INDUSTRY REVIEW ON TEXTILE SECTOR

OCEAN INDIA

Submitted By

NAME REGISTERED NUMBER

PRADEEP CHINTADA 1226113112

Submitted to

Dr. A V Rao GITAM School of International Business, GITAM University, Visakhapatnam

Andhra Pradesh, India-530045

GITAM School of International Business,

GITAM University, Visakhapatnam

INTRODUCTION:

Textile industry in India is the second largest employment generator after agriculture. It holds significant status in India as it provides one of the most fundamental necessities of the people. Textile industry was one of the earliest industries to come into existence in India and it accounts for more than 30% of the total exports. In fact India textile industry is the second largest in the world, second only to china.

Textile industry is unique in the terms that it is an independent industry, from the basic requirement of raw materials to the final products, with huge value –addition at every stage of processing. Textile industry in India has vast potential for creation of employment opportunities in the agriculture, industrial, organized and decentralized sectors &rural and urban areas, particularly for women and the disadvantage. Indian textile industry is constituted of the following segments: ready-made garments, cotton textiles including handlooms, man-made textiles, silk textiles, woolen textiles, handicrafts, coir, and jute.

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 separate policy statement was announced with regard to development of textile sector. In the year 2000, national textile policy was announced. Its main objective was to provide cloth of acceptable quality at reasonable prices for 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.

Indian textile and apparel industry is one of the largest in the world with US$ 19 billion of export and US$ 30 billion of domestic textile and apparel during 2006-07 (P). The industry has, over the years, contributed significantly to national output, employment and exports. At present, industry accounts for about 14% of our total industrial production and contributes to nearly 15% of total exports. It provides direct employment to about 35 million people and another 56 million are engaged in allied activities. The textile export has registered a growth of 10 percent to 19.24 billion during 2006-07 (P) from US$ 17.85 billion during 2005-06. The Industry has a potential to reach a size of US$ 85 billion by 2010. With its consistent growth performance and abundant cheap skilled manpower, there are enormous opportunities both for domestic and foreign investors to make investments in textile sector in India.

STRENGTHS OF THE INDIAN TEXTILE INDUSTRY:

India has rich resources of raw materials of textile industry. It is one of the largest producer of cotton in the world and is also rich in resources of fiber like polyester, silk , viscose

India is rich in highly trained manpower. The country has huge advantage due to lower wage rates. Because of low labor rates the manufacturing cost in textile automatically comes down to very reasonable rates

India is rich in highly competitive in spinning sector and has presence in almost all processes of the value chain

Indian garment industry is very diverse in size manufacturing facility, type of apparel produced, quantity and quality of out -put , cost, requirement for fabric etc. It comprises suppliers of ready –made garments for both, domestic or export markets.

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WEAKNESSES OF INDIAN TEXTILE INDUSTRY:

Indian Textile Industry is highly fragmented in industry structure, and is led by small scale companies. The reservation of production for very small companies across the country, led substantial fragmentation that distorted the competitiveness of industry. Smaller companies do not have the fiscal recourses to enhance technology or invest in the high –end engineering of processes. Hence they lose in productivity.

Indian labor laws are relatively unfavorable to the trades and there is an urgent need for labor reforms in India.

India seriously lacks in trade pact memberships, which leads to restricted access to the major markets.

MARKET SIZE:

The Indian textile industry is set for strong growth, buoyed by both strong domestic consumption as well as export demand. Abundant availability of raw materials such as cotton, wool, silk and jute and skilled workforce has made India a sourcing hub. The most significant change in the Indian textile industry has been the advent of man-made fibers (MMF). India has successfully placed its innovative range of MMF textiles in almost all the countries across the globe. MMF production increased by 6 per cent during December 2013. The production increased by about 4 per cent during the year April-December 2013.Cotton yarn production increased by 6 per cent during December 2013 and by 10 per cent during April-December 2013. Blended and 100 per cent non-cotton yarn production increased by 5 per cent during December 2013 and increased by 8 per cent during the year April-December 2013. Cloth production by mill sector increased by 4 per cent during December 2013 and by 6 per cent during April-December 2013. Cloth production by handloom, and hosiery increased by 3 per cent and 11 per cent respectively during December 2013. Production by handloom, and hosiery sectors increased by 4 per cent and 13 per cent during April-December 2013. The total cloth production grew by 2 per cent during April-December 2013.The potential size of the Indian textile and apparel industry is expected to reach US$ 221 billion by 2021, according to Technopak's Textile and Apparel Compendium 2012. Garment exports from India is expected to touch US$ 60 billion over the next 3 years, with the help of government support as of from Apparel Export Promotion Council (AEPC).

INVESTMENTS:

The textiles sector has witnessed a spurt in investment during the last five years. The industry (including dyed and printed) attracted foreign direct investments (FDI) worth Rs 6,428.18 crore (US$ 1.03 billion) during April 2000 to November 2013.

SOME OF THE MAJOR INVESTMENTS IN INDIAN TEXTILE INDUSTRY ARE:

Sutlej Textiles and Industries, one of the largest yarn, fabric, garments and home textiles manufacturers in India plans the expansion of its Jammu and Kashmir (J&K) manufacturing unit with an investment of Rs 1.75 billion (US$ 28.10 million).

Superdry plans to open 20 stores in India over the next five years, as per Mr James Holder, Founder, Superdry

The Aditya Birla Group has signed an in-principle agreement to buy the assets of Ontario-based Terrace Bay Pulp Mill for Rs 605 crore (US$ 97.14 million). The acquisition would be carried out through AV Terrace Bay (Canada), a special purpose vehicle (SPV) in which two group companies, Grasim Industries and Thailand-based Thai Rayon Public, would hold stake

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Tommy Hilfiger plans to add 500 stores in India over the next five years as part of their expansion spree

Canclini Tessile plans to tie up with Tirupur-based Emperor Textiles to stitch its shirts in India. The equal joint venture (JV) with Emperor Textiles will set up a separate manufacturing unit in Tirupur to manufacture Italian fabric for domestic consumption.

GOVERNMENT INITIATIVES:

The Government of India has promoted a number of export promotion policies for the Textile sector in the Union Budget 2011-12 and the Foreign Trade Policy 2009-14. It has also allowed 100 per cent FDI in textiles under the automatic route. Due to policy measures initiated by the Government in the recent past, the Indian textiles industry is in a stronger position than it was in the last six decades. The industry which was growing at 3-4 percent during the last six decades has now accelerated to an annual growth rate of 8-9 per cent in value terms. The Government has also allowed 100 per cent FDI in the sector through the automatic route. In the 12th Five Year Plan (2012–17), the government plans to spend US$ 9.1 billion on textiles as against US$ 4 billion in the 11th Plan.

PROFILE OF THE COMPANY:

Brandix India Apparel City one of the planned six integrated textile park in the country set up with central government support has been inaugurated in Vizag in Andhra Pradesh. The Andhra Pradesh government has allotted 1000 acres of land in the SEZ while the central government has provided Rs.360 million under the Union textile policy. Currently Brandix Apparel India and Ocean India (US) have already commenced exports, four other units are at different stages of completion. The BIAC city will have 20 textile units- 3 fabric mills, 8 accessories units and one finishing plants. The city is likely to attract to investment of over Rs-54000 million. Some of the companies who have evinced interest Fountain Set Holdings of Hong Kong. Pioneer Elastic India Quantum Clothing Indi (UK). DEB Fashion India and Seeds Intimate Apparel India.

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OCEAN INDIA :

Knit fabric manufacturing mill - Use the most advanced technology to deliver the best knitted fabric with in short period of time.

75 acre plot with a 520 Meter length.

Floor area of 400 square feet for a seamless movement of raw materials which is processed through high tech departments.

Subsidiary business unit of Brandix Lanka Ltd.

Started operation by June ‘2008 with an initially investment of US$ 20 million.

Today our turn over is US$ 38 million with production capacity of 40,000 Tons.

Facilitate Fabric requirement to the park and other regions.

Headquarter in Vizag and Business Development Office in Sri Lanka (Colombo) with an employee strength of 750 (Executive – 131 & Associate Cadre – 619)

The OCI portfolio includes :

Single Jersey

Rib Fabrications

Interlocks

Pique/Lacoste

Fleece

French Terry

Jacquard Jersey

CLOVER GROUP OF- CHINA:

Founded in1956, Clover Group Is one of the leading manufacturer of intimate lingerie for numerous prestige brand labels throughout North America and Europe. Our production complexes are located in china and Cambodia with workforce over 7,000.For the past half century; we aim to keep abreast with the industry transcendence from being a basic functional requirement into a bodice enhancement. Clover Group has always maintained its posture and embraced the challenges ahead even facing the ever changing needs and behavior of customers.

BRANDIX GROUP –SRILANKA:

Brandix Lanka Ltd is the largest exporter of apparel in Sri Lanka.As the holding company of the Brandix group of companies, it is engaged in developing, manufacturing and marketing end-to-end apparel solutions to global fashion super brands. A peek into an exclusive portfolio reveals Victoria’s Secret, Gap, Next, Mark and Spencer , Liz Claiborne, Abercrombie and Fitch, amongst other excellent company.

Sri Lanka’s single largest apparel exporter with an annual turnover exceeding USD 600 million

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Employing over 43,000 Associates and generating indirect employment to an equivalent number Supported by 38 manufacturing facilities in Sri Lanka, India & Bangladesh and strategically

located international Sourcing Offices Providing over 50% of value addition locally through our backward-linked operations in textiles,

buttons and hangers

How supply chain management related to Brandix:

Managing the production of the company's good and services, monitoring. storage. inventories. coordinating with suppliers and ensuring timely contribution of goods are some of the key functions covered by supply chain management. The supply chain is actually made up of five important components of plan, source, make and deliver, return. It also includes three flows which are cash, product and information within the chain. Through these components and members, the Brandix management of the supply chain allows efficient inventory control. As a dynamic process. the SCM requires the continuous exchange of information. finance and materials between and within the members of the chain. These elements of the SCM also make this business aspect challenging to implement and maintain.

FOREIGN DIRECT INVESTMENT:

India has most liberal and transparent policies in Foreign Direct Investment (FDI) amongst emerging countries. India is a promising destination for FDI in the textile sector. 100% FDI is allowed in the textile sector under the automatic route. FDI in sectors to the extent permitted under automatic route does not require any prior approval either by the Government of India or Reserve Bank of India (RBI). The investors are only required to notify the Regional Office concerned of RBI within 30 days of receipt of inword remittance. Ministry of Textiles has set up FDI Cell to attract FDI in the textile sector in the country.

The FDI cell will operate with the following objectives:

To provide assistance and advisory support (including liaison with other organizations and State Governments);

Assist foreign companies in finding out joint venture partners; To sort out operational problems; Maintenance and monitoring of data pertaining to domestic textile production and foreign

investment.

The sector is targeting US$ 6 billion foreign direct investment (FDI) by 2015 to be invested in textiles machinery, fabric and garment manufacturing, as well as technical textiles. The expected growth of Indian textiles industries will be worth about $220 billion by in the year 2020.

The investment scenario is becoming rise day by day, India is a growing source of supply of textiles and apparel to the world market, the exports are growing rapidly as more and more buyers around the world turn to India as an alternative to China. India has enormous opportunities to expand their share in Textiles and Apparel industries. International scenario does indicate favorable business atmosphere in India, FDI Inflows to Textiles industry in India enhanced the growth of the sector. India has been known for its textiles all over the world. The Indian textile industry contributes about 14 % to industrial production, 3 % to the country's Gross Domestic Product (GDP) and 27 % to the country's total foreign exchange.

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Major Players:

The textiles industry comprises both organized and unorganized or decentralized sectors. The sub-sectors working in an organized way are Composite mills, Combing units, Worsted and non-worsted spinning units, Knitwear and woven garment units and Machine-made carpet manufacturing units. On the other hand, the sub-sectors working in an unorganized or decentralized way are Hosiery and knitting units, Power-loom units, Hand-made carpets &drug gets units and Independent dyeing and process houses. Key big Indian players in the Indian textile industry include SRF, EntremondePolycoaters, Kusumgarh Corporates, Supreme Nonwovens, Aravind Mills, Garware Wall Ropes, Century Enka, Techfab India, Ahlstrom, Pacific Non Woven, Vardhman and Unimin.

Key foreign players include Johnson & Johnson, Du Pont, Procter & Gamble, 3M, SKAPs and Kimberly Clark. Several international retail players, such as Marks & Spencer, Haggar Clothing, Kellwood, Little Label and Boules Trading Company, are also using India as a key global sourcing destination. Government has also been facilitating setting up of various SEZs across India in the textiles sector. For instance, formal approval has been given to these SEZs in the sector Brandix India Apparel City Private Limited (BIAC), Visakhapatnam; MAS Fabric Park (India) Private Limited (MFP), Nellore; Deccan Infrastructure and Land Holdings Limited, Akutotapally, Alok Infrastructure Private Limited, Silvassa WelspunAnjar SEZ Limited, Gujarat; Pradip Overseas Limited, Ahmedabad Orient Craft Infrastructure Ltd, Gurgaon; KIADB, Hassan; Maharashtra Industrial Development Corporation Ltd., Maharashtra; Ishan Developers & Infrastructure Pvt. Ltd., Amritsar; RNB Infrastructure Pvt. Ltd., Bikaner; ETL Infrastructure Services Ltd., Erode; and Uttar Pradesh State Industrial Development Corporation (UPSIDC), Kanpur.

Input Cost:

The cost of production is one of the major factors in determining international competitiveness. Price of land, price of labor, hours worked, energy cost, building cost, transport and taxation constitute some of the key inputs for production. India faces fierce competition from Bangladesh, Cambodia, China and Pakistan in these cost factors. We need to improve upon these factors in order to improve our productivity and thereby increasing exports.

Factory Operations:

Challengers and issues:

Shrinking lead times: Brandix identified rapidly shrinking lead times as one of the biggest challenges for the apparel industry. The growing demand for 'instant gratification' by trend-driven consumers could result

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in manufacturers being given hours rather than days to deliver new designs within the next 18 to 24 months. Increasing no of style changers When there is new style for manufacturing plant they take some learning curve to conic high efficacy level. Because this situations op rations side can't do manufacturing products in high efficacy. Not enough rapacity for own raw material suppliers Brandix own raw material producers can't supply total garment manufacturing capacity of brandix. It has to import raw materials from foreign suppliers. It manly effect to our value chain. As an example if import yarn and our factory produce fabric mean can add some ting to our value chain. In this fabric mils low capacity problem we had to export fabric from our suppliers it effect to our value chain.

Poor flow of information

Poor Flow of information in both forward and backward in the supply chain and with the customers' requirements. information and specifications may not pass to manufacturer/ suppliers and quality issues of the raw materials also not been informed to suppliers. Sometime above details not pass within group suppliers also. So suppliers are able to send anything they produce as they do not get any feedback.

Demand forecasting problems :

Poor demand forecasting. here is an issue in production planning and as result delivery are not met on time. Some raw materials such as packing trims are not in housed on time and unfinished goods are remaining at packing.

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