os @ gtn textiles
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It is my Organization Study conducted at GTN Textiles...TRANSCRIPT
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--Chapter I--
--Introduction--
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Introduction
The textile industry has a glorious history in India. It reached its peak of excellence in
the period between tenth and seventeenth centuries. The Indian textiles industry is a diverse,
large, colorful, yet full of complexity like the country itself. India is among world’s top
producers of yarns and fabrics, and the export quality of its products is ever increasing.
Textile industry is one of the largest and oldest industries in India. Textile industry in India
is a self reliant and independent industry and has great diversification and versatility. The
Indian textile industry has greatest presence in the economic life of the country. It is the
second largest textile industry in the world after China. The textile industry contributes
about 14% to the country’s industrial output and about 17% to export earnings. From the
point of view of production, employment export and consumption of cotton textile industry
is very important.
Textiles occupy an important place in Indian economy. The industry employs about
35 million people and contributes approximately 4% of the GDP of India and 17%of the
country’s export earnings. The industry contributes around 25% share in the world trade of
cotton yarn. India is the largest exporter of yarn in the international market and has a share
of 25% in world cotton yarn have export market.
The major steps in the manufacture of textile clothes are:
To harvest and clean the fiber or wool.
To card it and spin it into threads.
To weave the threads into cloth and,
To fashion and sew the cloth into clothes.
The cotton textile industry has three main divisions. They are:
1. The mill industry producing yarn and clothes.
2. The power loom factories producing clothes from mill made yarn.
3. Widely dispersed handloom units producing cloth both from mill made and hand spun
yarn.
Thus, an industry has an important role to play both in economic prosperity of the
country and in the supply of an essential commodity for the entire population. The GTN
group traces its origin to yarns. Textiles and cotton trading for more than 5 decade.
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The group has acquired in depth knowledge of various cotton growing areas in the
country and overseas and developed close touch with cotton yarn market quality control is
thus ensure from the raw materials to procurement stage.
The group entered into manufacture of cotton yarn in 1996 and has subsequently
shifted its emphasis to manufacture high quality yarns for sophisticated international
markets. Today GTN group has emerged as the largest exporter of cotton yarn in the mill
sector in the country.
The present study of an organization like GTN Textiles, one of the leading textile
Corporation units in Kerala, helps to study the organizational setup as a whole, i.e., how they
adapt the strategies and structures that guide them. Organization study gives the opportunity
to the students to understand the basic managerial skills and corporate culture. It enables the
students to understand their skills and interest which helps in shaping the career. In addition
to it, students come to know the history of the organization, its milestones, vision, mission,
plans, and expectations of the organization regarding the qualities and skills of its
employees.
1.2 Objectives of the Study
To study the overall functions of organization and gain practical experience.
To study about the structure of the organization
To make an analysis of the organization’s performance.
To understand the history, growth profile, structure, & future plans of the
organization.
To study the quality maintenance procedures and techniques adopted for keeping the
international standards
To understand the duties and responsibilities performed by employee at different
levels in the organization.
To conduct a SWOT analysis.
1.3 Scope of the Study
GTN Textiles Ltd, a well-reputed and experienced company in Kerala, who enjoyed a
monopoly for several years in the field of manufacturing of cotton yarns and was found to
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be a good source for me as an MBA student. The company was running under various
departments and had vast hierarchies of administration, which could be carefully studied for
the well understanding of how a management works practically. In addition to that, direct
communication with the workers was also possible in the company. So, it was found to be
beneficial in doing a project work on the organizational study in GTN Textiles Ltd.
1.4 Chapterisation
The whole study contains four chapters:
First Chapter is the introductory chapter. It contains the following:
Introduction
Objectives of the Organization study
Scope of the Organization study
Second Chapter depicts the Concepts of Organizing, Organization-its Process and
Structure, Departmentation and its Types, Types of Organization, and Delegation of
authority, Decentralization and Centralization.
Third Chapter describes the Industry Profile i.e. World Scenario, Indian Scenario
and State Scenario of textile Industry and other details.
Fourth Chapter deals with Company Profile that is about the detailed study of
History of the Company, Products, and each Department in GTN Textiles Ltd., the
SWOT analysis, plans, Findings, Conclusion of this study and Bibliography.
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--Chapter II--
--Theoretical--
--Background--
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2.1 Concept of Organizing
Organization is the process of-:
1. Identifying and grouping the work to be performed.
2. Defining and delegating responsibility and authority.
3. Establishing the relationship for enabling people to work efficiency together in
accomplishing objectives.
The working relationships- vertical and horizontal associations between individuals
and groups- that exist within an organization affect how its activities are to be accomplishing
and coordinated. Effective organizing depends on the mastery of several important concepts:
work specialization, chain of command, authority, delegation, span of control, and
centralization versus decentralization. Many of these concepts are based on the principles
developed by Henri Fayol.
2.1.2 Organizing
Organizing is the act of rearranging elements following one or more rules. Organizing
plays a central role in the management process. Once plans are created, the manager's task is
to see that they are carried out. Given a clear mission, core values, objectives, and strategy,
the role of organizing is to begin the process of implementation by clarifying jobs and
working relationships. It identifies who is to do what, who is in charge of whom, and how
different people and parts of the organization relate to and work with one another. All of
this, of course, can be done in different ways. The strategic leadership challenge is to choose
the best organizational form to fit the strategy and other situational demands.
“Organizing is the managerial function of arranging people and resources to work
toward a goal.” The purposes of organizing include but are not limited to determining the
tasks be performed in order to achieve objectives, dividing tasks into specific jobs, grouping
jobs into departments, specifying reporting and authority relationships, delegating the
authority necessary for task accomplishment, and allocating and deploying resources in a
coordinated fashion.
2.1.3 Organization
“Organization is the process of identifying and grouping work to be performed,
defining and delegating responsibility, and authority and establishing relationship for the
purpose of enabling people to work most effectively together in accomplishing objective”.
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Organizations are groups of people organized for some purpose, such as business or political
activities.
2.1.3.1 Importance of an Organization
Significance of the organization in any institution is explained as below:
(a) It ensures optimum use of human resources: It establishes persons with different
Interest’s skills, knowledge, and viewpoints.
(b) It stimulates creativity: A sound and well-conceived organization structure is the
source of creative thinking and initiation of new ideas.
(c) Use of improved technology: A good organization provides for optimum use of
technological improvements.
(d) Co-ordination in the enterprise: In a good organization, the different departments
perform their functions in a closely related manner.
(e) Executive development: The pattern of an organization structure has strong influence
on the development of executives.
(f) It ensures cooperation among workers: A good organization promotes mutual
Goodwill and co-operation among workers also.
2.1.3.2 Principles of Organization
Principle means the theoretical basis on which something is build up. The theoretical
basis is formulated from fundamental truth. Some of the important principles to be followed
for developing round and efficient organizations are:
Principle of unity of objective
Principle of specification
Principle of co-ordination
Principle of unity of command
Principle of span of control
Principle of exception
Principle of flexibility
Principle of simplicity
Principle of communication
Principle of efficiency
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2.2 Process and Structure of Organization
Organizing, like planning, must be a carefully worked out and applied process. This
process involves determining what work is needed to accomplish the goal, assigning those
tasks to individuals, and arranging those individuals in a decision-making framework
(organizational structure). The result of the organizing process is an organization — a
whole consisting of unified parts acting in harmony to execute tasks to achieve goals, both
effectively and efficiently.
A properly implemented organizing process should result in a work environment where all
team members are aware of their responsibilities. If the organizing process was not done
well, the results may yield confusion, frustration, loss of efficiency, and limited
effectiveness.
2.3 Types of Organization
Although there are a number of variations of organizational structure, we shall discuss line
and staff organizations and committee organization here.
2.3.1 Line Organization
The line organization is the simplest organizational structure. It is the “doing"
organization, in that the work of all organizational units is directly involved in producing
and marketing the organization's goods and services. There are direct vertical links between
the different levels of the scalar chain. Since there is a clear authority structure, this form of
organization promotes greater decision-making and is simple in form to understand.
On the other hand, managers may be overburdened when they have too many duties.
The following figure illustrates a simple line organization:
(Figure 2.1)
President
Vice President
Operations
Vice President
Marketing
Purchasing Assembly Quality
Control
Promotion Sales Market
Research
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2.3.2 Line and Staff Organization
When staff specialists are added to a line organization to "advise, "serve” or “support"
the line in some manner, we have a line and staff organization. These specialists contribute
to the effectiveness and efficiency of the organization. Their authority is generally limited to
making recommendation to the line organization. Sometimes this creates conflict. However,
such conflict can be reduced by having staff specialists obtain some line experience, which
will tend to make them better understand the problems facing the line manager they support.
Such functions as human resources management and research and development are typical
staff functions. The following figure provides an example of such a structure.
(Figure 2.2)
2.3.3 Functional Organisation
In this type of organization, the personnel and their work are organized based on the
same type of work of activities. All works of the same type are grouped together and
brought under one department managed by an executive who is an expert. Thus, there are
separate functional departments, for the major functions of the business viz., engineering or
production, purchase, sales, finance personnel etc. Each department performs its specialized
function for the entire organization. For example, the purchase department deals with
purchases on behalf of the entire organization, and so on. Now a day, is almost all business
concerns usually follow some sort of functional plan to carry out the primary functions of
business. However, it is the rare to find a pure functional organization and there is always an
element of line organization mixed with it.
President
Director
Personnel
Director Research
and Development
Vice President
Operations
Vice President
Marketing
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(Figure 2.3)
2.4 Departmentation
The process of classifying an organization because of departments or similar
activities, to facilitate planning and control
2.4.1 Types of Departmentation
a) Functional Departmentation: - This is the simplest form of Departmentation when
grouping of departments is done because of functions such as production finance
marketing sales purchase etc., it is known as functional Departmentation. Further sub
divisions of the functions may be formed as marketing can be divided in to
advertisement sales and after sales service. Therefore, we can classify functions into two
parts.
Basic functions i.e. Production Marketing Finance and Personnel
Secondary Functions: - These are further parts of basic functions according to
the organizational needs or operations like Production: - Product planning,
R&D, Quality control, and material handling. Functional Departmentation is
useful where there is production of single product or similar kind of product,
for example TV Computer monitor or TFT.
(Figure 2.4)
CEO
Production Finance Marketing Personnel
Advertisement Sales Market
Research
President
Creative Sales &
Marketing
Accounts Human
Resource
Manager Manager Manager Manager
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b) Product Departmentation: - When grouping of activities and departments formed are
given name because of products manufactured in an organization, it is called Products
Departmentation. It is applied where there is large ranges of products are manufactured.
When there are several product lines and each product line consists of a variety of items,
functional classification fails to give balanced emphasis on each product. Apart from this
use; product or services may be made the basis of major divisions by a departmental
store, a banking concern and an insurance company. Again, manufacturing and
marketing departments may subdivide their activities because of products.
(Figure 2.5)
c) Territorial Departmentation (Geographical Departmentation): - Like the products basis,
geographical regions are adopted for main division as well as for subdivision purposes.
When activities of an organization are physically dispersed in different locations
territorial departmentation is adopted. Units that are located at different areas are made
so many self-contained divisions of the organization. Marketing activities are very often
subdivided because of geographical areas. This form of departmentation can be useful
where business is on national or international level. For e.g. Indian railways, insurance
company use territorial departmentation.
(Figure 2.6)
d) Customer Departmentation: - When departments are formed to cater different kind of
customers it is known as customer departmentation this basis of classification is widely
followed in sub-dividing activities of the marketing department. When the products are
offered to market through various channels and outlets, it has the special merit of
supplying goods in accordance with the peculiar needs of customers. Customers may be
CEO
Head TV
Division
Head AC and
Refrigeration
Head
Computer
CEO
Head North
Zone
Head East
Zone
Head West
Zone
Head South
Zone
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classified according to buying capacity or nature like wholesale, retail and export or
government or public. Most departmental stores may attempt t reach customers
preferring low price or higher price.
( Figure 2.7)
2.5 Authority and Delegation of Authority
2.5.1 Authority
Authority is the formal and legitimate right of a manager to make decisions, issue
orders, and allocate resources to achieve organizationally desired outcomes. A manager's
authority is defined in his or her job description.
Organizational authority has three important underlying principles:
Authority is based on the organizational position, and anyone in the same position has
the same authority.
Subordinates accept authority. Subordinates comply because they believe that
managers have a legitimate right to issue orders.
Authority flows down the vertical hierarchy. Positions at the top of the hierarchy are
vested with more formal authority than are positions at the bottom.
In addition, authority comes in three types:
Line Authority gives a manager the right to direct the work of his or her employees
and make many decisions without consulting others. Line managers are always in
charge of essential activities such as sales, and they are authorized to issue orders to
subordinates down the chain of command.
Staff Authority supports line authority by advising, servicing, and assisting, but this
type of authority is typically limited. For example, the assistant to the department
head has staff authority because he or she acts as an extension of that authority. These
assistants can give advice and suggestions, but they do not have to be obeyed. The
department head may also give the assistant the authority to act, such as the right to
Head
Marketing
Head Whole
Sale
Head
Retail
Head
Export
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sign off on expense reports or memos. In such cases, the directives are given under
the line authority of the boss.
Functional Authority is authority delegated to an individual or department over
specific activities undertaken by personnel in other departments. Staff managers may
have functional authority, meaning that they can issue orders down the chain of
command within the very narrow limits of their authority. For example, supervisors in
a manufacturing plant may find that their immediate bosses have line authority over
them, but that someone in corporate headquarters may also have line authority over
some of their activities or decisions.
The functional authority allows specialization of skills and improved coordination.
Frederick Taylor originally suggested this concept. He separated “planning” from “doing”
by establishing a special department to relieve the laborer and the supervisor from the work
of planning. The role of the supervisor became one of making sure that planned operations
were carried out. The major problem of functional authority is overlapping relationships,
which can be resolved by clearly designating to individuals that activities their immediate
bosses have authority over and which activities are under the direction of someone else.
2.5.2 Delegation
A concept related to authority is delegation. Delegation is the downward transfer of
authority from a manager to a subordinate. Most organizations today encourage managers to
delegate authority in order to provide maximum flexibility in meeting customer needs. In
addition, delegation leads to empowerment, in that people have the freedom to contribute
ideas and do their jobs in the best possible ways. This involvement can increase job
satisfaction for the individual and frequently results in better job performance. Without
delegation, managers do all the work themselves and underutilize their workers. The ability
to delegate is crucial to managerial success. Managers need to take four steps if they want to
successfully delegate responsibilities to their teams:
1. Specifically assign tasks to individual team members.
The manager needs to make sure that employees know that they are ultimately
responsible for carrying out specific assignments.
2. Give team members the correct amount of authority to accomplish assignments.
Typically, an employee is assigned authority commensurate with the task. A classical
principle of organization warns managers not to delegate without giving the subordinate the
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authority to perform to delegated task. When an employee has responsibility for the task
outcome but little authority, accomplishing the job is possible but difficult. The subordinate
without authority must rely on persuasion and luck to meet performance expectations. When
an employee has authority exceeding responsibility, he or she may become a tyrant, using
authority toward frivolous outcomes.
3. Make sure that team members accept responsibility.
Responsibility is the other side of the authority coin. Responsibility is the duty to
perform the task or activity an employee has been assigned. An important distinction
between authority and responsibility is that the supervisor delegates’ authority, but the
responsibility is shared. Delegation of authority gives a subordinate the right to make
commitments, use resources, and take actions in relation to duties assigned. However, in
making this delegation, the obligation created is not shifted from the supervisor to the
subordinate - it is shared. A supervisor always retains some responsibility for work
performed by lower-level units or individuals.
4. Create accountability.
Team members need to know that they are accountable for their projects.
Accountability means answering for one's actions and accepting the consequences. Team
members may need to report and justify task outcomes to their superiors. Managers can
build accountability into their organizational structures by monitoring performances and
rewarding successful outcomes. Although managers are encouraged to delegate authority,
they often find accomplishing this step difficult for the following reasons:
Delegation requires planning, and planning takes time. A manager may say, “By the
time I explain this task to someone, I could do it myself.” This manager is
overlooking the fact that the initial time spent up front training someone to do a task
may save much more time in the long duration. Once an employee has learned how to
do a task, the manager will not have to take the time to show that employee how to do
it again. This improves the flow of the process from that point forward.
Managers may simply lack confidence in the abilities of their subordinates. Such a
situation fosters the attitude, “If you want it done well, do it yourself.” If managers
feel that their subordinates lack abilities, they need to provide appropriate training so
that all are comfortable performing their duties.
Managers experience dual accountability. Managers are accountable for their own
actions and the actions of their subordinates. If a subordinate fails to perform a certain
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task or does so poorly, the manager is ultimately responsible for the subordinate's
failure. By the same token, if a subordinate succeeds, the manager shares in that
success as well, and the department can be even more productive.
Finally, managers may refrain from delegating because they are insecure about their
value to the organization. However, managers need to realize that they become more
valuable as their teams become more productive and talented.
Despite the perceived disadvantages of delegation, the reality is that a manager can
improve the performance of his or her work groups by empowering subordinates through
effective delegation. Few managers are successful in the long term without learning to
delegate effectively.
The following additional principles may be helpful for managers who have tried to
delegate in the past and failed:
Principle 1: Match the employee to the task. Managers should carefully consider
the employees to whom they delegate tasks. The individual selected should possess
the skills and capabilities needed to complete the task. Perhaps even more important is
to delegate to an individual who is not only able to complete the task but also willing
to complete the task. Therefore, managers should delegate to employees who will
view their accomplishments as personal benefits.
Principle 2: Be organized and communicate clearly. The manager must have a
clear understanding of what needs to be done, what deadlines exist, and what special
skills are required. Furthermore, managers must be capable of communicating their
instructions effectively if their subordinates are to perform up to their expectations.
Principle 3: Transfer authority and accountability with the task. The delegation
process is doomed to failure if the individual to whom the task is delegated is not
given the authority to succeed at accomplishing the task and is not held accountable
for the results as well. Managers must expect employees to carry the ball and then let
them do so. This means providing the employees with the necessary resources and
power to succeed, giving them timely feedback on their progress, and holding them
fully accountable for the results of their efforts. Managers also should be available to
answer questions as needed.
Principle 4: Choose the level of delegation carefully. Delegation does not mean that
the manager can walk away from the task or the person to whom the task is delegated.
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The manager must maintain some control of both the process and the results of the
delegated activities. Depending upon the confidence the manager has in the
subordinate and the importance of the task, the manager can choose to delegate at
several levels.
2.5.2.1 Delegation of Authority
A manager alone cannot perform all the tasks assigned to him. In order to meet the
targets, the manager should delegate authority. Delegation of Authority means division of
authority and powers downwards to the subordinate. Delegation is about entrusting someone
else to do parts of your job. Delegation of authority can be defined as subdivision and sub-
allocation of powers to the subordinates in order to achieve effective results.
For achieving delegation, a manager has to work in a system and has to perform following
steps: -
1. Assignment of tasks and duties
2. Granting of authority
3. Creating responsibility and accountability
Delegation of authority is the base of superior-subordinate relationship, it involves
following steps:-
1. Assignment of Duties - The delegator first tries to define the task and duties to the
subordinate. He also has to define the result expected from the subordinates. Clarity
of duty as well as result expected has to be the first step in delegation.
2. Granting of authority - Subdivision of authority takes place when a superior divides
and shares his authority with the subordinate. It is for this reason; every subordinate
should be given enough independence to carry the task given to him by his superiors.
The managers at all levels delegate authority and power which is attached to their job
positions. The subdivision of powers is very important to get effective results.
3. Creating Responsibility and Accountability - The delegation process does not end
once powers are granted to the subordinates. They at the same time have to be
obligatory towards the duties assigned to them. Responsibility is said to be the factor
or obligation of an individual to carry out his duties in best of his ability as per the
directions of superior. Responsibility is very important. Therefore, it is that which
gives effectiveness to authority. At the same time, responsibility is absolute and
cannot be shifted. Accountability, on the others hand, is the obligation of the
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individual to carry out his duties as per the standards of performance. Therefore, it is
said that authority is delegated, responsibility is created, and accountability is
imposed. Accountability arises out of responsibility and responsibility arises out of
authority. Therefore, it becomes important that with every authority position an equal
and opposite responsibility should be attached.
Therefore, every manager, i.e., the delegator has to follow a system to finish up the
delegation process. Equally important is the delegate’s role, which means his responsibility
and accountability, is attached with the authority over to here.
2.6 Centralization and Decentralization
The general pattern of authority throughout an organization determines the extent to
which that organization is centralized or decentralized.
2.6.1 Centralization
Centralization is said to be a process where the concentration of decision-making is in
a few hands. All the important decision and actions at the lower level, all subjects and
actions at the lower level are subject to the approval of top management. According to Allen,
“Centralization” is the systematic and consistent reservation of authority at central points in
the organization. The implication of centralization can be:-
Reservation of decision-making power at top level.
Reservation of operating authority with the middle level managers.
Reservation of operation at lower level at the directions of the top level.
Under centralization, the top management takes the important and key decisions and
the other levels are into implementations as per the directions of top level. For example, in a
business concern, the father & son being the owners decide about the important matters and
the department heads carry out all the rest of functions like product, finance, marketing,
personnel, and they have to act as per instruction and orders of the two people. Therefore in
this case, decision making power remain in the hands of father & son.
2.6.2 Decentralization
Decentralization is a systematic delegation of authority at all levels of management
and in all of the organization. In a decentralization concern, authority in retained by the top
management for taking major decisions and framing policies concerning the whole concern.
Rest of the authority may be delegated to the middle level and lower level of management.
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The degree of centralization and decentralization will depend upon the amount of
authority delegated to the lowest level. According to Allen, “Decentralization refers to the
systematic effort to delegate to the lowest level of authority except that which can be
controlled and exercised at central points.
Decentralization is not the same as delegation. In fact, decentralization is all extension
of delegation. Decentralization pattern is wider is scope and the authorities are diffused to
the lowest most level of management. Delegation of authority is a complete process and
takes place from one person to another. While decentralization is complete only when fullest
possible, delegation has taken place. For example, the general manager of a company is
responsible for receiving the leave application for the whole of the concern. The general
manager delegates this work to the personnel manager who is now responsible for receiving
the leave applicants. In this situation, delegation of authority has taken place. On the other
hand, on the request of the personnel manager, if the general manager delegates this power
to all the departmental heads at all level, in this situation decentralization has taken place.
There is a saying that “Everything that increasing the role of subordinates is decentralization
and that decreases the role is centralization”. Decentralization is wider in scope and the
subordinate’s responsibility increase in this case. On the other hand, in delegation the
managers remain answerable even for the acts of subordinates to their superiors.
2.6.2.1 Implications of Decentralization
1. There are fewer burdens on the Chief Executive as in the case of centralization.
2. In decentralization, the subordinates get a chance to decide and act independently
which develops skills and capabilities. This way the organization is able to process
reserve of talents in it.
3. In decentralization, diversification and horizontal can be easily implanted.
4. In decentralization, concern diversification of activities can place effectively since
there is more scope for creating new departments. Therefore, diversification growth is
of a degree.
5. In decentralization structure, operations can be coordinated at divisional level, which
is not possible in the centralization set up.
6. In the case of decentralization structure, there is greater motivation and morale of the
employees since they get more independence to act and decide.
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In a decentralization structure, co-ordination to some extent is difficult to maintain as
there are lot many department divisions and authority is delegated to maximum possible
extent, i.e., to the bottom most level delegation reaches. Centralization and decentralization
are the categories by which the pattern of authority relationships became clear. The degree
of centralization and de-centralization can be affected by many factors like nature of
operation, volume of profits, number of departments, size of a concern, etc. The larger the
size of a concern, a decentralization set up is suitable in it.
A variety of factors can influence the extent to which a firm is centralized or
decentralized. The following is a list of possible determinants:
The external environment in which the firm operates. The more complex and
unpredictable this environment, the more likely it is that top management will let low-
level managers make important decisions. After all, low-level managers are closer to
the problems because they are more likely to have direct contact with customers and
workers. Therefore, they are in a better position to determine problems and concerns.
The nature of the decision itself. The riskier or the more important the decision, the
greater the tendency to centralize decision-making.
The abilities of low-level managers. If these managers do not have strong decision-
making skills, top managers will be reluctant to decentralize. Strong low-level
decision-making skills encourage decentralization.
The organization's tradition of management. An organization that has traditionally
practiced centralization or decentralization is likely to maintain that posture in the
future.
In principle, neither philosophy is right or wrong. What works for one organization
may or may not work for another. Kmart Corporation and McDonald's have both been very
successful — both practice centralization. Similarly, decentralization has worked very well
for General Electric and Sears. Every organization must assess its own situation and then
choose the level of centralization or decentralization that works best.
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--Chapter III--
--Industry Profile--
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3.1 Industry profile
Modern textile industry in India has its origin in the 19th century. The textile industry
occupies a prominent role in the Indian economy contribution to about 23.5% of the
country’s industrial production. The textiles sector is closely linked with agriculture,
handlooms, power looms, garments manufacturing and a number if ancillaries in industry
and trade. India has the second largest spinning capacity in the world, after China. In fact,
after the expiry of Agreement on Textiles and Clothing, a number of existing units have
undertaken significant expansion of their spinning capacity.
Textile industry in India is the second largest employment generator after agriculture.
Indian textile and apparel industry, contribute to 3.6% of India’s gross domestic product
accounts for 25% of India export.
The removal of quotas has been advantageous mainly to the developing countries,
which were the main exporters of textiles and clothing products. The world textile and
clothing exports grew by 9.7% in 2006, to US $ 530 billion. Of the total exports, textiles
accounted for US $ 219 billion and clothing for the remaining US $ 311 billion. The world’s
largest exporter of textiles (excluding clothing) as a region was EU25, whereas in case of
individual countries, China was topping the list with US $ 48.68 billion, followed by Hong
Kong (US $ 13.91 billion), USA (US $ 12.67 billion) and South Korea (US $ 10.11 billion).
India stood at the 6th position with US $ 9.33 billion worth exports of textiles in 2006. In
case of imports of textiles too EU25, as a bloc, was leading the list with US $ 70.43 billion
followed by USA (US $ 23.5 billion), China (US $ 16.36 billion), Hong Kong (US $ 13.98
billion), and Japan (US $ 6.18 billion) USA was the largest importer in the case of individual
countries. India stood at the 14th position with regard to import of textiles by individual
countries, with a mere US $ 2 billion.
Developing countries were making an impressive stride in the clothing exports, as has
been in the textiles exports. China was the world’s largest exporter of clothing in 2006, with
the export value being US $ 95.39 billion, and constituting to around 31% of the world
exports in clothing, followed by EU25 (US $ 83.42 billion), as a bloc, Hong Kong (US $
20.39 billion), Turkey (US $ 11.88 billion) and India (US $ 10.19 billion). The leading
importers of clothing were EU 25, with the import value being US $ 141.15 billion and
constituting 44% of the total imports, followed by USA (US $ 82.97 billion) and Japan (US
$ 23.87 billion). The developed countries were having deficits in textiles and clothing trade
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for over a decade with USA topping the list with a deficit of US $ 89 billion in 2006. EU
held a huge deficit of US $ 56.95 billion, followed by Japan with US $ 22.63 billion during
the same period. Such trade deficits show the low competitiveness of manufacturing of
textile and clothing industry in these countries.
The growth in textile and clothing exports especially by the Asian countries has been
an important trend owing mainly to removal of quotas, increasing internationalization and
liberalization.
3.1.1 History of Textile Industry
English inventors in the 18th century began to automate textile cottage industry
processes including carding, spinning, and weaving. James Hargreaves developed the
Spinning Jenny, a device that replaced eight hand spinners in one operation. Richard
Arkwright assembled these processes and started the first factory on the Derwent River in
Cromford, England in 1771.
Following the American Revolution, several founding fathers felt manufacturing
should remain in England. Alexander Hamilton felt otherwise and wanted to establish a
model mill village in Paterson, New Jersey. His ideas were ahead of their time. The
"National Manufactory" went out of business in 1796.Samuel Slater of Rhode Island visited
several mills owned by Arkwright and associates, memorized the essential features and
returned to the US. In 1792, he opened a yarn spinning mill in Pawtucket, Rhode Island, the
first successful automated yarn spinning in the US. In 1814, James Cabot Lowell of Boston
built a factory in Waltham, up the Charles River from Boston. Later, the Boston Associates
built an entire mill town on the Merrimack River, and later named it “Lowell" in memory of
James Cabot Lowell.
1793 - Eli Whitney and Hogden Holmes developed a simplified method of removing
the cotton lint from the seed. Whitney’s, and especially Holmes' saw tooth gin,
revolutionized the cotton industry by dramatically increasing the productivity of cotton
ginning Gins.
In the early 1800s, cotton was raised in the southern United States and exported to
mills in England and the north. Leaders such as William Gregg of South Carolina advocated
a home-based textile industry for the south but the time was not right. Northern mills
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resisted to growth of mills outside New England. Textile machinery was built in New
England. New Jersey are imported from Europe.
After the Civil War, the south slowly replaced slaves with free workers. The industry
remained largely in the north until after the 1880s. Leaders such as Edwin Michael Holt and
family of Alamance County, North Carolina built mills in large numbers throughout the
south as the 19th century closed. Glencoe Cotton Mill and mill village are preserved today.
Cotton mills in New England began to decline in importance. Merchants contracted for
goods through agents. The Cone family moved from Baltimore to Greensboro and brokered
sales. The Belk family bought goods from Cone to sell in the dry goods stores. Merchants
such as Marshall Fields of Chicago bought goods from mills through intermediaries. Later,
in order to better control supply, the Cones and the Fields built mills of their own, e.g., Cone
Mills and Fieldcrest Mills. Machinery was imported from the north and from Europe.
World War I and the naval blockade imposed by England on German shipping, and
the use of U-boats by Germany to harass English vessels brought the realization that the
United States must be independent of England and Germany for machinery and dyestuffs.
New companies emerged to satisfy the war effort and remained strong for several decades
following the war. World War II once again emphasized the need for self-sufficiency.
Following the war, however, imported machinery and dyes, especially from Germany and
Switzerland, once again supplemented and eventually replaced domestic supply. American
textile companies thrived with the use of imported machinery and dyestuffs.
In the 1990s, a new world order began to replace the Made in the USA ideas. Buying
from the lowest cost producer drove many textile manufacturers out of the production side
and into imports. Manufacturing companies changed to marketing companies.
3.2 International Scenario
The textile and clothing trade is governed by the Multi-Fiber Agreement (MFA)
which came into force on January 1, 1974 replacing short-term and long-term arrangements
of the 1960’s which protected US textile producers from booming Japanese textiles exports.
Later, it was extended to other developing countries like India, Korea, Hong Kong, etc.
which had acquired a comparative advantage in textiles. Currently, India has bilateral
arrangements under MFA with USA, Canada, Australia, countries of the European
Commission, etc. Under MFA, foreign trade is subject to relatively high tariffs and export
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quotas restricting India’s penetration into these markets. India was interested in the early
phasing out of these quotas in the Uruguay Round of Negotiations but this did not happen
due to the reluctance of the developed countries like the US and EC to open up their textile
markets to Third World imports because of high labour costs. With the removal of quotas,
exports of textiles have now to cope with new challenges in the form of growing non-tariff /
non-trade barriers such as growing regionalization of trade between blocks of nations, child
labour, anti-dumping duties, etc.
Nevertheless, it must be realized that the picture is not all rosy. It is now being
admitted universally and even officially that the year 2005 AD is likely to present more of a
challenge than opportunity. If the industry does not pay attention to the very vital needs of
modernization, quality control, technology upgradation, etc. it is likely to be left behind.
Already, its comparative advantage of cheap labour is being nullified by the use of
outmoded machinery.
With the dismantling of the MFA, it becomes imperative for the textile industry to
take on competitors like China, Pakistan, etc., which enjoy lower labour costs. In fact, the
seriousness of the situation becomes even more apparent when it is realized that the non-
quota exports have not really risen dramatically over the past few years. The continued
dominance of yarn in exports of cotton, synthetics, and blends, is another cause for worry
while exports of fabrics are not growing. The lack of value added products in textile exports
do not augur well for India in a non-MFA world.
Textile exports alone earn almost 25 percent of foreign exchange for India yet its
share in global trade is dismal, having declined from 10.9 percent in 1955 to 3.23 percent in
1996. More significantly, the share of China in world trade in textiles, in 1994, was 13.24
percent, up from 4.36 percent in 1980. Hong Kong, too, improved its share from 7.06
percent to 12.65 percent over the same period. Growth rate, in US$ terms, of exports of
textiles, including apparel, was over 17 percent during 1993-94 to 1995-96. It declined to
10.5 percent in 1996-97 and to 5 percent in 1997-98. Another disconcerting aspect that
reflects the declining international competitiveness of Indian textile industry is the surge in
imports in the last two years. Imports grew by 12 percent in dollar terms in 1997-98, against
an average of 5.8 percent for all imports into India. Imports from China went up by 50
percent while those from Hong Kong jumped by 23 percent.
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3.2.1 Global factors influencing Textile Industry
The history of the textile and clothing industry has been replete with the use of
various bilateral quotas, protectionist policies, discriminatory tariffs, etc. by the developed
world against the developing countries. The result was a highly distorted structure, which
imposed hidden costs on the export sectors of the Third World. Despite the fact that GATT
was established way back in 1947, the textile industry, until 1994, remained largely out of its
liberalisation agreements. In fact, trade in this sector, until the Uruguay Round, evolved in
the opposite direction. Consequently, since 1974 global trade in the textiles and clothing
sector had been governed by the Multi-fiber agreement, which was the sequel to an
increasingly pervasive quota regime that began with the Short-term arrangement on cotton
products in 1962 and followed by the Long-Term arrangement. After the successful
conclusion of the Uruguay Round in 1994, the MFA was replaced by the Agreement on
Textiles and Clothing (ATC), which had the same MFA framework in the context of an
agreed, ten-year phasing out of all quotas by the year 2005. The section that follows takes a
brief look at the history of these protectionist regimes as also a more detailed look at the
MFA and the ATC.
3.2.2 Multi–Fibre Agreement (MFA)
On January 1, 1974, the Arrangement Regarding the International Trade in Textiles,
otherwise known as the MFA came into force. It superseded all existing arrangements that
had been governing trade in cotton textiles since 1961. The MFA sought to achieve the
expansion of trade, the reduction of barriers to trade and the progressive liberalisation of
world trade in textile products, while at the same time ensuring the orderly and equitable
development of this trade and avoidance of disruptive effects in individual markets and on
individual lines of production in both importing and exporting countries. Though it was
supposed to be a short-term arrangement to enable the adjustment of the industry to a free
trade regime, the MFA was extended in 1974, 1982, 1986, 1991, and 1992. Because of the
quotas allotted, the MFA resulted in a regular shift of production from quota-restricted
countries to less restricted ones as soon as the quotas began to cause problems for the traders
in importing countries. The first three extensions of the MFA, instead of liberalising the
trade in textiles and clothing, further intensified restrictions on imports, specifically
affecting the developing country exporters of the textile and clothing products. Increased
usage of several MFA measures tended to further erode the trust, which developing
countries had originally placed in the MFA.
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The MFA set the terms and conditions for governing quantitative restrictions on
textile and clothing exports of developing countries either through negotiations or bilateral
agreements or on a unilateral basis. The bilateral agreements negotiated between importing
and exporting country’s contained provisions relating to the products traded but they
differed in the details. The restraints under the MFA were often negotiated, or unilaterally
imposed at relatively short intervals, practically annually. The quotas could be either by
function or by fibre.
Under the MFA, product coverage was extended to include textiles and clothing made
of wool and man-made fibres (MMF), as well as cotton and blends thereof. With regard to
applications of safeguard measures, import restrictions could be imposed unilaterally in a
situation of actual market disruption in the absence of a mutually agreed situation. However,
in situations involving a real risk of market disruption only bilateral restraint agreements
were possible. The Textile Surveillance Body (TSB) was set up to monitor disputes
regarding actions taken in response to market disruptions.
The MFA permitted certain flexibility in quota restrictions for the exporters so that
they could adjust to changing market conditions, export demands and their own capabilities.
The MFA also provided for higher quotas and liberal growth for developing countries whose
exports were already restrained. The MFA asked the participants to refrain from restraining
the trade of small suppliers under normal circumstances. In general, developed countries,
under MFA, chose not to impose restrictions on imports from other developed countries
The TSB ensured compliance by all parties to the obligations of bilateral agreements
or unilateral agreements. It called for notification of all restrictive measures. A Textiles
Committee – established as a management body consisting of all member countries – was
the final arbiter under the MFA and worked as a court of appeal for disputes that could not
be resolved under TSB.
3.3 National Scenario
The Indian textile industry is one the largest and oldest sectors in the country and
among the most important in the economy in terms of output, investment, and employment.
The sector employs nearly 35 million people and after agriculture, is the second-highest
employer in the country. Its importance is underlined by the fact that it accounts for around
4% of Gross Domestic Product, 14% of industrial production, 9% of excise collections, and
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18% of employment in the industrial sector, and 16% of the country’s total exports earnings.
With direct linkages to the rural economy and the agriculture sector, it has been estimated
that one of every six households in the country depends on this sector, either directly or
indirectly, for its livelihood.
A strong raw material production base, a vast pool of skilled and unskilled personnel,
cheap labour, good export potential and low import content are some of the salient features
of the Indian textile industry. This is a traditional, robust, well-established industry, enjoying
considerable demand in the domestic as well as global markets.
India’s prominent role in textile production stems from its wealth in natural resources.
Silk, cotton and jute, all nature-base fibre resources are available in India. The textile and
clothing industry occupies a unique place in the Indian manufacturing sector. Having a
highly fragmented structure, the Indian textile and clothing value chain consists of four
stages:
Ginning and Spinning –Spinning is the process by which cotton or manmade fibre is
converted into yarn. In case of cotton, before spinning, ginning is done where the
impurities are removed;
Weaving and Knitting –Conversion of cotton or manmade yarns into woven or knitted
fabrics;
Processing – includes bleaching, dyeing, mercerizing and printing, which results in
finished fabric to be used for manufacture of clothing;
Clothing manufacturing this is the final stage where the designing, pattern making,
cutting, embellishing, stitching, finishing, and packaging is done for distribution.
One of the key advantages of the Indian textile industry is abundant availability of
raw material. Indian textile industry is multi-fibre based using cotton, jute, silk, manmade
synthetic fibres and wool. India is the largest producer of jute fibre, second largest producer
of cotton yarn and silk fibre in the world. Under the man-made fibre category also, India is
one of the major producers in the world; second largest producer of cellulosic fibre/ filament
yarn, third largest producer of viscose staple fibre and polyester filament yarn, fourth largest
producer of polyester staple fibre, and seventh largest producer of acrylic staple fibre. Value
of textile exports from India, including clothing, was worth US $ 17 billion in 2007-08.
Textiles accounted for 48% (US $ 8.3 billion) of exports and the rest 52% (US $8.7 billion)
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was accounted by clothing. As per the data collated by WTO, for the year 2006, India
accounted for 4.3% of total world export of textile products, and in the clothing segment
India’s share was3.3percentage. European Union and USA are the major destinations for
India’s textile and garment exports. Other major destinations include United Arab Emirates
(UAE), China, Bangladesh, Saudi Arabia, and Japan.
3.3.1 Indian Textile Industry
The textile industry is the largest industry of modern India. It accounts for over 20
percent of industrial production and is closely linked with the agricultural and rural
economy. It is the single largest employer in the industrial sector employing about 38
million people. If employment in allied sectors likes ginning, agriculture, pressing, cotton
trade, jute, etc. are added then the total employment is estimated at 93 million. The net
foreign exchange earnings in this sector are one of the highest and, together with carpet and
handicrafts, account for over 37 percent of total export earnings at over US $ 10 billion.
Textiles alone account for about 20 percent of India’s total fore earnings.
India’s textile industry since its beginning continues to be predominantly cotton based
with about 65 percent of fabric consumption in the country being accounted for by cotton.
The industry is highly localized in Ahmadabad and Bombay in the western part of the
country though other centers exist including Kanpur, Calcutta, Indore, Coimbatore, and
Sholapur.
The structure of the textile industry is extremely complex with the modern,
sophisticated and highly mechanized mill sector on the one hand and the hand spinning and
hand weaving (handloom) sector on the other. Between the two falls the small-scale power
loom sector. The latter two are together known as the decentralized sector. Over the years,
the government has granted a whole range of concessions to the non-mill sector because of
which the share of the decentralized sector has increased considerably in the total
production. Of the two sub-sectors of the decentralized sector, the power loom sector has
shown the faster rate of growth. In the production of fabrics, the decentralized sector
accounts for roughly 94 percent while the mill sector has a share of only 6 percent.
Being an agro-based industry the production of raw material varies from year to year
depending on weather and rainfall conditions. Accordingly the price fluctuates too.
India's trade in textiles and its share in world trade can be categorized as follows:
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India’s Trade in Textiles
(1998)
(Table 3.1)
3.3.1.1 Trends in Production
Yarn and production has been growing annually at 1.9% and 2.7% respectively, since
2000. Yarn production has increased from 3,940-mn kg in 1999- 00 to 4,326--mn kg in
2004-05. Man-made yarn has driven much of this, showing a robust growth of 4.3% in the
last five years. Spun yarn production and the cotton yarn sector have also grown, albeit less
impressively, recording growths of 2.4% and 0.6% respectively.
(Figure 3.1)
Type
India's Share in
World Trade
Yarn 22%
Fabrics 3.2%
Apparel 2%
Made-ups 9%
Over-all 2.8%
Compound Annual Growth Rate
(CAGR) of different segments
Type CAGR (1993-98)
Yarn 31.79%
Fabric 9.04%
Made-ups 15.18%
Garment 6.795%
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3.3.1.2 India’s Textile Industry Structure
Cotton textiles continue to form the predominant base of the Indian textile industry,
though other types of fabric have gained share in recent years. In 1995-96, the share of
cotton and manmade fabric was 60% and 27% respectively. More recently, cotton fabrics
accounted for 46% of the total fabric produced in 2005-06, while man-made fibres held a
share of 41%. This represents a clear shift in consumer preferences towards man-made
fabric.
The Textile and Apparel Supply Chain
(Figure 3.2)
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3.3.2 Raw Material Base and Capacity in India
Cotton: Cotton is one of the major raw materials for the Indian textiles industry. India is
the second largest producer of cotton in the world, has the largest cultivated area of
over9 million hectares and accounts for around 20% (4.8 million tons) of global
production (over 25 million tons). The performance of the cotton sector has been
increasing over the years and during the cotton season (Aug-Sept) 2007-08; the output
recorded was 310 lakh bales (170 kg each). Even the consumption has been increasing
over the years from 195.03 lakh bales in 2004-05 to 245 lakh bale sin 2007-08, by both
mill and non -mill sectors. During 2007-08, India exported 65 lakh bales of cotton.
Technology Mission of Cotton (TMC), Mini mission III, and Mini Mission IV are some
of the developmental measures taken by the Government in this sector. The cotton sector
provides employment to more than 50 million people in various activities starting from
cultivation to trade and processing.
Silk: In the world silk production, India is a distant - second largest producer, with a
share of around15percentage, next to China, which holds a share of 82% in the world.
With a total silk production of around18, 500 MT in 2006-07, India has the distinction of
producing all varieties of silk, viz; mulberry, eri, tasar and muga. Mulberry accounted
for nearly 90% of total silk production in India. The silk sector provides employment to
around six million persons in rural and semi urban areas, and the majority belonging to
the economically weaker sections of the society, including women. With Japanese
technology and cooperation, Indian sericulture industry is able to evolve and popularize
Bivoltine silkworm races, which can yield raw silk, matching the international standards.
Wool: India is the seventh largest producer of raw wool in the world accounting for little
over 2% of the world production, with about 4.2% of the total sheep population.
Although the woolen textile and clothing industry is relatively small compared to the
cotton and man-made fibre based textiles and clothing industry, yet the woolen sector
plays an important role as it is linking the rural sector with the textile-manufacturing
sector. The product portfolio is also diverse, ranging from textile intermediates to
finished textiles, garments, knitwear, blankets, and carpets. Indian woolen sector has also
a small presence in manufacture of technical textiles, catering to the civil and defense
requirements for warm clothing. Most of the wool produced in India (around 85%) is of
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course quality used mainly in the manufacture of hand-knotted carpets, and 5% is of
apparel grade, and 10% is of course grade, used mainly for production of blankets.
Jute: India is the largest producer and consumer of raw jute in the world. In the year
2006-07, India imported raw jute worth US $ 25 million (over83, 000 tons). During the
period April-February 2007-08, India imported raw jute valued US $ 31.6million (over
119,000 tons).Export of jute products (including floor coverings) from India was around
US $ 257 million in 2006-07, which has reached to US $ 296million, for the period April
–February 2007-08. There are 77jute mills in India; 60 in West Bengal, 3 each in Bihar
and Uttar Pradesh, 7 in Andhra Pradesh and one each in Assam, Orissa, Tripura and
Chhattisgarh.
Manmade Fibres: The man-made fibre industry comprises fibre and filament yarn
manufacturing units of cellulosic and non-cellulosic origin. The production of man-made
fibres in India has shown an increasing trend in 2007-08, a growth of around 10% over
the previous year. India also imports man-made fibres and synthetic & regenerated fibres
for processing and value addition. In the year 2006-07, India imported man-made fibres
valued US $ 555 million, and synthetic and regenerated fibres worth US $ 97million. In
the year 2007-08, during the period April-February, India’s imports of man-made
filament and spun yarn amounted to US $ 578million, and India’s import of synthetic
and regenerated fibres amounted to US $ 100 million.
Current Scenario
The Indian Textile Industry has an overwhelming presence in the economic life of the
country Apart from providing one of the necessities of life; the textiles industry also plays a
vital role through its contribution to industrial output, employment generation, and the
export earnings of the country. The Indian textile industry contributes about 14 per cent to
industrial production, 4 per cent to the country's gross domestic product (GDP), and 17 per
cent to the country’s export earnings. The industry provides direct employment to over 35
million people and is the second largest provider of employment after agriculture.
The total cloth production is increased by 10.2 percent during September 2010 as
compared to September 2009. The highest growth was observed in the power loom sector
(13.2 per cent), followed by hosiery sector (9.1 per cent). The total cloth production during
April-September2010 has increased by 2.1 per cent compared to the same period of the
previous year. The total textile exports during April-July 2010 (provisional) were valued at
US$ 7.58 billion as against US$ 7.21 billion during the corresponding period of the previous
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year, registering an increase of 5.20 per cent in rupee terms. The share of textile exports in
total exports was 11.04 per cent during April-July 2010. Cotton textiles has registered a
growth of 8.2 per cent during April-September 2010-11, while wool, silk and man-made
fibre textiles have registered a growth of 2.2 per cent while textile products including
wearing apparel have registered a growth of 3 per cent.
India has the potential to increase its textile and apparel share in the world trade from
the current level of 4.5 per cent to 8 per cent and reach US$ 80 billion by 2020. Textiles and
apparel industry exports, valued at US$ 20.02 billion (INR 963.05 billion), contributed about
11.5 per cent to the country’s total exports in 2008–09. Thus, the growth and all round
development of this industry has a direct bearing on the improvement of the economy of the
nation.
3.4 State -Scenario
The textile sector comprising of spinning and handloom is the single largest industry
in the state. The textile industry is dominated by handlooms, which enjoy a huge production
base and account for 10 per cent of the country’s exports. Total sales of the sector accounted
for 1.8 per cent of sales by industry in the state in 2010. The handloom industry dominated
by cooperative societies, accounts for 86 per cent of the looms and produces 97 per cent of
the state’s textiles. Cotton yarn is the most popular product in the state followed by knitted
garments and fabrics such as cotton and wool. The textile-processing complex at Kanjikode,
the International Apparel Park at Thiruvananthapuram and the Industrial Export Park at
Kochi offer walk-in-and-manufacture environments.
Hardly 20% of the textiles requirement of the state is met by local production, which
Comprises principally of the handloom and khaki sectors, the power loom sector (Which
produces over 75% of the requirement nationally) not having been encouraged Adequately
in Kerala for fear of aggravating the already problematic traditional Sectors. The
Government desires to con-act this policy on the lines of the Government of India’s Textile
Policy with adequate safeguards to prevent massive redundancies in the handloom and khaki
sectors.
3.4.1 Profile of Textile Sub-Sectors
Organised Mill Sector: As of December 31, 2007, there were over 1,700 cotton-fibre
and man-made fibre textiles mills (non-SSI) in the country with a capacity of around 35
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million spindles, and around 0.5 million rotors. India’s organized mill sector produced
about 4000 million kgs of yarn and over 1700 million sq. mtrs of cloth.
Power looms Sector: The power looms sector provides a wide variety of cloth, both
grey as well as processed fabrics. As on January 31, 2008, there was 20.83lakh power
looms distributed in over4.64 lakh units, constituting over 60% of the global power loom
age. The sector also contributes around 62percentage to the total cloth production in the
country, provides employment to about 50 lakh people, which constitutes around 14% of
the total employment in the textiles sector and contributes 60% of the fabric, meant for
exports.
Handlooms: The handlooms sector has been playing an important role in creating an
awareness of the Indian cultural diversity and fashion, which is unique only to the Indian
textile industry. The handloom cloth production was 6536 million square meters in
2006-07 and during2007-08, the production of cloth by handlooms sector was over
7000million square meters.
Readymade Garments: The clothing sector is fragmented and predominantly in the
small-scale sector. It is estimated that there are over 13,000 apparel units (excluding
tailoring units) in India, majority of which are in the SME sector. The total production of
clothing sector was around 8 billion pieces with a value of Rs. 1 trillion during 2005-06;
of which over one fourth in quantity terms are being exported. The clothing sector is
concentrated primarily in 8 clusters ,viz., Tirupur, Ludhiana, Bangalore, Delhi/ Noida/
Gurgaon, Mumbai, Kolkata, Jaipur and Indore. Tirupur, Ludhiana, and Kolkata are
major centers for knitwear, while Bangalore, Delhi/Noida/Gurgaon, Mumbai, Jaipur and
Indore are major centers for woven clothing. India’s exports of ready-made garments,
consisting of cotton, silk, man-made fibres, wool and other textile materials showed a
marginal increase of 0.8%, from 2005-06 to2006-07; and it is expected toper form
marginally better in the year 2007-08.
Technical Textiles: Textile materials and products, which are used for industrial
purposes and manufactured primarily for their technical performance and functional
properties, rather than for decoration, are called technical textiles. The maximum
consumption of technical textiles is in the USA, Western Europe, China and Japan.
These regions account for 65% of the total consumption of technical textiles in the
world. In India, the production of different items of the technical textile industry has
been slowly and steadily increasing. All the twelve items are produced in India in varied
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quantities. India has also made notable contribution in the production of textiles for
strategic applications viz. national security, e.g. parachute canopy fabric used for
carrying human, dropping of supply, brake parachute application etc. that are
indigenized and exported to othe0r countries as well. The market size and potential of
technical textiles was estimated at Rs 19,130 crores in 2003-04, and it is estimated to
have reached Rs 30,000 crores in 2007-08.Being an emerging field, Government of India
is launching a (Rs 1000 crore) Technology Mission on Technical Textiles (TMTT) to
ensure that there are necessary profitable benefits from the enduring investments. To
combat the issue of technology backwardness and infrastructure issues, The Ministry of
Textiles, Government of India, plans to create clusters on technical textiles, so that the
necessary textiles may be produced with adequate technology, thereby making the
products technologically competitive too.
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--Chapter IV--
--Company Profile—
Page| 37
4.1 Company Profile
GTN TEXTILES LTD is incorporated on August 2nd, 1962 at Aluva, near Cochin in
Kerala State by G.T. Narayanaswami Naidu and commissioned in 1964; GTN Textiles was
taken over by the present promoters in 1966. The company has its registered office at
Erumathala near Aluva in Ernakulam district. Company has roots in the textile business for
almost 100 years. The founders were from the raw cotton and yarn trading family business.
The flagship of the GTN Patodia group, GTN Textiles (GTNTL) has several unique
distinctions. It was the first company to export cotton yarn from India to Japan and Italy. In
1992, it exported virtually its entire production, although it is not an EOU (Export Oriented
Unit). Now only 85% is being exported and the rest is sold in the domestic market because
of very good growth in Indian market and the company has its sales export office at Cochin.
The installed capacity of its plant at Alwaye, Kerala, has been increased from 12000
to 38600 spindles, bringing the company's total spindle age to 60340. GTN Textiles Ltd is a
public limited company with both equity and preference shares. In Jan.'93, GTNTL came out
with its maiden public issue to modernize the existing plants, meet long-term working
capital requirements, and invest in the group's newly promoted company, Patspin India Ltd.
Over the years, there has been continuous expansion of capacity and modernization of
machines. In the yearly eighties, company shifted its focus domesticity to the international
market and it has benefited immensely from foreign collaboration. It has followed policy of
up gradation of its equipments and adaptation of state of the art technology. GTNTL is a
government-recognized Export House and a Star Exporter. Perfect Spinners, a group
company, also into cotton yarn, was merged with the company in Apr.'94. It is implementing
an expansion-cum- modernization programme at all its units.
Over 90% of company’s products are fine and superfine hundred percent yarns carded
and combed with counts ranging from 30s to 40s, both single and multi-fold, as well as
gassed, suitable for knitting and weaving.
It is one of the largest cotton yarns exporting organization from India. It exports to
countries like Japan, Italy South Korea, Taiwan. Indonesia, Singapore, Malaysia, West
Germany. The group export especially fine and s uperfine yarns.
GTN Exports and Packworth Udyog are subsidiaries of GTN Textiles. In 2000-2001,
the company has raised term loan of Rs. 22.83 crores under Technology Upgradation Fund
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Scheme which provides for 5% interest subsidy, for marginal increase in capacity and
substantial modernization /replacement of old machinery across the units, by availing world-
class technology. To foray in production of Compact Spun Yarns and to upgrade its
production technology the company embarked upon TUF-II scheme for a total outlay of Rs.
40 crores. It is also focusing on product diversification, strategic marketing, cost control
measures etc to perform satisfactorily.
During December 2005, the company has decided to demerge its Aluva Unit along
with investment of the company made in Patspin India Ltd and offices as well as its assets
situated in Mumbai, Kolkata, and Coimbatore to GTN Industries Ltd. In consideration of
demerger, the shareholders of the company will get One Equity Share of Rs. 10/-each of
GTN Industries for every One Equity Share held in the company.
Company had achieved TEXPROCIL Award winner for the last 18 years. It has units
at Hyderabad, Nagpur, and Shadnagar. The Patspin India Limited at Palakkad is the sister
unit. It has implemented the ISO 9001 quality standards to ensure that their products meet
the standard and which have helped them improve their export market.
List of Persons / entities comprising Promoters are as follows:
Sl.
No.
Name
Status
No. of
Shares
Percentage
to Paid-up
Capital
1.
SHRI.MADANLAL
PATODIA
Individual
362560
3.11
2.
SHRI.BINOD KUMAR
PATODIA
Individual
508210
4.36
3.
SHRI.MAHENDRA KUMAR
PATODIA*
Individual
742282
6.38
4.
SMT.PRABHA PATODIA
Individual
197480
1.70
5.
SMT.ANJANA PATODIA*
Individual
257166
2.21
6.
SHRI.UMANG PATODIA
Individual
421310
3.62
Page| 39
7.
SHRI.ANKUR PATODIA
Individual
378910
3.26
8.
SMT.MALA PATODIA
Individual
83880
0.72
9.
SMT.SWATI PATODIA
Individual
26680
0.08
10.
MS.PRACHI PATODIA*
Individual
10000
0.23
11.
MADANLAL
PURUSHOTTAMDAS HUF
HUF
121600
1.04
12.
BINOD KUMAR PATODIA
HUF
HUF
579440
4.98
13.
MAHENDRA KUMAR
PATODIA HUF*
HUF
556052
4.78
14.
M.B.CREDIT P LTD
Body Corporate
297458
2.56
15.
PATODIA EXPORTS &
INVESTMENTS P LTD
Body Corporate
320860
2.76
16.
UMANG FINANCE P LTD
Body Corporate
364526
3.13
17.
BEEKAYPEE CREDIT P
LTD
Body Corporate
376871
3.24
18.
EMKAYPEE
INVESTMENTS P LTD*
Body Corporate
489850
4.21
19.
FORWARD FINANCE P
LTD*
Body Corporate
616708
5.30
20.
MODESTY FINANCE &
INVESTMENTS P. LTD*
Body Corporate
120000
1.03
21.
MEGHA INVESTMENTS P.
LTD*
Body Corporate
314760
2.70
(Table 4.1)
* As per the Scheme of Arrangement, Shri.Mahendra Kumar Patodia and his family /
representatives / nominees will swap their Shares of GTN Textiles Limited in favour of
Page| 40
Shri.Binod Kumar Patodia and his family / representatives / nominees. Vice Versa,
Shri.Binod Kumar Patodia and his family / representatives / nominees will swap their Shares
of GTN Industries Limited in favour of Shri.Mahendra Kumar Patodia and his family /
representatives / nominees.
4.1.1 History of the Company:
The Company belonging to Patodia Family – GTN Group is functioning under the
guidance of Shri. M L Patodia, Chairman. The Group, which was originally engaged in
trading in all types of yarns as well as textiles and cotton, acquired vast experience and
understanding of the various aspects of the trade over four decades. The Group, as a natural
corollary entered into the manufacturing of cotton yarn with the acquisition of Aluva Unit,
in 1966. Initially focusing its attention in the marketing of quality yarn in the domestic
market, the group, since 1980, shifted its emphasis to the manufacture of high quality and
finer count yarns for the sophisticated international markets, with a major share in countries
like Japan and Italy. In 1983, GTN established another Unit at Chitkul Village, Sangareddy
Taluk, and Medak District in Andhra Pradesh.
The Company had acquired another Cotton Spinning Unit in Nagpur, Maharashtra
during 1994-95 by virtue of amalgamation of erstwhile Perfect Spinners Limited, which was
promoted by GTN Group. As late as in 1997, the Company further set up yarn dyeing and
mercerizing unit at Shadnagar, Andhra Pradesh. The Company has also promoted Patspin
India Limited, a 100% E.O.U as a joint venture along with Equity participation from
ITOCHU Corporation, Japan and KSIDC, Trivandrum. GTN has invested 39.07% of the
Paid-up Equity Share Capital of Patspin India Limited, a Listed Company, which also has
cotton spinning unit in Kerala.
GTN Group has over 3 decades of experience in the International Market. The
Company’s Aluva Unit is fully modernised by spending over Rs.50 crores with the latest
technology to achieve the optimum productivity meeting the highest quality at par with the
International quality standards. GTN continues to maintain its leadership in exports of fine
and superfine-combed cotton yarns. The Company has been constantly focusing its efforts to
cater to high priced end users in sophisticated markets and enjoys excellent relations with all
of its overseas customers, which have been assiduously built over the years by strictly
adhering to delivery schedules, maintaining consistent quality and providing prompt after
sales service.
Page| 41
In recognition of excellent export performance and leadership in the field of cotton
yarn export, the Company has won the Gold Trophy from TEXPROCIL, for the last 20
years consecutively for outstanding export performance in yarn amongst manufacturer
exporter mills in the Country. GTN is the pioneer Company in India to produce specialized
yarns like compact yarns for high end users.
GTN Industries Limited was Incorporated under Certificate of Incorporation
No.U18101KL2005PLCO18062 dated 28.3.2005 having its Registered Office at Door
No.VIII/911, Erumathala Post, Aluva, Kochi - 683 105, Kerala for the purpose of taking
over the demerged business of GTN Textiles Limited. Pursuant to the Scheme of
Arrangement, the names of GTN Textiles Limited and GTN Industries Limited were inter
changed and accordingly, the name of GTN Industries Limited has been changed to GTN
Textiles Limited, vide Certificate dated 27.12.2005 by the Registrar of Companies-Kerala.
Pursuant to the Order of the High Court of Kerala, the Company took over the
business activity of the Aluva Unit, investment of 39.07% of the Paid up Equity Share
Capital of Patspin India Limited and the Offices as well as its assets situated in Mumbai,
Kolkata and Coimbatore with effect from 1st April, 2005 (Appointed Date) on the Effective
Date, i.e.: 19.12.2005.
The principle business of the Company is manufacture and export of cotton yarn. The
main objects are set out in the Memorandum and Articles of Association and interalia allows
engaging in various business including those as spinners, weavers, bleachers, dyers of cotton
yarn, producers of processed yarn, mercerised yarn, dyed yarn, bleached cotton yarns, etc.
Vision
The vision of GTN is to realize their policies and implement the contents there in letter and
spirit.
“The market place is the driving force behind everything we do and we aim and achieve the
highest level of customer satisfaction on a continuous basis in all our transactions”.
GTN believes in continuous up-gradation of its product quality &services by investment in
the latest technology and its successful implementation
Page| 42
Mission
It is the mission of GTN to realize the zero defect zero accidents zero pollution and thereby
to have zero losses and also implicit trust, high ethical, moral values and unswerving
commitment to our customers. The exceedingly high standard we set for ourselves is the
driving force behind the quality and excellence of all our endeavors.
4.1.2 Main Objects of the Company
The Main Objects of the Company as set out in the Memorandum of Association are as
follows:
a) To carry on all or any of the businesses as manufacturers, distributors, producers,
assemblers, fabricators, designers, hirers, repairers, cleaners, exchangers, alterers,
buyers, sellers, importers, exporters, stockiest, agents, representatives, storers and
warehouses and dealers in textile industry and other allied industries.
b) To carry on the business of preparing, combining, spinning, doubling, twisting,
texturising, imparting, crimping, converting, calendaring, testing, sizing, weaving,
knitting, bleaching, processing, dyeing ginning, cutting, scouring, winding, mercerising,
combing, printing, finishing, manufacturing, buying, selling, importing, exporting or
otherwise dealing in industrial fabrics, synthetic fabrics, synthetic yarn, cotton yarn,
nylon, nylon tyre yarn, tyre cord, tyre fabrics and other end products, polyester, acrylic,
viscose, poly propelene cotton, linen, wool, silk, flex, hemp, jute, artificial silk rayon,
canvas and other fibres or textile substances whether natural or synthetic or manmade, in
any state and whether similar to the foregoing substances or not, and to treat, utilise and
deal in any waste arising from any such operations and to manufacture, felted, knitted,
looped and embroidered fabrics, lace and other types of manufactured, processed or
decorated fabrics and to manufacture coated or laminated fabrics and readymade
garments and apparels.
Objectives of the Company
(i) Corporate Objective
a) To improve its present position in export markets.
b) To satisfy its customers and shareholders
c) To concentrate more on high value added processing at yarn
d) To maintain long-term relationship with customers to provide then with good
service and better quality products.
Page| 43
(ii) Quality Objective
a) To meet changing global demands for specialized yarn.
b) Ensuring better quality by its commitments to social and environment needs.
c) Motivating personal for ensuring quality awareness of all level.
d) Continue upgradation of product quality and technology supported by research and
development effects in cost effective manner.
e) Highest level of customer satisfaction by meeting stated and perceived requirement
maintaining consistency and timely delivery.
4.1.3 Awards/ISO Cerfication
Winner of Texprocil award for outstanding exports achievement for the last 18
consecutive years.
Texprocil Gold
1993-94, 1994-95, 1995-96, 1997-98, 1998-99, 1999-2000, 2000-01, 2001-02, 2002-03
Texprocil Silver
1985-86. 1986-87, 1988-89, 1989-90, 1990-91, 1991-92, 1992-93, 2006-07
(GTN Enterprise Ltd.)
Texprocil Bronze
1996-97, 2002-03, 2003-04, 2004-05, 2006-07 (GTN Textiles Ltd.)
The award for excellence from Birla Economic and Textile Research Foundation
GTN is named the ‘STAR EXPORTER’ and ‘EXPORT HOUSE’ for its excellent
performance in export 2003-04.
GTN has the Birla award for its research and development and modernization efforts
1997-98.
National export award for outstanding performance 1987-98 by Government of India,
Ministry of Commerce.
SIMA Diamond Jubilee, 1993-94 Shri B K Patodia, Vice Chairman.
Cochin Special Economic Zone Export Excellence Award, 2000-01, 2001-02, 2002-03.
In recognition of the leadership enjoyed by the company in the field of cotton yarn
export, the textile export promotion council has awarded yet another gold trophy for the year
ended March 98, which is being received by the company in the past nine years.
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4.1.3.1 ISO 9001&14001
ISO 9001&14001 -2004 were implemented GTN textiles limited Aluva in the year
1994 and 2004 respectively. Both these system were integrated in the year 2006 and termed
as “Quality Environment Management System” (QEMS). The system is audited and
certificate is issued by “intertech” an international organizational dealing with the
international standards and operating in India. By integrating both these system, the
company has the advantages of reducing the number if audits preparation of document.
The ISO 9001 model of the quality system is built up on the principle of achieving customer
satisfaction by preventing non-conformity at all stages in the supply chain.
4.2 Competitors
The major competitors of GTN Textiles LTD are-
Arvind Mill Ltd
Raymond’s Ltd
Centuary Textiles & Industries Ltd
Reliance Textiles Ltd
Ginni Filaments Ltd
Hanil Era Textile Ltd
Vardhaman Spinning Co.
Page| 45
Organizational Structure of GTN Textiles Ltd
(Figure 4.1)
Chief Executive
Senior GM
Personnel & IR
Senior GM
Manufacturing
Deputy GM Technical Asst GM
Finance
&
Accounts
Sr.
Mgr
T & D
Sr. Mgr
Manufact
-uring
Head
Security
Guard
Mgr
Personnel
Security
Guards
Ship In-
Charge
Supervisor
Sr. Mgr
Engineering
Service
Electrical
Engineer
Asst. GM
Raw
Materials
Mechanical
Engineer
Electronics
Engineer
Mgr Raw
Materials
Asst.
Manager
Maintena
-nce
Asst. GM
Maintena-
nce
Supervisor
Jr. Officer
Time Office
Time
Keepers
Asst. Mgr
Security &
Welfare
Sr. Officer
Time Office
Group Technical Advisor
Store Asst.
Deputy Mgr
Finance &
Accounts
Asst. Mgr
Q & A
Senior
Officer
Q & A
Assistants
Accounts
Assistants
Sr. Officer
Q & A
Asst. Mgr
Finance &
Accounts
Chairman & Managing Director
Page| 46
4.3 Duties and Responsibilities of Departmental Heads
Chairman and Managing Director
Overall management of the group administration and review of systems for quality,
export, perspective planning, expansions, resources funding and raw materials
(cotton) procurement.
Defines and documents company's quality, policy, and objectives.
Chief Executive
Overall management of organization, administration, and review of system for
quality export perspective planning and expansion.
Overall management of purchase of capital equipments, spares and products
effecting quality.
Planning for expansions, resource funding, and control of finance department.
Senior General Manager (Manufacturing)
Managing and control of production process, product identification and traceability,
material handling, storage packaging and delivery.
Overseas the quality Management system that is being maintained in the
organization.
Identify and advise motivation programs for employees. He has overall control of the
worker.
Senior Manager (Engineering Services)
Overall control of utilities, civil, mechanical, and electrical activities.
Implementing n effective scheduled preventive maintenance program for utility
equipment.
Repairs and services of humidification or air conditioning plant.
Senior General Manager (Personnel and Industrial Relations)
Implementing systematic recruitment procedures, providing training facilities and
overall development and motivation of all employees.
Maintaining documentation of training programs.
Ensuring safety aspects in the organization.
Page| 47
Assistant General Manager (Maintenance)
Implementing an effective scheduled preventive maintenance program.
Repair and service of process equipment, calibration of gauges.
Communication with Senior GM Manufacturing
Assistant Manager (Quality & Assurance)
Establishing and maintaining inspection and test procedures for raw materials, in
process and final product.
Establishing and maintaining procedures for calibration of inspection measuring and
test equipment.
To implement research and development and quality improvement activities.
Reporting on the performance of the quality management system to the management
for review and as a basis for continual improvement.
Communication with external bodies on matters relating to quality management
system.
Timely conduct to Internal Quality Audits by trained personnel.
To organize and conduct management review at specified internals and initiate
follow-up-actions.
Manager (Maintenance)
To assist Assistant Manager (Maintenance) for process equipment maintenance,
repair and servicing.
Responsible for maintaining and servicing of all equipment.
Calibration of gauges and other measuring equipment.
Manager (Production)
Monitoring of all production, packaging, and delivery activities.
Ensuring good housekeeping in the organization.
Manager (Raw Material)
To control the distribution of the raw material to our units.
Assistant Manager (Quality Assurance)
Assist management representative in controlling of quality manual and matters
related to there to.
Page| 48
Assistant Manager Accounts
Provides finance assistant to various departments as per the requirements
Maintains the wages and salary bill of the department
Helps in assisting the manager in preparation of various accounts
Maintains records on the past as well as current financial figures, engages in
management discussions etc.
Store Assistant
Maintains records of stocks and reduces wastage
Supervises packaging
Reports storage and delivery of finished products
Informs executives in case of shortages
4.4 Various Department of GTN Textiles Ltd
1. Raw Material Department
2. Quality Assurance Department
3. Production Department
4. Stores Department
5. Maintenance Department
6. Management Information Systems Department
7. Finance Department
8. Personnel Department
9. Sales, Export/Marketing Department
Page| 49
4.4.1 Raw Materials Department
Introduction
Cotton is the sole raw material for the manufacture of cotton yarns. Since it is a
seasonal product and is available only during the months from October-March, the required
quantity is purchased and stocked for the production of cotton yarn. The fiber processors
seek to acquire the highest quality at the lowest price, and attempt to meet processing
requirements by blending bales with different average fiber properties.
Blends that fail to meet processing specification show marked increase in processing
disruption and product defect that cut into the profits of the yarn and textile manufacture
The cotton picked folds are ginned and taken to the factory site from the ginning
centers through agents. The purchase is done on a massive scale, before which the material
undergoes a series of tests. The basic sample considered should satisfy three parameters viz.
Sample length, strength, and value. Once the sample clears this high volume instrument
testing, the company goes for bulk purchase on lot basis. These samples again undergo the
quality check which once cleared for delivery. The approval lot again undergoes HVI tests.
Once cleared these lots are accepted for manufacturing.
Functions:
Verification of properties
Finding suppliers
Import of cotton
Purchase of raw materials
Waste management
Procedures
1. Verification of Properties
Successful processing of cotton depends on appropriate management during and after
harvest of those highly variable fibre properties that have been shown to affect finished –
product quality manufacturing efficiency. If fibre – blending specific end uses and
profitability, production managers in textile mills need accurate and effective descriptive and
predictive quantitative measures of both the means and ranges of these highly variable fibre
properties.
Page| 50
The components of cotton fibre quality are usually defined as those properties
reported for every bale which currently include length, length uniformly index, strength,
micron ire, and yellowness (+b), and trash content, all quantified by the High Volume
Instrument Line (HIV).
2. Finding Suppliers
Cotton is produced from different cotton producing states of India i.e. Gujarat,
Maharashtra, Karnataka, Andhra Pradesh, Tamil Nadu, Punjab, Haryana etc. The various
varieties of Indian cotton are J34, S6-S4, V797, Y-1, JAYADHAR, MECH, BRAHMA,
DCH, DIGVIJAY, H-4 etc. A part from these American Supima, Giza45, Giza70, Giza77,
Giza76, Giza86, Giza85, and Giza80 which are imported from America, Egypt and Sudan
are used for processing cotton yarns.
Earlier the company used to depend solely on Indian cotton, but the quality was not
up to the mark as it was contaminated with foreign particles. Later imported cotton was used
and now 90% of American cotton is used.
3. Import of Cotton
The company purchase more than 40% cotton raw materials from foreign countries
like America and Egypt. The main reason or import is better quality and productivity. Raw
material used for production is Suvin. One of the finest extra long staple cottons available in
the world. Suvin cotton is superior in all aspects like fineness Staple length, silkiness, and
luster. This exclusive cotton of Indian origin is a luxury and its products are considered
premium and niche worldwide.
a) Supima
It is a superior, extra long staple variety of cotton grown in America. Yarns produced
from Supima cotton are used to produce softer and more lustrous fabrics. Supima represents
highest quality in cotton yarns. GTN is the first spinning company in India to obtain a
Supima trademark license.
b) Egypt Giza
Giza cotton is a true mark of excellence with extremely superior quality in the extra
long staple and long staple variety. These varieties are also renowned for their excellent
fitness and feel.
Page| 51
c) Indian Cotton
GTN use high quality variety of MCUS and Shanker cotton known for their
superiority in terms of fitness and goodness.
d) Australian Cotton
Medium staple contamination free, varieties of cotton and one of the best grades of
raw materials from among the best suppliers.
e) American sjv Acala
GTN was the first Indian spinner to be given a cotton USA license. Medium staple
contamination free, varieties of cotton and one of the best grades of raw materials from
among the best suppliers.
4. Purchase of Raw Materials
The purchase is based on the three production plan made by the departments
according to the forecasted requirements for production. The production plans does not
allow shortage as it can lead to heavy loss. Random samples of the purchased cotton, is
tested in the quality lab for fiber quality specification. Test for fiber fitness is conducted as
spinning larger number of finer fibers together results in stronger, more uniform yarns than
if they hard be made up of fewer, thicker fibers. The 4 ultimate acceptance tests for fiber
color, as well as for finished yarns and fabrics is the human eye. Therefore instrumental
color measurement must be correlated closely with visual judgment.
Since GTN has its own cotton trading division, it has great advantages of buying raw
materials throughout the year. The purchase order of other companies in the group is placed
by the GTN Textiles, Aluva.
5. Waste Management
Long fibers are best suited for yarn production. Short fiber content is defined as the
percentage of fiber less than 12.7mm the short fibers obtained as waste from processing is
packed and sold.
Page| 52
Key factors for success
Procurement of the right quality at right at right time.
Ability to procure large quantum of raw material and keep long time stock which
ensures consistent quality.
The GTN has an associated concern trading in cotton for the last 40 years which
gives it added advantage.
Organization Structure- Raw Materials Department
(Figure 4.2)
Group Technical Advisor
Sr. GM Manufacturing
Asst. GM Raw Material
Store Assistant
Manager Raw Material
Page| 53
4.4.2 Quality Assurance Department
Introduction
This department is responsible for the quality assurance of raw materials, quality
assurance in process and quality of finished goods. The department is also responsible for
implementation of research and development quality improvement activities in the
organization and also tries to establish and maintain procedure for inspection, calibration of
measuring and testing equipments.
The department is situated inside the factory with state-of art laboratory for testing the
quality of cotton yarn at various stages of production and the finished goods. Some of the
machines used in the quality assurance department are USER Spin Lab excusing these
machines, testing is done for the raw materials and finished goods. GTN Textiles Ltd.,
Aluva is ISO 9002 for quality assures in production, installation and servicing. The company
has a quality manual that makes commitments to the customers that they shall comply with
all their requirements for improvement in all the activities to serve them.
Quality assurance department is the department where the quality is checked and there
are various parameters that affect the quality of cotton fiber, some of them are length,
evenness, fiber strength. These parameters are tested in the quality assurance lab.
Quality Policy
GTN textiles would ensure manufacturing and marketing of cotton yarn by complying with:
GTN Textiles Ltd. Would achieve the highest level of customer satisfaction by
meeting their slated and perceived requirements, manufacturing consistency and
timely delivery.
GTN 53endeavors continual up gradation of product quality and technology supported
by R&D efforts in a cost effective manner.
To meet the changing global demands and stay headed in competition GTN would
adapt/ innovate methods in its manufacturing activities.
GTN would inculcate a sense of quality awareness at all levels by using appropriate
training and motivation techniques.
GTN would aim at preserving the environmental conditions by adopting eco- friendly
measures in its manufacturing and other activities.
The main activities of QAD are:
Page| 54
Raw material selection and stock
Bale management
Online process monitoring of production and quality
100% zero / quantum clearer
UV lamp testing
Duties & Responsibilities
Senior Manager: Takes care of the overall administration of the quality assurance
department
Assistant Manager (Quality): Takes care of process control and development of new
products
Supervisor: Process control is monitored by the supervisor
Investigator: Inspection and testing of materials is done by the investigators
Levels of inspection
There are mainly three levels of inspection and each has different checking intervals
Raw Materials: the inspection and testing is immediately. Both are thus quality
assurance involves all those planned and systematic action necessary to provide
adequate confidence that product will satisfy the given requirement for quality
essential for continuous processing.
In Process: during each process, random samples are taken and tested. This is to
ensure the customers quality requirement.
Final Products: The product has to be tested before shipping. Usually a lot may
contains 7-8 tons random samples are taken from the lot and tested
Quality Lab
Twist per inch test: to improve the strength of the yarn, two yarns are twisted to
form a single strand. To determine the number of twists in an inch the test conducted.
Linear density test: in this the count of the yarn is tested. This is to ensure that the
yarn has the required count.
Tensile Property Test: the strength of the yarn is tested. The extent to which the fibre
can elongate is tested to avoid frequent broken end.
Page| 55
Unevenness Test: the presence of short fibre result in the unevenness of the yarn. Use
of uneven yarn in fabrics can cause bubbling in course of time. To avoid this, the
yarn is gassed
Cotton testing: cotton is tested for its fibre length, colour, and strength.
Organization Structure- Quality Assurance Department
(Figure 4.3)
Group Technical Advisor
Sr. Officer Q & A
Asst. Mgr. Q & A
Operators
Deputy GM Technical
Q & A Assistant
Page| 56
4.4.3 Production Department
Introduction
Production department is the most important part of this organization. Here
production is carried out in required quality at minimum cost. The production department in
coordination with the marketing division does managing and controlling of the production
process. Customer requirement in terms of quality, quantity, delivery, packaging are
obtained an analyzed as per the sales contract from the export division.
Production capacity
GTN have 165000 Spindles Capacity, consisting of 30000 Compact spindles, and
135000 Ring spinning .In addition process like twisting, Gassing, Dye package winding
,knitting etc. in-house in order to server different customers requirements effectively.
Product
The reason for success in this competitive environment is that all the products are
customized and are produced on a ‘made to order bases’
GTN’s Product Range
GTN group manufacture 100% cotton yarn/knitted fabrics:
Yarn of count 30’s to 140’s
Two for one twisted & Ring double
Knitting & Weaving yarn
Gassed yarn
Gassed and processed knitted yarn
Knitted garments
Main Counts
Over 90% of products are fine and superfine hundred percent yarns carded and
combed with counts ranging from 30s to 140s, both single and multi fold, as well as gassed,
suitable for knitting and weaving.
Page| 57
Flow Chart of Production Process
(Figure 4.4)
Production Process
The production process is mainly going through five stages:
1) Bale opening: In this process cotton are opened, foreign matters are segregated and
processed in the bale-opening machine. From this process, cotton is subject to
maximum.
2) Mixing: Here different varieties of cotton are blended in define proportion. The
objective of blending different varieties of cotton is to spin the required yarn
economically. Unimix is the machine that is used to mix the cotton and to convert into
chute.
Stack mixing is the best way of doing the mixing compared to using automatic bale
openers, which picks up the material from 40-70 bales depending on the length of the
machine and bale size, provided stack mixing is done perfectly. Improper stack mixing
will lead to shade variation problem, stack mixing with bale opener takes care of short
term blending and two mixers in series take care of long term blending.
Bale Opening
Mixing
Blow Room
Drawing
Combing
Carding
Simplex Spinning
Automatic Cone
Winding
Doubling
Conditional
Winding
Singeing
Conditional Yarn
Precision
Winding
Page| 58
3) Blow Room: In this, the mixed cotton is opened, cleaned and made into a continuous
sheet in the wound from. This product is called Blow Room Lap.
4) Carding: In carding operation, the Blow Room Lap material is cleaned, fibers are
made parallel and then wastes are extracted from fibers and assemble into a continuous
strand. This strand is called Card Silver. This silver are coiled and stored in cans.
There are two rules of carding:
The fiber must enter the carding machine, be efficiently carded and taken from it in as
little time as possible.
The fiber must be under supervision from entry to exit.
The purpose of carding:
To open the flocks individual fibers
Cleaning or elimination of impurities
Elimination of dust
Elimination of short fibers
Fiber blending
Fiber orientation or alignment
Silver formation
5) Combing: The carded silver is then prepared for combing in Silver Lap and Ribbon
Lap machines. The product thus prepared is called Ribbon Lap. These Ribbon Laps are
then fed to comber machine. In comber, the short fibers and minute impurities are
removed and the fibers are made parallel and assembled in from of Silver.
6) Drawing: In drawing process, a definite number of combed silver is doubled and
drawn together to make the resulting silver more even and parallelized fibers. The
silver is stored in cans in coiled form.
7) Simplex: The object of simplex or speed frame process is to attenuate the drawn silver
into a finer strand, twist and wind it on a plastic tube. This product is called Roving.
8) Spinning: In Ring Spinning process the roving is attenuated with the help of drafting
system and the drafted fiber strand is twisted and wound on a tube. The twisting and
winding operations are performed with the help of Ring Traveler and Spindle. The
yarn count is also set at this stage. The arrangement is being progress to spin the latest
form of compact yarn by the employment of Elite and Com4 machines.
9) Automatic Cone Winding: In the automatic cone winding process, yarn from the
Ring Frame cops passed through electronic yarn cleaners to detect and remove
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objectionable fault in the yarn. The yarn ends are joined with the splicing provision. A
definite length of yarn will be wounded on cones. Waxing can also be done in this
process.
10) Doubling: In doubling process, two or more single yarns are twisted together. This
consists of two processors - assembly winding and twisting. In assembly, winding the
required number of single yarns of definite length is wound in parallel to a single
package. Twisting may be carried out either with Ring Doubling machine or two-for
one twister.
11) Conventional winding: In conventional winding a definite length yarn is wounded on
cones. During winding the yarn is passed through electronic yarn cleaner to detect and
remove objectionable yarn fault waxing also can be done in this process.
12) Singeing: In singeing process yarn is passed through a flame at high speed to remove
the protruding fibers. The object of singeing is to make the yarn lustrous, which can be
used for some special end uses. The flame and speed of the fiber should be constant as
any change can cause damage to the yarn.
13) Conditional yarn: Apart from gassed yarn conditioned yarn is also produced.
According to the customer requirement the yarn is conditioned in a conditioning
machine. The yarn is conditioned for half an hour in specific temperature and moisture.
The time limit is important as over conditioning may lead to absorption of moisture by
the yarn and hence may result in poor quality.
14) Precision Winding: In this process yarn is passed through a special type of tension
assembly to get the package more softly so as to get the dye package directly. The
softness can be increased or decreased as per the requirement.
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Organization Structure- Production Department
(Figure 4.5)
Group Technical Advisor
Sr. GM Manufacturing
Ship In- Charge
Supervisors
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4.4.4 Stores Department
Introduction
Stores department is the department whose main service is maintaining several types
of inventories. Also it functions as maintenance of materials, spare parts and general store as
required. Purchase is made with reputed companies who offer good quality of products at
reasonable cost.
Functions:
Storing of purchased raw material
Issuing reorder level
Material inspection
Listing and selling of scrap
Procedure
Storing of Raw Material
It is the duty of the stores department to store the purchased raw material. All the
purchases are made online. SAP is the software used for this purpose. The purchases are
made through quotations for a period of six months. Quotations are received from dealers
who provide maximum discount.
Mainly 3 type of material are purchased and stored,
Mill stores: this includes spear parts, bearings, consumable goods etc.
Packing goods: these include material which is used for packing.
Utility item: this include engineering items, electric items etc.
All purchases are made within the limit of 8-12 days and on the same day itself it is fed into
the computer.
Issuing Re Order Level
All the purchase and issue of raw materials are entered in the computer and computer
will show the re order level.
First Release
The requirement of each department is listed out by the respective department staff.
This list is then sent to the department head.
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Second Release
The list prepared by the department is approved by the department head and then
sent to the vice-chairman
Order Placement
After the second release, the requirement list is sent to the stores department, where
the order is placed. The description and quantity of the product is specified in the
order form.
Order Release
The store manager places the order with the suppliers and is known as order release.
The re order time and lead time is estimated with the help of past record. Tax free
goods are specified.
Order Acceptance
The order acceptance is the receipt of goods ordered. The quantity of the item is
checked by the stores department.
Material Inspection
The quality of the items delivered by the suppliers is inspected by the investigators in
the quality assurance department. Then the materials are issued to the respective
departments. The purchase entry is also made during this time. The items received by the
stores department are stocked in the stores.
Monthly reports are generated. Consumption reports are generated to find out the
consumption rate. These reports are also used to tally the physical stock with consumption.
Listing and Selling of Scrap
The scrap materials are listed out once in every six months. A call for quotation is
made to find the best price that can be obtained for scrap. ABC analysis is used for regular
items, which directly affect the quality like packaging materials and machinery spares.
Organization Structure- Stores Department
(Figure 4.6)
Worker
Stores Assistant
Manager Raw Materials
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4.4.5 Maintenance Department
Introduction
GTN being a manufacturing concern, the number of equipments and machines are
involved directly or indirectly with production process and hence the effective functioning
of maintenance department is inevitable.
The objective of maintenance department includes minimizing long run maintenance
cost, minimizing breakdowns to keep operations stable, providing reliable conditions for
equipment to perform at specified technical conditions through service, repairs replacement
and modifications. They conduct the preventive maintenance program at intervals intended
to reduce the like hood of equipments conditions falling below a required level of
acceptability and also modernization works are done by the department.
In order to assist maintenance department, computers are provided with the details
and reminder dates of the maintenance of a machine in a department and details of its
services and replacement. All the machines are cleaned periodically and their functioning is
checked in order to assure that the machines are working smoothly with no troubles. Other
than daily checks, weekly, monthly or yearly checks are carried out. A time interval is set for
all machines. A monthly schedule is prepared to see which machine is to be attended first
and then at the time the concerned foreman will attend the machine.
GTN Textiles being s manufacture of fine and super fine quality cotton threads,
modernization has become the inevitable part of the production. Replacement of machines
and machine parts also is done by this department. Good quality machines are selected
according to the count rate.
Functions:
Minimizing maintenance cost
Minimizing breakdowns of machines
Replacement and modification of machine
Providing safer working condition
Ensure machine are working properly
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The maintenance operations are divided into two:
Preventive Maintenance
The manager and other concerned officers will fix the life of all machines spare parts
and will replace the particular spare part at the end of the period. All the machines
used in the company (Indian as well as imported ones) are under the annual
maintenance contract. So the serious mechanical problems are rectified by the
company, who supplied the machines.
Breakdown Maintenance
If any faults occur at any part of the machine, the assigned person from the
maintenance department will check out the problem and repair the part.
Levels of Maintenance
Mechanical Maintenance
To ensure the protection is carried out in a controlled condition.
Electrical maintenance
Ensure that process equipment or machinery are maintained and fit for the purpose.
Organization Structure- Maintenance Department
(Figure 4.7)
Group Technical advisor
Sr. GM Manufacturing
Asst. Mgr. Maintenance
Asst. GM Maintenance
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4.4.6 IT/ Management Information System Department
Introduction
About 90% of the organization is computerized. The main network is the SAP/ERP
implemented within the raw material finance, export and stores department. Other
applications like Payroll Software in Fox Pro and Production Control in visual basic are
implemented in the organization.
Functions:
Maintenance: The System has to be maintained and updated according to the increasing
needs of the organization
Process Monitoring: The production process is completely monitored by the department.
The Payroll Software is handled by the personnel department. The wage and salary
calculation is done using this software. The organization provided intranet facilities for ease
of access of information. The intranet is accessible by the top level management. The main
server is at Cochin through which the transactions are communicated. The information
regarding the transactions are shared and passed to the organization through routers.
Organization Structure- Management Information Systems Department
(Figure 4.8)
Deputy General
Manager
Technical
System Analyst
System
Administrator
Programmers
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4.4.7 Finance Department
Introduction
This department has to raise necessary funds, manage them, prepare finance budgets
and administer its working capital. This department functions on public issue of capital,
maintains records for helping the finance manager to access the appropriateness of capital
structure. It provides data for the preparation of budget and various financial statements. The
accounting function of the department includes the preparation of trial balance on a yearly
basis. They also prepare managerial reports regarding expenditure of travelling, postal,
telephone and courier transactions.
Functions of Finance Department
The company maintains a clear and perfect accounting system. The main activity of
the finance department is working capital management. Preparation of fund flow statement,
cash flow statement, balance sheet, profit and loss accounts are also the activities of finance
department. Secretarial work relating to board comes under the finance department. Most of
the activities carried out by the finance department are preparing to long term and short term
requirement of the operation, closing purchase bill, maintaining the account contractors,
subcontractors, income tax deduction, salary discrepancy, dealing with the financial
institutions with import and exports
Maintaining Books of Accounts like,
a. Purchase Records
The finance department of the company keeps the account of raw material and
accounting entries are made in the books of accounts of the company. The department
analyses the details of purchase afterwards.
b. Salary Accounts
The main function of the department is preparation and disbursement of salary of
officers, office staff and workers. The department keeps salary register pertaining to each of
the above said person and facilitates charges in salary due to granting of annual increment
and deduction from the salary. The department is maintaining sub ledgers for deduction
made in the salary such as PF, insurance premium advance and income tax. Another
important function is computation of income tax.
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c. Sales and Revenue Accounts
The department functions on calculation of paying sales tax and central excise duty to
the concerned government every year, provision for current tax is made on the basis
estimated taxable income for the current accounting year in accordance with income tax
1961.
d. Cash and Bank Accounts
The department does all the matters relating to the day to day cash transactions. They
receive and make payment for purchase and sales.
e. Cost Sheet
Annual budget and cost sheet is prepared at the outset of every year and the company
is following Process Costing Method. It helps the company to ascertain the cost of a product
at each stage of the production, i.e. cost at each process through which the raw cotton passes
through for the production of fine yarns. The total cost incurred at each stage of production
is carried out to ascertain the final cost. The pricing policy adopted by GTN Textiles is Cost-
plus-pricing and hence a certain percentage of the profit is added to the final cost incurred.
f. Depreciation
Department has been provided at the rates and in the manner prescribed in Schedule
XIV to the Companies act 1956. Plant and machinery and electrical installation have been,
on technical assessment, considered as continuous process.
Accounting System
The financial statements are prepared on historical cost and convention.
All fixed assets are stated at cost adjusted by revaluation in case of certain land,
building, plant and machinery and electrical installation, less accumulated
depreciation.
Long term investments are stated at cost less provision.
Values of fixed assets are revalued by technicians.
Valuation of investment is done at cost.
Depreciation is done as per the company’s act 1956.
Management of Payables and Receivables:
As 90% of the sales are as exports, it takes place with the support of letter of credit or
bank guarantee. Therefore, management of payables and receivables has not been a problem
for the company. In this total amount, 50% of the total amount is written off as bad depts.
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Likewise 80% of the raw cotton purchased is imported. So L/C is made us here too. Local
purchase is made by the company for a credit period of 30 to 90 days. The company claims
to have an efficient management of both payables as well as receivables.
Accounting Policies:
Basis of Presentation:
The financial statements have been prepared to comply with the mandatory
Accounting Standards issued by the Institute of Chartered Accountants of India and the
relevant provisions of the Company’s Act, 1956. The financial statements have been
prepared under the historical cost convention, 0 the basis of a going concern, on accrual
basis.
Use of Estimates:
The preparation of financial statements requires Management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the disclosure of
contingent liabilities on the date of financial statements and reported amounts of revenue
and expense of that year. Actual result could differ from these estimates. Any revision to
accounting estimates is recognized prospectively in current and future periods.
Fixed Assets:
i. All fixed assets are stated at cost less accumulated depreciation. Expenditure during
construction period in respect of new project/ expansion is allocated to the respective
fixed assets on their being ready for commercial use. Also refer Policy G and J below.
ii. Impairment of Assets the company assesses at each Balance Sheet date whether there
is any indication that any asset may be impaired. If any such indication exists, the
carrying value of such assets is reduced to recoverable amount and the impairment loss
is charged to Profit and Loss account. If at the Balance Sheet date there is any
deduction that a previously assessed impairment loss no longer exists, then such loss is
reversed and the asset is restated to that effect.
Investments:
Long term Investments are stated at cost less provision, if any, for other than
temporary diminution in the value of investments.
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Inventories:
Inventories are valued at lower of cost or net realizable value. Cost of Raw Materials
is computed by using “Specific Identification” method and for other inventories “Weighted
Average” method. The cost includes costs of purchase, cost of conversion and other costs
incurred in bringing the inventories to their present location and condition.
Sales:
Sales are recognized as and when risks and rewards of ownership are passed on to the
buyer and ultimate realization of price is reasonably certain. Export Sales are inclusive of
deemed exports while local sales are net of Sales Tax/ VAT.
Borrowing Cost:
Borrowing Costs attributable to acquisition and construction of qualifying assets are
capitalized as a part of the cost of such asset up to the date when such asset is ready for its
intended use. Other borrowing costs are charged to Profit & Loss Account.
Employee Benefit:
Short “Term employee benefits including accrued liability for Leave Encashment
(other than termination benefits) which are payable within 12 months after the end of the
period in which the employee render service are paid/provided during the year as per the
Rules of the Company.
Foreign Currency Transactions:
Transactions in foreign currency are recorded at the rate of exchange in force at the
date of transactions. Foreign currency assets and liabilities are stated at the rate of exchange
prevailing at the year-end and resultant gains/losses are recognized in the profit and loss
account. Premium in respect of forward foreign exchange contracts is recognized over the
life of the contracts. In accordance, with the AS – 11 (Revised 2003) the Exchange
difference arising on the contracts/transactions entered into on or after 01-04-2004 on the
settlement of monetary items or on reporting monetary items at rates different from those at
which they were initially recorded during the period, or reported in previous financial
statements, is recognized as income or expenses in the period in which they arise.
Taxation:
Income Tax expense comprises Current tax and Fringe benefit tax (i.e. amount of tax
for the period determined in accordance with the Income Tax Law) and deferred tax charge
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or credit (reflecting the tax effects of timing differences between accounting income and
taxable income for the year). Deferred tax charge or credit and the corresponding deferred
tax liabilities or assets are recognized using the tax rates that have been enacted or
substantively enacted by the balance sheet date income for the year). Deferred tax charge or
credit and the corresponding deferred tax liabilities or assets are recognized using the tax
rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax
assets are recognized only to the extent that there is reasonable certainty that the assets can
be realized in future; however where there is unabsorbed depreciation or carry forward loss
under Taxation laws, deferred tax assets are recognized only if there is a virtual certainty of
realization of such assets. Deferred tax assets are reviewed at each balance sheet date and
written down or written up to reflect the amount that is reasonably I virtually certain as the
case may be to be realized. Tax credit is recognized in respect of Minimum Alternative Tax
(MAT) as per the provisions of section IISJAA of the Income Tax Act, 1961 based on
evidence that the company will pay normal income tax within the statutory time frame and is
reviewed at each balance sheet date.
Costing and Pricing:
As GTN Textiles Limited is a manufacturing concern and involves a large number of
processes, Process Costing method is followed. It helps the Company to ascertain the cost of
a product at each stage of production, i.e. cost at each process through which the row cotton
passes through for the production of fine yarn. The total cost incurred at the each stage of
production is carried out to ascertain the final cost. The pricing method adopted by the GTN
Textiles is Cost-plus-pricing and hence a certain percentage of the profit is added to the final
cost incurred.
Budget and Budgetary Control:
Budgets are prepared by this department on a quarterly basis and based on this the
annual budgets are prepared. The budgets can be sales budget, production budget, expenses
budget and the total budget. At the month end, a comparison is made between budgets and
actual right from the raw cotton procurement till the last process. The reasons for variations
(if any) will be found out.
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Organization Structure- Finance Department
(Figure 4.9)
Group Technical Advisor
Senior Officers
Operators
AGM Finance & Accounts
Deputy Mgr. Finance & Accounts
Asst Mgr Finance & Accounts
Account Assistant
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4.4.8 Human Resource Department
Introduction
Personnel Department plays a crucial role in the management of the company. The
department try to create and utilize an able and motivated workforce to accomplish the
organizational goal, and try to satisfy individual and group needs by providing adequate and
equitable wages and incentives, employee, benefit and social security and measures for
challenging work prestige, recognition security, status etc.
The personal department is responsible for recruitment, selection, placement training,
performance appraisal, promotion and separation. This department is headed by DGM
(industrial relations). He is in charge of implementation systematic recruitment procedures
for providing facilities for the overall development and motivation of all the employees. He
is also in charge of ensuring safety aspect in the mill and maintaining cordials industrial
relation with the workers. The categories of workers employed in GTN are permanent and
temporary. The recruitment, employment, leave disciplinary actions, retirement etc are done
as per the standing order. This department is also responsible for training, performance
appraisal compensation, and separation.
Work Shifts
The company works round the clock in three shifts.
1st shift : 8 am – 4 pm
2nd shift : 4 pm – 12 pm
3rd shift : 12 pm – 8 am
Staff shift : 9 am – 5.30 pm
Employees : 721
Staff : 109
For each shift there would be 3 supervisors: 1 shift in charge and supervisors.
Functions of Personnel Department
Recruitment and Selection
Induction training procedure
Training
Evaluation
Performance appraisal
Wage and Salary Administration
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Procedure
Recruitment and Selection
GTN textile Ltd recruits its manpower resources through recruitment agencies and
advertisement in leading newspapers .the other sources are from reference service and
relatives of employees and from apprentices. Recruitment is done b the G.M of personnel
and Industrial Relation department. At GTN textile selection is done through tests and
interview.
Induction Training Procedure
Technical and non technical fresh recruits are given general exposure to the overall
activities of the organization during initial days. There after they are given in depth
training in assigned areas of work followed by on the job training
Work men fresh recruits are given general exposure to the overall activities of the
organization. They are given on the job training under the supervision of the
jobber/mastery, guided by supervisors or deputy Manager (training).
(Figure 4.10)
Training
Training is given to all workers for developing their skills and proficiency in work. The
probationary period for all workers and office staff is six months. A formal induction-
training program is provided for fresh recruits as per the program given in the induction-
training manual. In addition, training is given to each worker when a new machine is
installed respective to their department.
Induction Programme
Induction Report
Training
On the Job Off the Job
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Evaluation
On completion of training an evaluation regarding effectiveness of training received is
sought from the department concerned”
Performance Appraisal
Performance appraisal is systematic evaluation of the capacity for development. The
supervisors at GTN usually do it. Check list method is used for personnel evaluation .it
helps the superior or the manger to judge the honesty, sincerity, loyalty and responsibility
of the employees. It is usually done in the duration of six months. The performance of
each of the workers, their strengths, merits, weakness etc is discussed in detail with them
and these are considered for their promotion. However at the managerial level, the
through maintains the performance appraisal system, does not discuss with the officers. It
is not carried out in a transparent manner.
Wage and Salary Administration
GTN follows time rate wage system. For this purpose the attendance records are
maintained strictly also there is card punching system for recording entry and exit of the
employees and workers. The remuneration for the work of service rented by the
employees is paid in the form of salaries, wages or fringe benefit. Wages include both
monetary benefits and non monitory benefits. The employees pay/wage includes basic
pay, DT, TA, HRA, LTC, PF and ESI for 26 days. A certain percentage of the annual
earning is distributed as bonus/ of the total pay 12 % is for PF and 1.75 % is for ESI. Over
time work is also paid at the rate of 1.75 times that of a normal day’s pay. There is no PF
and ESI for over time and holiday work.
Employee Welfare Schemes
The company provides all the statutory welfare measures as per the Factory’s act
1948. There are general measures and the company also administers activities that come
under non-statutory items.
Employee Co-operative Society
There is an employee co-operative consumer stores to cater the requirements of
provisions, stationary and textile articles. They also arrange for supply of household
appliances like TV, Two wheelers, Sewing machines etc on installment basis.
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Employee Credit Society
GTN Textile Employees credit society advanced loans to the employees ranging from Rs.
2000/- to Rs. 25000/- for various purposes on a reduced rate of interest. They also run
recurring deposit schemes for the employees.
Silver Jubilee Educational Assistance
Under the silver jubilee educational assistance scheme, employees can avail benefits up to
2 children towards their educational expenses .It ranges from Rs.600/- up to VIII Std.
Students, Rs. 2500/- to medical/engineering students per year.
Marriage Assistance
Interest free loans of Rs. 10000/ - are being given to the employees in the event of
marriage of their daughter.
Insurance Linked Gratuity Scheme
The company has adopted insurance linked gratuity scheme for the benefit of the
employees. Under the scheme, in case of death of an employee, his dependents will be
eligible to receive full gratuity for the total calculated period of service including the
balance of years of service after death.
Holidays
Each employee can avail 13 paid holidays in a calendar year. List of holidays will be
notified each year.
Canteen
A subsidized canteen managed by the employee representatives is taken care of catering
needs of the employees. Meals, Snacks, Coffee/ Tea etc. are available in the canteen
during the prescribed timings.
Quality Circle
Quality circle activities are being organized in Aluva Unit with the effective participation
of the employees.
Safety
Safety, housekeeping activities are arrived out on a continuous basis. A part from the
statutory compliance; a safety committee is effectively working.
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GTN Textiles Employee Welfare Fund
There is fund constituted for the welfare of the employees. There are different benefits
like death benefit, retirement benefit, disablement benefit, loans assistance, etc.
contemplated under the scheme.
Assistance for the Handicapped Children
There is a scheme to assist the handicapped children of employees; this includes supply of
artificial limbs, aids or any other assistance to such cases.
Blood Donor Group
Blood Group of almost all employees has been ascertained. In case of emergency,
employees will come forward to donate blood.
Suggestion Scheme
The company conducts suggestion scheme in the areas of productivity, housekeeping,
quality, safety, etc. Employees who submit feasible suggestions are being properly
rewarded
Attendance Award
To recognize the employees to attend word regularly special prices are being given every
year.
Membership in Professional Bodies
The Company has membership in various professional bodies viz. SIMA, ATIRA,
SASMIRA, SITRA, Kerala state Productivity Council, etc.
Subscription to News Paper and Journals
Various News Papers and Journals are being subscribed for the benefit of Employees.
Anti Addiction Program
The company provides all assistance to employees who wish to come out from their
addiction habit.
Worker Education through Worker
In association with central board of workers education, employees are given classes in
batches for a period of 2-3 months on various subjects. There are trained worker teacher
who take such classes.
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Standing Orders
There is’ an approved Standing order, which regulates the conditions of employment.
Excursion Tours
Excursion tours are arranged regularly for the Staff Members and for the participation the
workers education classes.
Twenty Years Service Award
As a token of appreciation for the continuous service put in, the employees are given
memento after completion of 20 years of service.
Family Planning Program
Encouragement like special level of finance incentive is given to employees in the field of
family planning activities.
Conveyance Facility
Subsidized conveyance facility is provided between Alwaye and factory for the second
and third shifts.
Social Activities
The company take care of the need of the local people with due consideration. This
includes construction of buildings, waiting shed, donation to various charitable
organization etc. Steps are taken for pollution control
First Aid Facilities
The company has direct touch towards he nearby hospital the company can use the
service of the hospital, in case of emergence.
Welfare office
Welfare activities are under the supervision of the welfare officer MR. Wilson Joseph
appointed by the company.
Health and safety
There is a safety committee for looking after the safety of the workers drinking water
facilities are priced at different spots inside the company.
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Employee state insurance scheme
ESI scheme is unique multidimensional self financing social security scheme in which
every contributor is a benefactor and beneficiary. This integrated scheme of health
insurance prides comprehensive medical cover and cash benefit in contingencies of
sickness, maternity, disablement and death.
Trade Unions
There are four registered and one unregistered union in the organization
INTUC (Alwaye Textiles Employee Association)
AITUC (Alwaye Textiles Workers Union)
CITU (Alwaye Mekhala District Textiles Labour Union)
BMS (Bharathiya Masdoor Sangam)
The unregistered union is GTN Workers (Jobbers) Association
Organization Structure- Personnel Department
(Figure 4.11)
Sr. GM Personnel & IR
Time Keeper
Head Security
Guards
Operators
Asst. Mgr
Security &
Welfare
Jr. Officer
Time Office
Sr. Officer
Time Office
Operators
Manager Personnel Senior Manager
Training
Group Technical
Advisor
Security
Guards
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4.4.9 Export And Marketing Department
Introduction
Export Department is serving as a link between the customers. The main duties of the
department includes sales enquiry conformation, sales contract, preparation of work order
which in turn aids the preparation of production plan sending samples and finally shipment.
Thus the export department does not have separate marketing department. Once the lot is
ready the production department makes arrangements for lot dispatch. The goods are
shipped in containers, which undergo house stuffing or port stuffing; the cartons are covered
with Hessian Cloth and loaded in to trucks by experienced personnel under the supervision
of the factory trained expert more over the truck is covered with water proof tarpaulins to
protect the cartons while transportation. The containers used for transportation is of
international standards, which are leased and provided to shipping line.
The customer of the company include consumer who are directly use the product for
further processing and trader who sell it to other customers. The company promotion efforts
include MD’s visit to foreign countries and participation in Textile exhibition abroad. Their
major customers are Italy, Japan, China, Australia, Spain and UK etc.
The payments of almost all the transactions are through the letter of credit system.
The export department office is at Cochin where the transaction re carried out. The
information regarding the transaction are shared and passed to the organization through
routers. The main server of the company is at Cochin.
India continues to be dominant supplier of cotton yarn in the world. However,
Pakistanis closely following India and it may outpace India because of its advantageous
factors like favorable exchange rate, cheaper power tariff and lower wages. Of late, Pakistan
has started importing extra long staple cottons for manufacture of finer counts of yarn for
exports. Therefore, India will have to become more cost-effective to withstand Pakistani
competition in this segment. China’s imports of cotton yarn are raising Cotton. India is now
poised to become a prominent exporter of raw cotton and cotton Yarn.
Export Procedure
The export transaction of GTN textiles ltd starts with the receipt of an intent or order
from the foreign importer. After obtaining the license and complying with the exchange
regulations, they proceed to assemble the product as per the terms of the indent. Once the lot
is ready, the production department makes necessary arrangement for lot dispatch and
arrange the secure shipping space on convenient terms and obtain shipping order after
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complying with the customer formalities, i, e. paying customs duty and obtaining customs
export pass the company goes for bill of lading certificate of origin and insurance policy.
Finally, they prepare invoice showing the price, quantity and description of the
product and negotiates with the bank with necessary documents for securing payment under
letter of credit agreement. The procedure is:
Export Procedure Chart
(Figure 4.12)
The GTN textiles ltd has a well established and managed export department under the
control of well qualified professionals. Its strict delivery schedules, consistent quality and
after sales service had given the company an important position in the textile export area.
Even though there is no separate marketing department for the company the marketing,
activities of the company are well performed by the export department.
Receipt of Indent/Order
Production, Packing &
Forwarding of Goods
Secure Shipping Order
Customer Formalities
Obtain B/L, Certificate of
Origin & Insurance
Negotiates with Bank for
Payment– L/C
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Marketing
GTN Textiles Limited continues to maintain its leadership in exports of fine and
superfine-combed cotton compact yarns. It has export to over 25 countries across the world
selling high value and high quality products to the niche market. With a substantially large
export market and a growing domestic presence, GTN certainly has its quality control
measures and production standards in place. Not surprisingly the company has been the
recipient of Texprocil Gold award excellence in exporting for 18 years.
The company has been constantly focusing its efforts to carter to high priced end
users in sophisticated markets. Apart from predominant exports of cotton yarn to Japan and
Italy’s company’s yarn has also been well received in other countries viz. South Korea,
china Hong Kong, USA, Austria, Belgium, Israel, Australia, Taiwan, Malaysia, Mauritius
among others. The company enjoys excellent relations with all its overseas customers, which
have been assiduously built over the years by strictly adhering to delivery schedules,
maintaining consistent quality and providing prompt after sales service. For the past few
years, the company has been aggressively marketing its products to high end users in the
domestic market who have set up downstream projects for export of high value fabrics,
made-ups and garments.
The tie up with Japan has not only helped in penetrating the Japanese market, but also
in other parts of the world where ITOCHU, the marketing conglomerate has officers. The
connection has helped the company is sewing up business opportunities.
Supplier to Higher and Market:
Used for – shirting, stretch fabrics, voiles, velvets, velour, fine bed liner, fashion
knitwear, lingerie
Worldwide customer list – mark & Spencer, gap, Benetton, Victoria’s, secret, Ann-
Taylor
The payment of almost all the transaction is through the letter of credit system. The
export department office at Cochin, where the transactions are shared and passed to the
organization through routers. The main server of company is at Cochin.
Page| 82
Major Markets
Sl. No.
Markets
% share
1
Japan
36
2
Italy
15
3
Korea
12
4
Israel
10
5
China
6
6
Hong Kong
1
7
Taiwan
1
8
Malaysia
4
9
UK
1
10
Portugal
2
11
Germany
1
12
Austria
2
13
Australia
2
14
Mauritius
1
15
Chile
2
16
SriLanka
5
(Table 4.2)
Page| 83
Organization Structure- Export Department
(Figure 4.13)
General Manager
(Export)
Manager (Export)
Deputy Manager
(Export)
Assistant Manager
(Export)
Officers
Page| 84
4.5 Growth Profile
1962- GTN Textiles Ltd. was incorporated for the manufacturing of Cotton Yarn
1966- The company was taken over by the promoters, the Patodia Family of GTN
Group.
1983- The company Ltd. had established a unit at Chitkul Village, Medak District in
Andhra Pradesh.
1993- On 9th march 1993 company had allotted 18 lakh equity shares of Rs 10 each.
1994- The company had promoted Patspin India Limited, a 100% EOU as a joint
venture along with an equity participation of ITOCHU Corporation, Japan and
KSIDC, Trivandrum.
1995- The company had acquired Cotton Spinning Unit in Nagpur, Maharashtra
during 1994-95 by virtue of amalgamation of Perfect Spinners Limited with the
company.
1997- It further set up a yarn dyeing and mercerizing unit at Shadnagar, Andhra
Pradesh.
2004- The company was ranked 63rd in the BB 100 Gross Forex listing.
-The company ranked 327th in Industry 2.0's second annual listing of top 500
manufacturing companies in India.
-The company had received a composite score of 12 out of a possible 15 in Industry
2.0's SCM Metrics study.
2005- GTN Industries Limited was incorporated as a public limited company on 28th
March, 2005 under the Companies Act, 1956.
-It obtained the certificate for commencement of business on 6th
April, 2005.
Page| 85
-GTN Industries Limited had changed its name to GTN Textiles Limited and vice
versa through the fresh certificate of incorporation 27th
December 2005, issued by
the Registrar of Companies, Kerala.
2007- On 26th July 2007, company had authorized the board to borrow money for
and on behalf of the company in any manner from time to time and without
prejudice.
4.6 Future Plans
Reduce cost of production.
Sell improved quality, cost efficient products.
Focus more on export of cost efficient cotton yarns and less on promotional
activities.
Upgrading the present quality of products to international quality standards.
Page| 86
4.7 SWOT Analysis
Strength
Easy availability of cotton
Lower labour cost compared to developed countries
Well educated supervisory staff
Well educated technical & managerial skills
Excellent relationship with customer in India and abroad over the last
Experienced and committed personnel
State of the art quality assurance department
Foreign collaboration
ISO 9001 & 14001 certification
Highly skilled workers
Latest technology
Modern and automatic machines
Established product
Established market
Decades of experience in trading cotton yarn before venturing into this line of
activity
Strong finance
Goodwill of the company in the market
Uninterrupted supply of raw materials
Weakness
Many machines have become obsolete
The operating expenses are on the higher side.
High cost of power
No full utilisation of installed capacity
Poor infrastructure resulting in higher transaction cost
Raw material prices are increasing
Page| 87
Opportunities
India bring largest cotton cultivation has a great scope in textile market.
Globalization increased export opportunity for textile.
Increased demand of cotton garments in India and abroad.
Forward as well as backward integration.
Availability of cheap labour.
Threats
Growing competition from foreign brands.
Rising prices of raw materials.
Government policies and regulations.
Climate variations affect the cotton cultivation.
Page| 88
Bibliography
Prasad, L.M: Principles and Practices of Management: Sultan Chand & Sons,
2007
Annual Reports of GTN Textiles Limited
Websites
http://www.gtntextiles.com/homepage.html
http://www.moneycontrol.com/company-
facts/gtntextiles/history/GTN02#GTN02
http://www.india-crafts.com/textile/india-textile.html
http://www.dnb.co.in/SMEstextile/overview.asp
http://spg.umich.edu/about/authority-and-delegations
http://www.managementstudyguide.com/delegation_of_authority.htm
http://www.managementstudyguide.com/centralization_decentralization.htm
http://www.allsubjects4you.com/Management-departmenation.htm
http://www.openlearningworld.com/books/Organisation/Organizations/Types
%20of%20Departmentation.html
http://www.moneycontrol.com/annual-report/gtntextiles/directors-
report/GTN02#GTN02
http://www.bseindia.com/BSEdata/ipo_downloads/Info_memo_GTN.pdf
http://www.kkhsou.in/main/EVidya2/commerce/departmentation.html