garments tranning report

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A

TRAINING REPORT

ON

CONSUMER BUYING BEHAVIOR AT A TIME OF PURCHASE

GARMENTS

A Report submitted in partial fulfillment of the requirements for theaward of the degree of

BACHELOR OF BUSINESS ADMINISTRATIONFROM

Submitted By:

HITESH NATH SWAMIB.B.A. (SEM-V)

Submitted To:

THE CO-ORDINATOR

AISHWARYA COLLEGE OF EDUCATION

Jodhpur (Rajasthan)


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ACKNOWLEDGEMENT

I take this opportunity to express my profound gratitude and deep

regards to my guide Professor Mrs. Mridula Chanda for hisexemplary guidance, monitoring and constant encouragement

throughout the course of this thesis. The blessing, help and guidance

given by him time to time shall carry me a long way in the journey of

life on which I am about to embark.

I also take this opportunity to express a deep sense of gratitude to

Shankar Lal, Manager, Sundha Maa Enterprises, for his/her cordialsupport, valuable information and guidance, which helped me in

completing this task through various stages.

I am obliged to staff members of Sundha Maa Enterprises, for the

valuable information provided by them in their respective fields. I am

grateful for their cooperation during the period of my assignment.

Lastly, I thank almighty, my parents, brother, sisters and friends for

their constant encouragement without which this assignment would

not be possible.

HITESH NATH SWAMI


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Index

No. CONTEND pageno.01 INTRODUCTION 0-02

02 COMPANY OVERVIEW 02-04

03 MAJOR SEGMENTS 04-06

04 TYPES OF MERCHANDISE AND THEIR DEMAND 06-07

05 SUPPLY CHAIN IN APPAREL SECTOR 08-10

06 OBJECTIVES 10-12

07 ANALYSIS OF A DECADE PERFORMANCEOF THE GARMENT INDUSTRY

12-15

08 RETAIL SCENARIO 15-16

09 AN APPAREL SECTOR TRENDS 16-17

10 PRODUCTION IN APPAREL SECTOR 17-21

11 TECHNOLOGY AND INDIAN GARMENTINDUSTRY

21-25

12 TYPES OF CAD SYSTEM 25-27

13 BUDGETING IMPLICATIONS 27-31

14 MONETARY POLICY FOR THE YEAR2008-09 31-33

15 SWOT ANALYSIS 33-40

16 RECOMMENDATIONS 40-42

17 ANNEXURE 42-44

18 CONCLUSION 44-45

19 BIBLIOGRAPHY 45-46


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INDIAN GARMENT INDUSTRY

INTRODUCTION

The apparel and industry occupies a unique and importantplace 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 improvedquality of life. The sector

has a unique position as a self-reliant industry, from

theproduction of raw materials to the delivery of end

products, with considerablevalue-addition at every stage of

processing.


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Over the years, the sector has provedto be a major

contributor to the nations' economy. Its immense potential

for generation of employment opportunities in the industrial,

agricultural, organizedand decentralized sectors & rural andurban areas, especially for women and thedisadvantaged is

noteworthy.

HistoryThe history of apparel in India dates back to the use ofmordant dyes and printing blocks around 3000 BC. Thefoundations of the India's textile trade with other countriesstarted as early as the second century BC. A hoard of blockprinted and resist-dyed fabrics, primarily of Gujarati origin,discovered in the tombs of Fostat, Egypt, are the proof oflarge scale Indian export of cotton textiles to the Egypt inmedieval periods.

During the 13th century, Indian silk was used as barter forspices from the western countries. Towards the end of the

17th century, the British East India Company had begunexports of Indian silks and several other cotton fabrics toother economies. These included the famous fine Muslincloth of Bengal, Orissa and Bihar. Painted and printedcottons or chintz was widely practiced between India, Java,China and the Philippines, long before the arrival of theEuropeans.


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Company Overview

The Sundha maa Enterprises was incorporated in 1980 and within a span of few years,transformed from being an shop to a major enterprises.

I t i s m a n a g e d b y M r . S h a n k a r l a l . S u n d h a m a a

e n t e r p r i s e s i s t h e d e a l e r s i n a l l t y p e s o f f o r m a l a n d

c a s u a l s h i r t s a n d T - S h i r t s w h i c h i s m a n u f a c t u r e d u n d e r

t h e n a m e a n d t i t l e o f s u n d h a m a a .

T h e p r o d u c t s p r o d u c e d u n d e r t h e n a m e o f s u n d h a m a a

i s s u p p l i e d a l l o v e r t h e r e g i o n o f M a h a r a s h t r a ,

A h m e d a b a d a n d w e s t e r n p a r t o f r a j a s h t h a n .

It brings raw materials from outside and process under their organizations


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until it is converted into final product i.e., formals . sundha maa enterprises

is gaining high popularity due to the best quality and customer satisfaction .

Sundha maa Mills, incorporated in 1980, is a leading producer ofblended fabrics in India. The company is one of the most renownedvertically integrated textile companies in the country. It operates thewidest range of latest machinery in its eco-friendly plant at gujrat andMumbai.

With over 1.2 million metres of fabric produced per month, Sundhamaa has achieved the status of the leading textile manufacturer in thecountry. Its in-house production facility consisting of spinning, dyeing,weaving and finishing plus garmenting enables it to present a wide

offering of yarns, fabric, home textiles and apparels.

The Sundhamaa brand retails in over 40,000 outlets across thecountry. Its exclusive retail outlets offer the entire range of Sundhamaa brand.

The company has the largest weaving infrastructure with over 500looms of both dobby and Jacquard. It has the capacity to process 48million metres of suiting, shirting and home textiles fabrics each year.

Products

Fabrics - The company is acknowledged for the production ofthe largest variety of fabrics and is recognised as the countrysleading blended fabric manufacturer. Under this segment, itmanufactures premium suiting, workwear fabrics and shirtingfabrics.


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Ready to wear garments - It owns well established brands suchas MSD (Monday to Sunday Dressing), Oxemberg and JHampstead Apparels.

.

MAJOR SEGMENTS

Apparel industry has been broadly classified into threesegments:

1. Men 40.2%2. Women 34.8%3. Kids 24.9%

Market Share of Major Apparel Segments


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In the total apparel market size of Rs 122,400 crore in 2007,among the three major apparel segments, menswear formedthe largest block with 40.2%6 of market share, whilewomenswear followed with 34.8% and kidswear/uniformsfollowed with its 24.9%.

Unisex apparel has been apportioned among these broad

segments in the ratio of 5: 3.5: 1.5 for men, women and kids,respectively.


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TYPES OF MERCHANDISE AND THEIR

DEMAND


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The consumer has all kinds of demands for apparel. Theconsumer demand can be broadly trifurcated into threesegments: Basic, Basic Fashion and Fashion Apparel.

Basic apparel consists of highest volume with moderatedemand uncertainty and is priced relatively low. On the

other hand, fashionable attire comprises lowest volume withvolatile demand, but is highly priced. Mass-product is thefeature of basic-product segment and customizedmerchandise becomes the hallmark of fashion-productcategory. Therefore, depending to which demand-segmentthey cater to, apparel organization needs to formulatesuitable supply strategy.

SUPPLY CHAIN IN APPAREL SECTOR


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Supply Chain Management is the integration of key businessprocesses from end user to original suppliers that provides

products, services, and information that add value forcustomers and other stakeholders.

The Apparel Supply ChainThe Apparel Supply Chain comprises diverse raw materialsectors, ginning facilities, spinning and extrusion processes,processing sector, weaving and knitting factories andgarment (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 andproducts produced.

This supply chain supplies about 70 per cent by value of itsproduction to the domestic market. The distribution channelcomprises wholesalers, distributors and a large number ofsmall retailers selling garments and textiles. It is onlyrecently that large retail formats are emerging therebyincreasing variety as well as volume on display at a single

location. Another feature of the distribution channel is thestrong presence of agents who secure and consolidateorders for producers.

Exports are traditionally executed through Export Houses orprocurement/commissioning offices of large global apparelretailers.It is estimated that there exist 65,000 garment units in theorganized sector, of which about 88 per cent are for wovencloth while the remaining are for knits.


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However, only 3040 units are large in size (as a result oflong years of reservation of non-exporting garment units forthe small scale sectors a regulation that was removed

recently). While these firms are spread all over the country,there are clusters emerging in the National Capital Region(NCR), Mumbai, Bangalore, and employing about 1.2 millionpeople.

According to our estimate, the total value of production inthe garment sector is around Rs.1,0501,100 billion of whichabout 81 per cent comes from the domestic market. Thevalue of Indian garments (e.g.saree,dhoti,salwar kurta,etc.)is around Rs.200250 billion. About 40 per cent of fabric for

garment production is imported a figure that is expected torise in coming years.


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The weaving and knits sector lies at the heart of theindustry. In 2004-05, of the total production from the

weaving sector, about 46 per cent was cotton cloth, 41 percent was 100% non-cotton including khadi, wool and silk and13 per cent was blended cloth. Three distinctive technologiesare used in the sector handlooms, powerlooms and knittingmachines. 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 bothmass consumption products for use in rural India as well asniche products for urban & exports markets. It produces,chiefly, textiles with geographical characterization (e.g.,

cotton and silk sarees in Pochampally or Varanasi) and insmall batches. Handloom production in2003-04 was around 5493 mn.sq.meters of which about 82per cent was using cotton fiber. Handloom production ismostly rural (employing about 10 million, mostly, householdweavers) and revolves around master-weavers who providedesigns, raw material and often the loom.

Weaving, using power looms wastraditionally done by composite mills that combined it with

spinning and processing operations. Over the years,government incentives and demand for low cost, highvolume, standard products (especially sarees and grey cloth)moved the production towards power loom factories andaway from composite mills (that were essentially full linevariety producers). While some like Arvind Mills or Ashimatransformed themselves into competitive units, othersgradually closed down. In 2003-04, there remained 223composite mills that produced 1434 million. sq. mts. Ofcloth. Most of these mills are located in Gujarat andMaharashtra. Most of the woven cloth comes from the powerlooms (chiefly at Surat, Bhiwandi, NCR, Chennai). In 2005,there were 425,792 registered power loom units thatproduced 26,947 mn. sq. mts of cloth and employed about4,10,012workers. Weaving sector is predominantly smallscale, has on an average 4.5 power looms per unit, suffers


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from outdated technology, and incurs high co-ordinationcosts. Knits have been more successful especially in exportchannels.

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 confrontedto Garment ndustry.

To understand the demographics and psychographics ofIndian consumers.

To understand the reasons for Indias recent sluggish

performance in exports for textiles & garments.

To understand the entire process of garmentmanufacturing and budgeting implications at eachstage of manufacturing process.

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


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Reasons for Indias recent sluggish exportperformance in textiles and clothing include:

Slowdown in demand from some major importers.

The depreciation of the US dollar, resulting in anappreciation of the rupee vis--vis competitor countriesthat were partially or wholly pegged to the US dollar.

Labour laws and scale economics: Countries like Chinahave historically had high labour flexibility in theirexport oriented units. This has allowed them to achievelarge scale in terms of labour force employed in eachmanufacturing facility and reap the benefit of scale

economies and use the latest advanced machinery fromdeveloped countries. India, in contrast, because offragmentation of units and small scale (to avoid labourlaws applicable to employees above 100 and proceduralbiases and rigidities), has purchased relatively less ofsuch advanced machinery.

Logistical delays and costs: though the nationalhighways are improving, this is not true of connectivityto all sources and destinations. The turn around time inmajor ports of India and movement of cargo betweenships and source or destination within India is stillplagued by monopolistic bureaucratic structures withlittle accountability and incentives for efficient servicedelivery to the exporter and importer.


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High cost of power in India this is 1.5-2 times higherthen in competing nations.

ANALYSIS OF A DECADE PERFORMANCE

OF THE GARMENT INDUSTRY

The period of 1997 and 2007 was momentous for thegarment industry, both globally and domestically. South east Asian currency crisis struck in 1998 and December 2004marked the end of Agreement on Textile and clothing (A.T.C)limiting exports of garments from India to U.S.A and E U, thetwo main importers of garment world-wide.As is this was not enough, the government clamped ExciseDuty on woven garment for the first time in its history. The

move orchestrated a massive protest in all sections of theindustry from manufacturing to retail. For once, disparatesections appealed to government to roll back the duty. Butgovernment remained stubborn to its decision endangeringexport orders painstakingly entered into mark the end ofATC. Its after effects hit the industry hardest when thecountry lost substantial foreign exchange. The following yearonly gave cosmetic relief to the industry after the change ofthe 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 theobject of lowering the cascading influence of duty on thecommon man. Investment in the industry which had dried upin the wake of excise duty enforcement, started flowingfreely and the industry came into its own by expandingcapacity, merging and making acquisitions (both domestic


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and overseas) to present overseas buyers a picture of aresilient, expanding and competitive industry.

Meanwhile, the exchange rate of the Rupee vis--vis the US

dollar had been going through changes partly due to theeconomic boom in India and partly for the slow-down in USeconomy triggered by upsurge in petroleum prices.

Smaller and newly emerging Asian countries, nowattempting 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. Thetable presented below shows the movement of knitted andgarment exports juxtaposed with their unit prices,movement in exchange rate and the years in which thetumultuous events took place.

The above table shows garment exports knitted and woven

over a decade, juxtaposed with changes in exchange rateversus US Dollar. The following points stand out:

1. Until 19877, Knitted garment exports were lower than thatof woven garments; however, while knitted garmentsadvanced by almost 50% during this period, woven garmentsexpanded by less than 10%.

2. After 1987, knitted garment export exceeded that ofwoven garments and hardly ever looked back. Their rise wasfurther aided by levying of excise duty on woven garment forthe first time in the history of the industry. This led to adeceleration in the expansion of woven garments until theduty was made optional on CENVAT, whereupon the wovensector came into its own. But by then, knitted sector had faroutpaced the woven sector.


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3. Between 1995 and 2003 ( i.e. in eight years ) exchangerate advanced by almost 50%. During this period, knittedgarment exports have more than doubled, whereas woven

garment exports increased by globally 33%. Thereafter, theexchange rate steadily declined by about 12%.

4. Competition from Asian suppliers forced reduction in unitvalue (dollar/piece) for both knitted and wovengarments. Unit prices for knitted garments fell from 2.66USD 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, fluctuatedthroughout the period, averaging 5.70$ per/piece during the

period.

5. The improvement after 2005 could partly be attributed tothe restrictions placed on Chinese garments by both USA andEurope which are expected to expire by 2009.

6. Tt is important to note that unit value realization for bothknitted and woven garments are inclusive of accessories likehandkerchiefs, gloves, socks, shawls, scarves etc which arebasically low-value items. Such constitute about 10% of ourexport value for both knitted and woven separately. If duenote is taken of the above, the unit value would improve to2.95 $ and 5.5$ for knitted garments and woven garmentsrespectively


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7. The above performance is despite the fact that theindustry is not refunded state and corporation taxes togetheraggregating about 6% of the FOB value, although all ofIndias Asian competitors are not only granted full refund of

all taxes/duties, but also, in some case, granted exportrebates.

8. All the above points, specifically for exports, also apply toproduction basically, production is scheduled againstadvanced sales, whether domestic or export.

RETAIL SCENARIO

This can be sub divided into brand and non-brand. Thebranded retail sector is not more than 10 % of the total. Aretailer ( whether shop owner or mall) has to keep a highermargin for branded garments than for unbranded to takecare of returns on his investments as well as discount on endof season sales or out of fashion stocks and overheads. Theretail mark up is 50% for branded and 25% for non brandedgarments.

On this basis, the size of the retail market for garments canbe 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 thanearlier. Attention is now shifting to B class and C classcities as well as the rural sector. With the growth of theeconomy, thanks to economic liberalization, the result of


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which is percolating to our farm lands as well as spread ofeducation in the rural population is fast picking up to theurban level. Farm produce is being is better organized toreduce wastage and increase the income of farmers, Rural

indebtedness is being better bank managed than the earliersystem of dependence on money-lender sharks.

Better some villages, especially in Maharashtra, the rest canclaim a standard of life about equal, and in some villages,even better than their urban cousins. In the last six monthsor so, inflation has been a bug-bear. But this is due to twofactors namely unseasonable weather and strident increasein global oil prices.

AN 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


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Cluster based growth concentrated primarily in 6clusters, i.e, Banglore,Delhi,Mumbai,Kolkatta,Jaipur andIndore

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 nearly15% in quantity terms and 20 % in value terms in 11th planperiod. By 2001-12, production is expected to reach 19 bnpcs , amounting to rs 299300 crs, 32% of this population isexpected to be generated by the export sector. In valueterms, 51 % of the population is expected to be contributedby exports. The accent is on the value added growth bothfor domestic and export market India in recent years hasbeen the focal point of continuous growth and development


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making it one of the fastest growing economies of the world.It is the 4th largest economy in terms of Purchasing PowerParity, after USA, China & Japan, and is rated among the top10 FDI destinations.

The Indian consumer is evolving and driving retail growthdue to increased consumption. Private consumption growthcontributes to more than half of the GDP growth and isgrowing in double digit figures. Several businesses arereacting to this evolution positively, both through pull andpush phenomenon.

Following a similar trend, the Indian textile and apparelindustry is also experiencing rapid changes and growth.Apparel today has the largest share of the modern organizedretail in India i.e. 20% of the current market of Rs.56,000crore and this is expected to grow at a constant rate of 20%over the next 4 years.Trend 1Indian consumers are converting from stitchedapparel to ready-towear causing a surge in discountretailing.

Factory outlets have become distinct and importantshopping destinations retailers are increasingly acceptingthe widely agreed fact that consumers love a bargain andalways look forward to buying brands at low prices.

Factory outlets have become distinct shopping destinationswith distinct audiences. Apparel companies are focusing onthis market to cash in on consumers converting fromstitched apparel to ready-to-wear, further graduating tobranded apparel. India is thus seeing a surge in discount


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retailers offering year round discounts, ranging anywherebetween 30% to70%.

Trend 2Consumers now desire branded products in allaspects of their life

Traditionally brands that offered formal wear are nowextending into casual wear, accessories, footwear etc. Withmost brands turning lifestyle brands, they are opening largerExclusive Brand Outlets (EBOs) to showcase their completerange of merchandise and give an international feel, Thepast few months has seen brands opening up very large

format stores in India.

Trend 3Designers realize the huge opportunities in ready-to-wear market and are introducing prt lines

Another trend visible in the Indian designer wear market is

corporatization i.e. strategic tie-ups with large corporate inrelated industries to provide the necessary financial supportand expertise in operational management. The designerwear industry lacks the processes, systems, people andfinancial resources to rapidly scale up their operations. Thedirect advantage of this would accrue to the designers whowould be able to concentrate on the design and aestheticsrather than on business planning.


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Trend 4Indian companies see a huge opportunity inpartnering with luxury brands wishing to enter India

The Indian consumer desires to possess international luxurybrands as an inspirational product. Additionally, no Indianretail brand actually qualifies to be categorized as a luxurybrand.This readiness for luxury as an organized market, has been

recognized throughout the world and international luxurybrands are exploring possible avenues and tie-ups to enterthe Indian retail market.

Trend 5

Worldwide surge in demand for organic and eco-friendly products

Organic cotton has been able to achieve maximumpopularity amongst all eco-friendly fibers. Global retail salesof organic cotton products are projected to grow to $2.6billion by the end of 2008, reflecting a 40% average annualgrowth rate. Hence, the demand for organic cotton fiber isexpected to grow to 100,000 metric tons in 2008, an

average annual growth rate of 47%.

Trend 6Kids and youth are influenced by icons & charactersand desire to possess them in their everyday life

India has become an important market for characterlicensing specially in apparel Today's consumer is greatlyinfluenced by media and he exhibits a propensity to followicons to the extent of bringing them into his everyday life.


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This growing trend amongst consumers is being tapped byapparel companies by taking up licensing of popularcharacters and icons to be used in their merchandise. This isespecially true for the kids and youth market since they

identify with these characters and icons more strongly.According to Cartoon Network, the business of licensemerchandising of animated characters is estimated at Rs.360 crore in India.

Trend 7Companies are exploring new' locations to retail inorder to increase visibility of their brand

Apparel retailing is geared to take on customers at placesother than the traditional locations like neighborhoodmarkets, high streets and malls. With increased need forconvenience and visibility retailing, companies explorenewer locations like airports, metro stations, restaurants,cafs & even beauty salons.


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TECHNOLOGY AND INDIAN GARMENTINDUSTRY

The Indian garment industry is characterized by constantchange. What is in vogue today will be pass tomorrow. Thesize of India garment industry is has also been expandingand it is expected to drive exports worth US$ 25 billion by2010. In order to meet this growth, Indian manufacturerswould have to scale up their manufacturing capacity five-

fold, despite an expansion of 30 percentplanned by top players. The liberalization of world trade andabolition of the quota regime have opened up newopportunities for Indian manufacturers.

The challenges for Indian garment manufacturers aremultifold:

Keeping abreast of the market trends

Material usage patterns

Knowledge of resource points

Being in a position to deliver high quality goods inshorter lead times at competitive rates.

The garment industry specializes in offering a plethora ofproducts with multipart specifications catering to diverse

customer needs across markets viz. culture, climate andseasonal variations. Customers and retailers are forcingmanufacturers to deliver higher quality at lower costs inshort delivery times. To survive in this cut-throat business,garment manufacturers need to out think and out performcompetition.


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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 theenvironment makes it necessary for manufacturers to strictlyconform 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 wellintegrated supply chain.Automation of the various processes from raw fabric tofinished garment (maintenance of inventory records,inventory planning, sales forecasting, distribution andtransportation management) and smooth integration withthe 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, garmentmanufacturers have to adopt IT as a strategic option to scaleup efficiencies and improve business performances.


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Technology plays a very vital role in following areas ofGarment

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 andgarment industries. CAD is industry specific design systemusing computer as a tool. CAD is used to design anythingfrom an aircraft to knitwear. Originally CAD was used indesigning high precision machinery solely it found its way inother industries also. In 1970's it made an entry in the textileand apparel industry. Most companies abroad have now


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integrated some form of CAD into their design andproduction process.

In fact, according to National Knitwear Association of US, of228 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 thedesigner is given the time and freedom to be creative and toexperiment using the computer.

Today in our country automation is not only used forsubstituting the labour, it is also adopted for improvingquality and producing quantity in lesser time. However, aCAD system is only as good (or as bad) as the designerworking on it. Computer only speeds up the process of sayrepeat making, color changing, motif manipulation etc. It isactually the CAM aspect of CAD that will help reduce leadtime.


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Types of CAD Systems

Textile Design SystemsWoven textiles are used by designers and merchandisers forfabrics for home furnishing and to men-women-childrenwear. Most fabrics whether yarn dyes, plain weaves,

jacquards or dobbies can be designed and infact areinvariably used abroad using a CAD system for textiles.Similarly embroideries are also developed at CADworkstations.

Knitted FabricsSome systems specialize in knitwear production and finalknitted design can be viewed on screen with indication of allstitch formation. For instance a CAD program will produce a

pullover graph that will indicate information on amount ofyarn needed by color for each piece. Another example of thenew technology in the industries using a yarn scanner whichis attached to the computer scans a thousand meters of yarnand then simulates a knitted/ woven fabric on-screen.

This simulation will show how the fabric will look like ifwoven from that yarn.


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Printed FabricsThe process involves use of computers in design,development and

manipulation of motif. The motif can then be resized,recoloured, rotated or multiplied depending on thedesigner's goal. Textures and weave structures can beindicated so that printout either on paper or actual fabriclooks very much the way the final product will look. Thetextile design system can show color ways in an instantrather than taking hours needed for hand painting. Newsystems are coming which have built-in software to matchswatch color to screen color to printer color automatically i.e.what you see is what you get.

Illustrations/ Sketch Pad SystemsThese are graphic programmes that allow the designer to

use pen or stylus on electronic pad or tablet thereby creatingfreehand images which are then stored in the computer. Theend product is no different from those sketches made onpaper with pencil. They have additional advantage ofimprovement and manipulation. Different knit and weavesimulations can be stored in a library and imposed overthese sketches to show texture and dimensions.

Texture Mapping: 3D Draping SoftwareThis technology allows visualization of fabric on the body.Texture mapping is a process by which fabric can be drapedover a form in a realistic way.

The pattern of the cloth is contoured to match the formunderneath it. The designer starts with an image of a modelwearing a garment. Each section of the garment is outlined


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from seam line to seam line. Then a swatch of new fabriccreated in textile design system is laid over the area and thecomputer automatically fills in the area with new color orpattern. The result is the original silhouette worn by original

model in a new fabric.

Embroidery SystemsThe designs used for embroidery can be incorporated on thefabric for making garment. For this special computerizedembroidery machines are used. Designers can create theirembroidery designs or motifs straight on the computer orcan 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 embroiderymachine with one or multiple heads for stitching.

BUDGETING IMPLICATIONS

Like other industries, garments sector also has its wish-listfor consideration in the recent union budget. The wish listsegregated into segments viz.a. Policy issueb. Issues pertaining to domestic industryc. Issue pertaining to the export industry

d. Procedural issues

Policy IssuesRemoval of state and corporation Taxes on export ofgarments


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Export of garments are burdened with taxes and dutieslevied by :

a) Central government

b) State government

c) Municipal corporation Appreciation of the rupee hasfurtherlowered earnings of Indian exporters , where as those of ourAsian competitors have either appreciated less or evendepreciated. As a result, prices of Indian garments havebecome uncompetitive against Asian competitors.

Exporters are attempting to reduce the hardship of RUPEEappreciation by quoting in other currencies but importerstake advantage of dollar quotation by our competitors andinsist on dollar quotations. Recent increase in drawbackrates has to some extent but the major burden of the stateand corporation levies continues to hinder exports. Thesecollectively work out to 6 percent FOB. Further, introductionof vat was expected to reduce prices but since textiles havenot 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 areimmediate, thus affecting adversely the cash flow positionsof exporters and every budget brings with it fresh does oftaxation in one form or the other so in the forthcomingbudget, a provision should to be made to exempt exportsfrom all direct taxes (rather than pay and later refund)

Import Duty of Garment Machinery


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Import duty on most garment machinery is 5 percent pluscountervailing duty. Indigenous machinery manufactures donot manufacture garments machinery of similar speeds and

or stitches per minute and further, since countervailing islevied with the sole objective of the protecting the domesticindustry, it is hoped that the budget proposals will removecountervailing duty from all garments machinery entitled toconcessional duty.

1.8.6 Managerial skillsNot only workers manpower development is required desperately but also

managerial skills prevailing in garment industry is not very up to date and

professionally managed. Almost all units are owned and managed by familymembers. The managerial practices are as per their convenience and there is

no uniform industry practice. Hardly there is concept of employing

professional and basics of scientific principles of management are missing.

Hardly a garment manufacturer ever tried to implement ERP system, lean

manufacturing or JIT, which most of the units in Far East countries are

trying to adopt and have successfully implemented (Authors own resource).

Labour Reforms

Immediate reforms in labour laws to help improve productionandproductivity of garments are called for:


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_

Increase in working hours from 48 to 60 per week withsuitable provision for rest period Female workers tobe employed in the entire second shift In view of the secondnature of the garment industry, contract labors be permitted

on condition of a guaranteed employment 100 days in ayear.

The sector did get some sops in the budget, these were:SEZ- SEZ scheme is likely to continue, as per the assurancegiven by the Prime Minister. Six mega clusters are proposedto be developed in power looms, handlooms and handicrafts.


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Allocation of Rs.70 crore per cluster. With an immediateprovision of Rs 100 crore this year has been envisaged.

Textile Up gradation Fund (TUF)- Allocation for textilesup gradation fund (TUF) has been increased from Rs. 91

crore to Rs 109 crore. The budget has also maintained theprovision for Scheme for Integrated Textile Parks (SITP) atRs. 45 crore. However, the schemes would not provideimmediate support to textiles sector, which is need of thehour. Increases in subsidy under the TUF scheme can hardlybe considered a relief package looking to the outstandingclaims pending with the banks. There are alreadyRs 60cr plus outstanding according to the banks

Reduction in Excise Duty - The excise duty has beenreduced from 16% to 14% under 2008-09 budget but theconcession would prove to be highly elusive for apparelexporters as textile manufacturers, already struggling withstiff margins, may not be able to pass on the benefit downthe line to exporters.

Non Profit Corporations - The FM has proposed toestablish a non profit corporation with intention to garner Rs150 crore as capital from government, the public and privatesector and bilateral and multilateral sources for establishingtraining institutes including 30 additional ITIs. A noticeablething in budget 2008-09 is its silence about how to arrest theslump in employment intensive industries like textile,garments, leather and handicrafts. Apparel exportspromotion council estimates that if situation remainsunchanged, the job losses this year would be six lakhs.

MONETARY POLICY FOR THE YEAR


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2008-0914

Bank Rate and Repo Rate kept unchanged.

High priority to price stability, well-anchored inflationexpectations and orderly conditions in financialmarkets while sustaining the growth momentum,

Swift response on a continuous basis to evolvingadverse international and domestic developmentsthrough both conventional and unconventionalmeasures.

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 5.0per cent as soon as possible.

Going forward, the resolve is to condition policy andperceptions for inflation in the range of 4.0-4.5 per centso that an inflation rate of around 3.0 per cent becomesa medium-term objective.

Adjusted non-food credit projected to increase byaround 20.0 per cent during 2008-09.

Active demand management of liquidity throughappropriate use of the CRR stipulations and openmarket operations (OMO).


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Open market operations

Open market operations are the means of implementingmonetary policy by which a central bank controls its nationalmoney supply by buying and selling government securities,or other financial instruments. Monetary targets, such asinterest rates or exchange rates, are used to guide thisimplementation


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SWOT ANALYSIS

Strengths

Abundant raw material availabilityIndia is one of the leading producers of natural and manmade fibers. The abundance of raw material allows industryto control cost and reduce over all lead time.

Low cost skilled labourIndia has third lowest wage rate as compared to other key

garment manufacturing companies. This provides industrywith a distinct competitive advantage.


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Presence across value chainIndian industry has manufacturing capacity present acrosscompleteproduct range, that allows garment manufacturers to sourceraw material locally and thus reduces the lead time.

Growing domestic marketThe Indian domestic market is extremely sensitive to fashion

fads andthis has resulted in development of very responsive garmentindustry.

Weaknesses

Fragm ented

industryGlobal buyers prefer to source their requirements from twoto three vendors and Indian garment manufacturers find it

difficult to fulfill the capacity requirements.

Effect of historical government policiesThe industries continues to be affected by several historicalregulations, for instance there is still an absence of viableexit options for industry players. These regulations resulted


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in complex industry structure, which is currently an obstacle.In the Pre 200 era garmenting sector was reserved for theSmall scale Sector, which has resulted in most units beingset up with small capacities.

Till now, knitted garment sector is reserved for the smallscale sector.

Though the historical regulations are relaxed now, theycontinue to be an impediment to global competitiveness.

Lower productivity & cost competitivenessLower cost competitiveness has hampered ability to competewith lower cost global players because the labour force inIndia has a much lower productivity as compared tocompeting countries like China.

Technological obsolescence

A large portion of the industrys processing capacity isobsolete. This has resulted in low value addition in theindustry and a need has risen for significant technologyinvestments to achieve world class quality.

Opportunities

Post MFA opportunity: After quota elimination, India and China are

likely to dominate the textile and clothing industry world over. Due to strongraw material base, availability of labor and other factor inputs, India and

China will lead the textile and clothing industry. The western nations have

lost almost their textile base. Only fashion designing, research and

development part will be take care by western nations while production base

will be Asian nations specifically China and India. The opportunity is huge.


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Large domestic market: India is second most populated nation in theworld. Per capita consumption of fabric is very less i.e. approximately 3 mtr

per capita while global average is approximately 6.8/mtr per capita. There is

great potential to expand in domestic market. Disposable income is

increasing every year. Also price realization is higher in domestic market

and selling cost is also less. There are very bright chances to expand in

domestic market.


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Liberalizing economyOpening up of Indian economy has presented the playerswith lots ofopportunities; Indian companies are tying with global brands.

They are leveraging the brand name of global brands.

Growing dual incomeWith number of working womens increasing the dualincomes areincome thus income available at peoples discrete has alsoincreased.

Rising Disposable IncomeAccording to McKinsey Global Institute (MGI), by 2035 over 2

millionIndians will number among the countrys wealthiest citizens.Forecasts for Indias real GDP growth rate over the comingtwo decades generally range between 6 and 9% per year.MGI forecast real compound annual growth of 7.3% from2005-2025. Average real household disposable income willgrow from 113 Rs in 2005 to 318 Rs by 2005, a compoundannual growth rate of 5.3%. This is significantly more rapidthan the 3.6% annual growth of the last two decades.

Sizeable urban middle classAs Indian incomes rise, the shape of the countrys incomepyramid will also change dramatically. Apart from asubstantial reduction in poverty, India will create a sizeableand largely urban middle class. Middle class comprises twoeconomic segments - seekers with real annual householddisposable income of 200,000 to 500,000 Indian rupees andstrivers at 500,000 to 1,000,000 Indian rupees. In 2005, theIndian middle class was still relatively small comprisingapproximately 5% of the population, however middle class isexpected to reach 41% of population by 2025.


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Fifth largest consumerIndia will become the worlds fifth largest consumer marketby 2025. the combination of rapidly rising householdincomes and a robustly growing population will lead to astriking increase in overall consumer spending.

The aggregate consumption in India will grow in real termsfrom 17 trillion Indian rupees today to 34 trillion by 2015 and70 trillion by 2025 a fourfold increase.

Threats Matrix

THREAT MATRIX

Probability of occurrence


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Fluctuation in rupee valueThe fluctuation in rupee value posses a big threat in front ofimportersand exporters. The exchange value of Rupee against UD

Dollar hasdepreciated to Rs 50.03 which has resulted in huge losses fortheimporters. Thus there is always a great threat for players ininternational trade. But since it affects only internationalplayers thus it is not as big a threat as some of other threats.

State of Recession in the economyThe apparel industry gets severely hit during recessionbecause of less liquidity in the market. This industry is anexport-oriented industry which lies in doldrums during thisstage.

Competition from global playersThe major exporters of garments from all over the world aregiving tough competition to India as they are providinghigher productivity with lower costs. Competition is not likelyto remain just in the exports space, the industry is likely toface competition from cheaper imports as well. This is likely

to effect the domestic market and may lead to increasedconsolidation.

Ecological & Social Awareness is likely to result inincrease pressure on the industry to follow internationallabour and environmental laws.


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RECOMMENDATIONS

After understanding the industrial and economic scenarioswe would like to give following recommendations to Indiancompanies operating in garment industry:

More emphasis should be given on the micro andmacro leveleconomic factors. These factors indirectly or

sometimes directe affects each and every business inthe economy, marketers should be proactive enough toforesee the future impact of thes factors on theirbusiness.

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

well known brands into a single product. It is aneffective way to leverage strong brands and helps ingaining synergy by having the best combination ofunique strength each brand has. Co-branding can bebased on innovation, ingredient, alliance, supply chainor any other.

Find out new ways of communicating to customers, likesending information about new products, offers, stocks,etc through sms to cell phones.

Industrialists shouldnt consider the expenditure onR&D and

technology as a cost, it should be considered as aninvestment because it pays rich dividend in future.


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Industrialists must emphasize on improving thestandard of labors because garment manufacturing is alabor intensive industry. The productivity of industrydirectly depends upon the productivity of labor.

Give priority to consumers opinion. Keep in touch withcustomers by creating loyalty clubs and online databases and opinion leaders.

Marketers are under estimating the importance ofVisual merchandising, visual merchandisers not onlymakes the store look impressive but they also makessure right wears are kept at the right place in the store.

Blend up the bollywood, cricket and otherentertainment mix with other areas such as productdesign, distribution channel, price, promotion activities.Using celebrity endorsement can prove effectiveprovided the credibility and popularity of celebrity is

taken into consideration.

It has been seen in apparel retail stores that mostlyInstore advertisements to communicate variouspromotional offers, thus only that part of population isreached that is already visiting the stores. Thus usingOutdoor advertising & promotional campaigns is quiteimportant.

Through research it was revealed that majority ofcustomers prefer to buy with family members or withfriends, and such partners also influence the purchasedecisions of the buyer. Thus its necessary to have astrategy to impress these influencers. Having anassociate loyalty card thus should always be a part ofthe loyalty program.


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For retails apparel stores its imperative to build theirown Brand name they cant just rely upon the brandnames of the wears available in the stores.

CONCLUSION

The trends discussed above clearly show that the fashionbusiness is exploring all aspects of expansion i.e. it is boundfor a multilateral expansion rather than only unilateralexpansion. Multi lateral expansion is happening at every partof the value chain as well as for every consumer segment.

The Indian Garment Industry is taking cue from internationalstandards as well as the burgeoning consumer appetite tocreate their own growth path.Fashion companies are taking a much larger perspective ofthis industry in India and consolidating their position to faceit. On the other hand, the Indian consumer is at a preliminarystage of development and yet due to international exposuretrying to keep pace with the international fashion scenecreating unprecedented pressure on companies to perform.

This is a window of opportunity which the Indian Garmentindustry should make the most of before it reaches maturitywhich will signify slowdown.

Companies need to react as well as participate through in-depth understanding of fashion, consumer demands &


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micro/macro level economic factors to take on thischallenge.

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
http://www.ncaer.com/http://www.fibre2fashion.com/http://www.indiaexports.com/http://www.ncaer.com/http://www.fibre2fashion.com/http://www.indiaexports.com/


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garments tranning report

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