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Study On Distribution Network of Textile Industry RESEARCH METHODOLOGY Research Objectives Distribution network plays an important role in sales of the product in textile industry as well as other industries. As marketing students we need to study the role of distribution network in the market so we have taken this opportunity given to us by Reliance Textiles to gain the knowledge about the distribution network. The main objectives of our research are as follows: To study the market of textile industry. To study the role of distribution channel in enhancing the sales and meeting competitive environment. To study the present structure of distribution network of Reliance. To study the inventory management (Stocking Behavior) of Retailers. Research Design Primary data was collected through Survey method. The questionnaire was used as an instrument for the survey method. The questionnaire was open ended and closed ended. S. K. Patel Institute of Management & Computer Studies 1
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Study On Distribution Network of Textile Industry

RESEARCH METHODOLOGY

Research Objectives

Distribution network plays an important role in sales of the product in textile

industry as well as other industries. As marketing students we need to study the role of

distribution network in the market so we have taken this opportunity given to us by

Reliance Textiles to gain the knowledge about the distribution network. The main

objectives of our research are as follows:

To study the market of textile industry.

To study the role of distribution channel in enhancing the sales and meeting

competitive environment.

To study the present structure of distribution network of Reliance.

To study the inventory management (Stocking Behavior) of Retailers.

Research Design

Primary data was collected through Survey method. The questionnaire was used

as an instrument for the survey method. The questionnaire was open ended and closed

ended.

For the collection of the secondary data Newspaper, Magazines, Reference

Books, Internet etc were used.

Sample Area and target samples

We have selected Ahmedabad, Gandhinagar and Mehsana as our sample areas

and our target was the fabric retailers of these areas.

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Sample Size

The sample size for this project was 60 retailers.

Methods Used

Stratified random method was used as a sampling method and face-to-face

interview was used for contact method.

Assumptions

The sample area is assumed to represent whole universe of Indian textile market.

Data collected are assumed to be bias free from side of respondent, interviewer or

any other mediaries.

Limitation of the study

Reluctance on the part of the respondents to provide exact details.

Lack of sufficient funds to cover the whole universe as sample.

Limited Coverage area for survey, it was restricted to Ahmedabad, Gandhinagar

and Mehsana City only.

Time constraint as stipulated by university norms and by project guide.

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The history of textiles is as old as human civilisation itself. Initially used

for protection against nature, textiles were required increasingly to satisfy man's aesthetic

needs for colour and ornamentation in his apparel and surroundings.1940 is considered as

a year of revolution in textile industry. Cotton was the only product earlier but later on

polyester came into the market. The transition from the purely functional to the

decorative use of textiles has been accompanied by a shift in the manufacture of textiles

from a highly individualised and specialised cottage craft to a mechanised and large scale

operation. The creative genius of many persons from all walks of life has contributed to

this evolution.

Indian textile industry is the second largest in the world and also country’s

second largest industry after Agriculture. India has the largest acreage under cotton (9

million hector) and is the third largest producer in the world. It is fourth in terms of staple

fiber production and sixth among Filament Yarn producers. India accounts for about a

fourth of global trade in cotton yarn. The textile industry in India accounts for 9 percent

of Gross Domestics product, 20 percent of industrial production and 35 percent of the

export earnings. It directly employs 35 million persons and widespread forward and

backward linkages with the rest of the economy, thus providing indirect employment to

many more millions.

There are mainly two types of products in the textile industry as given below:

Man Made Fabric : Polyester (Made from chemicals)

Viscose (Made from wood pulp)

Natural Fabric : Cotton

Wool

Silk

A Cotton textile is the most important segment of the industry, accounting

for around 65 per cent of the domestic fibre consumption and exports.

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Currently, India has about 2,600 Spinning and Composite Units with about

35 million spindles and 3,45,000 Open-end rotors, in the mills sector. Besides, there are

about 15.6 lakh Power looms in the decentralized sector, employing about 77 lakh

persons. In the handloom sector, there are 38.90 lakh looms providing employment

opportunities to 124 lakh people. There are about 12,400 processing factories of which

around 10,000 are hand processors.

India produced 2230 million kgs. of cotton yarn, 583 million kgs of

blended yarn, 177 million kgs of 100% non cotton yarn and 769 million kgs of filament

yarn during 1997-98. During the year, India produced 20,000 million square meters of

cotton fabrics, 11,000 million square meters of non-cotton fabrics and 5,800 million

square meters of blended fabrics. About 50 percent of the fabric is converted into

readymade garments in the country. The decentralized power looms sector has a share of

nearly 55 percent and Handloom sector for about 23 percent of the total cloth produced in

the country.

However, India’s percentage share in the global textiles and the clothing

trade continues to be low at about 3 percent. The major reason responsible for a small

Indian share in the World trade has been the technological obsolescence in Weaving,

Processing and Clothing sectors. By the middle of year 1998, the number of closed mills

stood at 231 comprising of 136 spinning and 95 composite mills. In the Power loom

sector, most of the Looms are more than 20 years old and 75 percent of those are

conventional type, not fit for production of fault-free fabric at higher efficiency.

Presently, the industry is passing through a rough phase on account of

unabated escalation in the cost of raw materials and power, sluggish market conditions

both at home and abroad, slack export performance in the wake of South East Asian

currency turmoil, rising imports of textile products and unremunerative prices of yarns

and fabrics. Financial crisis due to liquidity crunch, halting approach of banks in

advancing adequate loans to textile units and high rates of interest stares in the face of the

industry. The old mindset of operating in protected markets with its attendant

inefficiencies will have to give way to a new era of efficiency-driven operations. The

World has enormous appetite for "Low tech" goods - garments, sports wear etc. China’s

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sales in this field are $ 70 billion, 5 times India’s. International standards in quality and

specification need to be imposed; Supply-chain management needs to be developed along

with improving market arrangements internationally.

The Government of India is already alive to the situation. It has recently

created Technology Up gradation Fund, EXIM policy is being revised and an Expert

Committee to review Textile policy is likely to submit its report in the near future.

The textiles sector has a dual manufacturing structure, dominated by a fast-expanding

decentralised small-scale manufacturing segment and a declining vertically-integrated,

large-scale composite mill segment.

For instance, the apparel industry has 27,700 domestic manufacturers,

over 48,000 fabricators, and 1,000 manufacturer-exporters. As much as 80 per cent of

apparel manufacturers have small operations (with less than 20 sewing machines) while

99 per cent of them are individual proprietorships or partnerships. The technologies for

processing cotton textiles and apparel have a broad range -- from hand-operated

equipment to sophisticated automated facilities.

DISTRIBUTION BETWEEN ORGANISED AND UNORGANISED SECTOR

The Organised sector includes the companies which cover composite

process of making fabric to fibre. The organised sector of the textile industry includes the

players like Reliance, Raymond, Birla, Mayur, BSL etc. These all are the big names in

the textile industry but surprisingly the organised sector captures only 20 percent of the

overall market.

The major part of the fabric market that is 80 percent is covered by the

unorganized sector of the industry. The unorganized sector includes the small

manufacturers of the fabric who does not cover the composite process of making fabric

from the fibre. The majority of the small manufacturers are located in the area of Surat,

Bhilwara, and Amritsar. In this way the big part of the total sales is captured by the

unorganized players so the Organised players has to do some thing like tie up with the

small manufacturer to increase the market share of the organised sector.

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INDIAN TEXTILES INDUSTRIES – A Snap Shot

Largest Gross and Net foreign exchange earner

35% of the total Export earnings with practically no import content (cotton yarn

contributing 13%)

20 % of the industrial production

9% of GDP

Direct employment to nearly 35 million of people.

10% of excise revenue

Sector wise Share of Cloth Production

5%

19%

58%

18%Mill

Handloom

Power Loom

Knitted

Export Marketing is broadly divided into four zones viz. America (U.S.),

Europe, Middle East & gulf and Asia (Far East). In there total turnover of Textile Exports

America contributes about 50%, Europe approx. 15 %, Middle East approx. 15% and Far

East contributes about 15% each.

S. K. Patel Institute of Management & Computer Studies

Raymonds 34%

Grasim9%

OCM & Digjam14%

Reliance43%

Performance in Exports

Raymonds

Grasim

OCM & Digjam

Reliance

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EFFECT OF WTO ON TEXTILE INDUSTRY

Trade restrictions had hitherto kept the textile industry from soaring to the

heights it is capable of. The year 2005 brings in a host of opportunities for the textile

sector as Quota-based restrictions for textile exports to the United States and European

nations were lifted on. The textile industry now faces a scenario where the players can

export any quantity they want and to wherever they want.

According to Apparel Export Promotion Organisation, the textile industry

is hopeful of achieving about 15-18 per cent growth in the next one year following the

dismantling of multi-fibre agreement. The government is even more sanguine about the

opportunities that phasing out of quota system in world textile trade presents. The

textiles ministry has unveiled a white paper -- Vision 2010 -- for the textile sector, which

set the target of $50 billion exports by 2010.

But with quotas having been removed and globalisation in full swing, the

market is now exposed to global competition. Indian manufacturers and exporters now

have to compete with the global players and also face emerging tariff and non-tariff

barriers. Yet with its speed of operation, skill, quality of products and low-cost labor, the

industry is gearing up to reap rich rewards in the new era. Like in the information

technology sector, the textiles business too is experiencing a big boom.

The cost of logistics in the Indian textile industry, unlike in China, is

notoriously high and inflexibility in labour laws discourages the best of the companies to

expand. The textile export business cyclical in nature and it will not like to on rolls

employees who will be sitting idle for a chunk of year. The government has also fine-

tuned the technology Upgradation Fund Scheme (TUFS) for the sector that has been

running for the last few years.

With the multi-fiber arrangement coming in competition will increase

drastically. In Italy a cluster of small specialised textile firms are competing on end

products, Germans weave for 24 hours under “lights out” arrangement, TQM is ensured

in Japanese and American plants, ‘looming robots’ are installed and firms in Southern

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USA are reported to be researching the use of genetic engineering, cellular biology and

tissue culture to grow coloured cotton.

Under these circumstances India needs to push hard. An IIM Ahmedabad

study points out the loopholes in Indian Textile Industry as long manufacturing and

delivery times, conflicts and competitions between small, medium and large players and

among links of supply chain viz. cotton producers, spinners, weavers, etc., poor process

control, outdated technology, non-existent indigenous R&Ds, etc.

About India, the WTO says: 'The country could nearly quadruple its share

of the US market to 15 per cent from 4 per cent in 2002.' According to a Crisil study,

Indian textiles and apparel industry can reach $85 billion by 2010 and needs an

investment of Rs 90,000 crore (Rs 900 billion) over the next five years. The industry has

seen investment of about Rs 50,000 crore in the last years and has ramped up capacities

to meet the challenge of quota free regime. However a total investment of about

Rs 1, 40,000 would be required to reach the export target of $ 50 billion by 2010.

Even though the textile export quota has been dismantled, not everybody

in India is aware of it. Only the large textiles companies are - small firms do not seem to

have any clue on what is happening and, therefore, the question of these firms preparing

to face a quota-free regime does not arise.

A survey conducted by the Research and Information System for Non-

Aligned and Other Developing Countries has revealed that 75 of the 100 firms covered in

the study are not aware of the development. The study found the level of awareness about

government-run schemes like the Textiles Up gradation Fund was nowhere near being

satisfactory. Only 45 per cent of the respondents were aware of the scheme, which is

aimed at making cheaper funds available for modernisation.

In terms of trade barriers coming up in developed countries, the survey

noted the industry as a whole considered environment and labour standards as the highest

threat, followed by trade diversion effects, product standards and transitional safeguards.

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Once quotas go, the sheer competition for volumes between China's

manufacturers and suppliers will ensure that prices drop by at least the same amount. In

2002, when quotas were lifted on 29 categories of apparel, prices crashed by an average

of 34 percent, and sometimes as much as 50-80 per cent. If this scenario holds, Indian

textile companies will also face pricing pressures. Quota premiums for apparel are high

and account for between 25 and 35 per cent of the selling price.

According to Rajinder Gupta, CEO of Trident India there will be bigger

opportunities for our textile industry to increase its market share in the post-quota world.

The country has natural competitive advantages, such as availability of inputs like cotton,

yarn and low-cost, well skilled manpower. Combined with the proactive stance taken by

the government, India is poised to gain market share at the expanse of high cost western

countries as well as others that enjoyed quota-free access.

The main challenge for Indian textile industry lies in protecting its

domestic market. The 3 C’s of commitment. Co-ordination and Co-operation need to be

applied all levels to be able to maintain its presence in the global market.

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Symbols of changing textile industry

Netaji Apparel Park at Tirupur India's first, biggest and most modern textile

cluster that matches China's textile industry in production quality and quantity.

Welspun India Ltd, one of the world's largest producers of terry towel products, is

building a $220 million factory in Gujarat.

Arvind Mills Ltd, Asia's largest producer of denim, is setting up new plants in

Bangalore and Ahmedabad.

Gujarat-based Super Spinning Mills Ltd has acquired two sick textile mills in

Madurai to cater to the US market.

Textiles- India has an edge over China

China is the undisputed leader in the world textile trade, making a quarter

of the apparel sold worldwide, but India enjoys a few key benefits over China, which will

come into play in a quota-free world.

India's current share in the world textile trade is only 4 per cent, according

to a study by the World Trade Organisation. But the Indian government says it can be

doubled to 8 per cent by 2010, now that the multi-fibre arrangement is history.

China caters to the mass segment; India has the ability to service high-value niche

orders and has better designer resources.

There is evidence to suggest the US textile industry is lobbying hard to block

dumping of products from China.

India is a favored destination in view of abundant availability of cotton, cheap

access to funds, traditional textile expertise, skilled labour and designer skills

At present Chinese textile firms are imparting 70 hours of training each year to an

experienced worker as opposed to 10 hours by Indian firms, investing in R&D for

new application areas, addressing the issue of quality systematically and also

canalizing export through centerlised channel.

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INTRODUCTION TO RELIANCE INDUSTRIES LIMITED

The Reliance Group, founded by Dhirubhai H. Ambani (1932-2002), is

India's largest business house. The Group's activities span exploration and production

(E&P) of oil and gas, refining and marketing, petrochemicals (polyester, polymers, and

intermediates), textiles, financial services and insurance, power, telecom and infocom

initiatives.

The Group exports its products to more than 100 countries the world

over. Reliance emerged as India's Most Admired Business House, for the fourth

successive year in a TNS Mode survey for 2004.

The Reliance Group Companies include: Reliance Industries Limited,

Reliance Capital Limited, Reliance Industrial Infrastructure Limited, Reliance Telecom

Limited, Reliance Infocom Limited, Reliance General Insurance Company Limited,

Indian Petrochemicals Corporation Ltd. and Reliance Energy Limited.

CORPORATE HISTORY AND BACKGROUND

This is the story of a company with a vision, of how it grew from being

a small trading unit, to be raked among the top 50 emerging market companies in the

world. It is the story of how a company helped place India firmly on the world industrial

scenario taking with it a family a growing family, which include collaborators, suppliers,

customers, employees and the largest investor base in the country. It is the story of how a

company’s vision has extended to include newer challenges, newer goals. And most of

all, it is the story of a company where growth is a way of life.

Reliance began in 1958, as a small trading organization, known as 'Reliance

Commercial Corporation', by late Sri. Dhirajlal Hirachand Ambani (Dhirubhai Ambani,

1932-2002) dealing in various commodities including Nylon and Rayon.

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In 1966, Working his way around Mumbai's Mulji Jetha Market, buying and selling

Yarns in the blazing afternoon sun, he finally found meager finance to purchase manually

operated knitting machines for Naroda Textile unit, near Ahmedabad - the first step in his

highly successful backward integration strategy.

From early days, the focus was on creating state-of-the-art world-class plants. During

1975, World Bank certified that Reliance's textile plant was excellent by developed

country's standard.

In 1982, Reliance Group came up with India's largest polyesters manufacturing plant at

patalganga, near Mumbai. By 1988, this complex was a part of one of the most integrated

marketing complexes of its kind in the world producing Polyester Filament Yarn,

Polyester Staple Fibre, Purified Terephthalic Acid, Paraxylene and Linear Alkyl

Benzene.

In 1991, Reliance started producing Polyvinyl Chloride and Mono Ethylene Glycol at

Hazira (Phase 1), near Surat. Subsequently, Ethylene Oxide, Vinyl Chloride Monomer

and Polyethylene were added to the product spectrum of this Complex. Hazira complex

near Surat in Gujarat is situated on the banks at river Tapti and is spread over 1000 acres

of land, which is comparable in design and Technology to the best in the world.

In 1993 pioneered the first ever Euro Convertible Bond issue by an Indian Company for

US$ 140 million. Reliance raised Rs. 2172 Crores from the domestic capital market for

setting up a World-Class and World-Scale refinery at Jamnagar, Gujarat - the largest ever

offering by any Indian Corporate.

In 1996-97, Reliance became the first Private Sector Company to be rated by

International Credit Rating Agencies. Reliance was rated "AAA", by CRISIL, indicating

the highest credit Quality. Reliance becomes the first Private Sector Company to raise

US$ 300 million in the international debt market in two landmark transactions.

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In 1998, Reliance completed phase II expansion of Hazira Petrochemical Complex

including world's largest multifeed cracker with an investment of Rs.9000 Crores (US$

2.5 billion) increasing Reliance's production capacity four folds to more than 6 million

tons per annum.

In 1998, The Wharton School, university of Pennsylvania, USA awarded Dhirubhai

Ambani the Dean's Medal, for setting an outstanding example of leadership.

During 1999: Integrated Jamnagar Complex comprising world's Largest Grassroots

Petroleum Refinery and fifth largest refinery in the world in terms of size with the

capacity of 27 Million Metric Tones Per Annum which contributes 25% of India's

refining capacity.

2002: RPL merges with RIL the largest ever merger in India. The merger gives RIL the

distinction of becoming India's first Private Sector Company, in the internationally

tracked Fortune Global 500 list of the world's largest corporations.

Reliance rated as "India's Most Admired Business House" for the second consecutive

year in the Business Barons- Taylor Nelson Sofres- Mode Survey.

2002: Reliance acquires IPCL; India's second largest Petrochemicals Company-

consolidates its position in the petrochemical business.

[

Reliance Industries limited today is the India's largest Private Sector Enterprise is a major

player in the Refining sector, Petrochemicals sector, Textile Manufacturing sector and

Power sector.

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RELIANCE GROUP OF COMPANIES:

1) Various Division of RIL:

LOCATION YEAR OF ESTABLISHMENT

NARODA (AHMEDABAD) 1966PATALGANGA (MUMBAI) 1980HAZIRA (SURAT) 1991-92JAMNAGAR 1999

2) Subsidiary Companies:

3) Significant Associate Companies:

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INDIA'S FIRST PRIVATE SECTOR FORTUNE GLOBAL 500

COMPANY

RIL is the first and only private sector Company from India to feature in the

2004 Fortune Global 500 list of 'World's Largest Corporations' and ranks amongst the

world's Top 200 companies in terms of profits. RIL emerged in the world's 10 most

respected energy/chemicals companies and amongst the top 50 companies that create the

most value for their shareholders in a global survey and research conducted by

PricewaterhouseCoopers and Financial Times in 2004. RIL also features in the Forbes

Global list of world's 400 best big companies and in FT Global 500 list of world's largest

companies.

RIL emerged as the 'Best Managed Company' in India in a study by

Business Today and A.T. Kearney in 2003. In 2004, the company emerged as 'India's

biggest wealth creator' in the private sector over a 5-year period in a study by Business

Today - Stern Stewart and as India's 'Most Admired Company' in a Business Barons -

TNS Mode Opinion Poll.

Reliance is only corporate entity in the world to be actively involved in the

entire value added chain, from oil production to the retailing of a verity of petroleum

products to textiles.

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FINANCIAL PERFORMANCE (2002-03 & 2003-04) OF RIL

PARTICULARS 2002-03 2003-04 Increase of

Gross Turnover Rs. 65,061 crores Rs. 74,418 crores 14%

Operating Profit Rs 9,366 crores Rs 11,122 crores 19%

Cash Profit Rs. 7,565 crores Rs 9,197 crores 22%

Net Profit Rs. 4,104 crores Rs 5,160 crores 26%

Net Worth Rs 30,326 crores Rs 34,452 crores 14%

Total Assets Rs 63,736 crores Rs 71,157 crore 12%

Compounded Annual Net Profit growth over 5 years - 19%

RIL's Gross Turnover for the year ended March 31, 2004 is Rs. 74,418

Crores, against Rs. 65,061 Crores for last year, an increase of 14%.

Reliance Industries Ltd. is by far the largest exporter in India with exports

of Rs 14,969 Crores (US$ 3.4 billion) for year ended 2004 which is an increase up to

30% against the last year exports of Rs11,510 Crores (US$ 2.4 billion), which accounts

to 5% of the total exports in India.

"The financial year 2003-04 has been yet another landmark year in the

history of Reliance. It has become the first company in the private sector in India to

record a profit of over one billion dollar in a year.

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SWOT Analysis

Strength

Group’s cash flow and ability to raise big funds in domestic and international

market.

Proven ability in executing global scale project.

Planning largest telecom bandwidth among private players with 60000 Km.

networks.

Early starter in biotech.

One of the leading manufacturers in manmade textiles.

Weakness

Latecomers in the telecom game and are yet to build-up a network in oil retailing.

With competitors like Exxon Mobil in energy, Bharti and Hutchinson in Telecom

Reliance face a tough test.

Opportunities

Reliance has potential to exploit deregulated energy sector.

Buying Hindustan or Bharat Petroleum will bring retail network.

Data/call center can bring Billion Dollar earning.

Threats

Need to have a fuel retail network very soon.

Telecom plans hinge largely on being able to offer CDMA-based Ltd. mobility on

fixed line phones.

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IMPORTANT FEATURES OF TEXTILE DIVISION

The textile division of Reliance is the first rung in its vertical integration ladder.

The Reliance textile division offers international standard of fabric quality at very

competitive price and also offers widest colour palette in its fabric range.

The division has a large manufacturing complex spread over half a million square

meters

Equipped with one of the largest textile facilities and environment friendly

technologies it is India’s most modern and vertically integrated textile complex.

The division has high quality control levels with ISO 9000 and ISO 14000

certificates.

The technological infrastructure is complemented by a talented and skilled

workforce.

The division produces about 32 million meters of fabric, both for domestic and

international market, offering the maximum range in the most number of

categories.

The division offers e-enabled operations right from the basic levels of colour

selection to delivery details of fabric.

The home furnishing brand ‘Harmony’ offers more choice in furnishing fabric

category than any other brand.

The textile division offers customized sampling facilities catering to specific

requirements of the international market.

The vertical integration (from fibre to fabric) enables complete quality control at

all levels.

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Integrated Textile Division at Naroda, Ahmedabad

LOCATION: 500 km. North of Mumbai at Naroda, Ahmedabad.

YEAR ESTABLISHED: 1966

TOTAL INVESTMENT: 386.4 Crores (US$ 230 million)

NO. OF EMPLOYEES: Approx. 2400 Staff and Regular Workers

PRODUCTS:

WORSTED SUITINGS

Wool and Wool blend suiting

PV SUITINGS

Poly. Viscose blend suiting

HOME TEXTILES

Polyester and Blends

INFRASTRUCTURE

Total Area 4, 84,950 sq. meters

Built-up-area 3, 01,000 sq. meters

Captive Power Plant 52 MW.

Effluent Treatment Capacity 4 million gallons/day

The Textile Division produces about 32 million meters of fabrics both for domestic and

international markets. This makes it the only textile mill in India to offer the maximum

range in varied product categories.

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Worsted Suiting

Capacity - 10 million meters per annum

Spinning capacity - 24000 spindles 3.3 million Kgs per annum.

Count range - 24 - 80 Nm

Looms - Sulzer, Dornier

Special treatments like Teflon, Enzyme washes etc.

Strong presence in Corporate Wear and Uniform Segments

PV Suiting

Production - 16 million meters per annum

Spinning capacity - 23000 spindles, 4.8 million Kgs per annum

Count range - 15-60 NEC

Looms - Sulzer, Dornier

Special fabrics like Lycra blends and special finishes like Teflon coating, which

perform well on parameters like colour fastness, tensile strength, crease

resistance, drape, handle etc. are offered

Home Textiles (Harmony)

Capacity - 7.5 million meters per annum

Weight range - 100 to 1000 grams/linear meter

Looms - Sulzer, Dornier

Major player in institutions and Contract Market Segment

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BRANDS

VIMAL

Suiting & Shirting

Dress Materials

HARMONY

Furnishing Fabrics

Day Curtains

Automotive Upholstery

RUEREL

Suiting

REANCE

Ready-to-wear

New Products

Over the past two years the Textile Division has introduced following new products

Cotlene

CoolCots

Concept

Micro

Plain Magic

Casanova

Campus

Right Choice

Copper Label

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THE MANUFACTURING PROCESS

Fiber to yarn : Spinning

Yarn to Fabric : Weaving

Grey Fabric to Finished Fabric : Processing

Finished product to Grading : Folding

: Packing

1) Spinning:

Spinning is the process of making yarn from fibers or from polymers

solution in a suitable solvent or as a melt by passing through a spinneret with a large

number of fine holes (for multi filament yarn) or with one hole (for mono filament

yarn). The fiber required for the yarn is brought from the Reliance’s Patalganga plant.

The spinning process as such comprises of the following processes:

a) Carding

b) Gilding

c) Combing

d) Dyeing

2) Weaving: The process is of conversion of the yarn into a fabric on a loom by

interlacing to sets of threads at right angles to each other.

3) Grey Mending

Any defect that may arise in the weaving is rectified by Grey mending.

4) Processing: After Grey mending the fabric is taken to the processing section where

the fabric is relaxed, unfolded, dried, cleared of loose ends, heat set and paper pressed.

5) Mending and Finishing

Final touches are given to the fabric so as to remove any defects before

sending it to the folding section.

6) Folding and Packaging

The fabric is cut according to the different length in the folding sections before it

is packed for final shipment

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Distribution Channel Followed By Textile Division of Reliance

The textile division of Reliance is also selling its products through the

similar kind of distribution channel used by the other major industry players given as

below.

1) Direct Marketing Channel (Zero Level)

This type of channel has no intermediaries. The goods go from the

producer directly to the consumer, e.g. Retail Outlet of companies

Producer Consumer

2) Indirect Marketing Channel

This may further be classified into the following categories.

I. One Level Channel

Producer Retailer\ Distributor Consumer

II. Two Level Channel

Producer Wholesaler\ Distributor Retailer Consumer

CONTRIBUTION OF THE UNIT

Reliance makes the largest contribution to the Indian economy, as a single

business house.

India (Rs. Crores) Reliance Group

(Rs. Crores)

%

GDP/Revenue 2,856,000 99,000 3.5%

Indirect Tax 158,500 14,800 10%

Exports 265,000 15,900 6%

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Reliance Group at this time is the largest business house in India and has

interests spanning an array of diverse business such as Textiles, Polyester, Fibers,

Intermediates, Petrochemicals, Oil & Gas Exploration, Petroleum Refining and

Marketing, Power, Infocom, Insurance etc.

Even as Reliance Industries Ltd. strives to reach higher and higher levels of

excellence in their business performance and create wealth for their shareholders, they

are deeply conscious of their social obligations as a corporate citizen.

They care for the people living in the villages around their complex. Their

aim is to enhance the quality of life, welfare and future through their community welfare

programs. Their helping hands always there for them - in normal times and in the time of

need through drought, cyclones and earthquakes. Their community development and

welfare programs cover many villages around the Jamnagar Complex - Motikhavdi,

Nanikhavdi, Meghpur, Gagwa, Padana, Nanalakhia, sikka etc. The Programme focuses

on: -

Quality of life and primary education: Various facilities provided during the

past few years towards improving hygiene and quality of life include water

drainage systems, roads, street lights, water supply tanks, primary school

buildings, community halls, temples and so on.

Health Care: In order to ensure availability and access to good health care

facilities, a free round-the-clock medical center has been set up at Motikhavdi.

Also, to extend medical facilities to other facilities to other villages near the

complex, free medical services are provided through mobile dispensaries and

medical camps organized regularly to provide dental and ENT checkups, eye care

etc.

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VARIOUS AWARDS AND ACCREDIATION

Naroda 1 1989-96 ASTM Safety Award For achieving lowest disability injury index every year.

2 1997 The Textile Institute Development Award

In recognition of the company’s commitment to international standard of quality.

Patalganga 1 1994 Indian Merchant Chamber Award

For outstanding achievement to awards of air and water pollution control

2 1992-93 Baroda Productive Council Award

For goods house keeping contest for petrochemical complex

3 1992 British Safety Council Award For lowest accident rate

4 1991 National Safety Award For highest accident free period

Hazira 1 1996 ICMA Award For Environmental Control Strategies and Safety in Chemical plants.

2 1995-96 Golden Jubilee Memorial Trust Award

For Outstanding Pollution Control Programme.

3 1995 Federation Of Gujarat Industrial Award

For Environmental preservation and pollution control

Jamnagar 1 2004 ‘Petrochemicals Company of the year’ at the prestigious sixth annual Platts Global Energy Awards ceremony in New York, USA

2 2003 Ranked best in Shell Benchmarking for the third consecutive year in ‘Energy and Loss’ Performance from amongst 50 refineries worldwide.

3 2002 The first ever and largest gas discovery by an Indian private sector company.

PRODUCT FLOW CHART

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Abbreviation Full Name Abbreviation Full Name Abbreviation Full Name

DEG Di-ethylene glycol

MEG Mono-ethylene glycol PP Polypropylene

ATF Aviation turbine fuel

LLDPE Linear low density polyethylene

PSF Polyester staple fibre

EDC Ethylene di-chloride

HDPE High density polyethylene

PTA Purified terephthalic acid

EO Ethylene oxide NGL Natural gas liquid PVC Polyvinyl chloride

HSD High speed diesel

NP Normal paraffin PX Paraxylene

MS Motor spirit PET Polyethylene terephthalate

TEG Tri-ethylene glycol

LAB Linear alkyl benzene

PFY Polyester filament yarn VCM Vinyl chloride monomer

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INTRODUCTIONDefinition of Distribution Channel:-

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According to American Marketing Association

“A Channel of distribution channel is a structure of intra-company organization, units and

intra-company agents and dealers, wholesalers and retailers through which a commodity

product or service is marketed”.

The role of distribution in ensuring the success of

organisation strategy is often underestimated. Distribution is thought of as a competitive

advantage for those organisations which have built up distribution clout and distribution

through sheer size. Well executed distribution strategy can be a source of competitive

advantage for organisations irrespective of size or market share, provided that it is

focused on end consumer needs and optimised with respect to cost of distribution.

The major focus of distribution channel is on delivery.

It is only through distribution that public and private goods and service can be made

available for use or consumption. Distribution channel help enhance promotion and

selling and impart marketing controls. It is the set of marketing institutions or

intermediaries who participate in distribution of goods and services from the point of

production to point of consumption. The emergence and of wide verity of distribution-

oriented institutions and agencies, typically called intermediaries because they stand

between production on the one hand and consumption on the other can be explained in

the following terms:

Intermediaries can improve the efficiency of the process.

Intermediaries help in the proper arrangement of routs of the transactions.

Intermediaries help in the searching process.

They help in the sorting process.

Objectives of Channel of Distribution:-

To ensure availability of products at the point of sale

To build channel members’ loyalty

To stimulate channel members to put greater selling efforts

To develop managerial efficiency in channel organization

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To identify organization at the buyer level

To have an efficient and effective distribution system, to make your products and

services available:

Readily

Regularly

Equitably and

In a fresh form.

Types of Distribution Channel:-

Because of the wide variety of channel arrangements that exists, it

is difficult to generalize the structure of channels across all industries. However,

distribution channels are usually of two types:

1) Direct Marketing Channel (Zero Level)

This type of channel has no intermediaries. The goods go from the

producer directly to the consumer, e.g. Retail Outlet of companies

Producer Consumer

2) Indirect Marketing Channel

This may further be classified into the following categories.

III. One Level Channel

Producer Retailer\ Distributor Consumer

IV. Two Level Channel

Producer Wholesaler\ Distributor Retailer Consumer

V. Three Level Channel

Producer Distributor Wholesaler Retailer Consumer

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VI. Four Level Channel

Producer Agent Distributor Wholesaler Retailer Consumer

Participants in Distribution Channel

Manufactures: - A manufacturer is one who produces the product. Manufacturer

represents significant and highly visible channel participants because they

produce product that become the primary concern of the overall distribution

process.

Agent: - Intermediaries with legal authority to market goods and to perform other

functions on behalf of the producer.

Distributors: -Distributors perform several functions including inventory

management, personal sale and financing.

Wholesalers: - Wholesalers are organizations that buy from producers and sell to

retailers and organizational customers.

Retailers: - As the last link in many marketing channels, retailers sell directly to

final consumers.

Distribution Channel Scenario in India

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The sheer diversity in the Indian population’s demographic and

economic status makes targeting it a very challenging proposition. Roughly 68 percent of

population live in the villages while 32 percent live in cities and towns. There are roughly

about 3,750 towns in India and 64 percent of the urban population lives in 309 of these

towns. The rest are scattered across the remaining 3,400 towns.

The population size of villages ranges from less than 200 to more

than 5,000. Of the total number of villages, 19 percent fall in the 500 to 1000 population

category while 15 percent lie in the over 5,000 category.

There are the income distribution statistics. According to the

National Council of Applied Economic Research’s MISH survey, 50 percent of the

population has income of less than Rs 25,000 per annum (at 1995-96 prices), while just

about five percent has income between Rs 77,000 to Rs 1,06,000.

Distribution of Villages According to Population (%)

Below 500 9.4%

500 – 1,000 18.6%

1,000-2,000 25.1%

2,000-5,000 32%

More than 5000 14.9%

Distribution of Urban Split According to Population size

THE DISTRIBUTION CHANNEL

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Population Size No. Of Households

Metros 5 million + 8.3

Mini-Metros 1.5 million 7.3

Main Towns 1,00,000(-) 4.5

Medium Towns 1 million 1.0

Class II and III Towns 20,000-1,00,000 10.6

Class IV Towns 10,000-20,000 3.1

Class V and VI Towns 5,000-10,000 1.1

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Consumer Satisfaction Manufacturer/ Distributor

Cooperation/Conflict

Manufacturer/ suppliersChannel Objectives

Market Share by segment Profit/ Contribution Goal R.O.I Distribution loyalty Market Development

Consumer Objectives Choice Availability Value Conveniences

Distributor’s Objectives Turn over Gross margin R.O.I Promotional

Assistance Technical Support Market Development

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1) In which of the following products you deal

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Products Respondent

Men’s Wear 60

Women’s Wear 19

Home Furnishing 3

0

10

20

30

40

50

60

60

19

3

Men's Wear

Women's Wear

Home furnishing

Interpretation

The basic idea behind asking this question is to find out the respondent who deals

in women’s wear and home furnishing fabric apart from men’s wear.

From the survey carried out among 60 retailers who deal in men’s wear 16 are the

retailers who deals in women’s wear and 3 are such who deals both in home furnishing

and women’s wear apart from men’s wear

Reliance has to target this type of retailers for selling “Vimal” man’s wear,

Women’s wear and “Harmony” the home furnishing fabric.

2) You normally stock which of the following company’s brand.

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BSL; 35

Digjam; 25

Donear; 33Mayur; 22OCM; 18Raymond; 34Reid & Taylor;

9

Reliance; 20

Siyaram; 23

Other; 28

Interpretation

This question gives us information about the brands which are stocked by the respondents. This information helps us in identifying the brands which has more demand in the market and has a strong distribution channel.

We have found that BSL, Raymond and Donear are the three major brands having more presence on the retailer’s shelf. While Reliance’s Vimal is stocked only by 20 of the 60 respondents visited. This shows the low demand of Vimal into the area targeted.

The point to be taken care here is that Raymond and BSL are the brand of the company’s located in Bombay and Bhilwara respectively has strong distribution network than the Reliance which is located in Naroda.

3) Please specify the reasons for not stocking other brands.

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Company / Brand Respondent Percentage

BSL 35 58.33

Digjam 25 41.67

Donear 33 55

Mayur 22 36.67

OCM 18 30

Raymond 34 56.67

Reid & Taylor 9 15

Reliance 20 33.33

Siyaram 23 38.33

Other 28 46.67

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Reasons Respondent Percentage

High Price 11 18.33

Low Demand 26 43.33

Inferior Quality 4 6.67

Limited Varity 4 6.67

Less Margin 5 8.33

Availability 1 1.67

Other 9 15

Total 60 100

High Price; 11

Low Demand; 26Inferior Quality; 4Limited Varity; 4

Less Margin; 5

Availability; 1

Other; 9

Interpretation

By asking this question to the respondents we can find out the reasons for not stocking the other brands mentioned in the above question.

The most common answer to this question was low demand by 43.33% of respondents. The main reason behind the low demand for fabrics might be the increasing craze of readymade garments. The demand for the fabric can be increased by the way of advertising or sales promotion schemes.

4) Which of the following parameters you prefer most to stock for any company’s product?

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Parameters Respondent Percentage

Easy Salability 26 43.33

Product Quality 12 20

Pricing 8 13.33

Brand Equity 10 16.67

Service 3 5

Other 1 1.67

Total 60 100

Easy Salabil-ity; 26

Product Quality; 12Pricing; 8

Brand Equity; 10

Service; 3 Other; 1

Interpretation

By asking this question to the respondents we can find out the reasons for

stocking the brands mentioned in the question-2. These reasons are the factors that

influence the retailers to stock one brand over that of other brands.

In answer of this question 43.33% of the respondents said that the Easy salability

is the factor that influences them to stock any of the brands while around 16.67% and

20% of the respondents respectively have chosen brand equity and better quality as the

reasons for stocking any brand.

5) From whom do you purchase the fabric?

Party Respondent Percentage

Wholesaler 37 61.67

Agent 11 18.33

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Direct From The Company 7 11.67

Depot 1 1.67

Other 4 6.66

Total 60 100

Wholesaler; 37Agent; 11

Direct From Company; 7

Depot; 1 Other; 4

Interpretation

With the help of this question we can know the distribution network followed by

various companies.

More than 60% of the respondents have said that they are purchasing the fabric

from the wholesaler this suggest that the companies are distributing their products

through one of the distribution networks given below.

Producer Wholesaler\ Distributor Retailer Consumer

Or

Producer Distributor Wholesaler Retailer Consumer

6) From whom do you prefer to purchase the fabric?

Party Respondent Percentage

Wholesaler 20 33.33

Agent 10 16.67

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Direct From The Company 26 43.33

Depot 0 0

Other 4 6.67

Total 60 100

Wholesaler; 20

Agent; 10Direct From

Company; 26

Other; 4

Interpretation

This question helps us in finding out the preferences of the respondents regarding

the distribution network. It means if given choice from whom they would like to

purchase.

43.33% of the respondent surveyed said that they would like to purchase directly

from the company because by this way the numbers of intermediaries will be reduced and

they would be able to earn more. While 33.33% respondents have said that they would

like to purchase from the wholesalers because of their limited capacity to purchase and

stock.

7) According to you who provides you better services

Party Respondent Percentage

Wholesaler 31 51.67

Agent 7 11.67

Direct From The Company 18 30

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Depot 0 0

Other 4 6.66

Total 60 100

Wholesaler; 31Agent; 7

Direct From-Company; 18

Other; 4

Interpretation

This question also helps us in understanding the viewpoint of the retailers. We

want to know according to them (retailers) who can provide them more and better

services.

As shown in the above chart according to 51.67% of the respondents wholesalers

are the one who can provide them more services because by doing this they also increases

their business. They also said that company would not provide as much as services as

wholesalers because of the limited stocking capacity of the small retailers.

8) Which of the following services provided by the company/ the person from whom you purchase?

Services Respondent Percentage

Credit Period 42 70

Discount 49 81.67

Gifts 21 35

Schemes 25 41.67

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POP materials 5 8.33

Transportation Facilities 19 31.67

Other 4 6.67

Credit Period; 42

Discount ; 49Gifts ; 21Schemes; 25

POP; 5

Transportation Facil-ities; 19

Other; 4

Interpretation

This question helps us in finding out the service that is presently provided to the

retailers by the party from whom they are purchasing.

Credit period and discount (cash) are the very common service provided to the

retailers by the wholesalers or the company. And as the respondent said on the very

special occasions like Diwali they also get the benefit of the gifts or schemes.

9) Which types of services do you prefer?

Services Respondent Percentage

Credit Period 47 78.33

Discount 52 86.67

Gifts 32 53.33

Schemes 39 65

POP materials 5 8.33

Transportation Facilities 21 35

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Other 1 1.67

Credit Period ; 47

Discount; 52Gifts; 32Schemes; 39

POP; 5

Transportation Facilities; 21

Other; 1

Interpretation

By asking this question we can know the preference of the respondents regarding

the services from the party from whom they are purchasing.

86.67% of the respondent have said that they would prefer discount because

that’s the service from where they get direct cash benefit while other most preferred

service was of the credit period because it provides the opportunity to the retailers to

stock more than his financial capability.

10) According to you which company has shortest delivery time?

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Company / Brand Respondent Percentage

BSL 10 16.67

Digjam 4 6.67

Donear 5 8.33

Mayur 4 6.67

OCM 4 6.67

Raymond 13 21.66

Reid & Taylor 2 3.33

Reliance 4 6.67

Siyaram 6 10

Other 8 13.33

Total 60 100

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BSL; 18

Digjam; 8

Donear; 10Mayur; 8OCM; 7Raymond ; 25Reid & Taylor; 4Reliance; 7

Siyaram; 11

Other; 16

Interpretation

The basic idea behind this is find out which has the most efficient distribution

network.

Surprisingly Raymond which is located in Bombay is considered as having the

shortest delivery period rather than the Reliance (Vimal) which is located in Naroda.

Raymond has achieved this shortest delivery period by building a team of good financial

strong wholesalers.

11) From your point view customer prefer to purchase from

Party Respondent Percentage

Retailers 24 40

Wholesaler 1 1.67

Company’s Showroom 10 16.67

Shopping Malls 25 41.66

Total 60 100

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Wholesaler; 1

Retailer; 24

Company Showroom; 10

Shopping Malls; 25

Interpretation

The basic idea behind asking this question is to find out the place from where the

consumers would like to purchase the fabric from the point of view of the retailers.

According to 41.66 % of the respondents the consumer would like to purchase the

fabric from the shopping malls because of the latest shopping trend and according to 40%

of the respondents the consumer would like to purchase the fabric from multi brand

retailers because this is the place where the consumer can have a look at the designs of

more than one brand and have more options to choose from.

Findings

We found that BSL and Raymond have more demand in the Gujarat region than

the famous brands like Reliance (Vimal) and Reid & Taylor.

We have also found from our survey that the retailers stock any brand based on

the demand of that product not based on the price of it or the margin he is getting

from selling of that brand

Easy salability is the main factor for preferring one brand over other brand

because for selling these types of brands the retailers have to put less effort so his

valuable time and up to some extent money also is being saved.

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During our research work we have found that the wholesaler is the party from

whom the majority of the retailers are procuring the fabric and more of the

retailers have agreed that if given choice they would like to purchase directly

from the company.

According to majority of the retailers the wholesaler is the person who can

provide them better services.

Credit period and discount are the two most common services provided to the

retailers and by asking their preference towards services these two same services

are preferred.

By asking about the shortest delivery time to the retailers we have found that

Raymond is the company which have shortest delivery period.

From the point of view of the retailers the customer would like to purchase from

shopping malls and multi brand retailers rather than company’s showroom.

Suggestions

Vimal is one of the top 3 brands but as we have surveyed only 20 out of the

60 respondents are stocking it so the company has to take some serious steps

to increase the presence of its products on the retailer’s shelf .

Some of the retailers are also stocking women’s wear and home furnishing

with the men’s wear so the company has to use them in proper way to sell

“Harmony” the home furnishing brand and women’s wear.

The demand of the readymade garments is increasing so the company has to

concentrate more on that department to capture good market growth. If

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possible company can come up with its own readymade brands or collaborate

with ready made garment manufacturer and supply them the needed fabric.

Reason for not stocking any particular brand as shown is the less demand.

The demand for any product can be achieved through creating the consumer

pool. So the company has to think of creating the consumer pool by the way

of advertising.

The demand for the cotton products especially of shirting is increasing so we

suggest the company to collaborate with some cotton manufacturer in

shirting and market their product under the brand name Vimal.

Raymond and BSL have shortest delivery period which are based at Bombay

and Bhilwara respectively. This shortest delivery period is being achieved by

the team of good financially strong wholesalers. Reliance which is based at

Naroda has long delivery period than these two companies. So the company

has to think of aggressive development of wholesaler in all major distribution

centers because these distribution centers reduces delivery time and provide

better services.

The company has to increase the number of retailers by introducing trade

sales promotion schemes because these multi brand retailers are the person

from where the consumer likes to purchase the fabric.

Company has to think of selling its products through the shopping malls

because of the trend of consumers going to malls for shopping.

Conclusion

Although Reliance gets stand in a list Fortune 500 Company and also

considered to be India’s largest private sector corporation, the brand “Vimal” has not

very big market in the area of Gujarat. As we know Reliance also manufactures the fabric

for women’s wear and home furnishing apart from Men’s fabric. But in the area in which

we have conducted our research we had not found even a single retail shop which sells all

the three types of fabric so the company has to do some thing like providing extra

discount to the retailers who purchases all the three types of fabric to improve the current

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situation. Apart from that as we have noticed the target segment of Reliance is the person

who falls in to B or C class not A class so the company has to give more franchises in the

small towns. By doing this the company would be able to sell entire range of its products

under the single roof in the small towns also.

Moreover the company has to do something like sales promotion schemes,

Advertisement etc. to improve its sales especially in the area of Gujarat. Reliance has to

spend little more on above mentioned activities to increase the consumer pool. The reach

of the Reliance product is not as much as of other companies’ product so the company

has to build the team of good wholesalers to expand the overall reach and through this the

sales of the company.

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QUESTIONNAIRE

We are students of MBA at S.K.Patel Institute of Management and Computer Studies, Gandhinagar. As a part of our academic course we have to prepare a Grand project. We have decided to do this task through market survey in Textile Industry. For this task we have prepared this questionnaire. We request you to help us in this task by filling up this questionnaire.

1) Name Of the Shop: ___________________________________________________

2) Address ___________________________________________________

___________________________________________________

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3) You deal in which of the following products

[ ] Men’s wear [ ] Women’s wear

[ ] Home furnishing [ ] other _________

4) You normally stock which of the following company’s brand

[ ] BSL [ ] Digjam [ ] Donear

[ ] Mayur [ ] OCM [ ] Raymond

[ ] Reid & Taylor [ ] Reliance [ ] Siyaram

[ ] Other ___________

5) Please specify the reasons for not stocking other brands.

[ ] High Price [ ] Low Demand [ ] Inferior Quality

[ ] Limited Variety [ ] Less margin [ ] Availability / Services from Co.

[ ] Other_____________

6) Which of the following parameters you prefer most to stock for any company’s product

[ ] Easy Salability [ ] Product Quality [ ] Pricing

[ ] Brand Equity [ ] After Sales Services [ ] Other __________

7) From whom do you purchase the fabric

[ ] Wholesaler [ ] Agent [ ] Direct from company

[ ] Depot [ ] Other __________

(PTO

8) From whom do you prefer to purchase the fabric

[ ] Wholesaler [ ] Agent [ ] Direct from company

[ ] Depot [ ] Other _____________

9) According to you who provides you better services

[ ] Wholesaler [ ] Agent [ ] Direct from company

[ ] Depot [ ] Other _____________

10) Which of the following services provided by the company/ the person from whom you purchase?

[ ] Credit period [ ] Discount [ ] Gifts

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[ ] Schemes [ ] POP materials [ ] Transportation Facilities

[ ] Other ____________

11) Which types of services do you prefer?

[ ] Credit period [ ] Discount [ ] Gifts

[ ] Schemes [ ] POP materials [ ] Transportation Facilities

[ ] Other ____________

12) According to you which company has shortest delivery time?

[ ] BSL [ ] Digjam [ ] Donear

[ ] Mayur [ ] OCM [ ] Raymond

[ ] Reid & Taylor [ ] Reliance [ ] Siyaram

[ ] Other ___________

13) From your point view customer prefer to purchase from

[ ] Retailers (Multi Brand Outlets) [ ] Wholesaler

[ ] Company’s Showroom [ ] Shopping Malls

14) Suggestions

_________________________________________________________________

_________________________________________________________________

Thank You

BIBLIOGRAPHY

Reference Books:

Sales and Distribution Management By S L Gupta

Marketing Management (11th Edition) By Philip Kotler

Websites:

www.ril.com

www.google.com

www.rediff.com

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www.indiainfoline.com

Newspaper

Times Of India

The Economic Times

Business Standard

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