Project Report Rswm Final

    PROJECT REPORT ON:

RE-EMERGENCE OF TEXTILE INDUSTRY,

AFTER RECESSION

Submitted To:

Mr. N.K. Shrivastava (GM – HR) Mr. Gaurav Bakliwal (Executive – HR)

Mr. Pranjal Agarwal (Dy. Manager – Marketing)

SUBMITTED BY:

OMLATA CHOUDHARY

HUMERA KHAN INSTITUTE OF MANAGEMENT AND RESEARCH,

JOGESHWARI, MUMBAI-2010.

ACKNOWLEDGEMENT

It gives me great pleasure to present before you, this project report, assigned to me as part of my summer training at RSWM Limited.

I express my sincere gratitude towards RSWM Limited, for giving me an opportunity to work on this project.

I take this opportunity to thank my respected guide Mr.N.K.Shrivastava (General Manager), Mr. Gaurav bakliwal (Executive HRD), Mr. G.S Joshi (Head –Raw Material) for giving me an opportunity to undertake this project. I thank Mr. Pranjal Agarwal (Dy.Manager Marketing), for his invaluable guidance, which helped in preparing this report. He provided me with valuable suggestion & guidance about the textile industry, which proved very helpful for me to gain theoretical knowledge as well as clear understanding of the issues of the Indian textile industry.

Last, but not least, I am thankful to all staff at RSWM Limited for advice, suggestion, encouragement, cooperation and motivation to prepare this project.

TABLE OF CONTENTS

Sr. No Topic

1. Executive Summary

2. Introduction & Reason for selecting the topic

3. Company Profile

4. Objective and Scope

5. Research Methodology

6. Observations and Findings

7. Limitations of the study

8. Suggestions and Recommendations

9. Annexure

10. Bibliography

Executive Summary

Rajasthan Spinning & Weaving Mills Limited (RSWM) is the core business company of L.N.J Bhilwara group. RSWM is a major producer of blended yarns & specialty fabrics. It produces different variants of blended yarns like P/V, P/C, cotton and mélange.

The primary objective of this project was to study “re-emergence of textile industry after recession “and its impact on RSWM Limited. The finding of the study reveals that when economic activities across the world have declined sharply, driven by the decline in consumption and exports. In the past few years, around half of the total production of textiles and garments in India has been exported; 60% of it to markets in the US, Japan and the European Unions. The recession in the West had adversely impacted the Indian textile industry. Due to low demand, competition, steep forex fluctuation, high cotton procurement prices, high interest rates resulted in high cash flow outside. So despite rise in turnover there has been decline in the companies’ financial performance during 2008-2009, the highlights are:

Net revenues from operations increased to Rs.1, 293Cr (20080-2009) from Rs. 1168Cr (2007-2008).

Operating profit declined from 121.6 to 77 Cr in 2008-2009.

Financial expenses increased from 43.8 to 68 Cr.

Another, important findings is that in spite of RSWM product being slightly costlier than the industry rates, the clients do not mind paying this premium ,because of the superlative quality of the products and services.

RSWM is a preferred supplier over its competitors as the clients perceive the organization as being highly reliable, passionate about its service the personnel practice excellence as a core value.

RSWM follows “Market Differentiation Strategy “where the clients are retained over a period of years because of superior Quality of products & the brand name of the company.

The pre and post sales services of RSWM both are perceived as “above average by most of the clients. The maximum revenues are generated from sales of p/v & p/c yarns.

INTRODUCTION TO THE TOPIC & AND REASONS FOR SELECTING THE TOPIC

The textile industry occupies a unique position in the Indian economy .This industry uses natural fibers ,cotton ,jute ,silk and wool as well as synthetic /man –made fiber `s –polyester ,viscose, nylon ,acrylic & their multiple blends. It contributes significantly to

the industrial production, employment generation and foreign exchange earnings.

The textile industry has shown remarkable growth in terms of installed spindle age, yarn production & output of fabric & garments. But with advent of recession in 2008; it started effecting the production and lives of billion’s of people across the globe and also upsetting the calculations and projections of most companies in the textile and apparel sector.

The global recession has hit the textile industry very badly both in domestic and international markets. The industry witnessed a slow down in demand, leading to reduced exports, pressure on selling and margin and production cuts leading to job crisis.

Under such circumstances; companies’ strategies to sustain, play major role .This topic is selected to understand the effect and measures, which the RSWM took during the period of crisis.

So here in this report, we will analyze yarn sales, export and domestic market and various aspects related from production to till sales in market.

With the greater globalization and liberalization, Indian textile industry seems to be looking ahead with both challenges and innovations, to have close look at how the major structural changes in world economy will affect the prospects of textile industry in India. In light of this, a review of Indian textile scenario in particular and the world situation in general will help all sectors of Indian textile industry to re-organize themselves to face new challenges both known and unknown that may come in future. Thus, we find many scopes in the development of Indian textile industry.

COMPANY PROFILE

ABOUT COMPANY :

it was founded by Mr. Laxmi Niwas Jhunjhunwala (LNJ) in 1961.LNJ Bhilwara group has emerged as one of India’s leading corporate houses, in last four decades.

Core business companies: LNJ Group is a multi product conglomerate with a global –presence and with business interests spanning a diverse range of industries –like:

Textiles:

Power Generation:

Graphite-Electrodes:

Information-Technology and IT –enabled services

Sponge-Iron.

The Group has successfully integrated its operations into today’s Global – Economy, with export earnings compromising over 46% of total revenues with over 20,000 employees and 17 production units strategically across the country.

LNJB as a Brand: LNJB group holds leadership in textile industry .it `s popular Brand in the market are

Mayur Suiting,

BSL Suiting

La Italia Fashion’s, Geoffrey Hammond superfine suiting,

Buddy Davis Leisurewear.

The pioneering textile industry of the group is not only a key player in the industry but also has many first to its credit. The textile division has the sole distinction of producing a unique fire retardant yarn called Trevira CS (now known as Len zing, Austria).it is also the sole licensee for the highly specialized yarn called Tencel. The group has been acknowledged for its world class quality products.

Little wonders then, that the LNJ Bhilwara Group of companies has been awarded IS / ISO 9001 : 2000 certification for setting exemplary standards in quality.

ABOUT RSWM LIMITED:

RSWM Limited is one of the largest textile manufacturers in the country with a turnover of Rs.1550 cr.it is the flagship company of conglomerate LNJ Bhilwara group.RSWM

operates about 3,60,000 spindles and produces 1,00,000 MT of yarn per year.

RSWM has the most modern spinning and weaving plants, considered as trendsetters and dominant in technology, quality and product - mix in the Indian Textile industry.

In 1968 - 69, RSWM manufactured India’s first polyester viscose (PV) blended yarn and this is where Mr. LNJ made his fortune. Having consolidated this business, the group started diversification.

MISSION :

“With unique insight into consumer behavior, we strive to offer the best. Following distinct business strategies, the company will continue its tradition of manufacturing the finest products.”

VISION:

“RSWM envisages itself as a trend setter of the textile industry. It is committed to introduce innovative products in the industry which will set new standards.”RSWM has the most modern spinning and weaving plants, considered as trendsetters and dominant in technology, quality and product - mix in the Indian Textile industry.

In 1968 - 69, RSWM manufactured India’s first polyester viscose (PV) blended yarn and this is where Mr. LNJ made his fortune. Having consolidated this business, the group started diversification.

The Spinning units are equipped with preparatory machines from Trutzschler, Rieter, Vouk, Crosrol and Lakshmi Machines. The post - spinning machines have been imported from Schlafhorst (Autoconers 238 & 338), two – for - one twister from Volkmann, Leewha and Murata.

The group’s philosophy is not to compromise on technology or raw material. Thus special fibers like flame retardant polyester from Hoechst (Germany), Tencel from Acordis (U.K.), Flax from Belgium and Silk from China are imported to spin world – class yarns. The units are also equipped with Fiber dyeing IITHP dyeing technology from Dalal - Obermeir. Weaving Plants have Sulzer P7100 & P7200, projectile & rapiers, apart from air jet & Sulzer and Toyoda weaving machines.

Its Denim and 46MW Captive Power Plants have commenced operation. As a significant milestone of its expansion plan, RSWM International B. V. Holland is incorporated as a 100 % subsidiary of the company. It has also announced the acquisition of Cheslind Textile Ltd., a Bangalore based textile unit.

The current yarn portfolio of RSWM can be classified into three main categories-

Greige yarn , Dyed yarn and

Mélange yarn.

Greige yarn/Grey yarn: it is produced from different synthetic fibers such as polyester and viscose, blends of synthetic and natural fibers and pure cottons. it is produced at the company’s Banswara, Rishabdev and partly at Kharigram plants. Although, it constitutes a relatively lower value added segment, it is by far the largest in terms of volume and it is crucial to the product portfolio offered to customers.

Dyed yarn: dyed yarns are produced at the companies, Kharigram and Ringas plants. These are relatively higher value added products and made according to customer specifications of blends, counts and shades.

Melange yarn : Melange yarns are premium products made from cotton and its blends and it is used in manufacturing of knitwear and hosiery .The company had completed expansion of its dyeing capacities to 350 tonnes per month for the mélange unit in the last financial year(2007-2008).today company is the largest manufacturer of mélange yarn in the country with 42,720 spindles.while this segment is still Quantitatively small compared to the greige and dyed yarn business of the company .

FABRIC AND DENIM BUSINESS:

Blended fabric: RSWM manufactures a range of blended suiting fabrics and has a significant presence in the domestic market with its “Mayur brand “.The company`s newly modernized process house is fully integrated with weaving and it is located at Mordi.

Denim fabric: The company has reported commencement of the commercial operations of the denim plant at Mordi in 2007-2008 with a capacity of 14 million metres of fabric. this project also includes a yarn spinning facility to aid in maintaining superior quality and higher degree of reliability and client servicing.

MANUFACTURING CAPACITIES:

PLANTSPECIALITY CAPACITY(MT)

Kharigram Dyed and Greige yarn 2100MT/month

Mandapam Dyed mélange yarn -

Banswara Grey yarn 3050 MT/month

Rishabhdev Grey yarn 1200 MT/month

Ringas Dyed bended yarn 650 MT/month

Mordi Processing & Weaving blended fabrics -

SOCIAL INITIATIVES :

RSWM has taken number of initiatives in education, healthcare and community development. The company has established and promoted a number of school and training centers.

It also runs “Mayur helpline” a 24 hour free ambulance service for trauma victims. Besides, this it also organize activities like –Blood donation camp, water conservation, anti tobacco campaign etc.

OBJECTIVE AND SCOPE

The objectives of the research are as follows:

SPECIFIC OBJECTIVES:

To analyze the effect of recession in textile industry. To analyze the performance of RSWM during and after recession.

To understand the market position of the company and how the company is managing their target market areas(competitors & its marketing department).

To understand the processing of fiber.

To understand the clients choice through questionnaire.

RSWM is one of the largest textile companies in terms of turnover. Getting the original experience of the business and understanding the business under situation like recession and strategies to sustain under such situation was the scope of my project.

RESEARCH METHODOLOGY

RESEARCH DESIGN

The research design used for this project is descriptive design. It focused on the following:

The objectives of the study are clearly formulated.

The techniques of data collection were designed in advance.

The processing and analysis of data worked out in anticipation.

The finding of the reports is per guidance of management.

DATA COLLECTION METHODOLOGY

The source of information is gathered through the primary and secondary data. While resorting to these two sources of information, major emphasis is laid on primary source as it gives first hand information in the area of survey. Primary Data collected was done using the questionnaire method. A copy of the questionnaire attached as an annexure. The open ended data analyzed qualitative.

Secondary data collection was done by referring to various generals, magazines and internet. The secondary data collection has been used to address the research objective-To understand the textile industry as a whole including fiber to processing .These sources of secondary data have been acknowledged in the bibliography section of this report.

DATA ANALYSIS

The sampling design highlights the sample size and sampling technique that is used for this study. A modest sample size of 30 respondents was selected for the study. The sample was selected using the convenience sample technique. This sample comprise of the existing clients of RSWM Ltd .These respondents were selected by references given directly through the company personnel .The entire sample population is from the Bhilwara district of Rajasthan state.

OBSERVATION AND FINDINGS

Economic downturn

The year 2008 -2009 has been an exceptional year in the last 60 years because of exceptionally challenging economic scenario. Across the world, the economic activity has declined sharply, driven mainly by the decline in consumption and exports. The advanced economies are facing a severe and synchronized contraction with unprecedented 7.5 %decline in real GDP during the Q4 of 2008.Reflecting sharp demand contraction, consumer price inflation has reached near zero in several advanced countries, raising concerns about sustained deflation on the way forward. Unemployment rates in the US, EU, UK and Japan have increased significantly.

The slump in export demand and tighter trade credit caused deceleration in aggregate demand, reversal of capital flows led to equity market losses and currency depreciations; global liquidity tightening resulted in lower external credit to Emerging Market Economies (EME) and market rigidities and erosion of confidence led to widening of credit spreads.

EFFECT OF RECESSION IN INDIA:

India textile industry largely depends upon the textile manufacturing and export. It also plays a major role in the economy of the country. India earns about 27% of its total foreign exchange through textile exports. Further, the textile industry of India also contributes nearly 14% of the total industrial production of the country. It also

contributes around 3% to the GDP of the country. India textile industry is also the largest in the country in terms of employment generation.

Indian textile industry can be divided into several segments, some of which can be listed as below:

Cotton Textiles Silk Textiles Woolen Textiles Readymade Garments Hand-crafted Textiles Jute and Coir

Like all other economies, India too has been impacted by the crisis. The GDP growth for financial year 2008-2009 is expected to be below 7 %.The service sector, which has been our prime growth engine for the last five years, is slowing, mainly in construction, transport, communication, trade and hospitality sectors. For the first time in seven years, export declined during October 2008-february 2009.

Dampening demand has dented corporate margine ,while the uncertainty surrounding the crisis has affected business confidence .profit margins of the corporate were eroded by:

Higher input costs, Increased interest outgo,

Significant drop in non –sales income and

Losses on foreign currency due to high volatility in forex movements.

As far as textile industry in India is concerned, earlier years have seen considerable interest in the sector from both local and foreign investors –with the expectation that efficient lower cost producers with large capacities would capture greater market share in the post quota trading world. Several domestic manufacturers across various textile segments have ramped up capacities to get ahead in the global game. And the government of India had helped by offering internationally competitive finance through its Textile Up gradation Fund Scheme.

But in the scenario of global recession , subdued consumer confidence and reduced sales at the point –of-sales, the manufacturing capacities in the textile sector that have been created over the past time in China and India ,have turned excessive.

The Government of India had set ambitious targets for the Indian Textile Industry in terms of turnover and exports .But there is likely to be huge shortfalls in achieving the targets ,which may be attributable to general decrease in the volume of imports of textile & clothing by the major buyer countries ;erosion of competitive of the exporters in the global markets due to high domestic transaction costs and incidences of multiple duties ,taxes and anti –dumping duties.

In the past few years, around half the total production of textiles and garments in India has been exported; 60% of it to markets in the United States ,Japan, and the European Union. The recession in the west had adversely impacted these economies the most as a result of which exports from India are projected in the coming months.

EFFECT OF RECESSION ON RSWM

The year 2008-2009 had been an exceptional year in the history of RSWM through following ways:

Global Recessionary Trend: Because of recession, confidence of customer was lowest across the world, so spending on consumer products has shown downward trend. This has resulted in poor retail sales, resulting in inventory buildup in the supply chain. Most of the retailers faced severe cash crunch and demanded relaxation in credit terms. This has put pressure on garments, apparel. So cutting down on their raw material inventories resulted in the stocking of finished goods inventory with the yarn manufacturer.

Effect of recession on PERFORMANCE (in CRORE)

Particulars 2009-10 2008-09 2007-08

TURNOVER 1538.49 1302.23 1173.83

EXPORTS 566.70 391.64 586.44

PAT 36.03 -63.86 .27

Steep Forex Fluctuations: There have been unpredictable, considerable and steep fluctuations in the foreign exchange markets because of the varied trends across the global economy and within the developed economies internally.

Finished Goods realization: Due to pressure on immediate customers, there was poor off take, especially in the export market. In the export market, sluggish demand, coupled with increased competitiveness, RSWM export have shown sharp fall ,but still the company ,on the strength of its quality ,consistency and brand value, was able to sell its production in domestic market against the stiff competition provided by the competitors.

Export performance FROM `09 to feb`10 (in rupee crores)

April`09-Feb`10 Apr`08-Feb`09 %change

FABRICS 8568.35 6752.53 26.89

YARN 3521.30 3374.95 4.34

MADE-UPS 1875.12 1374.59 36.41

FIBER 1273.91 949.32 34.19

TOTAL 15238.67 12451.39 22.39

Fabric dominated 57% share in the total exports followed by yarn 23%,madeups 12% and fiber 8%.

The main yarns declined during this period are polyester, cotton yarn and synthetic yarn. In made ups category,Bed sheet,Bed linen and curtain shown negative trends.

Input Costs: The key inputs for yarn is fiber, which accounts for more than 60% of the finished products costs. Compared to the subdued yarn prices, the fiber prices didn’t show similar downward trends The cotton procurement price was high at that time.

YARN SALES

RSWM,yarn sales department sells near about 1100 tonnes of grey /dyed yarn on monthly basis;out of total sales ,export contributes 60% ,whereas domestic contributes 40% of sales .

The major yarn types:

Polyster /viscose,

100% Acrylic,

100% Viscose,

Polyster /Acrylic,

Special blends like P/W, P/V/L, P/ LINEN.

MAIN COMPETITORS:

PARTICULARS MARKET CAP(Cr.) ROE (%)

RSWM LTD 267.61 -27.2

JINDAL CORTEX LTD 241.13 15.4

BANSWARA SYNTEX 150.32 17.8

SANGAM INDIA 147.43 -8.6

Financial Expenses: The interest rates continued to remain high during most of the period, resulted in higher cash outflow towards interest payment for servicing of debts.

Due to continuation of above factors and despite a rise in turnover, there has been decline in the company’s financial performance during 2008-2009, the highlights of which are as follows:

- Net revenues from operations increased from Rs.1, 168 cr (2007-8) to Rs.1,293 cr(20008-09).

- Operating profit declined from Rs.121.6 to Rs.77 cr.

- Financial expenses increased from Rs.43.8 to Rs.68 cr.

WORKING AT RSWM LIMITED

1. PROCUREMENT AND DISTRIBUTION: RSWM has a centralized purchase team to source its raw material, stock items and fuels. The basic raw material ,fibre –i.e.

polyester is supplied by reliance and viscose by nagda/Grasim, Acrylic fibre by Pasupati & imports from Italy, linen from France &Belgium .

Besides it ,major P/V dyed yarn suppliers are –sang am, RTM, BTM & Chenab Textile mills. Major grey yarn suppliers are –Rishabdev, Banswara & sunder rajan.Generally, the department procures on an average 90 tones /month from outside market.

The marketing offices are situated in Mumbai, Bhilwara, Delhi, Ludhiana, Tirupur.The teams are organized on the basis of various product segments and keep constant touch with the customers to assess their needs and changes in market preferences.

EXPORT MARKETING

The department is situated at Mumbai. .The major customers regions are; Middle East, Gulf, Singapore, Thailand, Malaysia, Japan , china , Italy, France, Denmark, Spain, USA & South Africa.

The marketing department is facing problem due to long lead time. It can be overcome by fixing top priority customers and it can go for block bookings to serve them in a better way. The company is too much concentrated on region i.e. Gulf, so market should be well distributed rather than concentrating on one.

DOMESTIC MARKETING

It can be divided into three; Ready Made Garments, regional marketing & Institutional. The regional market is further fragmented into various zones.

DISTRIBUTION CHANNELS

MARKETING

EXPORT MARKETING(MUMBAI)

DOMESTIC MARKETING(REGIONAL DEPOTS)

In the yarn business,the company caters to most large fabric manufacturers in India and a bulk of its revenue come from long term relationships.Most of the clients are serviced directly by the company.In fact,only small portion of RSWM `s sales is done through distribution Agents.

For the distribution of PV andDenim fabric,the company operates through a chain of wholesale and retail dealers.This financial year ,the company has also opened Mayur Company Outlets ,where Mayur fabrics are exclusively sold over the counters.

The distribution channels are as follows:

Mill --- Agents --- Dealers -- Retailers.

2. CPPC –CENTRALISED PRODUCTION PLANNING & CONTROL CELL

To have a better co-ordination between management, marketing & production areas and in order to eliminate the unorganized method of planning ,management and conflicts ,there is a cell called CPPC.

CPPC has control over all production stages and has been bi-furcated in the following way:

1. CPPC – Dye house,

2. CPPC – Spinning,

3. CPPC – Weaving,

4. CPPC – Process house,

5. CPPC – Flame retardant,

6. CPPC – Greige Go down.

CPPC Work Flow: Marketing department after releasing confirmed bulk order , inform CPPC about the final quantity to be dispatched and ask delivery date accordingly. Now,the real work of CPPC starts,they have to keep marketing person`s satisfied and on the other hand ,they have to do all calculations considering production facilities available and practical constraints faced by operational people.

3. TECHNOLOGY AND NEW PRODUCT DEVELOPMENT:

The companies technology initiatives have enabled it to achieve a high degree of automation and sophistication in all critical areas of production –resulting in better efficiencies in production ,high quality benchmarks and low downtimes.

RSWM`s ability to deliver customized products of assured quality within a committed schedule is an outcome of its strong product development.All new product development initiatives go through well defined processes involving different groups of people.Development of a new yarn involves two teams: yarn development ,to build the fibre mix based on required characteristics; and shades development ;which is done in association with the dye house.In case of any new PV or Denim fabric; the process also involves an additional team for designing the cloth.

4. QUALITY

Well defined quality tests are employed at every stage of the production process from selection and procurement of raw materials, to inspection of final product and after sales support. In addition customer satisfaction exercises are frequently conducted for feedback.

5. INFORMATION TECHNOLOGY

The company maintains a Virtual Private Network at all the six plants locations,all depots of the company ,head office in Noida and regional office in Mumbai.

6.HUMAN RESOURCE

The efforts are made to inculcate an understanding of the complex internal and external customer expectation to ensure a better conformance.

The local HR Department at respective units organizes knowledge improvement programs of all the function for the benefit of the employees on regular basis. This helps them in skill up gradation and improvements in interpersonal relationships, communication, teamwork ,etc.

QUESTION-WISE ANALYSIS OF THE CUSTOMER -SURVEY

A. In which type of manufacturing segment, you deal with?Piece Dyed: …….Fiber Dyed: ..........Fancy Dyed: …….

ANS: The respondent of this survey were thirty clients of RSWM Ltd. They preferred Piece & Fiber dyed segment. The P/c and P/V are the most products of RSWM followed by 100% cotton. It can be implied that RSWM follows the “marketing differentiation strategy” where their clients are retained over a period of years because of the superior quality of the product and the brand name of the products.

B. In which type of market, you deal?Domestic: ………..

Export: …………. ANS: There was mixed reaction. Most of the clients, purchased for sales in

domestic market.

C. Are you regularly associated with RSWM?YES: ………NO: ……….

ANS:

D. Are you satisfied with the quality of RSWM yarn?YES:……NO: ……

ANS: the product of the RSWM is better in quality and well accepted in the market .Customers are satisfied with the quality of the product and that’s why its rate is higher than the other mills producing the same product .Also there is consistency in the quality.

N.Are you satisfied with price structure of RSWM yarn?YES: …….

NO: ……… ANS: the clients felt that the prices of the RSWM products are slightly higher

than the prices of similar products available in the market.The flowing table illustrates this point with factual data.

PRODUCT NAME RSWM PRICES AVERAGE INDUSTRY PRICES.

2/24 PV GREY 143.00 141.002/24 PV 128.00 126.002/32 PV 133.00 131.002/50 PV 65/35 DYED 217.00 205.00

O. How would you rate RSWM with other manufacturer in terms of Quality & Price? (please number:1,2,3…)RSWM: ………Sangam: ……….Birla group of industries: ……….Orient syntax: ……….

ANS: On the basis of quality RSWM was rated as number 1 and on the basis of price, it was ranked as 2nd & SANGAM as no1.

P. How will you mark, the Pre and Post services, provided by the RSWM Marketing office to the clients?Excellent: ………..Good: …………….Average: ………….

ANS: it was marked as good.Pre-sales services: The clients appreciated the promptness with which the marketing manager would attend the needs of the clients. they also liked the fact that the manager would satisfy all the queries and concerns of the clients before closing the deals.this we can say the performance of the pre sales services of the RSWM are rated as “more than satisfactory”.

Post sales services: The post sales services of RSWM are an indispensable aspect of the clients experience with the company .this is especially so, as the clients are required to make a full advance payment, while placing the order. Usually the clients are happy with the product ,but if any dis -satisfaction with regards to the color or tenacity of the yarn ,the company is known for quick adequate replacement .this post sales services of the RSWM makes it as a preferred supplier.

Q. According to you which are the most effective media? T.V. : ……….

Magazines : ……….

News Paper : ……….

Radio : ………..

Mouth Publicity : ……

ANS: 40% of the respondent felt that “word of mouth” publicity is the most effective media for the yarn industry.

R. Any suggestions,you would like to give for improvement?

…………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

ANS :The respondent have given many suggestion to improve various aspects of

the RSWM business process ,as follows:

a. Company should increase the production cycles to reduce delivery time.

b. Company should revise the payment terms to make it more flexible .eg.50% at the

time of booking and the remaining at the time of delivery of the goods.

c. The yarn industry currently operates primarily on the basis of personal

network.RSWM being a major player in this industry can transform the way of

doing business by adopting a more professional approach. This will help smaller

organizations to benefit by RSWM products.

SWOT ANALYSIS OF RSWM :

Strength

RSWM is pioneer Company of LNJ Bhilwara Group which is largest Exporter of

Polyester / Viscose Yarn.

RSWM Products are known as Quality products and bagged the premier in

comparison of competitor’s product.

Its fabric is marketed with the well-known brand name of MAYUR.

Textiles future better after opening of Quotas.

RSWM accorded with certificate of IS/ISO 9001:2000 and weighted for quality

commitment.

Time To Time Expansion & modernization of plants.

Availability of highly trained manpower in both, management and technical

Weakness

Competition with the local process house/independent loom units in piece dyed

suiting qualities in view of their lower administering and other cost continuous

product development will enable to compete with them.

RSWM is not able to compete with Bhilwara local market with the reference of

Trading Channel.

Opportunity

RSWM has well known establish arrangement to sell its Yarn all over the world

and worldwide.

Having vision to penetrate in the Readymade market.

Entering into the Thermal Power Project.

Export to USA.

Threats

Opening of Import and Duty Reduction in the Country.

Increase trend of readymade garments and fashion fabric viz. Cotton fabrics as

against individually stitching change.

Discussion

Inventories “Inventories are lists of stocks – raw materials, work in progress or finished Goods - waiting to be consumed in production or to be sold.”

A company also needs a system of internal controls to efficiently manage stocks

and to ensure that stock records provide reliable information.

Company’s financial reports show only the total inventory balance. Analysts from

outside the department can examine this balance by using ratio analysis or other

techniques. However, this gives only a limited assessment of inventory

management and is not adequate for internal management. Good financial

management necessitates the careful analysis of individual inventory lines.

Inventory management is an important aspect of working capital management

Because inventories themselves do not earn any revenue. Holding either too little

Or too much inventory incurs costs.

Costs of carrying too much inventory are

opportunity cost of foregone interest;

warehousing costs;

damage and pilferage;

obsolescence;

Insurance

Costs of carrying too little inventory are

stock out costs:

lost sales;

Delayed service.

ordering costs:

freight;

order administration;

Loss of quantity discounts.

Carrying costs can be minimized by making frequent small orders but these increases

ordering costs and the risk of stock-outs. Risk of stock-outs can be reduced by carrying

"safety stocks" (at a cost) and re-ordering ahead of time.

The best ordering strategy requires balancing the various cost factors to ensure the

department incurs minimum inventory costs. The optimum inventory position is known

as the Economic Reorder Quantity (ERQ).

Analytical review of inventories can help to identify areas where inventory management

can be improved. Slow moving items, continual stock outs, obsolescence, stock

reconciliation problems and excess spoilage are signals that stock lines need closer

analysis and control.

However, it is important to keep an overall perspective. It is not cost-effective to closely

manage a large number of low value inventory lines, nor is it necessary. A usual feature

of inventories is that a small number of high value lines account for a large proportion of

inventory value. The "80/20" rule (PARETO) predicts that 80% of the total value of

inventory is represented by only 20% of the number of inventory items. Those high value

lines need reasonably close management. The remaining 80% of inventory lines can be

managed using "Broad-brush" strategies.

The overall management philosophy of an organization can affect the way in which

inventory is managed. For example, "Just In Time" (JIT) production management

organizes production so that finished goods are not produced until the customer needs

them (minimizing finished goods carrying costs), and raw materials are not accepted

from suppliers until they are needed. (Large organizations have the power to insist that

suppliers hold stocks of raw materials and thereby pass the carrying cost back to the

supplier). Thus, JIT inventory strategies reduce bottlenecks and stock holding costs.

Pre-sale strategies include

offering cash discounts for early payment and/or imposing penalties for late

payment;

agreeing payment terms in advance;

requiring cash before delivery;

setting credit limits;

setting criteria for obtaining credit;

billing as early as possible;

Requiring deposits and/or progress payments.

Post-sale strategies include:

Placing the responsibility for collecting the debt upon the center that made the

sale;

Identifying long overdue balances and doubtful debts by regular analytical

reviews;

Having an established procedure for late collections, such as

a reminder;

a letter;

Cancellation of further credit;

Telephone calls;

Use of a collection agency;

Legal action.

In summary

There is a trade-off to be made between carrying costs, ordering costs, and stock

out costs. This is represented in the Economic Reorder Quantity (ERQ) model.

Inventories should be managed on a line-by-line basis using the 80/20 rule.

Analytical review can help to focus attention on critical areas.

Inventory management is part of the overall management strategy.

LIMITATIONS OF THE STUDY

a. The survey is based on a small sample size .Thirty respondents is an insufficient number to draw conclusions about RSWM Ltd and Its clients perception s about its operations. A large sample size would have made the study more accurate.

b. Since the primary study is based on customer –feedback through questionnaire Methodology, the limitation of the respondent, bias creeps in. some respondent may not be honest in giving their opinions or may have factors like respondent fatigue,respondent dis-interest ,which may yield factually incorrect information in the survey.

c. The data analysis techniques are basic and the research lack s the use of highly sophisticated statistical tools.

SUGGESTIONS AND RECOMMENDATIONS

Based on the data obtained, the qualitative feedback gives two major insights which have been explained as suggestions and recommendations.

1. The objective of the company must be to maintain the optimum balance of inventory.RSWM Ltd should provide goods immediately on demand of customers to gain reliability and retain loyal customers with the company. The clients of the company have expressed their dissatisfaction with the time taken by the company to deliver the products. This is a concern and can be addressed as quickly as possible so that the customers –as a key stakeholder of the business remain “happy” with the organization.

2. Being a major player in the industry, RSWM Ltd should follow a professional approach to get new business. A company of this long standing and credibility has the influence to change the traditional ways of doing business.RSWM, known to be a Learning Organization can create formal channels of attracting new customers and not depends on informal or personal networks alone .this is important as it will allow smaller firms to take benefits of the superlative quality yarns produced by RSWM Ltd.

ANNEXURE

QUESTIONNAIRE

Client Name: ………………………………………………….. Location: ……………………. Date: ………………

E. In which type of manufacturing segment, you deal with?Piece Dyed: …….Fiber Dyed: ..........Fancy Dyed: …….

F. In which type of market, you deal?Domestic: ………..Export: ………….

G. Are you regularly associated with RSWM?YES: ………NO: ……….

H. Are you satisfied with the quality of RSWM yarn?YES:……NO: ……

I. Are you satisfied with price structure of RSWM yarn?YES: …….NO: ………

J. How would you rate RSWM with other manufacturer in terms of Quality & Price? (please number:1,2,3…)RSWM: ………Sangam: ……….Birla group of industries: ……….Orient syntax: ……….

K. How will you mark, the Pre and Post services , provided by the RSWM Marketing office to the clients?Excellent: ………..Good: …………….Average: ………….

L. According to you which are the most effective media? T.V. : ……….

Magazines : ……….

News Paper : ……….

Radio : ………..

Mouth Publicity : ……

M. Any suggestions,you would like to give for improvement?…………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

PROCESSING OF FIBRE TO YARN:

1.

2.

3.

4.

5.

BIBLIOGRAPHY AND WEBLIOGRAPHY

BIBLIOGRAPHY:

Strategic marketing problems –cases and comments by Roger kerin,Robert .A Magazine-reliance publication. Local newspaper

WEBLIGRAPHY: www.rajasthanspg.com www.lnjbhilwara.com www.rswm.in www.wikipedia.org