July- Sep 2013, Volume 2, Issue 2

July - September 2013 2 2 68

Need

For

CREDIT

RATIN G

ADVT

.

Kriplon Synthetics Pvt. Ltd. P 118, Rajlaxmi Commercial Complex, Kalher Village,

Kalher, Bhiwandi, Thane .127, Sanjay Building, 5-B, Mittal Estate, Andheri (E), Mumbai - 400059, Maharashtra, India

(022) 28505452, 28501686, 28505983 (022) 28504142 Contact Person : Mr. Satish Kriplani : 9323646986

Email : [email protected]

AD

VT.

Ratan GIitter Industries Limited

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PURE SILVER "M" TYPE YARN

Polyester Metallized Pure Silver Yarn, highly used on Schiffli Embroidery

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embroideries. It is widely used for tapestry and made-ups.

We manufacture Pure Silver M type metallic yarn for making ST type rounded pure

silver yarn. Our range of product includes non-resistant and resistant yarns to dyeing

and finishing procedures. Pure Silver M Type Metallic Yarn produced in 12 Micron and

24 Micron in different cuts of 1/69, 1/85, 1/100. These are capable of running on high

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PURE SILVER "MX" TYPE YARN

Along with pure Silver Metallic Yarn, we also produce ST and

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machines, circular Knitting and weaving Machines.

METALLIC YARN

In the recent reshuffle of the Union Cabinet, the burden on Shri

Anand Sharma, Honble Minister of Commerce and Industry has

been lightened by transferring the additional portfolio of textiles,

which he held as an interim arrangement.

Dr. K.S. Rao has taken over as the Honble Minister of Textiles as of

June 19, 2013. TVC is indeed very happy and delighted to convey

its best wishes to the new minister.

Within a short span of ten days after he was sworn in, the Honble

Minister made it a point to interact with all the stakeholders of the

industry. The addresses delivered by him at such meetings make it

abundantly clear that the Honble Minister is bound to be

successful in putting back the textile industry on the fast track,

despite sluggish economic climate in the USA and EU, two major

importers of textiles.

Sooner or later, two major issues will have to be tackled by the

Union Ministry of Textiles, under the guidance of the Honble

Minister.

One issue is how to promote exports of man-made fibre textiles

and clothing.

At the global level, man-made fibres, with a share of 60% reign in

the consumption basket of fibres for the manufacture of textiles

and clothing. Despite such a strong preference, man-made fibre

textiles and clothing accounted for only 31 % in the Indian export

basket, while cotton textiles and clothing accounted for the lions

share of 69 % in 2012-2013 [April February]

Grand Welcome to the new Union Minister of Textiles

When cotton and man-made fibres are spun on the same system

of spinning yarn, when the technology of weaving and processing is

same, when the cost of labour, and power is same at a given textile

centre and when the cost of finance is same everywhere, how

come cotton textiles and clothing march over man-made textiles

and clothing in the international market?

The answer is simple. Cotton textile industry gets its raw materials

at or below the international price. Unfortunately, the man-made

textile industry by and large is not getting its inputs at international

prices. The international price is the price at which our competitors

in other countries get raw materials in their factories.

Various strategies can be thought of to bring domestic prices in

alignment with international prices, such as sector-specific scheme

for abolition of excise and customs duties on inputs of man-made

fibres, withdrawal of excise duty on man-made fibres, retention

price scheme etc.

The second issue is export policies for different segments of the

textile value chain.

Once India has accepted the policy of liberalization, the export

policy has to be the same for all segments. In other words, the

policy set-up cannot be dismantled as per demands of individual

segments. The only solution is increased production throughout

the value chain. Only in a real crisis situation, a different line of

action can be charted.

The industry is in the safe hands of the new Honble Minister who

considers growth and development of the textile industry as his

mission.

Dr. Kavuru Sambasiva Rao, Union Minister for Textiles

Regd. Off.: 191/ 5-C, Mittal Ind. Estate, Andheri (E), Mumbai-400 059. Tel.: 2850 3106 / 1568 Fax: 2850 0124

Delhi Off.: Krishna Gali. 1st floor, Katra Neel. Chandni Chowk, Delhi-110 006 Tel.: 23934712 / 23951612 / 32600574 Fax: 23965942

Factory.: Raj Rajeshwari Compound, Village Sonale, off Nashik Highway Road., Bhiwandi, Dist. Thane (Mah.) ADVT

.

Editor & Publisher

Ms. Jigna Shah

Chief In Editor

Ms. Rajul J. Shah

INDUSTRY

Mr. Devchand Chheda City Editor - Vyapar ( Janmabhumi Group)

Mr. Manohar Samuel- Joint President, Birla Cellulose, Grasim Industries

Mr. Aditya Biyani- Marketing Director, Damodar Group

Dr. M. K. Talukdar VP, Kusumgar Corporates

Mr. Ajay Sharma GM- RSWM (LNJ bhilwara group)

Check Mens wear colour Forecast : Fall - Winter 2013-14Colour Forecast Pic. Courtesy Fall 2013 Prada Runway

CONSULTANT / ASSOCIATION

Mr. Avinash Mayekar, MD, Suvin Advisor Pvt. Ltd.

Mr. Shivram Krishnan, Senior Textile Advisor

Mr. G. Benerjee, Management & Industrial Consultant

Mr. Uttam Jain, Director- PDEXCIL; VP of Hindustan chamber of commerce

Mr. Jaykrishna Pathak, President, Bombay Yarn Merchant Association & Exchange Ltd.

Mr. Shiv Kanodia- Sec General, Bharat Merchant Chamber

EDUCATION / RESEARCH

Mr. B.V. Doctor - HOD knitting, SASMIRA ,

Dr. Ela Dedhia- Associate Professor, Nirmala Niketan College

Dr. Mangesh D. Teli Professor, Ex.HOD & Dean ICT (former UDCT) ,

Dr. S.K. Chattopadhyay,Principal Scientist & Head MPD, CIRCOT

Dr. Rajan Nachane, Retired Scientist, CIRCOT

Editorial Advisor

Shri V.Y. Tamhane

Advertising & Marketing

Md. Tanweer

Creative Head

Ms. Rajul J. Shah

Graphic Designer

Interactive Technology

7National News

8 & 9Government News

Letter to PM & Textile Committee Prs Rls

Textile Ministry News & BTRA News

9 & 10Corporate News

ATE & RIETER, BIRLA & LENZING

12Skill Gap Analysis

Emerging Trends in Skill requirement

14Fashion Forecast

Men's Colour Forecast: Fall- Winter 2013-14

16College Focus: Parsons Mumbai

CMAI- National Garment Fair Report

18 Cover Story: Need for Credit Rating

Interview with India Rating / Fitch, CRISIL, CARE

22Corporate Profile: Bombay Dyeing

Interview with Mr. Durgesh Mehta, Jt. MD & CFO

26 Fibre Focus

Birla Cellulose (Reprinted)

30 Post Show Report : Fabric & Accessories 2013

AEPC Press Release

31Post Event Report

CIRCOT Pre Commercialization Workshop

SDC Conference Report

33Yarn Focus

Interview with Everflow Petrofil &

Collaboration: Suvin Advisor &

Wadia Techno

35 Spinning of Banana Fibres on

CIRCOT Phoenix Charka

36Technical Textile Focus

Intelligent Textile, Smart Fabrics

41Fabric Focus

Electrolyte- Free Dyeing with Cationic

Reactive Dyes

44Fabric Report: Prices of Grey Fabric

47Garment Focus

Changing Trends of Leg wear in

Women's Wardrobe

51Retail Focus

Bubble Blast Theory of Consumer

Acceptance

54Textile Machinery

Indian Textile Engineering

Industry today

57Environment Focus

Role of Carbon footprint in

Textile & Apparel Industry

60Self Management

Managing career, life & Education,

A skill based Approach

64

Pre Show Report

Screen Print India 2013

TechTextil 2013

66

Tradeshow Details

EDITORIAL TEAM

ADVT.

Dyeing units feed River Cauvery with effluentsJune, M.K. Ananth for The Hindu

Effluents being discharged into River Cauvery at Pallipalayam. Photo: M. K. Ananth

With the water from Mettur dam hardly reaching River

Cauvery in Namakkal district, Tamil Nadu, the effluents discharged

from the unauthorised dyeing units in Pallipalayam and

Komarapalayam into the river has become its only source of water.

Anyone crossing the bridge that connects Erode and

Pallipalayam can easily see the extent of pollution caused to the

river, says environmental activist R.K. Madeshwaran. Pallipalayam

and Komarapalayam towns developed primarily because of the

large number of power looms, handlooms and textile processing

units such as dyeing units. But the people are suffering without

water and continuing pollution is adding to their woes, he adds.

People living in villages in and around the two towns say that

they are unable to use water from open wells and bore wells due to

the large scale pollution that has changed the colour of the water.

Even groundwater in the area is polluted: residents

The impact was not so high when water was flowing in the

river as the dark coloured effluents were washed away by the force

of the water, says K. Raja of Indra Nagar in Pallipalayam. About

three months ago the district administration made an

announcement through revenue department officials, asking

persons running dyeing units in Pallipalayam, Komarapalayam and

nearby areas to stop operation of the units, in a bid to put an end to

large scale discharge of effluents into the river till water released

from Mettur Dam became normal. A few units were also evicted for

not taking the announcement seriously.

On April 19, the Tamil Nadu Pollution Control Board team led

by District Environmental Engineer, M. Murugan, raided an illegal

dyeing unit in an agricultural field at Kokarayanpettai near

Pallipalayam. The landlord opened fire on them but they luckily

escaped. The police registered a case and arrested the accused.

Since then, the TNPCB has not initiated major action against any

polluting dyeing units.

S. Saravanan of the Association of Peoples Welfare

Organisations in Komarapalayam says that the dry river has made it

easy to identify illegal dyeing units as they can easily follow the path

through which the effluent flows into River Cauvery.

Solar lanterns to be given to weaversBhubaneshwar, June 10, The Hindu

In a bid to facilitate illuminated workplace, the State

government has decided to supply 10,072 units of solar lanterns to

handloom weavers during 2013-14. Handloom industry, second

largest cottage industry next to agriculture in the State, employs 1.03

lakh weavers.

As per Handloom Census-2009, there are 40683 weaver

households comprising 103158 weavers and allied workers

engaged in the profession. The government plans to cover 10,000

families every year.

The solar lantern designed by Odisha Renewable Energy

Development Agency (OREDA) would be given to each weaver

family. However, the government has made a priority list of

beneficiaries. Weavers working in areas which are yet to be

connected with electricity or suffering from low voltage problems

would be given preferences. Similarly, weavers belonging to weaker

section would be assisted on priority basis.

Directorate of textiles and handloom will be nodal agency for

distribution of solar lanterns. According to a top official, the

process of weaving involves handling of fine yarn with colour of

various shades continuously for longer period. Highest 2,900

solar lanterns will be distributed in Bargarh district and Sonepur

has second largest share with 1,250 lanterns.

Indian Govt may further relax FDI rules in MBRT: MinisterJune 17, Fibre to Fashion

The Govt of India may further relax or simplify guidelines for

foreign direct investment (FDI) in multi-brand retail trading (MBRT),

Minister of Commerce and Industry and Textiles, Anand Sharma,

has said.

The Indian Govt opened doors for multi-brand retailers around

nine months ago, allowing 51 percent investment through FDI

route, but the policy has not received expected response from

foreign retailers, who have so far stayed away. Last week, the

Government issued some clarifications related to 30% sourcing and

back-end infrastructure, but these too failed to generate any positive

response from foreign retailers.

If the foreign retailers have any other issues in mind, the Indian

Govt is receptive and it would further bring clarity to the guidelines,

because the objective of the policy is to attract FDI, Mr. Anand

Sharma told reporters. Mr. Sharma said, he would be chairing a

Retail Round Table on June 27, which would involve participation of

CEOs of Indian companies as well as foreign investors. The Round

Table would seek views of the participants on issues related to

implementation of the FDI Policy and address their concerns, if any.

The news of this conference is not yet out.

The Minister said that any proposal received by the Govt for FDI in

MDRT would be fast-tracked.

7Textile Value Chain | July -Sept 2013

NATIONAL NEWS

LBT IN MAHARASHTRA ONE MORE

COMPLICATED TAX WINDOW, CAUSE OF BIG

OBSTACLE FOR INVESTMENTS

Please refer to your meeting with

Hiromasa Yonekura, chairman of Japan

India Business Leadership Forum on

28th May 2013, who pointed to you

the differences in tax regimes of each

state and the complicated tax structure

were big obstacles for investments in

India.

You were candid in acknowledging

that the state governments belonging

to non-UPA parties were not in favour

of surrendering their tax power in

favour of the GST. Your ambitious vision of tax reforms & tax

simplifications could not be implemented due to opposition from other

political parties. Well, in reality, you will be shocked to note that your flag

ship state Maharashtra, ruled by Congress, is working contrary to your

vision. It is implementing LBT, in place of Octroi, which over a period of

time, every country and every other state in India has abolished. Your

UPA partners, opposition and the masses are against it, but your party

CM, alone, is adamant on LBTs implementation. The Maharashtrians

plea, of generating additional revenue, if required, to be collected along

with VAT, has fallen on deaf ears. LBT is obnoxious & creates another tax

collection authority leading to localized, unchecked corruption, which

will add to inflation, deter investments, and is anti - people.

The Honble Chief Minister has been misguided by the legislative

machinery of the state by reasoning that autonomy of municipal

corporations will end, if single window tax, VAT is enlarged to abolish

Octroi or LBT.

Truth Other states have seamlessly adopted single window tax

structure without compromising on autonomy. There is very thin line

between autonomy and factionalism. Such factionalism will only

weaken our country. Dividing our country religion, culture, region,

language, etc. will eventually lead India nowhere.

Truth Your talks of Tax reforms & simplification will take a major hit

and Maharashtra will further fall from 2nd position to lower position.

We have been begging to all, local MLAs, MPs, Smt. Sonia Gandhi,

Shri Rahul Gandhi, Sri P. Chidambaram, but there is no response.

Democratic interaction, discussions with concerned, are very basis of

democracy. It is heartening to note that the letters sent to various

government functionaries are not even been acknowledged.

Its a sorry state of affair and the Foreign Investors, when made

aware of this ground reality will only confirm the gradual deterioration

of Maharashtra. We request you to kindly look into this matter, on

merits and request Maharashtra Government to withdraw octroi & do

not impose LBT, in its place. If there is revenue shortfall, please increase

in VAT. By adding LBT window, you are adding fuel to fire and

complications will lead to further corruption. The people of

Maharashtra will never forgive this final nail in coffin, for centuries to

come.

We propose to take this issue to numerous Foreign Investors,

global organizations at various forums.

st

Excerpts of Letter dated 1 July, 2013 from

Shri Shiv Kanodia, Honorary General Secretary, Bharat Merchants'Chamber ( BMC), Mumbai to

Sri (Dr.) Manmohan Singh ji, The Hon'ble Prime Minister of India

Textiles Committee (TC), a statutory body, under the Ministry

of Textiles, was set up to promote quality in Textile Trade & Industry.

TC provide services like Textiles Testing & Technical Services, Quality

Appraisal of textiles & Export Promotion, Consultancy on ISO 17025

(QMS), 9000, ISO 14000, SA 8000, and Training to industrial &

Educational institutes, through its vast network of 30 regional offices

and 16 Laboratories scattered all over major textile clusters of India.

All 16 labs of TC are committed to the timely disposal of testing

activities and also maintain the confidentiality of test results.

Wherever required, the labs invite the customers to witness tests

and have indisputably demonstrated the repeatability of test results. 9

of TC Labs are notified by DGFT for testing of import consignment

received from different customs. TCs labs, in order to become more

efficient in its routine activities, have initiated a pass book system wherein

any customer can deposit certain amount as advance payment

depending upon their volume of transactions. Test charges of a pass book

holder will be deducted as soon as tests are over and the test report will

be automatically forwarded to respective customs. This will reduce the

effort of customers to wait till the test is over to ascertain and make the

payment for further action.

In order to become more transparent, TC labs, in its routine

activities are implementing Laboratory Information Management System

(LIMS). TCs Mumbai lab has already implemented LIMS and is now

working on it. In this system samples received from any source is

registered on LIMS. Then the sample is taken for testing and for further

action. Status of samples at any stage can be monitored by designated

officials. Along with this, lab has also initiated a digital display of information

related to receipt of sample, status of sample such as testing, dispatch,

payment, etc. This information is helpful to the customer to know the

status of the sample. This display system was inaugurated by Honble

Chairman of Textiles Committee, Shri S.P. Oswal on 8th May 13 at

Textiles Committees Sample Counter.

While inaugurating the new facility, Shri S.P oswal appreciated the

efforts taken by the TC. He urged it to be more customer friendly and

linking of LIMS information on to TC website. The Secretary of TC, Dr.P.

Nayak and other members of the Committee also graced the occasion.

Pic: Hon'ble Chairman of Textiles CommitteeShri S P Oswal inaugurating the LIMS Display facility

LETTER TO GOVERNMENT

ONLINE QUALITY STATUS REPORT THROUGH LIMS BY TEXTILE COMMITTEE

Pic: Sri (Dr.) Manmohan Singh ji,

The Hon'ble PM of India

8 Textile Value Chain | July -Sept 2013

Shri Anand Sharma Launches 21 New Textile Parks

The ex- Union Minister for Commerce, Industry and Textiles, Shri

Anand Sharma, before finishing his tenure, launched 21 New Textile

Parks approved under Scheme for Integrated Textile Parks (SITP).

The SITPs have been instrumental in development of wide range of

models for green field clusters from a 1000 acre FDI driven

integrated cluster, to a 100 acre powerloom cluster and a 20 acre

handloom cluster. Under the scheme, 61 parks have been

sanctioned 40 projects were started in the 11th Five Year Plan and

another 21 projects are to be implemented in the 12th Five Year

Plan. Out of the 40 parks sanctioned earlier, a total of 25 Parks are

already operational. Most of the balance Parks are expected to be

completed during this financial year. The estimated employment

generation is over 10 lakh persons with total estimated investment

of Rs. 27, 562 crore.

Shri Sharma also released a coffee table book on SITPs. The

book encapsulates the broad features of various ITPs set up all over

India and is a ready reference for the same. The book gives a brief

physical and pictorial status of each ongoing Park approved under

SITP. He also released a short film on SITP and visited a photo

exhibition that was created to mark the event.

Out of the 21 new parks, six are in Maharashtra, four in

Rajasthan, two each in Andhra Pradesh and Tamil Nadu and one

each in Uttar Pradesh, West Bengal, Tripura, Karnataka, Gujarat,

Himachal Pradesh and Jammu & Kashmir.

In this years budget speech, the Finance Minister announced an

additional amount of upto Rs. 10 crores per park for setting up

apparel manufacturing units for the projects under the SITP.

Necessary action is being taken for implementing the

announcement.

Handloom Silk Industry in Assam

The Govt is aware that silk handloom industry in Assam is passing

through a difficult phase. Assam does not produce required quantity

of mulberry silk as per the demand of the its consumers. Mulberry

silk yarn is supplied by the traders from other parts of the country,

due to which consumers have to purchase yarn at higher rates from

the open market.

In Assam, few silk fabric traders have been doing business by

producing the Assamese dress materials, particularly Mekhela-

Chadar of mulberry silk at the weaving units outside the State with

Assamese traditional patterns and designs. As a result, the local

producers have protested for importing such hand woven silk

fabrics from outside the State. To address this issue, the state Govt

has constituted a Committee to look into their grievances.

In order to promote Mulberry, Eri and Muga silk production in

Assam, Govt through Central Silk Board is implementing a centrally

sponsored scheme viz Catalytic Development Programme

(CDP) in collaboration with State Sericulture Department of Assam.

Under this scheme, financial assistance is provided to the

stakeholders of silk industry through the State Sericulture Dept. The

components under CDP envisage development and expansion of

host plant, support for seed production, development of farm and

post cocoon infrastructure, up-gradation of reeling and processing

technologies in silk, enterprise development programme, support

for extension and publicity etc. Rs. 10319.11 lakh Central assistance

has been provided to Assam under CDP during the XI Plan period

for the development of silk industry, including mulberry, eri & muga.

To increase the number of trained qualified weavers, a number of

skill upgradation programmes have been implemented through

various schemes like cluster projects and group approach projects

under Integrated Handlooms Development Scheme (IHDS).

Besides, the State Govt has been imparting training to the weavers

through 102 Handloom Training Centres and 4 Handloom Training

Institutes every year.

Central Silk Board, Ministry of Textiles is implementing Silk Mark

scheme through the Silk Mark Organization of India for popularizing

the products made of pure silk to protect the interest of consumers.

Silk Mark is a quality assurance label attached to the products made

of pure silk and is applicable to all the silk products made of pure silk

covering all varieties of silk viz. Mulberry and Vanya (Tasar, Eri &

Mugs) silks. Under the Silk Mark Scheme, there are 177 authorized

users in NE region, including Assam, who uses Silk Mark labels.

Further, Muga Silk of Assam, has been registered under

Geographical Indications of Goods (Registration & Protection) Act,

1999.

BTRA

r e a c h e d a

Memorandum of

Understanding

( M o U ) w i t h

C S I R - C e n t r a l

Road Research

Institute (CRRI),

New Delhi on

22nd May, 2013.

A signing-in ceremony took place at BTRA that is attended by Dr. S.

Gangopadhyay, Director, CSIR-CRRI and Dr. A.N. Desai, Director,

BTRA.

MoU on Geotextiles between BTRA and CSIR-CRRI

The purpose of this MOU is to create a framework for

collaboration between CSIR-CRRI and BTRA with the following

objectives.I) To establish close linkage and functional coordination

between CSIR-CRRI and BTRA.

ii) To work collectively for the sector in Geosynthetics

particularly Geotextiles for road and transportation sector.

iii) Mutual sharing of resources to accelerate the use of

Geotextiles in road construction and maintenance including

usage of library at both the end.

iv) Submission of the joint proposals to MORTH/NRRDA on

comprehensive evaluation of Geotextiles.

9Textile Value Chain | July -Sept 2013

News from the Textile Ministry

10 Textile Value Chain | July -Sept 2013

Rieter is a leading supplier on the world market for textile

machinery and components used in short staple fiber spinning.

Based in Winterthur (Switzerland), the company develops and

manufactures systems, machinery and technology components

used to convert natural and manmade fibers and their blends into

yarns. Rieter is the only supplier worldwide to cover spinning

preparation processes as well as all four final spinning processes

currently established on the market. Rieter has 18 manufacturing

locations in 10 countries.

Texgiulia becomes Com4rotor Yarn Licensee

The Italian company, Texgiulia, is committed to yarn quality spun

on Rieter rotor machines type R 60. In order to optimally promote

the yarns, the company decided to become a Rieter yarn licensee

for rotor yarns. The ceremonial presentation of the Com4rotor

certificate took place mid-March 2013 at the companys

headquarters in north Italian Rovellasca-Como.

The fully-integrated open-end spinning plant Texgiulia is part of

the Italian Gabel Group and is one of the leading manufacturers of

bedding and home textiles in Italy. The company generates its

complete added value domestically starting from yarn production

up to the product sales through its own distribution network.

First and foremost, Texgiulia produces for its own requirements.

By the acquisition of further Rieter R 60 rotor spinning machines, the

A little over a year after Zimmer tied-up with A.T.E. for the

marketing and sale of Zimmerdigital printing machines in India,

Zimmer Austria has also entrusted A.T.E. with the marketing, sales

and after sales service of its entire range of printing machinery

including rotary screen printing and flat-bedscreen printing

machines.

Zimmer, the world leader in printing technology, manufacturers a

complete range of machinery for textile and carpet finishing

covering digital printing systems, flat screen and rotary screen

printing, coating, steaming, washing, and drying in its plants situated

at Klagenfurt and Kufstein.

Zimmer rotary

screen printing,

Rotascreen, is

equipped with a

m a g n e t i c

squeegee system

and is modularly

constructed, thus

allowing for a

wide spectrum of

a p p l i c a t i o n s .

Rotascreen enables top quality results with single or multi-colour

printing on different substrates such as home textiles, fashion

fabrics, automotive, and other materials.

Z immer f l a t bed

m a c h i n e ,

Magnoprint, is a well

proven flat bed screen

p r i n t i ng mach ine

successful world wide.

Its magnetic system

a n d r o l l r o d

technology in the

longitudinal direction

enables single or multi-colour printing on different substrates such as

flags, home textiles, banners, towels, blankets, and automotive

technical textiles

Zimmer triple coat is a

c o m p a c t c o a t i n g

machine with precision

b a c k r o l l a n d i s

equipped with knife,

screen, and slot coating

un i t fo r d i f f e ren t

substrates such as

textiles, paper foil,

nonwoven, fibre, glass,

t i s sues and other

innovative materials. With an expanded portfolio in printing

solutions, A.T.E. now provides the full range of the latest

technologies in processing and caters to the end-to-end needs of all

processing customers.

Rotascreen

Magnoprint,

plant now has a sufficiently large capacity to also produce yarns for

third parties. The Rieter yarn license for high-quality Com4rotor

yarns thus offers Texgiulia the optimal promotion platform to win

new customers for rotor yarn in future and to develop customer

relationships.

The ceremonial presentation of the Com4rotor certificate

was held mid-March at the headquarters of the Gabel Group in

Rovellasca-Como (north Italy). In the presence of Dr. Emilio

Moltrasio (Delegate of the Board of Directors and Partner in the

Gabel Group) and Sergio Zonca (Technical Director General of the

Gabel Group), Rieter sales engineer Matthias Stuessi handed over

the certificate to the Management.

With the yarns, spun on the new R 60 rotor spinning machines,

Texgiulia was able to further increase the already very high quality

standard of the yarns and substantially improve the running

properties in its own weaving unit. Yarn purchasers will also profit

from this quality in future.

Rieter actively supports and promotes the supply sources of

licensed yarns, one of the measures being a direct link on the Rieter

website to the licensee. Licensed customers have the opportunity

to profit from the expertise of Rieter specialists and to participate in

Rieter Com4 yarn further training courses. Over and above these

activities, Rieter supports licensed customers with the

implementation of their own marketing actions.

Zimmer triple coat

CORPORATE NEWS

Indian textile market is a decentralized, unorganized, fragmented

market and with a hub centric mindset. eg. Surat is ladies fabrics &

polyester/ viscose fabric centric, Erode is a spinning & weaving

cluster, then Banaras is a silk cluster, etc. The problem is that these

hubs are unaware of each others activities and the organised players

play a back stage role in the same.

Birla Cellulose, is the umbrella brand of the Aditya Birla Groups

range of cellulosic fibre. The Company has taken an initiative to have

a centralized and more organized Indian textile industry. On the

30th of May 2013, Indias 1st time large scale Hub meet was held in

Surat by the Birla Group. The idea is to integrate the entire textile

value chain and its members under one platform and help each

other.

Surat is the largest Hub producing more than 70% of Indias ladies

dress material. More than 90% is with Polyester. And rest 10%

consists of all - Nylon, Cotton, Viscose and PC & PV Blends. The

questions are: World trend is going towards comfort as against our

Synthetic focus. Why are we not growing to our potential? Most

Buyers and orders are from outside Surat. There is Lack of Proactive

Product development in line with world trends. There is hardly any

awareness and links to consumer trends.

Bearing this in mind, Birla believes If my customer grows, I will grow

and vice versa. Hub meets and participation by all people involved

with the textile industry is one of the initiatives taken by Birla, that

none of the other Corporates have taken till date. Birla Cellulose

proposed the following measures at the Surat Hub Meet for a

fruitful textile partnership for mutual growth:

For new design the challenge starts from yarn. We support

sourcing for yarns & fabrics

Commercial information and vendor support for fabrics

beginning with outsourcing

Successfully started with 60s x 60s, 92 x 88 modal sourcing @

Rs.52/mtr and now being developed indigenously for

commercial use

Successfully conducted trials for dyeing and printing of

cellulosic fabrics (samples were displayed at the meet)

Further new products with 80s Modal, HT Modal Poly blends,

slub & fancy blends is in progress

Sizing development support till successful weaving

High speed weaving in shuttleless looms

TRADC: Their innovation centre at Kosamba, to support

innovation.

Master designers like Mr. Nirmal Doshi, International designer

Mr. Sandy to offer Surat new innovations

Birla targets to offer Surat over 100 new designs on regular

frequency and bring to international market samples from

mass suppliers like Indonesia and China for inspiration on

global trends

Accreditation support: All bench marks for quality of yarn,

fabric would be shared

Technology Transfer Support (TTS) through TRADC

Coordination with our front end team for marketing support

This kind of symbiotic relation will go a long way in the growth of

Indian textile Industry. Birla Cellulose is also planning to have these

meets in different cities of India. Next meet is in Mumbai where

hubs of Bhiwandi, Ulhasnagar and Tarapur will be included. Many

others are being planned at Ichalkanchi, Coimbatore, Erode etc on

every alternate month across the year.

Lenzing quality and innovative strength set global standards for man-

made cellulose fibres. With 75 years of experience in fibre production,

the Lenzing Group is the only company worldwide combining the

manufacturing of all three man-made cellulose fibre generations on a

large industrial scale under one roof from the classic viscose to modal

and lyocell (TENCEL) fibres. Lenzing supplies the global textile and

nonwovens industry with high-quality man-made cellulose fibres and is

the leading supplier in many business-to-business markets. The

portfolio ranges from dissolving pulp, standard and specialty cellulose

fibres to engineering services.

At Techtextil in Frankfurt from 3-5 Oct, 2013, Lenzing is presenting a

new flame-resistant fibre especially for use in upholstery fabrics in

public transportation vehicles.

The guidelines which apply to public transportation vehicles are

particularly strict. The fabric and materials used in these applications

have to satisfy the safety standards. With a newly developed Lenzing

FR fibre, these satisfy all the safety standards for public safety. The

advantage of a safety fibre in public transportation is that Lenzing FR is

made from beechwood and is endowed with all of the positive

properties this natural fibre has to offer. The seating climate remains

excellent even over longer distances since the good breathing

properties of the fibre take effect here.

The special thing about Lenzing FR or the divan fiber is that, unlike

conventional protection fibres, it does not melt, drip or afterglow. The

latter properties represent an enormous risk for passengers. Another

important safety aspect is that the new flame-resistant fibre delivers a

lower rate of toxicity and flue gas density in the event of a fire.

The divan fiber is particularly well suited for use in blends with wool.

Both fibres complement each other superbly. Resistance to fading and

excellent pilling performance coupled with durability make upholstery

fabrics a pleasure to sit on. As a result of using the Lenzing FR divan

fibre, treating wool with additional, ecologically harmful flame-

retardant agents is not necessary another production advantage!

The new specialty fibre can be used in various transportation vehicles.

Wherever safety and comfort are in demand, Lenzing FR is the

answer whether in maritime or rail transportation, air transportation,

subways or in public spaces such as cinemas and theatres.

Lenzing presents new fibre development

Mr. Manohar SamuelVP, Birla Cellulose

11Textile Value Chain | July -Sept 2013

Birla Hub Meet

Completing our section of skill gap from spinning, to fabric

manufacturing, to fabric processing and ending with

garmenting; we continue with the emerging trends in skill

requirements, requirements state-wise and projected

requirements of human resources.

Current Training/Education Infrastructure: The current

training infrastructure is inadequate on both number of people

trained and also the quality of training being imparted. Also, very

few of the training initiatives are targeted at the shop floor level.

The newly inducted workers learn through informal training and

learning from the experience of the existing work force.

The availability of trained manpower is a key issue for the

garmenting sector. The ATDC, ITIs and NIFT annually train up to

50,000 workers. A few private sector players also provide

training specific to the garmenting sector. A large portion of the

requirement of human resource at the operator level is met by

on the job training. Hence training at the operator level is a key

gap. Acute shortage of skilled man power leads to poaching and

acts as a detriment to spending on in house training initiatives.

Emerging trends in human resource requirements

1. Technology: The changes in technology would significantly

affect the profile of people involved. As mentioned earlier, the

share of shuttle-less looms in the Indian textiles industry is only 2-

3% as against a world average of 16.9%, thereby indicating a low

degree of modernization in the Indian weaving industry. Although

the Indian spinning sector is relatively more modernised, around

60% of installed spindles are more than 10 years old and open-

end (OE) rotors account for only 1% of total installed spindles. In

the apparel sector, India has much lower investment in special

purpose machines, which perform specific functions and add

value to the product. Very few export establishments have

invested in cutting machines or finishing machines. The low level

of technology and government incentives like TUFS would drive

modernization in the industry where as the high power costs

would be a detriment.

The technological upgradation would necessitate the human

resource to be trained in modern machinery and also greater in

house spending on training. The shortage of labour and

increasing wage rate would further induce greater automation

which will lead to higher productivity. For instance, the operating

hours per quintal of yarn have decreased from 77 to 25 on

account of modernization and would continue to fall. Also, the

numbers of people involved in post spinning operations have

come down on account of automatic cone winding machines.

The modern machinery would require skilled maintenance

people who have the requisite knowledge of the same. Proper

maintenance would be crucial as machine down time and costly

spare parts would significantly affect the performance of the

industry.

2. Quality Processes: There would be increasing focus and

adoption of quality and environment related processes, such as:

ISO 9001:2008

ISO 14001

3. Research & Development: The textile industry does not have

R&D as a focus area. The industry would have to invest more in

both process and product R&D to maintain product and cost

competitiveness. This requires industry-academia collaborations

as well as individual R&D efforts by the companies.

4. Labour laws: More flexible labour regulations will positively

affect the industry. Currently, T&C industry comes under the

purview of Contract Labour Act, 1970 which prohibits contract

labour for the work that is perennial in nature. The exporters find

it difficult to manage the seasonal and order based volatility in

demand on account of this. Change in the current regulations can

lead to opening up of more employment opportunities. Also, the

current regulations prohibit women from being employed in

night shifts. Relaxation of the same with adequate safeguards can

lead to more participation of women and also help in addressing

the skill shortage in the industry.

5. Human resource related: Modernization of technology

would necessitate more technical skills for operators in the

production and maintenance functions across the value chain of

the textile industry. The sector also needs multi-tasking/ multi-

skilling at the operator level. The human resource at the higher

levels as well as in other functions like procurement would need

to possess the knowledge of various types of machines and also

keep abreast with the changes in technology.

The garmenting sector would be the key driver of the

employment in the textile sector. Majority large portion of the

human resource requirement will be for operators who have the

adequate knowledge of sewing machine operations and different

types of seams and stitches. Although, the industry will continue

to have predominantly line system of operations, designer and

high end fashion exports would necessitate make through

system of operations which would require the operators to have

the ability to stitch the complete garment. The availability of

merchandising and designing skills would be crucial for increasing

share in export markets and tapping the potential in new markets.

Regions which will drive human resource requirements:

The major centres in India where this employment generation

would take place are Tamil Nadu, West Bengal, Karnataka,

Maharashtra, and Gujarat. The state of Tamil Nadu will account

for around 30% of the employment in the textile sector.

By ICRA Managment Consulting Services Ltd. (IMaCS), www. nsdcindia.org

12 Textile Value Chain | July -Sept 2013

SKILL GAP & ANALYSIS Emerging trends in skill requirements & projected requirements of human resources.

13Textile Value Chain | July -Sept 2013

Fig. 1. Share of various states of employment in the textile sector

Source: Annual Survey of Industries, IMaCS Analysis

The poor performance of the industry in the recent past has

resulted in the sector not attracting new investments. The cluster

development activities of various organizations have not found

takers and hence new clusters do not appear likely at this point of

time. However, Andhra Pradesh is a likely future destination for

new investments, especially in the garmenting sector with the

establishment of Apparel Parks. The government initiatives of

providing power at a cost of 2 Rs per unit will be a key factor in

attracting investments in spinning sector. Also, the state has

surplus cotton and would result in lower logistics cost. Availability

of raw materials and low power costs will also attract investments

in the downstream activities like fabric manufacturing, processing

and garmenting.

The scheme of integrated textile parks and various SEZs

would also affect the regions availability of labour. States like

Uttaranchal necessitate that most of the labour force in the units

operating in SEZ should be local.

The states of UP, Bihar and Orissa etc would be key

catchment areas to meet the labour requirements. Already the

spinning sector in Tamil Nadu is seeing more and more influx of

labour from these states as the current wage rates in the states

are very high.

Environmental concerns would affect the processing sector.

The effluent treatment requirements might see units shifting to

coastal areas as marine discharge requirements are less stringent.

Projected Human Resource Requirements in the Textile &

Clothing Sector: This projection is based on the projection of

industry size. It is estimated that the PFCE on clothing will grow at

a CAGR of 7.5% between 2008 and 20224. Based on projected

growth of GDP and exports, we expect that the exports of

textiles will grow at a rate of 11% to 11.5%. Thus, the overall

T&C sector will grow at a CAGR of 9.5% to a size of Rs. 6,730

billion. Out of this, the share of exports is expected to increase

from just under 50% currently to about 60% in 2022.

Fig. 2. Projected size of the Textile and Clothing industry (in Rs. billion)

While analyzing the human resource requirement, the

categorization of the overall T&C sector as follows:

1. The Mainstream T&C sector comprising of Spinning,

Fabric Manufacturing, Fabric Processing and Garmenting.

2. Other related industries such as:

Handloom, Woolen, Sericulture, Handicrafts, Jute.

While we expect the human resource requirement in the

Mainstream T&C sector to be closely related to market driven

T&C industry growth, the human resource requirement in areas

such as handloom and handicrafts would have to be

supplemented by initiatives from the Government and Industry.

The addition of human resource into these other sectors would

be at a much lower rate as compared to the Mainstream sectors

due to need for significant support for earnings, scope for

enhanced technology intervention and automation as compared

to current levels, the need to add value, and attractiveness of the

sector among the human resource supply.

Keeping in mind the above factors and the growth of the industry,

it is expected that the overall employment in the T & C sector

would increase from about 33 to 35 million currently to about 60

to 62 million by 2022. This would translate to an incremental

human resource requirement of about 25 million persons. Of

this the Mainstream T&C sector has the potential to employ

about 17 million persons incrementally till 2022.

In our next issue we will continue with NSDC Focus areas for

Skill Building

PFCE on cloting Exports

8,000

7,000

6,000

5,000

4,000

3,000

2,000

1,000

-

9.5%

4,049

2,684

2,611

2,160

1,359

1,404

2012 2018 2022

891

992

2008

Others,7%

Andhra Delhi,3%

Pradesh , 4%

Uttar Pradesh, 4%

Punjab, 5%

Rajasthan, 5%

Haryana, 5%

Gujarat, 10%

Maharashtra, 8%

Karnataka, 11%

West

Bengal, 11%

Tamil

Nadu, 28%

SKILL GAP & ANALYSIS

BASE COLOURS

GREY

04-CW-1100085-MC

WINTER WHITES

04-CW-1200071-MC

CAMEL

04-CW-0801480-CO

CHOCOLATE

04-CW-0701424-CO

COOL COLOURS

LODEN

04-CW-0904371-MC

BLUE SPRUCE

04-CW-0904602-MC

DELFT BLUE

04-CW-0501146-MC

COBALT

04-CW-0500508-MC

INK

04-CW-0503697-MC

2013-14 Fall/ WinterMen's Wear Colour Forecast

WARM COLOURS

Courtesy: www.knitweartrends.com. Colour Codes based on Color World, www.csicolorworld.com

DRIED ROSE

04-CW-0302843-CO

RAISIN

04-CW-0303056-MC

BORDEAUX

04-CW-0303146-CO

RED

04-CW-0301046-MC

RUST

04-CW-0200174-MC

YELLOW

04-CW-0101165-CO

GINGERBREAD

04-CW-0701603-MC

Men's Wear Colour Forecast 2013-14 Fall/ Winter

ISDI has entered into a collaboration with Parsons, the New

School for Design, New York. The Associate Campus of worlds

number one Fashion School Parsons is called the Indian School of

Design & Innovation (ISDI), Parsons Mumbai.

Parsons Mumbai is a central part of Parsons agenda of going

global. Parsons Mumbai, like Parsons Paris & Parsons Shanghai will

function differently based on local regulations, and, more importantly,

on local traditions. Through the establishment of Parsons Mumbai and its

other global academic centres, Parsons global initiatives are designed to

build learning networks connected by major urban centres of art and

design. These initiatives join Parsons existing study abroad offerings,

online courses, and educational partnerships in Europe, Asia, and Latin

America. The plan allows Parsons to share their proven educational

methodology and give students opportunities to learn and work in real-

world settings. Parsons goal is to develop students' global awareness,

cultural literacy, and familiarity with the systems that shape creative,

humanitarian, and entrepreneurial endeavours around the world.

The Indian School of Design and Innovation (ISDI) opens its

doors to students in July 2013. ISDI is committed to a new educational

model inspired by the idea of design and innovation as transformative

forces in society. It is located in Indias fashion capital Mumbai and its

campus is situated in centrally located Parel at the Indiabulls Centre.

ISDI offers a series of globally benchmarked Undergraduate

Diploma Programmes (UGDP), four year intensive programmes

(foundation year plus three year specialisation) for students across the

disciplines of fashion, interior, product and communication design.

Opportunities to engage in design education for graduates and young

professionals start in September 2013, with the launch of ISDIs one year

Post Graduate Programme (PGP) in Fashion Business Management and

Creative Entrepreneurship

The collaboration with Parsons will enable ISDI to benefit from

Parsons rigorous curriculum, prominent visiting faculty, well established

student exchanges and global relationships. The curriculum will include

development, quality assurance, student and faculty exchanges, as well

as collaborative projects with students at Parsons' campuses in New York

and Paris.

ISDIs academic ideology moulds designers to cater to a

diverse range of industries and employers. All educational programmes

are built upon the foundation of a forward-thinking and innovative

curriculum, industry sponsored projects, national and international

collaborations and a deep sense of social and environmental

responsibility. Creativity, innovation and sustainability are core to ISDIs

philosophy.

More programmes are on the anvil, so keep yourself

updated through their website www.isdi.in

Pic: Parsons, NY, USA

Last textile policy was declared in 2000. Thereafter, lots of

developments have taken place in the Textile Industry and new

sectors like technical textile have emerged. So, the Govt. has

appointed National Manufacturing Competitiveness Council

(NMCC) under the chairmanship of Mr. Ajay Shankar. The first nd

meeting of this committee will be taking place on 2 July 2013. This

committee will review the old textile policy and prepare a final report st

on National Fibre Policy by 31 October 2013, said Mr. A.B. Joshi,

Textlle Commissioner, while inaugurating India's largest garment fair st

on 1 July 2013.

The Clothing Manufacturers Association 0f India (CMAI), celebrating

its Golden Jubilee this Year, haD organized India's Largest ever th st rd

Apparel Trade Show The 57 National Garment Fair from 1 3

July at Bombay Exhibition Centre, NSE Complex, Goregaon (E),

Mumbai.

Mr. A.B. Joshi, Textile Commissioner has further stated that after

removal of 10% excise duty on branded readymade garments, it has

provided boost to the industry and it has started moving upwards

again towards growth path. Good monsoon will also increase the

cotton production.

The Fair was spread over approx. 3.75 Lakh Sq. Feet and had 589

Stalls displaying over 640 Brands. This has been the Indias Largest

ever Garment Fair held so far. Approx 35,000 Retailers from all across

thCMAI'S: The 57 National Garment Fair

India visited this B2B

Fair. There were 4

fashion shows, 2

fashion shows each,

on 1st & 2nd July

2013 which were

highly received &

appreciated.

T h e B u s i n e s s

N e t w o r k i n g

Sessions provided

opportunities for

Exhibitors to meet

A g e n t s &

Distributors in the

First Session, High

Street Retailers in

the Second Session and Merchandisers from National Chain Stores in

the Third Session. CMAI invited Reputed Agents & Distributors, High

Street Retailers from 15 States and All National Chain Stores to

Participate in the these Sessions.

CMAIs next National Garment Fair will be held from 6th to 8th January

2014 at Bombay Exhibition Centre, Goregaon-Mumbai.

16 Textile Value Chain | July -Sept 2013

COLLEGE FOCUS ISDI, Parsons Mumbai

ADVT.

Figure 2

Operational Competencies

Characteristics

Rating categories

Strong

Use of latest machinery/processes

Capacity utilisation >85%

IND A/lower end of IND AA

Medium Growing use of new technology

Capacity utilsation: 60%-85%

IND BBB

Weak Mix of old and new technology

Capacity utilisation: 40%-60%

IND BB

Very weak Capacity utilisation below 40% due to old

technology and/or power supply or labour

problems

IND B and below

Source: Ind-Ra

18 Textile Value Chain | July -Sept 2013

WHAT IS CREDIT RATING & WHY IS IT IMPORTANT?

These questions immediately come to the mind when one hears about Credit Rating.

Credit Rating is a pre-requisite for borrowing of funds by Corporate. Rating is an assessment of the financial strength of

company. Rating is intended to bring transparency and efficiency to build confidence of investors whether individuals, banks, financial

institution, foreign institution etc; by mitigating and managing risk, taking pricing decisions, generating more revenue and enhancing

returns.

Ratings help lenders and borrowers, issuers and investors, regulators, and market intermediaries to make better-informed

investment and business decisions. The rating exercise takes into account the management capability, industry dynamics, operational

performance, financial risk characteristics and the future prospects of the entity. Ratings help shape public policy on infrastructure in

emerging markets. Ratings catalyse economic growth and development in countries for a better tomorrow.

Even otherwise, it is advisable to conduct rating to know a companys strengths and weaknesses. To give an insight in the

world of Credit Rating, we have interviewed with the best in the credit rating business in India.

1- India Rating & Research / Fitch Group

2- CRISIL

3- CARE , Credit Analysis & Research limited

Readers will definitely find their interviews knowledgeable, worthwhile and interesting.

COVER STORY

Ind-Ra has issued a sector-specific special report describing

the credit factors the agency uses to analyse the Indian textile

companies.

Ind-Ra believes the Indian textile sector in general and

cotton textiles sector in particular is exposed to volatile raw

material prices which is the largest cost variant and can affect a

companys finances. Price risk also emanates from the adverse

impact of regulation and low pricing flexibility of end products.

For synthetic textile players, raw material prices are correlated to

the demand-supply situation, crude oil prices, movements

of dollar/rupee and prices of cotton and chemical

substitutes.

Textile operations are working-capital intensive due to long

inventory periods and high debtor days. In the cotton industry,

profitability is determined by the efficiency and the timing of

cotton buying and inventory management. Ind-Ra gives rating

advantage to companies which have a proven track record of

managing the inventory risk.

The natural rating territory of the Ind-Ra-rated textile

universe is IND BBB and below. This is due to lower margins

from a difficult operating environment on account of regulatory

influence, raw material cyclicality and fragmentation. Players

who demonstrate resilience to volatility, slowdown, adequate

liquidity and financial flexibility qualify for higher rating

categories. Companies with strong market position and

distribution network as well as with brand recognition enjoy a

comparative rating advantage.

The textile value chain is diverse and complex and every

companys business model can be unique depending upon the

level of value addition, product sophistication and end-market

exposure. Ind-Ra looks at product quality and range, labour

and power cost and availability and the level of technology and

integration while assessing a companys operational

competencies and earnings capacity.

Business risks are different for cotton and synthetic textiles.

Ind-Ra takes a positive note of companies which are diversified

into both cotton and synthetic textiles, or have the flexibility to

switch their primary raw material.

In the below tables, Ind-Ra Report tells us which sector is

rated, for what & their grades by Ind-Ra.

Indian Textiles: Rating Approach -

Factors Impacting Credit Ratings, A Special Report

Figure 1

Raw Material Sourcing Capability

Characteristics

Rating categories

Strong

Efficient scale and timing of procurement

Strong liquidity and supply chain

Capacity to weather cyclicality

IND A/lower end of IND AA

Medium

Demonstrated ability to manage working capital

cycle

Moderate scale of operations for efficient

procurement

IND BBB

Weak

Small scale of business

Volatile

working capital cycle

IND BB

Very weak Generally tight liquidity

Small scale leading to lower ability to mitigate

raw material cyclicality

IND B and below

Source: Ind-Ra

CREDIT RATING

Figure 6

Leverage and Coverage Ratios

Rating categories

FY12 median adjusted debt net of

cash/op. EBITDAR (x) Net fixed charge cover (x)

IND A/lower end of IND AA 2.5 4.4

IND BBB 3.2 1.8

IND BB 4.3 1.3

IND B 5.5 1.1

Source: Ind-Ra

Figure 5

Access to External Financing

Rating categories Access to external funds

IND A/lower end of IND AA Complete access to external financing; high financial flexibility

IND BBB Reasonable access to external financing

IND BB Access to external financial mainly in form of bank refinancing or

loans from founders

IND B and below Usually delays in obtaining additional bank limits; or non-injection of

funds from founders

Source: Ind-Ra

Figure 3

Level of Value Addition

Value chain Level of integration Rating range

Strong Value added/branded products that

command stable demand/ pricing

IND A/lower end of IND AA

Medium Reasonable value addition that enjoys

stable demand while pricing could vary;

wide product range

IND BBB

Weak Commoditised products; narrow product

range

IND BB

Very weak Low-value added businesses (e.g. trading);

highly susceptible to price changes

IND B and below

Source: Ind-Ra

Figure 4

EBITDAR and CFO Margin

Rating categories Op. EBITDAR margin (%) CFO/sales (%)

IND A/lower end of IND AA Consistently stable EBITDA

margins of 10% or higher

Consistently positive

IND BBB Moderate volatility in profitability

Expected to remain +ve

throughout cycle

Generally positive

IND BB Volatile, low margins

Likely to turn ve in downturn

Generally negative

IND B and below Erratic or very low margins

EBITDA losses

Consistently negative (>-10%)

Source: Ind-Ra

In an engrossing interview with TVC, Mr. Rakesh Valecha,

Senior Director, Head - Corporate Ratings, talks about Ind-Ras

role in credit rating for textile companies, their parameters and

the state of Indian textile industry.

TVC: What is the role of your agency and what are the various

services you offer?

R.V.: India Ratings & Research (Ind-Ra) is India's most respected

rating agency committed to providing the India's credit markets

with accurate, timely and prospective credit opinions. Built on a

foundation of independent thinking, rigorous analytics, and an

open & balanced approach towards credit research, Ind-Ra has

grown rapidly during the past decade gaining significant market

presence in India's fixed income market.

Ind-Ra has six offices in India located at Mumbai, Delhi, Chennai,

Bangalore, Hyderabad and Kolkata. Ind-Ra is recognised by the

Securities and Exchange Board of India, the Reserve Bank of India

and National Housing Bank

TVC: What are the different types of clients Ind-Ra caters to?

R.V.: Ind-Ra currently maintains coverage of corporate issuers,

financial institutions, which includes banks and insurance

companies, finance & leasing companies and managed funds,

urban local bodies and project finance.

TVC: What are the various factors considered by Ind-Ra

while assigning credit ratings for issuers of debt

obligations/instruments?

R.V.: The ratings are assigned based on established criteria and

methodologies. These cr i ter ia are ava i lab le on

www.indiaratings.co.in. The Key highlights of Corporate

Rating Methodology which is the Master criteria used for rating

Corporate are as below:

Qualitative and Quantitative Factors: India Ratings Corporate

ratings reflect both qualitative and quantitative factors

encompassing the business and financial risks of fixed-income

issuers and their individual debt issues.

Key Rating Factors

Industry risk Financial profile

Operating environment Cash flow and earnings

Company profile Capital structure

Management strategy/governance Financial flexibility

Group structure

Source: India Ratings

Issuer Ratings: An Issuer Rating (IR) is an assessment of an

issuers relative vulnerability to default on financial obligations,

and is intended to be comparable across industry groups.

Issuers may often carry both Long-Term and Short-Term IRs.

Because both types of IRs are based on an issuers fundamental

credit characteristics, a relationship exists between them

Historical and Projected Profile: India Ratings analysis typically

covers at least three years of operating history and financial data,

as well as the agencys forecasts of future performance. These

are used in a comparative analysis, through which the agency

reviews the strength of an issuers business and financial risk

profile relative to that of others in its industry and/or rating

category peer group.

Weighting of Factors Varies: This comparative analysis includes

consideration, where appropriate, of the potential for changes

in the issuers operating environment or financial strategy

relative to its ratings. The weighting between individual and

aggregate qualitative and quantitative factors varies between

entities in a sector as well as over time. As a general guideline,

Senior Director, Head - Corporate Ratings,

Rakesh Valecha

19Textile Value Chain | July -Sept 2013

COVER STORY CREDIT RATING

INTERVIEW India Ratings & Research, A Fitch Group Company

where one factor is significantly weaker than others, this weakest

element tends to attract a greater weight in the analysis.

TVC: How do you find the growth & investment in the current

Indian textile industry?

R.V.: Indian textile industry has been undergoing through a

challenging phase over 2009-2012 characterized by demand

seasonality, uneven government policy and speculation-led cotton

price volatility increasing financial risks for sector. Current demand

prospects remain modest and Ind-Ra has a negative to stable

outlook on the sector for calendar year 2013. Policy for 2013 is

however encouraging with Budget 2013-14 focusing on expansion

and modernization via continuation of TUFS (Technology

Upgradation Fund Scheme- providing capital and interest subsidy to

textile sector) with an investment target of INR 1510 bn. However

sectors appetite for large debt-led capex in the near-term could be

questioned as most companies are in consolidation mode.

Domestically, weak consumer sentiments, high inflation and

low wage growth have been dampening textiles and apparel sales.

Abatement of excise duty as announced in Budget 2013-2014 will

help reduce prices of end products and uplift demand. In 2012,

garment apparel exports declined by 6% due to economic

slowdown in key end-markets US and Europe. Going forward

garment exports outlook is mixed with Europe re-entering

recession, although US demand pick up is encouraging. Cotton

yarn growth outlook is positive with higher demand of cotton yarn

from China and improving margins on account of low cotton prices

and firm cotton yarn prices.

In this backdrop, investments in the textile sector have

slowed as reflected in the lower number of applications under

TUFS. In 2010-11 the number of TUFS applications plunged

manifold to 256 (total project cost INR 397 cr) from 2384 (total

project cost INR 28005 cr) in 2009-10.

TVC: There is a downtrend in investment in textile sectors. Why do

you think the investors are not expanding/planning new projects?

Are these investors diverting to other industries?

R.V.: Investment activity slowed down across the textile value chain

in 2012 due to uncertainty on demand and volatile raw material

prices which led of funds being tied in inventories. Companies have

deferred or slowed on capacity expansion plans due to several

reasons including under-utilization of existing capacity, shortage/high

cost of self-generated power (Gujarat and South India) and even

regulatory reasons (such as environmental regulation in Tirupur).

Continuation of the TUFS in the Twelfth Five Year Plan and

INR 24bn allotment for technology upgradation is likely to

encourage investments in power loom modernization. To boost

investments in the spinning segment, the Gujarat Government in

September 2012 came up with The Gujarat Textile Policy (GTP)

targeting installation of 2.5m spindles worth INR 70 bn over the next

five years. The impact will remain credit neutral in 2013 as benefits

will accrue only in the medium term. Improvement in market

conditions and Foreign Direct Investment could provide impetus to

new projects in the medium term.

There is a general deceleration in the domestic investment

drive due to high cost of debt and paucity of equity funding. Textile

expansion has the benefit of 10% capital subsidy and 4% interest

subsidy under TUFS which is not available for other industries. RBI

also extended the 2% interest subvention for exporters till 2014, and

additional 2% incentive is provided by the government for entities

registering higher exports. Hence Ind-Ra believes that investors are

broadly not diverting to other industries but anticipating the right time

to make new investments.

CRISIL Ratings is India's leading rating agency. They pioneered

the concept of credit rating in India in 1987. They have rated over

60,000 entities, by far the largest number in India. They are a full-

service rating agency who rate the entire range of debt instruments:

bank loans, certificates of deposit, commercial paper, non-

convertible debentures, bank hybrid capital instruments, asset-

backed securities, mortgage-backed securities, perpetual bonds,

and partial guarantees

In a candid conversation with TVC, Senior Director at CRISIL

Ratings, Mr. Subodh Rai, gives the real picture of Ratings in the

Textile Industry

TVC: How do you find the growth & investment in the current

Indian Textile Industry?

S.R.: The textile industry comprising of yarn, fabric and readymade

garments is expected to grow a modest rate of 4-5% p.a. over the

medium term. This is likely to be supported by stable domestic

demand, and a marginal growth in international demand.

Investment in the textile sector is likely to remain subdued over the

near to medium term with respect to large capacity additions.

However, extension of Technology Upgradation Fund Scheme

(TUFS) for the 12th Five- Year plan is expected to provide some fillip

to the sector.

TVC: Is there a downtrend in investment in the textile sector? If

Yes, Why do you think the investors are not expanding/planning

new projects?

S.R.: Yes. Given the uncertainties in the economic environment and

overcapacities prevailing in the industry, companies are adopting a

wait-and-watch approach towards investment in projects. Further,

shortage of labour and stressed power scenario in major textile hubs

of South India. are deterrents for additional investments.

TVC: What is the benefit of Ratings for textile companies?

S.R.: Rating is a prime input in deciding interest rate charged by banks.

In addition, the better-rated companies, across industries, are able to

diversify its funding sources e.g. access to capital market, and also

negotiate finer interest rates with banks thereby save on interest costs.

Rating is also perceived as a self-improvement tool; an independent

credit opinion from CRISIL provides the rated company pointers for

improvements. A large number of CRISILs textile clients have

indicated that besides the rating, the interaction and the feedback from

CRISIL is an important element in their strategic and operational

decision-making.

India Ratings & Research, A Fitch Group Company INTERVIEW

20 Textile Value Chain | July -Sept 2013

INTERVIEW CRISIL Ratings

CARE Ratings has established itself as the second-

largest credit rating agency in India.

General Manager of CARE Ratings, Mr. Milind

Gadkari was kind enough to give TVC an exclusive

interview in his busy schedule.

Mr. Milind GadkariGeneral Manager ofCARE Ratings

TVC: What is the role of your agency and what are the

various services you offer?

M.G. : Credit Analysis & Research Ltd. (CARE) is a premier Indian

Rating Agency providing full range of ratings as well as grading

services. It includes debt instrument ratings, bank loan ratings,

issuer ratings, SSI MSE ratings, SME ratings, Securitization ratings

etc. It also provides grading services like IPO grading, equi grade,

shipyard grading, maritime training course grading etc. CARE also

has a research division which provides Industry research,

customized research, etc

TVC: What are the different types of clients CARE caters to?

M.G. : CARE caters to a whole range of clients which includes

Industrial companies, Banks, Non-banking financial companies

(NBFCs), Infrastructure entities, Microfinance institutions,

Insurance companies, Mutual funds, State Govt. entities, urban

local bodies, services' organizations, etc.

TVC: Who are CARE's major clients?

M.G. : CARE's clientele includes large banks like State Bank of

India, ICICI Bank, Punjab National Bank, HDFC Bank, Axis Bank

etc. It also includes large corporate entities like Reliance Industries

Ltd., Grasim Industries Ltd., Tata Motors Ltd., Tata Steel Ltd., Aditya

Birla Nuvo Ltd. etc.

TVC: How do you find the growth & investment in the

current Indian Textile Industry?

M.G. : While the growth of Indian Textile Industry has remained

stable during last two years, incremental investments in new

capacity have not been aggressive. The investment in pipeline is not

uniform and it is distributed amongst some of the sectors of the

industry. Whereas there is capacity addition happening in sectors

like denim, continuous polymerization (CP) plants etc. some other

sectors like spinning are witnessing modest investments. Main

reasons for overall slowdown in investment climate have been as

follows:

Limited financial flexibility available with the textile companies,

with leveraged balance sheets

High interest rates

Heightened Volatility in commodity prices like cotton, cotton

yarn, crude oil

Increased power and fuel costs, with power shortages in

some of the states

After robust investment in FY11, spinning sector has witnessed

slowdown in investment flow in the next two years. At the same

time, denim sector has seen continued growth in investment,

which is likely to result in oversupply situation in the segment.

Polyester chain has witnessed investments in CP plants, with many

players implementing the same.

Union Budget 2013-14 has laid special emphasis on textile

sector by way of extension of TUFS in the 12th Plan with an

investment target of Rs.1,51,000 crores. Extension of TUFS

coupled with RBI's action on the monetary policy front will

encourage investment in the sector which has not seen much of

capacity addition in the past two years. Further, other budget

proposals like 'Zero Excise Duty Route' for Readymade Garment

(RMG) Industry, setting up of RMG Park within ITPs and financial

assistance for Handloom sector will also encourage investments in

the sector.

With moderation in cotton prices and sustained demand for

cotton yarn from China on the back of China's concentration on

production of value added products, the prospect of cotton

spinning units is expected to improve. Exports of cotton yarn are

expected to touch an all time high during FY13 with 758 million kg

of cotton already exported during the period April-Dec 2012,

which is almost 20% higher as compared to corresponding period

a year ago. However, in case of Indian apparel sector wherein the

US and EU account for more than 70% of exports, the concerns

over the economic health of these regions puts pressure on the

Indian apparel exporters in the medium term.

TVC: Please explain whether peculiar problems faced in

textile industry like change in export policies, volatility in

prices of cotton, fibres, etc are taken into account during

credit rating or not. In other words, whether some

consideration is shown for the set back of financial

performance relative to factors stated above.

M.G.: As per rating methodology, CARE's rating process begins

with the evaluation of the economy/industry in which the

company operates, followed by the assessment of the

business-risk factors specific to the company. This is followed

by an assessment of the financial and project-related risk factors

as well as the quality of the management. This methodology is

followed while analyzing all the industries that come under the

purview of the manufacturing sector. Any policy changes which

may occur from time to time and its impact on operations of the

companies in the industry are considered while rating debt of

those companies.

As far as ratings of companies in textile industry are

concerned, there has been deterioration in credit profile of small

to mid size companies having leveraged balance sheet and having

limited presence in the textile value chain. However, credit profile

of large, integrated players having presence across the textile value

chain has remained largely stable.

21Textile Value Chain | July -Sept 2013

CARE RATINGS INTERVIEW

Bombay Dyeing and Manufacturing Co Ltd. was established by Nowrosjee Wadia in 1879, as a very small operation. The

Company dip dyed Indian spun cotton yarn and dried it in the sun in three colours; turkey red, green and orange. From such modest

beginnings, over the last 133 years, Bombay Dyeing has transformed themselves into one of the most reputed and esteemed establishments

in India.

Bombay Dyeing is the flagship company of the Wadia Group, a multi-product conglomerate with turnover in excess of 1.5 billion dollars and

employee strength of 20,000 people. Some of the well known group companies include Britannia, Go Air, Bombay Dyeing, Bombay Realty,

Bombay Burmah and many more. In January 2009, Bombay Dyeing & Manufacturing Company acquired the shares of White Horse Real

Estate Company at face value and consequently it became a 100% subsidiary of the company.

The Indian textile industry is one of the oldest and prominent players in global textile industry. Currently it is a $52 billion industry and is

anticipated to grow to $115 billion by 2012. India accounts for 25% of the world yarn exports and it also accounts for 12% of the worlds

production of textile fibres and yarn. Companies like Bombay Dyeing play a tremendous in Indias growth.

Textile manufacturing is the main activity of Bombay Dyeing with 5 manufacturing facilities confirming to international standards. Bombay

Dyeing is countrys largest exporter of home textiles. Bombay Dyeing's production is exported to USA, Canada, UK, Germany,

Netherlands, Italy, France, Poland, Czechoslovakia, New Zealand, Switzerland, and many more countries. Presently, Bombay Dyeing has a

distribution chain of over 600 exclusive stores across the country.

Bombay Dyeings product range encompasses various categories of home furnishing, premium and stylish bed and bath linen, suiting and

shirtings. Let us take a brief look at their products:

Chemicals: Bombay Dyeing is the largest manufacturer of Dimethyl Terephthalate (DMT) in India. It has a capacity to manufacture 1,65,000

tonnes per annum (TPA). DMT is raw material for manufacturing polyester fibre, film, filament & yarn and engineering plastics.

Polyester Staple Fibre (PSF): PSF is manufactured from 100% Virgin Polymer from continuous polymerisation plant. Product range from PSF

includes micro fibres, semidull/ optically white/ dopes dyed black/ Hollow/ Super High Tenacity and trilobal products mix, amongst others.

The entire gamut of textile products includes:

Bedding range: Bed sheets, bed covers, quilts, duvet covers, dohars, bed-in-bag sets, blankets,

pillow cases, cushion covers and shams

Bedding accessories: Cushions, pillows, duvets, comforters, diwan sets and bed dcor sets

Bath linen: All types of towels for all purposes, bath robes and bath mats

Hotel linen: Twills, dobby weaves, satins, jacquards, high-thread-count-sheeting and satin

fabrics

Industrial fabrics: microdot interlining fabrics for shoe uppers, adhesives, abrasives and

leather cloth.

All Bombay Dyeing products are manufactured to the highest quality standards. The company has stood the test of time on the basis of the

wide range of high quality products that it offers to the consumers. It also creates the widest range of designs and offering with more than 1000

designs per year that are unmatched by any other company in its category and is the ultimate destination for the latest trends in the

industry.

Bombay Dyeing holds undisputed leadership in its category since its inception. The vision of the 1st generation created by Nowrosjee

Nusserwanje Wadia, is being continued thru generations with the 2nd generation of Sir Ness N. Wadia, 3rd generation of Neville N. Wadia,

4th generation of Nusli N. Wadia and the 5th generation of Jeh Wadia and it will indisputably continue with even more fervour. It is a Legacy of

over 130 years, driven by the vision to excel. It is an enterprise that generates sustainable value on the strength of trust and transparency.

CORPORATE PROFILE

Shri. Nusli N. Wadia ChairmanWadia Group

Shri.Jeh N. WadiaManaging Director

Bombay Dyeing

22 Textile Value Chain | July -Sept 2013

TVC: Bombay Dyeing is a leader in home textiles segment and

has ruled at the top for many years. However recent

impressions of the Company not much being very active in the

textile industry are doing the rounds. Our readers would like to

know your take on the same.

D.M.: Impressions are actually not correct. Growth of our

Company is more than 20% in last year as compared to general

market growth rate of 5 % in textile business. We are totally

committed to textile business, particularly home textiles. We have

recently hired a new CEO who is fully dedicated to expanding retail

side of our business by adding number of company outlets. In

addition, we are also increasing our focus on large format stores. So

our Company is very much keen in expanding textile business and

we are absolutely active.

TVC: What is your Companys current production capacity?

D.M.: Our production plant for home textiles is at Rajangaon, near

Pune, Maharashtra. Capacity is 50000 lac meters per month. We

procure grey fabric from our suppliers and various ancillaries,

process it and make final finished products to sell at retail counters.

Our Polyester Staple Fibre (PSF) plant is situated at Patalganga, in

Raigad district, Maharashtra has a capacity of 13,000 tones per

month & entire product is sold as a commodity in the market.

Our spinning and winding facilities has an installed capacity of

1,35,336 ring spindles and our daily production of fabrics is

3,00,000 meters.

TVC: What is the scenario of the Companys exports and

domestic markets?

D.M.: 90% of our turnover is from the domestic business in our

own brand. 10% turnover is from Exports with made- to-order. We

do not yet sell our own brand in the international market. We have

400 Exclusive Retail outlets & other 2000- 3000 outlets in India in

which Bombay dyeing products are available.

We also have institutional business where we supply to Hotels,

Hospitals, schools, charitable trusts and many more.

TVC: What is the current market size & share of Bombay Dyeing

products in India?

D.M.: Home textile segment is estimated at Rs. 10,000 crore of

industry in India, in which organized sector is only 10 %. In the

organized sector, Bombay Dyeings India market share is 40%. In

the total market (Organized & Unorganized) Bombay Dyeings

market share is 4%.

TVC: What is your take on branding of PSF; will that improve

your profitability?

D.M.: It is an industrial product. It will not impact profitability but

will impact innovation in terms of special features and benefits and

will increase growth of profit.

TVC: What is Bombay Dyeings Business Model?

D.M.: For Our Business Model for Marketing, we follow

multiple channels such as: our own retail stores, franchisee stores

(which are more successful), large format stores (in recent times)

and Multi-brand stores in 2 & 3 tier cities

For our Business Model for Manufacturing we have: dedicated

suppliers for yarn, Job work for weaving, direct outsource of

fabrics and in-house processing like bleaching, dyeing, value

added activity, etc.

Currently, however

our focus is on

R e t a i l i n g a n d

marketing rather

than manufacturing.

Our further plans

also include product

a n d d e s i g n

development.

TVC: What are the Companys plans and reasons for investing

in textiles & ot