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Indian Garment Industry

INDIAN GARMENT INDUSTRY

Made by:

Puneet Khurana Manika Pahwa Arushi Bansal

Rachit Dhingra Akanksha Sharma


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ACKNOWLEDGEMENT

The fulfillment of any research project work is in consequence of

integrated effort of a number of people. This project report has been

possible only through the guidance and help of many people. We hereby

take an opportunity to express our sincere thanks to all those for their

help and guidance. We would like to express our genuine gratitude to Mr

Rahul Jain for his valuable guidance in research and analysis through out

the project. With his unfaltering support and direction, we have been

able to complete this project and learn a lot. The two log submissions

during the project period really helped us in identifying and rectifying

the mistakes and shortcomings in the project.

We would finally thank all those friends who helped us in the

completion of this project.


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TABLE OF CONTENTS

Executive Summary Objective 1. Indian Garment Industry

• History • Growth of Industry

2. Major Segments

• Men • Women • Kids

3. Types of Merchandise and their Demand 4. Supply Chain in Apparel Sector 5. Key Players

• Brief profile of key players • Differentiation

6. Key Issues in Indian Garment Sector 7. Exports in Garment Sector

• Reasons for India’s recent sluggish export performance 8. Analysis of Decade Performance 9. USA and EU Dominancy

• Zero-Zero Benefit 10. Retail Scenario 11. Indian Apparel Sector Trends

• Salient Feature of India Apparel Sector • Production in Apparel Sector • Recent Trends


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12. Technology and Indian garment Industry

• Role of Technology • Types of CAD Systems

• Apparel Industry and Computers

13. Budgeting implications • Industry Wish List • Sops in Budget

14. Monetary Policy 15. Overview of Fashion Industry Advertising 16. SWOT Analysis 17. Recommendations 18. Conclusion

References

Annexure


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EXECUTIVE SUMMARY

Fashion is serious business, everywhere. Admittedly, India was a latecomer in the

scene, but the pace now is scintillating. This is testified through the escalating

figures of the garment market as also by the growing tally of fashion brands and

retailers who have occupied substantial share of the country’s retail space. Truly,

the clock cannot be turned back now.

Over the past year, the garment industry has been building up on its capacities at

various levels, expanding its product base, incorporating innovative technology,

and engineering newer avenues of business. This sector, being one of the largest

industrial sectors of the country, is a major propellant of the economy’s growth.

Inherent issues and challenges dominate the industry. With the changing dynamics

of doing business in a rapidly-changing global economic scenario, the sector needs

to identify scopes for potential business ideas and overcome challenges by

converting them into fresh opportunities.

The project aim is to understand how various movements in the economy affect the

garment industry. An in-depth analysis for implications of various government

policies on garment industry has also been done. The project work also highlights

how important is the garment industry to the growth of our economy. The study

also gives insights about the demographics and psychographics of Indian

consumers, the key players in the industry and recent trends in the industry.


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OBJECTIVES

The objectives of the project work are:

� To understand the impact of various government policies on Garment

industry.

� To analyze various opportunities and threats confronted to Garment

industry.

� To understand the demographics and psychographics of Indian consumers.

� To understand the reasons for India’s recent sluggish performance in exports

for textiles & garments.

� To understand the entire process of garment manufacturing and budgeting

implications at each stage of manufacturing process.

� To study the trends in the apparel industry (Retail, Exports & Technology).


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The apparel and industry occupies a unique

and important place in India. It is one of the

earliest industries to come into existence in

the country. The apparel industry caters to

one of the most basic requirements of

people and holds importance; maintaining the prolonged growth for improved

quality of life. The sector has a unique position as a self-reliant industry, from the

production of raw materials to the delivery of end products, with considerable

value-addition at every stage of processing. Over the years, the sector has proved

to be a major contributor to the nations' economy. Its immense potential for

generation of employment opportunities in the industrial, agricultural, organized

and decentralized sectors & rural and urban areas, especially for women and the

disadvantaged is noteworthy.

History

The history of apparel in India dates back to the use of mordant dyes and printing

blocks around 3000 BC. The foundations of the India's textile trade with other

countries started as early as the second century BC. A hoard of block printed and

resist-dyed fabrics, primarily of Gujarati origin, discovered in the tombs of Fostat,

Egypt, are the proof of large scale Indian export of cotton textiles to the Egypt in

medieval periods.

During the 13th century, Indian silk was used as barter for spices from the western

countries. Towards the end of the 17th century, the British East India Company


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had begun exports of Indian silks and several other cotton fabrics to other

economies. These included the famous fine Muslin cloth of Bengal, Orissa and

Bihar. Painted and printed cottons or chintz was widely practiced between India,

Java, China and the Philippines, long before the arrival of the Europeans.

Growth of Indian Garment Industry

The industry has already given ample hint of ingenuity, as is evident from the

revival of consumer enthusiasm in the seemingly stagnant menswear segment,

besides remarkable growth in categories like sports wear, casual wear and party

wear. The apparel market has grown 15.5% to INR 1,224 billion

Apparel Market Growth Rate

4.2 4.75.9

13.113.6

15.5

0

5

10

15

20

25

2003>2002 2005>2004 2007>2006

Year

% A

nn

ual

gro

wth

rate

Volume Value

Figure 11

2.

1 Images Yearbook 2008



9

Indian Apparel Market Growth

(Volume)

4,422 4,610 4,808 5,0345,332

5,6445,955

6,2706,580

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2002 2003 2004 2005 2006 2007 2008

ex

2009

ex

2010

ex

Year

Mil

lio

n U

nit

s

Volume

Figure 23

The Indian apparel industry (including garment retail, fashion designing and

accessories trade) is booming like never before. The rapid increase in job

opportunities and expanding earning capabilities has resulted in the inculcation of a

brand new mindset amongst Indian consumers. Spending on brands is no longer an

improbability, with shoppers willing to pay for quality and premium products. The

apparel industry has benefited immensely from these new market trends.



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The country’s organized retail is booming because of increasing private incomes

and changing lifestyles and consumption pattern of consumers is having a positive

effect on the apparel industry. There has been a rapid increase in the market size of

ready-to-wear clothing and lifestyle apparel brands.

Indian Apparel Market Growth

(Value)

613693

777883

1,060

1,224

1,390

1,555

1,715

0

200

400

600

800

1000

1200

1400

1600

1800

2000

2002 2003 2004 2005 2006 2007 2008

ex

2009

ex

2010

ex

Year

INR

Bil

lio

n

Value

Figure 34

The clothing and apparel segment is the largest organized retail category,

constituting Rs 21,400 crore of the country’s Rs 55,000 crore organized retail

sector in 2006.only 19% of this segment is organized, with a strong potential for

still further retail penetration. The high level of branding exercises undertaken by



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apparel manufacturers, retailers and merchandisers across retail formats- such as

exclusive outlets, multi brand outlets, department stores, discount formats and

hypermarkets – and the heightened interest in the franchise route for retail

expansion are all contributing to the rapid growth of apparel retail.

Considering the country’s present economic preference, fashion retail can only

continue to grow in direct proportion to the rising incomes and spending powers of

Indian consumers. With about 65% of these consumers below 35 years of age,

apparel retail can only reign supreme in the marketplace.


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MAJOR SEGMENTS

Apparel industry has been broadly classified into three segments:

1. Men

2. Women

3. Kids

Market Share of Major Apparel Segments

Total Size: Rs 122,400 Crore

24.9%

40.2%

34.8%

Kids' Apparel +Uniforms

Mens' Apparel

Womens' Apparel

Figure 45

In the total apparel market size of Rs 122,400 crore in 2007, among the three major

apparel segments, menswear formed the largest block with 40.2%6 of market share,

while womenswear followed with 34.8% and kidswear/uniforms followed with its




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24.9%. Unisex apparel has been apportioned among these broad segments in the

ration of 5: 3.5: 1.5 for men, women and kids, respectively.

SIZE OF MAJOR APPAREL SEGMENTS (VALUE TERMS: INR BILLION)7

2002 2003 2004 2005 2006 2007

MEN’S APPAREL

252.0 284.3 317.3 355.3 433.8 492.6

WOMEN’S APPAREL

207.8 237.6 269.5 309.5 367.6 426.3

KID’S APPAREL

153.2 171.4 190.6 218.7 258.3 305.1

TOTAL 613.8 693.3 77.4 883.4 1059.7 1224.0

VOLUME & VALUE GROWTH IN APPAREL SEGMENTS8

2003>2002 2005>2004 2007>2006

Segments Volume Value Volume Value Volume Value

MENSWEAR 3.4% 11.7% 3.8% 11.8% 5.9% 13.3%

WOMENSWEAR 5.1% 13.6% 5.5% 15.0% 5.8% 16.0%

UNISEX APPAREL

3.9% 23.1% 4.2% 13.6% 6.5% 15.7%

KIDSWEAR 3.5% 8.6% 3.8% 11.4% 4.4% 15.6%

UNIFORMS 6.5% 17.2% 8.0% 21.1% 9.3% 22.5%

Total 4.2% 13.1% 4.7% 13.6% 5.9% 15.5%

Growth trends across various apparel segments during the six-year period from

2002 to 2007 shows that menswear which had registered a steady decline in the




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growth rate (despite remaining the dominant market segment) since 2002, has

again embarked on an upward curve in 2007. in 2003, volumes in menswear grew

at 3.4% as against 5.1% in womenswear; in 2005, it was 3.8% and 5.5%,

respectively; but in 2007, this has been reversed with menswear volumes growing

at 5.9% as compared to a 5.8% volumes growth in womeswear.

Growth in Apparel Segments during 2007over 2006

13.30%

16%

15.70%

15.60%

22.50%

15.50%

5.90%

5.80%

6.50%

4.40%

9.30%

5.90%

0.00% 5.00% 10.00% 15.00% 20.00% 25.00%

Menswear

Womenswear

Unisex Apparel

Kidswear

Uniforms

TOTAL

Growth Rate

Volume Value

c

Figure 59

Growth in value terms still remains higher in womenswear (16%) as compared to

menswear (13.3%). However, since menswear accounts for 34.5% (Rs 43,270

crore) of the market share in value terms, as compared to womeswear making up

31.4% (Rs 38,440 crore) of market share, the apparel market in India will remain

primarily dominated by the menswear segment for quite sometime to come.



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Highest volumes as well as value growth are recorded in the uniforms segment,

which is currently valued at rs 11,500 crore. While the segment recorded as 9.3%

volume growth in 2007 over 2006, its value growth was as high as 22.5%, over

21.2% annual growth during 2005.

The next highest volumes growth is in unisex apparel (6.5%), where value growth

was to tune of 15.7% resulting in a market size of Rs 11,980 crore. Volume and

value growth in 2005 were 4.2% and 13,6% respectively. With the menswear

segment coming alive and all other segments also growing faster year after year,

the market is sure on a revival track.


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VOLUME SHARE OF APPAREL SEGMENTS

28.1%

27.8%

27.6%

27.4%

27.3%

27.4%

28.0%

28.2%

28.5%

28.7%

28.6%

28.5%

9.7%

9.7%

9.7%

9.6%

9.9%

10.0%

25.8%

25.6%

25.4%

25.2%

24.8%

24.5%

8.4%

8.6%

8.8%

9.1%

9.3%

9.6%

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0%

2002

2003

2004

2005

2006

2007

% Market Share

Menswear Womenswear Unisex Apparel Kidswear Uniforms

Figure 610

With regards to market share of apparel segments, from a 37.3% value in share in

2002, the menswear segment share has steadily declined to 35.4% in 2007.

Womenswear market share, on the other hand, has steadily increased during this

10

Images Yearbook 2008


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period, as also the uniforms segments. From 31.2% market share in 2002, the

womenswear segment share has increased marginally to 31.3% in 2006 and further

to 31.4% in 2007. Uniforms segment, which has shown the fastest growth among

all apparel segments, has increased its market share from 7.6% in 2002 to 8.8% in

2006 and further to 9.4% in 2007.

Unisex apparel has maintained a more-or0less plateau market share at 9.8% during

2006 and 2007, although it increased rapidly from 7.7% in 2002 to the present

level. Kidswear too has maintained a more-or-less plateau market share at 14.1%

during 2006 and 2007, but unlike unisex apparel, its market share had steadily

declined from 16.2% in 2002 to the level in 2006.


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TYPES OF MERCHANDISE AND THEIR DEMAND

The consumer has all kinds of demands for apparel. The consumer demand can be

broadly trifurcated into three segments: Basic, Basic Fashion and Fashion Apparel.

Basic apparel consists of highest volume with moderate demand uncertainty and is

priced relatively low. On the other hand, fashionable attire comprises lowest

volume with volatile demand, but is highly priced. Mass-product is the feature of

basic-product segment and customized merchandise becomes the hallmark of

fashion-product category. Therefore, depending to which demand-segment they

cater to, apparel organization needs to formulate suitable supply strategy.


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SUPPLY CHAIN IN APPAREL SECTOR

Supply Chain Management is the integration of key business processes from end

user to original suppliers that provides products, services, and information that add

value for customers and other stakeholders.

The Apparel Supply Chain

The Apparel Supply Chain comprises diverse raw material sectors, ginning

facilities, spinning and extrusion processes, processing sector, weaving and

knitting factories and garment (and other stitched and non-stitched) manufacturing

that supply an extensive distribution channel. This supply chain is perhaps one of

the most diverse in terms of the raw materials used, technologies deployed and

products produced.

This supply chain supplies about 70 per cent by value of its production to the

domestic market. The distribution channel comprises wholesalers, distributors and

a large number of small retailers selling garments and textiles. It is only recently

that large retail formats are emerging thereby increasing variety as well as volume

on display at a single location. Another feature of the distribution channel is the

strong presence of ‘agents’ who secure and consolidate orders for producers.

Exports are traditionally executed through Export Houses or

procurement/commissioning offices of large global apparel retailers.

It is estimated that there exist 65,000 garment units in the organized sector, of

which about 88 per cent are for woven cloth while the remaining are for knits.

However, only 30–40 units are large in size (as a result of long years of reservation

of non-exporting garment units for the small scale sectors – a regulation that was


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removed recently). While these firms are spread all over the country, there are

clusters emerging in the National Capital Region (NCR), Mumbai, Bangalore,

Tirupur/Coimbatore, and Ludhiana employing about 3.5 million people.

According to our estimate, the total value of production in the garment sector is

around Rs.1,050–1,100 billion of which about 81 per cent comes from the

domestic market. The value of Indian garments (e.g. saree, dhoti, salwar kurta,

etc.) is around Rs.200–250 billion. About 40 per cent of fabric for garment

production is imported – a figure that is expected to rise in coming years.


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Cotton (Farms)

Jute/Wool/ Silk

(Farms)

Polymers (Petrochemic

al Plants)

Ginning

Spinning

Processing/

Finishing

Garments & Accessories

Other Textile Products

Distribution Channel (Export & Domestic Markets)

Man-Made: Filament Extrusion Process

Composite Mills (spinning, weaving,

processing)

Stand-Alone

Weaving (mid-size)

Power looms

(small)

Handlooms

Knitting Grey

Yarn

Cloth

Cone

Hank

Cloth

Indian Garment Industry

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 per cent was cotton

cloth, 41 per cent was 100% non-cotton including khadi, wool and silk and

13 per cent was blended cloth. Three distinctive technologies are used in the

sector – handlooms, powerlooms and knitting machines. They also

represent very distinctive supply chains. The handloom sector (including

khadi, silk and some wool) serves the low and the high ends of the value

chain – both mass consumption products for use in rural India as well as

niche products for urban & exports markets. It produces, chiefly, textiles

with geographical characterization (e.g., cotton and silk sarees in

Pochampally or Varanasi) and in small batches. Handloom production in

2003-04 was around 5493 mn.sq.meters of which about 82 per cent was

using cotton fiber. Handloom production is mostly rural (employing about

10 million, mostly, household weavers) and revolves around master-weavers

who provide designs, raw material and often the loom.

Weaving, using power looms was traditionally done by composite mills that

combined it with spinning and processing operations. Over the years,

government incentives and demand for low cost, high volume, standard

products (especially sarees and grey cloth) moved the production towards

power loom factories and away from composite mills (that were essentially

full line variety producers). While some like Arvind Mills or Ashima

transformed themselves into competitive units, others gradually closed

down. In 2003-04, there remained 223 composite mills that produced 1434

million. sq. mts. of cloth. Most of these mills are located in Gujarat and

Maharashtra. Most of the woven cloth comes from the power looms (chiefly

at Surat, Bhiwandi, NCR, Chennai). In 2005, there were 425,792 registered

Indian Garment Industry 23

power loom units that produced 26,947 mn. sq. mts of cloth and employed

about 4,757,383 workers. Weaving sector is predominantly small scale,

has on an average 4.5 power looms per unit, suffers from outdated

technology, and incurs high co-ordination costs. Knits have been more

successful especially in export channels. Strong production clusters like

Tirupur and Ludhiana have led to growth of accessories sector as well, albeit

slowly. The hosiery sector, on the other hand, has largely a domestic focus

and is growing rapidly.

The spinning sector is perhaps most competitive globally in terms of variety,

unit prices and production quantity. Though cotton is the fiber of

preference, man-made fiber (polyster fibre and polyster filament yarn) is

also produced by about 100 large and medium size producers.

Spinning is done by 1566 mills and 1170 Small and Medium Enterprises

(SME). Mills, chiefly located in North India, deploy 34.24 mn. spindles and

0.385 mn rotors while the SME units produce their yarn on 3.29 mn spindles

and 0.119 mn. Rotors producing 2270 mn kg of cotton yarn, 950 mn kg of

blended yarn and about 1106 mn kg of man-made filament yarn every year.

Worsted and non-worsted spindles (producing woolen yarn) have also

progressively grown to 0.604 mn and 0.437 mn respectively. Spinning

sector is technology intensive and productivity is affected by the quality of

cotton and the cleaning process used during ginning.

The processing sector, i.e., dyeing, finishing and printing is mostly small in

scale. The largest amongst these would dye and finish about 5000 m/day.

The remaining are independent process houses (or part of composite mills)

that use automated large batch or continuous processing and have an average


scale of about 20,000 m of cloth daily. About 82.5 per cent or 10,397 units

are hand processors who dye cloth or yarn manually and dry in open

sunshine. Of the remaining (and these use automated and semi-automated

equipment), 2076 are independent process houses.

Cotton remains the most significant raw material for the Indian textile

industry. In 2003-04, 3009 mn kg of cotton was grown over 7.785 mn acres.

Other fibers produced are silk (15742 tonnes), jute (10985000 bales), wool

(50.7 mn kg) and man-made fibers (1100.65 mn kg). Cotton grows mostly

in western and central India, silk in southern India, jute in eastern and wool

in northern India. Significant qualities of cotton, silk and wool fibers are

also imported by the spinning and knitting sectors. (Except for garments, all

data in this section was obtained from OTC 2004 and Texmin 2005.)


COTTON THE PRIME RAW MATERIAL

India produces about 5,000 crore square meters of fabric annually with per

capita availability of cloth being 36.2 square meters. As of now 60% of the

total produce is consumed within the country but the share of exports is

expected to increase substantially over the next few years. In value terms, it

is estimated that the apparel and textile market will be worth USD 87 billion

by year 2010 with exports worth USD 45 billion and local consumption of

USD 42 billion. The domestic market for clothing and home textiles is

estimated to be worth Rs 137,100 crore, of which pure cotton contributes

33% of the value share, various cotton blends make up 39% and the

remaining 28% value is realized from non-cottons. Of the 137,100 crore

clothing and home textiles domestic market, cotton and cotton blends

contribute approximately Rs 98,766 crore. Of this share of 100% cotton

products is 45,200 crore and that of cotton blends is Rs 53,560 crore. Men’s

shirts, kidswear, men’s trousers, salwar suits, men’s formal suits and jackets

record maximum usage of cotton and cotton blends. After cotton, pure silk,

synthetics and wool are mostly commonly used fabrics.

The Cotton market

As of 2007, the ten largest producers of cotton in the world are: China, India,

USA, Pakistan, Brazil, Uzbekistan, Turkey, Greece¸ Turkmenistan and

Syria. The five leading exporters of cotton are: USA, Uzbekistan, India,

Brazil and Burkia Faso. The largest non-producing importers are

Bangladesh, Indonesia, Thailand, Russia and Taiwan.

The demand for cotton is strongly influenced by comparative prices vis-à-vis

manmade fibers, also known as artificial and synthetic fibers. Artificial


fibers like viscose rayon and acetates are made from organic polymers

derived from natural raw materials, mainly cellulose. Synthetic fibers

including acrylics, polyamides and polyesters are generally derived from

petrochemicals and petroleum products.

India Demand and Supply situation for cotton

Supply

Opening Stock 47.50

Crop size 310.00

Imports 6.50

Total availability 364.00

Demand

Mill consumption 207.00

Small-mill consumption 23.00

Non-mill consumption 15.00

Total Consumption 245.00

Exports 65.00

Total Disappearance 310.00

Carry forward 54.00


KEY PLAYERS

S. no. Menswear Womenswear Kidswear

1. Aditya Birla Nuvo Aditya Birla Nuvo Lilliput

2. Raymond’s Arvind Mills Benetton Kids

3. Koutons ITC Wills Catmos

Brief Profile of Key Players Aditya Birla Nuvo

Aditya Birla Group is in the league of Fortune 500.

It is anchored by an extraordinary force of 100,000

employees, belonging to 25 different nationalities.

In India, the Group has been adjudged "The Best

Employer in India and among the top 20 in Asia" by the Hewitt-Economic

Times and Wall Street Journal Study 2007. The apparel business of Aditya

Birla Nuvo dominates the premium and popular segments of the Indian

lifestyle market with its companies, Madura Garments Lifestyle & Retail

and Peter England Fashions & Retail

Aditya Birla Nuvo Brands:

• Esprit • Peter England • Allen Solley • Van Heusen • Louis Philippe


Raymond

A 100% subsidiary of Raymond Limited, Raymond

Apparel Ltd. (RAL) ranks amongst India's largest and

most respected apparel companies. RAL entered into

the ready-to-wear business with the introduction of

Park Avenue in 1986 catering to the men's formal wear market. Parx was

launched in 1998 to address the growing trend of smart casuals. In 2000,

Manzoni, a luxury lifestyle brand was launched offering a super-premium

formal range of men's shirts, suits, trousers, jackets, ties and leather

accessories. Raymond identified the vacuum for a high end, casual wear

brand and hence decided to acquire ColorPlus as a part of strategic

expansion plan for their ready-to-wear business. Notting Hill was launched

in 2007 to cater to the popular price segment. In addition to this, Raymond

Apparel has also ventured into the kidswear segment with its exclusive

brand Zapp!

Raymond Brands

• Raymond Finely Crafted Garments • Manzoni • Park Avenue • Park Avenue Woman • ColorPlus • ColorPlus Woman • Parx • Notting Hill • Zapp!


Koutons

Koutons retail is the leading manufacture of

readymade and stylish fashion wear brand in the

country today. With more than 1365 outlets across 493 cities in India,

Koutons a wide range of apparels in men, women and children wear.

Koutons has positioned itself as a “Fashion and Quality at Affordable price”

for the middle to high segment.

Koutons got into female segment this is April 2008 by launching their brand

less femme. This brand caters to young women in the age group of 16-34

years and includes apparels like t shirt party wear etc. it also launched their

brands kids junior catering to young boys and girls in the age group 2-14

years.

Koutons further plan to enter the footwear segment in October and add

men’s innerwear in its portfolio. Currently Koutons has four brands under it

umbrella Koutons men’s wear, les femme. Koutons Junior and Charlie

outlaw.

Koutons Brands:

• Koutons Menswear • Charlie Outlaw • Les Femme • Koutons Junior


Arvind Mills

Arvind Mills was established in 1931. It was founded

by Kasturbhai Lalbhai, one of the leading families of

Ahmedabad. Arvind’s brand portfolio includes: Lee ,

wrangler, nautical, Jansport, Kipling, Tommy, Flying Machine, Excalibur,

Arrow, US Polo , Izod, Pierre Cardin , Palm beach ,Cherokee, Gant, Hart

Schaffner, Marx, Sanabelt. It manufactures denims, shirting, khakhis, knits,

and garments. The company has a turnover of approx $500 million and is a

part of over 100 year’s old Lalbhai group.

Arvind entered into exports of garments setting up shirts factories in

Bangalore 2001. This modest beginning has quickly grown to a capacity of

around 4.50 million shirts, annum and the list of customers includes dockers,

gap, next, Espirit, FCUK, Osh, Kosh and many others.

The lalbhai group subsidiary Arvind Mills said recently that it temporarily

suspending expansion plans for two apparel brands, Rider and Hero, which

the company had jointly developed with the US based branded lifestyle

apparel player VF Corporation. The two companies had signed the JV

agreement in 2006 establishing the VF Arvind Brands to design market and

distribute VF’s branded lifestyle apparel in India.

Arvind Mills’s Brands

• Flying Machine • Newport • Ruf & Tuf • Excalibur • Arrow • Lee


Wills Lifestyle

ITC’s lifestyle retailing business

division has established a

nationwide speciality retail presence through its Wills Lifestyle, a chain of

exclusive speciality stores. Wills Lifestyle, as a fashion destination, offers

Wills Classic work wear, wills lifestyle, as a fashion destination, offers Wills

Classic work wear, Wills clublife evening wear and fashion accessories.

Wills Signature designer wear.

ITC forayed into the youth segment with the launch of john players in

December 2002. The brand available pan India through a network of over

1300 multi brands outlets. The launch of Miss Player is currently available at

select exclusive stores, select John Players stores and multi brand outlets.

Wills lifestyle currently command retail space with 50 EBO’s of 2,500 sq ft

each and plans to add 50 additional EBO’s in next two years. John players

and miss players is available in 250 EBO’s and 1300 MBO’s with plan of

add 100 more EBO’s in next two years


Differentiation among key players

Store Name

Aditya Birla Nuvo

Raymond Koutons Arvind Mills

ITC Wills

Product Range

Men’s, Women’s &

Kidswear

Men’s &

Womenswear

Family Store

Men’s, Women’s

& Kidswear

Men’s, & Womenswe

ar

Brands

• Esprit

• Peter-England

• Van Heusen

• Allen Solly

• Louis-Philippe

• Park Avenue

• ColorPlus

• Parx

• Notting Hill

• Zapp!

• Koutons

• Charlie Outlaw

• Les Femme

• Koutons-Junior

• Lee

• Wrangler

• Nautica

• Jansport

• Kipling

• Tommy

• John Players

• Miss Players

• Club Wills

Positioning Presence in all

segments High End Value for Money

Presence in all segments

High End

Tie Ups

Many International Players- Louis Philippe, Van Heusen etc.

All company hold brands

All company hold brands

Many International

Players- Wrangler,

Nautica, etc.

All Company hold brands

Media Used for

promotion

Print, electronic, hoardings, In store

Print, electronic,

hoardings, In store,

Hoardings, print,

POP

Print,

electronic, hoardings, In

store

Print, electronic,

hoardings, In store

Quality Different quality in

different brands High Quality Medium Quality

Different quality in different brands

High Quality

Loyalty Program

For Some Brands No No For Some

Brands Yes


KEY ISSUES IN INDIAN GARMENT SECTOR

Post-MFA Scenario

The Multi-Fiber Agreement (MFA) had been forced in India since 1962,

governing the textile trade between various countries. It was later abolished

in 2005. When the MFA was abolished, it was expected that tariff

distortions, which were prevalent earlier, would gradually disappear,

facilitating global trade of textile and apparel. The abolishment of the quotas

did fuel growth of the sector with textile exports growing from US$17

billion in 2005-06 to US$19.24 billion in 2006-07.

The readymade garments segment benefited the most with the abolishment

of the quotas. According to the Apparel Export Promotion Council (AEPC),

readymade garments export from India is expected to reach US$14.5 billion

by 2009-10. Presently, it accounts for 43 percent of total textile exports and

six percent of India’s total export.

Fluctuation Rupee Value

The subsequent spurt in exports did elude exporters in the segment as most

focused on short-term gains. But with the economy growing and

appreciation in the rupee value, there was a rather different tale to unfold.

With an appreciation in rupee value, the apparel and textile export industry

now needs more introspection to reduce the extent to the blow. Export

agreements, which were conducted in US dollars, faced the most severe

blows.


Though India enjoys the advantage of a host of low costs in textile and

apparel manufacturing, subsidies and supply of cheap labour currently faces

threat from its neighbouring competitors- Bangladesh, Vietnam and Sri

Lanka. These countries with minimal cost, under valued exchanged rates,

low taxes, subsidies and plentiful cheap labour could result in sail of the

industry to these locations.

Unemployment

As per a Confederation of Indian Textile Industry (CITI) study, total

employment generation from exports was at 25.80 lakh in 2004-05. The

CITI study points out that with appreciation of Rupee, the growth rate of

apparel and textile exports decreased from 16.6 percent to 9.2 percent in

2006-07; and this has already reduced employment from the apparel and

textile export trade by about 1.22 lakhs, and can further lead to an overall

loss of over six lakh jobs, unless serious remedial measures are undertaken

to prevent the crisis. Under present circumstances, it’s estimated that about

2.72 lakh jobs will be lost in direct employment in the textile and apparel

industry in 2007-08.

Lagging in Cost and Technology Spheres

Post MFA, exports splurged and substantial capital expenditures were made

to diverse and also re-inforce production capacity to meet the growing

domestic demand. For the short term this may be fine but mere increasing

the productivity was not a solution rather improving productivity and cost

efficiency ought to be the long term goal. In this segment, Indian Apparel

and Textiles companies face threat from low-cost Chinese Companies while

negotiating with tough global buyers.


It has also been observed that the textile and apparel sector witnessed more

investment in existing technology than on new technology. Although nano-

technology has helped in developing manmade fibres (and filament yarn),

the industry still lags behind it counterparts in the United States, china,

Europe and Taiwan. Import of new and advanced technology could certainly

compensate for the losses on account of exports due to declining dollar.

Existence of long and complex Supply Chains causing lengthening of

lead – time

The supply chain in India is highly fragmented mainly due to government

policies (SSI reservation) and lack of coordination between industry and

trade bodies. Existence of large number of intermediaries adds to the cost

but also lengthen the lead times. The countries who have significantly

consolidated their supply chain are globally competitive – Korea, China,

Mexico, Turkey.


EXPORTS IN GARMENTS SECTOR

READYMADE GARMENTS

Value of Exports - READYMADE GARMENTS11

%age Share in India's RMG Exports

%age Change in India's RMG Exports

Rank in India's Exports of RMG Year 2007

Destination Country

Year 2005 Year 2006 Year 2007 Jan-07 Feb-07 Jan-08 Feb-08 2007 2008 2007 2008 Jan-Feb 2008 /Jan-Feb 2007

0 TOTAL 8078.05 8948.44 9218.84 826.81 831.21 925.37 951.71 1658.02 1877.08 100 100 13.21

1 USA 2678.30 2937.10 2815.24 263.66 278.57 279.67 281.39 542.24 561.06 32.7 29.89 3.47

2 UK 905.58 919.39 1106.62 78.21 93.68 97.86 107.13 171.89 204.99 10.37 10.92 19.26

3 Germany 615.15 670.92 766.35 63.35 57.45 79.50 92.48 120.81 171.98 7.29 9.16 42.36

4 France 582.75 683.42 668.81 69.39 67.03 74.14 71.66 136.42 145.79 8.23 7.77 6.87

5 UAE 438.57 513.17 625.65 38.63 35.12 56.53 55.71 73.75 112.24 4.45 5.98 52.19

6 Italy 357.85 437.75 422.72 53.40 46.29 49.10 48.58 99.68 97.68 6.01 5.2 -2.01

7 Netherlands 258.61 342.56 338.20 37.31 30.90 37.39 39.68 68.21 77.07 4.11 4.11 13

8 Spain 333.69 330.96 333.71 32.39 33.69 43.77 43.77 66.08 87.54 3.99 4.66 32.48

9 Canada 263.74 290.89 252.93 24.88 26.08 24.23 25.61 50.96 49.84 3.07 2.66 -2.2

10 Saudi Arabia 193.12 196.07 209.12 10.98 11.27 14.20 11.46 22.25 25.66 1.34 1.37 15.29

11 Denmark 162.17 191.02 197.92 25.21 21.73 23.27 25.04 46.94 48.31 2.83 2.57 2.93

12 Belgium 120.70 162.20 176.45 16.99 15.37 21.94 17.33 32.36 39.27 1.95 2.09 21.35

13 Japan 106.74 127.74 101.38 10.70 13.83 9.93 14.14 24.54 24.07 1.48 1.28 -1.89

14 Sweden 62.58 77.63 76.23 5.44 7.66 9.67 11.33 13.10 21.00 0.79 1.12 60.28

15 Russia 23.30 57.05 67.32 13.70 5.00 6.29 5.72 18.70 12.01 1.13 0.64 -35.75

16 Mexico 49.54 61.57 66.72 7.14 5.61 6.91 5.33 12.75 12.24 0.77 0.65 -3.98

17 South Africa 59.28 50.88 60.74 3.73 2.94 4.05 4.03 6.67 8.07 0.4 0.43 21.02

18 Ireland 63.18 46.60 56.23 4.62 4.80 3.60 4.86 9.42 8.46 0.57 0.45 -10.2

19 Singapore 44.28 50.69 52.66 3.63 4.19 2.81 3.15 7.82 5.96 0.47 0.32 -23.78

20 Switzerland 53.78 56.67 51.10 4.65 4.86 4.89 5.66 9.51 10.55 0.57 0.56 10.96

11

Apparel Export Promotion Council


EXPORT TO WORLD12 (VALUE IN US$ MILLION)

2002 2003 2004 2005 2006 Exporting Countries Textil

es Apparel

Textiles

Apparel

Textiles

Apparel

Textiles

Apparel

Textiles

Apparel

Bangladesh

496 4084 413 5067 597 6296 696 7751

Cambodia

26 1313 21 1600 26 1981 2193 2675

China 20562 41302 26900 52061 33428 61856 41050 74163 48683 95388

India 6028 6037 6846 6625 7009 6632 8462 9212 9330 10192

Indonesia 2909 3875 2921 4052 2961 4285 3353 4959 3605 5699

Pakistan 4790 2228 5811 2710 6125 3026 7087 3604 7469 3907

Sri

Lanka

171 2350 161 2513 149 2776 136 2874 154 3046

Reasons for India’s recent sluggish export performance in textiles and

clothing include:

• Slowdown in demand from some major importers.

• The depreciation of the US dollar, resulting in an appreciation of the

rupee vis-à-vis competitor countries that were partially or wholly pegged

to the US dollar.

• Labour laws and scale economics: Countries like China have historically

had high labour flexibility in their export oriented units. This has allowed

them to achieve large scale in terms of labour force employed in each

manufacturing facility and reap the benefit of scale economies and use

the latest advanced machinery from developed countries. India, in

12

Images Yearbook 2008


contrast, because of fragmentation of units and small scale (to avoid

labour laws applicable to employees above 100 and procedural biases and

rigidities), has purchased relatively less of such advanced machinery.

• Logistical delays and costs: though the national highways are improving,

this is not true of connectivity to all sources and destinations. The

turnaround time in major ports of India and movement of cargo between

ships and source or destination within India is still plagued by

monopolistic bureaucratic structures with little accountability and

incentives for efficient service delivery to the exporter and importer.

• High cost of power in India this is 1.5-2 times higher then in competing

nations.


ANALYSIS OF A DECADE PERFORMANCE

OF THE GARMENT INDUSTRY

The period of 1997 and 2007 was momentous for the garment industry, both

globally and domestically. South –east Asian currency crisis struck in 1998

and December 2004 marked the end of Agreement on Textile and clothing

(A.T.C) limiting exports of garments from India to U.S.A and E U, the two

main importers of garment world-wide.

As is this was not enough, the government clamped Excise Duty on woven

garment for the first time in its history. The move orchestrated a massive

protest in all sections of the industry from manufacturing to retail. For once,

disparate sections appealed to government to roll back the duty. But

government remained stubborn to its decision endangering export orders

painstakingly entered into mark the end of ATC. Its after effects hit the

industry hardest when the country lost substantial foreign exchange. The

following year only gave cosmetic relief to the industry after the change of

the government at the centre in the general election.

The new government, alive to the plight of the industry, made the excise

duty optional to CENVAT Credit with the object of lowering the cascading

influence of duty on the common man. Investment in the industry which had

dried up in the wake of excise duty enforcement, started flowing freely and

the industry came into its own by expanding capacity, merging and making

acquisitions (both domestic and overseas) to present overseas buyers a

picture of a resilient, expanding and competitive industry.

Meanwhile, the exchange rate of the Rupee vis-à-vis the US dollar had been

going through changes partly due to the economic boom in India and partly

for the slow-down in US economy triggered by upsurge in petroleum prices.


Smaller and newly emerging Asian countries, now attempting to claim a

large slice as possible of the global foreign exchange pie, quoted

aggressively to entice buyers. In turn, this had effect on unit prices quoted by

India.

The table presented below shows the movement of knitted and garment

exports13, juxtaposed with their unit prices, movement in exchange rate and

the years in which the tumultuous events took place.

KNITTED GARMENT GMT EXPORTS

WOVEN GMT EXPORTS

EXCG RATE

REMARK UNIT VALUE

YEAR ENDED

M Pcs Bn $ M Pcs Bn $ Knitted Woven

Dec 1995 43.66 1.16 623.5 3.32 32.01 2.66 5.32 Dec 1996 560.2 1.47 644.5 3.32 34.87 2.62 5.15 Dec 1997 632.4 1.60 669.0 3.26 36.52 2.53 4.87 Dec 1998 682.0 1.63 655.7 3.42 41.27

S.E Asian currency crisis

2.39 5.22

Dec 1999 758.6 1.88 646.0 3.44 43.05 2.48 5.33 Dec 2000 827.7 2.06 679.1 3.72 44.87 2.49 5.48 Dec 2001 855.0 2.13 728.4 3.55 47.14 2.49 4.87 Mar 2002 610.0 1.23 783.0 3.15 47.72 18 % excise

duty on woven garments (2001 Budget)

2.02 4.02

Mar 2003 983.0 2.37 855.0 3.26 48.56 16 % Excise Duty on Woven Garments (2002 Budget)

2.41 3.81

Mar 2004 1,113 2.66 711.0 3.54 45.86 2.39 4.98 Mar 2005 857 2.50 746.0 3.71 44.84 a)Excise

made optional to Cenvat b) Dec ’04 end of ATC

2.92 4.97

Mar 2006 1,148 3.18 1153.0 5.43 44.28 Mid= Year, 12 % Re appreciation

2.77 4.71

Mar 2007 1315 3.61 1070.0 5.26 45.29 2.75 4.48

13

Apparel Talk magazine


The above table shows garment exports – knitted and woven over a decade,

juxtaposed with changes in exchange rate versus US Dollar. The following

points stand out:

1. Until 19877, Knitted garment exports were lower than that of woven

garments; however, while knitted garments advanced by almost 50%

during this period, woven garments expanded by less than 10%.

2. After 1987, knitted garment export exceeded that of woven garments

and hardly ever looked back. Their rise was further aided by levying

of excise duty on woven garment for the first time in the history of the

industry. This led to a deceleration in the expansion of woven

garments until the duty was made optional on CENVAT, whereupon

the woven sector came into its own. But by then, knitted sector had far

outpaced the woven sector.

3. Between 1995 and 2003 ( i.e. in eight years ) exchange rate advanced

by almost 50%. During this period, knitted garment exports have more

than doubled, whereas woven garment exports increased by obly 33%.

Thereafter, the exchange rate steadily declined by about 12%.

4. Competition from Asian suppliers forced reduction in unit value (

dollar / piece ) for both knitted and woven garments. Unit prices for

knitted garments fell from 2.66 USD to 2.39 USD by 2004 i.e. by

about 10% in 10 years, before recovering to 2.75$ by 2007. Unit value

( US dollar / piece ) for woven garments, on the other hand, fluctuated

throughout the period, averaging 5.70$ per/piece during the period.

5. The improvement after 2005 could partly be attributed to the

restrictions placed on Chinese garments by both USA and Europe

which are expected to expire by 2009.


6. it is important to note that unit value realization for both knitted and

woven garments are inclusive of accessories like handkerchiefs,

gloves, socks, shawls, scarves etc which are basically low-value

items. Such constitute about 10% of our export value for both knitted

and woven separately. If due note is taken of the above, the unit value

would improve to 2.95 $ and 5.5$ for knitted garments and woven

garments respectively

7. The above performance is despite the fact that the industry is not

refunded state and corporation taxes together aggregating about 6% of

the FOB value, although all of India’s Asian competitors are not only

granted full refund of all taxes/duties, but also, in some case, granted

export rebates.

8. All the above points, specifically for exports, also apply to production

basically, production is scheduled against advanced sales, whether

domestic or export.


USA AND EU DOMINANCY

The World Trade Organization (WTO) stands for an orderly growth of trade.

It envisages that the means of growth should be uniform for all countries and

not skewed in favor of certain countries or group of countries.

An obvious way is reduction of tariff walls and removal of non tariff

barriers. Unfortunately, the developed countries especially the USA and EU,

Which are the founder-members of WTO have been breaching the very

fundamentals of WTO in an attempt to promote the trade of their own

products and acting as global policemen.

FTA skewed ideology: promote sale of local products

USA has signed Free Trade Agreements with neighboring Canada and

Mexico as also with Caribbean Basin countries and Sub-Sahara Africa in the

grab of improving the economy of these countries. The agreement makes it

mandatory for the supplying countries to use American yarn or American

Fabric for conversion into garments prior to exporting to USA in order that

such garments may enter USA import duty free; Alternatively, of course,

they can use local yarn or local fabric, but cannot import the same from third

countries in which case the garments thus manufactured will lose the benefit

of free import duty in USA. Basically the object of the agreement is to

promote the off take of American yarn/fabric, take advantage of low labor

cost and import the finished garments at a low price for the American

consumer.


EU GSP Unfair

Europe also put in place Generalized System of Preference (GSP) whereby

certain countries were preferred over others. The current GSP scheme which

will run up to 2015 as three major arrangements:-

(a) The General arrangement

(b) The arrangement for least developed countries

(c) The GSP plus scheme

Under (a), products are divided into 2 groups viz sensitive and non sensitive.

Sensitive products are those products of EU which require higher and

broader protection from imports while the rest are non-sensitive. About 55%

of the products have been identified as being non-sensitive. Sc\such products

can enter EU duty free while sensitive products are allowed at 3.5% less

than MFN (most favored nation) rates. However, the most important point is

that the concessions apply only to those countries which (i) Protect labor

rights (ii) Contribute to environment protection and trafficking. This is

where policing by EU comes in. protection of labor rights is in accordance

with the labor laws of the supplying country but it is always facile for any

NGO to raise a dispute on non-observation of labor rights or on environment

in which case even pending orders or for goods-in-process can b cancelled

by the EU country and it would require intervention at government level to

remove such infraction.

Under (b), this is a special group carved out of less developed countries.

These least developed countries are officially recognized as such by the

United Nation. Duty concessions are double that of under (a) above. In this

case, the condition is that the raw material ie, yarn or fabric as the case may

be used for a garment should have been manufactured in the supplying


country or, if from another country should have undergone substantial

transformation in the supplying country. Repacking or labeling is not

considered to be a change in HS code. The catch here is that supplying

countries do not have their own manufacturing facilities for the raw material

in at least sufficient quantity and this blunts the scheme. Examples are

Bangladesh, Sri Lanka, Philippines and Vietnam.

Under ( c ), the duty concession is 100% but again, the qualifying factors

were protection of labor rights, sustained growth in environment and in

addition, good governance- all loosely worded and capable of being misused

to deny the concession.

Under the current GSP scheme, a graduation formula has also been

introduced whereby a beneficiary country would be denied the benefits

under the scheme, if imports into EU from such country in any product,

exceeds 15% pf total volume of imports of that product from all beneficiary

countries. This effectively leaves India out of GSP benefits, since the bar is

thus lowered by restricting it only to beneficiary countries.

Zero for Zero Tariff

Looking to opportunities in the vast Indian market, both EU and USA have

offered India Zero for Zero tariffs. Since labor costs in both USA & EU are

higher than in India and since freight will add further to the landed value in

India for their garments, the possibility of EU/USA garments swamping

India is remote. The only possibility is that garments manufactured by East

European countries of EU or by Turkey, could possibly compete with our

domestic industry. Although operating costs in East Europe or Turkey may

be low, freight to India and insurance costs will neutralize whatever

advantage they may have.


RETAIL SCENARIO

This can be sub divided into brand and non-brand. The branded retail sector

is not more than 10 % of the total. A retailer ( whether shop owner or mall)

has to keep a higher margin for branded garments than for unbranded to take

care of returns on his investments as well as discount on end of season sales

or out of fashion stocks and overheads.

The retail mark up is 50% for branded and 25% for non branded garments.

On this basis, the size of the retail market for garments can be estimated to

be around Rs. 4 to 5 trillion or around Rs. 500,000 crore. With malls coming

up all over Indian metros, retail trade in garments is getting better organized

than earlier. Attention is now shifting to ‘B’ class and ‘C’ class cities as well

as the rural sector. With the growth of the economy, thanks to economic

liberalization, the result of which is percolating to our farm lands as well as

spread of education in the rural population is fast picking up to the urban

level. Farm produce is being is better organized to reduce wastage and

increase the income of farmers, Rural indebtedness is being better bank

managed than the earlier system of dependence on money-lender sharks.

Better some villages, especially in Maharashtra, the rest can claim a standard

of life about equal, and in some villages, even better than their urban

cousins. In the last six months or so, inflation has been a bug-bear. But this

is due to two factors namely unseasonable weather and strident increase in

global oil prices.


INDIAN APPAREL SECTOR TRENDS

Salient feature of India Apparel Sector

• Maximum employment with minimum investment.

• High percentage of women employment –35 %

• 95% production in small-scale sector

• 3% share in global apparel exports

• Cluster based growth –concentrated primarily in 8 clusters, i.e Tirupur,

Ludhiana, Banglore, Delhi /Noida /Gurgaon, Mumbai, Kolkatta, Jaipur

and Indore

• Contributes around 8% to India s overall exports and 48% to textile

exports

Production in Apparel Sector

The apparel sector is expected to record a CAGR of nearly 15% in quantity

terms and 20 % in value terms in 11th plan period. By 2001-12, production is

expected to reach 19 bn pcs , amounting to rs 299300 crs, 32% of this

population is expected to be generated by the export sector. In value terms,

51 % of the population is expected to be contributed by exports. The accent

is on the value added growth –both for domestic and export market

India in recent years has been the focal point of continuous growth and

development making it one of the fastest growing economies of the world. It

is the 4th largest economy in terms of Purchasing Power Parity, after USA,

China & Japan, and is rated among the top 10 FDI destinations.


The Indian consumer is evolving and driving retail growth due to increased

consumption. Private consumption growth contributes to more than half of

the GDP growth and is growing in double digit figures. Several businesses

are reacting to this evolution positively, both through pull and push

phenomenon.

Following a similar trend, the Indian textile and apparel industry is also

experiencing rapid changes and growth. Apparel today has the largest share

of the modern organized retail in India i.e. 20% of the current market of Rs.

56,000 crore and this is expected to grow at a constant rate of 20% over the

next 4 years.

These are few recent trends pertaining to the garment industry:

Trend 1

Indian consumers are converting from stitched apparel to ready-to-

wear causing a surge in discount retailing.

Factory outlets have become distinct and important shopping destinations

Retailers are increasingly accepting the widely agreed fact that consumers

love a bargain and always look forward to buying brands at low prices.

Factory outlets have become distinct shopping destinations with distinct

audiences. Apparel companies are focusing on this market to cash in on

consumers converting from stitched apparel to ready-to-wear, further

graduating to branded apparel. India is thus seeing a surge in discount


retailers offering year round discounts, ranging anywhere between 30% to

70%.

Trend 2

Consumers now desire branded products in all aspects of their life

Traditionally brands that offered formal wear are now extending into casual

wear, accessories, footwear etc. With most brands turning lifestyle brands,

they are opening larger Exclusive Brand Outlets (EBO’s) to showcase their

complete range of merchandise and give an international feel, The past few

months has seen brands opening up very large format stores in India.

Trend 3

Designers realize the huge opportunities in ready-to-wear market and

are introducing prêt lines

Another trend visible in the Indian designer wear market is corporatisation

i.e. strategic tie-ups with large corporate in related industries to provide the

necessary financial support and expertise in operational management. The

designer wear industry lacks the processes, systems, people and financial

resources to rapidly scale up their operations. The direct advantage of this

would accrue to the designers who would be able to concentrate on the

design and aesthetics rather than on business planning.

Genesis Colors Pvt Ltd., is the forerunner in the corporatisation of the Indian

designer industry. It is the parent company behind the labels Satya Paul,

Deepika Gehani, Tie Bar and Samsaara. These designers enjoy a wide


distribution network throughout India and abroad of standalone/franchisee

stores and premier fashion boutiques.

Trend 4

Indian companies see a huge opportunity in partnering with luxury

brands wishing to enter India

The Indian consumer desires to possess international luxury brands as an

inspirational product. Additionally, no Indian retail brand actually qualifies

to be categorized as a luxury brand. This readiness for luxury as an

organized market, has been recognized throughout the world and

international luxury brands are exploring possible avenues and tie-ups to

enter the Indian retail market.

Trend 5

Worldwide surge in demand for organic and eco-friendly products

Organic cotton has been able to achieve maximum popularity amongst all

eco-friendly fibers. Global retail sales of organic cotton products are

projected to grow to $2.6 billion by the end of 2008, reflecting a 40%

average annual growth rate. Hence, the demand for organic cotton fiber is

expected to grow to 100,000 metric tons in 2008, an average annual growth

rate of 47%.

Trend 6

Kids and youth are influenced by icons & characters and desire to

possess them in their everyday life


India has become an important market for character licensing specially in

apparel

Today's consumer is greatly influenced by media and he exhibits a

propensity to follow icons to the extent of bringing them into his everyday

life. This growing trend amongst consumers is being tapped by apparel

companies by taking up licensing of popular characters and icons to be used

in their merchandise. This is especially true for the kids and youth market

since they identify with these characters and icons more strongly. According

to Cartoon Network, the business of license merchandising of animated

characters is estimated at Rs. 360 crore in India.

Trend 7

Companies are exploring new' locations to retail in order to increase

visibility of their brand

Apparel retailing is geared to take on customers at places other than the

traditional locations like neighborhood markets, high streets and malls. With

increased need for convenience and visibility retailing, companies explore

newer locations like airports, metro stations, restaurants, cafés & even

beauty salons.

Retailing at such outlets typically follows two formats - the first is when

space is sublet for retailing branded merchandise at airports, metro stations,

etc. The second kind is when cafés, restaurants, fast food chains sell

merchandise to promote their own brand through T-shirts, caps, bags, mugs,

etc. While brand retailing at airports/metro stations is growing at a fast pace,


brand building by cafés/restaurants through retailing of merchandise will

also be an important trend mostly targeted at kids and youth.

Trend 8

Textile companies are strengthening front and back end operations

through mergers and acquisitions

Companies are increasingly looking to acquire domestic and overseas

companies which complement the value chain. However, it is the foreign

acquisitions which have caught the attention of the industry and the world.

Indian companies are taking on larger companies, integrating the Indian

advantage of manpower & raw material with the acquired company's

strategic location, technology and/or well established distribution channels.


TECHNOLOGY AND INDIAN GARMENT

INDUSTRY

The Indian garment industry is characterized by

constant change. What is in vogue today will be

passé tomorrow. The size of India garment

industry is has also been expanding and it is

expected to drive exports worth US$ 25 billion

by 2010. In order to meet this growth, Indian

manufacturers would have to scale up their

manufacturing capacity five-fold, despite an expansion of 30 percent

planned by top players. The liberalization of world trade and abolition of the

quota regime have opened up new opportunities for Indian manufacturers.

The challenges for Indian garment manufacturers are multifold:

• Keeping abreast of the market trends

• Material usage patterns

• Knowledge of resource points

• Being in a position to deliver high quality goods in shorter lead times

at competitive rates.

The garment industry specializes in offering a plethora of products with

multipart specifications catering to diverse customer needs across markets

viz. culture, climate and seasonal variations. Customers and retailers are

forcing manufacturers to deliver higher quality at lower costs in short

delivery times. To survive in this cut-throat business, garment manufacturers


need to out think and out perform competition. They have to meet all of the

following quality standards:

• Dimensional stability

• Seam strength

• Abrasion resistance

• Seam slippage and other test descriptions.

Also, the regulatory concern for safeguarding the environment makes it

necessary for manufacturers to strictly conform to ecological requirements.

The moot point for Indian Players will be volume-driven efficiencies

combined with superior design capabilities, scalable and flexible

manufacturing processes and a well integrated supply chain.

Automation of the various processes from raw fabric to finished garment

(maintenance of inventory records, inventory planning, sales forecasting,

distribution and transportation management) and smooth integration with the

supply chain can be achieved in a cost-effective manner, using an efficient

IT solution like ERP.

In order to adopt to play on the world stage, garment manufacturers have to

adopt IT as a strategic option to scale up efficiencies and improve business

performances.


Technology plays a very vital role in following areas of Garment

Industry:

• Season collection planning

• Garment style management

• Sales order management

• Material requirement planning

• Material procurement management

• Inventory management

• Production management

• Quality management

• Exports & quota management

Over the past few years Computer Aided

Designing (CAD) has also become a very

important part of both textile and garment

industries. CAD is industry specific design

system using computer as a tool. CAD is

used to design anything from an aircraft to

knitwear. Originally CAD was used in designing high precision machinery

solely it found its way in other industries also. In 1970's it made an entry in

the textile and apparel industry. Most companies abroad have now integrated

some form of CAD into their design and production process.

In fact, according to National Knitwear Association of US, of 228 Apparel

manufacturers:


• 65% use CAD to create color ways

• 60% use CAD to create printed fabric design

• 48% use CAD to create merchandising presentation

• 41% use CAD to create Knitwear designs

Design choices and visual possibilities can be infinite if the designer is given

the time and freedom to be creative and to experiment using the computer.

Today in our country automation is not only used for substituting the labour,

it is also adopted for improving quality and producing quantity in lesser

time. However, a CAD system is only as good (or as bad) as the designer

working on it. Computer only speeds up the process of say repeat making,

color changing, motif manipulation etc. It is actually the CAM aspect of

CAD that will help reduce lead time.

Types of CAD Systems

Textile Design Systems

Woven textiles are used by designers and merchandisers for fabrics for home

furnishing and to men-women-children wear. Most fabrics whether yarn

dyes, plain weaves, jacquards or dobbies can be designed and infact are

invariably used abroad using a CAD system for textiles. Similarly

embroideries are also developed at CAD workstations.

Knitted Fabrics

Some systems specialize in knitwear production and final knitted design can

be viewed on screen with indication of all stitch formation. For instance a

CAD program will produce a pullover graph that will indicate information


on amount of yarn needed by color for each piece. Another example of the

new technology in the industries using a yarn scanner which is attached to

the computer scans a thousand meters of yarn and then simulates a knitted/

woven fabric on-screen. This simulation will show how the fabric will look

like if woven from that yarn.

Printed Fabrics

The process involves use of computers in design, development and

manipulation of motif. The motif can then be resized, recoloured, rotated or

multiplied depending on the designer's goal. Textures and weave structures

can be indicated so that printout either on paper or actual fabric looks very

much the way the final product will look. The textile design system can

show color ways in an instant rather than taking hours needed for hand

painting. New systems are coming which have built-in software to match

swatch color to screen color to printer color automatically i.e. what you see

is what you get.

Illustrations/ Sketch Pad Systems

These are graphic programmes that allow the designer to use pen or stylus

on electronic pad or tablet thereby creating freehand images which are then

stored in the computer. The end product is no different from those sketches

made on paper with pencil. They have additional advantage of improvement

and manipulation. Different knit and weave simulations can be stored in a

library and imposed over these sketches to show texture and dimensions.


Texture Mapping: 3D Draping Software

This technology allows visualization of fabric on the body. Texture mapping

is a process by which fabric can be draped over a form in a realistic way.

The pattern of the cloth is contoured to match the form underneath it. The

designer starts with an image of a model wearing a garment. Each section of

the garment is outlined from seam line to seam line. Then a swatch of new

fabric created in textile design system is laid over the area and the computer

automatically fills in the area with new color or pattern. The result is the

original silhouette worn by original model in a new fabric.

Embroidery Systems

The designs used for embroidery can be incorporated on the fabric for

making garment. For this special computerized embroidery machines are

used. Designers can create their embroidery designs or motifs straight on the

computer or can work with scanned images of existing designs. All they

need to do is assign color and stitch to different parts of the design. This data

is then fed into an embroidery machine with one or multiple heads for

stitching.

Apparel Industry and Computers

Digitising Systems

Digitisers put original patterns into the computer for use and storage. It can

be done by defining the X, Y co-ordinates of series of selected points around

the pattern. These basic patterns can be manipulated with the help of a

computer, for example in case of trousers, darts can be moved, pleats can be

created or flair can be introduced. This way new design can be created on


screen from pre-existing patterns. Today large scanners are also used to

input pattern shapes instead of tracing patterns on a digitizer.

Grading Systems

After a sample size pattern has been put, it has to be graded up and down in

size. Certain points on the pattern are considered as "growth points" or

places at which the pattern has to be increased or decreased to accommodate

changing body size. At each growth point the operator indicates the grade

rule to the computer. The system will then automatically produce the pattern

shapes in all the pre-specified sizes. Say if we define pattern for size 30, it

can be easily graded for size 32/34/36 and so on.

Marker Making Systems

Computerized marker making systems help in laying the pattern part

together more economically than an operator could do with hands. This

ensures minimal wastage of fabric. On plain fabric this is relatively simple

but on striped fabric also automatic matching is done by the computer. The

layout is then directed to big plotters which are overlaid on the stacked

fabric prior to cutting.

Cutting Operations

Pattern generated by marker making systems can be directed to automated

cutting machines which are operated without the help of human hands.


Marketing integration using Computer

Designer is in direct contact with the customer and also the manufacturer to

be aware of the latest trends and also needs and demands of the customer.

Internet and Information Explosion

NIFT, Calcutta is linked to Internet with TCP/IP account and the students

have continuous access to the sites of the top designers, trend forecasting

agencies, fashion houses and fabric suppliers. This has helped both the

institute and the students immensely keeping them updated with the latest

trends


BUDGETING IMPLICATIONS

Like other industries, garments sector also has its wish-list for consideration

in the recent union budget. The wish – list segregated into segments viz.

a. Policy issue

b. Issues pertaining to domestic industry

c. Issue pertaining to the export industry

d. Procedural issues

Policy Issues

Removal of state and corporation Taxes on export of garments

Export of garments are burdened with taxes and duties levied by :

a) Central government

b) State government

c) Municipal corporation

Appreciation of the rupee has further lowered earnings of Indian exporters ,

where as those of our Asian competitors have either appreciated less or even

depreciated. As a result, prices of Indian garments have become

uncompetitive against Asian competitors.

Exporters are attempting to reduce the hardship of RUPEE appreciation by

quoting in other currencies but importers take advantage of dollar quotation

by our competitors and insist on dollar quotations. Recent increase in

drawback rates has to some extent but the major burden of the state and

corporation levies continues to hinder exports. These collectively work out

to 6 percent FOB. Further, introduction of vat was expected to reduce prices


but since textiles have not been included in vat , garments units are not able

to offset taxes and duties paid on inputs. Again, refund take a long time

while payments are immediate, thus affecting adversely the cash flow

positions of exporters and every budget brings with it fresh does of taxation

in one form or the other

So in the forthcoming budget, a provision should to be made to exempt

exports from all direct taxes (rather than pay and later refund)

In case of indirect tax (including state and corporation levies) a find to be set

up from out of the taxes paid by the industry to refund 6 percent FOB on all

exports against realization of the exports against realization of the proceeds

through normal banking channels. Since exports contribute only 25 percent

of production, there is no fear of an outgo exceeding collection by govt. and

corporation

Import Duty of Garment Machinery

Import duty on most garment machinery is 5 percent plus countervailing

duty.

Indigenous machinery manufactures do not manufacture garments

machinery of similar speeds and or stitches per minute and further, since

countervailing is levied with the sole objective of the protecting the domestic

industry, it is hoped that the budget proposals will remove countervailing

duty from all garments machinery entitled to concessional duty.

Labour Reforms

Immediate reforms in labour laws to help improve production and

productivity of garments are called for:


These include: -

� Increase in working hours from 48 to 60 per week with suitable

provision for rest period

� Female workers to be employed in the entire second shift

� In view of the second nature of the garment industry, contract labors

be permitted on condition of a guaranteed employment 100 days in a

year.

The sector did get some sops in the budget, these were:

SEZ- SEZ scheme is likely to continue, as per the assurance given by the

Prime Minister. Six mega clusters are proposed to be developed in power

looms, handlooms and handicrafts. Allocation of Rs.70 crore per cluster.

With an immediate provision of Rs 100 crore this year has been envisaged.

Textile Up gradation Fund (TUF) - Allocation for textiles up gradation

fund (TUF) has been increased from Rs. 911 crore to Rs 1090 crore. The

budget has also maintained the provision for Scheme for Integrated Textile

Parks (SITP) at Rs. 450 crore. However, the schemes would not provide

immediate support to textiles sector, which is need of the hour. Increases in

subsidy under the TUF scheme can hardly be considered a relief package

looking to the outstanding claims pending with the banks. There are already

Rs 600cr plus outstanding according to the banks

Reduction in Excise Duty - The excise duty has been reduced from 16% to

14% under 2008-09 budget but the concession would prove to be highly

elusive for apparel exporters as textile manufacturers, already struggling


with stiff margins, may not be able to pass on the benefit down the line to

exporters.

Non Profit Corporations - The FM has proposed to establish a non profit

corporation with intention to garner Rs 15,000 crore as capital from

government, the public and private sector and bilateral and multilateral

sources for establishing training institutes including 300 additional ITI’s.

A noticeable thing in budget 2008-09 is its silence about how to arrest the

slump in employment intensive industries like textile, garments, leather and

handicrafts. Apparel exports promotion council estimates that if situation

remains unchanged, the job losses this year would be six lakh.


MONETARY POLICY FOR THE YEAR

2008-0914

• Bank Rate and Repo Rate kept unchanged.

• High priority to price stability, well-anchored inflation expectations

and orderly conditions in financial markets while sustaining the

growth momentum,

• Swift response on a continuous basis to evolving adverse international

and domestic developments through both conventional and

unconventional measures.

• Emphasis on credit quality and credit delivery while pursuing

financial inclusion.

• Scheduled banks required to maintain CRR of 8.25 per cent with

effect from the fortnight beginning May 24, 2008.

• GDP growth projection for 2008-09 in the range of 8.0- 8.5 per cent.

• Inflation to be brought down to around 5.5 per cent in 2008-09 with a

preference for bringing it close to 5.0 per cent as soon as possible.

Going forward, the resolve is to condition policy and perceptions for

inflation in the range of 4.0-4.5 per cent so that an inflation rate of

around 3.0 per cent becomes a medium-term objective.

• Deposits projected to increase by around 17.0 per cent or Rs.5,50,000

crore during 2008-09.

• Adjusted non-food credit projected to increase by around 20.0 per

cent during 2008-09.

14

RBI Website


• Active demand management of liquidity through appropriate use of

the CRR stipulations and open market operations (OMO).

Impact of various monetary policy measures

Recent money shortage in market has forced RBI to make changes in its

policies so that the money supply in the market can be increased. Following

are the recent changes that RBI has done in the market. These changes have

had positive impact on every industry in the economy:

Bank Rate

Bank rate is the rate at which central bank of the country lend funds to

national banks. A central bank adjusts the supply of currency within national

borders by adjusting the bank rate. When the central bank reduces the bank

rate, it increases the attractiveness for commercial banks to borrow, thus

increasing the money supply. When the central bank increases the bank rate,

it decreases the attractiveness for commercial banks to borrow, consequently

decreasing the money supply. Considering the current recession situation in

market, RBI is planning to reduce the bank rate. Thus, the interest rates in

market will decrease which will result in cheaper availability of funds for

industry which will again result in increasing the productivity for the

industry.

Cash Reserve Ratio

Cash Reserve Rat io (CRR) is portion (expressed as a percent) of depositors'

balances banks must have on hand as cash. This is a requirement determined

by the country's central bank, which in India is Reserve Bank of India. The

reserve ratio affects the money supply in a country. Cash reserve ratio


(CRR) of scheduled banks, which is 7.5 per cent at present, was cut by 100

basis points to 6.5 per cent with effect from the current reporting fortnight

that began on October 11, 2008. This measure will release additional

liquidity into the system of the order of Rs.40, 000 crore. Thus that would

result in increase of productivity in Industry.

Repo Rate

Repo Rate is the discount rate at which a central bank repurchases

government securities from the commercial banks, depending on the level of

money supply it decides to maintain in the country's monetary system. To

temporarily expand the money supply, the central bank decreases repo rates

(so that banks can swap their holdings of government securities for cash), to

contract the money supply it increases the Repo rates. Recently RBI has

reduced Repo rate by one percentage point to 8 per cent, as part of its

ongoing efforts to ease the pressure in the credit market.

Statutory Liquidity Ratio

Statutory Liquidity Ratio (SLR) is a term used in the regulation of banking

in India. It is the amount which a bank has to maintain in the form of cash,

gold or approved securities. The quantum is specified as some percentage of

the total demand and time liabilities ( i.e. the liabilities of the bank which are

payable on demand anytime, and those liabilities which are accruing in one

months time due to maturity) of a bank. This percentage is fixed by the

Reserve Bank of India. The maximum and minimum limits for the SLR are

40% and 25% respectively.


Open market operations

Open market operations are the means of implementing monetary policy by

which a central bank controls its national money supply by buying and

selling government securities, or other financial instruments. Monetary

targets, such as interest rates or exchange rates, are used to guide this

implementation


OVERVIEW OF FASHION INDUSTRY ADVERTISING IN 2007

Television

• 32%15 growth in TV ad volumes of fashion industry during 2007,over

2006.

• High advertising of fashion industry on hindi news channels in 2007

• Set Wet Zatak maintained its first rank in the top 10 brand list on TV

across both 2006 & 2007.

• Hosiery and footwear category of fashion industry has been a drop in

advertising volumes on TV during 2007, over 2006.

• Among all the categories of fashion industry, maximum advertising

growth was registered in perfumes/deodorant category, followed by

lifestyle and cosmetics categories, during 2007 as compared to 2006.

15

Images yearbook 2008


� Set Wet Zatak, Raymond Suitings , and Reid & Taylor were in the

top 10 list of brands across both 2006 & 2007.

� The top 10 list of brands in 2007 was a mix of six brands of

perfumes/deodorant and three of apparels.

� In 2006, five apparel brands and two each under branded jewellery

and perfumes/deodorant had made it to the top 10 brand list.

� Among the news channels, maximum advertising by fashion

industry was on Hindi news and English news, during 2007.

� Among general entertainment channels, regional GEC leads-

followed by Hindi GEC and English GEC.

Top Fashion Brands Advertised on TV

Rank 2006 2007

1 Set Wet Zatak Set Wet Zatak

2 D'damas Gold Expressions Forever Mark - DTC

3 D'damas Collection G set Wet Zatak Gold

4 Reid & Taylor Raymond Suitings

5 Koutons Readymades Axe Deodorant

6 Raymond Suitings Axe Vice

7 Integriti Readymades Rexona Deo Roll On

8 Axe Click Wild Stone

9 Titan Quartz Belmonte

10 Siyaram Reid & Taylor Source:AdEx India(A Division of TAM Research Note:Figures are based on secondages.


Print

• 13% growth in advertising volumes of fashion industry on print

during 2007, over 2006.

• Fashion industry used newspapers and magazines in an advertising

ratio of 81:19 during 2007.

• Maximum advertising of fashion brands on general-interest

newspapers and women- interest magazines.

• Koutons ready-mades maintained its first rank in the top 10 brand list

in print across both 2006 & 2007.

• The average ad per day by fashion industry has seen a rise of 27% in

print during 2007.

Radio

• Fashion industry advertising saw a growth of 173% on radio during

2007, as compared to 2006.

• Radio advertising by fashion industry skewed towards Delhi &

Mumbai.

• Pantaloons was the top name in the top 10 brand list on radio during

2007.

• Two-time rise in average ads aired per day by fashion brands on radio

during 2007, over 2006.


SWOT ANALYSIS

Strengths

• Abundant raw material availability

India is one of the leading producers of natural and man made fibers. The

abundance of raw material allows industry to control cost and reduce

over all lead time.

• Low cost skilled labour

India has third lowest wage rate as compared to other key garment

manufacturing companies. This provides industry with a distinct

competitive advantage.

• Presence across value chain

Indian industry has manufacturing capacity present across complete

product range, that allows garment manufacturers to source raw material

locally and thus reduces the lead time.

• Growing domestic market

The Indian domestic market is extremely sensitive to fashion fads and

this has resulted in development of very responsive garment industry.


Weaknesses

• Fragmented industry

Global buyers prefer to source their requirements from two to three

vendors and Indian garment manufacturers find it difficult to fulfill the

capacity requirements.

• Effect of historical government policies

The industries continues to be affected by several historical regulations,

for instance there is still an absence of viable exit options for industry

players. These regulations resulted in complex industry structure, which

is currently an obstacle. In the Pre 2000 era garmenting sector was

reserved for the Small scale Sector, which has resulted in most units

being set up with small capacities. Till now, knitted garment sector is

reserved for the small scale sector.

Though the historical regulations are relaxed now, they continue to be an

impediment to global competitiveness.

• Lower productivity & cost competitiveness

Lower cost competitiveness has hampered ability to compete with lower

cost global players because the labour force in India has a much lower

productivity as compared to competing countries like China, Sri Lanka.

• Technological obsolescence

A large portion of the industry’s processing capacity is obsolete. This

has resulted in low value addition in the industry and a need has risen for

significant technology investments to achieve world class quality.


Opportunities

Rising

Disposable

Income

Fifth largest

consumer

Liberalizing

economy

Sizeable urban

middle class

Success Probability

HIGH LOW

LOW

HIGH

Attractiveness

OPPORTUNITY MATRIX


• Liberalizing economy

Opening up of Indian economy has presented the players with lots of

opportunities; Indian companies are tying with global brands. They are

leveraging the brand name of global brands.

• Growing dual income

With number of working women’s increasing the dual incomes are

income thus income available at peoples discrete has also increased.

• Rising Disposable Income

According to McKinsey Global Institute (MGI), by 2035 over 23 million

Indians will number among the country’s wealthiest citizens. Forecasts

for India’s real GDP growth rate over the coming two decades generally

range between 6 and 9% per year. MGI forecast real compound annual

growth of 7.3% from 2005-2025. Average real household disposable

income will grow from 113,744 Rs in 2005 to 318,896 Rs by 2005, a

compound annual growth rate of 5.3%. This is significantly more rapid

than the 3.6% annual growth of the last two decades.

• Sizeable urban middle class

As Indian incomes rise, the shape of the country’s income pyramid will

also change dramatically. Apart from a substantial reduction in poverty,

India will create a sizeable and largely urban middle class. Middle class

comprises two economic segments - seekers with real annual household

disposable income of 200,000 to 500,000 Indian rupees and strivers at

500,000 to 1,000,000 Indian rupees. In 2005, the Indian middle class was

still relatively small comprising approximately 5% of the population,

however middle class is expected to reach 41% of population by 2025.


• Fifth largest consumer

India will become the world’s fifth largest consumer market by 2025. the

combination of rapidly rising household incomes and a robustly growing

population will lead to a striking increase in overall consumer spending.

The aggregate consumption in India will grow in real terms from 17

trillion Indian rupees today to 34 trillion by 2015 and 70 trillion by 2025

a fourfold increase.


Threats

L

State of

Recession in the

economy

Competition from

global players

Fluctuation in

rupee value

Ecological & Social Awareness

Probability of Occurrence

HIGH LOW

LOW

HIGH

Seriousness

THREAT MATRIX


• Fluctuation in rupee value

The fluctuation in rupee value posses a big threat in front of importers

and exporters. The exchange value of Rupee against UD Dollar has

depreciated to Rs 50.03 which has resulted in huge losses for the

importers. Thus there is always a great threat for players in international

trade. But since it affects only international players thus it is not as big a

threat as some of other threats.

� State of Recession in the economy

The apparel industry gets severely hit during recession because of less

liquidity in the market. This industry is an export-oriented industry which

lies in doldrums during this stage.

• Competition from global players

The major exporters of garments from all over the world are giving tough

competition to India as they are providing higher productivity with lower

costs. Competition is not likely to remain just in the exports space, the

industry is likely to face competition from cheaper imports as well. This

is likely to effect the domestic market and may lead to increased

consolidation.

� Ecological & Social Awareness is likely to result in increase pressure

on the industry to follow international labour and environmental laws.


RECOMMENDATIONS

After understanding the industrial and economic scenarios we would like to

give following recommendations to Indian companies operating in garment

industry:

• More emphasis should be given on the micro and macro level

economic factors. These factors indirectly or sometimes directly

affects each and every business in the economy, marketers should be

proactive enough to foresee the future impact of these factors on their

business.

• Look for co-branding: It involves merging two or more well known

brands into a single product. It is an effective way to leverage strong

brands and helps in gaining synergy by having the best combination

of unique strength each brand has. Co-branding can be based on

innovation, ingredient, alliance, supply chain or any other.

• Find out new ways of communicating to customers, like sending

information about new products, offers, stocks, etc through sms to cell

phones.

• Industrialists shouldn’t consider the expenditure on R&D and

technology as a cost, it should be considered as an investment because

it pays rich dividend in future.

• Industrialists must emphasize on improving the standard of labors

because garment manufacturing is a labor intensive industry. The

productivity of industry directly depends upon the productivity of

labor.


• Give priority to consumers’ opinion. Keep in touch with customers by

creating loyalty clubs and online data bases and opinion leaders.

• Marketers are under estimating the importance of Visual

merchandising, visual merchandisers not only makes the store look

impressive but they also makes sure right wears are kept at the right

place in the store.

• Blend up the bollywood, cricket and other entertainment mix with

other areas such as product design, distribution channel, price,

promotion activities. Using celebrity endorsement can prove effective

provided the credibility and popularity of celebrity is taken into

consideration.

• It has been seen in apparel retail stores that mostly Instore

advertisements to communicate various promotional offers, thus only

that part of population is reached that is already visiting the stores.

Thus using Outdoor advertising & promotional campaigns is quite

important.

• Through research it was revealed that majority of customers prefer to

buy with family members or with friends, and such partners also

influence the purchase decisions of the buyer. Thus it’s necessary to

have a strategy to impress these influencers. Having an associate

loyalty card thus should always be a part of the loyalty program.

• For retails apparel stores its imperative to build their own Brand name

they can’t just rely upon the brand names of the wears available in the

stores.


CONCLUSION

The trends discussed above clearly show that the fashion business is

exploring all aspects of expansion i.e. it is bound for a multilateral expansion

rather than only unilateral expansion. Multi lateral expansion is happening at

every part of the value chain as well as for every consumer segment.

The Indian Garment Industry is taking cue from international standards as

well as the burgeoning consumer appetite to create their own growth path.

Fashion companies are taking a much larger perspective of this industry in

India and consolidating their position to face it. On the other hand, the

Indian consumer is at a preliminary stage of development and yet due to

international exposure trying to keep pace with the international fashion

scene creating unprecedented pressure on companies to perform.

This is a window of opportunity which the Indian Garment industry should

make the most of before it reaches maturity which will signify slowdown.

Companies need to react as well as participate through in-depth

understanding of fashion, consumer demands & micro/macro level economic

factors to take on this challenge.


REFERENCES

� www.ncaer.com � www.fibre2fashion.com � www.indiaexports.com � Images Year Book 2008 � India Retail Report 2009 � Apparel Talk Magazine July 2008 Issue � Apparel Export Promotion Council � Marketing White Book 2007 � Marketing Management by Philip Kotler


ANNEXURES

Raymond’s Balance Sheet16

16

Raymond Website


Koutons Balance Sheet17

17

Koutons Website


Arvind Mills18

18

Arvind Mills Website


ITC Balance Sheet19

19

ITC Website


Aditya Birla Group balance sheet20

20

Aditys Birla website

(Rs Crore) 2007-08 2006-07 2005-06 2004-05 2003-04 2002-03 2001-02 2000-01 1999-00 1998-99

Net fixed assets 1,501.6 1,308.1 1,135.5 810.28 737.5 684.1 775.3 814.0 885.9 1,054.6

Investments

Long-term investments

3909.3 3,473.9 1,410.2 618.3 581.6 415.9 438.8 312.6 229.8 224.7

Other investments

144.9 375.5 265.6 81.3 160.0 98.4 1.0 31.2 114.3 215.5

Total investments

4,054.2 3,849.4 1,675.8 699.7 741.6 514.3 439.8 343.8 344.2 440.2

Net current assets

1,411.7 972.9 1,127.6 462.7 318.9 359.8 425.2 438.1 441.4 569.5

Capital employed

6,967.5 6,130.5 3,938.9 1,972.61 1,798.0 1,558.2 1,640.3 1,595.9 1,671.4 2,064.3

Net worth represented by:

Equity share capital #

95.0 93.3 83.5 59.9 59.9 59.9 59.9 59.9 59.9 67.5

Share Warrants $

377.4 - - - - - - - - -

Reserves and surplus (Net of Miscellaneous expenditure not w/o)

3,551.3 3,031.2 2,124.1 1,294.2 1,204.8 1,104.0 1,020.1 1,068.1 1,015.4 1,345.8

Net worth 4,023.7 3,124.5 2,207.6 1,354.1 1,264.7 1,163.9 1,080.0 1,128.0 1,075.3 1,413.3

Loan fund loans

Long term loans

1,841.2 1,869.2 972.5 285.3 211.5 197.8 282.7 317.3 320.4 534.0

Short term loans

902.2 962.7 591.1 207.7 194.3 70.1 176.4 150.6 275.7 117.0

Total loan funds

2,743.4 2,831.8 1,563.6 493.0 405.8 267.9 459.1 467.9 596.2 651.1

Deferred tax 200.3 174.1 167.7 125.5 127.5 126.4 101.2 - - -

Capital employed

6,967.5 6,130.5 3,938.9 1,972.6 1,798.0 1,558.2 1,640.3 1,595.9 1,671.4 2,064.3

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