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INDUSTRY AND COMPANY PERSPECTIVES
A Collaboration Between United Students against Sweatshops Jobs with Justice Society for Labour and Development
TABLE OF CONTENTS
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.
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
Contact Information .........................................................................................49 Brief History ....................................................................................................49 Basic Profile.....................................................................................................50 Financials .........................................................................................................51
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
the Registrar of Companies (ROC. and Third Eyesight (an industry consulting agency).. A management survey was developed using the framework of surveys used in other geographic contexts and updated on the basis of preliminary interviews.. These are the Northern India Textile Research Association (NITRA. The sixth company was identified by the researcher through an interview with a representative of the Indian Apparel Export Promotions Council (AEPC). Asking a question via e-mail often yielded claims of confidentiality. Interviews were obtained in a variety of ways.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.. E-mail was also used to a large extent to set up meetings. Manicandan. Several other agencies that are major players in the export garment industry were identified and profiled by the researcher. though it proved best to limit the amount of e-mail communication. linked to the Ministry of Textiles). It is advisable not to send questions via e-mail. and others do not disclose financial information beyond approximations of annual turnover and production capacity. the National Institute of Fashion Technology (NIFT.” a CEC report submitted by G. an interview by telephone would be far more likely to be successful than an information Page 3 . Contact information was available on websites. Managers at six companies and four agencies gave interviews. display their financial information on the company website. Ministry of Textiles). 2) To identify correlations between labor conditions and businesses characteristics. Orient Crafts Ltd. Government of India). Four of the six companies profiled and all of the agencies have individual websites. Pearl Global Ltd.) were identified using “Mapping First Tier Suppliers in Garment Industry in Delhi. while asking the same question in person would yield a response. 3) To develop corporate research strategies specific to the Delhi. Five companies (Modelama Exports Ltd. Obtaining the phone number from the agency website and directly calling was the simplest way of setting up interviews. the Apparel Export Promotions Council (AEPC). If an interview cannot be conducted in person. Public limited companies like Pearl Global Ltd. Shahi Exports Pvt. linked to the Ministry of Textiles. others self-report to financial databases. Online searches yielded some kind of press release or interview for each entity except for Jyoti Apparels. Methodology Preliminary research was conducted on the internet. Ltd. India context. although some were out of date.
no telephone interviews were conducted in this survey. and NIFT gave updated contact information for Shahi Exports Pvt. however. context and was integral in order to obtain information. without which interviews would not have been possible. Just. The AEPC was instrumental in identifying Jyoti Apparels as a top tier supplier. going as far as to hand over Standard Operating Procedures. They’re more docile. while others would refuse to state the number of workers in the manufacturing unit. An interview with an anonymous manager produced the following conversation. Researcher: I don’t understand. I don’t think they ever employed males… Limitations Time constraints limited the consistency and thoroughness of company information.. The agencies profiled were primarily interviewed before the export houses. or productivity schemes. I’ll tell you. Managers were surprisingly open in some cases. Women are easier to handle. 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. Questionnaire Used by the Researcher The following questionnaire was handwritten in shorthand and brought to the scheduled interviews as notes. as it was not possible in many cases to conduct follow-up visits. Ltd.request by e-mail would. It was not e-mailed to any of the managers. no significant differences in productivity. easier to control. What groups? Manager: Oh. The attitude and openness of those interviewed are subjectively recorded in the individual profiles. The purpose of this research was to obtain information about companies from a management perspective. Information on these companies was obtained primarily from top-down management sources. 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. ladies are more focused on work. However. and one experience ePage 4 . all interviews were in person. even though such a one-sided perspective may not reflect the reality of the situation. and used to establish industry contacts. and as such may be misleading as to actual conditions. Furthermore. men together tend to form groups and lobbies because they have spare time. time constraints would not permit cross-checking all information with workers and officers at each company. which typifies management attitude both towards women and unions: Researcher: Why are your workers mostly female? Are there significant differences in productivity? Manager: No. Also.S. and Orient Craft Ltd. industrial accidents record. but off the record. Researcher: Did you have problems with employing males in the past? Manager: No—no.
how fast company delivers products to brand Kinds of buyers—importers. sourcing. get order. I’ve heard of collegiate licensing that would provide steady orders from major brands at higher prices. they often had information regarding each of these areas. total sales. Designation. What kind of input— CMT. since a conversational approach proved to yield the most information. discount retailers (Wal-Mart).mailing questions proved fruitless in gathering information. help design. EU? Major foreign brands that the company supplies to: length of relationship. vol of product. where. 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. as there are some questions that an HR manager would know more than a Merchandising Agent. 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. 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. The survey questions were divided into sections according to the position of the respondent. CMT. and Responsibilities of Respondent: Number of Years in the Company: General Upper Management Do you have a brochure saying what products. DSP questions.S.. However.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. Ownership of Company. no input--or more capable. 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 . package. U. specialty (GAP). deliver? Does the company ever have problems with contracts and/or steady orders? (if possible. The questionnaire was used only as a guide in the interviews as a reminder of what kind of information was needed. if only a higher level manager could be reached. Name.
Have they used outside agencies in developing any part of their strategies? Part of AEPC. NITRA. checkers. Grievance Committee. trainees. men. what is displayed to workers on details of employment. finishers. etc. overhead. subcontracting. material cost. washers. Have there been any attempts at unionization in the past? What is the company’s attitude toward unionization? Page 6 . what do these forums do? Get any documents willing to give at any point. unskilled). pressmen. cutters. 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. total value of exports. who are the members and how are cases handled? Give details. standing orders. 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. supervisors. helpers. labor cost.e. Productivity Committee. semi skilled. How many women. Shopfloor Committee. 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. 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. Sexual Harassment Committee. Quality Circle? If yes. etc. Have you seen a benefit in productivity since implementation of program? Are there joint worker-manager forums in your organization? If yes. codes of conduct. 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. average age of employees.
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?
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, firstname.lastname@example.org), 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.
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.
which is not true for privately owned companies.nic. the compliance of companies act. Form 20 gets the Director a Director’s Identification number (the number used on the mca. According to an interview with the Company Secretary of Pearl Global Ltd. Companies are required to register new events such as a change of directors with the ROC.in However..gov. which are available for inspection by members of public on payment of the prescribed fee.sb@sb. The Central Government exercises administrative control over these offices through the respective Regional Directors.CHAPTER TWO AGENCY PROFILES 1.htm : Delhi & Haryana Regional Director: Dr. relating to the companies registered with them. CGO Complex. These offices function as registry of records. they must submit several forms at incorporation and annually.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 office at Nehru Stadium closed down earlier in the year. Form 29 for Pearl Global makes it a public limited company.nic.nic.in/ROC_2003. Since Pearl Global is a public limited company. the details of the board of directors/management structure. Lodhi Road.The financials publicly available include the annual return and balance (for all companies). Page 10 .email@example.com website to access the public disclosure documents). in order for a company to be registered with the ROC. The addresses of each state’s ROC as of 2003 can be found at http://dca. REGISTRAR OF COMPANIES (ROC) The Registrar of Companies is a division of the Indian government’s Ministry of Textiles. the profit and loss are also publicly available. New Delhi – 110003 E-Mail: rocjln. Navrang Saini Addresses: B-Block Paryavaran Bhawan. Form 32. Website of the Ministry of Company Affairs: http://www.mca. Such forms include: Form 1. New Delhi 110003 Phone: 011-24362708 Fax: 011-24364570 E-Mail: rocdel.in Nehru Stadium. Form 18. the address of the registered office and the locations of the business.
The researcher attempted to take notes by laptop. and though there is no formalized rule against this. but several did not have up-to-date financial or structural information. Documents are publicly available after submitting a form requesting a release of information along with a small fee for each company. etc.The ROC in Delhi is in a process of transitioning to an electronic format of filekeeping. it was not permitted either. was difficult and did not yield a lot of useful information. Furthermore. As such. Not only were entire company files missing. of a newly incorporated company detailing the scope of its operations). photocopying the documents in the file is not permitted unless a fee for a legal copy is paid. Information must be copied into a notebook by pencil (pens are not allowed). Page 11 . the process of obtaining public documents. such as financial information and company Articles and Memorandum of Association (objectives.
he co-founded a fashion sourcing company in which he remains a shareholder.122 002 INDIA Tel: +91 (124) 4112493. THIRD EYESIGHT (INDUSTRY CONSULTING AGENCY) Contact person: Mr. competitive and regulatory information. He was also based in the European practice of this multi-national consulting firm.development of India strategy and preliminary business plan including market analysis. Gurgaon . assistance in assessment of Indian supply base Page 12 .3isite. He then joined a start-up consulting firm and was instrumental during its growth into a multinational consulting firm's joint venture in India.2. Devangshu Dutta. He subsequently worked with an international retailer's joint-venture in India.strategic inputs for Asia-Pacific top management team to identify emerging opportunities in the Indian textile supply chain * Leading UK Retailer . The following are brief descriptions of some of the projects on which Third Eyesight's professionals have worked. Devangshu began his career with the then-leading Indian national retail chain in buying & merchandising and in store operations. 2nd Floor. health. * International multi-billion dollar apparel brand . * One of the largest global home products retailers . assistance in formulating strategy and developing partnerships with International retailers and brands. Third Eyesight and its team of associates & professionals have worked on a variety of business strategy.Strategic assessment of India – insights for a global senior management team to gain a realistic picture of the opportunities and the challenges in India. During his career Devangshu has performed the roles of an entrepreneur. trainer and teacher.com Website: www. 4112495 Fax: +91 (124) 2577586 Cell: +91 98111 03494 Email: devangshu. * Diversified Indian consumer and industrial products conglomerate . Benchmarking against global supply chain and product development best practices. new business start-up and operations projects with Indian and international clients.dutta@3isite. * Global fibre and chemicals company . in marketing and distribution. Sushant Lok-I. and product analysis.Assistance in development of global sourcing strategy and action plan. food & grocery. Thereafter. dining etc. home. over the last 16 years. as part of the team that launched the JV.Carrying out sectoral market studies in retail. Founder and Director of Third Eyesight A-847. manager. and returned to India to his position as General Manager of the Indian business. including fashion. advisor. Support in implementing changes in sourcing strategy and organisation. Third Eyesight's project teams consist of professionals who have hands-on experience in various aspects of retail and consumer products businesses.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. 4112494.
which continues to regulate knit-fabrics. * Indian subsidiary of one of the largest sports apparel and footwear brands – Design. The name is on the WRC disclosure list. In the early 90s. labor laws also limited the ability of companies to expand. and assistance in seeking new capital infusion. * One of the largest Indian textile and garment companies . D. development and delivery of sales & marketing collateral for three consecutive seasons.Assistance in formulating strategy and developing business with global customers for exports. Mentioned another apparent Tier 1 (said they are large and source directly to MNCs).Business planning for new brand acquisition. reserves certain sectors for small units.K. this model was phased out. Batra. it was a licensed economy in which you needed to get government clearance to manufacture in specific capacities. Much of the fragmentation of companies was really only on paper. According to him. This is partially why many of the current successful companies (such as Richa Global) are split up into many different companies. Sibichan Matthew. and the result of this was that a successful company was prevented from expansion. Initially. Mr. as you needed approval from the state government if you were operating a place of business with more than a hundred workers. who would be able to help schedule company interviews. Pradeep Joshi. Gave history of market structure in India. The quota system obliged companies to set up under different names.* Multi-billion dollar Indian consumer goods conglomerate . * Pioneer luxury brand house in India . gave contact information for the National Institute of Fashion Technology in Hauz-Khas. and you cannot have large units. Content of Interview (5 July 2006) with Director of Third Eyesight: Asked about study. Since the garment industry is extremely labor intensive. Business strategy and plan for current business. The small-scale reservation system.Comprehensive comparative study of 7 cities in India and outside to choose location of new garment manufacturing plant * Leading Turkish supplier .Formulating strategy and assistance in strategic alliance proposal to key European customer. The government thus limited how much you could produce under the reasoning that overcapacity would lead to inefficient use of capita. Matrix. Also told the researcher to contact faculty of Pearl Academy of Fashion. The investment cap was very low. Mr.org). The other reasons for company fragmentation are the nature of quota system and labor laws. 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. Directed researcher to online industry magazine resource (Website: apparelresources. (Website: niftindia. who could then direct me to industry management: Dr. you need a separate registration and thus it is easier to simply export (used to be tax-free). Page 13 .org) Advised researcher to contact faculty of the management studies department.
how the current transactional model is very inefficient insofar as buyer-supplier cooperation goes. so all the businesses had to pay was labor and overhead. which has worse infrastructure but is nevertheless optimistic about business.S. saying that the industry had often talked of diversifying. the quotas had restrained India far more than China (showed a graph from a U. the investment returned. the supplier makes the product. He mentioned that Delhi (mostly womenswear) is only one side of the big picture. He began to describe the different ways of sourcing.one hundred workers is nothing. Page 14 . From a piecemeal view. He stated that “the inconvenience of a labor inspector” pestering and harassing company management was a minor price to pay for business expansion. worrying that Indian business could not compete with China. ships a sample. but in the strategic long-run. and as such is seen as a big risk and many are reluctant to actually work on establishing these relationships. effort. whereby long-term relationships are cultivated. He expressed hope that soon the labor laws would relax some to reflect changing needs of business. and that Chennai (mostly menswear). gets quotes from suppliers. as the companies began to listen to the needs of buyers and in 2005. The MNC gives product specs. as it was clear that Indian businesses were gaining from the phase-out and smaller countries like Bangladesh were losing instead. this changed somewhat. the MNC may like it or require additional changes. for example. He began to talk about sourcing. strategic sourcing is dramatically different from the current widespread transaction model. that they were too “over-exposed in China. doesn’t communicate with the designer. He then mentioned that “strategic sourcing” would be much more beneficial to the market. From 2001-2004. but more menswear). couldn’t see name). However. money is instead wasted on an inefficient process. but would be greatly minimized). but that the outlook of the management may be more pessimistic than Tirupur. In 2004. he made it clear that somehow they were competing because of their “ability to develop and deliver product. and money (wastes that would not be eliminated by greater cooperation. Bangalore (roughly equal. he said. wherein the buyer.. total costs would go down because the current transactional model wastes a lot of time.” Furthermore. The current model has self-contained worlds instead of cooperation. he said that Indian companies were extremely uncertain about the effects of the MFA phase-out. material. Because of this. He said that Delhi is doing extremely well in terms of business and is the largest in terms of exports. and rather than cultivate a relationship in which the supplier provides input and designs according to a long-standing relationship. then privatized factories. economic source. etc. investment in the industry slowed down. the product is re-done. it would increase unit prices. and Tirupur (mostly jersey knits) all have different cultures. since vendors and suppliers both may have had bad business experiences when attempting to do the same. 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.” however that had mostly been talk and no action.
increase. to find out the tariff and other restrictive practices of importing countries. Mogrelia (M/s Zoro Garments Pvt. Gen. 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. S. Mr. Madras). The main objectives of the AEPC are as follows: (1) To promote. develop export of all types of readymade garments. Mr. N. New Delhi took a lead in this matter and formed a special ad-hoc committee of the following Members: Mr. Mr. of India. of India. Two leading organisations of readymade garments. Garment Exporters Association.. According to the Articles and Memorandum of Association: Up till now Cotton Textiles Export Promotion Council was handling the export promotion work of garments. (2) To undertake all export promotion measures. Ltd. Institutional Area. Banthia (M/s Magnum Enterprises. New Delhi) President. to undertake marketing in individual foreign markets. agents or correspondents in foreign markets for the purpose of continuously and regularly reporting the markets prices. Mr. Secretary General of AEPC Mobile: 98-9912-4555 Website: http://www. Singh (M/s Singh Export Corporation. Garments Exporters Association.F. P. B. (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 .K. Mr.N. woollen knitwear and garments of leather. quota distribution and allocation. market preferences and latest fashions and designs prevalent in the foreign countries. jute and hemp. Secretary. N. New Delhi) Ex-president. Ltd. (3) To appoint representative. M/s Handloom and Handicrafts Export Corporation. Gurgaon 122003 Contact Person: Mr. Clothing Mfrs. Smt. B. Sector 44.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. Bombay) Hon. Clothing Manufacturers Association of India. to find out the product range and export prices of garments of other countries.L. Vijay Mehta (M/s Intercraft Pvt. Clothing Mfrs. excluding. Calcutta). of India. Bombay) President.3.. Clothing Mfrs. Bombay and Garments Exporters Association.aepcindia. Bombay) Vice-President. Assn. Premila Wagle (M/s Paville Fashions Pvt. KK Jalan. Ramadorai (Chief Executive. to send trade delegations and missions to foreign countries as well as to survey export potential of readymade garments from the country. but now as the garment industry has reached a stature and maturity and has achieved the target of 250 crores. Ltd. Assn.. Assan. to develop new designs and patterns of garments. Mr.. Amersey (M/s Milton’s Ltd. advance. APPAREL EXPORT PROMOTIONS COUNCIL (AEPC) Office: Apparel House. particularly to undertake market research. New Delhi). Shah (M/s Hiralal Gulabchand.P.
(7) To undertake training of workers and technical personnel. designs and techniques and to encourage manufacture of garments for exports.for the purpose of continuously and regularly reporting to manufacturers. and • raw material supply (both indigenous and imported). and lastly Tirupur. development of export markets. For three months of the year. so that workers can be more easily fired and hired. AEPC focuses on three things: • marketing help. especially. Content of interview (7 July 2006) with the Secretary General of the AEPC: The main issues in the garment industry are labor and infrastructure. rules and procedures. He said the three biggest centers for garment production were • firstly Delhi. traders and exporters of garments. address. A specific AEPC goal is to get the government to change the law that states that workers are permanent employees after 100 days. and its specialization in better embroidery and the “India look” (ethnicwear heavy with embellishments and more complex work). He stated that over the industry as a whole. its strengths being better infrastructure. • lobbying to government to change laws regarding labor and infrastructure (and whatever other business bottlenecks there are). He stated that the government needs to increase labor flexibility. import licence facilities provided and how to apply for the facilities. otherwise productivity will remain stagnant and labor costs will remain high. to improve the qualities and standards of the fabrics and garments by importing technical know how. garment businesses do not have orders. to encourage export production of quality garments and to undertake necessary research in fashions. to evolve improved design and patterns and garments suitable for export. its strengths being higher levels of worker productivity. • help with training and productivity (14 training institutes). and description of subscribers. as well as the names. (6) To establish design centres. 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. NCR region. to 200 days. (8) To obtain from members of the Council and to prepare for the Council as a whole. unit prices have remained stable pre and post quota phase-out. Page 16 . 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). • secondly Bangalore. specializing in knitwear. he stated. action plans for promotion of exports. to improve the skill of workers engaged in garment manufacturing in India and to assist in the technological base of the garment industry. (5) To assist members. in the Small Scale Sector by giving assistance in the matter of understanding and implementation of the drawback. so that businesses who do not get orders during the winter are not hurt by the cost of labor. generation of production for exports.
The AEPC did not have company specific financial data. • Texports (Mumbai). The researcher purchased the newest book of statistics on industry level data that the AEPC had (2003) and a directory of garment exporters. and • the Eastmen Group (Tirupur). • Golkadas Images (Bangalore).He listed the top ten Indian garment factories as • Shahi Exports (Delhi). • Golkadas Exports (Bangalore). These businesses have succeeded through a number of different strategies. including • an HR training institute-KSA Technopack. • SPL Industries (Delhi). • Richa Global (Delhi). He mentioned several notable resources. • Centwin Group (Tirupur). as it is self-reported. and • the Cotton Textile Export Promotion Council. • Creative Group (Mumbai). with a common thread of individual attention to quality control and productivity by hiring consultants and building better facilities. • Modelama (Delhi). • a foreign consultant agency Method Workshop (main consultant Roger Thomas). • Gurgi (“biggest industry consultant”—saw this name in the fabric stores in Jyoti Apparels). Page 17 .
and avail of facilities like laboratories with state-of-the-art equipment. Management and Technology. NIFT is acknowledged as the premier institute of fashion design. Hyderabad. which have been developed in consultation with reputed academicians [sic] and industry practitioners.htm Address: NIFT Campus. Extn:306 Fax: 91-11-26851198 Mobile: 9810154829 E-mail: rajeshbheda@gmail. Department of Fashion Technology Telephone: 26850484. professionals. management and technology across the globe. The Institute has pioneered the evolution of fashion business education across the country through a network of seven centres at New Delhi. Bangalore. also offers short duration part time courses under Continuing Education (CE). besides conducting regular professional undergraduate and postgraduate programmes in Design. 26965080. PhD. 26965080. Director General of NIFT) The Institute: Today. These programmes reflect the requirements and Page 18 . enhancement of critical abilities. these courses offer a unique opportunity to participate in the lively academic environment of NIFT. Chennai. practitioners.. In addition to classroom learning. leading to upgradation of skills and knowledge. Extn:306 Contact Person: Professor Rajesh Bheda. According to its CE (Continuing Education) Prospectus 2006-07: NIFT provides quality fashion-education to industry experts. Continuing Education (CE) Programmes: National Institute of Fashion Technology. and excellence.niftindia. 26965059. 26964771.com/iftf. (Gauri Kumar. 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. Kolkata and Mumbai. New Delhi-110 016. 26964771. and diverse faculty expertise. India Telephone: 26850484. 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. Hauz Khas Near Gulmohar Park. The centres are professionally managed platforms of the world’s finest design expertise.com. Government of India Website: http://www. Chairperson. rajeshbheda@niftindia. advancement of careers. 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. and entry-level candidates in the form of Continued Education Programmes. NATIONAL INSTITUTE OF FASHION TECHNOLOGY (NIFT) Ministry of Textiles. and the evolution of new professionals. management practices and manufacturing technologies. They offer a learning environment that encourages innovation. Resource Centres. NIFT has crafted a range of Continuing Education Programmes.4. 26965059. creativity.com NIFT was set up under the Ministry of Textiles in 1986. Gandhinagar (Sub-Centre: Surat).
and also to those aspiring to join the industry. 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. Post-MFA trends have been a consolidation of supply chain and capacities.concerns of the industry and have been carefully planned to spur professional growth. The main characteristics of successful firms include: • recognizing what customers are looking for. The flexible schedule enables the participants to pursue the programme without interrupting their professional activities. operators. productivity (how to perform time studies). probably average 70% of India’s market. trying to get workers’ involvement. The average Indian garment factory has 100% potential in physical labor productivity. • higher productivity • use the help of consultants. • BPR manufacturing. demand is up. The participants receive a NIFT certificate on successful completion of the programme. corporate social responsibility. Unit prices are down. and EU have always been strong markets in India. Companies are trying to move up the value ladder as product development and design are becoming more important. though you cannot take bags inside the doors or check out books. suppliers reducing subcontracting. Content of interview (20 July 2006) with Professor Bheda: Professor Bheda has been with NIFT for 16 years. • design development. performance-based rewards system. 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. • better quality product and service. • have more highly trained workforce. quality improvement program.S. Page 19 . and • hire or train industrial engineers. The library at the NIFT campus is open to anyone. the programmes provide a congenial environment that integrates theory with practice. with production planning and scheduling. there could be a 50% improvement in quality. buyers reducing number of suppliers as well as brands. cost is up. manufacturers consolidating capacities. and a global overview of the garment industry. methods monitored. If companies put efforts into enacting these measures. With focus on interactive learning. He teaches classes in quality management. U. • managing their supply chain better. However. • offering shorter lead times. and they are making efforts to reach good productivity. training managers. relevant to individuals at different stages of their careers. as there has not much shift in markets. Most common is line supervision.
2) Shilpayan Craft (Jaipur) 3) Another firm from Jaipur. so the researcher asked IIGF workers) were 1) Intercraft (New Delhi). Jalan. The core group of organizers include Vijay Mathur.com). and as long as it is ensured that the rewards system cost comes down to the factory floor. K. not because the buyer says the firm has to do it. Mumbai). Page 20 . Everything in the market is transaction-based. Retailers should start partnering with the brands and rewarding CSR compliant suppliers. Social programs are a long-term investment. from principles. H. The award winners for their showcases (announced the previous day.K. the 37th annual garment fair with 393 exporters/exhibitors at Pragati Maidan. Magu (Chairman of Jyoti Apparels). However.indiaapparelfair. the AEPC Director of Export Promotions (interviewed him after K.L. He does not see a correlation between turnover and CSR programs: “ultimately it comes from within. None of the firms were top ten exporters or easily recognizable. it would have to be meticulously and carefully implemented. and are simply passing it on to the suppliers.com. Regarding corporate social responsibility. so some firms are investing in CSR to the extent they can afford.K.indianapparelfair.K. The day of the interview was the final day of the Indian International Garment Fair (IIGF: www. it would be good to invest in social improvement program.” that retailers are paying lip service to CSR without sharing the cost burden.there is an erosion of the bottom line and companies find it difficult to survive and improve working conditions. something like it has been discussed. driven by price and the customer can walk away at any point. it seemed to be a showcase for smaller firms to vie for new buyers and international exposure. Agarwal). so suppliers feel they are not committed. The researcher obtained a buyer ID and toured the grounds. 38th annual: www. He gave a contact person to interview from Shahi Exports and up-to-date contact information number for Orient Craft.” 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. and many cannot afford them because there is typically no financial payback. “suppliers get a feeling of being cheated. Vijay Agarwal (Chairman of AEPC.
Environmental Audit. V. and Seminars/ Conferences/ Training programs…NITRA has carved a niche and occupied leadership in Package Design Consultancy for effluent treatment and water recovery. 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. Chairman of NITRA. ISO-14000 Environment Management System. Energy Conservation. *Need based cost effective software development. *Collection and dissemination of data useful to the textile & garment industry. dyes. Pollution Control.S. It is linked to the Ministry of Textiles and is recognized by the Department of Scientific and Industrial Research (both government entities). Maintenance Management. Maintenance Audit and a lot more. P.5. effluents. Sector-23. J. waters. workshops. Cost Reduction. According to NITRA’s 2006 Prospectus: NITRA’s Multifarious Activities *Job oriented professional courses (full-time and distance learning) in textile. ISO-9000 Quality Management System. leather. *Quality Evaluation of textiles. environment and allied areas. Energy Audit. garment. Publications. Product Diversification. Manpower Planning. Process House Study. and plastics. *HRD activities through training programs. Design of Effluent Treatment Plants and Water Recovery Plants.org/ Contact person: Dr. NORTHERN INDIA TEXTILE RESEARCH ASSOCIATION (NITRA) NITRA. Several prestigious textile units and multinationals are already within its consultancy network. Rao. Raj Nagar. Quality Improvement. 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 . seminars. *Customized consultancy packages for national and international clients in the areas of Product Development. *Research and Development projects and industry specific surveys related to textile & garment industry. 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). It is the only ISO 9001:2000 accredited textile research organization in India. conferences and publications. Machine Design & Development. chemicals. Ghaziabad (UP) 201 002 Website: http://nitratextile. Techno-economic Viability Study.
etc.. effluent treatment and water recovery plant. The library also subscribes to 150 [national and international] periodicals. The government is currently working on better infrastructure. He believes the government should subsidize capital for Indian business like China (mentioned something about a Technology Aggregation Fund. especially the law whereby a worker that is employed for 100 days is considered a permanent employee. 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. He allowed that workers were being exploited. legal compliance. Content of interview (7 July 2006) with Chairman of NITRA: Gave background on the history of the textile industry. environmental statement…NITRA’s Environment Laboratory is well equipped with Sophisticated Analytical instruments. and perhaps have relaxed labor laws within these sites.000 books and journals. which would consolidate factories. [NITRA’s IT Center] has over 100 [PC’s]. TAF). mid term strategies and policies and creating necessary infrastructure. There is a shortage of skilled garment workers.. 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. An in-house miniature ETP (effluent treatment plant) of 100 Liters/hour capacity has been installed by NITRA. etc. Netherlands. water. Also stated that it cost businesses more to subcontract because they had to pay for delivery. fear of China post-quota. which are essential to conduct such a program…[it] is accredited/ recognized by the National Accreditation Board for Testing and Calibration Laboratories (NABL).textile and allied industries: waste management. he said that unions hurt business. 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. quality. especially Page 22 . and the Haryana State Pollution Control Board (HSPCB). improve infrastructure. better access to a supply of power through a cluster system called Scheme for an Integrated Textile Park (SITP). the…library [keeps students connected with] ongoing global developments. Stated that the fragmentation of the business made quality control an issue. During the 60s-80s. NITRA has a wide database of employers [in its placement cell. the Bureau of Indian Standards (BIS). eco-friendly textiles. energy. A programmable ADI Bioreactor System of 3 liters capacity from Applikon Dependable Instruments. but would not elaborate and would only refer to the intractability of trade unions in vague terms. 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]. NITRA helps factories with product development and various audits. has been installed for carrying out treatability studies of biodegradation of industrial effluents through aerobic cum anaerobic route.. Complained about government infrastructure and labor laws. Library: Enriched with 5.
4:30 pm. Bilwara. The researcher obtained a copy of the 2006 prospectus. The course coordinator is Vivek Agarwal.machine operators at the shop floor level. They typically have 4-5 students applying for one seat. Classes are full days. 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. not garment manufacturers). Reliance. so NITRA conducts training programs for workers that last 3-6 months. Page 23 . he mentioned Vardhmal. They conduct in-plant training as well as distance learning programs for middle management at NITRA itself. When asked for company names. a NITRA Senior Scientific Officer. Arvind. L and J (seem to be mills. 10:30 am . Students apply to the program online and are selected on the results of aptitude examinations and interviews.
Udyog Vihar Phase -1 Gurgaon. Haryana. ICRIER financial data.com.com E-mail: info@modelamaexport. Mobile: 9810015693 Corporate Office2 Plot No.com Head Office Delhi B-57. 2 Unit visited by the researcher. I. Manicandan’s CEC Report. India Tel: +91-124-2397838-42 fax: +91-124-2397843 1 Initial information obtained from company website. and updated telephone numbers from interview. Page 24 .modelamaexports. MODELAMA EXPORTS LTD. Director E-mail: lovleen@modelamaexports. 7 & 8. India Tel: +91-11-26810103 fax: +91-11-26817969 Head Office Gurgaon 184. phase -1 New Delhi -110020. and G. documents given by the HR and production managers including a company profile. 2291131 Fax: 91-124-2290864 Website: www. Okhla Industrial Area. India Tel: 91-124-2290993. Human Resources manager. the company website. Merchandising Agent. Manesar IMT Gurgaon -122016. An ISO 9001:2000 certified company The information in the following company report was obtained from interviews with the Director. business articles. Sector-5.CHAPTER THREE COMPANY PROFILES 1. CONTACT INFORMATION1 Contact Person Lovleen Kumar. Haryana.
Manesar. Okhla Industrial Area. Gurgaon1 6. B-33. 5 From website. phase -1 New Delhi 7. “Build Quality Rather Than Check The Quality. BRIEF HISTORY Modelama was founded in 1979 by Mr. phase -1 10. phase -1 New Delhi 9. phase -1 New Delhi 8. Phase 1 Gurgaon 2.000 square feet. Udyog Vihar Phase -1 II. 204. B-57. Sector-5. owner is Mr. Phase 1 Gurgaon 4.000 square feet. Phase 1 Gurgaon 3. Lalit Gulati as a family-run operation. 45 lakhs with 50 indigenous sewing machines and a workspace of 4. 184. In 1999.asp?msg=2710&cod=newsindetail&nam=>. Okhla Industrial Area. Sector-4 Gurgaon 5. B-80. Other production sites in untranslated Hindi document. Modelama places a great emphasis on technology as the secret to its success. Modelama professionalized its management structure and has been consistently upgrading technology in their production facilities.com/defaultnextone. Vinita. Okhla Industrial Area. interview. <http://apparelresources. IMT Manesar.Road Map 3 Production Units4 1. 7 & 8. Plot No-5. 201.5 III. Okhla Industrial Area.” Apparel Resources.00. From company website. 6 From company website. and Pandey. B-26. Lalit Gulati. Plot No. 4 3 Page 25 . 200. BASIC PROFILE6 Legal Composition Sole proprietorship. Modelama today has ten professionally run production units over 4. In the first year they exported Rs.
offering products such as table linen. 1992. synthetics (viscose. Modafil UK: Laura Ashley.. kidswear.. Kohls-Belk. La Halle. 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. drapery.EOU Information Modelama Exports Ltd. Charming Shoppe Inc. Added outerwear to their product mix in 2001-2002. Product Mix Areas of specialization include outerwear. and blends. GUS. Sears Roebuck & Co. 1996 Charming Shoppes Inc. 2001 Federated Merchandising Group Five Star Award (in Development of Federated Department Stores Private Brands and Labels). Next. Villersey & Boch. Freemans. Uses natural fabrics (cotton. etc. Monoprix. A & F. Canada: Eatons. 2000 Page 26 . AMC. Modelama does not manufacture for the domestic market. Federated Stores (Macy’s). Clients USA: GAP (Banana Republic. and 2002 Associated Merchandising Corporation Outstanding Performance. Saks. polyester. Proffitts. polyamide). Marshalls. Marks & Spencer. H&M. William-E-Sonoma. Grattan.AEPC/REG/MER/47569/N/2001) as a manufacturer/ exporter of readymade garments including woolen. Galeries Lafeyette. 1998. Pottery Barn. Marmaxx. ladies blouses. Westelm. Tommy Hilfiger. nightwear. Incorporates ethnic Indian accents and embroidery into design samples. Lands End. which may have contributed to minimizing seasonality issues. skirts. 1999. 2000. Colt’s Europe: Etam. 1999. dresses. cushion covers. silk. Target Stores. Exports/Imports 100% exports. and home furnishings. Sears Roebuck & Co. Chambers. Eurofiel (Women’s Secret). silk. Nov. LOP NO. is an export oriented unit registered with NEPZ. shorts. Mervyns. trousers. Lane Bryant.4530/2001-100% E. linen.. and decorative items for loungewear like throws. Dayton Hudson Corporation.O. wool). Zellers Australia: Country Road Awards Target Vendor Award of Excellence. knitwear and garments of leather. Old Navy). jute and hemp. 2000.U I/6921dt28/08/01 RCMC NO. Launched Home Textile Collection in 1999. 1993. Hudson Bay. top of beds. Zara. Sales Growth and Profitability Vendor Award.
500 Total employment 500 500 Production workers 450 450 Proportion exported directly --Proportion exported indirectly through intermediaries Misc. FINANCIALS Turnover 70 Turnover (millions USD) 60 60 50 40 30 20 10 0 1981 1985 1990 1995 2000 2002 2005 projected 15 0.5cr. Rs. 3cr.000 30% Rs. 7 ICRIER Data (based on an interview at B-57 Okhla Industrial Area plant in Fall 2005) Page 27 . VA per employee Rs. 2800/per month.000 per year 25. 500 500 450 60% 40% 150. 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. 3000/per month Rs. of pieces exported to the US No. 500 Rs.IV.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. No.
Europe Others 94% Major Clients Brand Federated Stores (Macy’s) Target Stores GAP (incl.V.asp?msg=2710&cod=newsin detail&nam=>. 9 8 Page 28 . which includes not only the factory unit price but the duty cost (AMC and freight). An example given was if the retail price of a given garment manufactured for Target is $9. BRAND INFORMATION8 Modelama's Export Market 1% 5% U.99. 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. Vinita. “Build Quality Rather Than Check The Quality.99.A. ~$2. the unit prices are markedly lower than specialty stores.75 goes to Modelama. 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. Modelama Chairman. <http://apparelresources.99 is the landed cost. Although they get large production volumes from discount retailers. 10 Nearly all brands are FOB with the exception of discount retailers like Target Stores (USA).” Lalit Gulati.” Apparel Resources.S.com/defaultnextone. Of that remaining $3. 60% of that is Target’s profit margin per unit (PMU). “GAP is sourcing worth about $1 billion from India and we are doing more than $10 million with them. Average Unit Prices (per piece of garment supplied) Unit Price Origin Product Mix $5-7 USD U. quoted in 9 Pandey.S. The remaining $3.
Page 29 .7 1 1990 1995 2000 2002 2005 projected Design/Sampling Modelama has a fairly large design department.80.) as well as home furnishing products. 14 Makhijani.asp?em=M&mcode=200602&idx=1083>. “Indian Fashion Firms Adopt Global Pret and Couture. an alumnus of the National Institute of Fashion Technology (NIFT). Typically. Modelama will present their company profile to the buying agencies of MNCs.4 1985 0. subtract a bit. who will then contact them with a development package if their profile fits their needs. for instance.Unit Prices Since MFA Phase-out Unit prices have gone down an estimated 7-10% due to increased global competition. “My team of designers scans international trends and comes up with a tentative collection of not only designs but also shades. The day the researcher observed the process.000 pieces.5 0.. INFRASTRUCTURE Subcontracting Modelama does not appear to subcontract.1 1981 0.ittimes.” <http://www. they were manufacturing garment orders for Charming Shoppes Inc. Production Capacity12 9 8 7 6 5 4 3 2 1 0 Number of Garments Produced (milions) 8 4 2. V.kr/en/node. which varies according to the product.13 Gayatri Lal. Then there is some back and forth communication between Modelama and the MNC to reach an agreement in terms of product design. and get down to manufacturing. Vishnu.”14 11 12 According to interview with the Director. add a bit. Some of the orders can be pretty huge . 13 From interview with Director and Senior Merchandising Officer. is one of the principal designers. We then sit down with the stores. From company website and brochure. and delivery times. volume. Marks and Spencer (Style and Co.co. fine-tune the patterns.11 Production System Uses an assembly line system.
An example line was sewing collar parts with a total of 46 tailors and 5 helpers. The product was women’s fashion blazers for Style and Co. Pneumatic Button Hemming Stations. tearing strength. etc. Programmable Sleeve Setter Stations. Multifusing with Three Track of Loading (High Performance Macpee). Cutting (50-55 workers) The cutting department had five lines of machines laid out with worker stations. Machinery includes Auto Zig Machine. PH check. Auto Cutter (Lectra). Tests include tensile strength. Auto Surging Machine. Differential Feed Machines Needle Feed Machine. Site visited by the researcher employs about 1100 workers (including about 15 accounts staff). input. Autocad (Lectra). Washing machinery includes a wet and dry processing unit comprised of micro processor controlled washer extractors. Approximate number of workers16 Modelama employs a total of ~6. GSM check.” Modelama emphasizes technology and internationally acclaimed systems to maintain a high level of quality. laundering and crocking. Washing (24 workers) and Finishing/ Pressing (175 workers) The finishing area had lines of workers pressing and folding clothes. Auto Dart Making Stations. The floor is laid out in dozens of assembly lines. they use internationally standardized procedures like the traffic light quality assurance system. over 90% male. at the front of which is displayed an “Hourly Production” dry-erase board with the line number. Procedures are based on aql 4 point system by which all fabrics are screened and categorized. 17 Information on machinery was primarily taken from the company website. This was the only department with women. Auto Belt Attaching Stations. 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. output. Top. perc based dry cleaning machines. From interview with Director and Human Resources Manager. Differential and Bottom Cylindrical Bed Unison Feed Machine. Page 30 . Machinery includes Auto Spreaders. color fastness to light.Quality Control15 Modelama’s motto is “build quality rather than check quality.000 workers in all plants. The company deploys over 3000 imported sewing machines with customized workstations. sand blasting. supervisor name. pitting test. Blind Hemmers. Information on workers and floor layout is specific to the unit visited and is taken from an interview with the HR Manager. 15 16 From company website. Air Flotation Tables. In the sewing departments. and brushing machines (from light softener washes to heavy enzymatic washes). and number of workers. Auto Pocket Welting M/C. Departments17 Production (~800 Workers) There are about 560 tailors. Band Knife M/Cs.
calendaring machines and range of buck shapes and steam irons from manufacturers like MACPII. the HR manager said that no incentives are given. stressing how much state-of-the-art machinery has contributed to the quality and productivity of the manufacturing process. Veit. No workers are involved in these meetings. 2448 per month./month) 3500 From interview with HR Manager. The production manager gave the researcher a copy of a time-study conducted for Charming Shoppes. The targets are communicated to workers by line supervisors and dry-erase boards on the production floor that display productivity goals. and unskilled minimum wage was Rs. dummy presses. 200 single head and 6 multiple head computer embroidery machines. Embroidery Did not observe embroidery process during visit. Has hand and machine embroidery capabilities. 3000 per month. Production Manager. VII. Category Tailors +skilled 18 Average Wage (Rs. 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. and Renzacci. indicating that he would like to develop such a system in the future. and line supervisors who perform time studies on particular styles and set worker targets. HR Manager boasted that Modelama was the only factory in India to have this machine. Machinery includes 20m length Schiffley Embroidery (Lasser & Saurer). management states that they set wages higher than minimum wage to get workers to commute. If workers cannot reach their targets. the HR manager stated that no punitive measures are taken as it is prohibited by law. Additional Machinery Factory has a special conveyor system that moves products from assembly lines to other departments. 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. Page 31 . Because the factory is not near a city. Productivity Schemes Company has production planning meetings consisting of the HR Manager.Pressing and finishing machinery include multipresses. flatbeds. However. Trevil. The Director said that workers are given incentives in productivity schemes if they reach their targets. Inc style.
19 Information based on interview with HR Manager and documents given by HR Manager and production manager. After a three-day period. stating. Page 32 . supervisors conduct time studies evaluating the skill level and productivity of a new hire. Expressed dissatisfaction with labor laws requiring double overtime. which is not subject to negotiation. Indicated that there are a few shop floor employees who have remained the two years the factory has been in operation. HUMAN RESOURCE POLICIES19 There does not appear to be common policies across the plants. including ESI and PF. like China. Overtime Management indicated no more than four hours per week per worker.” Labor Turnover Estimated worker turnover per month at 7-10%. VIII. “It should be time-and-a-half. workers are then offered a monthly wage based on this evaluation. 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. except for worker recruitment for middle management positions. Benefits HR Manager indicated that workers receive the social benefits required by law. and that workers receive double wages for overtime hours.
the company recruits from training centers and placement companies and has a formalized policy that the researcher obtained. Worker Training This site does not provide training to its workers. according to G. Manicandan’s “Mapping First Tier Suppliers in Garment Industry in Delhi. To recruit shop floor employees. while dotted-line boxed positions are factory-specific and subject to variance.Management Structure Mr. Phase-I Gurgaon. such as the unit located at 200.” Modelama uses labor contractors for some of its other units. at bus stops. and in nearby worker villages. 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. Anil Chauhan HR Manager Management Staff/Accounts Personne Mr. Recruitment Policy They do not use labor contractors at the unit visited. Lalit Gulati Sole Proprietor Founder/Chairman Mr. K. and vendor codes’ of conduct. Kiran Production Manager Mr. However. However. Lovleen Kumar Director Ms. Modelama’s anti-harassment policy. grievance procedures. Workers are a mix of local villagers and from Gurgaon. standing orders. Beneeta Seigal Senior Merchandising Other Upper Management Positions Mr. the company posts signs on the gate. For middle management positions. workers have a brief orientation session during which they are informed of security measures. Page 33 .
The factory locks its doors at night. and that management works to quickly solve problems in order to maintain an atmosphere of “family. such as a Health and Safety Committee. Manicandan’s “Mapping First Tier Suppliers in Garment Industry in Delhi. Work times for employees were also posted. nor have there been unionization attempts. the company usually pays the medical expense.Dismissal Procedure No information was obtained by the researcher regarding a formalized procedure. Union There is no union in the production site visited. U. A resident doctor is “available at all times. The code of conduct for Charming Shoppes Inc. traceability. and a Sexual Harassment Committee.S. but only in English. 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. companies have required them to uphold a more stringent counter-terrorism model of security in compliance with U. according to the Customers Trade Partnership Against Terrorism. so there is no need for a union.5 km from the factory. they have joint employee-worker committees required by law. If workers suffer from minor injuries. There is a company dentist that comes every Thursday. According to G. the researcher was informed that he was at another production site. or CTPAT model. Customs Security requirements regarding issues like preventing trespassing. Received a Hindi copy of policy.” but when asked to meet the doctor. Page 34 . a Works Committee. and an ESI station 1. All workers were said to have received medical attention. that they can report their grievance to their direct supervisor or upper management. an Anti-Harassment Committee. There are only six recorded injuries at this site for 2006.S.”21 Corporate Responsibility/ Codes of Conduct Modelama’s Anti-Abuse/Harassment Policy is posted on the factory floors in English and in Hindi. but avoids paying for major injuries and illnesses. “We take care of all their problems.20 Grievance Policy Procedure If workers have a problem. tampering. Phase-I Gurgaon and B-57 Phase-I Okhla Industrial Area). was displayed on the factory floor. in compliance 20 21 Received a Hindi copy of group meeting minutes.” there are no doctors in two of Modelama’s other production units (200. preferring to dismiss the workers.” Worker Committees Since there is no union. HR Manager indicated that there are very few worker grievances. Security New security measures have been implemented since the quota phase-out. Medical Care There is a medical room in the factory.
IX. and government bureaucratic hurdles regarding labor law. A business strategy that Modelama is looking into is “triangular shipping. only their department is kept open and the rest of the factory is shut down at 6 pm. and then ship the product from that country. 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. the Chairman stated that though the South is better known for it. the Chairman. In 2002. the former Director stated: Lalit: We do not consider machines as individual equipment but as a complete workstation.asp?msg=2710&cod=newsin detail&nam=>. 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 Pandey. and Sanjay Gulati. “Build Quality Rather Than Check The Quality. We do not need masters. stated that seasonality was not an issue and that they have orders year-round. Vinita. In an interview with Apparel Resources magazine. If Modelama has had as much success in outerwear as they have stated in press releases.22 X.” Apparel Resources. 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. <http://apparelresources. MNCs would present their contract orders to Modelama as an Indian company. 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. Lalit: Machines change according to the product requirement…We have to be flexible because the buyer doesn't buy one thing all the time. 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. The Director mentioned that seasonality is an issue. Lalit Gulati.perator. we need operators who can be trained.” a more developed system of subcontracting modeled on Southeast Asian business strategies.with these measures. Page 35 . however. Modelama would then shift the actual manufacture of the product to either countries with lower labor costs like Sri Lanka or duty-free countries. Modelama successfully invested in the necessary infrastructure to export ~Rs. The HR Manager. it would appear that seasonality should be less of an issue for them than other companies who do not manufacture winter clothing. BUSINESS BOTTLENECKS Main problems hindering financial success according to the Director are poor relative infrastructure.com/defaultnextone. If workers stay for overtime. 25 crore in jackets alone. low relative levels of productivity. whose upper management and design departments would remain in India. relative strength of the Indian rupee to the dollar opposed to weaker Asian currencies.
who was not available on the date of the interview. as it is the most modern. then was directed to a Senior Merchandising agent. The unit visited is the site of their corporate offices and was built two years ago with the help of industrial engineers. PERSONAL EXPERIENCE Modelama used an Italian consulting agency for the design of two of their factories. Modelama was the first company to be interviewed by the researcher. Page 36 . when they began to develop the infrastructure to manufacture outerwear. Contact was made by calling the general inquiry number on the website. but directed the researcher to her colleague. XI. 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]. The high level of attention paid to infrastructure and personnel management is probably not typical of their older factories. Modelama was very open in disclosing information about the factory unit. The only question that management would not answer was regarding a detailed financial breakdown of the company.
raman@shahi. is in Ghaziabad. Shahi Export House has a total of eighteen manufacturing units. BRIEF HISTORY Incorporated in 1974 in Delhi.com Head Office Bangalore Belandur Gate.shahiindia.co. Palmprint Textile. business articles. is former vice chairman of the Apparel Exports Promotion Council of India. Senior Management Ashok Raman.in Ajay Khanna.com Production Units: Plot No. II. Harish Ahuja.24 23 Unit visited by the researcher. Two or three other units are in Delhi (Noida) and a fabric processing unit.khanna@shahi. Divisional Manager of Marketing Mobile: 93-13369269 E-mail: ajay. the company website. Page 37 . The information in the following company report was primarily obtained from interviews with the General and Divisional Managers of Marketing. Sector 28 Faridabad 121008.D.in Head Office Faridabad23 Industrial Plot 1. I. the owner of the company.2. General Manager of Marketing Mobile: 98-18212505 E-mail: ashok. Sector 28. SHAHI EXPORT HOUSE PVT. Sarjapur Main Road Bangalore 560034. Manicandan’s CEC report. 1.co. Giri. and G. LTD. CONTACT INFORMATION Contact People J. The remaining woven and all knit production sites are located in Bangalore. Tel: +91-129-2273970/80 Fax: +91-129-2273485/91 E-Mail: seh@vsnl. Faridabad.com Website: www. Karnataka Tel: +91-80-28439214/15 Fax: +91-80-28439356 E-mail: shahiblr@vsnl. Haryana.
Euro Open. Target Stores. cotton fleece. acrylic wool. Ralph Lauren. yarn dyed single jersey. The knitwear product range includes 3 button polo shirts. men's and ladies' bottoms.26 24 Fashion Newsletter. though any exporter of this size must have at least one registered EOU for importing capabilities. Natural Issue. heavy jersey in cotton. t-shirts. BASIC PROFILE Legal composition of the Company Private Limited Company. lingerie. Seacorn. American Eagle. textured knits. 100% polyester polar fleece.25 Wal-Mart. double mercerized. Product Mix Areas of specialization are mostly ladies woven tops and men’s tops. At Last and Co. Von Daniels. but it is a small fraction of turnover ($5-10 million). It is primarily information taken from the website with a few new passages regarding Human Resources and corporate responsibility.pdf>. Solutions (New York).The fabrics range includes solids. St. Abercrombie & Fitch. tailored collar polo shirts. Cherokee. rib. 26 Remaining client names were obtained from interview with Divisional Manager of Marketing. Page 38 . full jacquards. jacquard. Hollister Co. Cento Mila.. tanks tops. No. pique. 25 From company brochure. John’s Bay. sportswear. Old Navy. Enzo Lorenzo.nsf/pub/Fashion_News_05_02_en2_Webb. 2005. flat back rib. Carolina Colours. Akademiks. A & F. the sole proprietor was Harish Ahuja. and circular woolen knits. Van Heusen. ladies' and girls' dresses. No Boundaries. Shahi has expanded to home furnishings in the past year.com/www/resource. who is now the Managing Director. JC Penny’s. American Khakis. Shahi’s product line covers casual and formal men's and boys'. Bleu. GAP. Exports/Imports 100% exports.. interlock.pdf/$FILE/Fashion _News_05_02_en2_Webb. jackets. turtlenecks. golfwear. Family-owned. nor does it currently have plans to do so. Shahi does not manufacture for the domestic market. polyester cotton. (Pacific Merchants).lawson. indigo dyed units. loungewear. EOU Information No information was obtained regarding registration and EOU capabilities. engineering stripers. Clients Bobbie Brooks (Woman). Faded Glory. mock neck. ladies' & girls' blouses . Arizona Jeans Co.III. Liz Claiborne. which was printed in 2005 by the Bangalore office. Carolina Blues. H & M. Jeans Dynam. Sag Harbor (Sport). The Children’s Place. TKS Basics. Place Jeans. spun filament. Up until a year ago. 2. Cross-Bow. sleepwear. polyester viscose. <www.
4 million 2. It can be none or most of the unit price. Turnover estimates varied by tens of millions of dollars between the GM and the Divisional Manager of Marketing.8 million 7-14 million 14 million % of Sales 50% 12-17% 10-20% 1% 2% 2% 5-10% 10% target Per Unit Price31 $3.5 USD.65 Material Cost Labor Trims and Packing Depreciation Machinery upkeep Overhead Embellishments32 Profit 27 Estimated by General Manager of Marketing.30 $0. so they can only be thought of as a rough approximation.Awards Wal-Mart International Supplier of the Year 2000 (can’t read others) IV.25 $0. 2.lawson. Page 39 . Percent of sales is based on an average estimate given by the Divisional Manager of Marketing.pdf>.8-23. 29 Estimated by General Manager of Marketing.65-$1.07 $0.78-$1.8 million 2. 2005 <www.nsf/pub/Fashion_News_05_02_en2_ Webb. 30 These figures were estimated by the Divisional Manager of Marketing in the space of 5-10 minutes. though generally it is four to seven times the unit price of the garment. Did not obtain average retail markup information. 28 Fashion Newsletter.11 $0. so figures cannot be considered accurate.13 $0.com/www/resource. 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 16.13 $0.8 million 14-28 million 1. No. 31 Based on the company’s average unit price of $6. 32 Embellishment costs such as embroidery depends on style.033-$0. accessed July 2006.pdf/$FILE/Fashion_News_05_02_en2_Webb.65 $0.
V. BRAND INFORMATION
Shahi's Export Market 1% 15% Europe U.S.A.
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.
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,
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
~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.
every hour the target is marked. single needle top and bottom variable feed machines. shipping staff Total number of workers: 3. grading. one for production and another room with rows of computers in which employees work on digitized patterns and samples. Productivity Schemes The unit visited has an industrial engineering department with eight staff. Juki. This unit has an incentive scheme for productivity. desize soft wash and golf ball wash. There are two departments for sampling. Embroidery Most is done by computer. Washing The washing facility puts out over a ton of garments per day through specialized wash treatments such as softener wash. Sampling This is a fairly large department in the production site visited. They also conduct joint department meetings. These meetings set targets for the shop floor workers. who are not involved in these meetings. and there are quality bonuses if clothes do not need repairs. For example. collar/cuff turning and blocking machines. They conduct production planning meetings jointly with managers and supervisors by department. incentives depends on how many pieces are finished. Hashima and Kannegiesser. accounts.000 Mostly female Mixed Machinery 6. in which workers get bonuses for exceeding their targets. In finishing. merchandising. The Divisional Manager of Marketing states that they always had incentive schemes. It is also equipped with single needle lock stitch programmable machines with UBT. Durkopp Adler. The production unit boasts machines from Brother. stone wash. The incentive scheme only applies to skilled and semi-skilled workers.800 in all of Shahi’s Delhi (Faridabad and Noida) units 750 in production site visited The CAM based cutting department can make 75. line supervisors convey target setting to them. in sewing. double needle-needle feed split bar machines. and it was stated that each unit has a similar department. which can be 10-25% of monthly salaries depending on how difficult the style is. but they Page 43 . feed-off-the-arm machines.+Supervisors and dpt/line-in-charge 40 Sampling (think incl in production) 50-150 Remaining marketing. fusing press. 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.000 cuts per day. very little is done by hand. The latest CAD software enables quick processing of pattern creation. This department is responsible for timemotion studies and an operation breakdown. enzyme wash . pocket machines and automatic pocket welters. Its implementation and form depends on the department. Ngai Shing.500 in all of Shahi’s production sites 1.
an increase in attendance. 37 The researcher toured the factory around 5 pm. Workers use their ID card to clock in and out of the factory. 40 G.00040 Minimum wage is posted as follows: Category Wage (Rs. Page 44 . leaving male sewing operators and some female ones./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. 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. VII./month) Unskilled helper 2200 Semi-skilled operator 3600 Skilled operator 6.38 Wages As Estimated by Divisional Manager of Marketing39: Category Average Wage (Rs. Manicandan’s CEC report. Benefits of the incentive scheme include a 10% increase in productivity in past two years in the sewing department. 39 Stated that these numbers do not include ESI and PF. these benefits are additional. when the first shift of workers were getting off. This early shift seemed to be entirely female.have recently gone through major changes in their implementation. Manicandan’s CEC report says a supervisor with eight years experience makes Rs. lower labor turnover. there was still a strong female presence in the factory. However. and a decrease of waste in the cutting department.000 Supervisors/Mid Mgmt 10. the workers at this unit do not get a tea break. 4200. and another fifteen-minute tea break between lunch and the end of their shift. 38 According to G. The workers get a fifteen-minute tea break between the start of work and their half-hour lunch break.
Estimated two hours per week per worker in the sewing and finishing departments. Labor Turnover Estimated at 7-10% per month. Wages are fixed and there is no negotiation. People who are motivated to excel and trained in different disciplines of garment 41 From interview with the Divisional Manager of Marketing. and a three-month maternity leave. VIII. 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. Page 45 . The Shahi workforce consists of committed and highly skilled people. if overtime is needed.” ~Shahi’s website Shahi’s updated brochure includes lengthy passages stating their dedication to innovative Human Resources approaches.Wage Setting Procedure Managers interview workers and then take a trial of their work for one day. HUMAN RESOURCE POLICIES41 “Human intelligence is the greatest asset which we possess. Overtime Stated that there is not a lot of overtime because they plan production with target setting. after which the HR manager will put them into a set wage scale depending on their ability. PF. Workers also have access to an on-site crèche for their children during the workday. 7500 are provided with ESI benefits. Workers who receive less than Rs. which the researcher observed. and negligible overtime for the other departments. Most sewing operators have been at Shahi for around two years. Benefits Stated that workers do receive ESI. Workers are then on a three to six month productivity probation.
Shahi has ensured all systems are in place to make sure that everybody works in an extremely salubrious environment. but it is not necessary to do so here. so the labor is here. making Shahi one of the most sought after organizations to work for in the garments arena. it is all direct employment. but definitely not. Some are skilled. Dismissal Procedure No information was obtained regarding a formalized procedure.manufacturing. Labor problems get a kind ear and are followed up on a priority basis. so they do not need to train them. they provide transportation to overcome those issues. 42 The brochure and website both state that human resources are developed using the training procedures of Kurt Salmon Associates. Page 46 . Particularly so as clothing corporations the world over are labor intensive and it’s imperative that they are well looked after. In the Shahi factories in Bangalore. workers revealed that there had been unionizing attempts that were suppressed by the management. They are able to have female workers because they are in heart of Faridabad. In G. 42 From company brochure and website. 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. Training depends on the job description of the worker. There is also an orientation program for upper level staff. Manicandan’s CEC report. Worker Committees Stated that there is a worker forum that managers also attend. Grievance Policy Procedure Presumably. Shahi has invested in a dedicated personnel management division to take care of its labor. Worker Training Shahi trains the unskilled operators for a period of a week. Union Didn’t ask directly. and union organizers were either dismissed or isolated from other employees. They do not recruit for shop floor positions beyond posting signs on their gates and through wordof-mouth. not the outskirts of cities. Recruitment Policy Shahi states that they do not use a labor contractor.
44 Safety measures are given utmost importance. And some of the remarkable provisions for employees include: eligibility of workers for health insurance. and a first aid room in the facility. Codes of conduct posted in factory include Carafour. From interview with Divisional Manager of Marketing and joint worker-manager magazine. and nutrition related topics. Best employee awards are given for overall discipline. More of these were in both Hindi and English than I’ve seen at other factories. and support their families in the best way possible.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. hygiene. Wal-Mart. and lectures. 44 43 Page 47 . Target Stores.45 Medical Care There are male and female onsite doctors and nurses in case of industrial accidents. Charming Shoppes Inc. Dayton Hudson Corporation. training facilities for employees. The Limited. and American Eagle. promote. seminars.Corporate Responsibility/ Codes of Conduct The company has a biweekly English magazine that publishes news and articles by workers. securing of employees’ earnings through e-com (EDI) and ATM cards. Liz Claiborne. The company organizes fire drills to keep employees alert in case of emergencies..” Shahi’s updated brochure includes add-ons regarding treatment of their labor force. They have activities for the workers such as an annual cultural week with games and contacts. in fact nearly all had a Hindi translation. 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. Nautica. 45 From company brochure and website. It aims at providing a conducive environment for employees to protect. Evaucation boards are put up on all floors along with photographs of fire fighting personnel. American Pacific. Awareness programs are conducted for employees on health. educational facilities for children. attendance and productivity. Shahi Export House adheres to International Labor Legislation. Strict compliance with anti-child labor law is ensured. personality development through work shops. A full-fledged Dispensary and Ambulance is provided with a doctor always on standby.” “Anything worth doing is worth doing well” and one about the importance of personal hygiene.
where the garment industry is over 90% male. traceability. Shahi does not have a sexual harassment committee. PERSONAL EXPERIENCE Obtained contact information from NIFT. It is not a huge issue. U.000 pieces per month. 46 47 From interview with Divisional Manager of Marketing. Manicandan’s CEC report.47 XI. Also argued for more labor flexibility. Page 48 . since it takes too much time to get clearance at the ports. From interview with Professor Rajesh Bheda of NIFT. or CTPAT model. Shahi is currently constructing a production unit in Bangalore that would have a capacity of manufacturing 200. however said they currently retain workers during the off-season because it becomes a problem to rehire workers.46 Shahi recently opened up a warehouse in New Jersey. tampering.S. though the researcher was not permitted to take pictures during the tour. (Stated that retained incentive schemes and everything off-season. only different season. but I did not have to show it.) X. The production unit was enormous. as he would not permit the researcher to do so. now they are getting competition from small exporters. However. as they produce about 2. Customs Security requirements regarding issues like preventing trespassing. according to G. However Shahi is trying to diversify their product range so that it becomes even less of an issue. who reported her case to the police. IX. INDUSTRY COMMENTS Trying to build up capacity to produce outerwear by next year to reduce seasonality issues. now they do. Suppliers have changed post-quota. Mentioned that Southeast Asia has the same problem of seasonality. before they didn’t have the quota holdings to compete. Shahi is notable in that they have a majority female workforce in a place like Delhi. Stated that they need better infrastructure regarding port system. Website contact numbers are out-of-date.4 million pieces during the peak season and 2. BUSINESS BOTTLENECKS Seasonality is an issue. Shahi has to decline some orders during peak season (OctoberMay). The picture of the minimum wage was taken by the manager.Security System New security measures have been implemented since the quota phase-out. and there was some controversy a few years back regarding a male manager and a female worker. according to the Customers Trade Partnership Against Terrorism.1 million PCs during the off-peak season. Supposedly all visitors have to have proof of identity. companies have required them to uphold a more stringent counter-terrorism model of security in compliance with U.S. The Marketing Managers did not mention any new initiatives taken to deal with the issue. and then not working to full capacity during the off-season. The security guards inside were asleep.
51 48 49 Unit visited by the researcher.com Production Units Magsons Exports.K. who had contacts in the garment and textile industry. Phase-I New Delhi. which roughly doubled each year until 1984.com Manish Mall Assistant Production Manager Mobile: 9899096999 Registered Office48 D-42 Okhla Industrial Area.L. HR strategies and production from Assistant Production Manager. The company has increased sales an estimated 30-40% in the past year. south of Gurgaon). and an interview with an Assistant Production manager. 51 Information on company background from Managing Director. he started business in 1977 with an investment of Rs. BRIEF HISTORY Company established in 1976 by Mr.000 ($444 USD50). 50 Conversions are based on today’s exchange rate (Rs. Managing Director Senior Vice-Chairman of the AEPC (Apparel Export Promotion Council) Mobile: 9810029999 E-mail: hklmagu@jyotiapparels. Magu and deceased brother. II. Page 49 . and remaining information is from observations unless otherwise noted. He had no experience. of which five are in Gurgaon. 000 ($11. H. 26818977.3. The company’s turnover was Rs. 110020 (India) Tel: +91-11-26816917. shop floor observations by the researcher. Magu. two are in Manesar (southwest of Delhi. and two are in Okhla Industrial Area (New Delhi).111 USD) in the first year. but by networking through his brother. 20. CONTACT INFORMATION Contact People H. E-mail: jyotiapparels@vsnl. Gurgaon49 The researcher was not able to obtain the addresses of all nine factory sites. 26810804 (D) Fax: +91-11-26819684. Unit visited by the researcher. L. 26817910 Website: Jyoti Apparels does not have a website. K. 500. due to the quota phase-out. a company profile and Standard Operating Procedures given by the Managing Director. I. 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. 41/42 Phase IV Udyog Vihar. 45~$1) and are not adjusted for inflation.
Siplec (E Leclerc). skirts. . Cabella’s. and other garments. Manufactures woven (80%) and knitted (20%) garments using mostly yarn dyes.” it was pre-quota phase-out January 2005). J D Williams. V F Jeanswear (Wrangler). K. blouses. L. Reitman Israel: Fenomen Malaysia: Metro Jaya Spain: Mango. Zeeman Italy: La Rinascente. Brumel. The Farmers Trading Co. India Imports. Specialize in high fashion made of exclusive prints. and ethnic handiwork accents. viscose yarn and denim fabrics. sequins. Wal*Mart. Jyoti’s strengths (and the North in general) are in high fashion garments with embroidery.D. Debenhams. British Home Stores. T. Page 50 . Product Mix Areas of specialization include ladies’ (roughy 80% of production volume). Miss Erica UK: Marks & Spencer. owners are Mr. Promod Germany: Neckerman. Tesco France: C. Onyx Denmark: Kompagniet Switzerland: Manor. Zara-Indtex Awards The researcher was unable to obtain any information on vendor awards. Evans. Jyoti does not manufacture for the domestic market. with embroidery and beadwork. Donn Kenny. International. Zellers. Gus. Karstadt Netherlands: Wehkamp. House of Frasers. BASIC PROFILE Legal composition of the Company Partnership firm. Adams. Oxford Industries Inc. Exports/Imports 100% exports. Canada: Hudson Bay Co. Charming Shoppes of America (CSI). Jyoti manufactures some winter clothing (about 20% of production volume). Blair Corporation). solid dye. K. Roamans. Otto Australia and New Zealand: Just Jeans. (Target Stores. gents.. Kishore Magu EOU Information No information was obtained regarding a registered EOU. but the majority is summer clothing.. Woolrich. Clients52 USA: Kellwood (Sagharbor). Carol Anderson. maybe 2004.III. Littlewood. H. Magu and Mr. Primark. 52 According to profile (which is out-of-date. Brylane. Prenatal. Enjoy. Freeman’s. Phool Fashion Ltd. Lane Bryant. as it mentions “Quota Holdings: We have sufficient quotas in all categories of USA. and children’s (roughly 15-20%) readymade tops. Mexx. Europe and Canada.
555 USD)53 Breakdown of Sales Revenue54 Est USD 2006 Per % Retail Garment55 Price56 Material Cost 9. Japan. which accounts for the inconsistencies.6-2. retain 75-84% of the sale of a retail item.6 million 10 $0.S. excluding the $12 million USD figure from the company profile.3 million 60 $3 10-15% Labor 1.50 1.A.6-2.5% Other Manufacturing 1. and cannot be used as an indicator of profit. 54 These figures were estimated by the Managing Director in the space of 5-10 minutes.000.50 1. 57 Since Jyoti’s unit prices are mostly FOB.57 V. so they can only be thought of as a rough approximation. FINANCIALS Turnover 12 million USD (either 2003 or 2004) Current year 18 million USD Other Financials Current year sales Rs. BRAND INFORMATION Jyoti's Export Market % of Sales U. this figure includes the amount the MNC spends on shipping.IV.5% Overhead and profit 1. duty.000 (15. 700.6 million 10 $0.50 1.6-2. Malaysia) Europe 53 Financials.5% Subcontracting Cost 1.5% MNC’s that source from Jyoti. were estimated by the Managing Director on two different occasions. 10% 50% 40% Others (Canada. costs. 55 Based on the company’s average unit price of $5 USD.50 1.6 million 10 $0. etc. 56 Average retail markup is four ($20) to six ($30) times the unit price of the garment.6-2. Latin America. on average.6 million 10 $0. Page 51 .
Subcontracting has not changed since quota phase-out. one is 8. It is notable that Jyoti subcontracts to a Shahi processing facility. Prices and other sourcing details are negotiated through the buying agencies.000 square meters. and two are 600 square meters. Did not mention any direct relationships.58 Production System 58 See Standard Operating Procedures for detailed subcontracting information. but later stated that overall they have remained stable. 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. Subcontracting Jyoti does not subcontract the production process. Two of the factories are 2.000 square meters. American Eagle. the company has about 20. which is not a production facility). four are 1. INFRASTRUCTURE Company has nine production facilities. Page 52 . primarily through the Triburg buying agency.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. he stated that unit prices have decreased about 10%. VI.000 square meters.000 square feet of land spread over ten different areas (including the registered office. but they do subcontract their fabric sourcing and processing. Overall. and Gloria Vanderbilt through buying agencies.
elastic insertion. which varies according to the product. belt attaching. The researcher observed production of ladies’ white blouses for Emma James (Liz Claiborne). perk-chloro plants. Quality Control Jyoti Apparels has a quality control assurance team with both an in-house auditing scheme and third-party inspection. piccoting. feed of the arm. Managing Director and Assistant Production manager stated they were all skilled. and brown machine-embroidered skirts for American Eagle. fusing machines. cross stitch/lock stitch button/ button hole/ snaps. shell stitch (Merrow). usually 80. Design/Sampling Small design department. over locks. 59 60 See SOPs for detailed quality control schemes.000 pieces per month. washing machines and set of 84 stem boiler irons. lock stitch single needle and double needle.Uses an assembly line system. between 240.59 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. 8000 woven pieces per day and 1200 knit pieces per day. Page 53 . computer embroidery. Production Capacity According to profile. but primarily just take paper designs from buyers and converts it to clothing. According to company profile. At production site visited.000 pieces per month.000 and 300. dry cleaning.000-90. Sometimes Jyoti has people from UK and France do designs for them.
though the researcher was not able to obtain a photograph of the plan. cutting. and embroidery departments.Ground Floor Plan Second Floor Plan There is also a basement floor with fabric and accessory storage. Page 54 .
There were two workers on the machines. This was the only department that had any female workers.(Right) A view of the basement and ground floor. one cutting assistant. Checking/ Finishing/ Pressing (40-50 workers) The finishing area had lines of workers pressing and folding clothes. is data for production site visited. Page 55 . The workers in this department were all male.. Packing (10-15 workers) Did not observe department during visit. Production (~180-190 Workers)61 on Second Floor Machinery includes about 200 Juki stitching machines. two supervisors in an office in the corner. Sampling (15-25 workers) The fabric store had a sign reading “Triburg. Document given to Buyer About Shop Floor Management (was displayed on shop floor. Machinery includes one bandknife cutting machine and two straight knife machines. The department has one finishing supervisor and one assistant finishing supervisor. and the remaining workers helpers. directly facing cutting tables and below looking up at the finishing department. etc.” which is the buying agency that many firms deal with. Fabric and Accessories Store. There were no fans in this room. Washing (10-15 workers) Washing was located on the topmost floor of the building. 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. with one cutting master. It did not seem as modern a unit as other top tier factories. Cutting (20-30 workers) in Basement There are four lines in the cutting area. three thread-cutters.” so they are barefoot when operating the computer embroidery machine. Some of the fans were broken or not on. observations. Embroidery (observed 5-7 workers) Workers have to take off shoes before coming in because of “dust.
Labor Turnover Estimated worker turnover per month at 20%. VII. If workers exceed this by 1 lakh. workers are offered a wage based on this evaluation. then the factory will give incentives.000-90. Benefits Production manager indicated that workers receive ESI and PF. Wage Setting Procedure For shop floor workers. After one day period. and gave a copy of the minimum wage scheme for Haryana. Then he stated that they conduct production planning meetings with the factory manager. Wise Tag check with care. finishing supervisor.000 pieces per month. which is not subject to negotiation. merchant/buyer (for style). production manager. The production unit visited usually produces 80. according to the Assistant Production Manager. However. The tailors and some finishing employees receive wages on a daily basis. while the rest of the employees receive a monthly salary. there is an incentive scheme that depends on monthly shippings. First the Assistant Production Manager stated that they do not perform time studies.O. and cutting supervisor who set the production lines and targets based on manual time-studies.Step 1—Care label. 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. rather they calculate targets manually by hourly production rate. 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. security tag Four operators Step 2—Initial Pressing One supervisor Step 3—P. Page 56 . it is all left to selfdiscipline. supervisors conduct time studies evaluating the skill level and productivity of a new hire. extra button.
though the Director mentioned that workers learn on the job. Worker Training Sometimes Jyoti trains workers during a lean period if there is time. but managers observe productivity and hire skilled workers. L. and the extent of their recruitment is posting signs on their front gates. Usually 20-25 tailors take 10-15 days to train. The Assistant Production Manager stated that if workers are not productive. The Managing Director states that they recruit people from Apparel Training and Design Centers. but these tend to be more middle management people. 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. Workers do not need experience per se. they are given a one month notice so they can find another job and they receive a letter of termination. while dotted-line boxed positions are factory-specific and subject to variance. HUMAN RESOURCE POLICIES There are no common policies across the plants.VIII. Dismissal Procedure The Managing Director stated that they keep workers for 240 days and then change their workforce. Management Structure Mr. Magu Partner Founder/Chairman Mr. Page 57 . because otherwise they become permanent and you have to pay them more. Recruitment Policy Jyoti states that they do not use labor contractors. K. H.
He said they have the joint employee-worker committees required by law since there is no union. Does not have its own employee code of conduct. Second time took my name. production. The first time security did not take my name in the confusion of finding a manager. or CTPAT model. they should run cargo through machines instead. 62 Based on interview with MD and Asst Production Manager. A lot of money is invested into customs. but did not give a visitor’s pass. He stated that old employees with a union do not work as hard. companies have required them to uphold a more stringent counter-terrorism model of security in compliance with U. Customs Security requirements regarding issues like preventing trespassing. No common policies (with HR. Grievance Policy Procedure/Corporate Responsibility/ Codes of Conduct No information was obtained regarding a formalized grievance policy procedure.. Medical Care There are doctors nearby the factories and first-aid kits in the production sites.Union The corporate office used to be a production site. they cannot transfer goods during “peak hours. etc. the Assistant Production Manager stated that they do have committees. etc). though neither of them knew where the medical facilities were located. traceability.) across plants except for buyers code of conduct. etc. labor laws (especially the lack of hire and fire exit policy).S. according to the Customers Trade Partnership Against Terrorism. higher material costs (indigenous. Believes that there should be special customs lines at airports so that everything is not searched. he moved production to another site (now there is just the accounts staff and some sampling/design). but no visitor’s pass. U. no imports because would have to pay landed costs). he did not. tampering. IX. anti-harassment. 63 Based on interview with Managing Director. such as environmental. ports. and high transaction charges.S. which makes it difficult to meet deadlines.” trucks are only allowed to transport good between 11 and 4. However. high rate of interest. but talked about them vaguely and though he stated that he could give me committee minutes. BUSINESS BOTTLENECKS63 Main problems facing the industry are poor infrastructure (need better highways. The production site visited did not have a union. and they have monthly meetings. but the Managing Director stated that when the old employees formed a union. There is a path behind the building to get to the main office over ripped metal sheets over grates. duties.62 Security System New security measures have been implemented since the quota phase-out. For example. etc. Page 58 . Worker Committees The Managing Director stated that they do not have any worker committees. lack of good fabric processing machinery.
so could not take orders from them anymore. like American Eagle. the overseas vendors couldn’t sell their inventory. Companies are very upset with the government’s “bureaucratic hurdles. or even leave their air-conditioned offices. production manager. etc. PERSONAL EXPERIENCE When observed work at the production site. Post-quota phase-out resulted in a boom for Indian business. and had everyone borrowing money from the bank and investing in huge factories.X. and one of them glanced at a time-study once. labor laws would be relaxed. but unit prices got too low. Phase out of quota system has brought in new buyers. and did nothing the rest of the time. Jyoti was an extremely open company in many respects. XI. because of the late summer. They’ve had to become very quality-conscious and price-conscious. etc. The Assistant Production Manager was almost never at the factory when the researcher came to the production site. making access to plants easier. They played solitaire. which is the capacity in which the researcher initially came to interview him. China is their main competitor. Page 59 . before couldn’t have more because of quotas. it was difficult to deal in huge quantities because of the possibility of mistakes in such a large order. as were much of the staff at the production site. who also permitted the researcher to take photos. did not see upper management (factory manager.) or some supervisors do anything. INDUSTRY COMMENTS64 Jyoti used to deal with Wal-Mart and Target. 64 Based on interview with the Managing Director. as they still have the edge on labor productivity and good infrastructure. The Managing Director is the Senior Vice-Chairman of the AEPC.” in which infrastructure would be built up by the government. Also. He was very open in disclosing information.” Jyoti supports “special garment zones. This year.
110015 (India) Tel: +91-11-25431408. 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. Udyog Vihar. Page 60 . 25454895 Contact person: Padam Vaish. 25172437. 479. Phase I. 67 Unit visited by the researcher. Phase I. Udyog Vihar. New Delhi 2. Manicandan’s CEC report. 192. 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. 66 According to company website. black iron. Gurgaon67 6. including: 1. and G. and Bangalore. Phase I. Phase-I. incorporated R and Co. Phase-I Gurgaon The company profiled has over ten manufacturing units. Udyog Vihar. the current Chairman. 239. Gurgaon. in 1977.69 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. Mayapuri Industrial Area. 236. Gurgaon 5. II. Gurgaon 2. Udyog Vihar. Gurgaon. Gurgaon 4. Gurgaon 8. CONTACT INFORMATION65 Registered Office: 2/2. 133. aluminum hardware. Udyog Vihar. an interview with a General Manager of Operations. I. Ware Housing Scheme Kriti Nagar. Phase III. Gurgaon 3. Udyog Vihar. Udyog Vihar. BRIEF HISTORY68 Vijay Uppal. 225. 25172438 Fax: +91-11-25451549. including: 1.4. 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. B-108. Udyog Vihar. Udyog Vihar. 506. G International was established in 1983 in Delhi and 1996 in Gurgaon. 68 According to the company website. 208. and ironmongery. Phase III. Gurgaon 7. New Delhi . Noida. 69 From an interview with the General Manager of Operations. 151. Phase IV. Phase I. with one woven garments manufacturing unit in Delhi. General Manager of Operations 236 Udyog Vihar Phase-I.
Crew. Cortefiel. knit. Lane Bryant. Ann Taylor. skirts. BCBG. Mexx. Wal-Mart. Spigel.Y. It specializes in (primarily) outerwear for men. Monsoon. which will specialize in ready-made specialty shirts. the group includes eight companies. Liz Claiborne.. to brands such as GAP. trousers. Awards 70 According to the company website. anilines. Betty Barclay. and Marks & Spencer. BASIC PROFILE70 Legal composition of the Company Virender Uppal is the Managing Director. Timberland. vests. skirts etc. semi-nubuck. ladies tops. May Stores. waxy distressed/ oily nappaloans. cargo pants and shorts. J.N. semi anilines. Target. Debhnams.K. Federated Stores. Polo Ralph Lauren. Product Mix Areas of specialization include ready-made woven. Land’s End. R Global was incorporated in 2002 at Bangalore. Calvin Klein... Etams Miss Sixty. Mervyn’s. Women’s Secret. antiques.1992. Sigrid Olsen. pants and shorts. Next. while Vijay Uppal and Gaurav Uppal are Joint Managing Directors. The R Group has recently established a fully integrated production line in Noida. III. The R group does not manufacture for the domestic market. The tannery has modern finishing technology for leather finishes of Sheep. Including the original R and Co. pants. The group launched a leather manufacturing unit in 1989 specializing in high fashion leatherwear under the management of Sunil Kapur. and leather high fashion garments for men. The R Group began producing knitwear when Gaurav Uppal joined the company management. Page 61 . Clients The R Group sources to over fifteen countries. The company has set up its own offices in Ludhiana and Tirupur in order to better source fabric. Charming Shoppe. Goat and Cow leather as well as nubuck. women and children such as jackets. It has initiated a backward integration project by starting its own tannery in Hyderabad. Inc. Dillard’s Sears. D. Tommy Hilfiger. women and children including shirts. The company has already started manufacturing leather accessories and is further expanding with a bigger factory planned in Gurgaon. Exports/Imports 100% exports.
90% Major Clients Brand GAP Macy’s Wal-Mart Dillards Liz Claiborne Federated Stores 71 72 UK and Japan Origin U. Export Performance Chart71 Other Financials No other financial information was obtained.A. U.S.A. From an interview with the General Manager of Operations.A. U.S. U.IV.A. U. BRAND INFORMATION72 Export Market of the R Gro 10% U.S.A.S. 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. V.S.A. FINANCIALS Turnover The R group has an expected annual turnover of US $ 85 million for the year 2005. Page 62 .S.A.S. U.
000 pieces. since they often don’t have established offices. Wal-Mart usually orders the largest volume. shows a sample range. though not to an established company or to direct employees. G International takes indicative orders from the buyer. INFRASTRUCTURE74 The R Group has over twenty-two integrated manufacturing units in Delhi. though there are fewer orders in the fall and winter. VI. The R Group’s leather manufacturing unit has an annual production capacity of 500. For a more detailed quality control process. G International does not use a recruiting agency or a labor contractor. Page 63 . 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). unless otherwise indicated. 73 74 Including Wal-Mart. see company website. Gurgaon. the company’s knitwear divison. 75 From an interview with the General Manager of Operations. Production Capacity The R Group’s woven division has an in-house annual production capacity of 10 million pieces. or sometimes they embroider in their homes. Taken from the company website. 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. and the buyer selects and negotiates the contract. However. has an annual production capacity of 2 million knitted garments. 76 From an interview with the General Manager of Operations. and Bangalore. Quality Control The General Manager of Operations stated they use a “2.75 Production System The R Group uses an assembly line system. Noida. there has been a 15-20% increase in orders. They set up a shelter (“shack”) for local tailors to do the hand embroidery.Buying Agency or Direct Contracts are mostly negotiated through buying agencies.5 APQ” quality check standard across the board. though they occasionally take direct orders. Smaller companies are more likely to be direct orders. R Global. Subcontracting G International subcontracts their hand embroidery.
and worker welfare programs. the General Manager refused to give any more specific numbers of workers. time and motion studies. such as medical checkups.78 The R Group has a Research and Development department for the technical aspects of garment manufacturing.000 workers. They incorporate corporate social responsibility schemes into their productivity ideas. from the sampling stage (product and pattern engineering. Page 64 . 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. operation research). Productivity Schemes The company has production planning meetings in which targets are set and the workers do not participate. 77 After disclosing this information regarding the number of skilled workers. cutting (Digitizers.Approximate number of workers in all facilities The R Group has a staff of over 10. with 1200 workers at this site (approximately 95% male.79 VII. material flow). 79 From the company website.000. 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. to the production stage (work aids. G International has a total of 7. an estimate was approximately Rs. scholarships for workers’ children. 80 From an interview with the General Manager of Operations. 700 per month extra.77 Machinery R Group’s production facilities use machinery at every point in the production process including designing (CAD). to the pre-production stage (layout and machine engineering. operator training and skill analysis). Plotters & Automated Cutting Machines) and fabric testing (fully equipped laboratory) and fusing. Preliminary worker interviews revealed that this company was considered one of the worst factories to work for in Gurgaon. 78 From an interview with the General Manager of Operations. They have incentive schemes for things like 100% attendance. 5% female).
Category (from pay slip) Tailor Sewing Operator Helper (8 months experience) Unskilled helper Helper (production) Wage (Rs. 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. 81 From G. supervisors conduct time studies evaluating the skill level and productivity of a new hire. HR Manager stated that wages increase after a year. Page 65 . workers are then offered a monthly wage based on this evaluation. Gaurav Uppal Joint Managing Director Mr. Virender Uppal Managing Director Founder/Chairman Mr. HUMAN RESOURCE POLICIES Management Structure Mr. and 225 UV.Wages81 The wage amount excludes overtime payment. Units visited in his report are Gurgaon Phase-1 192 UV. Overtime payment is Rs. After a three-day period. 15 per hour. which is made on a different date than the regular salary. Benefits According to the CEC report. VIII. which is not subject to negotiation./month) 2600 2750 2344 1893 2341 Wage Setting For shop floor workers. workers receive 12% PF and 2% ESI. Vijay Uppal Joint Managing Director Mr. Manicandan’s CEC report. while dotted-line boxed positions are factory-specific and subject to variance. which is reportedly not always paid. 151 UV. none of which were visited by this researcher. though they do not always receive their PF once they leave the company.
that they engage in the same kinds of recruitment. customer friendly. IX. like the labor norms in China. Other Human Resource Policies No information was obtained regarding a formalized dismissal procedure. [the R Group] is seen as a highlighted-tech. Medical Care No information was obtained regarding on-site medical care. or a union. 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. Researcher: But you said you didn’t use labor contractors. More than local labor laws. grievance policy. According to G. BUSINESS BOTTLENECKS The General Manager stated that buyer requirements like double pay during overtime are holding the industry back. These problems are taken care of with labor contractors. Manicandan’s CEC report. no. Today. Company G and the R Group does contract temporary laborers and subcontract to a labor contractor. buyer codes of conduct are hurting business because they are more strict. The General Manager stated that there are common policies across the plants. Researcher: Is labor flexibility or the lack of hire-and-fire policies an issue? General Manager of Operations: No. then tests worker productivity for an hour and a half. So how do you overcome these issues? General Manager of Operations: Oh. eco-responsive corporate citizen that is Shaping a Better Tomorrow for everyone. He stated that it should be looser. worker committees. Workers receive a letter of contract. interviews applicants. not anymore. Page 66 . Security System No information was obtained regarding a security system. However. Recruitment Policy The facility posts signs on gates. Training usually takes one or two days and is done through the research and development department. No other information about the R & D department at this specific facility was given.” The company has a manual code of conduct that the General Manager stated is given to each employee.Worker Training The facility sometimes trains workers if the operation is difficult. 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. we do more incentive programs and get better performance out of our existing workforce. well.
every one of them was canceled by the General Manager. When asked about the number of skilled workers. General questions about labor laws or productivity issues usually prompt details and complaints. G International is working on converting to a single product system within the next two or three months (August 2006). Although the researcher obtained a employee code of conduct handbook. who was not at the factory when the researcher visited. The work culture in the south is “different—more productive and efficient. In general. the Northern area of India is more embroidery and hand-work intensive and is multiproduct. Because they are trying to increase productivity. he initially would not let it leave the building. PERSONAL EXPERIENCE The R Group was extremely difficult to both interview with and extract information. Furthermore. as it would tell them new government policies and how to best utilize the system. especially in regards to quotas. he asked “why do you want to know that” and refused to give much more information past that. though several follow-up interviews were scheduled. It would be better to simply show up or not leave an option of calling before coming. Virender Uppal (the MD of the R Group) is a former Chairman of the AEPC. They are also setting up a leather accessory factory at Gurgaon. The General Manager stated that the AEPC was much more useful before the MFA phase-out. Page 67 . He refused to schedule an interview solely with the HR Manager. which makes productivity more difficult to increase. INDUSTRY COMMENTS The R Group is in the process of setting up a backward integration project for their knits division. The researcher was directed to the General Manager at a G International plant for an interview.” The South is also usually single product. but he answered questions in a more direct. He implied it has limited use after the quota phase-out. brief way. and avoided any other types of follow-up including the suggestion of a phone interview. XI. and he was much more reserved and suspicious.X.
” The House of Pearl is focused 82 83 Unit visited by the researcher. Manicandan’s CEC report. 870. Company Secretary Tel: 95-124-4308164 E-mail: jayants@pearlglobal. Gurgaon 3. BRIEF HISTORY83 Pearl Global was incorporated in 1979. Phase I. business began in the 1980s. Page 68 . PEARL GLOBAL LTD. Phase I. Gurgaon 2. Chief Finance Officer Tel: 91-124-4308201 rishiv@pearlglobal. CONTACT INFORMATION Contact People: Deepak Seth. Haryana Tel : 91-124-4004086/87/88/89/90 Fax: 95-124-4004067/85 Website: www. Udyog Vihar. Community Centre Naraina Industrial Area Phase-II New Delhi – 110 028 Tel : 011-51417680-82 Corporate Office82: 446 Udyog Vihar. Udyog Vihar. and an interview with the Company Secretary. the company website. In 1993 it became a public limited company. Gurgaon II. Gurgaon 4.com Rishi Vig. Phase V. 222. From an interview with the Chief Finance Officer. and its first manufacturing facility was established in 1989.com Production Units: 1.5. Chairman deepaks@pearlglobal. The company structure of Pearl Global is extremely unique. I. G. The information in the following company report was obtained primarily from an interview with the Chief Finance Officer. Udyog Vihar. Udyog Vihar.com Jayant Sood.pearlglobal.com Registered Office: A-3. 138. Phase-V Gurgaon – 122 016. 446. as it includes all parts of the garment industry under the “House of Pearl. online business publications and press releases. Phase V.
Dillards.) for the year 1990 . Pearl Academy of Fashion Domestic. which together yield a combined turnover exceeding U. It offers full services to large retailers with the chain broken into business units that cater to different product lines. It also has businesses in Hong Kong (NorWest) and the UK (Poetic Gem).1993.C. vests. shorts. The House of Pearl includes designing and manufacturing units. Clients Abercrombie & Fitch. marketing units in the U. ethnicwear. as a Special Invitee. t-shirts. bottoms. Nex86. 84 85 See company website for list of shareholders. NorPearl. nightwear dresses. He has been actively involved with the development of readymade garment industry in India. Marks and Spencer. Castromen. trousers. stain sealed garments using goretex and acquatex. Inc. dresses. He has successfully promoted and established the fashion apparel brand "Lerros" in Europe. Bangladesh: low cost.E. Esprit.S. The company recently entered into a business and education partnership with Babson College in the U. basic stuff. Karstadt/Neckermann. Pearl Global does not manufacture for the domestic market. is establishing a U.S. $200 million. H & M85. From company website. warehouse and distribution. Wal-Mart. Lerros.E. and outerwear. Besides having been elected to the Executive committee of the Apparel Export Promotion Council (A.P. Liz Claiborne. Siplec.S.84 Exports/Imports 100% exports. III. suits. skirts. including blouses.P. 86 From an interview with Chief Finance Officer. children’s. and the UK. The Chairman of Pearl Global established a fashion and design academy.on the apparel sector with manufacturing bases in India (primarily Pearl Global Ltd. Charming Shoppes.) and a global network of business associates and customers. he has been inducted to the Executive Committee of A.S. Page 69 . NorPlanet Pearl Global has manufactured women’s.C. GAP (including Banana Republic and Old Navy). JC Pennys. Product Mix Areas of specialization include: India: woven cotton and value-added cotton.” 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). George (Wal-Mart).. brand “Kool Hearts. etc. children’s and men’s shirts. BASIC PROFILE Legal composition of the Company Public limited company. Kohls.
Pearl announced a dividend of 30 per cent for the year [subject to shareholders’ approval].9 per cent to Rs 159. The revenue of the company during the year was up 31.com/articleshow/1690384.IV.5 crore [from 120. 90 “Pearl Global net up 88%. Page 70 .”90 See website for detailed financials. Towers.1 crore compared with Rs 7. G-Block Bandra – Kurla Complex Bandra (E) Mumbai – 400 051 4.9 crore in the previous fiscal].C/1. FINANCIALS Turnover $200 million worldwide before quota phase-out. 29 June 2006.43 crore[ from Rs. 89 From an interview with the Company Secretary. J. Rotunda Building. Sahajanand College Panjarapole.400 001.87 $400 million in its worldwide operations post quota phase-out. Ahmedabad .41 crore in 2004-05]. 3.88 Net profits are 234% up.5 crore in the previous year.6.com/1060712/asp/business/story_6465123. New Trading Ring. 3. <http://economictimes. In 2005-06 the company invested Rs 29 crore to augment its production capacities in Gurgaon and setting up a new unit in Chennai.” The Economic Times: Garments/Textiles. Babson College press release. Stock Exchanges where the securities are listed: 1. Bombay Stock Exchange Limited 1st Floor.380015 87 88 From Chairman’s Message on company website.cms> and “Corporate Briefs: Pearl Global. National Stock Exchange of India Limited Exchange Plaza.” <http://www.110 002 2. Ahmedabad Stock Exchange Limited Kamdhenu Complex Opp.indiatimes. The Delhi Stock Exchange Association Limited (Regional Stock Exchange) DSE House 3/1 Asaf Ali Road New Delhi . P.asp>. 5th Floor Plot No.89 Other Financials “Pearl Global posted 88 per cent year-on-year increase in net profit in 2005-06 to Rs . Dalal Street Mumbai .telegraphindia.” “The company’s operating profit was Rs 17.
Apologies for the delay in replying. They have supported our growth by putting in the infra-structure to service our needs. 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.they have grown to be our second largest supplier.S. Inc. 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).A. Our Customer's perception This reply has come from ASDA Walmart to a query of a Sr. woven. Journalist. Page 71 . EU and UK Major Clients Brand JC Pennys GAP (incl ON and BR) Charming Shoppes. They now supply us with a variety of casual.knitted. The following is a forwarded e-mail from George Clothing (Wal-Mart) regarding Pearl Global: Subject: Something you should know. 91 From an interview with the Chief Finance Officer. 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. To grow the business at this rate Pearl has had to show a "can do" attitude. the Chief Finance Officer stated that they are engaged in strategic partnerships with six of them. BRAND INFORMATION91 Pearl Global’s Export Market 40% 60% U. They are working on building strategic partnerships with between all of their vendors and suppliers and consolidating them. “Dear sir. and jersey product across all ages and genders from a variety of countries in the Far-East and Indian sub-continent. before the cost justified it.V. From an initial order in 2001.
Quality.We want style. flexibility to change our minds as to what we want right up to the last minute. Mr. or supplier. Below are a few points which I hope you would take time off and reply to at the earliest. and any issues that have arisen have been resolved immediately and taken as learnings to provide a better service going forward. Heather Moreton. 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. it is critical for us as a business to deal in the right way. * 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. I honestly believe that to supply fashion retailers at the volume end is one of the most difficult businesses to be in .Growth on this scale inevitably creates major head-aches for the supply-chain. and delivery have had to be a given. and where our distribution network has creaked under the pressure. Deepak Seth has also gone beyond the factory gates to work with the community and put something back. price.com --Original Message-Dear Ms. no-one whether it be store customer. hence would like to have some of your observation/views/comments on the business house and your relationship.quayle@wal-mart. As price deflation has become a way of life in the UK clothing market. Thanks and regards. Senior Sourcing Manager -Kidswear. retailer. 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. has a right to exploit the people who make the product we sell. ASDA Wal -Mart. For Pearl to grow their business with us. Business India” Page 72 . Best regards. quality. Currently I am doing a corporate feature on the House of Pearl who is your vendor. 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. so Pearl have stepped in to provide solutions and support. Finally. I feel that we can have an honest conversation with Mr. 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. We pride ourselves at George that our ethical standards are rigorous. 1 business publication. offering us product direct from factory or landed delivered if the situation demanded. UK I am a journalist from India writing for India's No. Lancelot Joseph. Allan Quayle General Manager-Strategic Supplier Development George Clothing Phone 00 44 (0)1455 264409 Mobile 07779 700695 e-mail allan. Executive Editor.
VI. 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. A few years ago the delivery/production cycle had to begin 18 months in advance. Production System Pearl Global uses an assembly line system. Pearl Global uses labor contractors.S. one in Chennai and the others in Gurgaon. They have six design factories. but it mostly in-house. Page 73 . 5% freight. The House of Pearl’s research and design department prepares a collection of high fashion styles for each season. They are working on doubling their capacity in the next 2-3 years. Production Capacity Pearl Global has 20 million pieces in-house capacity and 120 million pieces capacity all across Asia. Quality Control Raw material including fibres. who then chooses or modifies the styles. are consulted to developed in-house patterns. 50% FOB. Design/Sampling and Product Development Designs are mostly developed in-house. which are shown to buyers in advance.Buying Agency or Direct They used to contract through buying agencies. INFRASTRUCTURE92 Pearl Global has five or six production facilities in India. India: Unit Prices (paid to factory per piece of garment supplied) Range Average Retail Delivery Time Type India U. dyes and chemical are thoroughly checked before they are fed into the manufacturing process. Subcontracting Sometimes Pearl Global subcontracts hand embroidery. The embroidery tailors either come into the facilities to perform the work or they send it.S. The House of Pearl has over 150 factories across Asia. 90 incl. two of which are in Bangladesh. Every stage of the production line has its 92 From an interview with the Chief Finance Officer. one in Indonesia. Pearl Global then manufactures the style. Sometimes designers from the UK and the U. Markup (days) High of $10 $6-7 USD 3 to 4 times 60 to manufacture. but now they have developed direct relationships with their long-term business partners. yarns. now it is 6 months. and one in China.
Gurgaon 600 workers 870. Gurgaon 500-600 workers 222. WORKING CONDITIONS Wages and Benefits The Chief Finance Officer stated that sometimes Pearl Global pays workers above the minimum wage. Phase V. Page 74 . 93 Numbers for the units at 446 and 870 were estimated by the Chief Finance Officer while the other numbers were obtained from G. novelty yarns. fibre bundle strength. Polyster viscose and cotton yarn is tested for count. viscose tops and special fibre). CRA. Phase I. tensile strength. Productivity Schemes Pearl Global gives out “best worker awards” and “gold stars” for productivity. After workers receive their monthly salary they see a “rise in absenteeism. fibre composition percentage (blend %). Departments The researcher was not able to obtain information regarding the specific nature of the assembly line or tour the factory. twist per inch.” as workers do not have a long-term commitment to the factory.own set of detailed monitoring system. Phase V. moisture regain percentage and finish percentage. count strength product (CSP). Udyog Vihar. pilling. Udyog Vihar. If a worker stays for six months they get incentives. VII. which is sourced from outside is tested for fibre fitness micron ( fibre diameter). Production Unit Number of Workers93 138. ply yarn. and if they have a low level or no absenteeism they also get an incentive. Approximate number of workers in all facilities Pearl Global has approximately 6000 workers in India. Every set of fibre (polyester. 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. Udyog Vihar. Manicandan’s CEC report (and confirmed by the Chief Finance Officer). Udyog Vihar. uster percentage and impurity. Sretch yarn. single ply yarn is also checked on the uster machine to ensure consistency in yarn quality confirming to norms of the uster statistics. but did not give specific numbers. Phase I. drape and fastness to light washing and rubbing and slippage. as neither an HR manager nor a production manager was available for interview. Gurgaon 2500-3000 workers 446. Gurgaon 2000-3000 workers Machinery Pearl Global has an estimated 2000 machines for every part of the production process. etc. The finished yarn is tested for residual shrinkage.
96 From an interview with the Chief Finance Officer. 4000 per month Rs. Manicandan’s CEC report.Position Finishing supervisor (7 months experience) Tailor (8 years experience) Tailor (5 years experience) Wages94 Rs. Recruitment Policy Pearl Global uses labor contractors and specifically stated they use R. though sometimes workers work double shifts and are paid double. They did not have a HR manager before this. 95 Page 75 . 100 more and a 20% bonus for divali. For their HR strategies. if there are no orders or “no work” employees are told not to come. 97 From an interview with the Chief Finance Officer. although being a “permanent” employee will entitle a worker to an identity card.” However they are working on providing the necessary infrastructure (such as transportation) so they would be able to hire more women workers. & Company. Union and Worker Committees98 There is no job security. All but temporary workers are covered by social security schemes. There is no sexual harassment 94 According to G. and the head of the union is not an employee at the facility. & Co. Furthermore if “it was all women it would be fine. The labor turnover in Chennai. and Indonesia is lower.” and it is not convenient as Pearl Global would have to provide transportation. 3500 per month Rs. Labor Turnover96 The labor turnover in Gurgaon is about 20%. VIII. they used a mix of outside agencies and consultants. They contract temporary workers through R. who must first pass a hand-eye coordination test and then spend twenty days on the training line. Bangladesh. The union is not effective in addressing the problems of the workers. They want to hire more women like Southern facilities do because women workers are “more efficient. 3000 per month Every year workers receive Rs. K. Worker Training There is a training line for new workers. ESI and PF. There is a union in the facility at 138 UV. Overtime95 The facility at 222 UV has two shifts and thus there is little overtime.” but there are not enough “available. and Sukumar Pride. HUMAN RESOURCE POLICIES97 A new HR manager is to be hired as of August 15. 2006.K. who are not entitled for ESI and PF. Manicandan’s CEC report. but if it is mixed employees then it becomes a problem with issues of sexual harassment. Dismissal Procedure. Manicandan’s CEC report. Out of 500-600 workers only about 90 are in the union. 98 According to G. According to G.
Seasonality is an issue. implying that the AEPC is not as useful post-quota. This translates to bringing a high level of satisfaction to five constituencies Customers. 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. Investors. 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. Pearl Global just hired a lawyer to help analyze and plan financial structure. Employees. X. The House of Pearl has enough infrastructure to double turnover. which is missing in the North but the value-added garments (embroidered. Labor cost is still competitive (in terms of the world market). and teams are set up to work on weak areas in working conditions. which have monthly meetings. “ethnicwear” or design. a fashion design and manufacturing technology institute. which holds it back. as there is different management at each facility. Vendors and the Society-at-Large. The motto of every Corporate Body is to ensure Predictability. Corporate Responsibility/ Codes of Conduct According to the Chief Finance Officer.” IX. etc) helps immensely. BUSINESS BOTTLENECKS99 The industry is regulated by the supply of cotton. orders are fewer in July and August. The Company has built-up very effective TEAM WORK…The primary purpose of Corporate Leadership is to create wealth legally and ethically. According to the Chief Finance Officer. The strength of South India is its efficiency. Source the best from the World to deliver the best to the world by following ETHICAL MANUFACTURING AND TRADE PRACTICES. INDUSTRY COMMENTS100 Commented on the strengths of the North. From an interview with the Chief Finance Officer. there are sexual harassment committees. Pearl Global has a very effective HRD system they have build an empire highly trained and skilled manpower ready to face the dynamic changes. 2006.e. so they are working on capitalizing upon the existing capacities. Page 76 .committee. Sustainability and Profitability of revenues year after year. Deepak Seth): “A future that shall be built with the same strategy that has shaped our past. Working on having uniform HR and productivity strategies. i. The company also operates a school by the name of 'Little Pearls' in Delhi. They want to integrate all offices with an ERP 99 100 From an interview with the Chief Finance Officer. The Chairman Pearl Global espouses corporate responsibility ideals on its website (Chairman’s Message. The unit at 222 UV does not have a union. The company has set up Pearl Academy of Fashion.
It has links with acknowledged international leaders in fashion education.”101 Pearl Academy of Design Education-Pearl Academy of Fashion http://www. and London Centre for Fashion Studies. Partner. R & Company. at Naraina.. Bolton University.16 equity shares of the company for every share in City Estates was recommended by the board at the meeting. 7 Feb 2006. Modelama Exports The Pearl Academy of Fashion was set up in 1993 by Pearl Global Ltd. London College of Fashion.com/articleshow/1404688. 101 Page 77 . in India and abroad. industrialists and academicians. The company is setting up new facilities in Dhaka (Bangladesh) and a design center at Chennai. Merchandising. The Advisory Board of the Academy consists of leading exporters. Pearl Global. Managing Director. Hong Kong Polytechnic University. <http://economictimes. 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). Mr. It has a validation agreement with the UK's Nottingham Trent University (NTU). one of the top two in this field in the world. Mr.com/index. and is located in the Okhla Industrial Area (Phase II) of New Delhi. the Netherlands' Hogeschool van Amsterdam. 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. Retailing.system.Virender Uppal. Deepak Seth.indiatimes. and Germany's LDT Nagold. The House of Pearl is planning to get into retailing and is working on an industrial engineering department and setting up software SAM.pearlacademy. Chairman. As a result of the close interaction between the industry and the institute.” The Economic Times: Garments/Textiles. Production and Computer Aided Design…The Academy has opened its second campus in New Delhi. like in “Pearl Global to merge two companies. such as the UK's Chelsea College of Art & Design.cms>. Lalit Gulati. its alumni hold responsible positions in more than 300 leading organisations. It provides training programs in the areas of Fashion Design.htm Advisory board includes: Mr. who constantly review the institute's performance to ensure that the programmes are practical and industry-oriented. 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.
private business management institution at two campuses near New Delhi. The Asia Institute at Babson. Bombay Dyeing. President of Babson’s Alumni Club in India and Chairman of DCW Ltd. Chairman of Pearl Global and Dr. and assessment standards. learning.—a $400 million company exporting garments to Europe and North America—has formed a non-profit educational trust. internship facilitation. Shoppers' Stop and Ebony. and will visit regularly to monitor teaching. * Student report on the student admissions process and co-curricular activities. USA. and stipulations of the local region in India. has set up a business partnership with Babson College in Boston (U. The Babson college press release: Babson College. advisor to Pearl Global’s education trust. and Professor Ash Rao will present the final reports to Pearl. * Faculty report including Babson faculty profiles and approaches to faculty development. traveled to Delhi. Page 78 .’s premier business school). Current plans are for first classes to be admitted in the fall of 2008. Babson faculty will provide workshops for Pearl faculty and staffing. Michael Fetters. Both institutions will identify mutual exchange opportunities—on-line access to library resources. among others. Orient Craft. The Pearl School for Business Studies will grant Bachelor of Business Administration and/or Masters of Business Administration degrees with a focus on entrepreneurship. Advises Pearl Global..Benetton. India last week for the official signing ceremony with Deepak Seth. and procedures necessary to build an Entrepreneurial foundation and curriculum. workshops. Bhupatkar.” 102 Partnership with Babson College Pearl Global Ltd. Research in India Babson College.. Babson’s consulting reports will include: * The general curriculum for undergraduate and graduate programs. This trust is in the initial stages of developing a new. Sonal Garments. Ponds (India). links to websites. Executive Director.. was also present. processes. RMX Joss. Babson’s Provost. Pearl Global Ltd.—ranked #1 worldwide in Entrepreneurship Education---will advise Pearl on the strategies. Robert Eng. Mafatlal. Pearl will shape this information into a comprehensive Entrepreneurship curriculum to meet the particular conditions.S. requirements. Pearl Global Ltd. Richa & Co. 102 From the website of Pearl Academy of Fashion. India. on New Business School: Two Form Strategic Collaboration to Promote Entrepreneurship Education. * An overview of the entrepreneurship curriculum. Babson College in Wellesley. The collaboration is designed to expand over the next seven years. have signed a strategic collaboration on a full range of activities to promote world class research and education of entrepreneurship in India. joint information sharing.. USA and Pearl Global Ltd. Vivek Jain. Mass. distance participation in projects. India.
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.such as Jaipur. Mass. growth prospect remaining high. Babson grants BS degrees through its innovative undergraduate program. “According to market analysts. is recognized internationally as a leader in entrepreneurial management education. The interview consisted of a powerpoint presentation on the structure and capacities of Pearl Global. Gurgaon. Deepak Seth. is understood to have chalked up a plan for its presence in domestic retailing. and grants MBA and custom MS and MBA degrees through the F. <http://sify.edu/Newsroom/Releases/Babson-and-Pearl.”104 XI.S. Olin Graduate School of Business at Babson College.edu. 103 Babson Newsroom Release. Ltd. visit www. Page 79 . though the researcher was not able to obtain a copy without signing a confidentiality agreement. Babson Executive Education offers executive development programs to experienced managers worldwide. which is setting up a joint venture manufacturing facility for soft fabrics in China to secure part of its supplies.. the recent fall in price makes it an attractive long-term bet. “We are privileged to work with Pearl Global.W.“This collaboration is an important step in Babson’s journey to globalize Entrepreneurship Education. 104 “Pearl Global bullish on Q2 numbers. For information. however after e-mailing the Chairman. Pearl Global is getting into domestic retailing: “ [Pearl Global]. a company that shares our vision to advance Entrepreneurship knowledge in India. “According to industry sources.. the company is in the process of booking retail outlet spaces in cities across northern region . Chandigarh and Lucknow.babson. It was difficult to obtain an interview by calling the numbers on the website. The Company Secretary was not useful in arranging interviews with other personnel who would be able to answer what he could not. <http://www3.php?id=13972072>.cfm>. 24 April 2006.babson.” 26 Oct 2005. Kool Hearts label.com/finance/equity/fullstory.103 Domestic and International Retailing In addition to the U.” said Fetters. an interview was promptly arranged with the Chief Finance Officer.” Babson College in Wellesley.
G. Haryana105 3. mobile: 9871496362 Corporate Office: Orient House F-8 Okhla Industrial Area.000 shirts made in India.” E-mail: orient@orientcraft. BRIEF HISTORY106 Business began in 1972. most of the information is from the interview. Udyog Vihar. 68. Manicandan’s CEC report. Gurgaon. Unless otherwise indicated. 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. 26818249 Website: Orient Craft Ltd. Dhingra was a law graduate from Chandigarh with no experience. the largest computer embroidery facility in the Indian subcontinent. CONTACT INFORMATION Contact Person: Sudhir Dhingra. Phase-1 New Delhi.ocemb. 2343262 Fax: (+91-124) 2342042.com Production Units: 1. Page 80 . but it does not contain any information beyond the heading: Orient Craft Limited: Embroidery. online business and economic articles. Phase IV. 13. Managing Director. 2341110 2. Plot No. Gurgaon-122015. Haryana 4. 110020 (India) Tel: (+91-11) 26818247. so he could use the proceeds as seed capital. 15000 ($300) from his father. has no website. 14-A Maruti Industrial Complex Sector-18 Udyog Vihar. ORIENT CRAFT LTD. Udyog Vihar. 7-D Maruti Industrial Complex Sector-18 Udyog Vihar.com/. and 105 106 First two units visited by the researcher. Dhingra borrowed Rs. There is a preliminary website set up for its embroidery division at http://www. Haryana Tel: (+91-124) 5090800.6. found some tailors to make the shirts. who asked Dhingra to get 1. From an interview with the Managing Director. I. An ISO 9001-2000 Unit: “Orient Craft Embroidery Division. a company profile given to the researcher by the Managing Director. Founder/Chairman Personal secretary Meghna. but the company was not incorporated until 1978. and preliminary interviews from Gurgaon workers. Khansa Road Sector 37. Gurgaon II. He had a friend from London who was buying from importers and selling the goods to specialty shops. Gurgaon.
he decided to break into the industry.” Dhingra wanted to move production out of the village and industrialize the area and put as many skills in-house as possible.000 pieces and an annual turnover of around $40-50.shipped them to London.A. found another buyer. Then. yards and outsourced actual manufacturing. The first plant in Maruti Industrail complex was the first plant in India that was over 80. when he got back to India.niftindia. and Germany buyers. 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. he obtained a factory processing site of 240 sq. they’re looked down upon. Orient subcontracted until the early 80s. and he rented a house. set up a pressing line on the dining table and the production line in the garage. And being a tailor is like being a janitor.”107 Biography for Sudhir Dhingra for the International Fashion Technology Forum. National Institute of Fashion Technology. When he returned. he estimated a production capacity of about 150. When his friend repaid him the Rs. and others. CII. In the mid 1980s.” His father gave him one year to start up business. Orient’s first factory was established in a village in Hauz Marg and it is still there.com/iftf. he hired more people. 200-300 people.000 sq. they’re not looked up to.000. he was able to observe fashion trends and the kind of things that were selling. In the 1990s Dhingra set up a bigger plant with 100 machines. with more than 350 modernized factories. you had to be a tailor to be in the garment industry. Liz Claiborne sent an American technician to help Orient with worker training and modernization. Both were wholesalers who sold to specialty stores.A. though he stated that it was difficult to actually get the money from the government. CMAI. not just in the limited Indian context. During this traveling. only now it is 136.000 sq ft. 107 Page 81 . Dhingra wanted to improve the standards of quality and infrastructure to globally competitive standards. ASSOCHAM. The first Gurgaon plant was established in 1993. “At the time. he also encountered some buyers. as Gurgaon is the single largest manufacturing sector in India. Then while in Germany. 6000 ~ $133). then consolidated supply chain into one roof. Dhingra states that others followed Orient Craft’s example. During his traveling. 15000 plus a small portion of the profit (Rs. and that plant is still there. Then after a few years. May 2006. the Indian-inspired fad went away and he had to spend six to seven months traveling to get rid of inventory stock. 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. Dhingra “is also Executive Member of the Advisory Committee of AEPC and an active member of reputed associations such as FICCI. and restarted business with a trial order of 1200 pieces for a customer in L. <http://www. not like today. During the first few years. ft. Orient got clients by word-of-mouth from their L.htm>. with 1800 people. CIAE. with 3500 people.
Mr. Liz Claiborne (LizDresses. because of “language and cultural differences” with the European business partners. Old Navy (women’s). Now he owns 60% of the shares. Kohli. kidswear. coordinates. Express. Clients Armani Exchange. 2000. Limited. Jones of New York. and jeans). GAP (kids). 2001. boys’. LizWear. K. sportswear.K. Esprit. Awards Additional information: Orient Craft Ltd. knitted shirts/t-shirts. Zara. Susan Bristol. Dillards Stores. Polo Jeans). Rocawear. Marks & Spencer. J-Crew. Owners/Directors Mr. pants. jackets. ELM Street. and Marks & Spencer. Ann Taylor. Dhingra states that Orient is the only factory in India to manufacture for Marc Jacobs and Louis Vuitton. Sudhir Dhingra (Chairman and Managing Director). 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. 1998. 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. and gave 20% to his nephew and 20% to his friend. LizSports). Oasis Stores. Diane von Furstenberg. Marc Jacob. ropers. outerwear. Product Mix Areas of specialization include blouses. Donna Karen. dresses. Banana Republic.III. men’s shirts. The company does not do that much business with Zara and Miss Sixty (Italy). Orient Craft Ltd. Abercrombie & Fitch. Loft.. is looking into breaking into the domestic market. Mr. Next Retail Ltd. Calvin Klein Jeans. Dockers. women’s. shorts. skirts. Lands End. Macy’s. Anoop Thatai EOU Information The company has three 100% export oriented units (which can import all raw materials and trims free of duty). Page 82 . Orient used to source for Wal-Mart in back in 2003 but has since stopped.G. However. and 2002.Hook. Ralph Lauren (Lauren. Tommy Hilfiger (men’s. J. Exports/Imports 100% exports. Dhingra was the sole proprietor. Up until 10 years ago. BASIC PROFILE Legal composition of the Company Orient Craft is a privately owned company but deemed public limited.
A.S.12 0. “Winners and losers in textile shake-up.8 million 19. <http://news.00-6. so they can only be thought of as a rough approximation.5 million % of Sales 50-60 12-15 12-15 10 Per Garment110 $5. Kaushik.03 0. BRAND INFORMATION Orient Craft's Export Market 5% 15% U. now it is Rs. 742 crores) Other Financials Last years profit was $8 million (40 crores). which has doubled in a year and a half-as mentioned by NITRA president-used to be Rs.stm>. despite more competitive pricing. 112 Overhead (mostly energy. 2 March 2005.uk/2/hi/south_asia/4294679.02-0.IV. FINANCIALS Turnover FOB USD $105 million for 2002-2003 FOB USD $118 million for 2004-2005108 FOB USD $165 million for 2005-2006 (Rs.03 0. Europe 80% Canada 108 Basu. Breakdown of Sales Revenue109 Est USD 2006 Material Cost Labor Overhead112 Profit (target)113 82. 110 Based on the company’s average unit price of $10 USD.8-24.20-1. Page 83 .00 $1.02 V.5-99 million 19.50 $1.08-0. 4 per unit.” BBC News.50 $1. 109 These figures were estimated by the Managing Director in the space of 5 minutes.bbc. 111 Average retail markup is five to six times the unit price of the garment.8 million 16. 9 per unit) 113 Dhingra stated that Orient usually ends up with half of the target profit.20-1.8-24.co.00 % Retail Price111 0.02-0.
Recently. but they will open up their own office soon. however used to source to them about 10 years ago. 2 March 2005. Dhingra stated that Orient’s average unit price is $10. <http://news. Orient was manufacturing skirts that would be sold for $4 USD per piece.” BBC News.uk/2/hi/south_asia/4294679. the industry-wide average unit price in India is $3.stm>. 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. however. Limited used to be mostly direct. There has also been an expansion of volumes and an estimated 15-17% growth in orders. Kaushik. Some things have increased greatly. European companies pay higher unit prices). 116 According to Dhingra. but they just opened an office last year.) stated that on the date of the author’s visit in 2005. “Winners and losers in textile shake-up.bbc. Dhingra states that it is easier to deal with buying offices. 114 Dhingra stated that Orient manufactures 80-90% of what Diane von Furstenburg (high-end maternity clothes) sources from India. 115 Restarted business with Macy’s 2 years ago. they made one skirt for Polo Blue that will retail at $1199 (did not state unit price). Orient tends to deal in higher quality and higher unit prices and lower volumes.co. Orient would not take a Wal-Mart order. depending on the quota category and how much they were previously restricted. There has not been a huge shift in the composition of customers. like cotton pants.50 USD (from US companies. Page 84 . Marks & Spencer is currently direct. however an article written for the BBC in 2005 (Basu.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.
200. National Institute of Fashion Technology. the company had only 17 production facilities spread over 600. even a little bit before. 120 Biography for Sudhir Dhingra for the International Fashion Technology Forum. Orient also deals in some very small volume orders for high-end buyers like Oil Lily. ft. whose samples are then sent to potential buyers. Sector 37. The second plant visited was 380. six in Gurgaon. Orient has created a niche with their diversified product line (mostly cotton/knits or wovens. INFRASTRUCTURE Company has 21 production facilities.000 pieces. companies. 720. and one large plant is located in Noida. gives feedback. in and around Delhi. and employed 5000 people. (unclear if it is the same facility visited) at the cost of over $10 million USD. sometimes 25-45. Production System Orient Craft uses an assembly line system.000sq. 119 According to the company profile. chiffon to denims and outerwear). and creates new designs for each season.000 per day120 2006: In an average day.121 The average order size is 10-12. Gurgaon. Khansa Road.000 or even 100.com/iftf. Orient makes 130. In 2003 Orient established a manufacturing complex of 340. in 2003.000 knitted per month119 2006: More than 125. ft. 1. 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.”118 Subcontracting Orient does not appear to subcontract. product development became the key thing that most Western companies were looking for.000 knitted per month 2005-2006: 720.VI.000 sq. According to the company profile.000 woven per month.S.htm>. Production Capacity 2002-2003: 480. 13. Orient has put a lot of human resources into product development and now boasts 900 product development personnel at 5 different locations. but other fabric from silk. 121 According to an interview with the Managing Director.niftindia. May 2006. As Dhingra stated. which was at the time the “single largest multi-product manufacturing plant in the whole of India. <http://www.000 woven per month.000 pieces and production capacity has grown at least 25% over the past year. Haryana. It picks up fashion from around the globe. Udyog Vihar. Page 85 .000 pieces. of which four are in Delhi. after 9/11.000 sq.117 Previously. ft. Orient has a display store in NY on Park Avenue that it opened up 3 yrs ago. as traveling became restricted and Indian companies needed to build a competitive advantage. 117 118 Plot No. though it does use labor contractors.
which is generally equal in size to the production department.” 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. they “can’t be like Golkadas. shirts. Manicandan’s CEC report and could vary factory to factory. “most of the permanent employees are supervisors and perform high-end work such as production in-charge and finishing in-charge. In 2002-2003.” Dhingra stated that 70% of Orient’s workforce is direct employment. consisted of 12 production managers each in charge of about 250 workers (tailors and helpers) at 100 machines with 12 line supervisors. According to G. who manufactures 80-90% jackets/ outerwear. However according to G. Approximate number of workers in all facilities Number of people employed in 2002-2003: 12. Manicandan’s CEC report. Page 86 . Departments No information on specific departments was obtained through the interview. Productivity Schemes Orient uses incentive schemes to reduce absenteeism and has implemented worker welfare schemes. and since Orient produces high-end clothing with lots of embellishments. not through a labor contractor. workers do not go to lunch at the same time. one facility’s production department. Bihar. The labs are equipped to test for all parameters including color fastness to light. According to Dhingra the “girls” in the South are operators and less skilled.000 in-house Number of people employed in 2006: 23. fabrics.Quality Control The company has in-house lab testing for garments. and trims. the company had 7300 sewing machines. Manicandan’s CEC report. Information on work timings was taken from G. with very little embellishment. trousers. washing plants and dry cleaning units. the workers are skilled and come from a tailoring background and are usually from UP.000 Machinery Orient has in-house computerized embroidery machines. WORKING CONDITIONS The workers are 80% male and since Delhi and Orient is mostly multiproduct. MP and some from Haryana. VII. More contract workers and women (especially thread-cutting) are in the finishing department.
Manicandan’s CEC report. However. semi-skilled and unskilled workers that are hired through labor contractors are paid under a piece-rate system.000 per month plus ESI and PF. the following was mentioned in a business article: “Till a year ago.Wages The average wage starts at Rs. Dhingra stated that in the 1980s and 1990s Orient used a piece-rate system./month) 2850 2344 2000 2850 Labor Turnover According to Dhingra. according to G. Recruitment Policy Orient Craft employs contract workers for at least 30% of its workforce. 3000 per month for an unskilled worker salary. Dr. Union Though unions were not explicitly mentioned in the interview. Viet Kumar & Company. K. probably around 8-9% and as Orient is expanding. who takes a 5% commission before paying the rest to the worker. “particularly [those] working in the Finishing department. the company's chairman and managing director Sudhir Dhingra dreaded the idea of setting up huge factories . Some of these contractos are R.” Furthermore. 60-70% of the workers are unskilled helpers. HUMAN RESOURCE POLICIES Dhingra stated that there are common HR policies and productivity schemes across plants. With incentive programs for more highly skilled workers. & Company. and in 1993-1994 they started moving away from piece-rate and a few years ago they did away with piece-rate completely. Sartrushi. workers are paid much less than Dhingra asserts. and Vasisht & Company. no piecerate. The payments and benefits for contract employees are given to the contractor. Worker Training Dhingra stated that all the facilities have training schools and they want to make them more formalized. the turnover for Orient Craft is fairly low. Category Tailors Helper Trainees Contract Worker Average Wage (Rs. VIII. the salaries average Rs. The payscale is adjusted twice a year according to inflation. where workers can be trained and work for other companies if they choose to.all for the fear of Page 87 . Bonuses are given during Divali. 5-8. but he makes no mention of any other incentives. They are trying to start a training school NGO with a founding member of NIFT. labor turnover is decreasing. and most people are above the minimum wage.
Maruti Industrial Complex unit). “Preparing for 2005: Dressing up for the party. GAP gave Orient $35. I have always been very people-centric-. Clusters are reinventing themselves. Orient also helped train 300 women from the nearby village in hand embroidery at international standards.000 and Orient spent $20. “if someone asked me what my one single reason for success. According to Dhingra. Some of our workers are second-generation workers. Punishments are given to workers without any formalized procedure. One woman told me. it would be people. There is no grievance policy procedure in place for complains against workers or management. Manicandan’s CEC report. But will we be ready in time?” Businessworld. Sector-18. The “village panchayat said that Muslim women can’t go out…but now that they are trained. ten years ago we had 5000 people. workers are fired with no redress.it’s not just about the bottom line.” Worker Committees/Grievance Policy/Dismissal Procedure Dhingra was reluctant to give specific information regarding worker committees in person. it’s about what we can do for the community. Although Dhingra stressed how this was all for the benefit of the women and the community.[worker] strikes. 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.’” They built a four story structure to house the embroidery tailors. Global players are looking for India bases.businessworldindia. M. no formalized dismissal procedure.com/apr0504/coverstory01. sometimes more than their husbands. ‘my husband doesn’t beat me anymore. Thirty years ago we employed a women who worked as a thread-cutter and got paid Rs. 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. “around five years ago there was an attempt to establish a trade union (at the 7-D. and that Orient pays in full for the schooling of female children of workers and for 65% of the schooling of male children. Since then the company started sourcing their manpower from labour contractor[s]. they feel very proud to bring in income. Orient had no worker committees at the facility visited. Twenty years ago we had over 1000 workers. Manicandan’s CEC report. no sexual harassment committees and workers are not involved in wage negotiations or target setting. However upon further inquiry.”123 According to G. <http://www. and if a manager finds a worker guilty of an infraction. now we have 23. But the management suppressed and ousted all the workers who [were] involved in the establishment of a Trade Union. T.000. This strategy effectively stops any attempt to consolidate workers towards creating a Trade Union. stating that he would forward the company’s code of conduct and a list of their worker committees through his personal secretary. According to G.asp>.000 building a community welfare center that provides medical care for community members. 400 per month. Page 88 . and Surendar. Now she is a finishing manager and gets 123 Rajshekar. he stated that such information was confidential and would hurt Orient’s competitive advantage.
since Orient Craft products tend to be high-fashion. Marks & Spencers.paid Rs. as Orient usually doesn’t have as many orders May through August. According to the company website: The new complex is designed to create a very worker and management friendly environment in terms of esthetics. Labor flexibility is also an issue. we only have 23. and ease of working. It is the soul of our company. highly tailored outfits with additional embellishments like embroidery and special washes.” 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. IX. but Orient has taken up some holiday decoration work. Dhingra stated there are companies who do $1 billion (mentioned China and Lian Thai from Hong Kong. Besides being compliant by the current standards. Pottery Barn. “India is still not good at producing fall fabrics. They started producing denim products 5-6 years ago and just started manufacturing men’s suits at a plant for Liz Claiborne and Express. Although happy about Orient’s success. in-house fully functional gym and an Executive Club.” They started up home furnishing about three and a half years ago. Home furnishings is still smallish industry and comprises about $15-17 million of Orient’s sales. which includes a more complex manufacturing process.. he wants to extend the length of time it takes to become a permanent employee to 12 months. Donna Karan. We have created great recreational areas for workers and middle management by building great cafeterias. 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. “they have 100. 50.000 people. such as home furnishing. Macy’s. comfort. which eases strain some as well as the other diversification of profits. and her son is working here… I have always thought about social welfare. BUSINESS BOTTLENECKS Productivity is relatively low. for Bed Bath and Beyond. Specifically. Seasonality is an issue.000 per month.000). and Orient needs to do competitive pricing to stay in the game and Page 89 . 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. White Co. Dhingra wants increased flexibilization otherwise it is more difficult to expand and it hurts business.
India. The company has since then stripped the Spain unit of its machinery and fitted them in its plant here at Gurgaon. X. near Gurgaon…Levi’s was looking for a buyer due to high maintenance and labour costs in Spain.00.indiatimes. of which China contributes one-sixth. The company’s management is also planning to raise an IPO later this year. as they need to grow the base of buyers and price is a compelling reason to do that. “Garment exporter Orient Craft buys Levi’s plant in Spain for Rs 60 cr. and aims to increase it to over 40 lakh units after the expansion. Mayur Shekhar.indeconomist. Noida and Okhla in Delhi. “Indian textile companies on acquisition spree. In the changed business scenario. From business articles: The company… acquired a Levis unit in Spain in mid 2005 for Rs 60 crore (approximately 13. (despite quota regulations) and India adds to a minuscule 1. <http://economictimes. The company expects the expansion plans to boost its revenue generation. INDUSTRY COMMENTS Orient recently bought a Levi’s plant in Spain for its technology. 125 Jha. Mr Dhingra estimates the annual turnover to be in the excess of Rs 800 crore. Orient has 20 production units spread across Gurgaon. India is in an advantageous position.” Times News Network. Earlier. The company’s deal with Levi’s is the second such significant international venture. 16 September 2005. As of now.com/30thjune06p4.com/articleshow/msid-1232753. Ironically it is the same Indian companies who are buying the units for their machines. the garment industry presently stands at approximately Rs 15.5%. buyers are getting increasingly quality conscious. Orient Craft manufactures and exports about 30 lakh units of garment every month.125 124 Dipankar. Page 90 . Since the quota system has been reimposed on China.cms>.000 crore. Bangladesh and Pakistan. At present.htm>. World over.curpg-1. it is important to have machinery comparing to global standards.124 The machinery from the newly acquired plant will form part of the company’s expansion plan at Manesar.” said Mr Dhingra.3 million dollar)…Orient Craft by its own admission acquired the unit because of its superior machinery content. the textile industry in India still has a long way to go before it can catch up with Chinese volumes. “The lifting of quota has brought humongous demands on one side and on the other. Kumar. 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. Orient came up on the global radar when it started its first overseas facility in New York two years ago. growing by over onefourth from last year. The expansion plan envisages setting up of two new facilities at Manesar. PTI Economic Service. <http://www. India’s lack of worldclass machinery producers domestically has seen a lot of companies look to the West for help. However.bring in buyers.” Industrial Economist: Textiles Report.
” Italian and French mills are setting up joint ventures in India. As per the arrangement.— only about 30% of the U. which is a joint venture of Caramin (France) and Bairb McNutt (Ireland. the company’s MD. a leading Japanese buying house. Earlier." Mr Sudhir Dhingra. SBC. retail will explode…People say that Indians don’t have disposable income.S. consultant. if there is a mall…Real estate is growing. told ET. Chairman and Managing Director of the company.blonnet.126 Orient Craft… has entered into an outsourcing arrangement with Sumukin Bussan (SBC). In the next couple of years. <http://www. Why would people go through rain.Though most people in India. there were only three shopping malls. said the company was "welcome" to set up the SEZ. "The SEZ will house up to 50 companies. delivering the inaugural address. which plans to source $1-1.” For Orient Craft. Now there are 500. “An increasing number of Japanese buyers are looking at Indian export houses for their sourcing requirements. the exclusive Japan licensee of some well known international textile brands including Calvin Klein.com/2005/11/25/stories/2005112502590900. Rajasekhara Reddy. In 2-3 years.S. Yoshiaki Kamiyama. the Andhra Pradesh Chief Minister.” he said. That’s more than the people who spend in the U. He announced the company would be given 10 acres of land at Nacharam to set up a garment manufacturing unit. according to Sudhir Dhingra. that’s 200 million people. we ourselves are looking at buying 2-3 lakh pieces from India. SBC is the buying arm of Kashiama.htm>. Financial Daily from THE HINDU group of publications. told reporters on the sidelines of the CII conference on `Textiles forum . only about 60-70 million have disposable income.Emerging opportunities and the road ahead' here on Thursday. probably about 80-90% still get clothes from tailors. From business articles: Orient Craft Ltd plans to develop an exclusive special economic zone (SEZ) for garment units in Andhra Pradesh. heat. So the spending power is in India. where there are higher labor costs. but best linens) are setting up facilities in India and selling back in Europe. 126 “Orient Craft plans SEZ for garment units in AP.5m worth of textile products in the next couple of years.S. but look how large the population is—out of one billion. at present Japan is a relatively smaller market. lagging behind US and Europe. However. the market will contribute a significant share of Orient Craft’s overall business pie. dirt. 25 November 2005. etc. Page 91 . Banswala Mills. “The tie up with SBC will give us a good foot hold in the Japanese market. DKNY and Ralph Lauren. population spend. and every day a new one is opening up—there’s space available in Karol Bagh.” The Hindu Business Line Internet Edition. Orient Craft will be the exclusive suppliers from India to SBC.000 crore. we aim at scaling our Japanese business up to $30-40m. Orient is considering getting into the domestic market now. “Three years ago. The deal is likely to be signed later this month. the ready-to-wear demand in India is growing. Dr Y. The SEZ is likely to come up on a 300-acre plot with an estimated investment of Rs 2. if even 5% are rich and 15% have disposable income.
which it may have to take up to over 40 lakh units.com/apr0504/coverstory01. at Rs 450 crore of revenues. Clusters are reinventing themselves. The turnovers of these exporters range from Rs 100 crore to Rs 250 crore. 128 Rajshekar.128 XI. Global players are looking for India bases. T. Today he is spending Rs 40 crore on a new factory in Gurgaon that would employ 2.indiatimes. productivity and scale.Depending on the volume of the orders. 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. At present the Indian textile exports to Japan add up to $296m which is just about 1% of the country’s total textile imports." Orient Craft and Fabric & Fibres are among a few who have been pulling ahead of the pack.all for the fear of strikes.asp>. claiming more than three-fourth of the pie. Bangladesh churns out as many garments as India from a fifth as many factories. and Surendar. design to finishing. Till a year ago. But will we be ready in time?” Businessworld. Says Orient Craft's executive director Anoop Dhanda: "For the next few years. the company may go for a specific capacity expansion. Most are family-run. His personal secretary was not useful in obtaining any information. Orient Craft manufactures and exports about 30 lakh units of garment every month.businessworldindia. and smart use of technology. <http://economictimes. and Shahi Exports. “Preparing for 2005: Dressing up for the party.127 The biggest Chinese firms have a turnover of $800 million-1. But what distinguishes them is a relatively larger scale.” The Economic Times: Garments Textiles. Like most other economies. to cater to new deals in the pipeline. and Dhingra was surprisingly available for an interview.about 10 times the size of the Delhi-based Orient Craft. Meru Exports and Richa Exports of Delhi.200 million . Times News Network. 20 April 2006. Others include Gokaldas Exports of Bangalore. India's biggest exporter Orient Craft has also begun to realise that. Page 92 . Current contact information was finally obtained through a Professor at NIFT. 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. which made finding up to date contact information difficult. 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.com/articleshow/1496902. China is the largest exporter to Japan. India lags in technology. Clearly. the company's chairman and managing director Sudhir Dhingra dreaded the idea of setting up huge factories . The centrally air-conditioned facility will combine all the stages of garment manufacturing. Dhingra was fairly open in his responses. 127 “Orient Craft ties up with Japanese co. we will have to invest in new capacity every year if we have to keep pace with the industry. <http://www.cms>. M. PERSONAL EXPERIENCE Orient Craft does not have a website. skill-intensive manufacturing could be a way to compete. However. is India's largest garments exporter. Thailand does almost the same business as India with a workforce a third the size. which.000 people.
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