SUMMER TRAINING PROJECT

at OSWAL WOOLLEN MILLS LTD

Factors Affecting Indian Cotton Textile Exports

Presented By: -

Amit Chawla - MBA (IB)

Roll No :-94972238258

Current Scenario - INDIAN Textile Industry

Textile exports are targeted to reach $50 billion by 2010.

$25 billion of which will go to the US , other markets include UAE, UK, Germany, France, Italy, Russia, Canada ,Bangladesh and Japan.

Today textile sector accounts for nearly 14% of the total industrial output. 

Indian Textiles export have almost 30% share in Overall exports from the country.

Current Scenario - INDIAN Textile Industry

Because of the lifting up of the import restrictions of the multi-fibre arrangement (MFA) since 1st January, 2005 under the World Trade Organization (WTO) Agreement on Textiles and Clothing, the market has become more competitive.

Current Scenario - INDIAN Textile Industry

Textile industry is undergoing a substantial re-orientation towards other then clothing

segments of textile sector, which is commonly called as technical textiles.

The processes in making technical textiles require costly machinery and skilled workers

Segments of Textile Industry

Readymade Garments

Cotton Textiles including Handlooms

Man-made Textiles

Silk Textiles

Segments of Textile Industry

Woollen Textiles

Handicrafts including Carpets

Coir

Jute

Indian Cotton Textiles - Key Facts

Year Quantity (Lakh bales) Value (.Cr)

1996-97 16.82 1655.00

1997-98 3.50 313.62

1998-99 1.01 86.72

1999-00 0.65 52.15

2000-01 0.60 51.43

2001-02 0.50 44.40

2002-03 0.83 66.31

2003-04 12.11 1089.15

2004-05 9.14 657.34

2005-06 47.00 3951.35

2006-07 58.00 5267.08

2007-08 85.00 8365.98

2008-09 50.00 N.A.

Textile Exports - Segmentation

Process Description

Textile Value Chain

INDIA’s Competitive .vs. Other Nations

Key countries / regions Key positives Key negatives

China Efficient, low cost, vertically

integrated

Growth at the cost of profits

India, Pakistan Vertically integrated, low cost Lacks economies of scale and

infrastructure support

Mexico (NAFTA), Turkey Proximity to market, duty and

quota free

Lack China and Indias degree of

competitiveness

ASEAN (Vietnam,

Cambodia, Indonesia)

Cheap labor No other cost or location advantage

AGOA (African) countries,

Bangladesh

Quota and tariff free, cheap labor Lacks integration and China and

Indias degree of competitiveness

Hong Kong, Korea, Taiwan Trading hubs proximity to China No cost advantage, protected

currently by quotas

USA and EU Non-quota barriers likely to

prove irritant to imports

US suffers loss every year

Oswal Woollen Mills Ltd. @ Glance

Group turnover is over Rs 2500 crore

No strike/accident situation and no zero staff turnover

Brand names “ Monte Carlo” & “ Canterburry ”

OWM were the proud recipient of the “BEST

EXIBITED PRODUCTS ” award from the international wool secretariat

Social upliftment at every level :-

Jawahar Lal Oswal Public Charitable Trust Mohan Dai Oswal Memorial Hospital

Vision & Mission

Vision “Success is the ongoing journey not

destination”

Mission “Stepping Ahead into realm of New Challenge”

Board Of Directors

Mr. Jawahar Lal Oswal Chairman-Cum-Managing Director  Mr. Amarjeet Singh Director

Mr. Dinesh Oswal Director

Mr. Kamal Oswal Director  Mr. Sandeep Jain Executive Director  Mr. Dinesh Gogna Executive Director  Dr. (Mrs.) H.K. Bal Additional Director  Mr. O.P. Sahni Additional Director  Mr. K.S. Maini Additional Director  Dr. Suresh Kumar Additional Director

Organization Structure

OWM Product Portfolio

Wool / acrylic top

Yarns

Textile fabrics

Hosiery knitwear products

Export Market:

U.S.A. UNITED KINGDOM Germany Russia Japan Australia New Zealand Holland Thailand Hong Kong

Singapore Taiwan South Africa Canada Egypt Israel Bangladesh

Various departments

Quality control

Human Resource Department

Finance Department

Marketing Department

Export department

SWOT Analysis @ OWM

• Extensive Experience of Promoters

• Brand equity of MC, CC & Canterbury.

• Loyal & old Employee base.

• Premium range of Pullovers.

Strength

ThreatsOpportunities

Weakness

• Lack of Professionalism.

• Dependence on foreign producers for greasy wool.

• Hierarchy Structure too long.

• 3rd party dependence for Sales & Distribution.

• Booming Retail Sector

• Foreign players entering Indian Lands as FDI norms are relaxed to 49%.

• Kid Garments Range

• Job-Work / Fabrication fro various Brands.

• Small Hosieries coming up in Ludhiana

• Seasonal demand of Pullovers.

• Temp has been rising these days so winter season is getting shorter YOY.

Current Ratio

Particular 2006-07 2007-08 2008-09

Current Assets20543.67 Lacs 30129.28 Lacs 30422.64 Lacs

Current

Liabilities 11185.67 Lacs 9044.30 Lacs 9897.32 Lacs

Current Ratio

1.843.33 3.07

Acid test ratio/Quick Ratio

Particular 2006-07 2007-08 2008-09

Quick Assets9060 Lacs

17328 Lacs 17506 Lacs

Current Liabilities 11185 Lacs 9044 Lacs 9897 Lacs

Quick Ratio0.81 1.915 1.7688

Absolute Liquid or Cash Test Ratio

Particular 2006-07 2007-08 2008-09

Absolute Liquid

Assets556 Lacs 2930 Lacs 3277 Lacs

Current Liabilities 11185 Lacs 9044 Lacs 9897 Lacs

Cash Ratio 0.049 0.324 0.33

Turnover / Activity Ratio

Particular 2006-07 2007-08 2008-09

Cost of sales 32200.67 Lacs 44213.51 Lacs 53814.35 Lacs

Average Inventory 10467.04 Lacs 12141.98 Lacs 12858.36 Lacs

I.T.R (times) 3.07 3.64 4.18

I.H.P ( in days) 118 100 87

Debtor Turnover Ratio

Particulars 2006-07 2007-08 2008-09

Net credit sales 32200.67 Lacs 44213.51 Lacs 53814.35 Lacs

Average debtors 4527.23 Lacs 3387.42 Lacs 6957.81 Lacs

D.T.R (times) 7.11 13.05 7.73

D.C.P ( in days) 51 28 47

Creditors Turnover Ratio

Particulars 2006-07 2007-08 2008-09

Net credit purchase 18246 Lacs 24384 Lacs 28500 Lacs

Average. Creditors 2944 Lacs 3298 Lacs 4155 Lacs

C.T.R (times) 6.19 7.39 6.86

C.P.P ( in days) 59 49 53

Net Profit Ratio

Particulars 2006-07 2007-08 2008-09

Net profit 1402 Lacs 2127 Lacs 2368 Lacs

Sales 32200 Lacs 44213 Lacs 53814 Lacs

N.P. ratio (%) 4.35 4.81 4.41

Debt Equity Ratio

Particulars 2006-07 2007-08 2008-09

Total Debt 18220 Lacs 29466 Lacs 27416 Lacs

Shareholder’s Fund 9497 Lacs 11625 Lacs 13994 Lacs

Debt Equity Ratio 1.918 2.534 1.959

Proprietary Ratio

Particulars 2006-07 2007-08 2008-09

Shareholders Fund 9497 Lacs 11625 Lacs 13994 Lacs

Total Assets 20543 Lacs 49731 Lacs 51386 Lacs

Proprietary Ratio 0.46 0.23 0.27

Earning Per Share

Particulars 2006-07 2007-08 2008-09

Net profit available 1402 Lacs 2127 Lacs 2368 Lacs

Number of shares 249 Lacs 249 Lacs 249 Lacs

EPS 5.63 8.54 9.51

Operating Ratio

Particulars 2006-07 2007-08 2008-09

Operating Cost 22631 Lacs 31277 Lacs 38026 Lacs

Sales 32200 Lacs 44213 Lacs 53819 Lacs

O.P. ratio 70.28 70.74 70.66

Trend of Turnover

2006-07

2007-08

2008-09

0

10000

20000

30000

40000

50000

60000

32200.67

44213.51

53814.35

Turnover

Title

“Factors Affecting Indian Cotton Textile Exports”

Objectives

To study the different problems related to cotton textile industry in Ludhiana

To study the Government role in cotton textile exports

To analyze the competition faced by Indian cotton textiles industry in International market

To study the role of export promotion council in promoting exports.

Research Methodology

Research Design Descriptive

Data Collection Primary - Schedule Secondary – Internet , E-Journals, E-Papers

Sampling Plan

Universe All exporters of Cotton Textile products in world

Population All exporters of Cotton Textile Product in the City of India

Sampling Unit Any Cotton Textile Product exporter in the City of Ludhiana

Sampling Frame List of all Cotton Textile exporters from where samples are selected.

Sampling Size 30 Cotton Textile Product Exporters

Sampling Technique

Multistage Sampling technique

Statistical Tools

Simple tabulation of data using tally marks.

Calculating the percentage of the responses.

Formula used: Percentage= (Number of responses/Total responses)*100

Graphical analysis by means of bar graphs, pie charts

Average method to calculate the average of particular schemes.

Limitations of the Study

The conceptual framework and research questions have bound the study, keeping it focused, yet simultaneously limiting the method and topic of the research.

The recognized limitations of this study deal with the topic, the sample size, and the lack of existing literature.

The number of participants, their location, and the quantity and amount of time spent in getting the schedules filled were constraints balanced by the quality of the data gathered.

Limitations of the Study

Many of the respondents were busy in their work so they have not given proper time to answer the questions. Sometime they give false information while answering questions.

There might be chances of ambiguities in the analysis of data.

Limitations of the Study

Best efforts were made to consider all important variables of the study. Chances of some of the variable not appearing in the study are also there.

Some calculations have to be done with the statistical measures which are the biggest constrained for the research work because only percentage, Mean is being used in the research.

Limitations of the Study

There was very less of respondents to prove the validity. Among the lot of exporters , only 30 filled the Schedules.

Shortage of time & reach is also reason for incomprehensiveness.

Many of the concerned persons contacted are very busy in their schedule that they don’t give away their 5 minutes to it. So the sample size remained small.

DATA ANALYSIS & INTERPRETATION

Profile of the Respondents (Figure 4.1)

10%

63%

7%

20%

FabricGarmentsGarments & YarnsYarns

Export Content in Overall Turnover (Figure 4.2)

33%

40%

17%

10%

1-25%26 -50%51-75%76-100%

Raw Material related Issues faced by the Respondents (Figure 4.3)

57%

20%

23%

Price VariationsQualitySeasonality

Labour related issues raised by Respondents (Figure 4.4)

77%

3%

10%

10%

AvailabilityEducationPerformanceSkills set

Marketing related issues raised by the Respondents (Figure 4.5)

57%

17%

27%

CompetitionPrice variationsUnorganized

Response towards Government (Figure 4.6)

40%

43%

17%

DissatisfiedNeutralSatisfied

Major Competitors to Indian Cotton Textile Industry (Figure 4.7)

Bangl

ades

h

China

Turk

ey

Paki

stan

U.A

.EIta

ly

U.S

.A02468

101214161820

7

18

5 5

1 12

Respondents

Major Hurdles faced in the Trade: - (Figure 4.8)

7%

50%30%

13%

Product placingProduct PricesProduct QualityPromotion of product

Restriction Imposed by Government on the Sector (Figure 4.9)

Yes No0

5

10

15

20

25

7

23

Respondents

Special Incentives by the Government (Figure 4.10)

Yes No0

5

10

15

20

25

30

4

26

Respondents

Schemes which could Benefit Textile Sector (Figure 4.11)

TUFFS Scheme DEPB Scheme SEZ Scheme0

0.5

1

1.5

2

2.5

3

3.5

4

2.8 2.73

3.53

Average

EPC support to the Industry (Figure 4.12)

40%

13%

47% AlwaysNeverSometimes

Findings

Most of the exporters are of garments (63%) in Ludhiana. Then after that the exporters of yarn ie (20%) and after it comes the fabric and others

 Mostly the companies which export their cotton textile

products range up to 50 %. Rests are only domestic sales and here are only few export houses which fall in range of 76 – 100% exports which are complete export house.

 57% of the respondents had rated Price variations in the

raw material as a major concern for the trade as there are lot of fluctuation in the cotton crop prices which may be due to many factors such as Seasonality, Monsoon etc.

Findings

Major issue related to the Labour is the Availability aspect as major part of the Hosiery or Spinning business is dependent upon the labour but since Bihar Govt is providing a lot of retention schemes for native people so rather coming to Ludhiana for a job of Rs 5000-7000, they prefer to stay back.

 Major problem faced by the respondents related

to the Marketing are Competition that contributes to the tune of 56% as there are small players in the Garment manufacturing

Findings

Most of the Companies are dissatisfied (40%) from the Government as government has withdrawn DEPB incentives, TUFS scheme etc & maximum companies are neutral (43%) on the government support in helping the exports wit only 17% satisfaction level.

 CHINA have been the arch rivals for India in

various sectors & there is no difference in Textile sector

Findings

The cost of producing is very cheap because of economies of scale & moreover the cost of wages is higher for the labour but if we compare it with the efficiency of the labor which is 8 times higher in China than India.

50% of the people feel that the Product prices are a major hurdle in the industry which might be due to the fact in case of spinning the bigger players have the capacity to procure Cotton at cheaper rates.

 

Most Companies do not face any restrictions by the government in exporting their product to other countries i.e. 23 respondents out of 30 which is nearly 77% of the respondents.

Respondents are of the view that there are also some special incentives which have been provided from time to time by the government to boost up the Textile trade in the country & internationally.

 

Findings

Findings

TUFFS & DEPB were almost ranked on the similar scale so now it is up to State & Central Govt to work in tandom so that the sector could reap maximum benefits & hence could contribute further in bringing in more foreign reserves into the sector.

 There was more of mixed response coming in from

the respondents regarding the support provided my Export Promotion Council as 40% of the respondents had entered ALWAYS & 47% of them responded Sometimes.

Conclusion & Suggestions…..

Technology Up-gradation Fund Scheme to be pursued till next five years

Liberalization of FDI Policy with up to 100 per cent foreign equity participation.

TUFFS & DEPB

THANK YOU