INTRODUCTIONTextile 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. In fact Indian 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 agricultural, industrial, organised and decentralised sectors & rural and urban areas, particularly for women and the disadvantaged. Indian textile industry is constituted of the following segments: Readymade Garments, Cotton Textiles including Handlooms, Man-made Textiles, Silk Textiles, Woollen 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 a 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 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

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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.The textile industry holds significant status in the India. Textile industry provides one of the most fundamental necessities of the people. 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.Today textile sector accounts for nearly 14% of the total industrial output. Indian fabric is in demand with its ethnic, earthly colored and many textures. The textile sector accounts about 30% in the total export. This conveys that it holds potential if one is ready to innovate.The textile industry is the largest industry in terms of employment economy, expected to generate 12 million new jobs by 2010. It generates massive potential for employment in the sectors from agricultural to industrial. Employment opportunities are created when cotton is cultivated. It does not need any exclusive Government support even at present to go further. Only thing needed is to give some directions to organize people to get enough share of the profit to spearhead development.The Indian textile industry has a significant presence in the economy as well as in the international textile economy. Its contribution to the Indian economy is manifested in terms of its contribution to the industrial production, employment generation and foreign exchange earnings. It contributes 20 percent of industrial production, 9 percent of excise collections, 18 percent of employment in the industrial sector, nearly 20 percent to the countrys total export earning and 4 percent to the Gross Domestic Product.

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HISTORY OF TEXTILEINDUSTRY

India has been well known for her textile goods since very ancient times. The traditional textile industry of India was virtually decayed during the colonial regime. However, the modern textile industry took birth in India in the early nineteenth century when the first textile mill in the country was established at fort gloster near Calcutta in 1818. The cotton textile industry, however, made its real beginning in Bombay, in 1850s. The first cotton textile mill of Bombay was established in 1854 by a Parsi cotton merchant then engaged in overseas and internal trade. Indeed, the vast majority of the early mills were the handiwork of Parsi merchants engaged in yarn and cloth trade at home and Chinese and African markets.The first cotton mill in Ahmedabad, which was eventually to emerge as a rival centre to Bombay, was established in 1861. The spread of the textile industry to Ahmedabad was largely due to the Gujarati trading class.

The cotton textile industry made rapid progress in the second half of the nineteenth century and by the end of the century there were 178 cotton textile mills; but during the year 1900 the cotton textile industry was in bad state due to the great famine and a number of mills of Bombay and Ahmedabad were to be closed down for long periods. The two world War and the Swadeshi movement provided great stimulus to the Indian cotton textile industry. However, during the period 1922 to 1937 the industry was in doldrums and during this period a number of the Bombay mills changed hands. The second World War, during which

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textile import from Japan completely stopped, however, brought about an unprecedented growth of this industry. The number of mills increased from 178 with 4.05 lakh looms in 1901 to 249 mills with 13.35 lakh looms in 1921 and further to 396 mills with over 20 lakh looms in 1941. By 1945 there were 417 mills employing 5.10 lakh workers.

The cotton textile industry is rightly described as a Swadeshi industry because it was developed with indigenous entrepreneurship and capital and in the pre-independence era the Swadeshi movement stimulated demand for Indian textile in the country. The partition of the country at the time of independence affected the cotton textile industry also. The Indian union got 409 out of the 423 textiles mills of the undivided India. 14 mills and 22 per cent of the land under cotton cultivation went to Pakistan. Some mills were closed down for some time. For a number of years since independence, Indian mills had to import cotton from Pakistan and other countries.

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CURRENT STATUSThe textile industry holds significant status in the India. Textile industry provides one of the most fundamental necessities of the people. 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.Today textile sector accounts for nearly 14.64% of the total industrial output. Indian fabric is in demand with its ethnic, earthly colored and many textures. The textile sector accounts about 30.23% in the total export. This conveys that it holds potential if one is ready to innovate.The textile industry is the largest industry in terms of employment economy, expected to generate more than 12 million new jobs by 2010. It generates massive potential for employment in the sectors from agricultural to industrial. Employment opportunities are created when cotton is cultivated. It does not need any exclusive Government support even at present to go further. Only thing needed is to give some directions to organize people to get enough share of the profit to spearhead development.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. The name of these countries with their background can give thousands of insights to a thinking mind. The slant cut that will be producing a readymade garment will sell at a price of 600 Indian rupees, making the value addition to be profitable by 300 %.

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Currently, 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 competitive; on closer look however, it sounds an opportunity because better material will be possible with the traditional inputs so far available with the Indian market.At present, the textile industry is undergoing a substantial re-orientation towards other then clothing segments of textile sector, which is commonly called as technical textiles. It is moving vertically with an average growing rate of nearly two times of textiles for clothing applications and now account for more than half of the total textile output. The processes in making technical textiles require costly machinery and skilled workers.

The application that comes under technical textiles are filtration, bed sheets and abrasive materials, healthcare upholstery and furniture, blood-absorbing materials and thermal protection, adhesive tape, seatbelts, and other

specialized application and products.

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STRUCTURE - AND - SEGMENTS

The textile sector in India is one of the worlds largest. The textile industry today is divided into three segments:

1. Cotton Textiles

2. Synthetic Textiles

3. Other like Wool, Jute, Silk etc.

All segments have their own place but even today cotton textiles continue to dominate with 73% share. The structure of cotton textile industry is very complex with co-existence of oldest technologies of hand spinning and hand weaving with the most sophisticated automatic spindles and loom. The structure of the textile industry is extremely complex with the modern, sophisticated and highly mechanized mill sector on the one hand and hand spinning and hand weaving (handloom sector) on the other in between falls the decentralised small scale powerloom sector.Unlike other major textile-producing countries, Indias textile industry is comprised mostly of small-scale, nonintegrated spinning, weaving, finishing, and apparel-making enterprises. This unique industry structure is primarily a legacy of government policies that have promoted labor-intensive, small-scale operations and discriminated against larger scale-firms:

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♦Composite-Mills .

Relatively large-scale mills that integrate spinning, weaving and, sometimes, fabric finishing are common in other major textile-producing countries. In India, however, these types of mills now account for about only 3 percent of output in the textile sector. About 276 composite mills are now operating in India, most owned by the public sector and many deemed financially sick. In 2003-2004 composite mills that produced 1434 m.sq mts of cloth. Most of these mills-are-located-in-Gujarat-and-Maharashtra.

♦Spinning

Spinning is the process of converting cotton or manmade fiber into yarn to be used for weaving and knitting. This mills chiefly located in North India. Spinning sector is technology intensive and productivity is affected by the quality of cotton and the cleaning process used during ginning. Largely due to deregulation beginning in the mid-1980s, spinning is the most consolidated and technically efficient sector in Indias textile industry. Average plant size remains small, however, and technology outdated, relative to other major producers. In 2002/03, Indias spinning sector consisted of about 1,146 small-scale independent firms and 1,599 larger scale independent units.

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♦Weaving-and-Knitting.

The weaving and knits sector lies at the heart of the industry. In 2004-05, of the total production from the weaving sector, about 46 percent was cotton cloth, 41 percent was 100% non-cotton including khadi, wool and silk and 13 percent was blended cloth. Three distinctive technologies are used in the sector handlooms, powerlooms and knitting machines. Weaving and knitting converts cotton, manmade, or blended yarns into woven or knitted fabrics. Indias weaving and knitting sector remains highly fragmented, small-scale, and labour-intensive. This sector consists of about 3.9 million handlooms, 380,000 powerloom enter-prises that operate about 1.7 million looms, and just 137,000 looms in the various composite mills. Powerlooms are small firms, with an average loom capacity of four to five owned by independent entrepreneurs or weavers. Modern shuttleless looms account for less than 1 percent of loom capacity.

♦Fabric-Finishing .

Fabric finishing (also referred to as processing), which includes dyeing, printing, and other cloth preparation prior to the manufacture of clothing, is also dominated by a large number of independent, small-scale enterprises. Overall, about 2,300 processors are operating in India, including about 2,100 independent units and 200 units that are integrated with spinning, weaving, or knitting units.

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♦Clothing

Apparel is produced by about 77,000 small-scale units classified as domestic manufacturers, manufacturer exporters, and fabricators (subcontractors).

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SWOT ANALYSISSTRENGTHS

. India enjoys benefit of having plentiful resources of raw materials. It is one of the largest producers of cotton yarn around the globe, and also there are good resources of fibres like polyester, silk, viscose etc...

. There is wide range of cotton fibre available, and has a rapidly developing synthetic fibre industry.

. India has great competitiveness in spinning sector and has presence in almost all processes of the value chain.

. Availability of highly trained manpower in both, management and technical. The country has a huge advantage due to lower wage rates. Because of low labor rates the manufacturing cost in textile automatically comes down to very reasonable rates.

. The installed capacity of spindles in India contributes for 24.44% share of the world, and it is one of the biggest exporters of yarns in the global market. Having modern functions and favorable fiscal policies, it accounts about 25% of the world trade in cotton yarn.

. The apparel industry is largest foreign exchange earning sector, contributing 12% of the country's total exports.

. The garment industry is very diverse in size, manufacturing facility, type of apparel produced, quantity and quality of output, cost, requirement for fabric etc. It

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comprises suppliers of ready-made garments for both, domestic or export markets.

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WEAKNESS

Massive Fragmentation

A major loop-hole in Indian textile industry is its huge fragmentation in industry structure, which is led by small scale companies. Despite the government policies, which made this deformation, have been gradually removed now, but their impact will be seen for some time more. Since most of the companies are small in size, the examples of industry leadership are very few, which can be inspirational model for the rest of the industry.

The industry veterans portrays the present productivity of factories at half to as low as one-third of levels, which might be attained. In many cases, smaller companies do not have the fiscal resources to enhance technology or invest in the high-end engineering of processes. The skilled labor is cheap in absolute terms; however, most of this benefit is lost by small companies.

The uneven supply base also leads barriers in attaining integration between the links in supply chain. This issue creates uncontrollable, unreliable and inconsistent performance.

Political and Government Diversity

The reservation of production for very small companies that was imposed with an intention to help out small scale companies across the country, led substantial fragmentation that distorted the competitiveness of industry. However, most of the sectors now have been de-reserved, and major entrepreneurs and corporate are putting-in huge amount of

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money in establishing big facilities or in expansion of their existing plants.

Secondly, the foreign investment was kept out of textile and apparel production. Now, the Government has gradually eliminated these restrictions, by bringing down import duties on capital equipment, offering foreign investors to set up manufacturing facilities in India. In recent years, India has provided a global manufacturing platform to other multi-national companies that manufactures other than textile products; it can certainly provide a base for textiles and apparel companies.

Despite some motivating step taken by the government, other problems still sustains like various taxes and excise imbalances due to diversification into 35 states and Union Territories. However, an outline of VAT is being implemented in place of all other tax diversifications, which will clear these imbalances once it is imposed fully.

Labour Laws

In India, labour laws are still found to be relatively unfavorable to the trades, with companies having not more than ideal model to follow a 'hire and fire' policy. Even the companies have often broken their business down into small units to avoid any trouble created by labour unionization.

In past few years, there has been movement gradually towards reforming labour laws, and it is anticipated that this movement will uphold the environment more favorable.

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Distant Geographic Location

There are some high-level disadvantages for India due to its geographic location. For the foreign companies, it has a global logistics disadvantage due the shipping cost is higher and also takes much more time comparing to some other manufacturing countries like Mexico, Turkey, China etc. The inbound freight traffic has been also low, which affects cost of shipping - though, movement of containers are not at reasonable costs.

Lack of trade memberships

India is serious lacking in trade pact memberships, which leads to restricted access to the other major markets. This issue made others to impose quota and duty, which put scissors on the sourcing quantities from India.

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OPPORTUNITIES IN THE TEXTILE SECTOR

• Global Textile and apparel trade is estimated to be €340 billion

• Indian industry estimated at €35 billion with exports of €12 billion and employs 35 million people

• India is the third largest producer of cotton, largest exporter of yarn (25% of world cotton yarn export)

• India is a major player in the home textile segment (61% of world loom capacity)

It is anticipated that India's textile industry is likely to do much better. Since the consumption of domestic fibre is low, the growth in domestic consumption in tandem is anticipated with GDP of 6 to 8 % and this would support the growth of the local textile market at about 6 to 7 % a year.

India can also grab opportunities in the export market. The industry has the potential of attaining $34bn export earnings by the year 2010. The regulatory polices is helping out to enhance infrastructures of apparel parks, Specialized textile parks, EPZs and EOUs.The Government support has ensured fast consumption of clothing as well as of fibre. A single rate will now be prevalent throughout the country.The Indian manufacturers and suppliers are improving design skills, which include different fabrics according to different

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markets. Indian fashion industry and fashion designers are marking their name at international platform. Indian silk industry that is known for its fine and exclusive brocades, is also adding massive strength to the textile industry.The industry is being modernized via an exclusive scheme, which has set aside $5bn for investment in improvisation of machinery. International brands, such as Levis, Wal-Mart, JC Penny, Gap, Marks & Spencer and other industry giants are sourcing more and more fabrics and garments from India. Alone Wal-Mart had purchased products worth $200mn last year and plans to increase buying up to $3bn in the coming year. The clothing giant from Europe, GAP is also sourcing from India.

THREATS OF THE THEXTILE INDUSTRY

COMPETITON IN DOMESTIC MAREKT. NEED TO IMPROVE WORKING CONDITIONS OF

THE PEOPLE WHO ARE INVOLVED IN THIS PROFESSION.

NEED TO REVAMP CONSUMER CONSCIOUSNESS.

TACKLE CHINESE AGGRESION OVER THE INTERNATIONAL MARKET.

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ROLE OF TEXTILE INDUSTRY IN INDIA GDP

Role of Textile Industry in India GDP has been quite beneficial in the economic life of the country. The worldwide trade of textiles and clothing has boosted up the GDP of India to a great extent as this sector has brought in a huge amount of revenue in the country.

In the past one year, there has been a massive upsurge in the textile industry of India. The industry size has expanded from USD 37 billion in 2004-05 to USD 49 billion in 2006-07. During this era, the local market witnessed a growth of USD 7 billion, that is, from USD 23 billion to USD 30 billion. The export market increased from USD 14 billion to USD 19 billion in the same period.

The textile industry is one of the leading sectors in the Indian economy as it contributes nearly 14.64 percent to the total industrial production. The textile industry in India is claimed to be the biggest revenue earners in terms of foreign exchange among all other industrial sectors in India. This industry provides direct employment to around 35 million people, which has made it one of the most advantageous industrial sectors in the country.

Some of the important benefits offered by the Indian textile industry are as follows:

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India covers 61 percent of the international textile market

India covers 22 percent of the global market India is known to be the third largest manufacturer of

cotton across the globe India claims to be the second largest manufacturer as

well as provider of cotton yarn and textiles in the world

India holds around 25 percent share in the cotton yarn industry across the globe

India contributes to around 12 percent of the world's production of cotton yarn and textiles

The Role of Textile Industry in India GDP had been undergoing a moderate increase till the year 2004 to 2005. But ever since, 2005-06, Indian textiles industry has been witnessing a robust growth and reached almost USD 17 billion during the same period from USD 14 billion in 2004-05. At present, Indian textile industry holds 3.5 to 4 percent share in the total textile production across the globe and 3 percent share in the export production of clothing. The growth in textile production is predicted to touch USD 19.62 billion during 2006-07. USA is known to be the largest purchaser of Indian textiles. Following are the statistics calculated as per the contribution of the sectors in Textile industry in India GDP:

India holds 22 percent share in the textile market in Europe and 43 percent share in the apparel market of the country. USA holds 10 percent and 32.6 percent shares in Indian textiles and apparel.

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Few other global countries apart from USA and Europe, where India has a marked presence include UAE, Saudi Arabia, Canada, Bangladesh, China, Turkey and Japan

Ready made garments accounts for 45 percent share holding in the total textile exports and 8.2 percent in export production of India

Export production of carpets has witnessed a major growth of 42.23 percent, which apparently stands at USD 654.32 million during 2004-05 to USD 930.69 million in the year 2006-07. India holds 36 percent share in the global textile market as has been estimated during April-October 2007

The technical textiles market in India is assumed to touch USD 10.63 billion by 2007-08 from USD 5.09 billion during 2005-06, which is approximately double. It is also assumed to touch USD 19.76 billion by the year 2014-15

By 2010, India is expected to double its share in the international technical textile market

The entire sector of technical textiles is estimated to reach USD 29 billion during 2005-2010

The Role of Textile Industry in India GDP also includes a hike in the investment flow both in the domestic market and the export production of textiles. The investment range in the Indian textile industry has increased from USD 2.94 billion to USD 7.85 billion within three years, from 2004 to 2007. It has been assumed that by the year 2012, the investment ratio in textile industry is most likelyto touch USD 38.14 billion.

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TEXTILE EXPORTS OF INDIATextile exports continued to witness growth. During April-December 2008-09, it saw a growth of 8.12 per cent. Exports were worth US$13042.10 million during the period as against US$12002.10 million during the same period of 2006-07. In rupee terms however, a similar comparison shows that exports had declined by 2.41 per cent during the period as against the same period of the previous year.

Cotton Garments continued to occupy the largest share in the export basket. During April-December 2008-09, the share of the segment was a good 43.20, only marginally down from the share of 43.25 per cent that it had occupied during the month of November. Comparing the segment's share during April-December 2008-09 with that of the same period last year, shows a decline of 1.52 percentage points during the current period.

In terms of share, Cotton Garments was followed by Cotton Textiles which occupied a share of 28.12 per cent in total exports. Exports in the segment was worth US$3375.63 million during April-December 2008-09.

In dollar terms, except for Man Made Fibre Garments, all segments recorded a gain in exports during April-December 2008-09 as compared to the same period of the previous year. The decline witnessed in Man Made Fibre Garments was to the extent of 12.89 per cent. Exports declined from US$712.89 million during April-December 2007-08 to US$621.02 million during April-December 2008-09. In Rupee terms, the percentage of decline was 22.82 per cent. Among the segments that gained, the

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highest growth was that of Manmade Textiles (29.28 per cent). This was followed by Garments of Other Textile Materials which gained by 22.64 per cent. The gain in segments other than these two, were lesser than 10 per cent.

USA continued to be the largest importer of textile products from India. USA also continued to see a decline in its imports. USA's imports were worth US$2641.65 million during April- December 2008-09 as against US$2777.98 million during April-December 2007-08, a decline of 4.91 per cent. The only segment where USA had seen a gain in its imports was Garments of Other Textile Materials where it saw imports increase by 11.38 per cent.

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TEXTILE IMPORT OF INDIADuring April-October 2008-09, India's imports of textile products were worth US$1653.12 million. Imports had witnessed a gain of 8.29 per cent during the period as compared to the same period of 2006-07. In Rupee terms, however, a similar comparison shows a decline to the extent of 4.05 per cent.

Imports in Other Textiles, the segment that had the highest share in total imports (46.28 per cent), were worth US$765.00 million during April December 2008-09. The segment had seen an import growth of 11.00 per cent during the period as compared to the same period of 2007-08. MMF Yarn with imports worth US$444.23 million was the next biggest segment. The segment occupied a share of 26.87 per cent during the period. MMF Yarn that had witnessed a decline of 0.37 per cent during last month saw a gain of 0.37 per cent during the current month.

Since the last few months, the highest growth in imports had been that of Woolen Textiles. This position was now occupied by Ready Made Garments which recorded a 56.61 per cent growth during April-December 2008-09 as compared to the same period of 2006-07. The growth recorded by Woolen Textiles was 53.13 per cent. Imports of Ready made Garments were worth US$81.37 million and that of Woolen Textiles, worth US$41.02 million.

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The top supplier, China, had exported textile products worth US$740.31 million to India during April December 2008-09. This was a good 44.78 per cent of India's total imports.

As compared to its exports during April December 2007-08, exports made during April-December 2008-09 was a gain of 18.55 per cent. China continued to export the most in all segments except Woolen and Cotton Rags. In this segment, the largest exporter was Bangladesh. Bangladesh's supplies in the segment were worth US$2.83 million. As compared to its exports during April-December 2007-08, exports made by them during April December 2008-09 were over 200 times higher.

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GARMENT OUTSOURCING

Outsourcing is getting things done from sources other than own ones.

India provides its source to various international brands of the world.

• Walmart, Levis, Gap, JC Penny, Marks & Spencer, and other foreign labels are buying more and more garments and fabrics from India.

• Singapore based Crocodile International has announced its plans to invest an additional €.39 million.

• India is also developing design skills that cover different fabrics and different markets.

• The Indian silk industry, which is known for its finery and masterly brocades, are also a great strength to the textile industry.

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POSITION IN THE WORLD TEXTILE ECONOMY

India contributes 20% to world spindleage capacity, the second highest spindleage in the world after China. It

contributes 6% to the world rot orage and 62% to the world loomage. However in High-tech Shuttless Looms this

industry’s contribution is only 4.1% to the world Shuttless loomage. 12% to the world production of textile fibres and

yarns is from India and is the largest producer of Jute, second largest producer of silk and cellulose fibre / yarn,

third largest producer of cotton and fifth largest producer of synthetic fibres / yarns. India’s key assets include a large

and low-cost labour force, sizable supply of fabric, sufficiency in raw material and spinning capacities. On the

basis of these strengths, India will become a major outsourcing hub for foreign manufacturers and retailers,

with composite mills and large integrated firms being their preferred partners. It will thus be essential for SMEs to align with these firms, that can ensure a market for their

products and new orders.

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PROBLEM FACED BY THE TEXTILE INDUSTRY IN INDIA

The major problems are the following:

SicknessSickness is widespread in the cotton textile industry. After the engineering industry, the cotton textile industry has the highest incidence of sickness. As many as 125 sick units have been taken over by the Central Government. Sickness is caused by various reasons like the problems mentioned below.

ObsolescenceThe plant and machinery and technology employed by a number of units are obsolete. The need today is to make the industry technologically up-to-date rather than expand capacity as such. This need was foreseen quite sometime back and schemes for modernisation of textile industry had been introduced. The soft loan scheme was introduced a few years back and some units were able to take advantage of the scheme and modernise their equipment. However, the problem has not been fully tackled and it is of utmost importance that the whole industry is technologically updated. Not many companies would be able to find resources internally and will have to depend on financial institutions and other sources.

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Government Regulations

Government regulations like the obligation to produced controlled cloth are against the interest of the industry. During the last two decades the excessive regulations exercised by the government on the mill sector has promoted inefficiency in both production and management. This has also resulted in a colossal waste of raw materials and productive facilities. For example, the mills are not allowed to use filament yarn in warp in order to protect the interest of art silk and powerloom sector which use this yarn to cater to the affluent section of society.

Low Yield and Fluctuation of Cotton OutputThe cotton yield per hectare of land is very low in India. This results in high cost and price. Further, being largely dependent on the climatic factors, the total raw cotton production is subject to wide fluctuation causing serious problems for the mills in respect of the supply of this vital raw material.

Competition from Man-made FibresOne of the serious challenges facing the cotton textile industry is the competition from the man-made fibres and synthetics. These textures are gradually replacing cotton textiles. This substitution has in fact been supported by a number of people on the ground that it is not possible to increase substantially the raw cotton production without

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affecting other crops particularly food crops.

Competition from other CountriesIn the international market, India has been facing severe competition from other countries like Taiwan, South Korea, China and Japan. The high cost of production of the Indian industry is a serious adverse factor.

Labour Problems:

The cotton textile industry is frequently plagued by labour problems. The very long strike of the textile workers of Bombay 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.

Accumulation of Stock

At times the industry faces the problems of very low off take of stocks resulting in accumulation of huge stocks. The situation leads to price cuts and the like leading to loss or low profits.

MiscellaneousThe industry faces a number of other problems like power cuts, infrastructural problems, lack of finance, exorbitant rise in raw material prices and production costs etc

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MAJOR COMPETITIORS IN THE WORLD

To understand Indias position among other textile producing the industry contributes 9% of GDP and 35% of foreign exchange earning, Indias share in global exports is only 3% compared to Chinas 13.75% percent. In addition to China, other developing countries are emerging as serious competitive threats to India. Looking at export shares, Korea (6%) and Taiwan (5.5%) are ahead of India, while Turkey (2.9%) has already caught up and others like Thailand (2.3%) and Indonesia (2%) are not much further behind. The reason for this development is the fact that India lags behind these countries in investment levels, technology, quality and logistics. If India were competitive in some key segments it could serve as a basis for building a modern industry, but there is no evidence of such signs, except to some extent in the spinning industry.

India’s Competitive Position in Stages of

Textile Manufacture

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GOVERNMENT ORGANISATIONS, AGREEME

NTS AND POLICIES

The-Multi-Fibre-Agreement-(MFA)

The Multi-Fibre Agreement (MFA), that had governed the extent of textile trade between nations since 1962, expired on 1 January 2005. It is expected that, post-MFA, most tariff distortions would gradually disappear and firms with robust capabilities will gain in the global trade of textile and apparel. The prize is the $360 bn market which is expected to grow to about $600 bn by the year 2010 barely five years after the expiry of MFA.

National-Textile-Policy-2000

Faced with new challenges and opportunities in a changing global trade environment, the GOI unveiled its National Textile Policy 2000 (NTP 2000) on November 2, 2000. The NTP 2000 aims to improve the competitiveness of the Indian textile industry in order to attain $50 billion per year in textile and apparel exports by 2010.86 The NTP 2000 opens the countrys apparel sector to large firms and allows up to 100 percent FDI in the sector without any export obligation.

Export Promotion Capital Goods (EPCG) Scheme

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To promote modernization of Indian industry, the GOI set up the Export Promotion Capital Goods (EPCG) scheme, which permits a firm importing new or Secondhand capital goods for production of articles for export to enter the capital goods at preferential tariffs, provided that the firm exports at least six times the c.i.f. value of the imported capital goods within 6 years. Any textile firm planning to modernize its operations had to import at least $4.6 million worth of equipment to qualify for duty-free treatment under the EPCG scheme.

Export-Import-Policy

The GOIs EXIM policy provides for a variety of largely export-related assistance to firms engaged in the manufacture and trade of textile products. This policy includes fiscal and other trade and investment incentives contained in various programs

Duty-Entitlement-Passbook-Scheme-(DEPS)

DEPS is available to Indian export companies and traders on a pre- and post-export basis. The pre-export credit requires that the beneficiary firm has exported during the preceding 3-year period. The post-export credit is a transferable credit that exporters of finished goods can use to pay or offset customs duties on subsequent imports of any unrestricted products.

The Agreement on Textiles and Clothing (ATC)

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The Agreement on Textiles and Clothing (ATC) promises abolition of all quota restrictions in international trade in textiles and clothing by the year 2005. This provides tremendous scope for export expansion from developing countries.

Guidelines-of-the-revised-Textile-Centres-Infrastructure-Development-Scheme-(TCUDS)

TCIDS Scheme is a part of the drive to improve infrastructure facilities at potential Textile growth centres and therefore, aims at removing bottlenecks in exports so as to achieve the target of US$ 50 billion by 2010 as envisaged in the National Textile Policy, 2000.

Under the Scheme funds can be given to Central/ State Government Departments/ Public Sector Undertakings/ Other Central /State Governments agencies/recognized industrial association or entrepreneur bodies for development of infrastructure directly benefiting the textile units. The fund would not be available for individual production units.

Technology Upgradation Fund Scheme (TUFS)

At present, the only scheme through which Government can assist the industry is the Technology Upgradation Fund Scheme (TUFS) which provides for reimbursing 5% interest on the loans/finance raised from designated financial institutions for bench marked projects of modernisation. IDBI, SIDBI, IFCI have been designed as nodal agencies for large and medium small scale industry

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and jute industry respectively. They have co-opted 148 leading commercial banks/cooperative banks and financial institutions like State Finance Corporations and State Industrial Development Corporation etc.

Scheme for Integrated Textile Parks (SITP)

To provide the industry with world-class infrastructure facilities for setting up their textile units, Government has launched the Scheme for Integrated Textile Parks (SITP) by merging the Scheme for Apparel Parks for Exports (APE) and Textile Centre Infrastructure Development Scheme (TCIDS). This scheme is based on Public-Private Partnership (PPP) and envisages engaging of a professional agency for project execution. The Ministry of Textiles (MOT) would implement the Scheme through Special Purpose Vehicles (SPVs).

National Textile Corporation Ltd. (NTC)

National Textile Corporation Ltd. (NTC) is the single largest Textile Central Public Sector Enterprise under Ministry of Textiles managing 52 Textile Mills through its 9 Subsidiary Companies spread all over India. The headquarters of the Holding Company is at New Delhi. The strength of the group is around 22000 employees. The annual turnover of the Company in the year 2004-05 was approximately Rs.638 crores having capacity of 11 lakhs Spindles, 1500 Looms producing 450 lakh Kgs of Yarn and 185 lakh Mtrs of cloth annually.

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Cotton Corporation Of India Ltd. (CCI)

The Cotton Corporation of India Ltd (CCI), Mumbai, is a profit-making Public Sector Undertaking under the Ministry of Textiles engaged in commercial trading of cotton. The CCI also undertakes Minimum Support Price Operation (MSP) on behalf of the Government-of-India.

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MACRO ENVIRONMENTAL FORCES

An organization's macro environment consists of nonspecific aspects in the organization's surroundings that have the potential to affect the organization's strategies. When compared to a firm's task environment, the impact of macro environmental variables is less direct and the organization has a more limited impact on these elements of the environment.

Macro environmental variables include socio cultural, technological, political-legal, economic, and international variables. A firm considers these variables as part of its environmental scanning to better understand the threats and opportunities created by the variables and how strategic plans need to be adjusted so the firm can obtain and retain competitive advantage.

The macro environment consists of forces that originate outside of an organization and generally cannot be altered by actions of the organization. In other words, a firm may be influenced by changes within this element of its environment, but cannot itself influence the environment. The curved lines in Figure 1 indicate the indirect influence of the environment on the organization.

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ELEMENTS OF THE MACRO ENVIRONMENT

SOCIO CULTURAL FACTORS

TECHNOLOGICAL FACTORS

POLITICAL AND LEGAL FACTORS

ECONOMIC FACTOR

INTERNATIONAL FACTOR

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SOCIOCULTURAL FACTORS

The sociocultural dimensions of the environment consist of customs, lifestyles, and values that characterize the society in which the firm operates. Socio-cultural components of the environment influence the ability of the firm to obtain resources, make its goods and services, and function within the society. Sociocultural factors include anything within the context of society that has the potential to affect an organization. Population demographics, rising educational levels, norms and values, and attitudes toward social responsibility are examples of sociocultural variables.

POPULATION CHANGES.

Changes in population demographics have many potential consequences for organizations. As the total population changes, the demand for products and services also changes. For instance, the decline in the birthrate and improvement in health care have contributed to an increase in the average age of the population in the United States. Many firms that traditionally marketed their products toward youth are developing product lines that appeal to an older market. Clothing from Levi Strauss & Co. was traditionally popular among young adults. While its popularity in this market has waned, the firm has been able to develop a strong following in the adult market with its Dockers label.

Other firms are developing strategies that will allow them to capitalize on the aging population. Firms in the health-care industry and firms providing funeral services are

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expected to do well given the increasing age of the U.S. population. They are projected as a growth segment of U.S. industry simply because of the population demographics.

RISING EDUCATIONAL LEVELS.

Rising educational levels also have an impact on organizations. Higher educational levels allow people to earn higher incomes than would have been possible otherwise. The increase in income has created opportunities to purchase additional goods and services, and to raise the overall standard of living of a large segment of the population. The educational level has also led to increased expectations of workers, and has increased job mobility. Workers are less accepting of undesirable working conditions than were workers a generation ago. Better working conditions, stable employment, and opportunities for training and development are a few of the demands businesses confront more frequently as the result of a more educated workforce.

NORMS AND VALUES.

Norms (standard accepted forms of behavior) and values (attitudes toward right and wrong), differ across time and between geographical areas. Lifestyles differ as well among different ethnic groups. As an example, the application in the United States of Japanese-influenced approaches to management has caused firms to reevaluate the concept of quality. Customers have also come to expect increasing quality in products. Many firms have found it necessary to

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reexamine production and marketing strategies to respond to changes in consumer expectations.

SOCIAL RESPONSIBILITY.

Social responsibility is the expectation that a business or individual will strive to improve the welfare of society. From a business perspective, this translates into the public expecting businesses to take active steps to make society better by virtue of the business being in existence. Like norms and values, what is considered socially responsible behavior changes over time. In the 1970s affirmative action was a high priority. During the early part of the twenty-first century prominent social issues were environmental quality (most prominently, recycling and waste reduction) and human rights, in addition to general social welfare. More than just philanthropy, social responsibility looks for active participation on the part of corporations to serve their communities.

The stakeholder approach to social responsibility demonstrates some of the complexities of incorporating socially responsible issues into a firm's strategies. Stakeholders are anyone with a stake in the organization's existence. Highly visible stakeholders are stockholders, employees, customers, and the local community. Decisions to be responsible and maximize the return to stockholders may require closing an unprofitable plant. However, employees and members of the local community could view this move as socially irresponsible since the move would not benefit the community.

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TECHNOLOGICAL FACTORSTechnology is another aspect of the environment a firm should consider in developing strategic plans. Changing technology may affect the demand for a firm's products and services, its production processes, and raw materials. Technological changes may create new opportunities for the firm, or threaten the survival of a product, firm, or industry. Technological innovation continues to move at an increasingly rapid rate.

DEMAND.

Technology can change the lifestyle and buying patterns of consumers. Recent developments in the field of microcomputers have dramatically expanded the potential customer base and created innumerable opportunities for businesses to engage in business via Internet. Whereas computers were traditionally used only by large organizations to handle data processing needs, personal computers are commonly used by smaller firms and individuals for uses not even imagined fifteen years ago. Similarly, new developments in technology led to a reduction in prices for computers and expanded the potential market. Lower prices allow computers to be marketed to the general public rather than to business, scientific, and professional users—the initial market.

Technology may also cause certain products to be removed from the market. Asbestos-related illnesses have severely limited asbestos as a resource used in heat-sensitive

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products such as hair dryers. Further, a number of chemicals that have been commonly used by farmers to control insects or plants are prohibited from use or require licensure as a consequence of those chemicals appearing in the food chain.

PRODUCTION PROCESSES.

Technology also changes production processes. The introduction of products based on new technology often requires new production techniques. New production technology may alter production processes. Robotics represents one of the most visible challenges to existing production methods. Robots may be used in positions considered hazardous for people or that require repetitive, detailed activities.

The consequences for other jobs currently occupied by people are not clear. When production was first automated, although some workers were displaced, new jobs were created to produce and maintain the automated equipment. The impact of robotics on jobs is in large part a function of the uses made of the technology and the willingness of workers to learn to use new technology.

In some industries, use of robots during the early 2000s increased production and efficiency but resulted in significant numbers of job losses. However, technological innovation can also result in increased job growth. For example, Ford Motor Company's $375-million technology update to its Norfolk assembly plant to build its 2004 F-150 resulted in the ability to build more models on its assembly

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line and consequently created about 270 new jobs, an 11 percent increase.

EVALUATING TECHNOLOGICAL CHANGES.

There is little doubt that technology represents both potential threats and potential opportunities for established products. Products with relatively complex or new technology are often introduced while the technology is being refined, making it hard for firms to assess their market potential. When ballpoint pens were first introduced, they leaked, skipped, and left large blotches of ink on the writing surface. Fountain pen manufacturers believed that the new technology was not a threat to existing products and did not attempt to produce ball-point pens until substantial market share had been lost.

Another technology, the electric razor, has yet to totally replace the blade for shaving purposes. Perhaps the difference is that the manufacturers of blades have innovated by adding new features to retain customers. Manufacturers of fountain pens did not attempt to innovate until the ballpoint pen was well established.

It is quite difficult to predict the impact of a new technology on an existing product. Still, the need to monitor the environment for new technological developments is obvious. Attention must also be given to developments in industries that are not direct competitors,

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since new technology developed in one industry may impact companies and organizations in others.

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POLITICAL AND LEGAL FACTORS

The political-legal dimension of the general environment also affects business activity. The philosophy of the political parties in power influences business practices. The legal environment serves to define what organizations can and cannot do at a particular point in time.

ATTITUDES TOWARD BUSINESS

A pro-business attitude on the part of government enables firms to enter into arrangements that would not be allowed under a more anti-business philosophy. The numerous joint ventures between U.S. and Japanese automobile manufacturers could have been termed anticompetitive by a less pro-business administration. The release of many acres of government land for business use (logging, mining) angered many environmentalists who had been able to restrict business use of the land under previous administrations.

Changes in sentiments toward smoking and its related health risks have altered the public's attitude toward the tobacco industry. These changes have been reflected in many organizations by limiting smoking to designated areas or completely prohibiting it at work. The transformation in attitude has also caused firms within the tobacco industry to modify marketing strategies, encouraging many to seek expansion opportunities abroad.

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LEGISLATION.

The legal environment facing organizations is becoming more complex and affecting businesses more directly. It has become increasingly difficult for businesses to take action without encountering a law, regulation, or legal problem. A very brief listing of significant laws that affect business would include legislation in the areas of consumerism, employee relations, the environment, and competitive practices.

Many of the laws also have an associated regulatory agency. Powerful U.S. regulatory agencies include the Environmental Protection Agency (EPA), the Occupational Safety and Health Administration (OSHA), the Equal Employment Opportunity Commission (EEOC), and the Securities and Exchange Commission (SEC).

Estimates of the cost of compliance vary widely, but could well exceed $100 billion annually. Many of these costs are passed to consumers. However, costs of legal expenses and settlements may not be incurred for years and are not likely to be paid by consumers of the product or owners of the company when the violation occurred. Still, potential legal action often results in higher prices for consumers and a more conservative attitude by business executives.

LEVELS OF GOVERNMENT INFLUENCE.

We generally speak about "the government" as referring to the federal government. It is the federal government that passes and enforces legislation concerning the entire

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country. Actions by the federal government affect a large number of firms and are consistent across state boundaries. Environmental analysis, however, should not overlook actions by both state and local governments.

Regulations concerning many business practices differ between states. Tax rates vary widely. Laws regarding unionization (e.g., right-to-work states) and treatment of homosexual workers differ between states.

Local governments have the potential to affect business practices significantly. Some local governments may be willing to provide incentives to attract business to the area. Some may build industrial parks, service roads, and provide low-interest bonds to encourage a desirable business to move into the community.

Regulatory measures such as building codes and zoning requirements differ significantly between communities. Infrastructure such as electric and sewer services, educational facilities, and sewage treatment capabilities may not be able to accommodate the increased demand associated with certain industries, making that locale unsuitable for establishing some businesses.

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ECONOMIC FACTORSEconomic factors refer to the character and direction of the economic system within which the firm operates. Economic factors include the balance of payments, the state of the business cycle, the distribution of income within the population, and governmental monetary and fiscal policies. The impact of economic factors may also differ between industries.

BALANCE OF PAYMENTS.

The balance of payments of a country refers to the net difference in value of goods bought and sold by citizens of the country. To decrease the dollar value of goods imported into a country, it is common practice to construct barriers to entry for particular classes of products. Such practices reduce competition for firms whose products are protected by the trade barriers.

Mexico has limited the number of automobiles that can be imported. The purpose of this practice is to stimulate the domestic automobile market and to allow it to become large enough to create economies of scale and to create jobs for Mexican workers. A side effect of the import restriction, however, has been an increase in the price and a decrease in the quality of automobiles available to the public.

Another potential consequence of import restrictions is the possibility of reciprocal import restrictions. Partially in

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retaliation to import restriction on Japanese televisions and automobiles by the United States, the Japanese have limited imports of agricultural goods from the United States.

Lowering trade restrictions as a means of stimulating the economy of a country may meet with mixed results. The North American Free Trade Agreement (NAFTA) has opened the borders between the United States, Canada, and Mexico for the movement of many manufacturers. Government officials in the United States argue the results have been positive, but many local communities that have lost manufacturing plants question the wisdom of the agreement.

As discussed in an article by Susan Schmidt in World Trade magazine, issues that stemmed from regulatory agencies and national security measures were barriers to free trade during the early part of the twenty-first century, demonstrating that NAFTA alone could not clear the path for companies and countries to take advantage of free trade benefits.

BUSINESS CYCLE.

The business cycle is another economic factor that may influence the operation of a firm. Purchases of many durable goods (appliances, furniture, and automobiles) can be postponed during periods of recession and depression, as can purchases of new equipment and plant expansions. Economic downturns result in lower profits, reductions in hiring, increased borrowing, and decreased productivity for firms adversely affected by the recession. Positive consequences of recessions may include reductions in

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waste, more realistic perceptions of working conditions, exit of marginally efficient firms, and a more efficient system.

Some organizations may benefit from an economic downturn. Postponed purchases may result in the need to service existing products. An owner electing to keep a used automobile rather than buying a new one may need to have it repaired, thus creating an increased demand for automobile mechanics and replacement parts. Limited job opportunities during downturns also encourage individuals unable to get satisfactory jobs to consider going to college or joining the armed services.

INCOME DISTRIBUTION.

The distribution of income may differ between economic systems. Two countries with the same mean (per capita) income levels may have dramatically different distributions of income. The majority of persons in the United States are considered middle income, with only a relatively small number of persons having exceptionally high or low incomes.

Many developing countries have citizens who are either extremely wealthy or extremely poor. Only a few persons would qualify as middle class. Therefore, although both countries had the same mean income, opportunities to market products to the middle class would be greater in the United States.

TRANSFER PAYMENTS.

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Transfer payments (e.g., welfare, social security) within the United States change the distribution of income. Transfer payments provide money to individuals in the lower income brackets and enable them to purchase goods and services they otherwise could not afford. Such a redistribution of income may not be the practice in other economic systems. Thus, large numbers of people in need of basic goods and services do not assure that those people will be able to purchase such goods and services.

MONETARY AND FISCAL POLICIES.

Monetary and fiscal policies utilized by the federal government also influence business operations. Monetary policies are controlled by the Federal Reserve System and affect the size of the money supply and interest rates. Fiscal policies represent purchases made by the federal government.

For example, allocation of funds to defense means expenditures for weapons and hardware. If appropriations had gone to the Health and Human Services and Education Departments instead, much of the money would have constituted transfer payments. The primary beneficiaries of such a fiscal policy would be firms in the basic food and shelter businesses. No matter how government expenditures are reallocated, the result is lost sales and cut budgets for some companies, and additional opportunities for others.

Though unpopular in the United States, another aspect of government fiscal policy is deficit spending, which may allow government expenditures to rise, but can also

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influence interest rates, exchange rates, and other economic trends.

INTERNATIONAL FACTORSA final component of the general environment is actions of other countries or groups of countries that affect the organization. Governments may act to reserve a portion of their industries for domestic firms, or may subsidize particular types of businesses to make them more competitive in the international market.

Some countries may have a culture or undergo a change in leadership that limits the ability of firms to participate in the country's economy. As with the other elements of the macroenvironment, such actions are not directed at any single company, but at many firms.

ECONOMIC ASSOCIATIONS.

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One of the most recent joint efforts by governments to influence business practices was NAFTA. The agreement between the United States, Canada, and Mexico was intended to facilitate free trade between the three countries. The result has been a decrease in trade barriers between them, making it easier to transport resources and outputs across national boundaries. The move has been beneficial to many businesses, and probably to the economies of all three countries. In most economic associations, preference is also given to products from member countries at the expense of products from nonmembers.

Probably the best-known joint effort by multiple countries to influence business practices is the Organization of Petroleum Exporting Countries (OPEC). The formation of OPEC, an oil cartel including most major suppliers of oil and gas, led to a drastic increase in fuel prices. Rising fuel prices had a significant effect on the demand for automobiles worldwide. The increases in oil prices also contributed to inflation all over the world. OPEC's early success encouraged countries producing other basic products (coffee beans, sugar, bananas) to attempt to control the prices of their products.

A more recent example of an economic association serving multiple countries was the International Coffee Organization (ICO). The United States rejoined the ICO 2004 in hopes of fostering sustainability and competition across countries and the industry. The United States works with the Honduras, Mexico, and Nicaragua, among others, as part of this organization.

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INTERGOVERNMENTAL RELATIONS.

Changing relationships between the United States and other countries may alter the ability of firms to enter foreign markets. The United States' establishment of trade relations with China in the 1970s created opportunities for many firms to begin marketing their products in China.

The rise of Ayatollah Ruhollah Khomeini to power in Iran altered the lives of many Iranian citizens. Wine, vodka, music, and other forms of entertainment were prohibited. Black markets provided certain restricted items. Other products, such as wine, began to be produced at home. Anti-American sentiments throughout the country showed the hostility of many citizens. Non-American firms thus had an opportunity to capitalize on the anti-American sentiments and to provide goods and services formerly provided by U.S. firms.

CULTURAL DIFFERENCES.

In different countries, sometimes even within a country, there are substantial differences in attitudes, beliefs, motivation, morality, superstition, and perception, as well as other characteristics. Geert Hofstede (b. 1928) developed a model in which worldwide differences in culture are categorized according to five dimensions. These dimensions include:

Power distance—the degree of inequality among people which the population of a country considers normal.

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Individualism vs. collectivism—the degree to which people in a country prefer to act as individuals or as members of a group.

Masculinity vs. femininity—the degree to which values like assertiveness, performance, success, and competitiveness are used to guide decisions versus values like the quality of life, warm personal relationships, service, and solidarity.

Uncertainty avoidance—the degree to which citizens of a country prefer structured over unstructured situations, rigidity of procedures, or willingness to accept risk and potential failure.

Time orientation—the extent to which decisions are based on long-term orientation versus short-term orientation, past versus present versus future, and punctuality.

Hofstede argues that U.S. management theories contain a number of idiosyncrasies that are not necessarily shared by managers in other cultures. Approaches to motivation and leadership, for example, differ widely throughout the world. Citizens of Japan tend to put greater importance on collective effort and working as a team member. Individual recognition is not desired. It is viewed as contradictory to being a good team member.

Similarly, in other countries, high tax rates may make bonuses and other forms of monetary compensation less attractive and less motivating than in the United States. Hofstede argues that employees and products are more readily transferred between countries sharing similar cultures.

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The macroenvironment consists of forces that originate outside of an organization and generally cannot be altered by actions of the organization. Dimensions of the macroenvironment consist of sociocultural factors, technological factors, political-legal elements, economic factors, and international elements. A firm needs to study these elements of its environment, as they have the potential to affect how the organization should operate to attain and maintain its competitive advantage.

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CONCLUSIONThe future outlook for the industry looks promising, rising income levels in both urban and rural markets will ensure a rising market for the cotton fabrics considered a basic need in the realm of new economic reforms (NER) proper attention has been given to the development of the textiles industry in the Tenth plan. Total outlay on the development of textile industry as envisaged in the tenth plan is fixed at Rs.1980 crore. The production targets envisaged in the terminal year of the Tenth plan are 45,500 million sq metres of cloth 4,150 million kg of spun yarn and 1,450 million kg of man made filament yarn. The per capita availability of cloth would be 28.00 sq meters by 2006-2007 as compared to 23.19 sq meters in 2000-01 showing a growth of 3.19 percent. The export target of textiles and apparel is placed at $32 billion by 2006-2007 and $50 billion by 2010.

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MAJOR PLAYERS IN TEXTILE INDUSTRY

1. RAYMONDS

2. VARDHAMAN SPINNING

3. ARVIND MILLS

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INTRODUCTIONThe Raymond Group was incorporated in 1925 and within a span of a few years, transformed from being an Indian textile major to a global conglomerate.In our endeavor to keep nurturing quality and leadership, we always choose the path untaken - from being the first in 1959 to introduce a polywool blend in India to creating the world's finest suiting fabric the Super 230s made from the superfine 11.8 micron wool.Today, the Raymond group is vertically and horizontally integrated to provide customers total textile solutions. Few companies globally have such a diverse product range of nearly 20,000 varieties of worsted suiting to cater to customers across age groups, occasions and styles.We manufacture for the world the finest fabrics- from wool to wool-blended worsted suiting to specialty ring denims as well as high value shirting.After making a mark in textiles, Raymond forayed into garmenting through highly successful ventures like Silver Spark Apparel Ltd. and Regency Texteis Portuguesa Lda (for fine Tailored Suits, Trousers and Jackets), EverBlue Apparel Ltd. (Jeanswear) and Celebrations Apparel Ltd. (Shirts).We also have some of the most highly respected apparel brands in our portfolio: Raymond, Raymond Finely Crafted Garments, Manzoni, Park Avenue, ColorPlus, Parx, Be:, Zapp! and Notting Hill. The Raymond Group also has an expansive retail presence established through the exclusive chain of 'The Raymond Shop' and stand-alone brand stores for Raymond Finely

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Crafted Garments, Manzoni, Park Avenue, ColorPlus, Parx, Be:, Zapp! and Notting Hill. With a US$500 million turnover we are today one of the largest players in fabrics, designer wear, denim, cosmetics & toiletries, engineering files & tools, prophylactics and air charter services in national and international markets. All our plants are ISO certified, leveraging on cutting-edge technology that adheres to the highest quality parameters while also being environment friendly.

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HISTORYYears ago, when the Singhania family was building, consolidating and expanding its various businesses in Kanpur, one Mr. Wadia was in a similar manner setting up a small woollen mill in the area around Thane creek, 40 kms away from Bombay. The Sassoons, a well-known industrialist family of Bombay, soon acquired this mill and renamed it as The Raymond Woollen Mills.

Around the same time, the Singhanias aimed to broaden their business horizons. The family's sharp business foresight led to the acquisition of The Raymond Woollen Mills.When the grandson of Lala Juggilal, Lala Kailashpat Singhania took over Raymond in 1944, the mill primarily made cheap and coarse woollen blankets, and modest quantities of low priced woollen FabricsThe vision and foresight of Mr. Kailashpat Singhania greatly helped in establishing the J.K. Group's presence in the western region. Under his able stewardship, Raymond embarked upon a gradual phase of technological upgradation and modernization; producing woollen Fabrics of a far superior quality.Under Mr. Gopalakrishna Singhania, the mill became a world-class factory and the Raymond brand became synonymous with fine quality woollen FabricsWhen Dr. Vijaypat Singhania took over the reins of the company in 1980, he injected fresh vigour into Raymond, transforming it into a modern, industrial conglomerate. His son Mr. Gautam Hari Singhania, the present chairman and

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managing director has been instrumental in restructuring the group. With the divestment of its non-core businesses, the group has emerged stronger, with a more focused approach.Today, with a 33 million-meter capacity in wool & wool-blended fabrics, Raymond commands an over 60% market share in worsted suiting in India and ranks amongst the first three fully integrated manufacturers of worsted suiting in the world. We are perhaps the only company in the world to have a diverse product range of nearly 20,000 design and colours of suiting fabric to suit every age, occasion and style. We export these to over 50 countries, including USA, Canada, Europe, Japan and the Middle East. A 100% subsidiary of Raymond Ltd., Raymond Apparel Ltd. (RAL) ranks amongst India's largest and most respected apparel companies. We bring to our customers the best of fabric and style through some of the country's most prestigious brands- Raymond Finely Crafted Garments, Manzoni, Park Avenue, ColorPlus, Parx, Be: and Zapp! and Notting Hill. Even as the brand keeps evolving through its cuts, styles, apparels and collections, one thing has remained unchanged over time is the unrelenting pursuit of excellence!

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COMPANY OVERVIEWCompany was incorporated on 10th September 1925 at Mumbai. Raymond Group is a Rs. 2000 crore plus conglomerate having businesses in Textiles, Readymade Garments, Engineering Files & Tools, Prophylactics and Toiletries. The group is the leader in textiles, apparel, & files & tools in India and enjoys a pronounced position in the international market. Raymond believes in Excellence, Quality and Leadership. Raymond Woollen Mills Ltd. was registered in Kenya for manufacturing knitting yarns and price goods of wool and wool mixed with synthetic fibres, and woollen and worsted fabrics. Company also started the research and development for sheep breeding and wool production in India with a view to produce indigenously Merino type wool. Company started a new woollen mill unit in Jalgaon in Maharashtra. Company also started a modern Wool Combing Division in collaboration with Sir James Mill & Sons Ltd., Bradford, U.K. - Company changed its name from Raymond Woollen Mills Ltd. to Raymond Limited in 1994. Company acquired the files division of the A.V. Birla group company i.e. HGI Industries. The 50:50 joint ventures J K Ansell, between the Raymond and Australia-based Ansell International formed. Company has acquired the well-known brand Color Plus Fashions Private Ltd. Company started to manufacture suit lengths in the Super 200’s wool category, which is made by very few companies in the world. Company set up apparel subsidiary to establish good presence in the world market. Last year, company signed JV agreement with Lanificio Fedora, Italy and with MOB Outillage.

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Raymond – the frontrunner in innovation

-First to introduce polywool blend in India in 1959

-First to introduce Trovine, a cool fabric for the Indian summer in 1968

-First to introduce natural stretch worsted suiting

-First in the world to use nanotechnology

-First to develop superfine fabric such as Lineage line, Renaissance Collection, Chairman’s Collection

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GROUP COMPANIESRaymond Ltd.

Raymond Ltd. is among the largest integrated

manufacturers of worsted fabrics in the world.

Raymond Apparel Ltd.

Raymond Apparel Ltd. has in its folio some of the most

highly regarded apparel brands in India – Raymond Finely

Crafted Garments, Manzoni, Park Avenue for Men &

Women, ColorPlus for Men & Women, Parx, Be: and

Zapp! and Notting Hill.

ColorPlus Fashions Ltd.

ColorPlus is among the largest smart casual brands in the

premium category. The company was acquired by

Raymond to cater to the growing demand for a high end,

casual wear brand in the country for Men & Women.

Silver Spark Apparel Ltd.

A garmenting facility that manufactures formal suits,

trousers and jackets.

Regency Texteis Portuguesa Lda

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A facility set-up in northern Portugal bordering Spain, in Caminha for manufacturing suits, jackets and trousers.

EverBlue Apparel Ltd.

A state-of-the-art denim garmenting facility.

Celebrations Apparel Ltd.

A facility set-up for the manufacture of formal shirts.

J.K. Files & Tools

A leading player in the Engineering Files & Tools segment and the largest producer of steel files in the world.

Ring Plus Aqua Ltd.

A leading manufacturer in the engineering automotive components.

J.K. Helene Curtis Ltd.

A leading player in the grooming, accessories and toiletries category.

J.K. Investo Trade (India) Ltd.

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JKIT is an investment company registered with Reserve Bank of India as Non-Banking Financial Company.

BRAND

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ACHIEVMENTSThe Company received ‘Global HR Excellence Awards 2007-08’ for the outstanding contribution to the cause of education from ACCORServices – International Leaders and India’s foremost in Employees Benefits, Motivation and Loyalty Solutions.Textiles Division of the Company received the following awards during the year:

a) Chhindwara unit received State Environment Award for the year 2004-05 on February 23, 2008.

b) Jalgaon unit received State Level Award for excellence in Energy Conservation and Management from Maharashtra Energy DevelopmentAgency, for the year 2006.

c) ‘Most admired Textile brand of the year’ from Lycra Images Fashion Award 2008.

d) ‘Most admired Suiting brand of the year’ from Lycra Images Fashion Award 2008.

e) ‘The Best Branded Readymade Garment and Textile’ from CNBC Awaaz Consumer Awards.The ‘Park Avenue’ brand of Raymond Apparel Limited was adjudged the ‘Most Innovative Brand’ of the year at the Lycra Images Fashion Awards2007 in succession.

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Files and Tools Division of the Company received the following awards during the year:

a) ‘Outstanding Exporter Award’ in the engineering category in International Trade Awards 2006-07 sponsored by DHL & CNBC TV18.

b) All India Export Award by Engineering Export Promotion Council (EEPC) of India for being the Star Performer of 2005-06 in the Hand Tools Category.

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INTERNAL ENVIRONMENTS

Mission and Objectives:- Our business is people and their financial well-being.

Therefore, in the pursuit of our goals, we will conduct ourselves in accordance with the following precepts:

Our clients always come first. We must provide the highest level of service with

integrity. Assisting our clients in the attainment of their

financial objectives is our most worthy enterprise. We must communicate with our clients clearly and

frequently. Our investments and services must be of superior

quality. Teamwork — cooperating with and providing

assistance and support to our fellow associates — is fundamental to sustaining a quality work environment that nurtures opportunities for unparalleled service, personal growth and job satisfaction.

Continuing education is necessary to maintain the timeliness of investment knowledge, tax law information and financial planning techniques.

Innovation is requisite to our survival in a changing world.

To emulate other members of our industry requires us to continue to work hard; to excel beyond our peers requires us to provide an even higher caliber of service to our clients.

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We must give something back to the communities in which we live and work.

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MANAGEMENT STRUCTURE

BOARD OF DIRECTORS

DR. VIJAYPAT SINGHANIA, Chairman EmeritusGAUTAM HARI SINGHANIA, Chairman & Managing DirectorB. K. KEDIANANA CHUDASAMAB. V. BHARGAVAU. V. RAOI. D. AGARWALNABANKUR GUPTA

MANAGEMENT EXECUTIVES

GAUTAM HARI SINGHANIA, Chairman & Managing DirectorDEEPAK KHETRAPAL, Chief Operating OfficerANIRUDDHA DESHMUKH, President – FMCG & RetailHARSHAL JAYAVANT, President – Engineering BusinessK. A. NARAYAN, President – HRROBERT LOBO, President – Shirting Fabric BusinessSHREYAS JOSHI, President – Group ApparelS. K. SINGHAL, President – TextilesH. SUNDER, President – Finance, Chief Financial Officer

DIRECTOR - LEGAL & COMPANY SECRETARY

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R. NARAYANAN

BANKERS

BANK OF INDIABANK OF MAHARASHTRABANK OF AMERICACENTRAL BANK OF INDIACITIBANK N.A.HDFC BANK LIMITEDTHE HONGKONG AND SHANGHAI BANKING CORPORATION LIMITEDSTATE BANK OF INDIASTANDARD CHARTERED BANK LIMITED

AUDITORS

DALAL & SHAHChartered Accountants

MAHAJAN & AIBARAChartered Accountants

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COMPANY IMAGE AND JOINT VENTURES

The Raymond Group today is poised to become a global player, integrated across various categories like worsted suiting, denim, shirting etc. The Group has achieved this through partnerships with companies that are the best in the world in their business. Raymond has entered into a JV with Gruppo Zambaiti, Italy’s leading manufacturer of shirting fabric, Lanificio Fedora, one of the largest manufacturers of carded woolen fabric in the world. Our JV with UCO is a merger of equals that will create a global denim major with transcontinental manufacturing in US, Europe and Asia along with a combined capacity of 80 million metres. This JV with UCO will create synergies in sourcing, manufacturing and marketing. All our JVs have resulted in a unique combination of synergies in manufacturing, marketing, technology, sourcing etc. and will reap tremendous mutual benefits in the years to come.Raymond Ltd. has announced a 50:50 joint venture with Grotto S.p.A, one of the most important Italian fashion companies. The joint venture recently launched the highly successful 'GAS' brand in India. With a total investment of approximately Rs. 500 million, this jointventure brings together Grotto S.p.A's proven expertise in design and managing a successful brand and Raymond Ltd's expertise in apparel brand building and retailing and its vast distribution network to give Indian consumers a new fashion experience. This 50:50 joint JOINT VENTURES venture company will characterize a distinct identity in the youth fashion casual apparel category in India.

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FINANCIAL-POSITION:-

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RISK MANAGEMENTThe Company is exposed to risks from market fluctuations of foreign exchange, interest rates and commodity prices and business risk.Foreign Exchange RiskThe Company’s policy is to systematically hedge its long term foreign exchange risks as well as short term exposures in line with its hedgingpolicies.Interest Rate RiskThe Company is proactively using derivatives for foreign currency borrowings to hedge interest rate risk and minimise interest cost.Given the interest rate fluctuations, the Company has adopted a prudent and conservative risk mitigating strategy, as a result of which interestrate fluctuations are not expected to pose a significant risk nor are they likely to have any material impact on the Company’s profitability.Commodity Price RiskThe Company is exposed to the risk of price fluctuation on raw materials as well as finished goods in all its products. The Company proactivelymanages these risks in inputs through forward booking, inventory management, proactive management of vendor development and relationships.The Company’s strong reputation for quality, product differentiation and service and the existence of a strong brand image and a strongmarketing network mitigates the impact of price risks on finished goods.

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Risk Element in Individual BusinessesApart from the risks on account of interest rate, foreign exchange and regulatory changes, various businesses of the Company areexposed to certain operating business risks, which are managed by regular monitoring and corrective actions.

RESEARCH AND DEVELOPMENT

. The R&D Department of Textile Division strives to develop and provide exclusive and innovative products under its brand. Some ofthe products developed and introduced during the year under review were:1 . Jacketing fabric based on 100 percent exotic and luxurious Vicuuna fibers.2 . Range of fabrics based on latest type of elastomeric polymeric yarn (Dow XLA) imparting unique stretch properties to polywool and wool fabrics.3 . New range of extra black (deep black) polyester-wool fabrics with anti-lint finish.4 . Range of polyester-wool and wool fabrics with silver based antimicrobial finish.5 . A range of sparkling fabrics with fine metallic effect for ceremonial wear.6. Range of fine soft fabrics, with special wool enzyme finish

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In order to maintain the leadership of JKFT in files business, 13 new SKU’s have been developed for the Export market for customerspecific engineering and agro applications.

Technology Absorption Adaptation and innovation :The Files and Tools division introduced automatic VCI pouch packing and commissioned slim taper files for enhancing brandimage to the end customer.Value stream for flat files introduced at Pithampur for productivity improvement.

HUMAN RESOURCING Internal Resourcing

The company first scouts for talent within the organization to provide growth opportunities to its employees. This is done by notifying vacancies internally. This practice helps in managerial cross-functional exposure for career development and learning.

Talent from Campus

Raymond recruits young textile engineering graduates, textile technologists, chartered accountants, fashion technologists and MBA's only from some of India's leading Institutes. They are then rigorously trained for a period of one year, during which they are placed across different departments, before being finally placed in their area of specialization. The objective of the programme is to gauge

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the recruit's area of expertise and then train them to independently shoulder their responsibilities. A Mentoring programme for new inductees in the organization enables them to adapt themselves to the organization.

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Lateral Recruitment

'Market-skilled' employees from other companies are periodically inducted into the organization from time to time. A combined force of existing talent and induction of fresh blood helps the company to be competitive in the face of increasing business complexities.

FUTURE PLANS =>Raymond is planning to increase its retail stores from 433 to 950 and expects the revenue from the stores to increase from Rs 7 billion in the present to Rs 11 billion to Rs 12 billion in 2009-2010. Most of these stores will come up in small towns.

=>The company is also planning to foray into automobile furnishing sector by way of a joint venture with Treves SA.

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VARDHMAN TEXTILES LIMITED

COMPANY ANALYSIS

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INTRODUCTION

Vardhman is a major integrated textile producer in India. The Group was setup in 1965 at Ludhiana, Northern India. Since then, the Group has expanded manifold and is today, one of the largest textile conglomerates in India. The Group portfolio includes manufacturing and marketing of Yarns, Fabrics, Sewing Threads, Fiber and Alloy Steel.The group started its corporate journey with an installed capacity of 6000 spindles in 1965 under the flagship company Vardhman Spinning & General Mills Limited (now known as Vardhman Holdings Limited and is an investment arm of the Group) in Ludhiana. Over the years the group has expanded its spinning capacities besides adding new businesses. The group has also diversified into yarn processing, weaving, Sewing thread, fabric processing, acrylic fiber manufacturing and into special/ alloy steels. Today, close to 20,000 people is the Organization’s most important asset its human capital.

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HISTORY

The Vardhman Group, born in 1965, under the entrepreneurship of Late Lala Rattan Chand Oswal has today blossomed into one of the largest Textile Business houses in India.At its inception, Vardhman had an installed capacity of 14,000 spindles, today; its capacity has increased multifold to over 5.5 lakh spindles. In 1982 the Group entered the sewing thread market in the country which was a forward integration of the business. Today Vardhman Threads is the second largest producer of sewing thread in India. In 1990, it undertook yet another diversification - this time into the weaving business. The grey fabric weaving unit at Baddi (HP), commissioned in 1990 with a capacity of 20,000 meters per day, has already made its mark as a quality producer of Grey poplin, sheeting, and shirting in the domestic as well as foreign market. This was followed by entry into fabric processing by setting up Auro Textiles at Baddi, which currently has a processing capacity of 1 lakh meters/day.In the year 1999 the Group has added yet another feather to its cap with the setting up of Vardhman Acrylics Ltd., Bharuch (Gujarat) which is a joint venture in Acrylic Fiber production undertaken with Marubeni and Exlan of Japan. The company also has a strong presence in the markets of Japan, Hong Kong, Korea, UK and EU in addition to the domestic market. Adherence to systems and a true dedication to quality has resulted in obtaining the coveted

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ISO 9002/ ISO 14002 quality award which is the first in Textile industry in India and yet another laurel to its credit.

The Vardhman group comprises of three listed and two unlisted companies:

Listed Companies

Vardhman Textiles Limited (formerly Mahavir Spinning Mills Limited)Vardhman Acrylics LimitedVardhman Holdings Limited1 (formerly Vardhman Spinning & General Mills Limited)

Unlisted Companies

VMT Spinning Company Limited Vardhman Threads Limited Vardhman Group consists of 5 SBUs spread across 9

manufacturing locations

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MANAGEMENT STRUCTURE

Shri Paul Oswal - Chairman & Managing DirectorAjay Kumar Chakraborty - (Nominee of ICICI Bank Ltd.)Vinod Kumar Saxena - (Nominee of IDBI)Arun Kumar Purwar(Dr.) Triloki Nath KapoorPrafull AnubhaiSurinder Kumar BansalSubash Khanchand BijlaniDarshan Lal SharmaSachit Jain - Executive DirectorVardhman Holdings LimitedBoard of Directors - Shri Paul Oswal - ChairmanSurinder Singh BagaiJagdish Rai SingalChaman Lal JainRam Swarup GuptaBal Krishan AroraSat Pal KanwarSachit JainShakun OswalSuchita JainVardhman Acrylics Limited

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Board of Directors -

Shri Paul Oswal Sachit Jain

Darshan Lal SharmaSudeshkumar Ganpatrai Gulati

Sanjit Paul SinghMunish Chandra Gupta

(Dr.)Arvind Kumar BakhshiBal Krishan Choudhary - Managing Director

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PORTFOLIO

Yarns

Yarn Manufacturing is the major activity of the group

accounting for 65 percent of the group turnover.

Vardhman is virtually a supermarket of yarns,

producing the widest range of cotton, synthetics and

blended, Grey and Dyed yarns and Hand Knitting

Yarns, in which Vardhman is the market leader in

India. The group has nine production plants with a

total capacity of over 5.5 lakh spindles, spread all over

the country. In many of the yarn market segments,

Vardhman holds the largest market share. Vardhman

is also the largest exporters of yarn from India,

exporting yarns worth more than USD 90 million.

Sewing Thread

Vardhman is the second largest producer of sewing

thread in the country. The sewing thread

manufacturing capacity is being expanded from

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present 17 tons per day to 22 tons per day in its sewing

thread plants located at Hoshiarpur, Baddi and

Ludhiana. Sewing threads contributes 12 percent of

the group turnover.

Fabrics

The group has created state-of-the-art fabric weaving

and processing facilities in its plant at Baddi, Northern

India. The group has installed 208 shuttleless looms

and a fabric processing capacity of 30 million meters

per annum in collaboration of Tokai Senko of Japan.

Fabrics business contributes 8 percent to the group

turnover.

Fiber

The group has recently set up an Acrylic Staple Fiber

plant at Bharuch in Gujarat in collaboration with

Marubeni and Japan Exlan of Japan. The plant has

annual capacity of 18000 tons per annum. Fibre

contributes 8 percent to the total turnover of the group.

Steel

The Group is also present in upper-end of the steel

industry. The group has manufacturing capacity of

100000 tons of special and alloy steel. The group

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supplies its steel products to some of the most

stringent quality steel buyers like Maruti

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MARKET POSITION The Vardhman Group is an undisputed market leader

in India and can point to impressive corporate data. It

has the largest spinning capacity in the country and is

the biggest producer of cotton, synthetic fiber and

mixed yarns, as well as a large dyer of fibres and

yarns. The Vardhman Group is also one of India’s

biggest exporters of cotton yarns, the Indian hand

knitting yarn market leader and the second largest

producer of sewing threads.

Total company sales amount to around USD 500

million and some 20% of all yarns are exported to

countries such as the USA, the EU states, Canada,

China, Japan, Korea, Mexico, Brazil, etc. Vardhman

has a 6% share of Indian yarn exports.

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ANALYSIS The analysis of the company can be divided into the

following ;

INTERNAL ENVIRONMENT

EXTERNAL ENVIRONMENT

INTERNAL ENVIRONMENT ANALYSIS

Vardhman aims to be world class textile organization

producing diverse range of products for the global textile

market. Vardhman seeks to achieve customer delight

through excellence in manufacturing and customer service

based on creative combination of state-of-the-art

technology and human resources. Vardhman is committed

to be responsible corporate citizen.

EXTERNAL ENVIRONMENT ANALYSIS

A comprehensive understanding of the external

environments is essential for the firm to understand the

present and predict the future. A firm’s external

environment is divided into three major areas: the general,

industry and competitor environment

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CAPACITIESVardhman has one of the largest spinning capacities in

India with a spindlage of more than 500,000. Vardhman

Threads has emerged as second largest sewing thread

brand in the country. In fabrics, the Group has already

made its mark as a quality producer of grey poplin

/shirting / suiting in the home market and has also

entered the highly competitive export market within this

short span, now exporting fairly large volume of its

production. Vardhman established a modern fabric

process house in 1999 with a capacity of 30 million

meters per annum. This capacity has been expanded to

42 million meters per annum in FY 2005-06. Set up in

technical collaboration with Marubeni and Japan Exlan

of Japan, the acrylic fiber plant has an annual capacity of

16500 metric tonnes annum. The steel mill has been

modernized and expanded to a capacity of 100000 metric

tonnes per annum.

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STRATEGIC DIRECTION Focus on Value Added yarn

Improvement in Capacity Utilization

Focus on high value customers

Focus on improving yields

Participation in overseas yarn fairs

Strategic Alliance with Nisshimbo, Japan

Putting plants in Central India

Fabric

Alliance with a leading Italian Design House to present

our

collections

Focus on Value Added products esp. cotton Lycra

based fabrics,

Sheared & compact yarn based fabric

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Reducing cycle time & reducing lead time

Strategic relationship with key exporters

High level of Operational performance

New expansion coming up in M.P. with reduced energy

costs &

improved logistics

Thread

Strategic Alliance with American & Efird, Inc. USA

for manufacturing

& distribution of A&E branded sewing threads

Decision taken to consolidate the thread business

under one company,

which is currently divided into two entities: Vardhman

Threads Ltd &

Vardhman Textiles Ltd

This would help to enhance focus & accelerate growth

momentum

It opens up a possibility of strategic tie-ups or

attracting financial investors

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HUMAN RESOURCE DEVELOPMENT

Setting up of HRD centers for worker training

In House Training and Development Centre for

staff and

management MANAV VIKAS

KENDAR

TQM and TPM (Total quality management & Total

productivity management)

Quality Circle, Competitions, Suggestion Scheme

Olympiads- Workers competition on skills and

productivity

Regular benchmarking

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RESEARCH AND DEVELOPMENT

Vardhman’s corporate philosophy attaches great

importance to first class production facilities equipped with

modern technology. Moreover, the R&D focus is on

production sequence optimization. In all areas of the

Group, a large number of people are engaged with the

improvement of existing products and the development of

innovations. Apart from cotton, tests are under way with

bamboo fibres and Lyocell. Mr. S.P. Oswal, "Naturally

enough, we cannot offer everything and this is not our

objective. Nonetheless, our production programme is

growing steadily.

However, the most important factor in a company is formed

by quality employees and some 15-20 are always involved

in further training courses. We also have an in-company

programme in this area, in order to enable employees to

step up into management positions. An MBA is not an

absolute necessity for advancement in our company."

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Limited

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INTRODUCTIONThe Arvind Mills was set up with the pioneering effort of the Lalbhai brothers in 1931. With the best of technology and business acumen, Arvind has become a true Indian multinational, having chosen to invest strategically, where demand has been high and quality required has been superlative. Today, The Arvind Mills Limited is the flagship company of Rs.20 billion (US$ 500 million) Lalbhai Group.

Arvind Mills has set the pace for changing global customer demands for textiles and has focused its attention on select core products. Such a focus has enabled the company to play a dominant role in the global textile arena. With its presence across the textile value chain, the company endeavors to be a one-stop shop for leading garment brands.

Forevision and Technology has brought Arvind to be one of the top three producers of Denim in the world, and on its way becoming the Global Textile Conglomerate. Arvind is already making its presence felt in Shirting’s, Knits and Khakhis fabrics apart from being all set to create ripples in the ready to wear Garments world over.

 

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HISTORY

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 brothers, Kasturbhai, Narottambhai 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.

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In the mid 1980’s the textile industry faced another major crisis. With the power loom churning out vast quantities of inexpensive fabric, 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. There could be no better time, concluded the Management, for a rethink on strategy. The Arvind management coined a new word for it new strategy – Renovision. 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 Arvind’s 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, Renovision 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 Arvind’s 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 muliti-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

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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 garment packages to its international and domestic customers. of Lee, Wrangler, Arrow and Tommy Hilfiger and its own domestic brands of Flying Machine, Newport, Excalibur and Ruf & Tuf, is setting its vision of becoming the largest apparel brands company in India.

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ARVIND INTO VARIOUS BUSINESSES

Corporate

Lifestyle Fabrics

Lifestyle Apparel

Brands & Retail

Anup Engineering

Telecom Business

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BEYOND BUSINESS

At Arvind, it is firmly believed that a successful company must play an active role in the development of the society from which it springs. Besides pursuing its business goals, it should also be responsible corporate citizen. It is because of these beliefs that Arvind is always on the forefront of extending a helping hand for the needy, downtrodden and for the society at large.

Arvind has always been actively involved in the educational institution, hospitals and research institutions of Ahmedabad, its hometown. It co-pioneered the world renowned Indian Institute of Management, Ahmedabad (IIMA), and helped set up the Ahmedabad Textile Industry Research Association (ATIRA), and The Kasturbhai Lalbhai Textile Training Center to develop and enhance the skills of textile workers.

The Narottambhai Lalbhai Rural Development Fund and The Lalbhai Group Rural Development Fund where founded to undertake special programs for the economically deprived. It also assists the nearby villages, through nutritional programs, food camps and the harnessing of solar energy.

SHARDA TRUST

At Arvind, we believe in repaying to society in our own little way through a social arm of ours – Sharda Trust

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Established in 1995 with the support of Arvind Mills, “Strategic Help Alliance for Relief to Distressed Areas” (SHARDA), its purpose is to help the urban poor in improving their quality of life. The Trust has based its strategy on the premise that a family has five basic needs, listed below and ranked according to their priority. These are:

Basic physical infrastructure for clean potable water at the door steps in adequate quantity at convenient hours, individual toilets and hygienic surroundings.

Primary health-care.

Access to high quality secondary and tertiary health care.

Reading, writing and arithmetic skills (3Rs) for all.

Skill and ability to compete in today’s environment.

SHARDA Trust joined hands with the Ahmedabad Municipal Corporation to upgrade the physical environment and living conditions in a slum pocket called “Sanjay Nagar.” The Municipal Corporation assigned the task of implementation to this Trust, which completed the project within time and budget. So innovative was the

Nations Centre for Human Settlement (UNCHS) included the Sanjay Nagar project in its "100 Best Practices Global List".

Subsequently, the Trust has taken several initiatives like providing secondary and tertiary healthcare to the urban poor through networking with prominent hospitals in the

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city. About eight hundred patients have benefited and approximately Rs.13 lakh have been spent on this activity.

The Trust collaborated with the National Institute of Fashion Technology (NIFT), Gandhinagar, and helped the urban poor to train in the area of sewing machine operation. The Trust also organized placement activity with the local garment manufacturers and has so far trained and placed over 300 persons in Ahmedabad.

Spoken English and basic mathematics for the youth belonging to poor families and providing them with computer skills is the other activity that the Trust has undertaken in collaboration with the Chandraprasad Desai Memorial Foundation. The Trust is poised for a rapid expansion in all its projects.

Arvind & Environment

A) Environmental Policy:

Arvind Mills commits itself to continually improve our environmental management. It strives to go beyond the requirements of the applicable environmental laws & other regulations through:

Optimizing usage of cotton, energy, chemicals & water.

Adopting preventive strategies to reduce the generation of effluents, waste & air emissions.

Maximizing the recycling of inevitable wastes.

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Encouraging suppliers & buyers to become environmentally responsible.

Maintaining a safe working environment.

Increasing the green cover.

Training employees on environmental issues.

B) Effluent Treatment Facilities:

All the production / processing units are provided with adequate wastewater / water treatment facilities, to meet the requirements of regulating authorities as well as our reputed customers like Levis, Nike etc.

Arvind Mills at Santej has one of the largest effluent recycle plants in Asia with recycling capacity 10,500 m3/day. The latest & best of the technologies available in water / wastewater treatments can be seen in operation in this plant.

The Arvind International (division) has Effluent recycling facilities comprising Chemical, Biological & tertiary treatment and it is of 800-m3/day capacity. The plant also has ISO 9000 & ISO 14000 certification.

Arvind Mills @ the main site at Naroda also possess chemical, biological treatment facilities to treat 10000 m3/day of effluents to meet the pollution control board norms.

Ankur Mills (division) has Effluent treatment plant of 1600-m3/day capacity with chemical & biological treatment facility to achieve the pollution board norms.

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Arvind Mills (Garment exports division) is setting up a new garment unit at Mysore road, Bangalore, along with Effluent treatment plant of 1450 m3 /day capacity. This plant also possesses chemical, biological & tertiary treatment facilities to achieve the State Pollution Control Board norms. The uniqueness of this plant is – all it’s process water requirements will be attained through recycled sewage water of Bangalore City.

C) Air pollution Control

Arvind Mills has switched from liquid fuel to Natural gas for all their heating & steam requirements in order to avoid the air pollution.

D) Solid waste Management

All the units believe in waste minimization measures. All the ETP plants are provided with adequate sludge Dewatering facilities. Units at Santej, Naroda, Arvind International & the upcoming Bangalore unit are provided with Decanter Centrifuges for sludge de-watering. De-watered sludge is dried in solar evaporation pans for further volume reduction. Waste oil generated in all the units is recycled. Polythene liners, Discarded containers are disposed off to the respective buyers.

E) Afforestation & Rain water Harvesting

Units at Khatrej & Santej have very good afforestation & green belts. The Santej unit has more than 1 lakh trees & other shrubbery. Plants like Jetropha (seeds used for Biodiesel

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generation) are grown extensively. ETP treated water is used for this plantation so as to minimize raw water consumption. Beautiful lawns with Fountains are part of the landscape.

At the Santej unit ground water recharging facility is also developed where in yearly about 40 MLD rain water is recharged in to ground water table. Two recharge ponds with a capacity of about 4000 m3 are made & Rainwater during the monsoon is collected in these ponds & recharged in to Ground water table.

INTERNAL ENVIRONMENT

MISSION AND OBJECTIVES

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'.

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COMPANY-BELIEVEIn people and their unlimited potential. In content and focus in problem solving. In teams for effective performance. In intellect & its power.

COMPANY-ENDEAVOURTo 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.

COMPANY-DREAMOf excellence in all endeavours. Of mutual benefit and prosperity. Of making the world a better place to live in. We Make Things Happen.

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MANAGEMENT STRUCTURE

CHAIRMAN AND MANAGING DIRECTORMr. Sanjay S. Lalbhai

DIRECTOR AND CHIEF FINANCIAL OFFICER

Mr. Jayesh K. Shah

OTHER DIRECTORS

Mr. S. R. Rao (Nominee of EXIM Bank) Mr. K.M. Jayarao (Nominee of ICICI Bank)Mr. Sudhir MehtaMr. Tarun SethMr. Munesh Khanna Mr. G.M.Yadwadkar (Nominee of IDBI)

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COMPANY IMAGE AND BRAND EQUITY

Arvind Mills is one of the world's largest denim manufacturers and one ofIndia's largest textile exporters. Aside from leadership in denim (a 72% market share) in India, Arvind Mills has a presence in shirting, knits, khakhis, voiles fabrics and a wide range of garments. It is an integrated player with a presence across the textile value chain - global capacity of 154m meters in fabrics, vertical integration to garments, strong brand franchise and a distribution network for branded apparels. Arvind's wide product range, scaleable capacities and ability to offer specialty fabrics and high-end garments make it a preferred vendor in the domestic market and to global brands. It is the flagship company of the Lalbhai Group, which owns a 34% stake.

BRANDS

KNITWARES

Arvind Knits Division has the distinction of being the only nominated supplier of INVISTA (DuPont) Specialty Lycra® Fabrics in the Indian Subcontinent. INVISTA has entrusted Arvind Knits as the only INVISTA accredited Readymade Garment Vendor (RGV) source for Lycra® based garments in India. Arvind KBD has tied up with International Fiber Companies like Celanese (for Acetate), Lenzing (for Modal), Courtaulds (for Tencel®) and

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Wellman who have approved Arvind knits as a Vendor for fabrics made from their fiber. Arvind KBD is a nominated supplier of fabrics to Nike Golf, Marks & Spencer, Arnold Palmer, Eddie Bauer, Calvin Klein and Columbia Sportswear.

Labs accredited by:

Marks & Spencer Target Invista (DuPont) 

DENIM

ISO 9001:2000 from BVQI ISO 14001 Oeko-Tex-100 from Shirley Tec Certified Supplier for GAP Lycra Assured Partners of Du Pont

Labs accredited by:

Marks & Spencer Levis-Strauss & Co. NEXT INVISTA

KHAKIS

Labs accredited by:

Marks & Spencer Levis-Strauss & Co.

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NEXT INVISTA

SHIRTINGS

Labs accredited by:

Mark & Spencers NEXT Levis-Strauss & Co. INVISTA

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FINANCIAL FACTORSFINANCIAL HIGHLIGHTS:-

• The earnings of the company continue to be depressed on account of weak denim markets coupled with rapid rise in the input cost

• The new economy business of brand and retail continue to grow in excess of 35%

• The apparel export business has also been showing rapid growth in terms of profitability primarily due to productivity gains

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FINACIAL POSITION

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RISK MANAGEMENT

We rate Arvind Mills as Medium Risk, as opposed to the Low Risk rating assuggested by our quantitative risk-rating system, which tracks 260-day shareArvindMills (ARMI.BO) 30 September 2007 price volatility. The key reasons for our Medium Risk rating include high earnings volatility due to volatility in denim prices and its vulnerability to forex fluctuations. The main upside risks to our target price include: (1) strong up-tick in denimprices (greater than assumed 5%) could significantly improve earnings forecasts; (2) new tie-ups with global retailers for sourcing garments could put our conservative assumptions at risk; (3) stronger-than-expected turnaround for its branded apparel division could contribute towards higher growth; and (4) any potential unlocking of hidden value in real estate assets in Ahmedabad and Bangalore would be a positive.

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HUMAN RESOURCES Human Resources for a business enterprise needs a conceptual outlay to enable business managers to identify, plan and implement planning for manpower. Fundamentally, business situations have changed the world over. The rise of the intellect has been imminent. Human resource planning can no longer confine it to the traditional sources for hiring and retaining. The human resources of today see their roles having changed from that of a doer to that of a thinker and on most occasions “a thinker doer”. HR Vision

Be The Foundation That Integrates Culture, Vision & Values , Creates an Environment That facilitates The Maximization of Human Potential.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 endeavours. Of mutual benefit and prosperity. Of making the world a better place to live in. We Make Things Happen.

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BIBLIOGRAPHY http://apparel.indiamart.com/indian-textile-policy/

www.vardhman.in

“Socio economic security of south India” – Mohan Gurguswamy, Ronald and

Uma Natarajan

http://www.raymondindia.com/

http://www.arvindmills.com/

http://www.alokindustry.com/

http://www.indiastat.com/

http://www.economywatch.com/business-and-economy/textile-industry.html

http://finmin.nic.in/downloads/reports/repInvestmentGrowth.PDF

http://www.bharattextile.com/newsitems/2006884

http://retailindustry.about.com/cs/textilesofindia/

http://www.texprocil.com/

http://www.fibre2fashion.com/news/textiles-import-export-news/index.aspx

http://yarnsandfibers.com/news/index_fullstory.php3?

id=14288&section=&country=Bangladesh&p_type=General

http://www.datamonitor.com/

http://yarnsandfibers.com/news/index_fullstory.php3?id=14178&p_type=General

http://www.fibre2fashion.com/news/company-news/technopak-advisors/

newsdetails.aspx?news_id=45986

http://www.thehindubusinessline.com/2004/12/06/stories/2004120600890200.htm

http://apparel.indiamart.com/indian-textile-policy/

http://www.worldjute.com/jute_policy/policy_national_textile_00.html

http://www.techno-preneur.net/cgovt/textilepol2000.htm

http://www.india-crafts.com/business-reports/indian-textile-industry/major-

players.htm

http://www.tradeindia.com/communities/3/1083/Trade-Policy-Initiatives/India-

faces-stiff-competition-in-textile-export.html

http://www.equitymaster.com/DETAIL.ASP?story=1&date=3/31/2006

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