurement of cotton is done based on the Cotton Testing Laboratories by

checking Cottons Length, Strength and Uniformity. Then the cotton bales are
send to Spinning Department to start with production of yarn.
COTTON SPINNING HAS 4 TYPES OF PROCESS:Ring Spinning
Rotor Spinning or OE Spinning
Adjudge Spinning
Trap-Frictions Spinning
126
To manufacture a Denim Fabric Arvind Ltd. uses Rotor Spinning or Open-End

Spinning Processes and Ring Spinning is used at their another Business
Divisions that is Ashoka Spintex.
Spinning Department produces 60 tons of Yarn with potential of 24 Rotor
Spinning Machines by having different counts i.e. coarser yarn which is used
for Denim and within counts of 5.3 to 20 and the finer yarn is used to
manufacture Shirting and Trousers within counts of 30 to 160.
They are having Open End Spinning Process for making Yarns and in
this Cotton are passed through four different routes to produce a Yarn:Blowing: - in the blower cotton is opened up and cleaned by the
removal of the impurities like trash and short cotton fibres.
Carding: - Carding is defined as a process in which complete
individualization of fibrous material is taking place by working them
between two closely spaced relatively moving clothed surfaces. The
end product of this machine is sliver, which is having a rope like
structure. There three Liners and each liner are having 12 Cards so
there are 36 Cards in total.
Draw- Frame (Drawing): The draw frame improves the uniformity of
the sliver by doubling process, Parallelize and straighten the fibres
to the sliver axis, Mixes and blending of sliver to sliver, Remove
the residual impurities, Prepare the package of sliver in the can
properly.
Then after the above three process, it goes into the Final yarn making
machine which is known as Auto Coro. It continuously keep a watch on
production of yarn and any deviations found are detected with the help
of the sensors provided in the machine and hence corrective actions
are taken by the operators.
127
DYEING AND S IZING
After spinning department produces yarns and then after converts it

into warp beams it is then transferred to the Dyeing and Sizing
Department for the further processes. Mainly they use natural indigo
dyeing in producing Denim Fabric and as per the requirements of
customers, they also used multi-colored dyes such as Black, Blue,
Navy Blue, Green with the help of Sulphuric Colors.
Dyeing and Sizing department uses two Approaches for dyeing the
warp beams and Sizing of it.
Sizing is the process in which the warp is treated with a starch paste
and a coat of the paste is applied on it to increase the strength of the
warp.
I.
Sucker Muller ( Warp Dyeing)
II.
Rope Dyeing
SUCKER MULLER: Generally there are 320 to 400 number of ends in

a warp beams, in addition, this machine can handle upto 12 Beams in
one go.
ROPE DYEING: In this method a warp beams first converts into rope
beamers and then are passed to the 50 Rope Dyeing machine for the
further process.
128
The basic difference between Warp Dyeing and Rope Dyeing is that in
Warp Dyeing- Dyeing and Sizing Process goes together whereas in
Rope Dyeing the focus is mostly on Dyeing Process and then after the
Ropes is filled into cans and then Ropes are opened as a Warp and
thereafter Sizing part is done.
WEAVING
After processes such as Spinning, Warping, Dyeing and Sizing

weaving is a stage where Raw Fabric is manufactured and then finally
it goes to Finishing Department.
TSUDAKOMA AIRJET LOOMS are used for Denim production. There
are 203 looms in the Loom Shed. Out of 203, 159 looms are of ZAX
model and 44 looms are of 209i model.
These Looms works with a speed of 700 to 750 Rotations per Minute
(RPM).
Warp Beamers are first installed on the Air jet loom set, and then after
a weft is entered into nozzles through air pressure.
Then interlacement of the yarn into fabric takes place with the help of
heald shafts and the air jet
Generally, one machine produces 500 meters of Raw Fabric daily
(depend on picks).
129
FINISHING
This
department
tries
to
maintain
Quality,
Production
level,
and
Transparency like other departments and keep liaison with other

departments. This department has three processes and any process can be
by-pass as per customers requirement. They are as follows:
a) SINGEING
b) DESIZING
c) MERCERIZING
a) SINGEING: In this process the hairiness, improper slubs and other

impurities are removed with the help of three burners at 900 .C. The burning
takes place in one goes i.e. Fabric passes through these 3 burners at a one
go. In this process route of fabric is decided automatically and each
customers fabric has its own identity or code number.
b) DESIZING: The sizing process for increasing the strength of the warp
applies a size paste on the warp which makes the fabric stiff and hence to
make the fabric soft, and to remove the paste after weaving process takes
place, Desizing is carried out through which the size paste is washed out from
the fabric.
c) MERCIRIZING: The mercerizing process gives additional luster to the
fabric and also improves the dimensional stability of the fabric. The fabric is
130
treated with alkali solution in the boilers for the process.
QUALITY ASSURANCE
The quality assurance division keeps a check on the quality of the fibre , yarn
and fabric.
The quality check is done at many stages as follows:
1 The cotton bales trash content and the length of the fibre is checked before
the raw cotton is taken for the spinning process.
2 The spun yarn is check in terms of the slubs, knots or other yarn defects.
Also the strength of the yarn is checked.
3 The gray fabric is checked to see that it does not contain any fabric defects.
4 The finished fabric is checked to see the dye fastness of the fabric and
uniformity of the dyeing process.
All these quality assurance process is carried out as per the specifications
provided by the customers and their requirements.
Depending upon the various quality checks required, there are various Quality
departments as followed:
1 Cotton Laboratory
2 Chemical Laboratory
3 Clearance and Complaint Cells
4 Process control Cell
131
5 Sample Check Cell

6 Small Garmenting Division
7 Certification Department
Development and New Technology Group
The objective of this department is to develop samples as per

customers requirement. They develop new yarns and fabrics and
some of their developed categories are Lenin Denim, Polyester Cotton
Denim and Shades of fabric dyes.
They receive samples from marketing department send by the
customers for development.
Fabric designing and analysis of the fabric send by the customers is
done here.
Also the new shades as per the customers requirement are been tried
to develop by replication in the department.
The feasibility check of new fabric designs, new shades developed,
and any other related fabric development is done and then the
following set of process is been followed.
132
INSPECTION
The inspection department checks all the 100% fabric produced in the
production department to ensure the quality of the fabric so as to maintain the
standards followed by the company.
Arvind Limited follows the Four Point System for the inspection of the fabrics.
~ Four Point System ~
A widely recognized inspection method frequently used in the textile industry.
It is a technique issued by the American Society for Testing & Materials with
reference to the designation ASTM D5 430-93.
The four-point system derives its name from the basic grading rule that a
maximum of four penalty points can be assessed for any single defect and
that no linear meter can be assigned more than four points regardless of the
number of defects within that piece.
PENALTY POINT EVALUATION: Defects in both warp / fill directions will be
assigned points under the following criteria.
Defect Range
Points Evaluation
Up to 3 inches
1 Point
> 3 inches < 6 inches
2 Points
> 6 inches < 9 inches
3 Points
> 9 inches
4 Points
The length of the defect is used to determine the penalty points. Only major
defects are considered. A major defect is any defect, if found on a finished
product, would classify the product as a B grade. Any defect of a continuous
nature shall be assigned four points for each meter in which it occurs.
133
15.2 MARKETING AT ARVIND LIMITED

Styles may be short lived, but for well over seven decades Arvind has
been defining and shaping many a collection and trendsetting styles
across the ramps and retail outlets of the fashion capitals of the world.
Arvind is today synonymous with a vast range of lifestyles products be it fabrics or brands. Time and again they have been called to
produce some of the finest fabrics and exacting dresses for some of
the world's most quality conscious brands - while evolving our own
extensive brand portfolio.
Arvind is amongst a few organizations worldwide with a portfolio of
brands that are distinctive and relevant across diverse consumers. At
Arvind, brands work across multiple channels, price points and
consumer segments.
The Arvind limiteds marketing strategy is focused on niche market,
they have developed different brands for different group of customers.
The company promotes its products in various ways.
The biggest example is development of the Ruf & Tuf denim brand and
its promotion through TV Ads, with their brand ambassador as Akshay
Kumar, which was the first time any Textile Company promoted its
product on television at large scale.
Company launches 'Mega mart', now India's largest value apparel-retail
chain in 2008 again as their marketing strategy to attract large number
of customers.
The company changed the total approach of marketing of products in
India.
Along with domestic marketing of the company, the company has its
presence at the international level also.
134
INTERNATIONAL MARKETING:
Country-Wise Exports for Denim (Contribution in %)
U.S.A
30%
Europe
55%
Middle-East
(Bangladesh, Turkey, Sri
Lanka)
15%
Arvind Limited is India's largest integrated textile company and

operates across the entire value chain from designing of fabric to
brands. Arvind Limited was the first company in India to bring
international brands when they brought Arrow to India. Arvind has
licensing relationships with many international brands like Arrow,
GANT US Polo & Cherokee. They also have JVs with VF Corporation
with brand portfolio of Lee, Wrangler, Nautica, Jansport, Kipling, Hero
by Wrangler & Lee Riders, Tommy Hilfiger and most recently a JV with
Diesel.
The Marketing Strategies are different as per Geographical Indicators.
For Example: - Particularly for Europe countries, Fabric have category
named as Euro-line. The Europeans wants depth of color (Darkness in
Fabric).
The Company believes in Secured Payment, therefore, it gives no
credit to any of its customer but can give terms and conditions of L/C.
The Pricing Quotations are different as per customers convenience i.e.
F.O.B or C.I.F. They follow the ethics on Fabric such as Width, Weight
and Ounces. These are carefully observing and try that none of these
have been tampered.
135
The company has developed different brands for different customers as

shown below:
Lee & Arrow for the super premium segment
FlyingMachine&Excalibur
for
the
premium
segment
Newport for the economy and higher middle class people.
Innovative Ruf & Tuf for the mass market.
The company has recently made a foray into children segment by

introducing Lee Youth, Ruggers Kids & Newport Kids. Similarly in tieup with Cluett Peabody, USA, to manufacture and market their world
famous Arrow shirts, it launched what is todays Indias most
inspirational brand of dress shirts.
Arvind was already making shirting for the Indian market. In 1990, it
decided to focus on high value shirting, so as to expand their markets
beyond India's borders.
Arvind has recently set up a dedicated bottom weights plant as part of
Arvind Polycot Limited. This new addition to the Arvind Textile Complex
brings the total investment in the complex up to Rs.12000 million.
Ahmedabad. It has both weaving and processing infrastructure, captive
136
power supply, steam generation and a wastewater treatment plant. The

latter makes it a zero discharge complex i.e. one that recycles all its
wastewater.
With a production capacity of 120 million meter per annum, Arvind is
currently Indias largest and worlds third largest denim manufacturer.
It sells under the brand names ARVIND DENIM and BIG MILL
DENIM (in Europe). In India Arvind commands a market share of
approximately 64% which is five times that of the next largest player.
Our denim is used to make Indias leading jeans brands Flying
Machine, Killer, Levis, Numero Uno, Pepe, Texas jeans, UFO and
Wrangler. All the leading local denim manufacturers use Made from
original Arvind denim as an indicator of high quality and consistency.
Arvind also exports denim to over sixty-six countries worldwide. Denim
exports constitute of approximately 50% of the turnover.
Today Arvind is making yet another foray in the manufacture of the
finest quality Cotton Knits in the world.
This new venture features a technical collaboration with Alamac Knits
Inc, USA to manufacture high value and high-fashion knits. With an
investment of US $50 million, the plant will produce fabric in both
tubular and open widths. The product range aims to offer widest choice
in both tubular and open widths in single (Jersey, Pique, Textures,
Pointless, Fleece, French Terry, Jacquards in solids, feeds and
automatics) and double (Interlocks, Needle-outs, ottomans, Pointless,
Textures, Reversible, jacquards, Ribs in solids, feeds and automatics,
Collars: Plains and Jacquards) knits.
Arvinds Own Brands
Licensed Brands
137
Arvind Customers
22
138
ARVIND LTD. CHANGES NAME, FOCUS AND STRATEGY
Textile major Arvind Ltd. which has been recently going through a bad
patch owing to rising rupee, reducing exports and falling margins is
undertaking a business transformation in a bid to become a billion
dollar company.
The company has firstly changed its name from Arvind Ltd. limited to
Arvind limited with a new logo and identity to reflect a company which
is diversified with focus on branded apparel and retail. The promoters
will increase their stake from 34% to 47% and infuse Rs.188 crore
capital into the company.
Also, half of the Rs.1400 crore debts which Arvind limited has would be
repaid by selling off land at Ahmadabad and Bangalore thus positively
affecting the companys profitability.
Arvind is now giving more focus to brands and retail which until now
contributes 19% of total revenue. It will also move to become an
integrated textile player by producing fabric as well as retailing it. With
a combination of its own as well as licensed brands, Arvind aims to
become the largest apparel brand in India with focus on Tier II and III
cities.
Major emphasis would be on the value store format Megamart which
is targeted to achieve Rs.1000 crore sales in 3 years. Other than that
Arvind plans to setup 250 small format and 30 large format stores by
2012.The strategy may work out to be rewarding for the company as it
has a good portfolio of domestic and international, and has been an
established national player. The move would also help it to ward off
any risk it faces from the recession in export markets.
139
15.3 FINANCE DEPARTMENT

Arvind limited is acclaimed in the Indian corporate field for its financial
skills. Being the phase of rapid growth or downturn the company has
demonstrated swift, sharp and robust financial acumen to navigate the
company through different phases of economic cycles. Arvind Ltd. was
the first Textile Company from India to issue GDRS in the year 199293. Highly complex financial restructuring exercise involving more than
80 domestic and international tenders, who the company implemented
following the major downturn in the business cycle during year 20002002, is considered to be the benchmark for the Indian corporate.
Arvind limited has been making judicious choice of fund leasing
avenues in the domestic as well as international markets so as to utilis
very efficient capital structure, which is in the tune with operating risks
and enhances the shareholders value.
The company has laid down the risk management policy to manage the
financial risks emerging out of currency and interest rate. It runs an
active treasury desk so as to make use of modern hedging tools
available to manage financial risks.
Arvind Ltd. was the first Textile Company in India to implement ERP,
SAP as back as in the year 1997-98. The company follows best
accounting practices to prepare its financial statements as envisaged in
the Indian and international accounting standards
SHAREHOLDING PATTERN OF ARVIND LIMITED
TABLE: 15.1
Particulars
NO.OF SHARES
% OF TOTAL
Promoters
76908767
35.24%
Institution
42340700
19.40%
General public
98980382
45.36%
Grand total
218229849
100%
Source: www.arvindmills.com
140
GRAPHICAL PRESENTATION OF NUMBERS OF SHAREHOLDERS

GRAPH 15.1
25000000
218229849
20000000
15000000
98980382
10000000 76908767
Series1
42340700
50000000
Series2
0
Promoters Institution
General
public
Grand total
MARGIN IMPROVEMENTS TABLE 15.2
EBIDTA margins likely to improve going forward:

Denim & shirting & Khaki business generated margin of 22% in 2009-10
However, overall margin for entire textile business in 2009-10 was 15%
as garments activity and knit fabric unit incurred losses
Capacity addition of 80 Million Meters (about 50% increase) planned
over next 3-4 years in these businesses while other businesses
consolidating
Garments activity is likely to break even in the current FY
141
Significant capacity additions leading to 15% revenue growth with relatively

lower overhead increase (7-8%)
Improving pricing power as share of retail revenue is growing (set to become

20% of textile Business in next 3 years)
FINANCIAL ANALYSIS OF ARVIND LIMITED

15.3.1 RATIO ANALYSIS
Ratio analysis is a study of relationship among the financial factor in a
business. Thus, Ratio analysis measures the profitability, efficiency and
financial soundness of the business.
Ratio analysis is to present the DIAGRAM of financial statement in simple and
intangible form. Ratio analysis is to present the DIAGRAM of financial
statement in simple and intangible for. Ratio analysis is the process of
establishing meaningful relationship between two DIAGRAM and set for
financial statement.
OBJECTIVE OF DOING COMPERATIVE RATIO ANALYSIS

Measuring which firm is more profitable.
Judging difference in the operational efficiency between two firms.
Assessing the solvency of both the company.
Comparing short and long-term financial position of both the company.
Facilitating comparative analysis performance.
CLASSIFICATION OF RATIOS:
1) Liquidity Ratios
2) Leverage Ratios
3) Activity Ratios
4) Profitability Ratios
142
COMPARATIVE RATIO ANALYSIS
1. CURRENT RATIO
Current Ratio, also known as working capital ratio is a measure of general
liquidity and its most widely used to make the analysis of short-term financial
position or liquidity of a firm. It is defined as the relation between current
assets and current liabilities. Thus,
CURRENT RATIO = CURRENT ASSETS
CURRENT LIABILITES
The two components of this ratio are:
1) CURRENT ASSETS
2) CURRENT LIABILITES
Current assets include cash, marketable securities, bill receivables, sundry
debtors, inventories and work-in-progresses. Current liabilities include
outstanding expenses, bill payable, dividend payable etc.
A relatively high current ratio is an indication that the firm is liquid and has the
ability to pay its current obligations in time. On the hand a low current ratio
represents that the liquidity position of the firm is not good and the firm shall
not be able to pay its current liabilities in time. A ratio equal or near to the rule
of thumb of 2:1 i.e. current assets double the current liabilities is considered to
be satisfactory.
CURRENT RATIO OF TEXTILE INDUSTRY AND ARVIND LIMITED
TABLE 15.3
TEXTILE INDUSTRY
ARVIND LIMITED
2010
2009
5.65
3.26
3.84
2.62
COMPARISON OF CURRENT RATIO

GRAPH 15.2
CURRENT RATIO
6
4
TEXTILE INDUSTRY
ARVIND LIMITED
0
2010
2009
143
INTERPRETATION:
The standard current ratio is 2:1. In case of Textile industry and Arvind Ltd.
the current ratio is higher than the standard ratio. Here, the current ratio of
Textile industry is higher than that of Arvind Ltd. which shows that Textile
industry as a whole has good liquidity position than Arvind Ltd. This means
that Textile industry has good short term solvency than Arvind Ltd. and also
has more current assets to meet short term obligations. But such high ratio
also indicates improper management of working capital (current assets)
because high level of current assets indicates blockage of money in terms of
receivables, inventories and cash.
2. QUICK RATIO
Quick ratio is a more rigorous test of liquidity than current ratio. Quick ratio
may be defined as the relationship between quick/liquid assets and current or
liquid liabilities. An asset is said to be liquid if it can be converted into cash
with a short period without loss of value. It measures the firms capacity to pay
off current obligations immediately.
QUICK RATIO = QUICK ASSETS
CURRENT LIABILITES
Where Quick Assets are:
1)
Marketable Securities
2)
Cash in hand and Cash at bank
3)
Debtors
A high ratio is an indication that the firm is liquid and has the ability to meet its
current liabilities in time and on the other hand a low quick ratio represents
that the firms liquidity position is not good.
As a rule of thumb ratio of 1:1 is considered satisfactory. It is generally
thought that if quick assets are equal to the current liabilities then the concern
may be able to meet its short-term obligations. However, a firm having high
quick ratio may not have a satisfactory liquidity position if it has slow paying
debtors. On the other hand, a firm having a low liquidity position if it has fast
moving inventories.
144
QUICK RATIO OF TEXTILE INDUSTRY AND ARVIND LIMITED

TABLE 15.4
TEXTILE INDUSTRY
ARVIND LIMITED
2010
2009
3.59
2.31
2.45
1.16
COMPARISON OF QUICK RATIO

GRAPH 15.3
QUICK RATIO
4
3
2
TEXTILE INDUSTRY
ARVIND LIMITED
0
2010
2009
INTERPRETATION:
The standard quick ratio is 1:1 while here both the companies have their quick
ratio higher than the standard ratio. The quick ratio of Textile Industry is
higher than Arvind Limited. This indicates that the industry as a whole has
more investment in liquid assets.
3. CASH RATIO
Since cash is the most liquid asset, a financial analyst may examine cash
ratio and its equivalent current asset.
Cash ratio = Cash + Marketable securities
Current liabilities
145
CASH RATIO OF TEXTILE INDUSTRY AND ARVIND LIMITED

TABLE 15.5
2010
2009
TEXTILE INDUSTRY
1.05
0.43
ARVIND LIMITED
0.11
0.09
COMPARISON OF CASH RATIO

GRAPH 15.4
CASH RATIO
1.2
1
0.8
0.6
TEXTILE INDUSTRY
0.4
ARVIND LIMITED
0.2
0
2010
2009
INTERPRETATION:
Cash ratio of Arvind Ltd. is lower than Textile industry. This shows that as
Textile industry has huge amount of cash it has improper management of
resources.
4. NET WORKING CAPITAL RATIO

The difference between the current assets and current liabilities excluding the
short term bank borrowings is called net working capital or net current assets.
It is sometimes used to measure the firms liquidity. It however measures the
firms potential reservoir of funds.
Net working capital ratio = Net working capital
Net assets
146
NET WORKING CAPITAL RATIO OF TEXTILE INDUSTRY AND ARVIND

LIMITED
TABLE 15.6
TEXTILE INDUSTRY
ARVIND LIMITED
2010
2009
0.84
0.74
0.8
0.63
COMPARISON FOR THE NET WORKING CAPITAL RATIO

GRAPH 15.5
NET WORKING CAPITAL RATIO

1
0.8
0.6
TEXTILE INDUSTRY
0.4
ARVIND LIMITED
0.2
0
2010
2009
INTERPRETATION:
Here, it is almost the same for both the company and industry which show
that both have equal capability to meet their current obligations. That is both
companies have same liquidity position.
5. INVENTORY TURNOVER RATIO
Every firm has to maintain a certain amount of inventory of finished goods so
as to meet the requirements of the business. But the level of inventory should
neither be too high nor too low. Because it is harmful to hold more inventory
as some amount of capital is blocked in it and some cost is involved in it. It will
therefore be advisable to dispose the inventory as soon as possible.
147
INVENTORY TURNOVER RATIO =
COST OF GOOD SOLD

AVERAGE INVENTORY
Inventory turnover ratio measures the speed with which the stock is converted
into sales. Usually a high inventory ratio indicates an efficient management of
inventory because more frequently the stocks are sold; the lesser amount of
money is required to finance the inventory. Whereas the low inventory
turnover ratio indicates inefficient management of inventory. A low inventory
turnover implies over investment in inventories, dull business, poor quality of
goods, stock accumulations and slow moving goods and low profits as
compared to total investment.
Cost of goods sold = sales Gross profit
Average inventory = Opening stock + Closing stock
2
INVENTORY TURNOVER RATIO OF TEXTILE INDUSTRY AND
ARVIND LIMITED
TABLE 15.7
TEXTILE INDUSTRY
ARVIND LIMITED
2010
2009
1.05
5.84
4.04
4.22
COMPARISON FOR INVENTORY TURNOVER RATIO

GRAPH 15.6
INVENTORY TURN OVER RATIO

7
6
5
4
TEXTILE INDUSTRY
ARVIND LIMITED
2
1
0
2010
2009
148
INTERPRETATION:
The inventory turnover of the company is more than the whole industry. This
shows the inefficiency of the company in managing the inventory.
6. DEBTORS RATIO:
A concern may sell its goods on cash as well as on credit to increase its
sales and a liberal credit policy may result in tying up substantial funds of a
firm in the form of trade debtors. Trade debtors are expected to be converted
into cash within a short period and are included in current assets. So liquidity
position of a concern also depends upon the quality of trade debtors.
Debtors Ratio = Debtors + Bills Receivable *365 days

Credit Sales
DEBTORS RATIO OF TEXTILE INDUSTRY AND ARVIND LIMITED
TABLE 15.8
2010
TEXTILE INDUSTRY
ARVIND LIMITED
2009
77
39
73
55
COMPARISON OF DEBTORS RATIO

GRAPH 15.7
DEBTOR'S RATIO
100
80
60
TEXTILE INDUSTRY
40
ARVIND LIMITED
20
0
2010
2009
INTERPRETATION:Debtors turnover ratio of Arvind is lower than that of

whole industry which indicates that Arvind is more efficient in management of
debtor.
149
7. TOTAL ASSET TURNOVER

This ratio shows the firms ability in generating sales from all financial
resources committed to total assets. It is computed by dividing sales by total
assets. The following formula is applied to compute this ratio:
Total asset turnover =
Sales
Total assets
TOTAL ASSETS TURN OVER RATIO OF TEXTILE INDUSTRY AND

ARVIND LIMITED
TABLE 15.9
2010
2009
TEXTILE INDUSTRY
0.46
0.45
ARVIND LIMITED
0.63
0.6
COMPARISON OF TOTAL ASSETS TURNOVER RATIO

GRAPH 15.8
TOTAL ASSETS TURNOVER

RATIO
0.8
0.6
0.4
TEXTILE INDUSTRY
0.2
ARVIND LIMITED
0
2010
2009
INTERPRETATION:
Total asset turnover ratio for Arvind Limited is higher than The industry which
indicates that Arvind utilizes all its financial resources committed to total
assets better than as compared to the industry.
150
7. GROSS PROFIT MARGIN

The gross profit margin reflects the efficiency with which management
produces each unit of product. This ratio indicates the average spread
between the costs of goods sold and average revenue.
Gross profit higher because of the following factors:
1) When the sales price is higher.
2) Cost of sales remains constant.
3) If there is increase in the volume of sales.
4) If closing stock is valued at a higher price.
Gross profit margin = sales cost of goods sold
Sales
GROSS PROFIT MARGIN OF TEXTILE INDUSTRY AND ARVIND LIMITED
TABLE 15.10
2010
2009
TEXTILE INDUSTRY
1.93
1.88
ARVIND LIMITED
8.44
5.75
COMPARISON OF GROSS PROFIT MARGIN

GRAPH 15.9
GROSS PROFIT MARGIN

10
8
6
TEXTILE INDUSTRY
ARVIND LIMITED
2
0
2010
2009
151
INTEPRETATION
In both the years the gross profit margin ratio of Arvind is higher than the
industry which indicates that company is more profitable than whole of the
industry. Thus it means that for the industry the cost incurred on the cost of
goods sold on every unit of sales is higher than company.
8. NET PROFIT MARGIN

The net profit margin ratio is obtained by dividing profit after tax by sales. Net
profit margin ratio establishes a relationship between net profit and sales and
indicates managements efficiency in manufacturing, administering and selling
the product. This ratio is the overall measure of the firms ability to turn each
rupee sales into net profit. This ratio also indicates the firms capacity to
withstand adverse economic conditions.
Net profit margin = PAT
Sales
NET PROFIT MARGIN OF TEXTILE INDUSTRY AND ARVIND LIMITED
TABLE 15.11
TEXTILE INDUSTRY
ARVIND LIMITED
2010
2009
0.05
2.2
-0.01
-1.99
COMPARISON OF NET PROFIT RATIO

GRAPH 15.10
NET PROFIT MARGIN

3
2
1
TEXTILE INDUSTRY
0
-1
2010
2009
-2
-3
152
ARVIND LIMITED
INTERPRETATION:
The net profit margin of Arvind is higher than the industry which indicates
Arvind managements efficiency in manufacturing, administering and selling
the product. It also indicates that more earnings are available to the
shareholders of Arvind.
10. OPERATING EXPENSE RATIO
The operating expense ratio explains the changes in the profit margin ratio.
This ratio is computed by dividing operating expense by sales. The operating
expense is the yardstick of operating efficiency.
Operating expense ratio =
operating expense
Sales
OPERATING EXPENSE RATIO OF TEXTILE INDUSTRY AND ARVIND

LIMITED
TABLE 15.12
TEXTILE INDUSTRY
ARVIND LIMITED
2010
2009
0.49
0.94
0.67
0.96
COMPARISON OF OPERATING EXPENSE RATIO

GRAPH 15.11
OPERATING EXPENSE RATIO

1.2
1
0.8
0.6
0.4
0.2
0
TEXTILE INDUSTRY
ARVIND LIMITED
2010
2009
153
INTERPRETATION
Here, the operating ratio of the textile industry is comparatively low than
Arvind Ltd. which shows that textile industry has higher profit margin.
Operating expense ratio of textile industry in 2010 indicates that 49% of sales
have been consumed together by the cost of goods sold and other operating
expense and 51% of sales were left to cover interest, taxes and earning to
owners.
15.3.2 DUPONT ANALYSIS

The Du Pont analysis helps in understanding how return on assets is
influenced by the net profit margin and total assets turnover ratio. Here is
analysis of the Assets of Arvind Ltd. and its efficiency to utilize it.
Formula to calculate DPA
Return on Assets = Net Profit Margin* Total Assets Turnover
DuPont Analysis of Arvind Ltd.:

ROA
Net Profit
Net Sales
Net Sales
= 1.78%
Avg. Total Assets
Arvind Ltd. Is having ratio of 1.78% against industries ratio of 4.06%. This
means company is not making effective use of assets.
15.3.3 ROI ANALYSIS

Return on investment is one of the parameter to analyze efficiency to utilize
resources on which company has made investment.
Formula to Calculate ROI
ROI
Profit After Tax

Net Worth
154
ROI Analysis of Arvind Ltd. = 231.9

From the calculation it is clear that in Arvind Ltd. not having proper rate of
return on investment. Because it is very much low which affect the profitability
of firm.
15.3.4 LEVERAGE ANALYSIS

Three leverage will be calculated to know the degree of leverage in the
Arvind Ltd..
1) Operating Leverage =
Contribution_________
Earnings before Interest & Tax

= 6.75
From the calculation, for 6.75% change in sales of Arvind Ltd.
there will be more than 1% change in EBIT. So, it shows more
fixed burden securities are at Arvind Ltd..
2) Financial Leverage = EBIT
= 3.99
EBT
As calculation here, 3.99% change in EBIT of Arvind Ltd. there
will be more than 1% change in EBT. So, more chances of
Financial Risk with company.
3) Combine Leverage = DOL * DFL
= 6.75 * 3.99
= 26.94
Total risk of Arvind Ltd. is more than 1/4th of companies total capital
structure. So, company has to choose a tradeoff between Total Risk &
Expected Return, keeping in mind of maximizing shareholders value.
155
15.3.5 WORKING CAPITAL MANAGEMENT ANALYSIS
It is important for company like Arvind Ltd. to manage its working capital for
the Smooth operation and maintain brand image because it shows the
liquidity of the firm which is required for cotton textile Mills.
At Arvind Ltd. there are experts to handle all the money related decisions.
They are following general method of calculating there WC. Only Through
which they manage cash & inventory at a same time payments to creditors.
Net Working Capital = Current Assets Current Liabilities
= 1298.06
- 440.8
=857.26
In Arvind Ltd. proper management of current assets is there. With compare to

Textile Industry WC, Arvind mill is one of the best companies in WCM. Thats
why company is achieving targets with export of goods.
Note: the numerical data was available from Annual report of Arvind limited as
in annexure 6
156
Arvinds Transformational Initiatives coupled with Industrys

Buoyancy shall create Sustainable Growth Platform
157
15.4 HUMAN RESOURCE AT ARVIND LIMITED

Being an Employer of Choice is a rare feat. And Arvind accomplishes that by
aiming to attract, retain and nurture talent. The development of the individual
is all-important and as long as there is learning, there is job satisfaction. That
explains Arvinds HR policy and its emphasis on learning and skill
enhancement.
Training calendars keep their people busy across businesses, encompassing
technical, functional and behavioural modules. Training is imparted on the job,
as well as through classrooms and seminars.
Career and succession planning initiatives are implemented through role
elevation and enhancement, evaluating intercompany and inter unit
opportunities, and special development plans for top talent. Arvind employs
20324 people as workmen and over 5296 people as management staff,
making it one of the more prolific employers in the state.
CORPORATE RESPONSIBILITY
A Company and its city
The fortunes of a Company and the fortunes of a City are closely linked. They
share a mutually beneficial relationship. In fact, a Company that improves its
environment will find that its own prospects also improve in the process. It is
this philosophy that has given shape to the Companys CSR policy.
Education
Through the Sharda Trust, the Companys CSR vehicle, Arvind has
been involved in upgrading the standard of municipal schools in
Ahmedabad and building a pool of employable youth with current skill
sets. Today, over 700 students from three municipal schools benefit
from supplemental English, mathematics and computer education in
classes equipped with state-of-the-art facilities, across 3 locations.
Urban infrastructure
158
In an effort to make Ahmadabad a more attractive city to work in,

focused on two areas: Development of C G road. Ahmadabads most
popular street received a makeover so that both the urban dweller and
visitor can enjoy a clean, organized and enjoyable shopping
experience. Upgrading of slums.
SHARDA TRUST
Arvind Limited established the "Strategic Help Alliance for Relief to
Distressed Areas" (SHARDA) Trust. Registered as a Public Charitable
Trust, its broad objective is to improve the quality of life of urban poor
anywhere in India.
Training Garment Workers
The Trust has also undertaken programmes to train youth as Sewing
Machine Operatives in collaboration with National Institute of Fashion
Technology (NIFT) Gandhinagar, and organized their placement with
Arvind and other Garment manufacturing firms.
Practical English and Computer Applications Training
The trust has conducted training programs in computer applications
and practical English speaking for unemployed youth. The skills of the
youth were upgraded to a level where they could find employment in
BPO, ITES, and Banking & Finance firms.
Municipal School Education
The current mission of the Trust is to improve the quality of education
in Ahmadabads Municipal Schools. This programme aims to teach
English, Computers and Mathematics, the three languages of modern
business and commerce to children studying in class V, VI & VII.
LALBHAI RURAL DEVELOPMENT:
These include programmes like:
Vocational Programmes for rural poor.
Upgrading the infrastructure in a rural primary school.
Helping the rural poor in improving the yields in their farms.
159
S.W.O.T ANALYSIS
160
STRENGHT:
WEAKNESS:
A company
Lalbhai group
One of the oldest played in Indian

fabric market
from prestigious
Situated very far from city
Low advertisement budget
Unable to handle small orders
Can supply both fabric as well as

garment
Production capacity of 7million

tons monthly wise
Provide quality with consistence
OPPORTUNITIES:
THREATS:
Able to handle more franchisee of

international brands
Retails are going to be a major

sector in India. Therefore demand
for fabric is also increasing.
Higher cost of production due

to heavy investment
Having potential to increase their

capacity, so that they can satisfy
more and more customer needs.
Competition from various

domestic players, especially
from Raymonds and LNJ.
Fluctuation in price of yarn.
Regularly
technology
Existing players coming up

with
more
variety
and
innovation esp. catering small
order.
Change in government policy
By providing consistency in
quality they can attract more
customers.
161
innovation
in
Risk Factors for Arvind limited

Foreign Exchange
Net FX inflows of about $ 200 M
Appreciation of rupee hurts margin
Company takes forward covers for 2-3 years on rolling basis so that it can
achieve at least Rs. 47
Share of exports from present 33% of revenue likely to fall to 25% next FY
Cotton prices
Increase in cotton prices may impact the margin to the extent the company
is not able to pass on the cost increase to its customers.
In the recent past the price increases have been very steep and significant
Gas prices
Arvind has a 9 year contract with GAIL for supply of gas for its power plants.
The gas price are decided by Central Government
Leverage
Company is planning to realize about Rs. 1000 crores from real estate
divestment over next 4 years which will help it pay off all its long term debt.
Global Recession
Global recessionary conditions do affect the volume of sale as well as
pricing power.
Arvinds reliance on exports has been steadily falling due to:
Focus on domestic market for fabrics
Significant revenue growth coming from brands & retail business
162
COMPARATIVE ANALYSIS
OF TWO MAJOR
TEXTILE PLAYERS
163
COMPARITIVE STUDY OF STRATEGIES IMPLEMENTED BY TWO

TEXTILE MAJOR PLAYERS RAYMOND LIMITED AND ARVIND LIMITED:
The textile industry in India is having many competitors and hence the major
companies try to develop new strategies to attain good marketing positions.
STRATEGIC THRUST AREAS OF RAYMOND LIMITED:

Strong thrust on their core business areas of Branded Fabrics and
Apparel
Immediate expansion plan in high value cotton shirting fabric business
current capacity 11.5 mn meters p.a. to be increased to 21.6 mn
meters
Aggressive retail thrust last year initiated a plan to add 289 stores by
2011 (128 new stores opened since then upto June 2010)
Address the dual manufacturing cost at Thane and Vapi potential
margin increase in Textiles business of 34% per annum
Focus on profitable growth across businesses
RAYMONDS RECENT STRATEGIES
Raymond
put
the
finishing
touches
to
its
high-tech
denim
manufacturing facility, Everblue Apparel, in Dodaballapur. The

company plans to supply three million pairs of denim jeans per year out
of this plant to customers across the world. With the removal of quota
barriers worldwide, Raymond is cashing in on the opportunity of an
increased global presence available now to textile manufacturers from
India. And to meet supply orders on time, Raymond has invested Rs
450 crore in Everblue Apparel.
Raymond is already in the second stage of expansion in the overseas
market, and is getting into outsourcing and tie-ups in places like Dubai,
Malaysia and the Middle East. The company is already present in
Thailand, Sri Lanka and Bangladesh. Once they have the right scales,
they will enter the US and UK markets. That will be the third stage of
overseas expansion.
164
Back home, the companys focus is on its high-end menswear through

brands like Manzoni and Park Avenue, managed by Raymond Apparel
Ltd (RAL). RAL is working on its two other showrooms one in
Mumbai and one in Delhi. Raymond is also setting up 50 shop-in-shop
Manzoni outlets in the chain.
In terms of position, Park Avenue is a premium lifestyle brand, whereas
Manzoni is a luxury lifestyle brand. Raymond has strategically put the
two brands in different price categories: Mazoni begins where Park
Avenue ends.
Commenting on the plethora of casual wear brands in the market
today, Raymond President feels excited to articulate that in order to
have its own distinct identity, they are transforming their mid price Parx
brand more and more into casual wear products suitable for various
outdoor occasions like leisure, travel and celebrations both during the
day and evening.
While apparel seems to be the focus area, Raymond is also putting
necessary funds into its textile projects. For instance, in worsted suiting
fabric, it is expanding capacity by three million meters by early next
year, taking the total capacity to 28 million meters. For shirting, it
recently set up a new plant, Celebration Apparel, near Bangalore, with
an investment of Rs.14 crores. This will produce 3,000 shirts per day in
the first phase and 6,000 per day in the second.
In March, this year, Raymond closed a Rs 206 crore deal with Italys
Gruppo Zambaiti to set up a Greenfield facility in India for the
manufacture of high value cotton shirting fabric. The facility will
manufacture fine cotton and cotton linen shirting fabric with a capacity
of 11.5 million meters.
165
STRATEGIC INITIATIVES OF ARVIND LTD.

Moving up the value chain in Denim
Leveraging on global capacities and strong product development skills,
Arvind has moved up the value chain focusing on value added denim.
Presently, value added denims contribute 70% of its fabric volumes
with 30% being the standard range. This improved product mix has
insulated it from the increasing commoditization of denim, boosted
exports and contributed towards higher realizations of an estimated
Rs.100-plus per meter. Although its plants are running at full its
initiatives to relocate the Mauritius plant (8mn metres) and debottleneck its plants will increase capacities by 15-16% to 105mn
meters.
Focus on High Value Cotton Shirting
It is increasing focus on high value cotton shirting (HVCS) having
higher realizations. It is in the process of de-bottlenecking to increase
capacities from 27mn meters in FY04 to achieve rated capacity of
34mn meters per annum. Additionally with part of the denim capacity
made fungible for shirting and its product mix shifting towards very fine
quality shirting enjoy higher realizations the growth outlook is strong.
Further, with new shirt capacities of 2.4mn pieces commencing in
2HFY05, its key customers already given plant approvals and order
projections, we foresee its captive consumption of shirting fabric
increasing from 24% in FY04 to 28-29% in FY05.
Fabric Wide range
Denim stretched, faded, streaked, mercerized, striped checked, ring,
brushed, soft, speed wash, over dyed Tencel, Chinos, Rain denim,
Super
Dark
denim
Shirting
Twills,
Dobbys,
Cords,
Poplins,
Chambrays, Classical Oxfords, Cottons, Chief Value Cottons, Stripes,

Checks Indigo Oxfords/Twills, Fil-a-Fil, White & Solid Colors Knit
Garments T-Shirts, Polo-Shirts, Knitted bottoms, shirts, ruby shirts,
Ladies blouses, track suits, jackets, inner wear
166
Value added denim contributes 70% of denim fabric volumes Shirting

fabric realizations to increase to Rs.131 per meter
Moving ahead with garmenting strategy
Arvind is aggressively expanding its garmenting capacities to take
advantage of the growth in garment exports post the quota regime in
Jan05. It will have a capacity of 14.3mn pieces per annum on a single
shift basis across Denim, Shirts, Knits and Trousers ready by Dec04. It
also plans to implement an incentive wage plan for increasing
productivity at its garments units. Further it can double the capacity by
operating at two shifts, once the single shift operations stabilize. We
foresee garments as the new growth engine for Arvind and expect this
segment increasing contribution from 8% in FY05 to 19% by FY06.
Shirts, Jeans, Khaki, Trousers ,Knit
Mine relationships with global brands
Arvind plans to leverage on its relationships with global brands like
GAP, Levis, JC Penney, Tommy Hilfiger, Marks & Spencer, Nike,
Reebok for exports post removal of quota on garments. These brands
are already sourcing either fabric or garments from Arvind and looking
to increase its outsourcing garments post Jan05. We foresee Arvind
mining these relationships for strong growth in garment exports and
expect its garment business to grow by 94% .
Ready to ride the textile wave post quotas
With global capacities in fabric, presence across denim, shirtings and
knits and initiatives to forward integrate into garments, we believe it is
ready to ride the textile outsourcing wave post quotas in Jan05. With
its new capacity of 2.4mn shirts to commence at full capacity utilization
in 3QFY05, healthy order book position in knits and new customers
added for diversifying in new markets, the outlook is robust. We believe
exports will be the growth driver going forward and expect the same to
grow by 35% per annum over FY05-06.
Domestic fabric demand likely to rise
With dismantling of quotas, we believe Asia will emerge as a garment
outsourcing base to the developed nations. This in our view will trigger
167
growth for domestic fabric makers, as garment houses will increase

sourcing of fabric for servicing the growth in garments. We believe
Arvinds global capacities will come in advantage for tapping of this
long-term growth potential.
Shifts Mauritius facilities to India
With extension of the African Growth and Opportunity Act (AGOA)
Acceleration Act by three years, Arvind has shifted its Mauritius plants
of denim fabric (8m meters) and jeans (2mn capacity) to India. It has
invested an estimated Rs.120mn and expects a payback of 1-yr given
the expectation of higher contributions in India. We foresee this as step
towards consolidating denim capacities and efforts to increase
presence in denim apparels ahead of the removal of quotas.
Denim cycle on a recovery

With denim fabric witnessing a reversal with volumes up in 1QFY05
after decline over last 3-quarters, we believe the denim cycle is on a
recovery. Denim Prices have also firmed up from levels of Rs.90 per
metre to Rs.100- plus levels in 1QFY05. This is largely a result of
structural shift in garment operations from US and Western Europe to
Asia and African regions and focus on value added denim. We expect
this trend to gain further momentum post the removal of quotas in
Jan05, with surge in garment orders for delivery scheduled post
quotas. Additionally, extension of African Growth and Opportunities Act
(AGOA) by three years to 2007 will also boost demand for denim in
Asia going forward. With global capacities in the region, we believe
Arvind is geared to service these requirements and expect volumes to
pick up going forward.
168
RECOMMENDATIONS
AND
CONCLUSION
169
RECOMMENDATIONS
As compared with the Raymonds strategies, who are trying to increase
their market share in Denim, Arvind Limited needs to plan a strong
strategies to sustain its high market position.
Also Arvind Limited needs to start its retail business in other countries
as they are having a good brand name, so that they can make their
presence felt internationally and can also compete with Raymond
textiles , as they are having many retail outlets internationally.
Arvind Limited has expanded its business in terms of vertical and
backward integration in field of cotton textiles and so it should now aim
to diversify its products in worsted and woolen cloths also so that it can
become major player in both cotton as well as worsted and hence can
give though competition to Raymond the largest player in worsted
fabrics.
Also Arvind Limited needs to market its brand portfolio as many
potential customers in the market are not familiar with its brands.
Arvind Limited is facing increased competition in the market so it will
have to adopt more aggressive working capital management policy in
order to increase its share and sales turnover.
It should focus more on the herbal and eco-friendly dyes for denim as
many competitors are coming up with the same concept and even
customers are becoming environmental conscious.
170
CONCLUSION
With 200 Million meters of capacity, the company is one of the largest
players in the world. Through product differentiation and cost
competitiveness the company has been able to service some of the
best customers in the world. In the recent past the company has
reentered the domestic retail market segment by expanding its
distribution and offering unique functional fabrics to the consumers at
affordable prices. While its fabric and garment business will continue to
grow by 10%-12% in next 3-5 years, the major growth drivers would be
retail and business.
Further company is entering the segment of technical textile/ advanced
material and which is expected to contribute significantly to the revenue
of the company in next 3-5 years.
On the backdrop of resurgence in demand from US and European
markets, growing domestic market, favuorable exchange rate, lower
energy cost and expansion in capacities in both denim fabric and
cotton woven fabric through outsourcing route, the company expects
the growth in both,revenue as well as operating margins in next year.
Hence we can say that the company is going to prosper more in future
and augment its growth and fame in the Textile Industry.
171
ANNEXURE 1
PRICES OF RAW COTTON AND COTTON YARN
Prices of Raw Cotton for the week ending 12/03/2011
Price (Rs. Per Kg.) during
Current
Last
Last
Last
Week
Week
Month
Year
Variety
12/03/2011 05/03/2011 26/02/2011 27/03/2010
SHORT (20mm & below)
Bengal Deshi (Fine)
141.94
140.34
140.91
59.06
J-34 (Bikaneri Narma)
164.11
162.63
161.67
75.66
V-797
124.22
121.99
131.01
58.22
JAYADHAR
N.A.
N.A.
N.A.
63.00
Y-1/
152.20
150.82
149.06
69.47
Average
146.84
145.15
147.25
66.59
MEDIUM (20.5 - 24.5)
MEDIUM LONG (25 to 27 mm)

NHH-44
N.A.
N.A.
N.A.
69.19
F-414 (SG)
N.A.
N.A.
N.A.
N.A.
LRA-5166
154.78
152.93
155.39
74.81
Average
154.78
152.93
155.39
72.00
H-4/MECH.1
160.31
157.85
156.79
76.22
LK
N.A.
N.A.
N.A.
N.A.
Shankar-6/shankar-4
164.33
162.99
160.69
76.22
Average
162.32
160.42
158.74
76.22
LONG (27.5 TO 32 mm)
EXTRA LONG (32.5 & ABOVE)
172
MCU-5
176.96
173.67
171.56
77.62
DCH - 32 (SI)
231.56
234.14
232.03
116.72
SUVIN
N.A.
N.A.
N.A.
N.A.
Average
204.26
203.91
201.80
97.17
157.89
156.23
156.92
72.76
Wt. Avg Price of Raw

Cotton
Source : Tecoya Trend, Bombay.

Prices of Cotton Yarn for the week ending 12/03/2011
Price (Rs. Per Kg.) during
Current
Last
Last
Last
Week
Week
Month
Year
12/03/2011
05/03/2011
26/02/2011
27/03/2010
6s
N.A.
N.A.
N.A.
73.00
10s
N.A.
N.A.
N.A.
80.00
20s
218.00
221.00
221.00
140.00
30s
250.00
253.00
253.00
153.00
40s
279.00
283.00
283.00
173.00
60s Card
324.00
328.00
328.00
209.00
60s / 62s comb
346.00
350.00
350.00
230.00
80s comb
438.00
440.00
440.00
309.00
100s comb
486.00
486.00
486.00
321.00
Wt. Avrg
265.51
268.87
268.87
136.71
Variety
B: COTTON CONE YARN :

6s
N.A.
N.A.
N.A.
75.00
10s
N.A.
N.A.
N.A.
83.00
20s
145.00
145.00
145.00
138.00
30s
204.00
204.00
204.00
156.00
173
40s /42s
228.00
228.00
228.00
174.00
60s Card
269.00
269.00
269.00
209.00
60s / 62s comb
278.00
278.00
278.00
223.00
80 comb
N.A.
N.A.
N.A.
281.00
100s comb
N.A.
N.A.
N.A.
324.00
Wt. Avrg
208.74
208.74
208.74
148.20
C: COTTON YARN HOSIERY CONES :

20s (K)
233.00
227.00
227.00
139.00
30s (K)
253.00
247.00
247.00
146.00
40s (K)
267.00
261.00
261.00
161.00
40s (C)
278.00
272.00
272.00
171.00
Average
257.75
251.75
251.75
154.25
Source :
RO Coimbatore, The prices mentioned above are inclusive of all
duties/taxes. ( i.e. inclusive of 4% VAT for Cone yarn, no VAT for hank yarn as
applicable in Tamilnadu.)
174
ANNEXURE 2
Financial Year-Wise Break-Up of Inflow of Foreign Direct Investment (FDI) In
India from August 1991 to April 2010 (Amount in billions)
175
ANNEXURE 3 EXCISE DUTY SRUCTURE ON DIFFERENT TEXTILE

PRODUCTS:
Source : EXIM INDIAMART
AS PER CHAPTER 51 OF EXIM POLICY
Chapter 51
Notes:
SUB-HEADING NOTE
For the purposes of sub-heading Nos. 5209.42 and 5211.42 the expression "denim" means fabrics of
yarns of different colors, of 3-thread or 4-thread twill, including broken twill, warp faced, the warp yarns
of which are of one and the same color and the weft yarns of which are unbleached, bleached, dyed
grey or coloured a lighter shade of the color of the warp yarns.
Heading
Sub-
No.
heading
Description of article
Rate of duty
No.
Standard
Preferential
Areas
(1)
(2)
(3)
(4)
52.01
5201.00
Cotton, not carded or combed
5%
52.02
Cotton waste (including yarn waste

and garnetted stock)
5202.10
- Yarn waste (including thread waste)
15% ***
- Other :
52.03
5202.91
- Garnetted stock
15% ***
5202.99
--Other
15% ***
5203.00
Cotton, carded or combed
35%
52.04
Cotton sewing thread, whether or not

put up for
retail sale
- Not put up for retail sale :
5204.11
-- Containing 85% or more by weight of
20%
cotton
52.05
5204.19
-- Other
20%
5204.20
- Put up for retail sale
20%
Cotton yarn (other than sewing

thread), containing 85% or more by
176
(5)
weight of cotton, not put up for retail

sale
- Single yarn, of uncombed fibres :
5205.11
--Measuring 714.29 decitex or more (not
20%
exceeding 14 metric number)

5205.12
--Measuring less than 714.29 decitex but
20%
not less than 232.56 decitex (exceeding

14 metric number but not exceeding 43
metric number)
5205.13
20%

metric number)
5205.14
20%
not less than 125 decitex (exceeding 52

metric number but not exceeding 80
metric number)
5205.15
-- Measuring less than 125 decitex
20%
(exceeding 80 metric number)

- Single yarn, of combed fibres :
5205.21
-- Measuring 714.29 decitex or more (not
20%

5205.22
-- Measuring less than 714.29 decitex but
20%

metric number)
5205.23
20%

metric number)
5205.24
20%

metric number)
5205.26
-- Measuring less than 125 decitex but
20%

metric number)
5205.27
20%
not less than 83.33 decitex (exceeding 94

metric number)
5205.28
--Measuring less than 83.33 decitex

- Multiple (folded) or cabled yarn, of
177
20%
uncombed fibres :
5205.31
-- Measuring per single yarn 714.29
20%
decitex or more (not exceeding 14 metric

number per single yarn)
5205.32
-- Measuring per single yarn less than
20%
714.29 decitex but not less than 232.56

decitex (exceeding 14 metric number but
not exceeding 43 metric number per
single yarn)
5205.33
20%

single yarn)
5205.34
20%
192.31 decitex but not less than 125

single yarn)
5205.35
20%
125 decitex (exceeding 80 metric number

per single yarn)
combed fibres:
5205.41
20%

5205.42
20%

single yarn)
5205.43
20%

single yarn)
5205.44
20%

single yarn)
5205.46

125 decitex but not less than 106.38
178
20%
single yarn)
5205.47
20%

single yarn)
5205.48
20%
83.33 decitex (exceeding 120 metric

52.06
Cotton yarn (other than sewing

thread), containing less than 85% by
weight of cotton, not put up for retail
sale
- Single yarn, of uncombed fibres :
5206.11
20%

5206.12
20%

metric number)
5206.13
20%

metric number)
5206.14
20%

metric number)
5206.15
20%

- Single yarn, of combed fibres :
5206.21
20%

5206.22
20%

metric number)
5206.23
20%

metric number)
5206.24

not less than 125 decitex' (exceeding 52
metric number)
179
20%
5206.25
20%

uncombed fibres :
5206.31
--Measuring per single yarn 714.29
20%

5206.32
20%

single yarn)
5206.33
20%

single yarn)
5206.34
20%

single yarn)
5206.35
20%

per single yarn)
combed fibres :
5206.41
20%

5206.42
20%

single yarn)
5206.43
--Measuring per single yarn less than
20%

not
exceeding 52 metric number per single
yarn)
5206.44

single yarn)
180
20%
5206.45
20%

per single yarn)
52.07
Cotton yarn (other than sewing thread)

put up for retailsale
5207.10
-Containing 85% or more by weight of
25%
cotton
5207.90
52.08
- Other
35%
Woven fabrics of cotton, containing

85% or more by weight of cotton,
weighing not more than 200 g/m
- Unbleached:
5208.11
-- Plain weave, weighing not more than

100 g/m
5208.12
-- Plain weave, weighing more than 100

g/m
5208.13
35%
35%
-- 3-thread or 4-thread twill, including
35%
cross twill
5208.19
-- Other fabrics
35%
- Bleached:
5208.21

100 g/m
5208.22
35%
35%
g/m2
5208.23
--3-thread or 4-thread twill, including
35%
cross twill
5208.29
-- Other fabrics
35%
- Dyed:
5208.31

100 g/m
5208.32

g/m
5208.33
35%
35%
35%
cross twill
5208.39
-- Other fabrics
35%or Rs. 150

per Kgs
whichever is
higher
- Of yarns of different colours :

5208.41

100 g/m
30% or Rs. 9
per sq mtr.,
whichever is
higher
181
5208.42
- Plain weave, weighing more than 100

g/m
30% or Rs 37
per sq mtr.,
whichever is
higher
5208.43
35%
cross twill
5208.49
-- Other fabrics
35% or Rs. 200

per kg.,
whichever is
higher
- Printed:
5208.51
30% or Rs. 27
100 g/m2
per sq. mtr.,

whichever is
higher
5208.52

g/m
30% or Rs. 23
per sq. mtr.,
whichever is
higher
5208.53
30% or Rs. 35
cross twill
per sq. mtr.,

whichever is
higher
5208.59
-- Other fabrics
30% or Rs. 50
per sq. mtr.,
whichever is
higher
52.09
Woven fabrics of cotton, containing

85% or more by weight of cotton,
weighing more than 200 g/m2
- Unbleached:
5209.11
-- Plain weave
35%
5209.12
35%
cross
twill
5209.19
--Other fabrics
35%
- Bleached:
5209.21
-- Plain weave
35%
5209.22
35%
cross twill
5209.29
-- Other fabrics
35%
- Dyed:
5209.31
-- Plain weave
35% or Rs. 150

per Kgs
182
whichever is
higher
5209.32.
35% or Rs. 150
cross twill
per Kgs
whichever is
higher
5209.39
-- Other fabrics
35% or Rs. 150

per Kgs
whichever is
higher
-Of yarns of different colours:

5209.41
-- Plain weave
35% or Rs 32
*** per Sq. Mtr.
whichever is
higher
5209.42
-- Denim
30% or Rs. 25
*** per sq. mtr.,
whichever is
higher
5209.43
-- Other fabrics of 3-thread or 4-thread
35% or Rs. 30
twill, including cross twill
*** per Sq. Mtr.,

whichever is
higher
5209.49
-- Other fabrics
35%or Rs. 150

per Kg.
whichever is
higher.
- Printed:
5209.51
-- Plain weave
30% or Rs. 30
per sq mtr.,
whichever is
higher
5209.52
- 3-thread or 4-thread twill, including
30% or Rs. 30
cross twill
per sq. mtr.,

whichever is
higher
5209.59
-- Other fabrics
30% or Rs. 38
*** per sq. mtr.,
whichever is
higher
52.10
Woven fabrics of cotton, containing less

than 85% by weight of cotton, mixed
mainly or solely with man-made fibres,
weighing not more than 200 g/m
- Unbleached:
5210.11
-- Plain weave
35%
183
5210.12
35%
cross twill
5210.19
-- Other fabrics
35%
- Bleached:
5210.21
-- Plain weave
35%
5210.22
35%
cross twill
5210.29
--Other fabrics
35%
- Dyed:
5210.31
-- Plain weave
35%
5210.32
35%
cross twill
5210.39
--Other fabrics
35%or Rs. 150

per Kg.
whichever is
higher
- Of yarns of different colours:

5210.41
-- Plain weave
30% or Rs. 15
per sq. mtr.,
whichever is
higher
5210.42
35% or Rs 25
cross twill
*** per sqm.,

whichever is
higher
5210.49
-- Other fabrics
35% or Rs. 185

per kg.,
whichever is
higher
- Printed:
5210.51
-- Plain weave
30% or Rs. 15
per sq. mtr.,
whichever is
higher
5210.52
30% or Rs. 15
cross twill
per sq. mtr.,

whichever is
higher
5210.59
-- Other fabrics
30% or Rs. 15
per sq. mtr.,
whichever is
higher
52.11
Woven fabrics of cotton, containing less

than 85% by weight of cotton, mixed
184
mainly or solely with man-made fibres,

weighing more than 200 g/m
- Unbleached:
5211.11
-- Plain weave
35%
5211.12
35%
cross twill
5211.19
-- Other fabrics
35%
-Bleached:
5211.21
-- Plain weave
35%
5211.22
35%
cross twill
5211.29
--Other fabrics
35%
- Dyed:
5211.31
-- Plain weave
35% or Rs. 150

per kg.
whichever is
higher.
5211.32
35% or Rs. 150
cross : twill
per kg.
whichever is
higher.
5211.39
-- Other fabrics
35% or Rs. 150

per kg.
whichever is
higher.
- Of yarns of different colours :

5211.41
-- Plain weave
35% or Rs. 44
*** per sqm.
whichever is
higher
5211.42
-- Denim
30% or Rs. 18
per sq. mtr.,
whichever is
higher
5211.43
--Other fabrics of 3-thread or 4-thread
35% or Rs. 40
twill, including cross twill
*** per sqm.,

whichever is
higher
5211.49
--Other fabrics
35%Rs. 150 per

kg. whichever is
higher.
- Printed:
5211.51
-- Plain weave
30% or Rs. 18
per sq. mtr.,
185
whichever is
higher.
5211.52
30% or Rs. 18
cross twill
per sq. mtr.,

whichever is
higher
5211.59
-- Other fabrics
30% or Rs. 18
per sq. mtr.,
whichever is
higher
52.12
Other woven fabrics of cotton

- Weighing not more than 200 g/m2 :
5212.11
-- Unbleached
35%
5212.12
-- Bleached
35%
5212.13
--Dyed
35%
5212.14
-- Of yarns of different colours
35%
5212.15
--Printed
35% or Rs. 165

per kg.,
whichever is
higher
2
-Weighing more than 200 g/m :

5212.21
-- Unbleached
35%
5212.22
--Bleached
35%
5212.23
--Dyed
35%
5212.24
--Of yarns of different colours
30% or Rs. 20
per sq. mtr.,
whichever is
higher
5212.25
-- Printed
35% or Rs 165
per kg.,
whichever is
higher
186
ANNEXURE 4
EXPORT OF COTTON TEXTILE PRODUCTS FROM INDIA
Sector-wise Analysis of the Indian Textiles Exports
(Rs. In crores)
In the table above the Item No. 1= Readymade Garments, 2=Cotton Textiles,
3= Man Made Textiles, 4= Woolen Textiles, 5= Silk and 6= Exports of total
textiles.
V* = Variation in Exports
ANNEXURE 5
187
SUPPLY AND DEMAND OF COTTON IN INDIA

Supply and Demand of Cotton12 (Quantity in lakh bales of 170 kgs each)
188
ANNEXURE-6
Balance Sheet of cotton Textile Industry as on Year ended 31stMarch, 2010
Particulars
31/3/2010
31/3/2009
230.87
1127.55
122.03
932.41
2575.98
288.54
2249.16
257.76
Deferred Tax Liability

TOTAL
128.26
4354.45
105.81
3700.89
APPLICATION OF FUNDS
Fixed Assets
Gross Block
Less: Depreciation
Net Block
Capital Work in Progress
3187.20
865.43
2261.77
215.56
2589.06
759.38
1829.68
472.30
340.91
0.03
-0.21
364.91
2.24
1.35
662.62
409.77
339.19
27.86
383.41
503.50
367.28
156.07
21.11
340.17
295.84
26.97
322.81
1536.40
0
4354.45
315.51
46.29
361.80
1026.32
0
3700.89
SOURCES OF FUND
Share Holders Fund
Share Capital
Reserve & Surplus
Loan Funds
Secured Loan
Unsecured Loan
Investments
Foreign Currency Monetary Term Transaction
Difference Account
Current Assets, Loan & Advances
Inventory
Sundry Debtors
Cash & Bank Balance
Other Current Assets
Loans & Advances
Less: Current Liabilities & Provisions
Liabilities
Provisions
Net Current Asserts
Miscellaneous Expenditure
TOTAL
189
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Dhanabhakyam, M. & Shanthi, A. "Indian textile industry An
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India Brand Equity Foundation, Textiles & Apparel: Market &
Opportunities,
Available
from:
http://www.ibef.org/artdisplay.aspx?cat_id=172&art_id=19785.
Infoline News, Textile sector investment, on Available from:
http://www.indiainfoline.com/news/innernews.asp?storyId=76063&lmn=
1&cat=19
Ministry of Textiles, Foreign Direct Investment Policy in Textiles,
Available from:
http://texmin.nic.in/fdi/fdi_main.htm
The textile And Apparel Industry India, By Pankaj Chandr, Indian
Institue
of
Management,Vastrapur,
Ahmadabad
380015,
chandra@iimahd.ernet.in
Chandra, P., Competitiveness of Indian Textiles & Garment Industry:
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Ahmedabad, December 2004.
FICCI, Trends Analysis of India & Chinas Textiles and Apparel
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Annual Report of FICCI, New Delhi, July 2005.
Majmudar, Madhavi (1996), The MFA Phase-Out and the EU Clothing
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190
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Aligarh Muslim
University, Aligarh, India E-mail: asiyaac@rediffmail.com

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Prashant
Agarwal,
Luv
Jasuja
and
Rohit
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FDI Inflows to Textiles a report on Textiles.htm.
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http://www.wto.org/english/res_e/statis_e/its2007_e/its07_merch_trade
_product_e.htm
http://www.wto.org/english/res_e/statis_e/its2010_e/its10_merch_trade
_product_e.htm
www.arvind.com
www.raymondindia.com
www.alokind.com
www.vardhmantextiles.com
www.welspunsyntex.com
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COMPREHENSIVE PROJECT REPORT

INCLUSIVE STUDY OF COTTON TEXTILE INDUSTRY

Gujarat Technological University

Samkiti .B. Gandhi

Enrollment No: (0970952024)

Enrollment No: (0970952056)

C K Shah Vijapurwala Institute Of Management

DIMPAL .R. RAMOLIYA

SAMKITI .B. GANDHI

Further, we have undertaken a detailed study of Arvind Limited, being one of

Also we have made a comparative study of the strategies implemented by two

DEMAND DETERMINATION OF THE COTTON

MAJOR PLAYERS IN THE INDUSTRY

DISTRIBUTION CHANNEL OF THE TEXTILE

KEY ISSUES AND CURRENT TRENDS IN THE

COTTON TEXTILE INDUSTRY

PESTEL ANALYSIS FOR TEXTILE INDUSTRY

FINANCIAL ANALYSIS OF THE TEXTILE

TEXTILE INDUSTRY ANALYSIS:MICHAEL

PORTERS FIVE FORCE MODEL

FUTURE OUTLOOK OF THE TEXTILE INDUSTRY

RECOMMENDATIONS AND CONCLUSION

PART-II COMPANY STUDY OF ARVIND LIMITED

PRODUCT PROFILE OF ARVIND LIMITED

FUNCTIONAL DEPARTMENTS AT ARVIND

COMPARATIVE ANALYSIS OF TWO MAJOR

RECOMMENDATIONS AND CONCLUSION

Price of Cotton Fabric

Income Of Targeted Customer

Major Players Of Textile Industry

Shareholding Pattern Of Arvind Ltd.

Net Working Capital Ratio

Inventory Turnover Ratio

Total Assets Turnover Ratio

Gross Profit Margin Ratio

Net Profit Margin Ratio

Operating Expense Ratio

Structure Of Textile Industry

Contribution of Textile Industry in Indian Economy

The Textile Value Chain

Major World Producer As Cotton Yarn & Fabric

INDIA: Exports Of Textile & Clothing By Use

Net Exports Of Textile & Clothing By Global Region

Exports Of Textile & Clothing By Fiber Type

INDIA: Per Capita Cloth Availability By Type

Cotton Share Of Fiber Use By Global Region

Deflated Wholesale Price Index For Textile Products Of India

Excise Taxes For Man Made & 100% Cotton Products

Share Of Household Income Spent On Textile Of India

Supply Chain Of Cotton Textile Industry

INDIA: Yarn Production By Type

INDIA: Export By type

INDIA: Capacity End Use Of Cotton Spinning Center

INDIA: Cloth Production By Sector

Porters Five Force Model

Graphical Presentation Of No. of Share Holders

Comparison Of Current Ratio

Comparison Of Quick Ratio

Comparison Of Cash Ratio

Comparison Of Net Working Capital

Comparison Of Inventory Turnover Ratio