FIRST TIER GARMENT EXPORTERS IN DELHI

:
INDUSTRY AND COMPANY PERSPECTIVES

A Collaboration Between United Students against Sweatshops Jobs with Justice Society for Labour and Development

March 2007

TABLE OF CONTENTS

PAGE NUMBER

Chapter One: Introduction ............................................................................ 3
1. Methodology ..............................................................................................................3

Chapter Two: Agency Profiles
1. Registrar of Companies (ROC)...........................................................................10 2. Third Eyesight.....................................................................................................12 3. Apparel Export Promotions Council (AEPC).....................................................15 4. National Institute of Fashion Technology (NIFT) ..............................................18 5. Northern India Textile Research Association (NITRA) .....................................21

Chapter Three: Company Profiles
1. Modelama Exports Ltd.
I. II. III. IV. V. VI. VII. VIII. IX. X. XI. Contact Information .........................................................................................24 Brief History ....................................................................................................25 Basic Profile.....................................................................................................25 Financials .........................................................................................................27 Brand Information............................................................................................28 Infrastructure....................................................................................................29 Working Conditions.........................................................................................31 Human Resource Policies ................................................................................32 Business Bottlenecks .......................................................................................35 Industry Comments..........................................................................................35 Personal Experience.........................................................................................36

2. Shahi Exports Pvt. Ltd.
I. II. III. IV. V.
VI.

VII. VIII. IX. X. XI.

Contact Information .........................................................................................37 Brief History ....................................................................................................37 Basic Profile.....................................................................................................38 Financials .........................................................................................................39 Brand Information............................................................................................40 Infrastructure....................................................................................................41 Working Conditions.........................................................................................44 Human Resource Policies ................................................................................45 Business Bottlenecks .......................................................................................48 Industry Comments..........................................................................................48 Personal Experience.........................................................................................48

3. Jyoti Apparels
I. II.
III.

IV.

Contact Information .........................................................................................49 Brief History ....................................................................................................49 Basic Profile.....................................................................................................50 Financials .........................................................................................................51

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V. VI. VII. VIII. IX. X. XI.

Brand Information............................................................................................51 Infrastructure....................................................................................................52 Working Conditions.........................................................................................56 Human Resource Policies ................................................................................57 Business Bottlenecks .......................................................................................58 Industry Comments..........................................................................................59 Personal Experience.........................................................................................59

4. Company G of R Group of Companies
I. II. III. IV. V. VI. VII. VIII. IX. X. XI. Contact Information .........................................................................................60 Brief History ....................................................................................................60 Basic Profile.....................................................................................................61 Financials .........................................................................................................62 Brand Information............................................................................................62 Infrastructure....................................................................................................63 Working Conditions.........................................................................................64 Human Resource Policies ................................................................................65 Business Bottlenecks .......................................................................................66 Industry Comments..........................................................................................67 Personal Experience.........................................................................................67

5. Pearl Global Ltd.
I. II. III. IV. V. VI. VII. VIII. IX. X. XI. Contact Information .........................................................................................68 Brief History ....................................................................................................68 Basic Profile.....................................................................................................69 Financials .........................................................................................................70 Brand Information............................................................................................71 Infrastructure....................................................................................................73 Working Conditions.........................................................................................74 Human Resource Policies ................................................................................75 Business Bottlenecks .......................................................................................76 Industry Comments..........................................................................................76 Personal Experience.........................................................................................79

6. Orient Craft Ltd.
I. II. III. IV. V. VI. VII. VIII. IX. X. XI. Page Contact Information .........................................................................................80 Brief History ....................................................................................................80 Basic Profile.....................................................................................................82 Financials .........................................................................................................83 Brand Information............................................................................................83 Infrastructure....................................................................................................85 Working Conditions.........................................................................................86 Human Resource Policies ................................................................................87 Business Bottlenecks .......................................................................................89 Industry Comments..........................................................................................90 Personal Experience.........................................................................................92 2

It is advisable not to send questions via e-mail. Several other agencies that are major players in the export garment industry were identified and profiled by the researcher. and Third Eyesight (an industry consulting agency). the National Institute of Fashion Technology (NIFT. Obtaining the phone number from the agency website and directly calling was the simplest way of setting up interviews. though it proved best to limit the amount of e-mail communication.CHAPTER ONE INTRODUCTION The identification and profiling of top tier Indian garment exporters was undertaken for the following purposes: 1) To identify common Human Resource strategies used to suppress union organizing in the export garment sector. Company G of Group R. linked to the Ministry of Textiles. 2) To identify correlations between labor conditions and businesses characteristics.. Online searches yielded some kind of press release or interview for each entity except for Jyoti Apparels. Four of the six companies profiled and all of the agencies have individual websites. linked to the Ministry of Textiles). others self-report to financial databases. while asking the same question in person would yield a response. Public limited companies like Pearl Global Ltd. Ministry of Textiles). A management survey was developed using the framework of surveys used in other geographic contexts and updated on the basis of preliminary interviews. Pearl Global Ltd. display their financial information on the company website. the Registrar of Companies (ROC.. Asking a question via e-mail often yielded claims of confidentiality. 3) To develop corporate research strategies specific to the Delhi. and others do not disclose financial information beyond approximations of annual turnover and production capacity. Methodology Preliminary research was conducted on the internet. the Apparel Export Promotions Council (AEPC). E-mail was also used to a large extent to set up meetings. India context.” a CEC report submitted by G. The sixth company was identified by the researcher through an interview with a representative of the Indian Apparel Export Promotions Council (AEPC). Government of India). Interviews were obtained in a variety of ways. an interview by telephone would be far more likely to be successful than an information Page 3 . Ltd. Five companies (Modelama Exports Ltd. Managers at six companies and four agencies gave interviews.. Shahi Exports Pvt.) were identified using “Mapping First Tier Suppliers in Garment Industry in Delhi. These are the Northern India Textile Research Association (NITRA. Manicandan. If an interview cannot be conducted in person. Orient Crafts Ltd. Contact information was available on websites. although some were out of date.

they get involved in politics—(phone call) Researcher: What were you saying about the worker groups? Manager: No—that’s not—don’t quote that. An interview with an anonymous manager produced the following conversation. going as far as to hand over Standard Operating Procedures. without which interviews would not have been possible. They’re more docile. It was not e-mailed to any of the managers. Ltd. and NIFT gave updated contact information for Shahi Exports Pvt. but off the record. even though such a one-sided perspective may not reflect the reality of the situation. The purpose of this research was to obtain information about companies from a management perspective. Managers were surprisingly open in some cases. easier to control.. Questionnaire Used by the Researcher The following questionnaire was handwritten in shorthand and brought to the scheduled interviews as notes. Researcher: I don’t understand. ladies are more focused on work. or productivity schemes. Just. time constraints would not permit cross-checking all information with workers and officers at each company. The agencies profiled were primarily interviewed before the export houses.request by e-mail would. Also. The attitude and openness of those interviewed are subjectively recorded in the individual profiles. no telephone interviews were conducted in this survey. I’ll tell you. Information on these companies was obtained primarily from top-down management sources. as it was not possible in many cases to conduct follow-up visits. Aggressiveness both in pursuing interviews (which could take several phone calls and emails before contacts could be made) and in asking questions during the e-mail was not seen as rude as it would in a U. However. which typifies management attitude both towards women and unions: Researcher: Why are your workers mostly female? Are there significant differences in productivity? Manager: No. however. men together tend to form groups and lobbies because they have spare time. The AEPC was instrumental in identifying Jyoti Apparels as a top tier supplier. and used to establish industry contacts. and Orient Craft Ltd. context and was integral in order to obtain information. and one experience ePage 4 . industrial accidents record. Furthermore. What groups? Manager: Oh. Women are easier to handle. I don’t think they ever employed males… Limitations Time constraints limited the consistency and thoroughness of company information. while others would refuse to state the number of workers in the manufacturing unit. Researcher: Did you have problems with employing males in the past? Manager: No—no. and as such may be misleading as to actual conditions.S. all interviews were in person. no significant differences in productivity.

I’ve heard of collegiate licensing that would provide steady orders from major brands at higher prices. U. vol of product. DSP questions. Ownership of Company.Incorporation of Company) What is the shareholding and ownership makeup of the company? What plans for expansion? Do they cater to domestic market or only export? What share of turnover/sales/production is export? Markets—who. Landed Cost)? different practice of brands and retail clients? How does the company get contracts with foreign vendors? How are prices negotiated with a foreign brand? Do you have design department? Where is it located? Give details. where. help design. deliver? Does the company ever have problems with contracts and/or steady orders? (if possible. specialty (GAP). how fast company delivers products to brand Kinds of buyers—importers. get order. Designation. CMT. dpt stores (Belks) What is the average price that you get per piece of garment supplied? Do you know the average retail price at the point of sale? By item? At what point of delivery do you get the price (FOB – freight on board. they often had information regarding each of these areas. The survey questions were divided into sections according to the position of the respondent. if only a higher level manager could be reached. total sales. sourcing. package.mailing questions proved fruitless in gathering information. However. and Responsibilities of Respondent: Number of Years in the Company: General Upper Management Do you have a brochure saying what products. discount retailers (Wal-Mart). EU? Major foreign brands that the company supplies to: length of relationship. Name. What kind of input— CMT. as there are some questions that an HR manager would know more than a Merchandising Agent.S. etc? What products do you manufacture? How many factory locations does the company have? Size and scale? Addresses? Does it have objectives on which it was founded? Articles and Memorandum of Association (Objectives. if such a program were introduced would be willing to participate if increase wages and committed to labor rights and worker representation?) Problems with seasonality? Manufacture winter clothes? How have vendors changed post-MFA? Have you taken price cuts? Which products? Larger volumes? Different buyers? Deepened relationship? Middlemen? Who are the company’s competitors? Are subcontractors involved and if so at what stages? Which factories/companies? What are the size and scale of these operations? Has this changed post-quota phase out? What effect does the company believe the quota phase-out will have on turnover and the industry in general? Page 5 . The questionnaire was used only as a guide in the interviews as a reminder of what kind of information was needed.. no input--or more capable. since a conversational approach proved to yield the most information.

subcontracting.Have they used outside agencies in developing any part of their strategies? Part of AEPC. finishers. codes of conduct. standing orders. cutters. material cost. overhead. tailors (skilled. can you give a sample of the contract letter? Is there a procedure for workers to complain about supervisors/management? Are there programs or committees to minimize conflict and improve morale of workers? i. Have you seen a benefit in productivity since implementation of program? Are there joint worker-manager forums in your organization? If yes. checkers. profit margin HR Manager What are the normal timings of work at the factory? What are the periods of break? Do you use labor contractors? Temporary employees? What benefits are different? How do you train your workers? At what level? How long does the training last? Give figures for the total number of employees and their average wages per month by category and gender. what do these forums do? Get any documents willing to give at any point. trainees. helpers. How many women. washers. NITRA. Have there been any attempts at unionization in the past? What is the company’s attitude toward unionization? Page 6 . supervisors. total value of exports. men. Sexual Harassment Committee. what is displayed to workers on details of employment. semi skilled. or do they use agencies like Third Eyesight for technology and HR development? How has AEPC or NITRA or NIFT helped them? In what capacity? What are two or three main things holding business back? What are you doing to solve this? How has the central and state government helped the company’s smooth functioning? Or not? Labor laws. Shopfloor Committee. unskilled). who are the members and how are cases handled? Give details. average age of employees. labor cost. how long they have stayed in company Are workers in any way involved in wage negotiation or target setting? Target setting-prod planning mtgs? How many years of experience do the workers need to have in ordered to be hired at your company? What is the usual turnover of employees? How do you fill vacancies? Do you use recruiting agencies? Are all employees in the company given a letter of contract? If yes. Quality Circle? If yes. pressmen. etc.e. etc. Productivity Committee. infrastructure How do you manage being so large? Market Related information: Is financial data/ annual reports for the past five years available? Can you give a copy of the latest annual/financial report for the company? Current figures for the company: Total sales. Grievance Committee.

Is there a personnel ‘code of conduct’? Is this a company policy or vendor policy? How are these communicated to workers? What employers are covered by: (i) ESI (Employee State Insurance) (ii) PF (Provident Fund) (iii) Gratuity (iv) Maternity benefits (specify) What are the details of employment that are displayed / notified to workers? (i) minimum wage (ii) ESI/PF/Gratuity? What is the average overtime payment to all employees? (i) overtime per month (ii) overtime as a percentage of total wages (iii) rate of overtime payment Ask about industrial accidents, if there is a doctor available, how often, rotate between factories, what is the most common injury, what kinds of safety equipment What is your approach in HR and Productivity/Efficiency? (Get policy document) Do you involve outside agencies in your HR strategies? Do you have common policies across your plants? What are the typical causes of punishment of employees? What are the types of punishment given? (wage cuts/extra work/asked to go home?) Is there a procedure followed for dismissal of employees? Who initiates the procedure? Is the employee given a hearing? Give details? Do you have a legal officer in the company? Do you have an Industrial Relations policy? (any written documents?) What are two or three main things holding business back? production, labor situation, training , quality control, etc. What are you doing to solve this? HR/Production Manager: Get any documents willing to give on productivity schemes, time-study worksheets, productivity numbers, structure of lines, how many supervisors, etc What is your approach in HR and Productivity/Efficiency? (Get policy document) Could you give me a sense of the floor layout of a typical factory; what kind of technology and planning has gone into the factories? What are the different departments? (Floor chart) Department # Workers # Men # Women # Machines What are parts of a Line? Is it an assembly line? How much time does an item take from the beginning to the end of a line? How many supervisors are there on the Line? Is there a productivity scheme in your company? If yes, when was it introduced? What categories of workers are covered? Are workers in any way involved in target setting? Prod planning? How much time does a worker take to achieve the desired productivity? What kinds of productivity schemes? Teams? Line supervisors? How come up with time studies? How conveyed? What have been the benefits from the productivity scheme in terms of (i) increase in productivity (ii) reductions in waste (iii) any others? Does the productivity scheme give incentives to workers? If yes, give details based on category, average incentive, and maximum incentive. How make workers more productive?

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What are the typical causes of punishment of employees? What are the types of punishment given? (wage cuts/extra work/asked to go home?) Is there a procedure followed for dismissal of employees? Who initiates the procedure? Is the employee given a hearing? Give details? Has the company ever consulted industrial engineers to design the factory? What was productivity output before and after the consultation? What are the quality check points that the buyer requires? Does the company management have other quality checks? How have they used technology and state of the art equipment to improve quality? What are two or three main things holding business back? production, labor situation, training, quality control, etc. What are you doing to solve this? Types of Sources (other than management interviews) To obtain much of the initial company information, the researcher performed internet searches for the company names, and several common business periodicals showed up several times including: Apparel Resources http://www.apparelresources.com http://www.ittimes.co.kr/ The Economic Times http://economictimes.indiatimes.com/ http://www.sify.com http://www.businessworldindia.com/ http://www.indeconomist.com/ The Hindu Business Line Internet Edition, Financial Daily http://www.blonnet.com/ Most of the companies profiled had company websites, except for Jyoti Apparels and Orient Craft. Once interviewed, the companies typically gave company profiles that they use for potential buyers, which contain information about the composition of the company, the types of clothing it manufactures, production capacity, turnover, and major clients. The agencies profiled, especially the AEPC and NIFT, were vital in obtaining information that would lead to interviews, identification of major players, and important industry resources. Third Eyesight has links to industry-related articles at http://www.3isite.com/index.htm. Although the researcher was not able to research the following sources further, some were featured at an international garment fair and others are commonly used as industry resources for financials: CMAI (www.cmai.info, cmai@hathway.com), EBSCO CRIS, INFAC (intranet and internet), INSIGHT, CMIE, RMS, IAS, INDIASTAT, IRA. Information In Company Profiles Contact information includes addresses of known production sites, contact persons, website, and e-mail. Brief history includes relevant information regarding the establishment and incorporation of the company. Basic profile includes the legal composition of the company, export oriented unit information, the breakup of exports and imports of the company (100% exports for all the companies profiled in this report), the product mix, clients, and awards of the company.

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Financials section includes the turnover and whatever other financial information could be obtained on the company. Brand information section includes major clients, length of relationship and percentage of turnover, direct or buying agency clients, and unit prices. Infrastructure section includes subcontracting information, the type of production system (all assembly line units), production capacity, the design/sampling department, quality control, specific departmental information, and productivity schemes. Working conditions section includes timings of work, wages, wage-setting procedures, benefits, overtime information, and labor turnover. Human Resource policies section includes management structure, worker training information, recruitment policy, dismissal procedure, union information, worker committee information, grievance policy procedure, corporate social responsibility schemes, codes of conduct, worker medical care information, and security system information. Business bottlenecks section includes whatever setbacks or problems that managers perceive as holding back business. Industry comments section includes strategy, predictions, and other relevant information regarding the growth of the company, its views on the industry as a whole, strategies for expansion, etc. Personal experience section includes miscellaneous description regarding the researcher’s views of the company and its managers and the ability to get an interview.

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htm : Delhi & Haryana Regional Director: Dr. Since Pearl Global is a public limited company.CHAPTER TWO AGENCY PROFILES 1. Form 29 for Pearl Global makes it a public limited company. CGO Complex..in However. Form 18.mca.nic.sb@sb. Website of the Ministry of Company Affairs: http://www. Page 10 .in According to the Ministry of Company Affairs website: Registrars of Companies (ROC) appointed under Section 609 of the Companies Act covering the various States and Union: Territories are vested with the primary duty of registering companies floated in the respective states and the Union Territories and ensuring that such companies comply with statutory requirements under the Act. the address of the registered office and the locations of the business.gov website to access the public disclosure documents). Form 32. which is not true for privately owned companies. New Delhi – 110003 E-Mail: rocjln. According to an interview with the Company Secretary of Pearl Global Ltd.gov. the office at Nehru Stadium closed down earlier in the year. in order for a company to be registered with the ROC.in/ROC_2003. relating to the companies registered with them. they must submit several forms at incorporation and annually. which are available for inspection by members of public on payment of the prescribed fee. REGISTRAR OF COMPANIES (ROC) The Registrar of Companies is a division of the Indian government’s Ministry of Textiles. The Central Government exercises administrative control over these offices through the respective Regional Directors. The addresses of each state’s ROC as of 2003 can be found at http://dca.sb@sb. These offices function as registry of records. the profit and loss are also publicly available. New Delhi 110003 Phone: 011-24362708 Fax: 011-24364570 E-Mail: rocdel.nic.The financials publicly available include the annual return and balance (for all companies). the compliance of companies act.in Nehru Stadium. Navrang Saini Addresses: B-Block Paryavaran Bhawan. Lodhi Road. Form 20 gets the Director a Director’s Identification number (the number used on the mca. Companies are required to register new events such as a change of directors with the ROC. the details of the board of directors/management structure. Such forms include: Form 1.nic.

was difficult and did not yield a lot of useful information. such as financial information and company Articles and Memorandum of Association (objectives. the process of obtaining public documents. As such. of a newly incorporated company detailing the scope of its operations).The ROC in Delhi is in a process of transitioning to an electronic format of filekeeping. and though there is no formalized rule against this. photocopying the documents in the file is not permitted unless a fee for a legal copy is paid. Furthermore. it was not permitted either. The researcher attempted to take notes by laptop. Not only were entire company files missing. Documents are publicly available after submitting a form requesting a release of information along with a small fee for each company. Information must be copied into a notebook by pencil (pens are not allowed). etc. Page 11 . but several did not have up-to-date financial or structural information.

as part of the team that launched the JV. THIRD EYESIGHT (INDUSTRY CONSULTING AGENCY) Contact person: Mr.com Third Eyesight's Experience Profile: (from their promotional materials) Third Eyesight was founded in late-2003 by Devangshu Dutta who has worked with retailers and manufacturers from across the world in a variety of consumer products sectors. During his career Devangshu has performed the roles of an entrepreneur. Thereafter. Devangshu Dutta.Carrying out sectoral market studies in retail. in marketing and distribution. Benchmarking against global supply chain and product development best practices.development of India strategy and preliminary business plan including market analysis.2. * Diversified Indian consumer and industrial products conglomerate . He then joined a start-up consulting firm and was instrumental during its growth into a multinational consulting firm's joint venture in India. food & grocery. and returned to India to his position as General Manager of the Indian business. Devangshu began his career with the then-leading Indian national retail chain in buying & merchandising and in store operations. * Global fibre and chemicals company . over the last 16 years. Third Eyesight and its team of associates & professionals have worked on a variety of business strategy. manager. new business start-up and operations projects with Indian and international clients. including fashion.Assistance in development of global sourcing strategy and action plan. Gurgaon . assistance in formulating strategy and developing partnerships with International retailers and brands.Strategic assessment of India – insights for a global senior management team to gain a realistic picture of the opportunities and the challenges in India.122 002 INDIA Tel: +91 (124) 4112493. 4112495 Fax: +91 (124) 2577586 Cell: +91 98111 03494 Email: devangshu. advisor. Founder and Director of Third Eyesight A-847. health. Sushant Lok-I. The following are brief descriptions of some of the projects on which Third Eyesight's professionals have worked.dutta@3isite. dining etc.com Website: www. Third Eyesight's project teams consist of professionals who have hands-on experience in various aspects of retail and consumer products businesses. 2nd Floor.strategic inputs for Asia-Pacific top management team to identify emerging opportunities in the Indian textile supply chain * Leading UK Retailer . and product analysis. 4112494. he co-founded a fashion sourcing company in which he remains a shareholder. He subsequently worked with an international retailer's joint-venture in India. He was also based in the European practice of this multi-national consulting firm. Support in implementing changes in sourcing strategy and organisation.3isite. * International multi-billion dollar apparel brand . trainer and teacher. home. assistance in assessment of Indian supply base Page 12 . competitive and regulatory information. * One of the largest global home products retailers .

Initially.K. Mr. The investment cap was very low. Business strategy and plan for current business. Directed researcher to online industry magazine resource (Website: apparelresources. Mentioned another apparent Tier 1 (said they are large and source directly to MNCs). The government thus limited how much you could produce under the reasoning that overcapacity would lead to inefficient use of capita. In the early 90s. this model was phased out. Batra. The small-scale reservation system. development and delivery of sales & marketing collateral for three consecutive seasons. you need a separate registration and thus it is easier to simply export (used to be tax-free).Business planning for new brand acquisition. This is partially why many of the current successful companies (such as Richa Global) are split up into many different companies. * Indian subsidiary of one of the largest sports apparel and footwear brands – Design.Assistance in formulating strategy and developing business with global customers for exports. * Pioneer luxury brand house in India . According to him. Gave a brief background about salient law regulating the textile and garment industry: The tax laws are such that if you subcontract work but sell to the domestic market.* Multi-billion dollar Indian consumer goods conglomerate . Much of the fragmentation of companies was really only on paper. Mr. it was a licensed economy in which you needed to get government clearance to manufacture in specific capacities. The name is on the WRC disclosure list. as you needed approval from the state government if you were operating a place of business with more than a hundred workers. The quota system obliged companies to set up under different names. (Website: niftindia. labor laws also limited the ability of companies to expand. who could then direct me to industry management: Dr. and assistance in seeking new capital infusion. and the result of this was that a successful company was prevented from expansion. Matrix. reserves certain sectors for small units. * One of the largest Indian textile and garment companies . who would be able to help schedule company interviews. Content of Interview (5 July 2006) with Director of Third Eyesight: Asked about study. which continues to regulate knit-fabrics. Page 13 . Sibichan Matthew. and you cannot have large units.org) Advised researcher to contact faculty of the management studies department. The other reasons for company fragmentation are the nature of quota system and labor laws. D. gave contact information for the National Institute of Fashion Technology in Hauz-Khas. Pradeep Joshi.Formulating strategy and assistance in strategic alliance proposal to key European customer. Also told the researcher to contact faculty of Pearl Academy of Fashion. Since the garment industry is extremely labor intensive.Comprehensive comparative study of 7 cities in India and outside to choose location of new garment manufacturing plant * Leading Turkish supplier . Gave history of market structure in India.org).

as it was clear that Indian businesses were gaining from the phase-out and smaller countries like Bangladesh were losing instead. it would increase unit prices. material. the product is re-done. since vendors and suppliers both may have had bad business experiences when attempting to do the same. but that the outlook of the management may be more pessimistic than Tirupur. whereby long-term relationships are cultivated. total costs would go down because the current transactional model wastes a lot of time. but would be greatly minimized). he said. which has worse infrastructure but is nevertheless optimistic about business. Because of this.S. the MNC may like it or require additional changes. and as such is seen as a big risk and many are reluctant to actually work on establishing these relationships. how the current transactional model is very inefficient insofar as buyer-supplier cooperation goes. the quotas had restrained India far more than China (showed a graph from a U. However. and that Chennai (mostly menswear). he said that Indian companies were extremely uncertain about the effects of the MFA phase-out.. The MNC gives product specs. ships a sample.” however that had mostly been talk and no action. doesn’t communicate with the designer. He began to describe the different ways of sourcing. From a piecemeal view. From 2001-2004. saying that the industry had often talked of diversifying. and Tirupur (mostly jersey knits) all have different cultures. He mentioned that Delhi (mostly womenswear) is only one side of the big picture. In 2004. He then mentioned that “strategic sourcing” would be much more beneficial to the market. Page 14 . as the companies began to listen to the needs of buyers and in 2005. worrying that Indian business could not compete with China. investment in the industry slowed down. so all the businesses had to pay was labor and overhead.one hundred workers is nothing. effort. Bangalore (roughly equal. He began to talk about sourcing. He said that Delhi is doing extremely well in terms of business and is the largest in terms of exports. He stated that “the inconvenience of a labor inspector” pestering and harassing company management was a minor price to pay for business expansion. and money (wastes that would not be eliminated by greater cooperation. The current model has self-contained worlds instead of cooperation. strategic sourcing is dramatically different from the current widespread transaction model. this changed somewhat.” Furthermore. he made it clear that somehow they were competing because of their “ability to develop and deliver product. but in the strategic long-run. the investment returned. then privatized factories. couldn’t see name). gets quotes from suppliers. that they were too “over-exposed in China. etc. money is instead wasted on an inefficient process. economic source. for example. but more menswear). He expressed hope that soon the labor laws would relax some to reflect changing needs of business. and rather than cultivate a relationship in which the supplier provides input and designs according to a long-standing relationship. Although he expressed the belief that a market economy cannot compete with a controlled economy like China in that the Chinese government built factories and infrastructure. the supplier makes the product. wherein the buyer.

Singh (M/s Singh Export Corporation.K. New Delhi took a lead in this matter and formed a special ad-hoc committee of the following Members: Mr. but now as the garment industry has reached a stature and maturity and has achieved the target of 250 crores. Mr. Amersey (M/s Milton’s Ltd. Clothing Mfrs. woollen knitwear and garments of leather. Mr.com/ The AEPC was originally incorporated in 1978 as the Apparels Export Promotion Council and re-incorporated in 1984 as the Apparel Export Promotion Council. increase. Garments Exporters Association. Assan. According to the Articles and Memorandum of Association: Up till now Cotton Textiles Export Promotion Council was handling the export promotion work of garments. Ltd. N. (4) To conduct propaganda and publicity regularly and continuously so as to bring to the notice of the importers and the public in foreign countries the advantages of trade and commerce with India and to create a liking for the various types of garments markets Page 15 . Bombay) Hon. jute and hemp. New Delhi) Ex-president. Assn. develop export of all types of readymade garments. APPAREL EXPORT PROMOTIONS COUNCIL (AEPC) Office: Apparel House. quota distribution and allocation. Clothing Mfrs. to find out the product range and export prices of garments of other countries. N. The main objectives of the AEPC are as follows: (1) To promote. Two leading organisations of readymade garments. Banthia (M/s Magnum Enterprises. Premila Wagle (M/s Paville Fashions Pvt. Assn. New Delhi). Sector 44. the leaders of the garment industry thought that it would be in the best interests of the garment industry to have a separate export promotion council. Madras). Bombay) Vice-President. Ltd. P. Mr. of India. Mogrelia (M/s Zoro Garments Pvt. Bombay) President. M/s Handloom and Handicrafts Export Corporation. Ltd. Smt. of India.. Mr. (2) To undertake all export promotion measures. Institutional Area. Garment Exporters Association. Secretary. Ramadorai (Chief Executive. Vijay Mehta (M/s Intercraft Pvt.3.. S. Gurgaon 122003 Contact Person: Mr.. (3) To appoint representative. Bombay and Garments Exporters Association.F.aepcindia. New Delhi) President. of India. B. B.N. excluding. advance. to undertake marketing in individual foreign markets. Mr. Calcutta). market preferences and latest fashions and designs prevalent in the foreign countries. Shah (M/s Hiralal Gulabchand. agents or correspondents in foreign markets for the purpose of continuously and regularly reporting the markets prices. KK Jalan.L. Clothing Mfrs. particularly to undertake market research. Gen. Clothing Manufacturers Association of India.. to send trade delegations and missions to foreign countries as well as to survey export potential of readymade garments from the country. Mr. Secretary General of AEPC Mobile: 98-9912-4555 Website: http://www. to develop new designs and patterns of garments. to find out the tariff and other restrictive practices of importing countries.P.

and description of subscribers. (6) To establish design centres. For three months of the year. to encourage export production of quality garments and to undertake necessary research in fashions. A specific AEPC goal is to get the government to change the law that states that workers are permanent employees after 100 days. to improve the skill of workers engaged in garment manufacturing in India and to assist in the technological base of the garment industry. to 200 days. and its specialization in better embroidery and the “India look” (ethnicwear heavy with embellishments and more complex work). (8) To obtain from members of the Council and to prepare for the Council as a whole. its strengths being higher levels of worker productivity. rules and procedures. address. so that businesses who do not get orders during the winter are not hurt by the cost of labor. • lobbying to government to change laws regarding labor and infrastructure (and whatever other business bottlenecks there are). setting of export targets generally and in relation to specific countries and commodities on an annual basis and for such medium and longer terms as may be considered desirable and to ensure/undertake execution of such plans. (5) To assist members. import licence facilities provided and how to apply for the facilities. AEPC focuses on three things: • marketing help. its strengths being better infrastructure. in the Small Scale Sector by giving assistance in the matter of understanding and implementation of the drawback. especially. and • raw material supply (both indigenous and imported). and lastly Tirupur. He stated that over the industry as a whole. He stated that the government needs to increase labor flexibility. Page 16 . to improve the qualities and standards of the fabrics and garments by importing technical know how. traders and exporters of garments. so that workers can be more easily fired and hired. (7) To undertake training of workers and technical personnel. He said the three biggest centers for garment production were • firstly Delhi. development of export markets.for the purpose of continuously and regularly reporting to manufacturers. as well as the names. generation of production for exports. Content of interview (7 July 2006) with the Secretary General of the AEPC: The main issues in the garment industry are labor and infrastructure. NCR region. designs and techniques and to encourage manufacture of garments for exports. garment businesses do not have orders. he stated. • secondly Bangalore. otherwise productivity will remain stagnant and labor costs will remain high. specializing in knitwear. The complete list of the AEPC’s objectives can be found on the company’s website in the Articles and Memorandum of Association (link from main page). • help with training and productivity (14 training institutes). to evolve improved design and patterns and garments suitable for export. unit prices have remained stable pre and post quota phase-out. action plans for promotion of exports.

including • an HR training institute-KSA Technopack.He listed the top ten Indian garment factories as • Shahi Exports (Delhi). The AEPC did not have company specific financial data. • SPL Industries (Delhi). These businesses have succeeded through a number of different strategies. • Texports (Mumbai). as it is self-reported. and • the Eastmen Group (Tirupur). • a foreign consultant agency Method Workshop (main consultant Roger Thomas). • Richa Global (Delhi). • Creative Group (Mumbai). • Centwin Group (Tirupur). • Gurgi (“biggest industry consultant”—saw this name in the fabric stores in Jyoti Apparels). The researcher purchased the newest book of statistics on industry level data that the AEPC had (2003) and a directory of garment exporters. Page 17 . • Golkadas Exports (Bangalore). He mentioned several notable resources. and • the Cotton Textile Export Promotion Council. with a common thread of individual attention to quality control and productivity by hiring consultants and building better facilities. • Modelama (Delhi). • Golkadas Images (Bangalore).

and the evolution of new professionals.. In addition to classroom learning. Chairperson. Continuing Education (CE) Programmes: National Institute of Fashion Technology. Hyderabad. Chennai. NATIONAL INSTITUTE OF FASHION TECHNOLOGY (NIFT) Ministry of Textiles.htm Address: NIFT Campus. 26965059. management practices and manufacturing technologies. Extn:306 Fax: 91-11-26851198 Mobile: 9810154829 E-mail: rajeshbheda@gmail. 26965080. New Delhi-110 016. They offer a learning environment that encourages innovation. The Institute has pioneered the evolution of fashion business education across the country through a network of seven centres at New Delhi. Each of the seven NIFT Centers offers a spectrum of specialized short-term courses that address the dynamics and niche needs of the fashion industry and open windows of opportunity to interested candidates. practitioners. The centres are professionally managed platforms of the world’s finest design expertise. Director General of NIFT) The Institute: Today. Department of Fashion Technology Telephone: 26850484. these courses offer a unique opportunity to participate in the lively academic environment of NIFT. creativity. 26965059. PhD. Government of India Website: http://www. NIFT has crafted a range of Continuing Education Programmes. These programmes reflect the requirements and Page 18 . India Telephone: 26850484. leading to upgradation of skills and knowledge. (Gauri Kumar. also offers short duration part time courses under Continuing Education (CE). Extn:306 Contact Person: Professor Rajesh Bheda.com/iftf. professionals. advancement of careers. and excellence. NIFT has set academic standards and excelled in thought leadership by providing a pool of creative genius and technical competence to the fashion industry nationally as well as globally. 26964771. and entry-level candidates in the form of Continued Education Programmes. rajeshbheda@niftindia.4. and avail of facilities like laboratories with state-of-the-art equipment. Kolkata and Mumbai. and diverse faculty expertise. According to its CE (Continuing Education) Prospectus 2006-07: NIFT provides quality fashion-education to industry experts. Resource Centres. management and technology across the globe.com. Bangalore. besides conducting regular professional undergraduate and postgraduate programmes in Design. NIFT is acknowledged as the premier institute of fashion design. 26965080.niftindia. The thrust of CE Programmes is on integrating theory and practicals with industry best practices and reciprocal professional interaction in a consolidated time-bound format. which have been developed in consultation with reputed academicians [sic] and industry practitioners. Hauz Khas Near Gulmohar Park. Gandhinagar (Sub-Centre: Surat). Management and Technology. 26964771.com NIFT was set up under the Ministry of Textiles in 1986. enhancement of critical abilities.

productivity (how to perform time studies). • better quality product and service. operators. • offering shorter lead times. and also to those aspiring to join the industry. The average Indian garment factory has 100% potential in physical labor productivity. it is a useful resource in identifying the types of materials used in classes and to train managers and HR personnel—one book on HR management that the researcher later purchased had a lengthy passage on labor unions and how to use HR strategies to discourage their formation. and they are making efforts to reach good productivity. probably average 70% of India’s market. • have more highly trained workforce. The CE Certificate Programmes are aimed at complementing the practical knowledge of the industry professionals with formal technical education in their respective areas of work. buyers reducing number of suppliers as well as brands. Page 19 .S. Companies are trying to move up the value ladder as product development and design are becoming more important. demand is up. trying to get workers’ involvement. Post-MFA trends have been a consolidation of supply chain and capacities. Unit prices are down. suppliers reducing subcontracting.concerns of the industry and have been carefully planned to spur professional growth. • design development. The flexible schedule enables the participants to pursue the programme without interrupting their professional activities. and • hire or train industrial engineers. Most common is line supervision. The main characteristics of successful firms include: • recognizing what customers are looking for. manufacturers consolidating capacities. With focus on interactive learning. performance-based rewards system. The library at the NIFT campus is open to anyone. If companies put efforts into enacting these measures. Content of interview (20 July 2006) with Professor Bheda: Professor Bheda has been with NIFT for 16 years. • managing their supply chain better. He teaches classes in quality management. quality improvement program. cost is up. training managers. with production planning and scheduling. there could be a 50% improvement in quality. though you cannot take bags inside the doors or check out books. methods monitored. • higher productivity • use the help of consultants. corporate social responsibility. and a global overview of the garment industry. relevant to individuals at different stages of their careers. the programmes provide a congenial environment that integrates theory with practice. and EU have always been strong markets in India. U. The participants receive a NIFT certificate on successful completion of the programme. • BPR manufacturing. as there has not much shift in markets. However.

The award winners for their showcases (announced the previous day. it would be good to invest in social improvement program.com).K. However. “suppliers get a feeling of being cheated. so the researcher asked IIGF workers) were 1) Intercraft (New Delhi). from principles. The core group of organizers include Vijay Mathur. so some firms are investing in CSR to the extent they can afford. The day of the interview was the final day of the Indian International Garment Fair (IIGF: www. the AEPC Director of Export Promotions (interviewed him after K. Vijay Agarwal (Chairman of AEPC.K. it would have to be meticulously and carefully implemented. it seemed to be a showcase for smaller firms to vie for new buyers and international exposure.indiaapparelfair. so suppliers feel they are not committed.com. He gave a contact person to interview from Shahi Exports and up-to-date contact information number for Orient Craft. Regarding corporate social responsibility. Magu (Chairman of Jyoti Apparels). not because the buyer says the firm has to do it.” The researcher mentioned the United Students Against Sweatshops-proposed Designated Suppliers program and if suppliers would be interested in such a proposal and he said absolutely. The researcher obtained a buyer ID and toured the grounds. K. something like it has been discussed. H.indianapparelfair. Agarwal). and are simply passing it on to the suppliers. the 37th annual garment fair with 393 exporters/exhibitors at Pragati Maidan.” that retailers are paying lip service to CSR without sharing the cost burden.L. None of the firms were top ten exporters or easily recognizable. 38th annual: www. Mumbai). Page 20 . and as long as it is ensured that the rewards system cost comes down to the factory floor. driven by price and the customer can walk away at any point.there is an erosion of the bottom line and companies find it difficult to survive and improve working conditions. He does not see a correlation between turnover and CSR programs: “ultimately it comes from within. Everything in the market is transaction-based. Retailers should start partnering with the brands and rewarding CSR compliant suppliers. and many cannot afford them because there is typically no financial payback. Social programs are a long-term investment. 2) Shilpayan Craft (Jaipur) 3) Another firm from Jaipur. Jalan.K.

*Collection and dissemination of data useful to the textile & garment industry. J. *Quality Evaluation of textiles. and Seminars/ Conferences/ Training programs…NITRA has carved a niche and occupied leadership in Package Design Consultancy for effluent treatment and water recovery. Pollution Control. NITRA’s Experience in Environment Field: NITRA’s Environmental Division has made headway…[in] solving the industrial problems related to environment through R & D based Consultancy. Ghaziabad (UP) 201 002 Website: http://nitratextile. Manpower Planning. Maintenance Management. Publications. Raj Nagar. Several prestigious textile units and multinationals are already within its consultancy network. P. Energy Conservation. environment and allied areas. The Environment division has successfully executed 74 industrial projects with effluent handling capacity of 100 m3/day to 2000m3/day…Environmental division has 40 publications in environment field…The division has organized several seminars/workshops during the last one decade in the following areas for the benefit of Page 21 . Techno-economic Viability Study. Chairman of NITRA. It is the only ISO 9001:2000 accredited textile research organization in India. Environmental Audit. effluents. Sector-23. garment. It is linked to the Ministry of Textiles and is recognized by the Department of Scientific and Industrial Research (both government entities). *Research and Development projects and industry specific surveys related to textile & garment industry. Product Diversification. Machine Design & Development. waters. NORTHERN INDIA TEXTILE RESEARCH ASSOCIATION (NITRA) NITRA. conferences and publications. seminars. ISO-14000 Environment Management System. *HRD activities through training programs. Rao.S. V. chemicals. Cost Reduction. According to NITRA’s 2006 Prospectus: NITRA’s Multifarious Activities *Job oriented professional courses (full-time and distance learning) in textile. 0120 278-3638 NITRA was established jointly by the industry and the Indian government (Ministry of Textiles) in 1975 with the objective “to carry out scientific research in the field of textile as well as to promote and foster scientific research studies for the extension of knowledge related to or connected with textile industry” (NITRA’s website). *Customized consultancy packages for national and international clients in the areas of Product Development. Quality Improvement. workshops.org/ Contact person: Dr. dyes. Energy Audit. and plastics. ISO-9000 Quality Management System. Maintenance Audit and a lot more. Process House Study.5. Design of Effluent Treatment Plants and Water Recovery Plants. leather. *Need based cost effective software development.

improve infrastructure. eco-friendly textiles. Content of interview (7 July 2006) with Chairman of NITRA: Gave background on the history of the textile industry. TAF). environmental statement…NITRA’s Environment Laboratory is well equipped with Sophisticated Analytical instruments. the Bureau of Indian Standards (BIS). According to NITRA’s website: The Research Advisory Committee is an apex policy making committee of NITRA to guide it in its research activities and formulating short term. The government is currently working on better infrastructure. NITRA helps factories with product development and various audits. Complained about government infrastructure and labor laws. There is a shortage of skilled garment workers. Stated that the fragmentation of the business made quality control an issue. [NITRA’s IT Center] has over 100 [PC’s].. He allowed that workers were being exploited.. but would not elaborate and would only refer to the intractability of trade unions in vague terms. better access to a supply of power through a cluster system called Scheme for an Integrated Textile Park (SITP).000 books and journals. fear of China post-quota. to build the careers of its students and] monitors the current trends and requirements in the job market [by keeping in constant touch with prospective recruiters]. Netherlands. which are essential to conduct such a program…[it] is accredited/ recognized by the National Accreditation Board for Testing and Calibration Laboratories (NABL). Library: Enriched with 5. especially the law whereby a worker that is employed for 100 days is considered a permanent employee. especially Page 22 . has been installed for carrying out treatability studies of biodegradation of industrial effluents through aerobic cum anaerobic route. energy. water. Also stated that it cost businesses more to subcontract because they had to pay for delivery.. legal compliance. He believes the government should subsidize capital for Indian business like China (mentioned something about a Technology Aggregation Fund. During the 60s-80s. mid term strategies and policies and creating necessary infrastructure. A programmable ADI Bioreactor System of 3 liters capacity from Applikon Dependable Instruments. effluent treatment and water recovery plant. The Committee also guides NITRA to conduct research and provide consultancy to the industry in the areas which are more relevant in the present context.. etc. the…library [keeps students connected with] ongoing global developments. An in-house miniature ETP (effluent treatment plant) of 100 Liters/hour capacity has been installed by NITRA. The library also subscribes to 150 [national and international] periodicals. which would consolidate factories. etc. and perhaps have relaxed labor laws within these sites. Access to and the price of power seemed to be a big issue for him. from composite textile mills in the 50s-60s to the rise of small scale businesses/ fragmentation. he said that unions hurt business.textile and allied industries: waste management. and the Haryana State Pollution Control Board (HSPCB). NITRA has a wide database of employers [in its placement cell. quality.

Page 23 . NITRA’s worker training program’s classes (this year beginning in August) cover mostly productivity issues for middle management such as production managers and line supervisors. They conduct in-plant training as well as distance learning programs for middle management at NITRA itself. Classes are full days. 10:30 am . When asked for company names. L and J (seem to be mills. Students apply to the program online and are selected on the results of aptitude examinations and interviews.4:30 pm. Reliance. Bilwara.machine operators at the shop floor level. The course coordinator is Vivek Agarwal. a NITRA Senior Scientific Officer. not garment manufacturers). so NITRA conducts training programs for workers that last 3-6 months. They typically have 4-5 students applying for one seat. Arvind. he mentioned Vardhmal. The researcher obtained a copy of the 2006 prospectus.

Manicandan’s CEC Report.modelamaexports. Manesar IMT Gurgaon -122016. 7 & 8. Udyog Vihar Phase -1 Gurgaon. Haryana.CHAPTER THREE COMPANY PROFILES 1. An ISO 9001:2000 certified company The information in the following company report was obtained from interviews with the Director. Page 24 . Human Resources manager. 2291131 Fax: 91-124-2290864 Website: www. the company website. I. Merchandising Agent. Director E-mail: lovleen@modelamaexports. Mobile: 9810015693 Corporate Office2 Plot No. CONTACT INFORMATION1 Contact Person Lovleen Kumar. Haryana. Sector-5. Okhla Industrial Area. 2 Unit visited by the researcher. India Tel: +91-11-26810103 fax: +91-11-26817969 Head Office Gurgaon 184.com Head Office Delhi B-57. ICRIER financial data. business articles. and G. India Tel: 91-124-2290993.com E-mail: info@modelamaexport. documents given by the HR and production managers including a company profile. and updated telephone numbers from interview. India Tel: +91-124-2397838-42 fax: +91-124-2397843 1 Initial information obtained from company website. phase -1 New Delhi -110020. MODELAMA EXPORTS LTD.com.

B-80.” Apparel Resources.00. interview.com/defaultnextone. Udyog Vihar Phase -1 II. Okhla Industrial Area. 4 3 Page 25 . B-33. In the first year they exported Rs. Gurgaon1 6. In 1999. 184. and Pandey.000 square feet. <http://apparelresources. B-57. 5 From website. 200. Lalit Gulati. “Build Quality Rather Than Check The Quality. IMT Manesar. Vinita. Lalit Gulati as a family-run operation. owner is Mr. BRIEF HISTORY Modelama was founded in 1979 by Mr. Manesar. Modelama professionalized its management structure and has been consistently upgrading technology in their production facilities. Modelama places a great emphasis on technology as the secret to its success. Plot No-5. From company website. Okhla Industrial Area. phase -1 New Delhi 9. B-26. Phase 1 Gurgaon 3. phase -1 New Delhi 7.5 III.000 square feet. 45 lakhs with 50 indigenous sewing machines and a workspace of 4. Other production sites in untranslated Hindi document. 6 From company website. BASIC PROFILE6 Legal Composition Sole proprietorship. 204.asp?msg=2710&cod=newsindetail&nam=>. Phase 1 Gurgaon 4. Phase 1 Gurgaon 2. Modelama today has ten professionally run production units over 4. phase -1 New Delhi 8. Sector-5. Okhla Industrial Area. 7 & 8.Road Map 3 Production Units4 1. 201. Sector-4 Gurgaon 5. Plot No. phase -1 10. Okhla Industrial Area.

Charming Shoppe Inc. Marks & Spencer. kidswear. silk. Freemans. Federated Stores (Macy’s). Grattan. wool). 4-530/2001-100% EOU/103 dt 14/09/2001 and also registered with the Apparel Export Promotion Council since 03/05/2001 (Registration No. 1998. Product Mix Areas of specialization include outerwear. Modafil UK: Laura Ashley. Chambers. Zara. A & F. 2000 Page 26 . Clients USA: GAP (Banana Republic. 1996 Charming Shoppes Inc. Marmaxx.. Modelama does not manufacture for the domestic market. drapery.AEPC/REG/MER/47569/N/2001) as a manufacturer/ exporter of readymade garments including woolen. skirts. polyester. and 2002 Associated Merchandising Corporation Outstanding Performance. AMC. and home furnishings. Pottery Barn. linen. 1993. 1999. Tommy Hilfiger. H&M. silk. cushion covers. Sears Roebuck & Co. Saks. knitwear and garments of leather. Monoprix. Kohls-Belk. Galeries Lafeyette. Lane Bryant. Exports/Imports 100% exports.. Zellers Australia: Country Road Awards Target Vendor Award of Excellence.U I/6921dt28/08/01 RCMC NO. Old Navy). Villersey & Boch. Sears Roebuck & Co. offering products such as table linen. Marshalls. etc. Launched Home Textile Collection in 1999. Uses natural fabrics (cotton. 2000. polyamide). shorts. Nov. 2000. 2001 Federated Merchandising Group Five Star Award (in Development of Federated Department Stores Private Brands and Labels). top of beds. 1999. Westelm. and blends. Colt’s Europe: Etam. Target Stores. Incorporates ethnic Indian accents and embroidery into design samples. and decorative items for loungewear like throws. nightwear. Proffitts. Canada: Eatons. Eurofiel (Women’s Secret). 1992. synthetics (viscose. William-E-Sonoma. which may have contributed to minimizing seasonality issues. Lands End. Dayton Hudson Corporation. GUS.EOU Information Modelama Exports Ltd.. is an export oriented unit registered with NEPZ. Added outerwear to their product mix in 2001-2002. LOP NO. La Halle. jute and hemp. Mervyns. Next.4530/2001-100% E. trousers.O. Hudson Bay. Sales Growth and Profitability Vendor Award. ladies blouses. dresses.

3000/per month Rs. 7 ICRIER Data (based on an interview at B-57 Okhla Industrial Area plant in Fall 2005) Page 27 . VA per employee Rs. 500 Rs. 2800/per month.5 2 3 5 30 Other Financials7 2003 2004 Total Sales 180 crores 180 cr % of output exported 100% 100% Profits 15% 15% Capital employed 2. Rs.000 per year 25. 500 Total employment 500 500 Production workers 450 450 Proportion exported directly --Proportion exported indirectly through intermediaries Misc. 500 500 450 60% 40% 150.5cr.IV.000 30% Rs. FINANCIALS Turnover 70 Turnover (millions USD) 60 60 50 40 30 20 10 0 1981 1985 1990 1995 2000 2002 2005 projected 15 0. 3cr. No. of pieces exported to the US No. of pieces exported to EU countries Proportion of workforce that is female Average wage for female production workers Average wage for male production workers 2005 200 cr 100% 20% 3cr.

” Apparel Resources. 60% of that is Target’s profit margin per unit (PMU). Average Unit Prices (per piece of garment supplied) Unit Price Origin Product Mix $5-7 USD U. “Build Quality Rather Than Check The Quality. Vinita. “GAP is sourcing worth about $1 billion from India and we are doing more than $10 million with them.V. Europe Others 94% Major Clients Brand Federated Stores (Macy’s) Target Stores GAP (incl. ~$2. An example given was if the retail price of a given garment manufactured for Target is $9. The remaining $3. 10 Nearly all brands are FOB with the exception of discount retailers like Target Stores (USA).asp?msg=2710&cod=newsin detail&nam=>.S. the unit prices are markedly lower than specialty stores. quoted in 9 Pandey. Brands Casual wear $10-16 USD European Brands High Fashion Retail Markup 4 to 7 times 4 to 7 times Type10 Mostly FOB Mostly FOB From interviews with the Director and Senior Merchandising Agent. BRAND INFORMATION8 Modelama's Export Market 1% 5% U.99 is the landed cost. <http://apparelresources.99. 9 8 Page 28 .com/defaultnextone.A. Of that remaining $3.S.” Lalit Gulati. which includes not only the factory unit price but the duty cost (AMC and freight). BR and ON) 9 Tommy Hilfiger Marks & Spencer A&F Colt’s Saks Etam Zara Marks & Spencer H&M Origin USA USA USA USA USA USA USA USA Europe Europe Europe Europe Length of Relationship Since 1975 Since 1975 10 years plus 10 years plus 10 years plus 10 years plus 10 years plus 10 years plus 5-6 years 5-6 years 5-6 years 5-6 years % of Sales 30-40 15 10 ---------- Buying Agency or Direct Most contracts are negotiated through buying agencies.75 goes to Modelama.99. Although they get large production volumes from discount retailers. Modelama Chairman.

INFRASTRUCTURE Subcontracting Modelama does not appear to subcontract.. Marks and Spencer (Style and Co.4 1985 0. “Indian Fashion Firms Adopt Global Pret and Couture. Vishnu. “My team of designers scans international trends and comes up with a tentative collection of not only designs but also shades.ittimes.” <http://www. which varies according to the product.co.11 Production System Uses an assembly line system. fine-tune the patterns. for instance. is one of the principal designers. Then there is some back and forth communication between Modelama and the MNC to reach an agreement in terms of product design. Modelama will present their company profile to the buying agencies of MNCs.1 1981 0. they were manufacturing garment orders for Charming Shoppes Inc.”14 11 12 According to interview with the Director. Production Capacity12 9 8 7 6 5 4 3 2 1 0 Number of Garments Produced (milions) 8 4 2. From company website and brochure. V.asp?em=M&mcode=200602&idx=1083>. The day the researcher observed the process.kr/en/node. who will then contact them with a development package if their profile fits their needs. volume. add a bit. Page 29 . 14 Makhijani. and delivery times.13 Gayatri Lal. Typically. We then sit down with the stores. subtract a bit.000 pieces.80.7 1 1990 1995 2000 2002 2005 projected Design/Sampling Modelama has a fairly large design department. an alumnus of the National Institute of Fashion Technology (NIFT).Unit Prices Since MFA Phase-out Unit prices have gone down an estimated 7-10% due to increased global competition.5 0. Some of the orders can be pretty huge . 13 From interview with Director and Senior Merchandising Officer. and get down to manufacturing.) as well as home furnishing products.

000 workers in all plants. color fastness to light. Washing machinery includes a wet and dry processing unit comprised of micro processor controlled washer extractors. and number of workers. An example line was sewing collar parts with a total of 46 tailors and 5 helpers. Approximate number of workers16 Modelama employs a total of ~6. GSM check. Blind Hemmers. Departments17 Production (~800 Workers) There are about 560 tailors. etc. at the front of which is displayed an “Hourly Production” dry-erase board with the line number. Page 30 . The floor is laid out in dozens of assembly lines. Washing (24 workers) and Finishing/ Pressing (175 workers) The finishing area had lines of workers pressing and folding clothes. The product was women’s fashion blazers for Style and Co. In the sewing departments. supervisor name. This was the only department with women. Auto Belt Attaching Stations. Auto Dart Making Stations. Air Flotation Tables. pitting test. Machinery includes Auto Zig Machine. Differential and Bottom Cylindrical Bed Unison Feed Machine.Quality Control15 Modelama’s motto is “build quality rather than check quality. Autocad (Lectra). Machinery includes Auto Spreaders. Programmable Sleeve Setter Stations. Band Knife M/Cs. Auto Cutter (Lectra). The company deploys over 3000 imported sewing machines with customized workstations. PH check.” Modelama emphasizes technology and internationally acclaimed systems to maintain a high level of quality. From interview with Director and Human Resources Manager. Procedures are based on aql 4 point system by which all fabrics are screened and categorized. Tests include tensile strength. 17 Information on machinery was primarily taken from the company website. and brushing machines (from light softener washes to heavy enzymatic washes). Top. Auto Pocket Welting M/C. sand blasting. Information on workers and floor layout is specific to the unit visited and is taken from an interview with the HR Manager. input. Pneumatic Button Hemming Stations. Cutting (50-55 workers) The cutting department had five lines of machines laid out with worker stations. Auto Surging Machine. laundering and crocking. Differential Feed Machines Needle Feed Machine. output. tearing strength. over 90% male. Multifusing with Three Track of Loading (High Performance Macpee). perc based dry cleaning machines. they use internationally standardized procedures like the traffic light quality assurance system. 15 16 From company website. Modelama has an in-house laboratory that is equipped with testing machines for AATC Standards and has developed in-house grading systems based on ERP. Site visited by the researcher employs about 1100 workers (including about 15 accounts staff).

The Director said that workers are given incentives in productivity schemes if they reach their targets. and line supervisors who perform time studies on particular styles and set worker targets. flatbeds. 3000 per month. The targets are communicated to workers by line supervisors and dry-erase boards on the production floor that display productivity goals. Inc style.Pressing and finishing machinery include multipresses. He talked vaguely about “helping” the worker to reach their targets or perhaps moving them to another department for which they would be better suited. the HR manager said that no incentives are given. Machinery includes 20m length Schiffley Embroidery (Lasser & Saurer). 2448 per month. the HR manager stated that no punitive measures are taken as it is prohibited by law. calendaring machines and range of buck shapes and steam irons from manufacturers like MACPII. and Renzacci. stressing how much state-of-the-art machinery has contributed to the quality and productivity of the manufacturing process. management states that they set wages higher than minimum wage to get workers to commute. Because the factory is not near a city. No workers are involved in these meetings. 200 single head and 6 multiple head computer embroidery machines. Trevil. HR Manager boasted that Modelama was the only factory in India to have this machine. Productivity Schemes Company has production planning meetings consisting of the HR Manager. dummy presses./month) 3500 From interview with HR Manager. and unskilled minimum wage was Rs. Veit. Page 31 . Embroidery Did not observe embroidery process during visit. Additional Machinery Factory has a special conveyor system that moves products from assembly lines to other departments. Category Tailors +skilled 18 Average Wage (Rs. indicating that he would like to develop such a system in the future. VII. However. Production Manager. If workers cannot reach their targets. The production manager gave the researcher a copy of a time-study conducted for Charming Shoppes. WORKING CONDITIONS18 From 9:30 1:00 1:15 to 6:00 1:30 (washing) 1:45 (production) Work timings Timings for Lunch break (in shifts by dept) Wages Average wages Rs. Has hand and machine embroidery capabilities.

Indicated that there are a few shop floor employees who have remained the two years the factory has been in operation. except for worker recruitment for middle management positions. Page 32 .” Labor Turnover Estimated worker turnover per month at 7-10%. After a three-day period. and that workers receive double wages for overtime hours. Overtime Management indicated no more than four hours per week per worker. HR Manager stated that wages increase after a year.+semi-skilled +unskilled Cutters +machine operators +unskilled Washers +sandblasting operators +other machine operators Finishing +pressers +skilled final checkers +semi-skilled checkers +general unskilled checkers Supervisors/Mid Mgmt +skilled (3+ yrs experience) +assistant (1-2 yrs experience) 3000-3300 2710 3000 2500-2800 4000 5000 3000 3500 3200 2700 7000-11000 6000 Wage Setting For shop floor workers. workers are then offered a monthly wage based on this evaluation. supervisors conduct time studies evaluating the skill level and productivity of a new hire. VIII. like China. Expressed dissatisfaction with labor laws requiring double overtime. which is not subject to negotiation. including ESI and PF. stating. HUMAN RESOURCE POLICIES19 There does not appear to be common policies across the plants. “It should be time-and-a-half. 19 Information based on interview with HR Manager and documents given by HR Manager and production manager. Benefits HR Manager indicated that workers receive the social benefits required by law.

Manicandan’s “Mapping First Tier Suppliers in Garment Industry in Delhi. Worker Training This site does not provide training to its workers. grievance procedures. Lovleen Kumar Director Ms. Page 33 . However. the company posts signs on the gate. such as the unit located at 200. Phase-I Gurgaon. and in nearby worker villages. standing orders. at bus stops. Recruitment Policy They do not use labor contractors at the unit visited. Modelama’s anti-harassment policy. K. However.Management Structure Mr. workers have a brief orientation session during which they are informed of security measures. while dotted-line boxed positions are factory-specific and subject to variance. For middle management positions.” Modelama uses labor contractors for some of its other units. To recruit shop floor employees. the company recruits from training centers and placement companies and has a formalized policy that the researcher obtained. Shiv Singh Skilled Production Line Supervisor Assistant Supervisor (Less skill/experience) Skilled Tailors/Machine Operators Helpers (Unskilled) Boxes with straight-line borders are positions common throughout all production sites. Kiran Production Manager Mr. Lalit Gulati Sole Proprietor Founder/Chairman Mr. Beneeta Seigal Senior Merchandising Other Upper Management Positions Mr. Anil Chauhan HR Manager Management Staff/Accounts Personne Mr. Workers are a mix of local villagers and from Gurgaon. and vendor codes’ of conduct. according to G.

If workers suffer from minor injuries. but avoids paying for major injuries and illnesses. traceability.” there are no doctors in two of Modelama’s other production units (200.20 Grievance Policy Procedure If workers have a problem. the researcher was informed that he was at another production site. companies have required them to uphold a more stringent counter-terrorism model of security in compliance with U. so there is no need for a union. a Works Committee. Phase-I Gurgaon and B-57 Phase-I Okhla Industrial Area). Management stated that it would have no objection if workers wanted to form a union and they are free to associate with any group they desire.”21 Corporate Responsibility/ Codes of Conduct Modelama’s Anti-Abuse/Harassment Policy is posted on the factory floors in English and in Hindi. U. or CTPAT model. Medical Care There is a medical room in the factory. but only in English. Security New security measures have been implemented since the quota phase-out. that they can report their grievance to their direct supervisor or upper management.S. Manicandan’s “Mapping First Tier Suppliers in Garment Industry in Delhi. Customs Security requirements regarding issues like preventing trespassing. Page 34 . Work times for employees were also posted. HR Manager indicated that there are very few worker grievances. preferring to dismiss the workers. Union There is no union in the production site visited. The factory locks its doors at night. According to G. tampering. and an ESI station 1. and that management works to quickly solve problems in order to maintain an atmosphere of “family. the company usually pays the medical expense. The code of conduct for Charming Shoppes Inc. A resident doctor is “available at all times. There are only six recorded injuries at this site for 2006.” Worker Committees Since there is no union. according to the Customers Trade Partnership Against Terrorism. in compliance 20 21 Received a Hindi copy of group meeting minutes. such as a Health and Safety Committee. Received a Hindi copy of policy. and a Sexual Harassment Committee. nor have there been unionization attempts. There is a company dentist that comes every Thursday. an Anti-Harassment Committee.S.” but when asked to meet the doctor. All workers were said to have received medical attention. they have joint employee-worker committees required by law.Dismissal Procedure No information was obtained by the researcher regarding a formalized procedure. was displayed on the factory floor. “We take care of all their problems.5 km from the factory.

Vinita. whose upper management and design departments would remain in India. BUSINESS BOTTLENECKS Main problems hindering financial success according to the Director are poor relative infrastructure. only their department is kept open and the rest of the factory is shut down at 6 pm. The HR Manager. In an interview with Apparel Resources magazine. however. Sanjay: …We have to train the operators to work on these re-engineered machines and I myself have worked on the machines eight hours to familiarize myself. the former Director stated: Lalit: We do not consider machines as individual equipment but as a complete workstation. the Chairman. advancing the common view that the government should amend labor law to increase worker flexibilization so that companies can more easily fire workers when there are fewer orders in the winter.22 X.asp?msg=2710&cod=newsin detail&nam=>.com/defaultnextone. This can be achieved by deskilling operations to the simplest and most automatic level…We convert the machine with the help of our in-house engineers into individual units by developing different work-aids that convert a normal lockstitch machine into a workstation. relative strength of the Indian rupee to the dollar opposed to weaker Asian currencies. Lalit Gulati. MNCs would present their contract orders to Modelama as an Indian company. we need operators who can be trained. The idea is to convert a single lockstitch machine into a machine which can do a specialized jobs…so that we do not have to worry about the skill of the o. and then ship the product from that country.” a more developed system of subcontracting modeled on Southeast Asian business strategies. The Director mentioned that seasonality is an issue. If workers stay for overtime.perator. <http://apparelresources. and government bureaucratic hurdles regarding labor law. it would appear that seasonality should be less of an issue for them than other companies who do not manufacture winter clothing. If Modelama has had as much success in outerwear as they have stated in press releases. low relative levels of productivity. Page 35 . IX. We do not need masters. Modelama would then shift the actual manufacture of the product to either countries with lower labor costs like Sri Lanka or duty-free countries. and Sanjay Gulati. 22 Pandey. Modelama successfully invested in the necessary infrastructure to export ~Rs. 25 crore in jackets alone. stated that seasonality was not an issue and that they have orders year-round. In 2002. “Build Quality Rather Than Check The Quality. INDUSTRY COMMENTS The Director opined that the only reason MNCs were still placing orders in India is because they did not want to overexpose themselves in China. A business strategy that Modelama is looking into is “triangular shipping. Lalit: Machines change according to the product requirement…We have to be flexible because the buyer doesn't buy one thing all the time.” Apparel Resources.with these measures. the Chairman stated that though the South is better known for it.

Modelama was the first company to be interviewed by the researcher. as it is the most modern. then was directed to a Senior Merchandising agent. but directed the researcher to her colleague. who was not available on the date of the interview. when they began to develop the infrastructure to manufacture outerwear. Modelama was very open in disclosing information about the factory unit. PERSONAL EXPERIENCE Modelama used an Italian consulting agency for the design of two of their factories. Page 36 . Contact was made by calling the general inquiry number on the website. The only question that management would not answer was regarding a detailed financial breakdown of the company. The unit visited is the site of their corporate offices and was built two years ago with the help of industrial engineers. The high level of attention paid to infrastructure and personnel management is probably not typical of their older factories. This is likely the factory to which buyers are taken.Sanjay: It is a very unique combination of machines that we have that gives us this flexibility of handling [versatile] product [mixes]. XI.

SHAHI EXPORT HOUSE PVT.co. is former vice chairman of the Apparel Exports Promotion Council of India.co. Sector 28 Faridabad 121008.2.com Website: www. is in Ghaziabad. 1. General Manager of Marketing Mobile: 98-18212505 E-mail: ashok. Manicandan’s CEC report. Senior Management Ashok Raman. Harish Ahuja. Sector 28. Faridabad.24 23 Unit visited by the researcher. and G. Two or three other units are in Delhi (Noida) and a fabric processing unit.shahiindia.D. I. Sarjapur Main Road Bangalore 560034. Tel: +91-129-2273970/80 Fax: +91-129-2273485/91 E-Mail: seh@vsnl. Shahi Export House has a total of eighteen manufacturing units. the company website. BRIEF HISTORY Incorporated in 1974 in Delhi. CONTACT INFORMATION Contact People J.khanna@shahi.in Ajay Khanna. Page 37 . The remaining woven and all knit production sites are located in Bangalore.in Head Office Faridabad23 Industrial Plot 1. II.raman@shahi. the owner of the company. LTD. Giri.com Production Units: Plot No. Divisional Manager of Marketing Mobile: 93-13369269 E-mail: ajay. Palmprint Textile.com Head Office Bangalore Belandur Gate. Karnataka Tel: +91-80-28439214/15 Fax: +91-80-28439356 E-mail: shahiblr@vsnl. Haryana. The information in the following company report was primarily obtained from interviews with the General and Divisional Managers of Marketing. business articles.

JC Penny’s. American Khakis. A & F. men's and ladies' bottoms. Target Stores. 2. No Boundaries. The Children’s Place. indigo dyed units. jacquard. Page 38 . 25 From company brochure. engineering stripers. American Eagle.com/www/resource. Hollister Co. The knitwear product range includes 3 button polo shirts. polyester cotton. At Last and Co. spun filament. Seacorn. jackets. lingerie. Solutions (New York). textured knits. Clients Bobbie Brooks (Woman). polyester viscose. Exports/Imports 100% exports.pdf>. the sole proprietor was Harish Ahuja. turtlenecks. Shahi does not manufacture for the domestic market. acrylic wool. Enzo Lorenzo. GAP. ladies' and girls' dresses. H & M. mock neck.26 24 Fashion Newsletter. Up until a year ago. sportswear. Ralph Lauren. Place Jeans. Carolina Blues. Bleu. yarn dyed single jersey. Von Daniels. double mercerized.nsf/pub/Fashion_News_05_02_en2_Webb. Cento Mila. EOU Information No information was obtained regarding registration and EOU capabilities. Liz Claiborne. No. TKS Basics. tanks tops..25 Wal-Mart. full jacquards. Akademiks. 26 Remaining client names were obtained from interview with Divisional Manager of Marketing.The fabrics range includes solids. ladies' & girls' blouses .. flat back rib. Carolina Colours.lawson. Jeans Dynam. Faded Glory. t-shirts. Shahi’s product line covers casual and formal men's and boys'. Arizona Jeans Co. Shahi has expanded to home furnishings in the past year. tailored collar polo shirts. Sag Harbor (Sport). which was printed in 2005 by the Bangalore office. heavy jersey in cotton. Cherokee.III. Product Mix Areas of specialization are mostly ladies woven tops and men’s tops. Abercrombie & Fitch. John’s Bay. Euro Open. Natural Issue. Van Heusen. sleepwear. golfwear. St. Cross-Bow. 100% polyester polar fleece. who is now the Managing Director. BASIC PROFILE Legal composition of the Company Private Limited Company. Family-owned. interlock. 2005.pdf/$FILE/Fashion _News_05_02_en2_Webb. (Pacific Merchants). pique. rib. loungewear. <www. and circular woolen knits. cotton fleece. Old Navy. but it is a small fraction of turnover ($5-10 million). though any exporter of this size must have at least one registered EOU for importing capabilities. It is primarily information taken from the website with a few new passages regarding Human Resources and corporate responsibility. nor does it currently have plans to do so.

65 $0.4 million 2. 31 Based on the company’s average unit price of $6. FINANCIALS Turnover $140 million 2005-200627 $120 million 2004-200528 $90 million 2003-200429 Other Financials Breakdown of Sales Revenue30 Est USD 2006 70 million 16.pdf/$FILE/Fashion_News_05_02_en2_Webb. so they can only be thought of as a rough approximation.65-$1. Percent of sales is based on an average estimate given by the Divisional Manager of Marketing.30 $0. 2005 <www. 30 These figures were estimated by the Divisional Manager of Marketing in the space of 5-10 minutes.pdf>.lawson.07 $0. Page 39 . 29 Estimated by General Manager of Marketing.13 $0. so figures cannot be considered accurate.8 million 2.25 $0. It can be none or most of the unit price.Awards Wal-Mart International Supplier of the Year 2000 (can’t read others) IV.11 $0. 28 Fashion Newsletter.8 million 7-14 million 14 million % of Sales 50% 12-17% 10-20% 1% 2% 2% 5-10% 10% target Per Unit Price31 $3. No. though generally it is four to seven times the unit price of the garment. 2.nsf/pub/Fashion_News_05_02_en2_ Webb.5 USD.78-$1.033-$0. accessed July 2006. Turnover estimates varied by tens of millions of dollars between the GM and the Divisional Manager of Marketing. 32 Embellishment costs such as embroidery depends on style.8 million 14-28 million 1.65 Material Cost Labor Trims and Packing Depreciation Machinery upkeep Overhead Embellishments32 Profit 27 Estimated by General Manager of Marketing.13 $0. Did not obtain average retail markup information.com/www/resource.8-23.

V. BRAND INFORMATION
Shahi's Export Market 1% 15% Europe U.S.A.

84%

Other Licensees (Japan, Middle East, Australia)

Major Clients Brand Wal-Mart GAP H&M Target Stores JC Penny’s Liz Claiborne Abercrombie and Fitch American Eagle

Origin U.S. U.S. Europe33 U.S. U.S. U.S. U.S. U.S.

Lgth of Relationship 18 years 6 years 6 years 4-5 years 15-16 years 3 years 5 years 4-5 years

% of Turnover 10-14 7-14 5-14 3-8 3-8 3-4 3-4 3-4

Stated that do not have many huge clients; sales are mostly spread out among 15-20 buyers at any point in time. Buyers haven’t changed considerably post-MFA, though they are planning to increase shares in Europe. Buying Agency or Direct About 30% direct relationships, the rest through buying agencies. Stated that it is easier to deal with buying agencies in India than to maintain a direct relationship. Unit Prices (USD paid to factory per piece of garment supplied) Unit Price Range Average Product Mix Type $3.30-$26 $6.50 Casual, High Fashion Mostly FOB34

Delivery Time 60-120 days

Liz Claiborne can be up to $20, A & F can be up to $26, Wal-Mart is usually $4.50. Unit Prices Since MFA Phase-out Unit prices have gone down an estimated 7.5-15%, depending on the product. Prices for pants have dropped more, because of the nature of the quota restrictions.
In the U.S. as well, but the majority of the sales are to the European market. H & M is also the company’s biggest client in Europe. 34 Very few landed costs, though Abercrombie was mentioned as a landed cost buyer.
33

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VI. INFRASTRUCTURE Subcontracting Shahi does not subcontract. Production System Assembly line system. Production Capacity Shahi as a whole: 2.4 -2.8 million PCs per month All Delhi factories: 300,000 PCs per month Production site visited: 150,000 PCs per month The knitwear sewing facility is capable of producing 250,000 pieces per month. Efforts are on to increase the knit production capacity to 0.5 million pieces per month. When the researcher visited the unit, Shahi was producing orders for many different buyers, among them 85000 pieces of peasant blouses with lace trim for GAP (Old Navy), denim jeans for Woodland, and 5,000 pieces of embroidered corduroy fashion blazers for Monsoon company. Design Shahi has two design departments located at the head offices in Delhi and Bangalore. Buyers send a “technopack” and/or samples of the “look” they’re going for, Shahi’s design departments produce a sample range for the buyer, who then shops around until they reach some sort of agreement. Quality Control Shahi has a fabric division that handles knitting, processing, and inspection. Fabrics are sent to in-house testing facilities to ensure that they adhere to STM standards. The laboratory is equipped with a Datacolor Computer Colour Matching System coupled with a Datacolor automatic Dispenser to ameliorate human error as well as a Mathis Padder with Dryer and Steamer and a replica pilot plant of bulk dyeing machines. The lab to bulk co-relation is maintained above 95%. The lab has a Datacolor infra-red dyeing equipment for exhaust dyeing. The color management group handles the product shade sorting and color related defects like listing and end-to-end problem detection. It is equipped with various machines that check tensile strength, tear strength, abrasion resistance, pilling resistance, shrinkage, fabric drape, fastness to various agencies (washing, crocking, perspiration, etc.). Processing Palmprint Textile is Shahi’s wet processing plant in Ghaziabad. Woven fabrics like poplin, twill, canvas, gauze, etc., and made of cotton, linen, rayon, and lycra blends are processed to international standards. Shahi makes prints like reactive, vat color discharge on reactive grounds, and pigments apart from some special printing techniques like burnt out effects on polyester-cotton blends. The unit produces 9000 meters of processed fabric per day. The pre-treatment section houses an Osthoff Gas Singe & Desize machine,

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Benninger Continuous Bleaching Range, Ben Dimensa Chainless Merceriser. The Dyeing Section has machinery like a Kusters Cold Pad Batch & Benninger wash range, Continuous Dyeing Range , Jet Dyeing, Benninger Pad-Dry (with Kuster Padder) and Benninger Pad Steam Range. The unit has twelve color rotary Printing Machines, with after treatment machines like continuous Ager, Loop Ager , Star Agers , Polymerisers and Washing Ranges. The designing department is computerized with small yardages tackled on a Baby-Pilot Rotary Machine. The Finishing Section is equipped with Stenters, a Relax Dryer cum baker, Emerising (Peaching) Machine & Preshrinking Range, Speciality finishes (apart from normal silicon or soft finishes) like easy care (Self Smoothening rating 3-3.5), Permanent Hydrophilic, Stain repellant–Teflon , Water repellent, and application of Anti microbe or Permanent Fresh and Permanent Perfume. Knitwear The knitwear sewing facility is equipped with Pegasus top feed, micro processor controlled with automatic trimmers, CF Italia Collar attaching and latest Button Hole Machines capable of handling fine textured knits. Number of workers 15,000 in all of Shahi’s production sites 5,500 in all of Shahi’s Delhi (Faridabad and Noida) units Shahi’s Delhi factories employ 80% female workers, while in the Bangalore factories they are 90% female. Workers at production site visited Department and category Production +Unskilled +Semi-skilled and Skilled sewing operators +Line supervisors Cutting +Unskilled fabric spreaders +Skilled machine operators Centralized Storage35 +Semi-skilled and unskilled +Skilled workers +Staff who manage quality control Washing +Semi-skilled +Skilled machine operators Finishing (incl pressing/checking) +Unskilled (heavy lifting) +Semi-skilled +Skilled
35

~Number of workers Total 1800 400-500 1100-1300 25 Total 85 60 25 Total 150 120 20 30 Total 150 120 30 600 50 410 100

Gender Mostly female -90% female Mostly male Mostly male ---------Mixed

Stores for Noida production units as well.

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Its implementation and form depends on the department. who are not involved in these meetings. Durkopp Adler. double needle-needle feed split bar machines. and there are quality bonuses if clothes do not need repairs. Productivity Schemes The unit visited has an industrial engineering department with eight staff. Embroidery Most is done by computer. in sewing. single needle top and bottom variable feed machines. which can be 10-25% of monthly salaries depending on how difficult the style is. one for production and another room with rows of computers in which employees work on digitized patterns and samples. collar/cuff turning and blocking machines. fusing press. very little is done by hand. Washing The washing facility puts out over a ton of garments per day through specialized wash treatments such as softener wash. feed-off-the-arm machines. in which workers get bonuses for exceeding their targets. Sampling This is a fairly large department in the production site visited. marker making and global electronic exchange of pattern data. while the 60 multihead computerized embroidery machines have a capacity of 800 million stitches per day. desize soft wash and golf ball wash. every hour the target is marked. The latest CAD software enables quick processing of pattern creation. The production unit boasts machines from Brother.000 cuts per day. They conduct production planning meetings jointly with managers and supervisors by department. Ngai Shing. enzyme wash . accounts. Juki. incentives depends on how many pieces are finished. shipping staff Total number of workers: 3. In finishing. line supervisors convey target setting to them. This department is responsible for timemotion studies and an operation breakdown. The incentive scheme only applies to skilled and semi-skilled workers. merchandising.000 Mostly female Mixed Machinery 6. grading. For example. Hashima and Kannegiesser. It is also equipped with single needle lock stitch programmable machines with UBT.500 in all of Shahi’s production sites 1.+Supervisors and dpt/line-in-charge 40 Sampling (think incl in production) 50-150 Remaining marketing. stone wash. These meetings set targets for the shop floor workers. and it was stated that each unit has a similar department. They also conduct joint department meetings.800 in all of Shahi’s Delhi (Faridabad and Noida) units 750 in production site visited The CAM based cutting department can make 75. but they Page 43 . This unit has an incentive scheme for productivity. There are two departments for sampling. The Divisional Manager of Marketing states that they always had incentive schemes. pocket machines and automatic pocket welters.

have recently gone through major changes in their implementation. leaving male sewing operators and some female ones. The workers get a fifteen-minute tea break between the start of work and their half-hour lunch break./month) Unskilled helper 2200 Semi-skilled operator 3600 Skilled operator 6. Page 44 . 37 The researcher toured the factory around 5 pm. 38 According to G. This early shift seemed to be entirely female. lower labor turnover.00040 Minimum wage is posted as follows: Category Wage (Rs. 4200. Workers use their ID card to clock in and out of the factory. an increase in attendance.38 Wages As Estimated by Divisional Manager of Marketing39: Category Average Wage (Rs. Manicandan’s CEC report says a supervisor with eight years experience makes Rs. VII.000 Supervisors/Mid Mgmt 10. 39 Stated that these numbers do not include ESI and PF. and another fifteen-minute tea break between lunch and the end of their shift. and a decrease of waste in the cutting department./month) Unskilled 2448 Semi-skilled 2558 Skilled 2708 Highly skilled 3008 36 Information from interview with the Divisional Manager of Marketing and the researcher’s observations. when the first shift of workers were getting off. WORKING CONDITIONS36 to From Work timings (Shift 1) 8:30 am 5:00 pm37 Shift 2 9:00 am 5:30 pm Shift 3 9:30 am 6:00 pm The office opens at 9:30 and closes at 6:00. these benefits are additional. However. 40 G. there was still a strong female presence in the factory. the workers at this unit do not get a tea break. Benefits of the incentive scheme include a 10% increase in productivity in past two years in the sewing department. Manicandan’s CEC report.

Most sewing operators have been at Shahi for around two years. Workers who receive less than Rs. after which the HR manager will put them into a set wage scale depending on their ability. Overtime Stated that there is not a lot of overtime because they plan production with target setting. Labor Turnover Estimated at 7-10% per month. Page 45 . 7500 are provided with ESI benefits. PF. and a three-month maternity leave.” ~Shahi’s website Shahi’s updated brochure includes lengthy passages stating their dedication to innovative Human Resources approaches. VIII. if overtime is needed. they try to have the male workers pick up the extra work instead of the female workers. Shahi’s overtime policies take into account gender. they are only evaluated to see what category of skill they fall in. and negligible overtime for the other departments. HUMAN RESOURCE POLICIES41 “Human intelligence is the greatest asset which we possess. Workers also have access to an on-site crèche for their children during the workday. Estimated two hours per week per worker in the sewing and finishing departments. The Shahi workforce consists of committed and highly skilled people. Wages are fixed and there is no negotiation. Benefits Stated that workers do receive ESI. People who are motivated to excel and trained in different disciplines of garment 41 From interview with the Divisional Manager of Marketing. Workers are then on a three to six month productivity probation. which the researcher observed.Wage Setting Procedure Managers interview workers and then take a trial of their work for one day.

Page 46 . Some are skilled. Labor problems get a kind ear and are followed up on a priority basis. Manicandan’s CEC report. so the labor is here. Worker Training Shahi trains the unskilled operators for a period of a week. Employ more women and uses HR strategies to disempower workers and remove blatant rallying points for workers. the worker forum is a “safe space” in which workers can address any issues they have with managers. making Shahi one of the most sought after organizations to work for in the garments arena. and union organizers were either dismissed or isolated from other employees. but it is not necessary to do so here. Recruitment Policy Shahi states that they do not use a labor contractor.manufacturing. 42 From company brochure and website. In the Shahi factories in Bangalore. They do not recruit for shop floor positions beyond posting signs on their gates and through wordof-mouth. 42 The brochure and website both state that human resources are developed using the training procedures of Kurt Salmon Associates. Training depends on the job description of the worker. it is all direct employment. workers revealed that there had been unionizing attempts that were suppressed by the management. so they do not need to train them. In G. Shahi has ensured all systems are in place to make sure that everybody works in an extremely salubrious environment. Union Didn’t ask directly. They are able to have female workers because they are in heart of Faridabad. but definitely not. not the outskirts of cities. Dismissal Procedure No information was obtained regarding a formalized procedure. Grievance Policy Procedure Presumably. Shahi has invested in a dedicated personnel management division to take care of its labor. There is also an orientation program for upper level staff. Worker Committees Stated that there is a worker forum that managers also attend. Particularly so as clothing corporations the world over are labor intensive and it’s imperative that they are well looked after. they provide transportation to overcome those issues.

. Awareness programs are conducted for employees on health. The Limited.” “Anything worth doing is worth doing well” and one about the importance of personal hygiene. educational facilities for children. From interview with Divisional Manager of Marketing and joint worker-manager magazine. It aims at providing a conducive environment for employees to protect. Charming Shoppes Inc. Shahi Export House adheres to International Labor Legislation. A full-fledged Dispensary and Ambulance is provided with a doctor always on standby. and support their families in the best way possible. Codes of conduct posted in factory include Carafour. Wal-Mart. Liz Claiborne. Target Stores.” Shahi’s updated brochure includes add-ons regarding treatment of their labor force. promote. personality development through work shops. The company organizes fire drills to keep employees alert in case of emergencies. And some of the remarkable provisions for employees include: eligibility of workers for health insurance. and nutrition related topics. and a first aid room in the facility. attendance and productivity. 45 From company brochure and website. Nautica. and American Eagle. Evaucation boards are put up on all floors along with photographs of fire fighting personnel. in fact nearly all had a Hindi translation.43 Shahi’s website claims a dedication to the environment and that “waste reduction is practiced to the hilt… the plants are environment friendly with Effluent Treatment Plants at all the wet processing units. More of these were in both Hindi and English than I’ve seen at other factories. hygiene. training facilities for employees. securing of employees’ earnings through e-com (EDI) and ATM cards. Best employee awards are given for overall discipline.45 Medical Care There are male and female onsite doctors and nurses in case of industrial accidents.44 Safety measures are given utmost importance. Dayton Hudson Corporation. and lectures. They have activities for the workers such as an annual cultural week with games and contacts. American Pacific. There are many signs posted on the factory floor with stating things like “Discipline: Team work is an easier path to excellence. Fire fighters are on high alert at all times and every floor is equipped with the right fire fighting equipment. 44 43 Page 47 .Corporate Responsibility/ Codes of Conduct The company has a biweekly English magazine that publishes news and articles by workers. Strict compliance with anti-child labor law is ensured. seminars.

tampering. BUSINESS BOTTLENECKS Seasonality is an issue. before they didn’t have the quota holdings to compete. The production unit was enormous. Manicandan’s CEC report. Supposedly all visitors have to have proof of identity. Shahi is currently constructing a production unit in Bangalore that would have a capacity of manufacturing 200. Customs Security requirements regarding issues like preventing trespassing. Website contact numbers are out-of-date. It is not a huge issue. now they are getting competition from small exporters. now they do.46 Shahi recently opened up a warehouse in New Jersey. and there was some controversy a few years back regarding a male manager and a female worker.47 XI. since it takes too much time to get clearance at the ports. where the garment industry is over 90% male. The picture of the minimum wage was taken by the manager. Page 48 . Stated that they need better infrastructure regarding port system. but I did not have to show it.S. who reported her case to the police. only different season. 46 47 From interview with Divisional Manager of Marketing. Suppliers have changed post-quota. or CTPAT model. INDUSTRY COMMENTS Trying to build up capacity to produce outerwear by next year to reduce seasonality issues. However. as he would not permit the researcher to do so. however said they currently retain workers during the off-season because it becomes a problem to rehire workers. However Shahi is trying to diversify their product range so that it becomes even less of an issue.4 million pieces during the peak season and 2.Security System New security measures have been implemented since the quota phase-out.1 million PCs during the off-peak season. Shahi is notable in that they have a majority female workforce in a place like Delhi. The Marketing Managers did not mention any new initiatives taken to deal with the issue. companies have required them to uphold a more stringent counter-terrorism model of security in compliance with U. Also argued for more labor flexibility. according to the Customers Trade Partnership Against Terrorism. though the researcher was not permitted to take pictures during the tour. The security guards inside were asleep. Mentioned that Southeast Asia has the same problem of seasonality.S. Shahi has to decline some orders during peak season (OctoberMay). IX. Shahi does not have a sexual harassment committee. as they produce about 2. and then not working to full capacity during the off-season. PERSONAL EXPERIENCE Obtained contact information from NIFT. according to G.) X. U. (Stated that retained incentive schemes and everything off-season. traceability.000 pieces per month. From interview with Professor Rajesh Bheda of NIFT.

L. 51 Information on company background from Managing Director. two are in Manesar (southwest of Delhi. 20. 110020 (India) Tel: +91-11-26816917. E-mail: jyotiapparels@vsnl. Phase-I New Delhi. Gurgaon49 The researcher was not able to obtain the addresses of all nine factory sites. 500. 50 Conversions are based on today’s exchange rate (Rs. Magu and deceased brother. and remaining information is from observations unless otherwise noted. 45~$1) and are not adjusted for inflation. BRIEF HISTORY Company established in 1976 by Mr. I.com Manish Mall Assistant Production Manager Mobile: 9899096999 Registered Office48 D-42 Okhla Industrial Area. HR strategies and production from Assistant Production Manager. II. K.111 USD) in the first year. he started business in 1977 with an investment of Rs. Unit visited by the researcher. 26817910 Website: Jyoti Apparels does not have a website. H. 26810804 (D) Fax: +91-11-26819684. which roughly doubled each year until 1984. south of Gurgaon). 26818977. Page 49 .com Production Units Magsons Exports.3. The company’s turnover was Rs. due to the quota phase-out. and an interview with an Assistant Production manager. 51 48 49 Unit visited by the researcher. but by networking through his brother.000 ($444 USD50). of which five are in Gurgaon. CONTACT INFORMATION Contact People H. and two are in Okhla Industrial Area (New Delhi). a company profile and Standard Operating Procedures given by the Managing Director. Magu. 000 ($11. The company has increased sales an estimated 30-40% in the past year. He had no experience. shop floor observations by the researcher. 41/42 Phase IV Udyog Vihar.L.K. Managing Director Senior Vice-Chairman of the AEPC (Apparel Export Promotion Council) Mobile: 9810029999 E-mail: hklmagu@jyotiapparels. who had contacts in the garment and textile industry. M/S JYOTI APPARELS An ISO 9002 Company Government Recognized Trading House The information in the following company report was obtained primarily from an interview with the Managing Director.

Littlewood. (Target Stores. Zellers. Debenhams. blouses. Roamans. Gus. Phool Fashion Ltd. Lane Bryant. Canada: Hudson Bay Co. Page 50 . . Clients52 USA: Kellwood (Sagharbor). Siplec (E Leclerc). Cabella’s. Jyoti’s strengths (and the North in general) are in high fashion garments with embroidery. viscose yarn and denim fabrics. Charming Shoppes of America (CSI). gents. V F Jeanswear (Wrangler). Miss Erica UK: Marks & Spencer. Promod Germany: Neckerman. owners are Mr. Reitman Israel: Fenomen Malaysia: Metro Jaya Spain: Mango. T. Specialize in high fashion made of exclusive prints. Brylane. Karstadt Netherlands: Wehkamp. Freeman’s... Zeeman Italy: La Rinascente. Mexx. Kishore Magu EOU Information No information was obtained regarding a registered EOU. Blair Corporation). Brumel. Jyoti manufactures some winter clothing (about 20% of production volume). Woolrich. House of Frasers. Product Mix Areas of specialization include ladies’ (roughy 80% of production volume).” it was pre-quota phase-out January 2005). Onyx Denmark: Kompagniet Switzerland: Manor. Exports/Imports 100% exports. Europe and Canada. Magu and Mr. Manufactures woven (80%) and knitted (20%) garments using mostly yarn dyes. H. Donn Kenny. Primark. 52 According to profile (which is out-of-date. International. as it mentions “Quota Holdings: We have sufficient quotas in all categories of USA. The Farmers Trading Co. skirts. solid dye. Oxford Industries Inc. Otto Australia and New Zealand: Just Jeans. sequins. Jyoti does not manufacture for the domestic market. and ethnic handiwork accents. Zara-Indtex Awards The researcher was unable to obtain any information on vendor awards. and other garments. Evans. India Imports. British Home Stores.III. Adams. Carol Anderson. Prenatal. L. BASIC PROFILE Legal composition of the Company Partnership firm. K. and children’s (roughly 15-20%) readymade tops. K. but the majority is summer clothing. maybe 2004.D. Wal*Mart. Enjoy. with embroidery and beadwork. Tesco France: C. J D Williams.

duty. on average. 54 These figures were estimated by the Managing Director in the space of 5-10 minutes. and cannot be used as an indicator of profit.A.6-2. were estimated by the Managing Director on two different occasions.50 1.6-2. 700. Latin America. excluding the $12 million USD figure from the company profile.50 1.IV.6-2.50 1.6 million 10 $0. Japan. FINANCIALS Turnover 12 million USD (either 2003 or 2004) Current year 18 million USD Other Financials Current year sales Rs. 55 Based on the company’s average unit price of $5 USD. costs.000. etc.5% MNC’s that source from Jyoti.555 USD)53 Breakdown of Sales Revenue54 Est USD 2006 Per % Retail Garment55 Price56 Material Cost 9.5% Subcontracting Cost 1.3 million 60 $3 10-15% Labor 1. retain 75-84% of the sale of a retail item. BRAND INFORMATION Jyoti's Export Market % of Sales U. 10% 50% 40% Others (Canada.6 million 10 $0.000 (15.S. Page 51 .6 million 10 $0. Malaysia) Europe 53 Financials.6 million 10 $0.5% Overhead and profit 1. so they can only be thought of as a rough approximation.50 1. this figure includes the amount the MNC spends on shipping.6-2. which accounts for the inconsistencies.5% Other Manufacturing 1. 57 Since Jyoti’s unit prices are mostly FOB. 56 Average retail markup is four ($20) to six ($30) times the unit price of the garment.57 V.

but later stated that overall they have remained stable. primarily through the Triburg buying agency.000 square feet of land spread over ten different areas (including the registered office. Average Unit Prices (per piece of garment supplied) Unit Price Origin Retail Markup $4-5 USD Across the board 4 to 7 times Type Mostly FOB Delivery Time 60-90 days Unit Prices Since MFA Phase-out During the first meeting with the Managing Director.58 Production System 58 See Standard Operating Procedures for detailed subcontracting information. which is not a production facility).000 square meters. Did not mention any direct relationships. four are 1. It is notable that Jyoti subcontracts to a Shahi processing facility. and Gloria Vanderbilt through buying agencies. and two are 600 square meters. but they do subcontract their fabric sourcing and processing. the company has about 20. VI.Major Clients Brand India Imports Lane Bryant Marks & Spencer Mode Liz Claiborne American Eagle Tesco Adams Littlewood Sainsbury Okaidi Orchestra Origin UK USA Holland USA USA UK UK UK UK France France Length of Relationship 29 years 10 years 2 years 1 year 1 year 15 years 15 years 10 years 4 years 3 years 2 years Total: % of Turnover 10 10 10 10 10 5 5 5 5 }5 75 Buying Agency or Direct The company does business with MNCs such as Liz Claiborne. Subcontracting has not changed since quota phase-out.000 square meters. he stated that unit prices have decreased about 10%. Prices and other sourcing details are negotiated through the buying agencies. American Eagle. Subcontracting Jyoti does not subcontract the production process.000 square meters. Page 52 . INFRASTRUCTURE Company has nine production facilities. one is 8. Overall. Two of the factories are 2.

computer embroidery. feed of the arm. belt attaching. but primarily just take paper designs from buyers and converts it to clothing. At production site visited.Uses an assembly line system. shell stitch (Merrow). and brown machine-embroidered skirts for American Eagle. Page 53 . which varies according to the product.000 and 300. fusing machines. washing machines and set of 84 stem boiler irons. elastic insertion. Quality Control Jyoti Apparels has a quality control assurance team with both an in-house auditing scheme and third-party inspection. piccoting.000-90. dry cleaning. Production Capacity According to profile. between 240. Design/Sampling Small design department. According to company profile. Sometimes Jyoti has people from UK and France do designs for them. usually 80. cross stitch/lock stitch button/ button hole/ snaps.000 pieces per month. The researcher observed production of ladies’ white blouses for Emma James (Liz Claiborne). 59 60 See SOPs for detailed quality control schemes. Managing Director and Assistant Production manager stated they were all skilled. perk-chloro plants. over locks.000 pieces per month. lock stitch single needle and double needle. 8000 woven pieces per day and 1200 knit pieces per day.59 Approximate number of workers (in all facilities) Position ~Number of workers Tailors60 1200 Fabric Cutters 125 Thread-cutters (use embroidery machines) 200 Pressers 75 Fabric and Accessories Storage Workers 40 Helpers 50 Accounts personnel 20 Miscellaneous 100 Total number of workers in all facilities: 1400-1800 Machinery (at all sites) Jyoti has 1000 Juki stitching machines.

cutting. Page 54 . though the researcher was not able to obtain a photograph of the plan. and embroidery departments.Ground Floor Plan Second Floor Plan There is also a basement floor with fabric and accessory storage.

Packing (10-15 workers) Did not observe department during visit. and the remaining workers helpers. This was the only department that had any female workers. It did not seem as modern a unit as other top tier factories. There were two workers on the machines. Production (~180-190 Workers)61 on Second Floor Machinery includes about 200 Juki stitching machines.” so they are barefoot when operating the computer embroidery machine. Washing (10-15 workers) Washing was located on the topmost floor of the building. one cutting assistant. with one cutting master. three thread-cutters. two supervisors in an office in the corner. Machinery includes one bandknife cutting machine and two straight knife machines. Document given to Buyer About Shop Floor Management (was displayed on shop floor. Fabric and Accessories Store. Cutting (20-30 workers) in Basement There are four lines in the cutting area. Sampling (15-25 workers) The fabric store had a sign reading “Triburg.” which is the buying agency that many firms deal with.. observations. etc. There were no fans in this room. directly facing cutting tables and below looking up at the finishing department.(Right) A view of the basement and ground floor. the researcher did not have time to write names) Magsons Export (a Jyoti Apparels Production Site) Finishing: One in-charge Finishing: One supervisor Finishing: Pressing Supervisor Finishing Quality Administrator (QA) Finishing Quality Checker (QC) Finishing: Quality and Production Floor After washing 61 Number of workers per department. Checking/ Finishing/ Pressing (40-50 workers) The finishing area had lines of workers pressing and folding clothes. The workers in this department were all male. The department has one finishing supervisor and one assistant finishing supervisor. Page 55 . is data for production site visited. Embroidery (observed 5-7 workers) Workers have to take off shoes before coming in because of “dust. Some of the fans were broken or not on.

VII. Benefits Production manager indicated that workers receive ESI and PF. finishing supervisor. However.000 pieces per month. The tailors and some finishing employees receive wages on a daily basis. merchant/buyer (for style). Wise Tag check with care.Step 1—Care label.000-90. security tag Four operators Step 2—Initial Pressing One supervisor Step 3—P. workers are offered a wage based on this evaluation. while the rest of the employees receive a monthly salary. Labor Turnover Estimated worker turnover per month at 20%. button placement One checker Step 4—Initial Checking Two checkers Two thread-cutters Productivity Schemes There are no incentive schemes according to the Managing Director. Then he stated that they conduct production planning meetings with the factory manager. WORKING CONDITIONS From 9:15 am 11:00 am 1:00 pm 4:00 pm to 6:00 pm 11:15 am 1:30 pm 4:15 pm Work timings Tea Break Lunch break Tea Break Wages HR Manager stated that employees receive the minimum wage. supervisors conduct time studies evaluating the skill level and productivity of a new hire. which is not subject to negotiation. extra button. production manager. After one day period. Page 56 . First the Assistant Production Manager stated that they do not perform time studies.O. it is all left to selfdiscipline. The production unit visited usually produces 80. and gave a copy of the minimum wage scheme for Haryana. then the factory will give incentives. Wage Setting Procedure For shop floor workers. there is an incentive scheme that depends on monthly shippings. according to the Assistant Production Manager. If workers exceed this by 1 lakh. rather they calculate targets manually by hourly production rate. and cutting supervisor who set the production lines and targets based on manual time-studies.

HUMAN RESOURCE POLICIES There are no common policies across the plants. Worker Training Sometimes Jyoti trains workers during a lean period if there is time. but managers observe productivity and hire skilled workers. but these tend to be more middle management people. The Assistant Production Manager stated that if workers are not productive. while dotted-line boxed positions are factory-specific and subject to variance.VIII. Recruitment Policy Jyoti states that they do not use labor contractors. Usually 20-25 tailors take 10-15 days to train. Magu Partner Founder/Chairman Mr. H. L. because otherwise they become permanent and you have to pay them more. Kishore Magu Partner Other Upper Management? Factory Manager Management Staff/Accounts Personnel Production Manager Manish Mall Assistant Production Manager Line Supervisors Assistant Supervisor (Less skill/experience) Skilled Tailors/Machine Operators Helpers (Unskilled) Boxes with straight-line borders are positions common throughout all production sites. Dismissal Procedure The Managing Director stated that they keep workers for 240 days and then change their workforce. Page 57 . they are given a one month notice so they can find another job and they receive a letter of termination. and the extent of their recruitment is posting signs on their front gates. K. Workers do not need experience per se. The Managing Director states that they recruit people from Apparel Training and Design Centers. though the Director mentioned that workers learn on the job. Management Structure Mr.

Customs Security requirements regarding issues like preventing trespassing. However. For example. Page 58 . lack of good fabric processing machinery. and high transaction charges. There is a path behind the building to get to the main office over ripped metal sheets over grates.” trucks are only allowed to transport good between 11 and 4. companies have required them to uphold a more stringent counter-terrorism model of security in compliance with U.S. but no visitor’s pass. and they have monthly meetings. etc). labor laws (especially the lack of hire and fire exit policy).. A lot of money is invested into customs. production. higher material costs (indigenous. according to the Customers Trade Partnership Against Terrorism. or CTPAT model. but the Managing Director stated that when the old employees formed a union.) across plants except for buyers code of conduct. duties. He stated that old employees with a union do not work as hard. anti-harassment. but talked about them vaguely and though he stated that he could give me committee minutes. He said they have the joint employee-worker committees required by law since there is no union. etc. which makes it difficult to meet deadlines. The first time security did not take my name in the confusion of finding a manager. no imports because would have to pay landed costs). 62 Based on interview with MD and Asst Production Manager. Does not have its own employee code of conduct.S. Worker Committees The Managing Director stated that they do not have any worker committees. etc. Believes that there should be special customs lines at airports so that everything is not searched. U. The production site visited did not have a union.Union The corporate office used to be a production site. 63 Based on interview with Managing Director. ports. No common policies (with HR. Grievance Policy Procedure/Corporate Responsibility/ Codes of Conduct No information was obtained regarding a formalized grievance policy procedure. he did not. they should run cargo through machines instead. they cannot transfer goods during “peak hours. but did not give a visitor’s pass. though neither of them knew where the medical facilities were located. tampering. IX. Second time took my name. the Assistant Production Manager stated that they do have committees. high rate of interest. such as environmental. BUSINESS BOTTLENECKS63 Main problems facing the industry are poor infrastructure (need better highways.62 Security System New security measures have been implemented since the quota phase-out. etc. traceability. Medical Care There are doctors nearby the factories and first-aid kits in the production sites. he moved production to another site (now there is just the accounts staff and some sampling/design).

because of the late summer. the overseas vendors couldn’t sell their inventory. 64 Based on interview with the Managing Director. Jyoti was an extremely open company in many respects. as they still have the edge on labor productivity and good infrastructure. production manager. as were much of the staff at the production site. and did nothing the rest of the time. labor laws would be relaxed. Post-quota phase-out resulted in a boom for Indian business. He was very open in disclosing information. or even leave their air-conditioned offices. did not see upper management (factory manager. XI.” in which infrastructure would be built up by the government. Phase out of quota system has brought in new buyers. and had everyone borrowing money from the bank and investing in huge factories. but unit prices got too low. INDUSTRY COMMENTS64 Jyoti used to deal with Wal-Mart and Target. The Assistant Production Manager was almost never at the factory when the researcher came to the production site. Companies are very upset with the government’s “bureaucratic hurdles. who also permitted the researcher to take photos. it was difficult to deal in huge quantities because of the possibility of mistakes in such a large order. so could not take orders from them anymore. PERSONAL EXPERIENCE When observed work at the production site. The Managing Director is the Senior Vice-Chairman of the AEPC. etc.) or some supervisors do anything. like American Eagle. Page 59 . Also. They played solitaire. etc.” Jyoti supports “special garment zones. before couldn’t have more because of quotas.X. This year. making access to plants easier. China is their main competitor. and one of them glanced at a time-study once. They’ve had to become very quality-conscious and price-conscious. which is the capacity in which the researcher initially came to interview him.

Phase I. Gurgaon 5. 67 Unit visited by the researcher. Udyog Vihar. BRIEF HISTORY68 Vijay Uppal. black iron. Noida. Gurgaon. Gurgaon 8. CONTACT INFORMATION65 Registered Office: 2/2. B-108. in 1977. Udyog Vihar. Phase III. 151. 133. 236. and Bangalore. Udyog Vihar. Phase I. Phase I.4. Gurgaon. Manicandan’s CEC report. Gurgaon The group of companies has several offices throughout India as well as a textile mill in Tiruthani near Chennai and a tannery for leather finishing in Hyderabad. Phase III. Gurgaon 4. Phase IV. Gurgaon 2. 69 From an interview with the General Manager of Operations. Phase-I. 25172438 Fax: +91-11-25451549. the current Chairman. incorporated R and Co. 25454895 Contact person: Padam Vaish. Udyog Vihar.69 The R Group established its own textile mill in the year 65 Disambiguation: There is another company by the same name registered in UP that produces brass hardware. G INTERNATIONAL OF R GROUP OF COMPANIES Indian Government Recognized Export House The information in the following company report was primarily obtained from the company website. an interview with a General Manager of Operations. with one woven garments manufacturing unit in Delhi. Gurgaon 3. 192. I. New Delhi 2. G International was established in 1983 in Delhi and 1996 in Gurgaon. 25172437. Udyog Vihar. and ironmongery. New Delhi . aluminum hardware. Gurgaon67 6. Phase III. Haryana (India) Tel: 95124-2439701 Mobile: 9313634777 Fax: 0124-2439710-11 Production Units66 The R group of companies has over twenty-two integrated manufacturing units in Delhi. Gurgaon 7. including: 1. Page 60 . 68 According to the company website. 239. Udyog Vihar. 479.110015 (India) Tel: +91-11-25431408. 225. Ware Housing Scheme Kriti Nagar. 208. Phase-I Gurgaon The company profiled has over ten manufacturing units. Mayapuri Industrial Area. II. 506. Phase I. and G. Udyog Vihar. Udyog Vihar. including: 1. 66 According to company website. General Manager of Operations 236 Udyog Vihar Phase-I. Udyog Vihar.

Timberland.. Land’s End. Tommy Hilfiger.Y. the group includes eight companies. waxy distressed/ oily nappaloans. pants. to brands such as GAP. It specializes in (primarily) outerwear for men. vests. May Stores. anilines. Betty Barclay. women and children including shirts. women and children such as jackets. D. The company has already started manufacturing leather accessories and is further expanding with a bigger factory planned in Gurgaon. Monsoon. Cortefiel. J. and leather high fashion garments for men. Including the original R and Co.. pants and shorts. skirts etc. Lane Bryant.Crew. Women’s Secret. Dillard’s Sears. The company has set up its own offices in Ludhiana and Tirupur in order to better source fabric. Ann Taylor.N. Liz Claiborne. cargo pants and shorts. Product Mix Areas of specialization include ready-made woven. Federated Stores. The R Group has recently established a fully integrated production line in Noida. while Vijay Uppal and Gaurav Uppal are Joint Managing Directors. Debhnams. Sigrid Olsen. III. It has initiated a backward integration project by starting its own tannery in Hyderabad. The group launched a leather manufacturing unit in 1989 specializing in high fashion leatherwear under the management of Sunil Kapur. The tannery has modern finishing technology for leather finishes of Sheep. skirts. which will specialize in ready-made specialty shirts. BASIC PROFILE70 Legal composition of the Company Virender Uppal is the Managing Director.K. Target. knit. BCBG. and Marks & Spencer..1992. Mervyn’s. Next. semi anilines. semi-nubuck. Wal-Mart. Inc. Calvin Klein. Clients The R Group sources to over fifteen countries. Awards 70 According to the company website. Charming Shoppe. Spigel. Etams Miss Sixty. The R group does not manufacture for the domestic market. antiques. Exports/Imports 100% exports. Page 61 . R Global was incorporated in 2002 at Bangalore. Polo Ralph Lauren. The R Group began producing knitwear when Gaurav Uppal joined the company management. ladies tops. Goat and Cow leather as well as nubuck. trousers. Mexx.

U.A. U. U. Export Performance Chart71 Other Financials No other financial information was obtained. From an interview with the General Manager of Operations. U. BRAND INFORMATION72 Export Market of the R Gro 10% U. Length of Relationship 15-20 years 15-20 years 20 years 15-20 years 15-20 years 15-20 years % of Turnover 40 20-25 20 12 7 - Graph taken from the company website.S.A.S.S. V.A.A.S. 90% Major Clients Brand GAP Macy’s Wal-Mart Dillards Liz Claiborne Federated Stores 71 72 UK and Japan Origin U.S. FINANCIALS Turnover The R group has an expected annual turnover of US $ 85 million for the year 2005. Page 62 .S.IV.A.A.A. U.S.

though there are fewer orders in the fall and winter. 73 74 Including Wal-Mart. They set up a shelter (“shack”) for local tailors to do the hand embroidery.5 APQ” quality check standard across the board. has an annual production capacity of 2 million knitted garments. Smaller companies are more likely to be direct orders. Unit Prices (paid to factory per piece of garment supplied) Avg Retail Markup Type Delivery Time 73 $6-8 USD 4 to 6 times FOB 60 or 120 days Unit Prices Since MFA Phase-out Unit prices have gone down 10-12% post-quota phase-out across the board. VI. Gurgaon. Noida. The R Group’s leather manufacturing unit has an annual production capacity of 500. Quality Control The General Manager of Operations stated they use a “2. G International does not use a recruiting agency or a labor contractor. the company’s knitwear divison. Design/Sampling76 The design department for G International and the entire R Group is located at Kriti Nagar (presumably at the site of its registered office). 75 From an interview with the General Manager of Operations. Page 63 . Subcontracting G International subcontracts their hand embroidery. R Global. or sometimes they embroider in their homes. 76 From an interview with the General Manager of Operations.75 Production System The R Group uses an assembly line system. However.Buying Agency or Direct Contracts are mostly negotiated through buying agencies. INFRASTRUCTURE74 The R Group has over twenty-two integrated manufacturing units in Delhi. Taken from the company website. and Bangalore. For a more detailed quality control process. though not to an established company or to direct employees. and the buyer selects and negotiates the contract. since they often don’t have established offices. Wal-Mart usually orders the largest volume. unless otherwise indicated. Production Capacity The R Group’s woven division has an in-house annual production capacity of 10 million pieces.000 pieces. see company website. there has been a 15-20% increase in orders. G International takes indicative orders from the buyer. though they occasionally take direct orders. shows a sample range.

the General Manager refused to give any more specific numbers of workers. to the production stage (work aids. 79 From the company website. G International has a total of 7. such as medical checkups.79 VII. WORKING CONDITIONS80 Work timings Lunch break Tea Break From 9:00 am 1:00 pm 4:00 pm to 5:30 pm 1:30 pm 4:15 pm No other working condition information was obtained from the factory. Plotters & Automated Cutting Machines) and fabric testing (fully equipped laboratory) and fusing. They have incentive schemes for things like 100% attendance. time and motion studies. to the pre-production stage (layout and machine engineering.000. Page 64 . an estimate was approximately Rs. 80 From an interview with the General Manager of Operations.78 The R Group has a Research and Development department for the technical aspects of garment manufacturing. 78 From an interview with the General Manager of Operations. Productivity Schemes The company has production planning meetings in which targets are set and the workers do not participate.000 workers. operation research). They incorporate corporate social responsibility schemes into their productivity ideas. Position ~Number of workers *Machine operators 250 -A-grade skilled operator 50 -B-grade 160-170 -C-grade 30-40 There is one supervisor per every 30-40 operators. Departments No information on specific departments was obtained. operator training and skill analysis). and worker welfare programs. cutting (Digitizers.77 Machinery R Group’s production facilities use machinery at every point in the production process including designing (CAD). from the sampling stage (product and pattern engineering. 77 After disclosing this information regarding the number of skilled workers. material flow).Approximate number of workers in all facilities The R Group has a staff of over 10. scholarships for workers’ children. 700 per month extra. Preliminary worker interviews revealed that this company was considered one of the worst factories to work for in Gurgaon. 5% female). with 1200 workers at this site (approximately 95% male.

After a three-day period. Benefits According to the CEC report. Category (from pay slip) Tailor Sewing Operator Helper (8 months experience) Unskilled helper Helper (production) Wage (Rs. Manicandan’s CEC report. HR Manager stated that wages increase after a year. 151 UV. Units visited in his report are Gurgaon Phase-1 192 UV. which is not subject to negotiation. VIII. Virender Uppal Managing Director Founder/Chairman Mr.Wages81 The wage amount excludes overtime payment. supervisors conduct time studies evaluating the skill level and productivity of a new hire. 81 From G./month) 2600 2750 2344 1893 2341 Wage Setting For shop floor workers. 15 per hour. while dotted-line boxed positions are factory-specific and subject to variance. none of which were visited by this researcher. Overtime payment is Rs. Vijay Uppal Joint Managing Director Mr. workers receive 12% PF and 2% ESI. Page 65 . Gaurav Uppal Joint Managing Director Mr. workers are then offered a monthly wage based on this evaluation. which is reportedly not always paid. and 225 UV. which is made on a different date than the regular salary. HUMAN RESOURCE POLICIES Management Structure Mr. though they do not always receive their PF once they leave the company. Padam Vaish General Manager of Operations Factory Managers at each Incorporated Company in the R Group HR Manager Management Staff/Accounts Personnel Production Manager Skilled Production Line Supervisor Assistant Supervisor (Less skill/experience) Skilled Tailors/Machine Operators Helpers (Unskilled) Straight-lined boxes are positions common throughout all production sites.

no. [the R Group] is seen as a highlighted-tech. we do more incentive programs and get better performance out of our existing workforce. or a union. He stated that it should be looser. BUSINESS BOTTLENECKS The General Manager stated that buyer requirements like double pay during overtime are holding the industry back. interviews applicants. However. not anymore. an interview with a G International worker in a Gurgaon plant revealed that he had never seen or heard of the employee code of conduct manual. So how do you overcome these issues? General Manager of Operations: Oh. Researcher: But you said you didn’t use labor contractors. The General Manager stated that there are common policies across the plants. grievance policy.” The company has a manual code of conduct that the General Manager stated is given to each employee. like the labor norms in China. worker committees. Workers receive a letter of contract. IX. No other information about the R & D department at this specific facility was given. eco-responsive corporate citizen that is Shaping a Better Tomorrow for everyone. then tests worker productivity for an hour and a half. Corporate Responsibility/ Codes of Conduct The R Group touts its corporate responsibility on its website “we have been in the forefront in complying with our customers’ requirements vis-à-vis Government laws and regulations on environmental safety. Recruitment Policy The facility posts signs on gates. These problems are taken care of with labor contractors. Security System No information was obtained regarding a security system. Training usually takes one or two days and is done through the research and development department. that they engage in the same kinds of recruitment. According to G. Manicandan’s CEC report. Company G and the R Group does contract temporary laborers and subcontract to a labor contractor. customer friendly. well. Researcher: Is labor flexibility or the lack of hire-and-fire policies an issue? General Manager of Operations: No. Other Human Resource Policies No information was obtained regarding a formalized dismissal procedure. More than local labor laws. Medical Care No information was obtained regarding on-site medical care.Worker Training The facility sometimes trains workers if the operation is difficult. buyer codes of conduct are hurting business because they are more strict. Today. Page 66 .

and avoided any other types of follow-up including the suggestion of a phone interview. General questions about labor laws or productivity issues usually prompt details and complaints. though several follow-up interviews were scheduled. as it would tell them new government policies and how to best utilize the system. Furthermore. It would be better to simply show up or not leave an option of calling before coming. brief way. They are also setting up a leather accessory factory at Gurgaon. but he answered questions in a more direct. especially in regards to quotas.X. The researcher was directed to the General Manager at a G International plant for an interview. The work culture in the south is “different—more productive and efficient. who was not at the factory when the researcher visited. Virender Uppal (the MD of the R Group) is a former Chairman of the AEPC. the Northern area of India is more embroidery and hand-work intensive and is multiproduct. When asked about the number of skilled workers. In general. Page 67 . PERSONAL EXPERIENCE The R Group was extremely difficult to both interview with and extract information. he asked “why do you want to know that” and refused to give much more information past that.” The South is also usually single product. INDUSTRY COMMENTS The R Group is in the process of setting up a backward integration project for their knits division. Because they are trying to increase productivity. he initially would not let it leave the building. Although the researcher obtained a employee code of conduct handbook. He refused to schedule an interview solely with the HR Manager. G International is working on converting to a single product system within the next two or three months (August 2006). every one of them was canceled by the General Manager. The General Manager stated that the AEPC was much more useful before the MFA phase-out. which makes productivity more difficult to increase. and he was much more reserved and suspicious. He implied it has limited use after the quota phase-out. XI.

In 1993 it became a public limited company. G. Phase V. The company structure of Pearl Global is extremely unique. Company Secretary Tel: 95-124-4308164 E-mail: jayants@pearlglobal. Manicandan’s CEC report. Gurgaon 2. 870. 222. Chairman deepaks@pearlglobal. the company website. Udyog Vihar. Udyog Vihar. Chief Finance Officer Tel: 91-124-4308201 rishiv@pearlglobal. Community Centre Naraina Industrial Area Phase-II New Delhi – 110 028 Tel : 011-51417680-82 Corporate Office82: 446 Udyog Vihar. Phase V. Page 68 . I.5. Phase I. Gurgaon 4. and an interview with the Company Secretary. Haryana Tel : 91-124-4004086/87/88/89/90 Fax: 95-124-4004067/85 Website: www. CONTACT INFORMATION Contact People: Deepak Seth. BRIEF HISTORY83 Pearl Global was incorporated in 1979.com Jayant Sood.com Registered Office: A-3. Gurgaon 3. From an interview with the Chief Finance Officer. PEARL GLOBAL LTD.com Production Units: 1. Udyog Vihar. Udyog Vihar. 446. Gurgaon II.” The House of Pearl is focused 82 83 Unit visited by the researcher. business began in the 1980s. Phase-V Gurgaon – 122 016. as it includes all parts of the garment industry under the “House of Pearl.pearlglobal.com Rishi Vig. and its first manufacturing facility was established in 1989. Phase I. 138. online business publications and press releases. The information in the following company report was obtained primarily from an interview with the Chief Finance Officer.

as a Special Invitee. Kohls. GAP (including Banana Republic and Old Navy). Castromen. From company website. basic stuff. is establishing a U.) for the year 1990 .. ethnicwear.C.” Its operations in Bangladesh (NorPearl and NorPlanet) focus on more simple sourcing and manufacturing while its offices in India focus on the sourcing and manufacturing of ethnicwear (more production-intensive and complicated clothing). Inc. He has successfully promoted and established the fashion apparel brand "Lerros" in Europe. NorPearl. Dillards. and outerwear. Siplec. brand “Kool Hearts.E. Marks and Spencer. It offers full services to large retailers with the chain broken into business units that cater to different product lines. shorts.S. BASIC PROFILE Legal composition of the Company Public limited company. vests. III. H & M85. Page 69 .) and a global network of business associates and customers. Nex86. Wal-Mart. etc. trousers.on the apparel sector with manufacturing bases in India (primarily Pearl Global Ltd. NorPlanet Pearl Global has manufactured women’s. bottoms. warehouse and distribution.E. The House of Pearl includes designing and manufacturing units. 86 From an interview with Chief Finance Officer. stain sealed garments using goretex and acquatex. children’s and men’s shirts. marketing units in the U.S. The company recently entered into a business and education partnership with Babson College in the U. nightwear dresses. Lerros. which together yield a combined turnover exceeding U. and the UK. Esprit. including blouses. suits.84 Exports/Imports 100% exports. Liz Claiborne. JC Pennys.1993. dresses. The Chairman of Pearl Global established a fashion and design academy. Product Mix Areas of specialization include: India: woven cotton and value-added cotton.P. Pearl Academy of Fashion Domestic. It also has businesses in Hong Kong (NorWest) and the UK (Poetic Gem). t-shirts. Besides having been elected to the Executive committee of the Apparel Export Promotion Council (A.S. children’s. Bangladesh: low cost. Clients Abercrombie & Fitch. 84 85 See company website for list of shareholders.C. He has been actively involved with the development of readymade garment industry in India. he has been inducted to the Executive Committee of A.P. skirts.S. George (Wal-Mart). Pearl Global does not manufacture for the domestic market. $200 million. Karstadt/Neckermann. Charming Shoppes.

110 002 2. 5th Floor Plot No.asp>.” The Economic Times: Garments/Textiles.1 crore compared with Rs 7.41 crore in 2004-05]. In 2005-06 the company invested Rs 29 crore to augment its production capacities in Gurgaon and setting up a new unit in Chennai. Ahmedabad .indiatimes. Stock Exchanges where the securities are listed: 1.” “The company’s operating profit was Rs 17.89 Other Financials “Pearl Global posted 88 per cent year-on-year increase in net profit in 2005-06 to Rs . Ahmedabad Stock Exchange Limited Kamdhenu Complex Opp.” <http://www.88 Net profits are 234% up.com/1060712/asp/business/story_6465123. Bombay Stock Exchange Limited 1st Floor. Page 70 .43 crore[ from Rs.9 crore in the previous fiscal].”90 See website for detailed financials. Pearl announced a dividend of 30 per cent for the year [subject to shareholders’ approval]. P.9 per cent to Rs 159. J. Towers.6.C/1.5 crore [from 120.400 001.87 $400 million in its worldwide operations post quota phase-out.com/articleshow/1690384. 89 From an interview with the Company Secretary. 90 “Pearl Global net up 88%. G-Block Bandra – Kurla Complex Bandra (E) Mumbai – 400 051 4. New Trading Ring. Babson College press release. The Delhi Stock Exchange Association Limited (Regional Stock Exchange) DSE House 3/1 Asaf Ali Road New Delhi .5 crore in the previous year. 3. Sahajanand College Panjarapole.cms> and “Corporate Briefs: Pearl Global. 29 June 2006. The revenue of the company during the year was up 31. Dalal Street Mumbai .IV.380015 87 88 From Chairman’s Message on company website. FINANCIALS Turnover $200 million worldwide before quota phase-out. 3. National Stock Exchange of India Limited Exchange Plaza. <http://economictimes. Rotunda Building.telegraphindia.

Apologies for the delay in replying.A.they have grown to be our second largest supplier. From an initial order in 2001. we have been moving our office location over the last two weeks We have been dealing with the Pearl Group for the last 5 years. before the cost justified it. BRAND INFORMATION91 Pearl Global’s Export Market 40% 60% U. George (Wal*Mart) Kohls Dillards Marks and Spencer Esprit Liz Claiborne Nex Length of Relationship 10 years 7 years 7 years 5 years 5 years 5 years 2 years 2 years 2 years 2 years Of the top ten retailers in Asia (would not be more specific). To put that growth into context George Clothing at Asda has seen its market share more than double in the last 5 years to the point where it is the second largest seller of apparel in the UK on volume. and jersey product across all ages and genders from a variety of countries in the Far-East and Indian sub-continent. They now supply us with a variety of casual. “Dear sir.S. woven. Journalist. The following is a forwarded e-mail from George Clothing (Wal-Mart) regarding Pearl Global: Subject: Something you should know. Page 71 . To grow the business at this rate Pearl has had to show a "can do" attitude. EU and UK Major Clients Brand JC Pennys GAP (incl ON and BR) Charming Shoppes. 91 From an interview with the Chief Finance Officer. They have supported our growth by putting in the infra-structure to service our needs. Inc.V. Our Customer's perception This reply has come from ASDA Walmart to a query of a Sr. the Chief Finance Officer stated that they are engaged in strategic partnerships with six of them. They are working on building strategic partnerships with between all of their vendors and suppliers and consolidating them.knitted.

Best regards. quality etc? * As compared to other supplier where do they stand? Please feel free to add whatever else you would like to express/say on the business house. Executive Editor. * For how long have you been interacting with the House of Pearl and what has been the business relationship? * As a supplier how reliable are they in terms of delivery schedule. it is critical for us as a business to deal in the right way. For Pearl to grow their business with us. 1 business publication.quayle@wal-mart. Pearl are also helping us to achieve our ambitions to make the George brand a truly Global brand by opening an office in Canada to support the growth of the George brand in Wal-Mart Canada. price. Pearl have taken it upon themselves to go beyond the bare minimum requirements and when building new plant have set them up to be compliant from day one. hence would like to have some of your observation/views/comments on the business house and your relationship. Allan Quayle General Manager-Strategic Supplier Development George Clothing Phone 00 44 (0)1455 264409 Mobile 07779 700695 e-mail allan. ASDA Wal -Mart. Deepak Seth has also gone beyond the factory gates to work with the community and put something back. and delivery have had to be a given. UK I am a journalist from India writing for India's No. Thanks and regards. and where our distribution network has creaked under the pressure. flexibility to change our minds as to what we want right up to the last minute.We want style. Quality. Finally. quality. Business India” Page 72 . Below are a few points which I hope you would take time off and reply to at the earliest. Mr. retailer. Lancelot Joseph. I feel that we can have an honest conversation with Mr. Senior Sourcing Manager -Kidswear. offering us product direct from factory or landed delivered if the situation demanded. no-one whether it be store customer. or supplier. so Pearl have stepped in to provide solutions and support. and any issues that have arisen have been resolved immediately and taken as learnings to provide a better service going forward.Growth on this scale inevitably creates major head-aches for the supply-chain. We pride ourselves at George that our ethical standards are rigorous.com --Original Message-Dear Ms. As price deflation has become a way of life in the UK clothing market. I honestly believe that to supply fashion retailers at the volume end is one of the most difficult businesses to be in . Heather Moreton. Currently I am doing a corporate feature on the House of Pearl who is your vendor. Seth and his son and that there is a trust between us and we look forward to growing together as we set out to be the best clothing brand in the world. has a right to exploit the people who make the product we sell.

who then chooses or modifies the styles. 90 incl. Sometimes designers from the UK and the U. two of which are in Bangladesh. which are shown to buyers in advance. India: Unit Prices (paid to factory per piece of garment supplied) Range Average Retail Delivery Time Type India U. Page 73 . The House of Pearl has over 150 factories across Asia. but it mostly in-house. A few years ago the delivery/production cycle had to begin 18 months in advance. INFRASTRUCTURE92 Pearl Global has five or six production facilities in India.S. one in Indonesia. Quality Control Raw material including fibres. Production Capacity Pearl Global has 20 million pieces in-house capacity and 120 million pieces capacity all across Asia. shipment 50% landed 30% FOB Bangladesh: Unit Prices (paid to factory per piece of garment supplied) Range Avg Product Mix $4-12 Varies by style Mostly casual No information was obtained regarding a change in unit prices post-quota phase-out. They have six design factories. Pearl Global then manufactures the style. now it is 6 months.Buying Agency or Direct They used to contract through buying agencies. and one in China. The embroidery tailors either come into the facilities to perform the work or they send it. Every stage of the production line has its 92 From an interview with the Chief Finance Officer. Pearl Global uses labor contractors. They are working on doubling their capacity in the next 2-3 years. one in Chennai and the others in Gurgaon. The House of Pearl’s research and design department prepares a collection of high fashion styles for each season. yarns.S. but now they have developed direct relationships with their long-term business partners. 5% freight. Markup (days) High of $10 $6-7 USD 3 to 4 times 60 to manufacture. Production System Pearl Global uses an assembly line system. dyes and chemical are thoroughly checked before they are fed into the manufacturing process. Subcontracting Sometimes Pearl Global subcontracts hand embroidery. VI. Design/Sampling and Product Development Designs are mostly developed in-house. are consulted to developed in-house patterns. 50% FOB.

CRA. but did not give specific numbers. twist per inch. Polyster viscose and cotton yarn is tested for count. drape and fastness to light washing and rubbing and slippage. Gurgaon 2500-3000 workers 446. Udyog Vihar. Production Unit Number of Workers93 138. pilling. Gurgaon 2000-3000 workers Machinery Pearl Global has an estimated 2000 machines for every part of the production process. Gurgaon 600 workers 870. Approximate number of workers in all facilities Pearl Global has approximately 6000 workers in India. novelty yarns. Phase I. Udyog Vihar. Page 74 . Sretch yarn. tensile strength. VII. After workers receive their monthly salary they see a “rise in absenteeism. Productivity Schemes Pearl Global gives out “best worker awards” and “gold stars” for productivity. Manicandan’s CEC report (and confirmed by the Chief Finance Officer). etc. as neither an HR manager nor a production manager was available for interview.” as workers do not have a long-term commitment to the factory. uster percentage and impurity. They are thinking of switching to a piece-rate system instead of a monthly salary because “with the current labor laws” you cannot take disciplinary action for low levels of productivity. WORKING CONDITIONS Wages and Benefits The Chief Finance Officer stated that sometimes Pearl Global pays workers above the minimum wage. Every set of fibre (polyester. Phase I. count strength product (CSP). ply yarn. fibre bundle strength. 93 Numbers for the units at 446 and 870 were estimated by the Chief Finance Officer while the other numbers were obtained from G. fibre composition percentage (blend %). Gurgaon 500-600 workers 222. viscose tops and special fibre). If a worker stays for six months they get incentives. and if they have a low level or no absenteeism they also get an incentive. Phase V. single ply yarn is also checked on the uster machine to ensure consistency in yarn quality confirming to norms of the uster statistics. moisture regain percentage and finish percentage. Departments The researcher was not able to obtain information regarding the specific nature of the assembly line or tour the factory. Phase V. The finished yarn is tested for residual shrinkage. Udyog Vihar. Udyog Vihar.own set of detailed monitoring system. which is sourced from outside is tested for fibre fitness micron ( fibre diameter).

and the head of the union is not an employee at the facility.Position Finishing supervisor (7 months experience) Tailor (8 years experience) Tailor (5 years experience) Wages94 Rs. They contract temporary workers through R. HUMAN RESOURCE POLICIES97 A new HR manager is to be hired as of August 15. they used a mix of outside agencies and consultants. Union and Worker Committees98 There is no job security. There is a union in the facility at 138 UV. 95 Page 75 . All but temporary workers are covered by social security schemes. & Company.” and it is not convenient as Pearl Global would have to provide transportation. although being a “permanent” employee will entitle a worker to an identity card. 3500 per month Rs. and Indonesia is lower. For their HR strategies. VIII. Bangladesh. There is no sexual harassment 94 According to G. if there are no orders or “no work” employees are told not to come. They want to hire more women like Southern facilities do because women workers are “more efficient. Labor Turnover96 The labor turnover in Gurgaon is about 20%. Manicandan’s CEC report. 97 From an interview with the Chief Finance Officer.” However they are working on providing the necessary infrastructure (such as transportation) so they would be able to hire more women workers. Worker Training There is a training line for new workers. 3000 per month Every year workers receive Rs. Manicandan’s CEC report. 96 From an interview with the Chief Finance Officer. K. & Co. Furthermore if “it was all women it would be fine. Overtime95 The facility at 222 UV has two shifts and thus there is little overtime. but if it is mixed employees then it becomes a problem with issues of sexual harassment. who must first pass a hand-eye coordination test and then spend twenty days on the training line. Out of 500-600 workers only about 90 are in the union. Recruitment Policy Pearl Global uses labor contractors and specifically stated they use R. The labor turnover in Chennai. 4000 per month Rs. According to G. They did not have a HR manager before this.” but there are not enough “available. Dismissal Procedure. who are not entitled for ESI and PF. The union is not effective in addressing the problems of the workers. 2006. 98 According to G. ESI and PF. and Sukumar Pride. 100 more and a 20% bonus for divali.K. Manicandan’s CEC report. though sometimes workers work double shifts and are paid double.

This translates to bringing a high level of satisfaction to five constituencies Customers. as there is different management at each facility. Source the best from the World to deliver the best to the world by following ETHICAL MANUFACTURING AND TRADE PRACTICES. which holds it back. The strength of South India is its efficiency. and teams are set up to work on weak areas in working conditions. The unit at 222 UV does not have a union. Corporate Responsibility/ Codes of Conduct According to the Chief Finance Officer. etc) helps immensely.committee. Pearl Global has a very effective HRD system they have build an empire highly trained and skilled manpower ready to face the dynamic changes. The AEPC helped a lot before the quota phase-out in terms interpreting and figuring out best way to capitalize on existing structures and business law. 2006. a fashion design and manufacturing technology institute. there are sexual harassment committees.e. The motto of every Corporate Body is to ensure Predictability. From an interview with the Chief Finance Officer. Employees. The House of Pearl has enough infrastructure to double turnover. “ethnicwear” or design. According to the Chief Finance Officer. i. Vendors and the Society-at-Large. The Company has built-up very effective TEAM WORK…The primary purpose of Corporate Leadership is to create wealth legally and ethically. Seasonality is an issue. The company has set up Pearl Academy of Fashion. Working on having uniform HR and productivity strategies. implying that the AEPC is not as useful post-quota. orders are fewer in July and August. Labor cost is still competitive (in terms of the world market). Investors. They want to integrate all offices with an ERP 99 100 From an interview with the Chief Finance Officer. BUSINESS BOTTLENECKS99 The industry is regulated by the supply of cotton.” IX. X. The Chairman Pearl Global espouses corporate responsibility ideals on its website (Chairman’s Message. Page 76 . The company also operates a school by the name of 'Little Pearls' in Delhi. which is missing in the North but the value-added garments (embroidered. Pearl Global just hired a lawyer to help analyze and plan financial structure. they have set up a medical treatment facility in the spirit of social responsibility. as mentioned previously there is a new HR manager slated to begin on August 15. Sustainability and Profitability of revenues year after year. INDUSTRY COMMENTS100 Commented on the strengths of the North. which have monthly meetings. so they are working on capitalizing upon the existing capacities. Deepak Seth): “A future that shall be built with the same strategy that has shaped our past.

Virender Uppal. Managing Director. Lalit Gulati. They just initiated a subjectivity productivity software analysis system which would analyze the difficulty of manufacturing particular items and adjust productivity goals accordingly (so workers are not “punished” for lower productivity levels if the style is more difficult and it is not their fault). and is located in the Okhla Industrial Area (Phase II) of New Delhi. Bolton University. 101 Page 77 . It has links with acknowledged international leaders in fashion education. Merchandising. <http://economictimes. Hong Kong Polytechnic University. London College of Fashion. R & Company. 7 Feb 2006. It provides training programs in the areas of Fashion Design. one of the top two in this field in the world. Retailing.htm Advisory board includes: Mr. at Naraina. The company is setting up new facilities in Dhaka (Bangladesh) and a design center at Chennai.16 equity shares of the company for every share in City Estates was recommended by the board at the meeting.pearlacademy.” The Economic Times: Garments/Textiles.com/articleshow/1404688. The House of Pearl is planning to get into retailing and is working on an industrial engineering department and setting up software SAM. whereas no equity share of the company would be issued in lieu of shares of Pearl Styles as it’s a subsidiary of Pearl Global…The amalgamation scheme has got approval from the boards of City Estates and Pearl Styles as well. As a result of the close interaction between the industry and the institute.com/index. Partner. It has a validation agreement with the UK's Nottingham Trent University (NTU). who constantly review the institute's performance to ensure that the programmes are practical and industry-oriented..”101 Pearl Academy of Design Education-Pearl Academy of Fashion http://www. Pearl Global.indiatimes. Production and Computer Aided Design…The Academy has opened its second campus in New Delhi. Deepak Seth. According to The Economic Times: “Leading apparel group Pearl Global Ltd has decided to merge Pearl Styles Ltd and City Estates Pvt Ltd with itself…A swap ratio of 30. industrialists and academicians. The Advisory Board of the Academy consists of leading exporters.system. Modelama Exports The Pearl Academy of Fashion was set up in 1993 by Pearl Global Ltd. and London Centre for Fashion Studies. and Germany's LDT Nagold.cms>. Mr. Mr. Chairman. like in “Pearl Global to merge two companies. in India and abroad. such as the UK's Chelsea College of Art & Design. the Netherlands' Hogeschool van Amsterdam. its alumni hold responsible positions in more than 300 leading organisations.

Research in India Babson College. Page 78 .. Orient Craft.. RMX Joss.—ranked #1 worldwide in Entrepreneurship Education---will advise Pearl on the strategies. Shoppers' Stop and Ebony. workshops. Mass. and Professor Ash Rao will present the final reports to Pearl. This trust is in the initial stages of developing a new. India. Robert Eng. links to websites. Bhupatkar. and procedures necessary to build an Entrepreneurial foundation and curriculum. Pearl will shape this information into a comprehensive Entrepreneurship curriculum to meet the particular conditions. The Asia Institute at Babson. and will visit regularly to monitor teaching. Current plans are for first classes to be admitted in the fall of 2008.. Babson’s consulting reports will include: * The general curriculum for undergraduate and graduate programs. Babson’s Provost. 102 From the website of Pearl Academy of Fashion. India last week for the official signing ceremony with Deepak Seth. Executive Director. USA and Pearl Global Ltd. Richa & Co. on New Business School: Two Form Strategic Collaboration to Promote Entrepreneurship Education. Sonal Garments. Mafatlal. and assessment standards. The Babson college press release: Babson College. * Student report on the student admissions process and co-curricular activities. Advises Pearl Global.” 102 Partnership with Babson College Pearl Global Ltd. Michael Fetters. learning. has set up a business partnership with Babson College in Boston (U. and stipulations of the local region in India. Chairman of Pearl Global and Dr. Bombay Dyeing. Babson faculty will provide workshops for Pearl faculty and staffing. Vivek Jain. internship facilitation. distance participation in projects. joint information sharing. private business management institution at two campuses near New Delhi. advisor to Pearl Global’s education trust.. USA. Pearl Global Ltd. Babson College in Wellesley. Pearl Global Ltd. traveled to Delhi. among others. requirements. The collaboration is designed to expand over the next seven years. India. Both institutions will identify mutual exchange opportunities—on-line access to library resources.’s premier business school).—a $400 million company exporting garments to Europe and North America—has formed a non-profit educational trust. * Faculty report including Babson faculty profiles and approaches to faculty development. * An overview of the entrepreneurship curriculum.Benetton. Ponds (India).S. The Pearl School for Business Studies will grant Bachelor of Business Administration and/or Masters of Business Administration degrees with a focus on entrepreneurship. have signed a strategic collaboration on a full range of activities to promote world class research and education of entrepreneurship in India. President of Babson’s Alumni Club in India and Chairman of DCW Ltd. processes. was also present.

For information. visit www.“This collaboration is an important step in Babson’s journey to globalize Entrepreneurship Education.babson. a company that shares our vision to advance Entrepreneurship knowledge in India. Pearl Global is getting into domestic retailing: “ [Pearl Global]. is understood to have chalked up a plan for its presence in domestic retailing. Gurgaon. 24 April 2006.babson. Deepak Seth. Ltd. the company is in the process of booking retail outlet spaces in cities across northern region . growth prospect remaining high. and grants MBA and custom MS and MBA degrees through the F.php?id=13972072>. “We are privileged to work with Pearl Global. Babson grants BS degrees through its innovative undergraduate program. Olin Graduate School of Business at Babson College.” 26 Oct 2005.cfm>.. The Company Secretary was not useful in arranging interviews with other personnel who would be able to answer what he could not. Babson Executive Education offers executive development programs to experienced managers worldwide.edu/Newsroom/Releases/Babson-and-Pearl.” said Fetters. The interview consisted of a powerpoint presentation on the structure and capacities of Pearl Global. though the researcher was not able to obtain a copy without signing a confidentiality agreement.such as Jaipur.W. however after e-mailing the Chairman.com/finance/equity/fullstory.. the recent fall in price makes it an attractive long-term bet. It was difficult to obtain an interview by calling the numbers on the website.edu. Page 79 .”104 XI.” Babson College in Wellesley. Chandigarh and Lucknow. PERSONAL EXPERIENCE The interview with the Company Secretary was useful only in determining what reports are required to be submitted to the Registrar of Companies by each company. 104 “Pearl Global bullish on Q2 numbers.S. “According to market analysts. is recognized internationally as a leader in entrepreneurial management education. <http://sify. “According to industry sources. <http://www3. which is setting up a joint venture manufacturing facility for soft fabrics in China to secure part of its supplies. Kool Hearts label. Mass.103 Domestic and International Retailing In addition to the U. an interview was promptly arranged with the Chief Finance Officer. 103 Babson Newsroom Release.

G. Phase IV. CONTACT INFORMATION Contact Person: Sudhir Dhingra. so he could use the proceeds as seed capital. I. Udyog Vihar. 13. 15000 ($300) from his father. An ISO 9001-2000 Unit: “Orient Craft Embroidery Division. Page 80 . Unless otherwise indicated. Udyog Vihar. online business and economic articles.ocemb. Gurgaon. From an interview with the Managing Director. the largest computer embroidery facility in the Indian subcontinent. Government Recognized Golden Trading House The information in the following company report was obtained primarily from an interview with the Managing Director on 1 August 2006.000 shirts made in India. Haryana105 3. found some tailors to make the shirts. and preliminary interviews from Gurgaon workers. Dhingra was a law graduate from Chandigarh with no experience. Founder/Chairman Personal secretary Meghna. Khansa Road Sector 37. 26818249 Website: Orient Craft Ltd. Haryana Tel: (+91-124) 5090800. Gurgaon. Dhingra borrowed Rs.com/. ORIENT CRAFT LTD. 2343262 Fax: (+91-124) 2342042. a company profile given to the researcher by the Managing Director. most of the information is from the interview. He had a friend from London who was buying from importers and selling the goods to specialty shops. but it does not contain any information beyond the heading: Orient Craft Limited: Embroidery. Haryana 4. but the company was not incorporated until 1978. There is a preliminary website set up for its embroidery division at http://www. has no website. BRIEF HISTORY106 Business began in 1972. 68.6. 110020 (India) Tel: (+91-11) 26818247. mobile: 9871496362 Corporate Office: Orient House F-8 Okhla Industrial Area. 14-A Maruti Industrial Complex Sector-18 Udyog Vihar. Gurgaon-122015. Manicandan’s CEC report. who asked Dhingra to get 1. 7-D Maruti Industrial Complex Sector-18 Udyog Vihar. Plot No. Managing Director. 2341110 2.” E-mail: orient@orientcraft. Gurgaon II. and 105 106 First two units visited by the researcher. Phase-1 New Delhi.com Production Units: 1.

CII.000. During this traveling. Both were wholesalers who sold to specialty stores. Dhingra “is also Executive Member of the Advisory Committee of AEPC and an active member of reputed associations such as FICCI. set up a pressing line on the dining table and the production line in the garage. as Gurgaon is the single largest manufacturing sector in India. In the mid 1980s. not just in the limited Indian context. they’re not looked up to. When he returned. not like today.com/iftf. yards and outsourced actual manufacturing. only now it is 136. the Indian-inspired fad went away and he had to spend six to seven months traveling to get rid of inventory stock. he decided to break into the industry. In the 1990s Dhingra set up a bigger plant with 100 machines. 15000 plus a small portion of the profit (Rs. During the first few years. CMAI. CIAE. found another buyer. <http://www. The first plant in Maruti Industrail complex was the first plant in India that was over 80. Dhingra wanted to improve the standards of quality and infrastructure to globally competitive standards. Liz Claiborne sent an American technician to help Orient with worker training and modernization. and others. 6000 ~ $133). he was able to observe fashion trends and the kind of things that were selling. ft.niftindia.”107 Biography for Sudhir Dhingra for the International Fashion Technology Forum. When his friend repaid him the Rs.htm>. During his traveling. and set up a manufacturing plant in the late 1970s with a assistance of a government program that give 150% of exports sales as incentives to burgeoning enterprises.000 sq ft. and Germany buyers. Dhingra states that others followed Orient Craft’s example. though he stated that it was difficult to actually get the money from the government. The first Gurgaon plant was established in 1993. and that plant is still there. And being a tailor is like being a janitor.” Dhingra wanted to move production out of the village and industrialize the area and put as many skills in-house as possible.shipped them to London. ASSOCHAM. with 3500 people. with more than 350 modernized factories. he hired more people. he obtained a factory processing site of 240 sq. 200-300 people. Then after a few years. “At the time. you had to be a tailor to be in the garment industry.000 pieces and an annual turnover of around $40-50.A. Orient got clients by word-of-mouth from their L. Orient’s first factory was established in a village in Hauz Marg and it is still there. He “knew [he] had to look at the industry from a global perspective and globally what textile buyers needed and what the competition was from the suppliers. they’re looked down upon. with 1800 people. Then. he also encountered some buyers. 107 Page 81 . when he got back to India. National Institute of Fashion Technology.” His father gave him one year to start up business. Orient subcontracted until the early 80s. Then while in Germany. then consolidated supply chain into one roof. and he rented a house. and restarted business with a trial order of 1200 pieces for a customer in L. he estimated a production capacity of about 150. May 2006.A.000 sq.

G. Macy’s. Page 82 . Limited. Ralph Lauren (Lauren. Anoop Thatai EOU Information The company has three 100% export oriented units (which can import all raw materials and trims free of duty). Lands End. women’s.Hook. Sudhir Dhingra (Chairman and Managing Director). Old Navy (women’s). 2000. Up until 10 years ago. sportswear. Orient Craft Ltd. jackets. and jeans). Calvin Klein Jeans. Banana Republic. Liz Claiborne (LizDresses. men’s shirts. Ann Taylor. LizSports). Next Retail Ltd. The company also has a specialized home furnishing division that sources soft furnishing products such as pillow and duvet covers to brands such as William Sonoma. Loft. coordinates. was set up in 1978 and has been India’s number one garment manufacturer and exporter and is the recipient of the ‘Gold Trophy’ given by the government of India for highest global exports out of the country for 1977. K. Tommy Hilfiger (men’s. Susan Bristol. Orient used to source for Wal-Mart in back in 2003 but has since stopped.. Dockers.K. Now he owns 60% of the shares. Rocawear. skirts. The company does not do that much business with Zara and Miss Sixty (Italy). kidswear. Donna Karen.III. However. J. shorts. boys’. Clients Armani Exchange. ropers. ELM Street. Diane von Furstenberg. is looking into breaking into the domestic market. Dillards Stores. Jones of New York. Dhingra was the sole proprietor. and gave 20% to his nephew and 20% to his friend. Oasis Stores. Polo Jeans). J-Crew. because of “language and cultural differences” with the European business partners. Marks & Spencer. Owners/Directors Mr. Exports/Imports 100% exports. GAP (kids). Awards Additional information: Orient Craft Ltd. pants. Mr. LizWear. BASIC PROFILE Legal composition of the Company Orient Craft is a privately owned company but deemed public limited. Marc Jacob. knitted shirts/t-shirts. and Marks & Spencer. Kohli. dresses. Dhingra states that Orient is the only factory in India to manufacture for Marc Jacobs and Louis Vuitton. Abercrombie & Fitch. 2001. Product Mix Areas of specialization include blouses. Zara. 1998. and 2002. outerwear. Mr. Esprit. Express.

Page 83 .20-1. despite more competitive pricing.20-1. BRAND INFORMATION Orient Craft's Export Market 5% 15% U.02-0.” BBC News. 112 Overhead (mostly energy.5 million % of Sales 50-60 12-15 12-15 10 Per Garment110 $5.00 $1.8-24.03 0.03 0. so they can only be thought of as a rough approximation. 2 March 2005.A.co. Breakdown of Sales Revenue109 Est USD 2006 Material Cost Labor Overhead112 Profit (target)113 82.08-0. Kaushik. 109 These figures were estimated by the Managing Director in the space of 5 minutes. which has doubled in a year and a half-as mentioned by NITRA president-used to be Rs.00 % Retail Price111 0.8 million 16.50 $1. 9 per unit) 113 Dhingra stated that Orient usually ends up with half of the target profit. 4 per unit.8 million 19. “Winners and losers in textile shake-up.50 $1. 742 crores) Other Financials Last years profit was $8 million (40 crores).12 0.5-99 million 19. <http://news.stm>.S. 110 Based on the company’s average unit price of $10 USD.IV. now it is Rs.uk/2/hi/south_asia/4294679.02 V. Europe 80% Canada 108 Basu.00-6. 111 Average retail markup is five to six times the unit price of the garment.8-24.bbc.02-0. FINANCIALS Turnover FOB USD $105 million for 2002-2003 FOB USD $118 million for 2004-2005108 FOB USD $165 million for 2005-2006 (Rs.

<http://news. however an article written for the BBC in 2005 (Basu. but they will open up their own office soon. the industry-wide average unit price in India is $3. Dhingra stated that Orient’s average unit price is $10. “Winners and losers in textile shake-up. Marks & Spencer is currently direct. they made one skirt for Polo Blue that will retail at $1199 (did not state unit price). Kaushik.” BBC News.uk/2/hi/south_asia/4294679. Unit Prices (paid to factory per piece of garment supplied) Average116 Retail Markup Avg Retail Price Type $10 USD 5 to 6 times $50 All FOB Unit Prices Since MFA Phase-out There has been an estimated decrease in unit prices of 10-15% across the board in most categories.stm>. depending on the quota category and how much they were previously restricted. 2 March 2005. 115 Restarted business with Macy’s 2 years ago. Orient tends to deal in higher quality and higher unit prices and lower volumes.Major Clients Brand Diane von Furstenberg114 Macy’s Marc Jacob Marks & Spencer Ann Taylor Loft Ralph Lauren Express The Limited Dillards Tommy Hilfiger GAP Liz Claiborne Length of Relationship 1 and a half years 2 years115 4 years 4 years 4-5 years 4-5 years 4-5 years 6 years 6 years 8 years 8-9 years 12 years 15-16 years Turnover $17-18 million - Buying Agency or Direct Most companies are represented by an agent and very few are direct.co. however. European companies pay higher unit prices). 116 According to Dhingra. 114 Dhingra stated that Orient manufactures 80-90% of what Diane von Furstenburg (high-end maternity clothes) sources from India. There has not been a huge shift in the composition of customers.50 USD (from US companies. like cotton pants. however used to source to them about 10 years ago.bbc.) stated that on the date of the author’s visit in 2005. Orient was manufacturing skirts that would be sold for $4 USD per piece. Limited used to be mostly direct. Orient would not take a Wal-Mart order. Recently. Some things have increased greatly. There has also been an expansion of volumes and an estimated 15-17% growth in orders. but they just opened an office last year. Dhingra states that it is easier to deal with buying offices. Page 84 .

000 pieces. As Dhingra stated.121 The average order size is 10-12. Orient also deals in some very small volume orders for high-end buyers like Oil Lily.000 woven per month. and one large plant is located in Noida. Design/Sampling Orient has ramped up its design department in the past five to seven years using mostly in-house skills with some help from U. though it does use labor contractors.000 woven per month. Orient has a display store in NY on Park Avenue that it opened up 3 yrs ago. Production System Orient Craft uses an assembly line system. In 2003 Orient established a manufacturing complex of 340.htm>.200. Sector 37. in 2003.000 pieces and production capacity has grown at least 25% over the past year.000sq.S. 13. whose samples are then sent to potential buyers. Page 85 . Khansa Road. Orient has put a lot of human resources into product development and now boasts 900 product development personnel at 5 different locations. product development became the key thing that most Western companies were looking for. INFRASTRUCTURE Company has 21 production facilities. but other fabric from silk. It picks up fashion from around the globe.000 per day120 2006: In an average day. Udyog Vihar. and employed 5000 people. in and around Delhi. 1. 120 Biography for Sudhir Dhingra for the International Fashion Technology Forum. which was at the time the “single largest multi-product manufacturing plant in the whole of India.000 knitted per month119 2006: More than 125. 121 According to an interview with the Managing Director. Gurgaon. Production Capacity 2002-2003: 480. chiffon to denims and outerwear). ft.com/iftf.000 or even 100. after 9/11. Haryana. of which four are in Delhi. May 2006. as traveling became restricted and Indian companies needed to build a competitive advantage. ft. sometimes 25-45. 117 118 Plot No. Orient makes 130.117 Previously.000 sq. The second plant visited was 380. <http://www. the company had only 17 production facilities spread over 600. National Institute of Fashion Technology.000 knitted per month 2005-2006: 720.”118 Subcontracting Orient does not appear to subcontract.000 pieces. According to the company profile. ft. 119 According to the company profile. even a little bit before.000 sq.VI. six in Gurgaon. 720. and creates new designs for each season. gives feedback. companies.niftindia. Orient has created a niche with their diversified product line (mostly cotton/knits or wovens. (unclear if it is the same facility visited) at the cost of over $10 million USD.

According to G. and trims. the company had 7300 sewing machines.” Dhingra stated that 70% of Orient’s workforce is direct employment. one facility’s production department. Information on work timings was taken from G. shirts. and since Orient produces high-end clothing with lots of embellishments. Departments No information on specific departments was obtained through the interview. Manicandan’s CEC report.” From 9:30 am 11:00 am 12:30 pm 4:00 pm to 6:30 pm 11:15 am 2:00 pm 4:30 pm Work timings Tea Break Lunch break (30 min)122 Tea Break 122 The line does not stop during lunch. trousers. who manufactures 80-90% jackets/ outerwear. Productivity Schemes Orient uses incentive schemes to reduce absenteeism and has implemented worker welfare schemes. VII. In 2002-2003. washing plants and dry cleaning units. workers do not go to lunch at the same time. The labs are equipped to test for all parameters including color fastness to light. WORKING CONDITIONS The workers are 80% male and since Delhi and Orient is mostly multiproduct. the workers are skilled and come from a tailoring background and are usually from UP. More contract workers and women (especially thread-cutting) are in the finishing department. Manicandan’s CEC report. Bihar. Manicandan’s CEC report and could vary factory to factory. Approximate number of workers in all facilities Number of people employed in 2002-2003: 12. However according to G. fabrics. not through a labor contractor. MP and some from Haryana. which is generally equal in size to the production department.000 in-house Number of people employed in 2006: 23. “most of the permanent employees are supervisors and perform high-end work such as production in-charge and finishing in-charge. consisted of 12 production managers each in charge of about 250 workers (tailors and helpers) at 100 machines with 12 line supervisors. with very little embellishment.000 Machinery Orient has in-house computerized embroidery machines. According to Dhingra the “girls” in the South are operators and less skilled.Quality Control The company has in-house lab testing for garments. Page 86 . they “can’t be like Golkadas.

5-8. HUMAN RESOURCE POLICIES Dhingra stated that there are common HR policies and productivity schemes across plants. The payscale is adjusted twice a year according to inflation.” Furthermore. Dr./month) 2850 2344 2000 2850 Labor Turnover According to Dhingra. but he makes no mention of any other incentives. Category Tailors Helper Trainees Contract Worker Average Wage (Rs. K. and in 1993-1994 they started moving away from piece-rate and a few years ago they did away with piece-rate completely. the company's chairman and managing director Sudhir Dhingra dreaded the idea of setting up huge factories . according to G. 60-70% of the workers are unskilled helpers. probably around 8-9% and as Orient is expanding. Sartrushi. semi-skilled and unskilled workers that are hired through labor contractors are paid under a piece-rate system.all for the fear of Page 87 . VIII.Wages The average wage starts at Rs. Manicandan’s CEC report.000 per month plus ESI and PF. Bonuses are given during Divali. no piecerate. “particularly [those] working in the Finishing department. Worker Training Dhingra stated that all the facilities have training schools and they want to make them more formalized. the following was mentioned in a business article: “Till a year ago. & Company. However. labor turnover is decreasing. workers are paid much less than Dhingra asserts. the turnover for Orient Craft is fairly low. Dhingra stated that in the 1980s and 1990s Orient used a piece-rate system. and Vasisht & Company. The payments and benefits for contract employees are given to the contractor. Viet Kumar & Company. They are trying to start a training school NGO with a founding member of NIFT. Recruitment Policy Orient Craft employs contract workers for at least 30% of its workforce. the salaries average Rs. 3000 per month for an unskilled worker salary. and most people are above the minimum wage. With incentive programs for more highly skilled workers. where workers can be trained and work for other companies if they choose to. Some of these contractos are R. Union Though unions were not explicitly mentioned in the interview. who takes a 5% commission before paying the rest to the worker.

Orient also helped train 300 women from the nearby village in hand embroidery at international standards.com/apr0504/coverstory01.it’s not just about the bottom line. now we have 23. One woman told me. ten years ago we had 5000 people.[worker] strikes.000 and Orient spent $20. Page 88 . Thirty years ago we employed a women who worked as a thread-cutter and got paid Rs. workers are fired with no redress. 400 per month.asp>. it’s about what we can do for the community. According to Dhingra. I have always been very people-centric-. Now she is a finishing manager and gets 123 Rajshekar. Sector-18. and if a manager finds a worker guilty of an infraction. This strategy effectively stops any attempt to consolidate workers towards creating a Trade Union. he also mentioned customers were concerned that if hand embroidery was subcontracted rather than done in-house that it would not meet quality compliance standards. However upon further inquiry.” Worker Committees/Grievance Policy/Dismissal Procedure Dhingra was reluctant to give specific information regarding worker committees in person. M. GAP gave Orient $35. Global players are looking for India bases. <http://www. But will we be ready in time?” Businessworld. But the management suppressed and ousted all the workers who [were] involved in the establishment of a Trade Union.000 building a community welfare center that provides medical care for community members. Although Dhingra stressed how this was all for the benefit of the women and the community. Manicandan’s CEC report. Some of our workers are second-generation workers.businessworldindia. Maruti Industrial Complex unit). Orient had no worker committees at the facility visited. no sexual harassment committees and workers are not involved in wage negotiations or target setting. Since then the company started sourcing their manpower from labour contractor[s]. Punishments are given to workers without any formalized procedure. and Surendar. no formalized dismissal procedure. Twenty years ago we had over 1000 workers.000. they feel very proud to bring in income. sometimes more than their husbands.”123 According to G. “around five years ago there was an attempt to establish a trade union (at the 7-D. Clusters are reinventing themselves. it would be people. and that Orient pays in full for the schooling of female children of workers and for 65% of the schooling of male children. T. “if someone asked me what my one single reason for success. The “village panchayat said that Muslim women can’t go out…but now that they are trained. he stated that such information was confidential and would hurt Orient’s competitive advantage. Corporate Responsibility Dhingra stated that Orient has a fund to help workers who need to take a day off if they are sick or have to attend a wedding. There is no grievance policy procedure in place for complains against workers or management. According to G.’” They built a four story structure to house the embroidery tailors. ‘my husband doesn’t beat me anymore. Manicandan’s CEC report. stating that he would forward the company’s code of conduct and a list of their worker committees through his personal secretary. “Preparing for 2005: Dressing up for the party.

Specifically. This facility is completely air-conditioned and dust-proof to facilitate higher efficiency levels during summer months as well as better quality of sewing and finishing for some of the higher end apparels. and ease of working. we only have 23. Dhingra stated there are companies who do $1 billion (mentioned China and Lian Thai from Hong Kong.. IX. It is the soul of our company. comfort. Dhingra wants increased flexibilization otherwise it is more difficult to expand and it hurts business. but Orient has taken up some holiday decoration work. he wants to extend the length of time it takes to become a permanent employee to 12 months.000 people. in an endeavor to go beyond compliance we have adopted the village next door as one of the community welfare programs under which we are helping the local community build a primary school as well as a garment sewing and embroidery unit.” His words are interesting when you consider that Orient uses labor contractors and didn’t build up any of the community welfare projects until external forces like GAP pressured them. Pottery Barn. “India is still not good at producing fall fabrics. since Orient Craft products tend to be high-fashion. Donna Karan. for Bed Bath and Beyond. Besides being compliant by the current standards. which includes a more complex manufacturing process. as Orient usually doesn’t have as many orders May through August. “they have 100. According to the company website: The new complex is designed to create a very worker and management friendly environment in terms of esthetics. Macy’s. which eases strain some as well as the other diversification of profits.000).paid Rs. and Orient needs to do competitive pricing to stay in the game and Page 89 . in-house fully functional gym and an Executive Club. highly tailored outfits with additional embellishments like embroidery and special washes. and her son is working here… I have always thought about social welfare. They started producing denim products 5-6 years ago and just started manufacturing men’s suits at a plant for Liz Claiborne and Express. We have created great recreational areas for workers and middle management by building great cafeterias. 50. Seasonality is an issue. White Co. BUSINESS BOTTLENECKS Productivity is relatively low. Labor flexibility is also an issue. Although happy about Orient’s success. such as home furnishing. Marks & Spencers. Home furnishings is still smallish industry and comprises about $15-17 million of Orient’s sales.000 per month.” They started up home furnishing about three and a half years ago.

and aims to increase it to over 40 lakh units after the expansion.” Industrial Economist: Textiles Report. At present. The company has since then stripped the Spain unit of its machinery and fitted them in its plant here at Gurgaon. buyers are getting increasingly quality conscious.htm>.00. Bangladesh and Pakistan. Earlier. India’s lack of worldclass machinery producers domestically has seen a lot of companies look to the West for help. However. The expansion plan envisages setting up of two new facilities at Manesar. near Gurgaon…Levi’s was looking for a buyer due to high maintenance and labour costs in Spain.com/30thjune06p4.com/articleshow/msid-1232753. The company expects the expansion plans to boost its revenue generation. Page 90 . Noida and Okhla in Delhi.000 crore.” Times News Network. 125 Jha. 16 September 2005. PTI Economic Service. the textile industry in India still has a long way to go before it can catch up with Chinese volumes. “Indian textile companies on acquisition spree. Since the quota system has been reimposed on China. INDUSTRY COMMENTS Orient recently bought a Levi’s plant in Spain for its technology. “The lifting of quota has brought humongous demands on one side and on the other. X. From business articles: The company… acquired a Levis unit in Spain in mid 2005 for Rs 60 crore (approximately 13. The company’s deal with Levi’s is the second such significant international venture. The company’s management is also planning to raise an IPO later this year. Orient has 20 production units spread across Gurgaon.” said Mr Dhingra.3 million dollar)…Orient Craft by its own admission acquired the unit because of its superior machinery content. As of now.124 The machinery from the newly acquired plant will form part of the company’s expansion plan at Manesar. India is in an advantageous position. <http://www. (despite quota regulations) and India adds to a minuscule 1.bring in buyers. Mayur Shekhar. as they need to grow the base of buyers and price is a compelling reason to do that.indiatimes. Mr Dhingra estimates the annual turnover to be in the excess of Rs 800 crore.cms>. <http://economictimes. Orient came up on the global radar when it started its first overseas facility in New York two years ago. it is important to have machinery comparing to global standards. World over.indeconomist.5%. And retribution has come in the form of dying sick units in EU which are suffering as a result of lower labour costs in China.125 124 Dipankar. Kumar. Orient Craft manufactures and exports about 30 lakh units of garment every month. India. In the changed business scenario. “Garment exporter Orient Craft buys Levi’s plant in Spain for Rs 60 cr. growing by over onefourth from last year. the garment industry presently stands at approximately Rs 15. of which China contributes one-sixth.curpg-1. Ironically it is the same Indian companies who are buying the units for their machines.

Dr Y. and every day a new one is opening up—there’s space available in Karol Bagh. SBC is the buying arm of Kashiama. That’s more than the people who spend in the U. said the company was "welcome" to set up the SEZ. lagging behind US and Europe. So the spending power is in India.126 Orient Craft… has entered into an outsourcing arrangement with Sumukin Bussan (SBC).blonnet. where there are higher labor costs. Financial Daily from THE HINDU group of publications. which is a joint venture of Caramin (France) and Bairb McNutt (Ireland." Mr Sudhir Dhingra. there were only three shopping malls. the company’s MD. In the next couple of years. The deal is likely to be signed later this month. Rajasekhara Reddy. heat. Chairman and Managing Director of the company. which plans to source $1-1. DKNY and Ralph Lauren.Though most people in India. Orient is considering getting into the domestic market now. As per the arrangement. However. but look how large the population is—out of one billion. Yoshiaki Kamiyama. according to Sudhir Dhingra. The SEZ is likely to come up on a 300-acre plot with an estimated investment of Rs 2. etc.” he said. we aim at scaling our Japanese business up to $30-40m. Earlier. From business articles: Orient Craft Ltd plans to develop an exclusive special economic zone (SEZ) for garment units in Andhra Pradesh. delivering the inaugural address. “The tie up with SBC will give us a good foot hold in the Japanese market.” The Hindu Business Line Internet Edition. “Three years ago. Now there are 500. SBC. at present Japan is a relatively smaller market. but best linens) are setting up facilities in India and selling back in Europe. He announced the company would be given 10 acres of land at Nacharam to set up a garment manufacturing unit. the exclusive Japan licensee of some well known international textile brands including Calvin Klein. retail will explode…People say that Indians don’t have disposable income. the market will contribute a significant share of Orient Craft’s overall business pie. the ready-to-wear demand in India is growing.” Italian and French mills are setting up joint ventures in India. if there is a mall…Real estate is growing. told ET.S. we ourselves are looking at buying 2-3 lakh pieces from India. dirt. Why would people go through rain.htm>. consultant. “An increasing number of Japanese buyers are looking at Indian export houses for their sourcing requirements.000 crore.” For Orient Craft. if even 5% are rich and 15% have disposable income. the Andhra Pradesh Chief Minister.com/2005/11/25/stories/2005112502590900. probably about 80-90% still get clothes from tailors.S.Emerging opportunities and the road ahead' here on Thursday. that’s 200 million people. told reporters on the sidelines of the CII conference on `Textiles forum . population spend. 126 “Orient Craft plans SEZ for garment units in AP. 25 November 2005.S. Page 91 . only about 60-70 million have disposable income.5m worth of textile products in the next couple of years. <http://www. Orient Craft will be the exclusive suppliers from India to SBC.— only about 30% of the U. a leading Japanese buying house. "The SEZ will house up to 50 companies. In 2-3 years. Banswala Mills.

Depending on the volume of the orders. which it may have to take up to over 40 lakh units. Most are family-run. is India's largest garments exporter. His personal secretary was not useful in obtaining any information.com/articleshow/1496902. But will we be ready in time?” Businessworld." Orient Craft and Fabric & Fibres are among a few who have been pulling ahead of the pack. Orient Craft manufactures and exports about 30 lakh units of garment every month. which. However. Says Orient Craft's executive director Anoop Dhanda: "For the next few years.127 The biggest Chinese firms have a turnover of $800 million-1. Times News Network. China is the largest exporter to Japan. though he stated that she would be able to forward company codes of conduct and additional information that could not be covered in the interview. to cater to new deals in the pipeline. India's biggest exporter Orient Craft has also begun to realise that. and Dhingra was surprisingly available for an interview. But what distinguishes them is a relatively larger scale. Global players are looking for India bases.businessworldindia.200 million . 20 April 2006.asp>.all for the fear of strikes. PERSONAL EXPERIENCE Orient Craft does not have a website.indiatimes. 127 “Orient Craft ties up with Japanese co. M. design to finishing. at Rs 450 crore of revenues. Page 92 . the company's chairman and managing director Sudhir Dhingra dreaded the idea of setting up huge factories . we will have to invest in new capacity every year if we have to keep pace with the industry. and Shahi Exports.com/apr0504/coverstory01. 128 Rajshekar. the company may go for a specific capacity expansion. <http://economictimes. Bangladesh churns out as many garments as India from a fifth as many factories.about 10 times the size of the Delhi-based Orient Craft. Till a year ago. Thailand does almost the same business as India with a workforce a third the size. Current contact information was finally obtained through a Professor at NIFT. which made finding up to date contact information difficult. a share of the Japanese market isn’t an isolated case and the textile industry in India has a long way to go before it can catch up with Chinese volumes.cms>. productivity and scale. “Preparing for 2005: Dressing up for the party. The centrally air-conditioned facility will combine all the stages of garment manufacturing. Others include Gokaldas Exports of Bangalore. T. Dhingra was fairly open in his responses.128 XI. Today he is spending Rs 40 crore on a new factory in Gurgaon that would employ 2. skill-intensive manufacturing could be a way to compete. Clusters are reinventing themselves. <http://www. claiming more than three-fourth of the pie. At present the Indian textile exports to Japan add up to $296m which is just about 1% of the country’s total textile imports. probably because most of the specific questions about workers and working conditions were asked after he was giving his views on the industry and general strategies for expansion. and Surendar.” The Economic Times: Garments Textiles. India lags in technology. and smart use of technology.000 people. The turnovers of these exporters range from Rs 100 crore to Rs 250 crore. Meru Exports and Richa Exports of Delhi. Like most other economies. Clearly.

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