INDIAN+GARMENT+INDUSTRY

Indian Garment Industry

INDIAN GARMENT INDUSTRY

Made by:

Puneet Khurana Manika Pahwa Arushi Bansal Rachit Dhingra Akanksha Sharma


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 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.

2


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 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.

2


TABLE OF CONTENTS Executive Summary Objective 1.

Indian Garment Industry History Growth of Industry

•

•

2.

Major Segments Men Women Kids •

•

•

3.

Types of Merchand M erchandise ise 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

•

•

•

3


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 A dvertising

16.

SWOT Analysis

17.

Recommendations

18.

Conclusion

References Annexure

4


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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INDIAN GARMENT INDUSTRY 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

7


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 25 e 20 t a r h t w15 o r g l a u 10 n n A % 5

15.5 13.6

13.1

4.2

4.7

2003>2002

2005>2004

5.9

0 2007>2006

Year Volume

Value

Figure 1 1 2

.

1

Images Yearbook 2008

2


8


Indian Apparel Market Growth (Volume) 7,000 6,000 s 5,000 t i n U4,000 n o i 3,000 l l i M

5,034 4,808 4,422 4,610

5,332

5,644

5,955

6,270

6,580

2,000 1,000 0 2002 2003 2004 2005 2006 2007 2008 ex

2009 2010 ex ex

Year Volume

Figure 2 3

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.

3


9


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) 2000 1800 1600

1,715

1400

1,555

n o 1200 i l l i 1000 B R 800 N I

1,390 1,224 1,060

600 400

613

693

777

883

200 0 2002

2003

2004

2005

2006

2007

2008 ex

2009 ex

2010 ex

Year Value

Figure 3 4

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 4


10


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% 34.8%

Kids' Apparel + Uniforms Mens' Apparel Womens' Apparel

40.2%

Figure 4 5

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

5 6

Images Yearbook 2008 Images Yearbook 2008

12


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 7 8

Images Yearbook 2008 Images Yearbook 2008

13


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 5.90%

TOTAL

9.30%

Uniforms Kidswear

22.50%

4.40%

15.60%

6.50%

Unisex Apparel Womenswear

5.80%

Menswear

5.90%

0.00%

15.50%

5.00%

10.00%

15.70% 16% 13.30% 15.00%

20.00%

25.00%

Growth Rate Volume

Value

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.

9


14


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

9.6% 2007

24.5%

10.0%

28.5% 27.4%

9.3% 2006

24.8%

9.9%

28.6% 27.3%

9.1% 2005

25.2%

9.6%

28.7% 27.4%

8.8% 2004

25.4%

9.7%

28.5% 27.6%

8.6% 2003

25.6%

9.7%

28.2% 27.8%

8.4% 2002

0.0%

25.8%

9.7%

5.0%

10.0%

28.0% 28.1% 15.0%

20.0%

25.0%

30.0%

Kidswear

Uniforms

35.0%

% Market Share Menswear

Womenswear

Unisex Apparel 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


16


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

19


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)

Composite Mills (spinning, weaving, processing)

Ginning

Processing/ Finishing

Cloth

Yarn

Jute/Wool/ Silk (Farms)

Cone

Hank

Stand-Alone Weaving (mid-size)

Power looms (small)

Garments & Accessories

Distribution Channel (Export & Domestic Markets)

Cloth

Handlooms

Spinning Polymers (Petrochemic al Plants)

Man-Made: Filament Extrusion Process

Grey

Knitting Other Textile Products

21


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


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

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 Indian Garment Industry

23

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.)


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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


25

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


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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


27

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!


28

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


29

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


30

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


31

Differentiation among key players Store Name

Aditya Birla Nuvo

Raymond

Product Range

Men’s, Women’s & Kidswear

Men’s & Womenswear

• •

Brands

• • •

Esprit Peter-England Van Heusen Allen Solly Louis-Philippe

Positioning

Presence in all segments

Tie Ups

Many International Players- Louis Philippe, Van Heusen etc.

Media Used for promotion

• • • • •

Park Avenue ColorPlus Parx Notting Hill Zapp!

• • • •

Koutons

Arvind Mills

ITC Wills

Family Store

Men’s, Women’s & Kidswear

Men’s, & Womenswe ar

Koutons Charlie Outlaw Les Femme Koutons-Junior

• • • • • •

Lee Wrangler Nautica Jansport Kipling Tommy

• •

John Players Miss Players Club Wills

•

Value for Money

Presence in all segments

High End

All company hold brands

All company hold brands

Many International PlayersWrangler, Nautica, etc.

All Company hold brands

Print, electronic, hoardings, In store

Print, electronic, hoardings, In store,

Hoardings, print, POP

Quality

Different quality in different brands

High Quality

Medium Quality

Loyalty Program

For Some Brands

No

No


High End

Print, electronic, hoardings, In store Different quality in different brands For Some Brands

Print, electronic, hoardings, In store

High Quality

Yes

32

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.


33

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. Indian Garment Industry

34

It has also been observed that the textile and apparel sector witnessed more investment in existing technology than on new technology. Although nanotechnology 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.


35

EXPORTS IN GARMENTS SECTOR READYMADE GARMENTS Rank in India's Exports Destination of RMG Country Year 2007 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

TOTAL USA UK Germany France UAE Italy Netherlands Spain Canada Saudi Arabia Denmark Belgium Japan Sweden Russia Mexico South Africa Ireland Singapore Switzerland

11

%age %age Share Change in in India's India's RMG RMG Exports Exports

Value of Exports - READYMADE GARMENTS 11

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

2008

2007 2008

8078.05 2678.30 905.58 615.15 582.75 438.57 357.85 258.61 333.69 263.74 193.12 162.17 120.70 106.74 62.58 23.30 49.54 59.28 63.18 44.28 53.78

1877.08 561.06 204.99 171.98 145.79 112.24 97.68 77.07 87.54 49.84 25.66 48.31 39.27 24.07 21.00 12.01 12.24 8.07 8.46 5.96 10.55

100 32.7 10.37 7.29 8.23 4.45 6.01 4.11 3.99 3.07 1.34 2.83 1.95 1.48 0.79 1.13 0.77 0.4 0.57 0.47 0.57

8948.44 2937.10 919.39 670.92 683.42 513.17 437.75 342.56 330.96 290.89 196.07 191.02 162.20 127.74 77.63 57.05 61.57 50.88 46.60 50.69 56.67

9218.84 2815.24 1106.62 766.35 668.81 625.65 422.72 338.20 333.71 252.93 209.12 197.92 176.45 101.38 76.23 67.32 66.72 60.74 56.23 52.66 51.10

826.81 263.66 78.21 63.35 69.39 38.63 53.40 37.31 32.39 24.88 10.98 25.21 16.99 10.70 5.44 13.70 7.14 3.73 4.62 3.63 4.65

831.21 278.57 93.68 57.45 67.03 35.12 46.29 30.90 33.69 26.08 11.27 21.73 15.37 13.83 7.66 5.00 5.61 2.94 4.80 4.19 4.86

925.37 279.67 97.86 79.50 74.14 56.53 49.10 37.39 43.77 24.23 14.20 23.27 21.94 9.93 9.67 6.29 6.91 4.05 3.60 2.81 4.89

951.71 281.39 107.13 92.48 71.66 55.71 48.58 39.68 43.77 25.61 11.46 25.04 17.33 14.14 11.33 5.72 5.33 4.03 4.86 3.15 5.66

1658.02 542.24 171.89 120.81 136.42 73.75 99.68 68.21 66.08 50.96 22.25 46.94 32.36 24.54 13.10 18.70 12.75 6.67 9.42 7.82 9.51

100 29.89 10.92 9.16 7.77 5.98 5.2 4.11 4.66 2.66 1.37 2.57 2.09 1.28 1.12 0.64 0.65 0.43 0.45 0.32 0.56

Apparel Export Promotion Council


36

Jan-Feb 2008 /JanFeb 2007 13.21 3.47 19.26 42.36 6.87 52.19 -2.01 13 32.48 -2.2 15.29 2.93 21.35 -1.89 60.28 -35.75 -3.98 21.02 -10.2 -23.78 10.96

EXPORT TO WORLD12 (VALUE IN US$ MILLION) Exporting Countries

2002

2003

2004

2005

Textil es 496

Appar el 4084

Textil es 413

Appar el 5067

Textil es 597

Appar el 6296

Cambodi a

26

1313

21

1600

26

1981

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

171

2350 161

Banglade sh

2513 149

Textil es 696

2006 Appar el 7751

Textil es

2193

2776 136

Appar el

2675

2874 154

3046

Lanka

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



37

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.


38

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.


39

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. WOVEN EXPORTS

GMT

GMT

YEAR ENDED Dec 1995 Dec 1996 Dec 1997 Dec 1998

KNITTED GARMENT EXPORTS M Pcs

Bn $

M Pcs

Bn $

43.66 560.2 632.4 682.0

1.16 1.47 1.60 1.63

623.5 644.5 669.0 655.7

3.32 3.32 3.26 3.42

32.01 34.87 36.52 41.27

Dec 1999 Dec 2000 Dec 2001 Mar 2002

758.6 827.7 855.0 610.0

1.88 2.06 2.13 1.23

646.0 679.1 728.4 783.0

3.44 3.72 3.55 3.15

43.05 44.87 47.14 47.72

Mar 2003

983.0

2.37

855.0

3.26

48.56

Mar 2004 Mar 2005

1,113 857

2.66 2.50

711.0 746.0

3.54 3.71

45.86 44.84

Mar 2006

1,148

3.18

1153.0

5.43

44.28

Mar 2007

1315

3.61

1070.0

5.26

45.29

13

EXCG RATE

REMARK

UNIT VALUE

Knitted 2.66 2.62 S.E Asian 2.53 currency 2.39 crisis 2.48 2.49 2.49 18 % excise 2.02 duty on woven garments (2001 Budget) 16 % Excise 2.41 Duty on Woven Garments (2002 Budget) 2.39 a)Excise 2.92 made optional to Cenvat b) Dec ’04 end of ATC Mid= Year, 2.77 12 % Re appreciation 2.75

Woven 5.32 5.15 4.87 5.22 5.33 5.48 4.87 4.02

3.81

4.98 4.97

4.71

4.48

Apparel Talk m agazine


40

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.


41

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.


42

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.


43

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 Indian Garment Industry

44

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. Indian Garment Industry

45

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.


46

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 th

terms and 20 % in value terms in 11 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.


47

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-towear 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


48

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


49

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 Indian Garment Industry

50

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,


51

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.


52

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


53

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.


54

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: Indian Garment Industry

55

•

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 Indian Garment Industry

56

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.


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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 Indian Garment Industry

58

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.


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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


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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 Indian Garment Industry

61

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:


62

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


63

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.


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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


65

•

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 Indian Garment Industry

66

(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.


67

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


68

OVERVIEW OF FASHION INDUSTRY ADVERTISING IN 2007 Television 32%15 growth in TV ad volumes of fashion industry during 2007,over 2006. •

•

•

•

•

15

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.

Images yearbook 2008


69



Set Wet Zatak, Raymond Suitings , and Reid & Taylor were in the top 10 list of brands across both 2006 & 2007. Top Fashion Brands Advertised on TV Rank 1

2006 Set Wet Zatak D'damas Gold 2 Expressions 3 D'damas Collection G 4 Reid & Taylor 5 Koutons Readymades 6 Raymond Suitings 7 Integriti Readymades 8 Axe Click 9 Titan Quartz Source:AdEx India(A Division of TAM Research 10 Siyaram









2007 Set Wet Zatak Forever Mark - DTC set Wet Zatak Gold Raymond Suitings Axe Deodorant Axe Vice Rexona Deo Roll On Wild Stone Belmonte Reid & Taylor

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 leadsfollowed by Hindi GEC and English GEC.


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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.


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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.


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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.


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Opportunities OPPORTUNITY MATRIX Success Probability HIGH

A t t r a c t i v e n e s s

H I G H

LOW

Rising

Fifth largest

Disposable

consumer

Income

L O W

Liberalizing

Sizeable urban

economy

middle class


74

•

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. Indian Garment Industry

75

•

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.


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Threats THREAT MATRIX Probability of Occurrence HIGH

S e r i o u s n e sL s

H I G H

State of

Competition from

Recession in the

global players

economy

Fluctuation in L O W

LOW

rupee value


Ecological & Social Awareness

77

•

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.


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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.


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•

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.


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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.


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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


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ANNEXURES Raymond’s Balance Sheet16

16

Raymond Website


83

Koutons Balance Sheet17

17

Koutons Website


84

Arvind Mills18

18

Arvind Mills Website


85

ITC Balance Sheet19

19

ITC Website


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INDIAN+GARMENT+INDUSTRY

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