SUMMER TRAINING PROJECT
at OSWAL WOOLLEN MILLS LTD
Factors Affecting Indian Cotton Textile Exports
Presented By: -
Amit Chawla - MBA (IB)
Roll No :-94972238258
Current Scenario - INDIAN Textile Industry
Textile exports are targeted to reach $50 billion by 2010.
$25 billion of which will go to the US , other markets include UAE, UK, Germany, France, Italy, Russia, Canada ,Bangladesh and Japan.
Today textile sector accounts for nearly 14% of the total industrial output.
Indian Textiles export have almost 30% share in Overall exports from the country.
Current Scenario - INDIAN Textile Industry
Because of the lifting up of the import restrictions of the multi-fibre arrangement (MFA) since 1st January, 2005 under the World Trade Organization (WTO) Agreement on Textiles and Clothing, the market has become more competitive.
Current Scenario - INDIAN Textile Industry
Textile industry is undergoing a substantial re-orientation towards other then clothing
segments of textile sector, which is commonly called as technical textiles.
The processes in making technical textiles require costly machinery and skilled workers
Segments of Textile Industry
Readymade Garments
Cotton Textiles including Handlooms
Man-made Textiles
Silk Textiles
Segments of Textile Industry
Woollen Textiles
Handicrafts including Carpets
Coir
Jute
Indian Cotton Textiles - Key Facts
Year Quantity (Lakh bales) Value (.Cr)
1996-97 16.82 1655.00
1997-98 3.50 313.62
1998-99 1.01 86.72
1999-00 0.65 52.15
2000-01 0.60 51.43
2001-02 0.50 44.40
2002-03 0.83 66.31
2003-04 12.11 1089.15
2004-05 9.14 657.34
2005-06 47.00 3951.35
2006-07 58.00 5267.08
2007-08 85.00 8365.98
2008-09 50.00 N.A.
Textile Exports - Segmentation
Process Description
Textile Value Chain
INDIA’s Competitive .vs. Other Nations
Key countries / regions Key positives Key negatives
China Efficient, low cost, vertically
integrated
Growth at the cost of profits
India, Pakistan Vertically integrated, low cost Lacks economies of scale and
infrastructure support
Mexico (NAFTA), Turkey Proximity to market, duty and
quota free
Lack China and Indias degree of
competitiveness
ASEAN (Vietnam,
Cambodia, Indonesia)
Cheap labor No other cost or location advantage
AGOA (African) countries,
Bangladesh
Quota and tariff free, cheap labor Lacks integration and China and
Indias degree of competitiveness
Hong Kong, Korea, Taiwan Trading hubs proximity to China No cost advantage, protected
currently by quotas
USA and EU Non-quota barriers likely to
prove irritant to imports
US suffers loss every year
Oswal Woollen Mills Ltd. @ Glance
Group turnover is over Rs 2500 crore
No strike/accident situation and no zero staff turnover
Brand names “ Monte Carlo” & “ Canterburry ”
OWM were the proud recipient of the “BEST
EXIBITED PRODUCTS ” award from the international wool secretariat
Social upliftment at every level :-
Jawahar Lal Oswal Public Charitable Trust Mohan Dai Oswal Memorial Hospital
Vision & Mission
Vision “Success is the ongoing journey not
destination”
Mission “Stepping Ahead into realm of New Challenge”
Board Of Directors
Mr. Jawahar Lal Oswal Chairman-Cum-Managing Director Mr. Amarjeet Singh Director
Mr. Dinesh Oswal Director
Mr. Kamal Oswal Director Mr. Sandeep Jain Executive Director Mr. Dinesh Gogna Executive Director Dr. (Mrs.) H.K. Bal Additional Director Mr. O.P. Sahni Additional Director Mr. K.S. Maini Additional Director Dr. Suresh Kumar Additional Director
Organization Structure
OWM Product Portfolio
Wool / acrylic top
Yarns
Textile fabrics
Hosiery knitwear products
Export Market:
U.S.A. UNITED KINGDOM Germany Russia Japan Australia New Zealand Holland Thailand Hong Kong
Singapore Taiwan South Africa Canada Egypt Israel Bangladesh
Various departments
Quality control
Human Resource Department
Finance Department
Marketing Department
Export department
SWOT Analysis @ OWM
• Extensive Experience of Promoters
• Brand equity of MC, CC & Canterbury.
• Loyal & old Employee base.
• Premium range of Pullovers.
Strength
ThreatsOpportunities
Weakness
• Lack of Professionalism.
• Dependence on foreign producers for greasy wool.
• Hierarchy Structure too long.
• 3rd party dependence for Sales & Distribution.
• Booming Retail Sector
• Foreign players entering Indian Lands as FDI norms are relaxed to 49%.
• Kid Garments Range
• Job-Work / Fabrication fro various Brands.
• Small Hosieries coming up in Ludhiana
• Seasonal demand of Pullovers.
• Temp has been rising these days so winter season is getting shorter YOY.
Current Ratio
Particular 2006-07 2007-08 2008-09
Current Assets20543.67 Lacs 30129.28 Lacs 30422.64 Lacs
Current
Liabilities 11185.67 Lacs 9044.30 Lacs 9897.32 Lacs
Current Ratio
1.843.33 3.07
Acid test ratio/Quick Ratio
Particular 2006-07 2007-08 2008-09
Quick Assets9060 Lacs
17328 Lacs 17506 Lacs
Current Liabilities 11185 Lacs 9044 Lacs 9897 Lacs
Quick Ratio0.81 1.915 1.7688
Absolute Liquid or Cash Test Ratio
Particular 2006-07 2007-08 2008-09
Absolute Liquid
Assets556 Lacs 2930 Lacs 3277 Lacs
Current Liabilities 11185 Lacs 9044 Lacs 9897 Lacs
Cash Ratio 0.049 0.324 0.33
Turnover / Activity Ratio
Particular 2006-07 2007-08 2008-09
Cost of sales 32200.67 Lacs 44213.51 Lacs 53814.35 Lacs
Average Inventory 10467.04 Lacs 12141.98 Lacs 12858.36 Lacs
I.T.R (times) 3.07 3.64 4.18
I.H.P ( in days) 118 100 87
Debtor Turnover Ratio
Particulars 2006-07 2007-08 2008-09
Net credit sales 32200.67 Lacs 44213.51 Lacs 53814.35 Lacs
Average debtors 4527.23 Lacs 3387.42 Lacs 6957.81 Lacs
D.T.R (times) 7.11 13.05 7.73
D.C.P ( in days) 51 28 47
Creditors Turnover Ratio
Particulars 2006-07 2007-08 2008-09
Net credit purchase 18246 Lacs 24384 Lacs 28500 Lacs
Average. Creditors 2944 Lacs 3298 Lacs 4155 Lacs
C.T.R (times) 6.19 7.39 6.86
C.P.P ( in days) 59 49 53
Net Profit Ratio
Particulars 2006-07 2007-08 2008-09
Net profit 1402 Lacs 2127 Lacs 2368 Lacs
Sales 32200 Lacs 44213 Lacs 53814 Lacs
N.P. ratio (%) 4.35 4.81 4.41
Debt Equity Ratio
Particulars 2006-07 2007-08 2008-09
Total Debt 18220 Lacs 29466 Lacs 27416 Lacs
Shareholder’s Fund 9497 Lacs 11625 Lacs 13994 Lacs
Debt Equity Ratio 1.918 2.534 1.959
Proprietary Ratio
Particulars 2006-07 2007-08 2008-09
Shareholders Fund 9497 Lacs 11625 Lacs 13994 Lacs
Total Assets 20543 Lacs 49731 Lacs 51386 Lacs
Proprietary Ratio 0.46 0.23 0.27
Earning Per Share
Particulars 2006-07 2007-08 2008-09
Net profit available 1402 Lacs 2127 Lacs 2368 Lacs
Number of shares 249 Lacs 249 Lacs 249 Lacs
EPS 5.63 8.54 9.51
Operating Ratio
Particulars 2006-07 2007-08 2008-09
Operating Cost 22631 Lacs 31277 Lacs 38026 Lacs
Sales 32200 Lacs 44213 Lacs 53819 Lacs
O.P. ratio 70.28 70.74 70.66
Trend of Turnover
2006-07
2007-08
2008-09
0
10000
20000
30000
40000
50000
60000
32200.67
44213.51
53814.35
Turnover
Title
“Factors Affecting Indian Cotton Textile Exports”
Objectives
To study the different problems related to cotton textile industry in Ludhiana
To study the Government role in cotton textile exports
To analyze the competition faced by Indian cotton textiles industry in International market
To study the role of export promotion council in promoting exports.
Research Methodology
Research Design Descriptive
Data Collection Primary - Schedule Secondary – Internet , E-Journals, E-Papers
Sampling Plan
Universe All exporters of Cotton Textile products in world
Population All exporters of Cotton Textile Product in the City of India
Sampling Unit Any Cotton Textile Product exporter in the City of Ludhiana
Sampling Frame List of all Cotton Textile exporters from where samples are selected.
Sampling Size 30 Cotton Textile Product Exporters
Sampling Technique
Multistage Sampling technique
Statistical Tools
Simple tabulation of data using tally marks.
Calculating the percentage of the responses.
Formula used: Percentage= (Number of responses/Total responses)*100
Graphical analysis by means of bar graphs, pie charts
Average method to calculate the average of particular schemes.
Limitations of the Study
The conceptual framework and research questions have bound the study, keeping it focused, yet simultaneously limiting the method and topic of the research.
The recognized limitations of this study deal with the topic, the sample size, and the lack of existing literature.
The number of participants, their location, and the quantity and amount of time spent in getting the schedules filled were constraints balanced by the quality of the data gathered.
Limitations of the Study
Many of the respondents were busy in their work so they have not given proper time to answer the questions. Sometime they give false information while answering questions.
There might be chances of ambiguities in the analysis of data.
Limitations of the Study
Best efforts were made to consider all important variables of the study. Chances of some of the variable not appearing in the study are also there.
Some calculations have to be done with the statistical measures which are the biggest constrained for the research work because only percentage, Mean is being used in the research.
Limitations of the Study
There was very less of respondents to prove the validity. Among the lot of exporters , only 30 filled the Schedules.
Shortage of time & reach is also reason for incomprehensiveness.
Many of the concerned persons contacted are very busy in their schedule that they don’t give away their 5 minutes to it. So the sample size remained small.
DATA ANALYSIS & INTERPRETATION
Profile of the Respondents (Figure 4.1)
10%
63%
7%
20%
FabricGarmentsGarments & YarnsYarns
Export Content in Overall Turnover (Figure 4.2)
33%
40%
17%
10%
1-25%26 -50%51-75%76-100%
Raw Material related Issues faced by the Respondents (Figure 4.3)
57%
20%
23%
Price VariationsQualitySeasonality
Labour related issues raised by Respondents (Figure 4.4)
77%
3%
10%
10%
AvailabilityEducationPerformanceSkills set
Marketing related issues raised by the Respondents (Figure 4.5)
57%
17%
27%
CompetitionPrice variationsUnorganized
Response towards Government (Figure 4.6)
40%
43%
17%
DissatisfiedNeutralSatisfied
Major Competitors to Indian Cotton Textile Industry (Figure 4.7)
Bangl
ades
h
China
Turk
ey
Paki
stan
U.A
.EIta
ly
U.S
.A02468
101214161820
7
18
5 5
1 12
Respondents
Major Hurdles faced in the Trade: - (Figure 4.8)
7%
50%30%
13%
Product placingProduct PricesProduct QualityPromotion of product
Restriction Imposed by Government on the Sector (Figure 4.9)
Yes No0
5
10
15
20
25
7
23
Respondents
Special Incentives by the Government (Figure 4.10)
Yes No0
5
10
15
20
25
30
4
26
Respondents
Schemes which could Benefit Textile Sector (Figure 4.11)
TUFFS Scheme DEPB Scheme SEZ Scheme0
0.5
1
1.5
2
2.5
3
3.5
4
2.8 2.73
3.53
Average
EPC support to the Industry (Figure 4.12)
40%
13%
47% AlwaysNeverSometimes
Findings
Most of the exporters are of garments (63%) in Ludhiana. Then after that the exporters of yarn ie (20%) and after it comes the fabric and others
Mostly the companies which export their cotton textile
products range up to 50 %. Rests are only domestic sales and here are only few export houses which fall in range of 76 – 100% exports which are complete export house.
57% of the respondents had rated Price variations in the
raw material as a major concern for the trade as there are lot of fluctuation in the cotton crop prices which may be due to many factors such as Seasonality, Monsoon etc.
Findings
Major issue related to the Labour is the Availability aspect as major part of the Hosiery or Spinning business is dependent upon the labour but since Bihar Govt is providing a lot of retention schemes for native people so rather coming to Ludhiana for a job of Rs 5000-7000, they prefer to stay back.
Major problem faced by the respondents related
to the Marketing are Competition that contributes to the tune of 56% as there are small players in the Garment manufacturing
Findings
Most of the Companies are dissatisfied (40%) from the Government as government has withdrawn DEPB incentives, TUFS scheme etc & maximum companies are neutral (43%) on the government support in helping the exports wit only 17% satisfaction level.
CHINA have been the arch rivals for India in
various sectors & there is no difference in Textile sector
Findings
The cost of producing is very cheap because of economies of scale & moreover the cost of wages is higher for the labour but if we compare it with the efficiency of the labor which is 8 times higher in China than India.
50% of the people feel that the Product prices are a major hurdle in the industry which might be due to the fact in case of spinning the bigger players have the capacity to procure Cotton at cheaper rates.
Most Companies do not face any restrictions by the government in exporting their product to other countries i.e. 23 respondents out of 30 which is nearly 77% of the respondents.
Respondents are of the view that there are also some special incentives which have been provided from time to time by the government to boost up the Textile trade in the country & internationally.
Findings
Findings
TUFFS & DEPB were almost ranked on the similar scale so now it is up to State & Central Govt to work in tandom so that the sector could reap maximum benefits & hence could contribute further in bringing in more foreign reserves into the sector.
There was more of mixed response coming in from
the respondents regarding the support provided my Export Promotion Council as 40% of the respondents had entered ALWAYS & 47% of them responded Sometimes.
Conclusion & Suggestions…..
Technology Up-gradation Fund Scheme to be pursued till next five years
Liberalization of FDI Policy with up to 100 per cent foreign equity participation.
TUFFS & DEPB
THANK YOU
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