This action might not be possible to undo. Are you sure you want to continue?
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
Managers at six companies and four agencies gave interviews. These are the Northern India Textile Research Association (NITRA. Several other agencies that are major players in the export garment industry were identified and profiled by the researcher. others self-report to financial databases. The sixth company was identified by the researcher through an interview with a representative of the Indian Apparel Export Promotions Council (AEPC). Pearl Global Ltd. Online searches yielded some kind of press release or interview for each entity except for Jyoti Apparels. 2) To identify correlations between labor conditions and businesses characteristics. the Registrar of Companies (ROC. Public limited companies like Pearl Global Ltd. although some were out of date. Company G of Group R. Interviews were obtained in a variety of ways. Ministry of Textiles). It is advisable not to send questions via e-mail. 3) To develop corporate research strategies specific to the Delhi. display their financial information on the company website. linked to the Ministry of Textiles. Manicandan. while asking the same question in person would yield a response. linked to the Ministry of Textiles).” a CEC report submitted by G. A management survey was developed using the framework of surveys used in other geographic contexts and updated on the basis of preliminary interviews.) were identified using “Mapping First Tier Suppliers in Garment Industry in Delhi. an interview by telephone would be far more likely to be successful than an information Page 3 . Contact information was available on websites.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. and Third Eyesight (an industry consulting agency). Asking a question via e-mail often yielded claims of confidentiality. the National Institute of Fashion Technology (NIFT. India context. and others do not disclose financial information beyond approximations of annual turnover and production capacity. Government of India). Orient Crafts Ltd. Obtaining the phone number from the agency website and directly calling was the simplest way of setting up interviews. Shahi Exports Pvt.. Ltd. Four of the six companies profiled and all of the agencies have individual websites.. E-mail was also used to a large extent to set up meetings. If an interview cannot be conducted in person. Five companies (Modelama Exports Ltd. Methodology Preliminary research was conducted on the internet. the Apparel Export Promotions Council (AEPC).. though it proved best to limit the amount of e-mail communication.
It was not e-mailed to any of the managers. Questionnaire Used by the Researcher The following questionnaire was handwritten in shorthand and brought to the scheduled interviews as notes. easier to control. What groups? Manager: Oh. Researcher: I don’t understand. An interview with an anonymous manager produced the following conversation. time constraints would not permit cross-checking all information with workers and officers at each company. even though such a one-sided perspective may not reflect the reality of the situation. and as such may be misleading as to actual conditions. Just. The purpose of this research was to obtain information about companies from a management perspective. and NIFT gave updated contact information for Shahi Exports Pvt. Information on these companies was obtained primarily from top-down management sources.request by e-mail would. Women are easier to handle. ladies are more focused on work. Managers were surprisingly open in some cases. 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. Furthermore. no telephone interviews were conducted in this survey. without which interviews would not have been possible. Researcher: Did you have problems with employing males in the past? Manager: No—no. but off the record. going as far as to hand over Standard Operating Procedures. or productivity schemes. and one experience ePage 4 .S. however. I’ll tell you. which typifies management attitude both towards women and unions: Researcher: Why are your workers mostly female? Are there significant differences in productivity? Manager: No. Ltd. men together tend to form groups and lobbies because they have spare time.. and Orient Craft Ltd. as it was not possible in many cases to conduct follow-up visits. all interviews were in person. and used to establish industry contacts. while others would refuse to state the number of workers in the manufacturing unit. However. They’re more docile. 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. industrial accidents record. context and was integral in order to obtain information. The agencies profiled were primarily interviewed before the export houses. I don’t think they ever employed males… Limitations Time constraints limited the consistency and thoroughness of company information. Also. no significant differences in productivity. The attitude and openness of those interviewed are subjectively recorded in the individual profiles. The AEPC was instrumental in identifying Jyoti Apparels as a top tier supplier.
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. The questionnaire was used only as a guide in the interviews as a reminder of what kind of information was needed. as there are some questions that an HR manager would know more than a Merchandising Agent. Ownership of Company. Designation. DSP questions. U. deliver? Does the company ever have problems with contracts and/or steady orders? (if possible. total sales. The survey questions were divided into sections according to the position of the respondent. 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 . discount retailers (Wal-Mart).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. and Responsibilities of Respondent: Number of Years in the Company: General Upper Management Do you have a brochure saying what products. package. Name. EU? Major foreign brands that the company supplies to: length of relationship. get order. how fast company delivers products to brand Kinds of buyers—importers. 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. they often had information regarding each of these areas. help design. I’ve heard of collegiate licensing that would provide steady orders from major brands at higher prices. since a conversational approach proved to yield the most information. no input--or more capable. vol of product. What kind of input— CMT. However. specialty (GAP).mailing questions proved fruitless in gathering information. where. CMT. if only a higher level manager could be reached. sourcing.S.. 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.
average age of employees. pressmen. washers. tailors (skilled. who are the members and how are cases handled? Give details. 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. 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. etc. material cost. Quality Circle? If yes. Sexual Harassment Committee. men. trainees. Have there been any attempts at unionization in the past? What is the company’s attitude toward unionization? Page 6 . Shopfloor Committee. semi skilled. How many women. what is displayed to workers on details of employment. checkers. Have you seen a benefit in productivity since implementation of program? Are there joint worker-manager forums in your organization? If yes. NITRA.Have they used outside agencies in developing any part of their strategies? Part of AEPC. labor cost. subcontracting. 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.e. codes of conduct. 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. standing orders. Productivity Committee. unskilled). finishers. 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. supervisors. helpers. total value of exports. what do these forums do? Get any documents willing to give at any point. etc. overhead. Grievance Committee.
Is there a personnel ‘code of conduct’? Is this a company policy or vendor policy? How are these communicated to workers? What employers are covered by: (i) ESI (Employee State Insurance) (ii) PF (Provident Fund) (iii) Gratuity (iv) Maternity benefits (specify) What are the details of employment that are displayed / notified to workers? (i) minimum wage (ii) ESI/PF/Gratuity? What is the average overtime payment to all employees? (i) overtime per month (ii) overtime as a percentage of total wages (iii) rate of overtime payment Ask about industrial accidents, if there is a doctor available, how often, rotate between factories, what is the most common injury, what kinds of safety equipment What is your approach in HR and Productivity/Efficiency? (Get policy document) Do you involve outside agencies in your HR strategies? Do you have common policies across your plants? What are the typical causes of punishment of employees? What are the types of punishment given? (wage cuts/extra work/asked to go home?) Is there a procedure followed for dismissal of employees? Who initiates the procedure? Is the employee given a hearing? Give details? Do you have a legal officer in the company? Do you have an Industrial Relations policy? (any written documents?) What are two or three main things holding business back? production, labor situation, training , quality control, etc. What are you doing to solve this? HR/Production Manager: Get any documents willing to give on productivity schemes, time-study worksheets, productivity numbers, structure of lines, how many supervisors, etc What is your approach in HR and Productivity/Efficiency? (Get policy document) Could you give me a sense of the floor layout of a typical factory; what kind of technology and planning has gone into the factories? What are the different departments? (Floor chart) Department # Workers # Men # Women # Machines What are parts of a Line? Is it an assembly line? How much time does an item take from the beginning to the end of a line? How many supervisors are there on the Line? Is there a productivity scheme in your company? If yes, when was it introduced? What categories of workers are covered? Are workers in any way involved in target setting? Prod planning? How much time does a worker take to achieve the desired productivity? What kinds of productivity schemes? Teams? Line supervisors? How come up with time studies? How conveyed? What have been the benefits from the productivity scheme in terms of (i) increase in productivity (ii) reductions in waste (iii) any others? Does the productivity scheme give incentives to workers? If yes, give details based on category, average incentive, and maximum incentive. How make workers more productive?
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, email@example.com), EBSCO CRIS, INFAC (intranet and internet), INSIGHT, CMIE, RMS, IAS, INDIASTAT, IRA. Information In Company Profiles Contact information includes addresses of known production sites, contact persons, website, and e-mail. Brief history includes relevant information regarding the establishment and incorporation of the company. Basic profile includes the legal composition of the company, export oriented unit information, the breakup of exports and imports of the company (100% exports for all the companies profiled in this report), the product mix, clients, and awards of the company.
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.
sb@sb. Form 29 for Pearl Global makes it a public limited company. Page 10 .in According to the Ministry of Company Affairs website: Registrars of Companies (ROC) appointed under Section 609 of the Companies Act covering the various States and Union: Territories are vested with the primary duty of registering companies floated in the respective states and the Union Territories and ensuring that such companies comply with statutory requirements under the Act. Form 18.in Nehru Stadium. REGISTRAR OF COMPANIES (ROC) The Registrar of Companies is a division of the Indian government’s Ministry of Textiles. New Delhi 110003 Phone: 011-24362708 Fax: 011-24364570 E-Mail: rocdel. CGO Complex.gov website to access the public disclosure documents). the office at Nehru Stadium closed down earlier in the year. they must submit several forms at incorporation and annually. Navrang Saini Addresses: B-Block Paryavaran Bhawan. the profit and loss are also publicly available.in However. the address of the registered office and the locations of the business. Since Pearl Global is a public limited company. New Delhi – 110003 E-Mail: rocjln.sb@sb. Companies are required to register new events such as a change of directors with the ROC. Such forms include: Form 1. Form 20 gets the Director a Director’s Identification number (the number used on the mca.in/ROC_2003. relating to the companies registered with them.mca.nic. the compliance of companies act. which are available for inspection by members of public on payment of the prescribed fee. Form 32.htm : Delhi & Haryana Regional Director: Dr.nic. The Central Government exercises administrative control over these offices through the respective Regional Directors. the details of the board of directors/management structure. These offices function as registry of records.The financials publicly available include the annual return and balance (for all companies).CHAPTER TWO AGENCY PROFILES 1. in order for a company to be registered with the ROC. According to an interview with the Company Secretary of Pearl Global Ltd. Lodhi Road. Website of the Ministry of Company Affairs: http://www. The addresses of each state’s ROC as of 2003 can be found at http://dca.gov.. which is not true for privately owned companies.nic.
of a newly incorporated company detailing the scope of its operations). As such. photocopying the documents in the file is not permitted unless a fee for a legal copy is paid. Page 11 .The ROC in Delhi is in a process of transitioning to an electronic format of filekeeping. etc. The researcher attempted to take notes by laptop. Not only were entire company files missing. such as financial information and company Articles and Memorandum of Association (objectives. Furthermore. Information must be copied into a notebook by pencil (pens are not allowed). was difficult and did not yield a lot of useful information. Documents are publicly available after submitting a form requesting a release of information along with a small fee for each company. the process of obtaining public documents. it was not permitted either. and though there is no formalized rule against this. but several did not have up-to-date financial or structural information.
2. Third Eyesight's project teams consist of professionals who have hands-on experience in various aspects of retail and consumer products businesses.development of India strategy and preliminary business plan including market analysis. 4112495 Fax: +91 (124) 2577586 Cell: +91 98111 03494 Email: devangshu.com Website: www. He then joined a start-up consulting firm and was instrumental during its growth into a multinational consulting firm's joint venture in India.Assistance in development of global sourcing strategy and action plan. home. Devangshu Dutta. including fashion. assistance in formulating strategy and developing partnerships with International retailers and brands. He was also based in the European practice of this multi-national consulting firm. Benchmarking against global supply chain and product development best practices. Third Eyesight and its team of associates & professionals have worked on a variety of business strategy. dining etc. During his career Devangshu has performed the roles of an entrepreneur. and returned to India to his position as General Manager of the Indian business. and product analysis. Founder and Director of Third Eyesight A-847. The following are brief descriptions of some of the projects on which Third Eyesight's professionals have worked. THIRD EYESIGHT (INDUSTRY CONSULTING AGENCY) Contact person: Mr. trainer and teacher. as part of the team that launched the JV. food & grocery.122 002 INDIA Tel: +91 (124) 4112493. 2nd Floor. * One of the largest global home products retailers . Support in implementing changes in sourcing strategy and organisation.Carrying out sectoral market studies in firstname.lastname@example.org 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. manager. He subsequently worked with an international retailer's joint-venture in India. Devangshu began his career with the then-leading Indian national retail chain in buying & merchandising and in store operations. assistance in assessment of Indian supply base Page 12 . * International multi-billion dollar apparel brand .Strategic assessment of India – insights for a global senior management team to gain a realistic picture of the opportunities and the challenges in India. competitive and regulatory information. Gurgaon . Sushant Lok-I. * Diversified Indian consumer and industrial products conglomerate . he co-founded a fashion sourcing company in which he remains a shareholder.strategic inputs for Asia-Pacific top management team to identify emerging opportunities in the Indian textile supply chain * Leading UK Retailer . health. * Global fibre and chemicals company . new business start-up and operations projects with Indian and international clients. advisor. over the last 16 years. 4112494. Thereafter.3isite. in marketing and distribution.
Much of the fragmentation of companies was really only on paper. Matrix. The investment cap was very low. Pradeep Joshi. and the result of this was that a successful company was prevented from expansion. Mentioned another apparent Tier 1 (said they are large and source directly to MNCs). (Website: niftindia. Initially. Page 13 .org) Advised researcher to contact faculty of the management studies department. The government thus limited how much you could produce under the reasoning that overcapacity would lead to inefficient use of capita.K. this model was phased out. gave contact information for the National Institute of Fashion Technology in Hauz-Khas. The other reasons for company fragmentation are the nature of quota system and labor laws. * Indian subsidiary of one of the largest sports apparel and footwear brands – Design.org). In the early 90s. Sibichan Matthew.Assistance in formulating strategy and developing business with global customers for exports. Content of Interview (5 July 2006) with Director of Third Eyesight: Asked about study. * Pioneer luxury brand house in India . Also told the researcher to contact faculty of Pearl Academy of Fashion.Comprehensive comparative study of 7 cities in India and outside to choose location of new garment manufacturing plant * Leading Turkish supplier . who could then direct me to industry management: Dr. This is partially why many of the current successful companies (such as Richa Global) are split up into many different companies. 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. as you needed approval from the state government if you were operating a place of business with more than a hundred workers. Gave history of market structure in India. * One of the largest Indian textile and garment companies .* Multi-billion dollar Indian consumer goods conglomerate . and assistance in seeking new capital infusion. and you cannot have large units.Business planning for new brand acquisition. which continues to regulate knit-fabrics. The small-scale reservation system. it was a licensed economy in which you needed to get government clearance to manufacture in specific capacities.Formulating strategy and assistance in strategic alliance proposal to key European customer. According to him. The name is on the WRC disclosure list. who would be able to help schedule company interviews. Directed researcher to online industry magazine resource (Website: apparelresources. labor laws also limited the ability of companies to expand. D. development and delivery of sales & marketing collateral for three consecutive seasons. Since the garment industry is extremely labor intensive. The quota system obliged companies to set up under different names. Mr. Business strategy and plan for current business. reserves certain sectors for small units. Batra. you need a separate registration and thus it is easier to simply export (used to be tax-free). Mr.
Bangalore (roughly equal. In 2004. as it was clear that Indian businesses were gaining from the phase-out and smaller countries like Bangladesh were losing instead. and money (wastes that would not be eliminated by greater cooperation.” Furthermore. doesn’t communicate with the designer. the quotas had restrained India far more than China (showed a graph from a U. and as such is seen as a big risk and many are reluctant to actually work on establishing these relationships. strategic sourcing is dramatically different from the current widespread transaction model. Page 14 . he made it clear that somehow they were competing because of their “ability to develop and deliver product. the MNC may like it or require additional changes. how the current transactional model is very inefficient insofar as buyer-supplier cooperation goes. couldn’t see name). worrying that Indian business could not compete with China. it would increase unit prices. economic source. so all the businesses had to pay was labor and overhead. He expressed hope that soon the labor laws would relax some to reflect changing needs of business. since vendors and suppliers both may have had bad business experiences when attempting to do the same. He said that Delhi is doing extremely well in terms of business and is the largest in terms of exports. money is instead wasted on an inefficient process. The current model has self-contained worlds instead of cooperation. but that the outlook of the management may be more pessimistic than Tirupur. the supplier makes the product. he said that Indian companies were extremely uncertain about the effects of the MFA phase-out. whereby long-term relationships are cultivated. this changed somewhat. for example. the product is re-done. He began to talk about sourcing. and that Chennai (mostly menswear). he said. From 2001-2004. material. 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. and rather than cultivate a relationship in which the supplier provides input and designs according to a long-standing relationship. as the companies began to listen to the needs of buyers and in 2005. that they were too “over-exposed in China. From a piecemeal view. then privatized factories. but in the strategic long-run. effort. ships a sample. etc. but more menswear). but would be greatly minimized). which has worse infrastructure but is nevertheless optimistic about business.S. saying that the industry had often talked of diversifying. However. He began to describe the different ways of sourcing. the investment returned. investment in the industry slowed down. wherein the buyer. gets quotes from suppliers. Because of this. total costs would go down because the current transactional model wastes a lot of time. He stated that “the inconvenience of a labor inspector” pestering and harassing company management was a minor price to pay for business expansion. He mentioned that Delhi (mostly womenswear) is only one side of the big picture. The MNC gives product specs. He then mentioned that “strategic sourcing” would be much more beneficial to the market.” however that had mostly been talk and no action.one hundred workers is nothing.. and Tirupur (mostly jersey knits) all have different cultures.
quota distribution and allocation. Garments Exporters Association.P. Clothing Mfrs.L. to find out the product range and export prices of garments of other countries. market preferences and latest fashions and designs prevalent in the foreign countries. S. Clothing Manufacturers Association of India.. Mogrelia (M/s Zoro Garments Pvt. Clothing Mfrs. B. N. to send trade delegations and missions to foreign countries as well as to survey export potential of readymade garments from the country.F. Bombay and Garments Exporters Association. Ltd. Mr. New Delhi took a lead in this matter and formed a special ad-hoc committee of the following Members: Mr. (3) To appoint representative. Vijay Mehta (M/s Intercraft Pvt. Clothing Mfrs. Sector 44. KK Jalan. Two leading organisations of readymade garments. APPAREL EXPORT PROMOTIONS COUNCIL (AEPC) Office: Apparel House.. New Delhi) Ex-president. (2) To undertake all export promotion measures. Amersey (M/s Milton’s Ltd. Smt. of India. Garment Exporters Association. Singh (M/s Singh Export Corporation. but now as the garment industry has reached a stature and maturity and has achieved the target of 250 crores. Mr. Institutional Area.aepcindia. M/s Handloom and Handicrafts Export Corporation. (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 . Banthia (M/s Magnum Enterprises. New Delhi). Shah (M/s Hiralal Gulabchand. 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.N.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.K. Mr. Assn. Mr. P. According to the Articles and Memorandum of Association: Up till now Cotton Textiles Export Promotion Council was handling the export promotion work of garments. woollen knitwear and garments of leather. New Delhi) President. of India. Mr. agents or correspondents in foreign markets for the purpose of continuously and regularly reporting the markets prices. Secretary General of AEPC Mobile: 98-9912-4555 Website: http://www. N. Ramadorai (Chief Executive. Assan. develop export of all types of readymade garments. Assn. Bombay) Vice-President. to find out the tariff and other restrictive practices of importing countries. B. Ltd.3. Gen. Calcutta). to develop new designs and patterns of garments. Gurgaon 122003 Contact Person: Mr. Premila Wagle (M/s Paville Fashions Pvt. Bombay) President. The main objectives of the AEPC are as follows: (1) To promote.. particularly to undertake market research. Secretary. Mr. advance.. of India. Madras). increase. Ltd. excluding. jute and hemp. to undertake marketing in individual foreign markets.
as well as the names. development of export markets. designs and techniques and to encourage manufacture of garments for exports. garment businesses do not have orders. to improve the qualities and standards of the fabrics and garments by importing technical know how. so that workers can be more easily fired and hired. • help with training and productivity (14 training institutes). For three months of the year. 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. and its specialization in better embroidery and the “India look” (ethnicwear heavy with embellishments and more complex work). rules and procedures. NCR region. and lastly Tirupur. its strengths being better infrastructure. especially. AEPC focuses on three things: • marketing help. 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). Page 16 . import licence facilities provided and how to apply for the facilities. A specific AEPC goal is to get the government to change the law that states that workers are permanent employees after 100 days. Content of interview (7 July 2006) with the Secretary General of the AEPC: The main issues in the garment industry are labor and infrastructure. so that businesses who do not get orders during the winter are not hurt by the cost of labor. to 200 days. in the Small Scale Sector by giving assistance in the matter of understanding and implementation of the drawback. He stated that the government needs to increase labor flexibility. he stated. generation of production for exports. • lobbying to government to change laws regarding labor and infrastructure (and whatever other business bottlenecks there are). traders and exporters of garments. to evolve improved design and patterns and garments suitable for export. to encourage export production of quality garments and to undertake necessary research in fashions. unit prices have remained stable pre and post quota phase-out. to improve the skill of workers engaged in garment manufacturing in India and to assist in the technological base of the garment industry. action plans for promotion of exports. He stated that over the industry as a whole. and description of subscribers.for the purpose of continuously and regularly reporting to manufacturers. (8) To obtain from members of the Council and to prepare for the Council as a whole. specializing in knitwear. (7) To undertake training of workers and technical personnel. otherwise productivity will remain stagnant and labor costs will remain high. its strengths being higher levels of worker productivity. address. (5) To assist members. • secondly Bangalore. He said the three biggest centers for garment production were • firstly Delhi. (6) To establish design centres. and • raw material supply (both indigenous and imported).
He mentioned several notable resources. The AEPC did not have company specific financial data. • Texports (Mumbai). • Creative Group (Mumbai). • SPL Industries (Delhi). • Gurgi (“biggest industry consultant”—saw this name in the fabric stores in Jyoti Apparels). • a foreign consultant agency Method Workshop (main consultant Roger Thomas). and • the Eastmen Group (Tirupur).He listed the top ten Indian garment factories as • Shahi Exports (Delhi). and • the Cotton Textile Export Promotion Council. • Centwin Group (Tirupur). The researcher purchased the newest book of statistics on industry level data that the AEPC had (2003) and a directory of garment exporters. These businesses have succeeded through a number of different strategies. with a common thread of individual attention to quality control and productivity by hiring consultants and building better facilities. • Modelama (Delhi). • Golkadas Images (Bangalore). • Golkadas Exports (Bangalore). including • an HR training institute-KSA Technopack. Page 17 . • Richa Global (Delhi). as it is self-reported.
4. enhancement of critical abilities. Kolkata and Mumbai. leading to upgradation of skills and knowledge.htm Address: NIFT Campus. 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. Department of Fashion Technology Telephone: 26850484. Chairperson. Director General of NIFT) The Institute: Today. 26964771. 26965059. and diverse faculty expertise. NIFT is acknowledged as the premier institute of fashion design. Gandhinagar (Sub-Centre: Surat). rajeshbheda@niftindia. The Institute has pioneered the evolution of fashion business education across the country through a network of seven centres at New Delhi. According to its CE (Continuing Education) Prospectus 2006-07: NIFT provides quality fashion-education to industry experts.com/iftf. NATIONAL INSTITUTE OF FASHION TECHNOLOGY (NIFT) Ministry of Textiles. Management and Technology. Hauz Khas Near Gulmohar Park. Chennai.. NIFT has crafted a range of Continuing Education Programmes. and excellence. 26965059. 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. management practices and manufacturing technologies. besides conducting regular professional undergraduate and postgraduate programmes in Design. (Gauri Kumar. management and technology across the globe. and entry-level candidates in the form of Continued Education Programmes. Extn:306 Contact Person: Professor Rajesh Bheda. They offer a learning environment that encourages innovation. professionals. 26965080. 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. and the evolution of new professionals.com NIFT was set up under the Ministry of Textiles in 1986. Continuing Education (CE) Programmes: National Institute of Fashion Technology. practitioners. Bangalore. advancement of careers. In addition to classroom learning. 26965080. these courses offer a unique opportunity to participate in the lively academic environment of NIFT. India Telephone: 26850484. The centres are professionally managed platforms of the world’s finest design expertise. Extn:306 Fax: 91-11-26851198 Mobile: 9810154829 E-mail: rajeshbheda@gmail. Resource Centres.com. New Delhi-110 016. also offers short duration part time courses under Continuing Education (CE). which have been developed in consultation with reputed academicians [sic] and industry practitioners. These programmes reflect the requirements and Page 18 . Hyderabad. PhD. 26964771. Government of India Website: http://www. creativity.niftindia. and avail of facilities like laboratories with state-of-the-art equipment.
trying to get workers’ involvement. relevant to individuals at different stages of their careers. U. quality improvement program. with production planning and scheduling. • design development. Page 19 . suppliers reducing subcontracting. With focus on interactive learning.concerns of the industry and have been carefully planned to spur professional growth. there could be a 50% improvement in quality. though you cannot take bags inside the doors or check out books. However. demand is up. and also to those aspiring to join the industry. as there has not much shift in markets. and they are making efforts to reach good productivity. operators. The library at the NIFT campus is open to anyone. The main characteristics of successful firms include: • recognizing what customers are looking for. • offering shorter lead times. Post-MFA trends have been a consolidation of supply chain and capacities. Unit prices are down. He teaches classes in quality management. and a global overview of the garment industry. performance-based rewards system. • have more highly trained workforce. productivity (how to perform time studies). the programmes provide a congenial environment that integrates theory with practice. Content of interview (20 July 2006) with Professor Bheda: Professor Bheda has been with NIFT for 16 years. and • hire or train industrial engineers. • higher productivity • use the help of consultants. training managers. • better quality product and service. buyers reducing number of suppliers as well as brands. Most common is line supervision. probably average 70% of India’s market. The participants receive a NIFT certificate on successful completion of the programme. • managing their supply chain better. • BPR manufacturing. The flexible schedule enables the participants to pursue the programme without interrupting their professional activities. manufacturers consolidating capacities. cost is up.S. Companies are trying to move up the value ladder as product development and design are becoming more important. If companies put efforts into enacting these measures. and EU have always been strong markets in India. 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. methods monitored. The average Indian garment factory has 100% potential in physical labor productivity. 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. corporate social responsibility.
not because the buyer says the firm has to do it.com). and many cannot afford them because there is typically no financial payback. The day of the interview was the final day of the Indian International Garment Fair (IIGF: www. None of the firms were top ten exporters or easily recognizable. The researcher obtained a buyer ID and toured the grounds.indiaapparelfair. driven by price and the customer can walk away at any point. The award winners for their showcases (announced the previous day.com.” that retailers are paying lip service to CSR without sharing the cost burden. so some firms are investing in CSR to the extent they can afford. Vijay Agarwal (Chairman of AEPC.indianapparelfair. so the researcher asked IIGF workers) were 1) Intercraft (New Delhi). something like it has been discussed. The core group of organizers include Vijay Mathur.” 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 are simply passing it on to the suppliers. Social programs are a long-term investment. Magu (Chairman of Jyoti Apparels). Page 20 . the AEPC Director of Export Promotions (interviewed him after K.K. the 37th annual garment fair with 393 exporters/exhibitors at Pragati Maidan. H.L. Agarwal). from principles. Everything in the market is transaction-based.K. 38th annual: www.K. Jalan. Mumbai). Regarding corporate social responsibility. Retailers should start partnering with the brands and rewarding CSR compliant suppliers. “suppliers get a feeling of being cheated. K. it would have to be meticulously and carefully implemented. it would be good to invest in social improvement program. He gave a contact person to interview from Shahi Exports and up-to-date contact information number for Orient Craft. However.there is an erosion of the bottom line and companies find it difficult to survive and improve working conditions. He does not see a correlation between turnover and CSR programs: “ultimately it comes from within. 2) Shilpayan Craft (Jaipur) 3) Another firm from Jaipur. and as long as it is ensured that the rewards system cost comes down to the factory floor. it seemed to be a showcase for smaller firms to vie for new buyers and international exposure. so suppliers feel they are not committed.
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). conferences and publications. Chairman of NITRA. Several prestigious textile units and multinationals are already within its consultancy network. *Customized consultancy packages for national and international clients in the areas of Product Development. Product Diversification. workshops.5. Maintenance Management. Ghaziabad (UP) 201 002 Website: http://nitratextile. Publications. Energy Conservation. Environmental Audit. It is linked to the Ministry of Textiles and is recognized by the Department of Scientific and Industrial Research (both government entities).org/ Contact person: Dr. *Need based cost effective software development. effluents. Rao. Process House Study. *Collection and dissemination of data useful to the textile & garment industry. NORTHERN INDIA TEXTILE RESEARCH ASSOCIATION (NITRA) NITRA. According to NITRA’s 2006 Prospectus: NITRA’s Multifarious Activities *Job oriented professional courses (full-time and distance learning) in textile. Energy Audit. garment. Techno-economic Viability Study. ISO-9000 Quality Management System. Machine Design & Development. chemicals. Design of Effluent Treatment Plants and Water Recovery Plants. 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. J. Maintenance Audit and a lot more. Quality Improvement. and Seminars/ Conferences/ Training programs…NITRA has carved a niche and occupied leadership in Package Design Consultancy for effluent treatment and water recovery. Sector-23. dyes. Manpower Planning. V. ISO-14000 Environment Management System. and plastics.S. P. *Research and Development projects and industry specific surveys related to textile & garment industry. Cost Reduction. waters. Raj Nagar. Pollution Control. It is the only ISO 9001:2000 accredited textile research organization in India. 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 . *Quality Evaluation of textiles. seminars. environment and allied areas. *HRD activities through training programs. leather.
NITRA has a wide database of employers [in its placement cell. especially the law whereby a worker that is employed for 100 days is considered a permanent employee. Content of interview (7 July 2006) with Chairman of NITRA: Gave background on the history of the textile industry. the Bureau of Indian Standards (BIS). Stated that the fragmentation of the business made quality control an issue. The library also subscribes to 150 [national and international] periodicals. eco-friendly textiles. A programmable ADI Bioreactor System of 3 liters capacity from Applikon Dependable Instruments. Netherlands. [NITRA’s IT Center] has over 100 [PC’s]. NITRA helps factories with product development and various audits. and perhaps have relaxed labor laws within these sites. During the 60s-80s. but would not elaborate and would only refer to the intractability of trade unions in vague terms. improve infrastructure. 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]. He believes the government should subsidize capital for Indian business like China (mentioned something about a Technology Aggregation Fund. TAF). Library: Enriched with 5. 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.000 books and journals. and the Haryana State Pollution Control Board (HSPCB).. from composite textile mills in the 50s-60s to the rise of small scale businesses/ fragmentation. There is a shortage of skilled garment workers. has been installed for carrying out treatability studies of biodegradation of industrial effluents through aerobic cum anaerobic route. An in-house miniature ETP (effluent treatment plant) of 100 Liters/hour capacity has been installed by NITRA. which would consolidate factories. water. etc. etc. Complained about government infrastructure and labor laws. The government is currently working on better infrastructure. especially Page 22 . According to NITRA’s website: The Research Advisory Committee is an apex policy making committee of NITRA to guide it in its research activities and formulating short term. the…library [keeps students connected with] ongoing global developments. environmental statement…NITRA’s Environment Laboratory is well equipped with Sophisticated Analytical instruments.... he said that unions hurt business. better access to a supply of power through a cluster system called Scheme for an Integrated Textile Park (SITP). quality. mid term strategies and policies and creating necessary infrastructure. He allowed that workers were being exploited. legal compliance. Access to and the price of power seemed to be a big issue for him. effluent treatment and water recovery plant. Also stated that it cost businesses more to subcontract because they had to pay for delivery.textile and allied industries: waste management. which are essential to conduct such a program…[it] is accredited/ recognized by the National Accreditation Board for Testing and Calibration Laboratories (NABL). fear of China post-quota. energy.
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. L and J (seem to be mills. They conduct in-plant training as well as distance learning programs for middle management at NITRA itself. Bilwara. Classes are full days. Arvind.machine operators at the shop floor level. so NITRA conducts training programs for workers that last 3-6 months. not garment manufacturers).4:30 pm. When asked for company names. Page 23 . Students apply to the program online and are selected on the results of aptitude examinations and interviews. The course coordinator is Vivek Agarwal. he mentioned Vardhmal. The researcher obtained a copy of the 2006 prospectus. a NITRA Senior Scientific Officer. They typically have 4-5 students applying for one seat. 10:30 am . Reliance.
CONTACT INFORMATION1 Contact Person Lovleen Kumar. business articles. 2 Unit visited by the researcher. Human Resources manager. Mobile: 9810015693 Corporate Office2 Plot No. Sector-5. Haryana. Page 24 . the company website.modelamaexports. An ISO 9001:2000 certified company The information in the following company report was obtained from interviews with the Director. documents given by the HR and production managers including a company profile. and G. Merchandising Agent.com. 7 & 8. Manicandan’s CEC Report. Haryana. Okhla Industrial Area. India Tel: 91-124-2290993. 2291131 Fax: 91-124-2290864 Website: www. Manesar IMT Gurgaon -122016. India Tel: +91-11-26810103 fax: +91-11-26817969 Head Office Gurgaon 184.CHAPTER THREE COMPANY PROFILES 1. phase -1 New Delhi -110020. Director E-mail: email@example.com E-mail: info@modelamaexport. I. Udyog Vihar Phase -1 Gurgaon.com Head Office Delhi B-57. and updated telephone numbers from interview. MODELAMA EXPORTS LTD. India Tel: +91-124-2397838-42 fax: +91-124-2397843 1 Initial information obtained from company website. ICRIER financial data.
000 square feet. phase -1 New Delhi 8. 6 From company website. Okhla Industrial Area. 200. B-33. B-80. Manesar.Road Map 3 Production Units4 1. Lalit Gulati. IMT Manesar. Phase 1 Gurgaon 2.” Apparel Resources. 45 lakhs with 50 indigenous sewing machines and a workspace of 4. B-26. BRIEF HISTORY Modelama was founded in 1979 by Mr. Sector-5. interview. Plot No-5. Phase 1 Gurgaon 3.5 III. Plot No. Lalit Gulati as a family-run operation. 5 From website. Okhla Industrial Area. 4 3 Page 25 .asp?msg=2710&cod=newsindetail&nam=>. Okhla Industrial Area.000 square feet. phase -1 10. Udyog Vihar Phase -1 II. Phase 1 Gurgaon 4. phase -1 New Delhi 7. In 1999. 201.00. From company website. 7 & 8. Modelama today has ten professionally run production units over 4. Modelama places a great emphasis on technology as the secret to its success. BASIC PROFILE6 Legal Composition Sole proprietorship. <http://apparelresources. Sector-4 Gurgaon 5.com/defaultnextone. Vinita. Gurgaon1 6. owner is Mr. Okhla Industrial Area. In the first year they exported Rs. Modelama professionalized its management structure and has been consistently upgrading technology in their production facilities. B-57. 204. Other production sites in untranslated Hindi document. 184. and Pandey. phase -1 New Delhi 9. “Build Quality Rather Than Check The Quality.
and home furnishings. William-E-Sonoma. kidswear. Nov. etc. Marks & Spencer. GUS. H&M. Federated Stores (Macy’s). and 2002 Associated Merchandising Corporation Outstanding Performance. wool). Colt’s Europe: Etam. skirts. 1999. Zara. jute and hemp. and blends. Westelm. Clients USA: GAP (Banana Republic. and decorative items for loungewear like throws. 2000. LOP NO. 1999. silk.AEPC/REG/MER/47569/N/2001) as a manufacturer/ exporter of readymade garments including woolen. Target Stores. Pottery Barn. Monoprix. La Halle. Lane Bryant. 1993. Galeries Lafeyette. 2001 Federated Merchandising Group Five Star Award (in Development of Federated Department Stores Private Brands and Labels). Proffitts. Incorporates ethnic Indian accents and embroidery into design samples. Sears Roebuck & Co.U I/6921dt28/08/01 RCMC NO. Sears Roebuck & Co. Old Navy). 1992. Grattan. Launched Home Textile Collection in 1999. Eurofiel (Women’s Secret).. which may have contributed to minimizing seasonality issues. is an export oriented unit registered with NEPZ. synthetics (viscose. cushion covers. Next. Kohls-Belk. Canada: Eatons.4530/2001-100% E. AMC.. Sales Growth and Profitability Vendor Award. Tommy Hilfiger. knitwear and garments of leather. Modafil UK: Laura Ashley. Dayton Hudson Corporation. Added outerwear to their product mix in 2001-2002. Mervyns. Product Mix Areas of specialization include outerwear. Hudson Bay. 2000. polyester. 1998. Lands End.EOU Information Modelama Exports Ltd. trousers. offering products such as table linen. linen. Charming Shoppe Inc. dresses. 2000 Page 26 . polyamide).O. 1996 Charming Shoppes Inc. nightwear. Chambers. top of beds. Uses natural fabrics (cotton. ladies blouses. Saks. drapery. A & F. silk. Marmaxx. Marshalls. Zellers Australia: Country Road Awards Target Vendor Award of Excellence. Exports/Imports 100% exports.. Modelama does not manufacture for the domestic market. shorts. 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. Freemans. Villersey & Boch.
500 Rs. FINANCIALS Turnover 70 Turnover (millions USD) 60 60 50 40 30 20 10 0 1981 1985 1990 1995 2000 2002 2005 projected 15 0.000 30% Rs. 2800/per month. 7 ICRIER Data (based on an interview at B-57 Okhla Industrial Area plant in Fall 2005) Page 27 . 500 500 450 60% 40% 150. 3cr. 3000/per month Rs.5cr. 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. VA per employee Rs. 500 Total employment 500 500 Production workers 450 450 Proportion exported directly --Proportion exported indirectly through intermediaries Misc. Rs.000 per year 25. of pieces exported to the US No.IV. No.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.
An example given was if the retail price of a given garment manufactured for Target is $9. The remaining $3.S.99 is the landed cost. Average Unit Prices (per piece of garment supplied) Unit Price Origin Product Mix $5-7 USD U.A.asp?msg=2710&cod=newsin detail&nam=>. <http://apparelresources. 60% of that is Target’s profit margin per unit (PMU).V. which includes not only the factory unit price but the duty cost (AMC and freight). the unit prices are markedly lower than specialty stores.com/defaultnextone. 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. ~$2. Of that remaining $3. 10 Nearly all brands are FOB with the exception of discount retailers like Target Stores (USA). “GAP is sourcing worth about $1 billion from India and we are doing more than $10 million with them.” Apparel Resources. Europe Others 94% Major Clients Brand Federated Stores (Macy’s) Target Stores GAP (incl. Although they get large production volumes from discount retailers.99.75 goes to Modelama.99. “Build Quality Rather Than Check The Quality. quoted in 9 Pandey. 9 8 Page 28 . Brands Casual wear $10-16 USD European Brands High Fashion Retail Markup 4 to 7 times 4 to 7 times Type10 Mostly FOB Mostly FOB From interviews with the Director and Senior Merchandising Agent. BRAND INFORMATION8 Modelama's Export Market 1% 5% U. Modelama Chairman.S. Vinita.” Lalit Gulati.
V. fine-tune the patterns.co.1 1981 0.. “Indian Fashion Firms Adopt Global Pret and Couture. is one of the principal designers. Marks and Spencer (Style and Co. We then sit down with the stores. The day the researcher observed the process.4 1985 0. 14 Makhijani. who will then contact them with a development package if their profile fits their needs. “My team of designers scans international trends and comes up with a tentative collection of not only designs but also shades.13 Gayatri Lal. INFRASTRUCTURE Subcontracting Modelama does not appear to subcontract.asp?em=M&mcode=200602&idx=1083>. for instance. From company website and brochure. Typically. and delivery times. Vishnu.000 pieces. Modelama will present their company profile to the buying agencies of MNCs. subtract a bit. Page 29 . volume. Then there is some back and forth communication between Modelama and the MNC to reach an agreement in terms of product design. Production Capacity12 9 8 7 6 5 4 3 2 1 0 Number of Garments Produced (milions) 8 4 2. which varies according to the product. Some of the orders can be pretty huge .7 1 1990 1995 2000 2002 2005 projected Design/Sampling Modelama has a fairly large design department. add a bit.Unit Prices Since MFA Phase-out Unit prices have gone down an estimated 7-10% due to increased global competition.kr/en/node. and get down to manufacturing. 13 From interview with Director and Senior Merchandising Officer.80.) as well as home furnishing products.11 Production System Uses an assembly line system. they were manufacturing garment orders for Charming Shoppes Inc.5 0.” <http://www. an alumnus of the National Institute of Fashion Technology (NIFT).ittimes.”14 11 12 According to interview with the Director.
The company deploys over 3000 imported sewing machines with customized workstations. Washing machinery includes a wet and dry processing unit comprised of micro processor controlled washer extractors. Machinery includes Auto Zig Machine. Auto Dart Making Stations. Multifusing with Three Track of Loading (High Performance Macpee). Page 30 . Blind Hemmers. Information on workers and floor layout is specific to the unit visited and is taken from an interview with the HR Manager. Approximate number of workers16 Modelama employs a total of ~6. In the sewing departments. Programmable Sleeve Setter Stations. Auto Cutter (Lectra). Auto Pocket Welting M/C. Top. Differential and Bottom Cylindrical Bed Unison Feed Machine. Tests include tensile strength. Auto Belt Attaching Stations. Site visited by the researcher employs about 1100 workers (including about 15 accounts staff). etc. The floor is laid out in dozens of assembly lines. PH check. Washing (24 workers) and Finishing/ Pressing (175 workers) The finishing area had lines of workers pressing and folding clothes. Auto Surging Machine. From interview with Director and Human Resources Manager. laundering and crocking. Autocad (Lectra). and number of workers. over 90% male.000 workers in all plants. Differential Feed Machines Needle Feed Machine. 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. Pneumatic Button Hemming Stations. tearing strength. An example line was sewing collar parts with a total of 46 tailors and 5 helpers. at the front of which is displayed an “Hourly Production” dry-erase board with the line number. 17 Information on machinery was primarily taken from the company website. supervisor name. Air Flotation Tables. This was the only department with women. Procedures are based on aql 4 point system by which all fabrics are screened and categorized. sand blasting. and brushing machines (from light softener washes to heavy enzymatic washes). they use internationally standardized procedures like the traffic light quality assurance system. perc based dry cleaning machines. Departments17 Production (~800 Workers) There are about 560 tailors. The product was women’s fashion blazers for Style and Co. color fastness to light.Quality Control15 Modelama’s motto is “build quality rather than check quality. GSM check. Band Knife M/Cs. input. pitting test. Cutting (50-55 workers) The cutting department had five lines of machines laid out with worker stations. Machinery includes Auto Spreaders. 15 16 From company website.” Modelama emphasizes technology and internationally acclaimed systems to maintain a high level of quality. output.
200 single head and 6 multiple head computer embroidery machines. Machinery includes 20m length Schiffley Embroidery (Lasser & Saurer). HR Manager boasted that Modelama was the only factory in India to have this machine. Additional Machinery Factory has a special conveyor system that moves products from assembly lines to other departments. and unskilled minimum wage was Rs.Pressing and finishing machinery include multipresses. the HR manager said that no incentives are given. calendaring machines and range of buck shapes and steam irons from manufacturers like MACPII. dummy presses. VII. Has hand and machine embroidery capabilities. the HR manager stated that no punitive measures are taken as it is prohibited by law. Veit. The Director said that workers are given incentives in productivity schemes if they reach their targets. and line supervisors who perform time studies on particular styles and set worker targets. Production Manager. indicating that he would like to develop such a system in the future. stressing how much state-of-the-art machinery has contributed to the quality and productivity of the manufacturing process. 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. The targets are communicated to workers by line supervisors and dry-erase boards on the production floor that display productivity goals. However. 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./month) 3500 From interview with HR Manager. management states that they set wages higher than minimum wage to get workers to commute. Because the factory is not near a city. 3000 per month. Category Tailors +skilled 18 Average Wage (Rs. flatbeds. Embroidery Did not observe embroidery process during visit. Productivity Schemes Company has production planning meetings consisting of the HR Manager. Page 31 . and Renzacci. Trevil. If workers cannot reach their targets. No workers are involved in these meetings. 2448 per month. Inc style. The production manager gave the researcher a copy of a time-study conducted for Charming Shoppes.
Overtime Management indicated no more than four hours per week per worker. workers are then offered a monthly wage based on this evaluation. Benefits HR Manager indicated that workers receive the social benefits required by law. supervisors conduct time studies evaluating the skill level and productivity of a new hire. HUMAN RESOURCE POLICIES19 There does not appear to be common policies across the plants. HR Manager stated that wages increase after a year. “It should be time-and-a-half. Indicated that there are a few shop floor employees who have remained the two years the factory has been in operation. except for worker recruitment for middle management positions. like China. including ESI and PF. stating. and that workers receive double wages for overtime hours. Expressed dissatisfaction with labor laws requiring double overtime. which is not subject to negotiation.” Labor Turnover Estimated worker turnover per month at 7-10%. After a three-day period. Page 32 . 19 Information based on interview with HR Manager and documents given by HR Manager and production manager. VIII.+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.
such as the unit located at 200. 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. Lalit Gulati Sole Proprietor Founder/Chairman Mr. Recruitment Policy They do not use labor contractors at the unit visited.” Modelama uses labor contractors for some of its other units. To recruit shop floor employees. Worker Training This site does not provide training to its workers. However. Workers are a mix of local villagers and from Gurgaon. workers have a brief orientation session during which they are informed of security measures. according to G. Page 33 . Manicandan’s “Mapping First Tier Suppliers in Garment Industry in Delhi. Beneeta Seigal Senior Merchandising Other Upper Management Positions Mr. the company posts signs on the gate. Kiran Production Manager Mr. and in nearby worker villages. grievance procedures. at bus stops. K. standing orders. However. the company recruits from training centers and placement companies and has a formalized policy that the researcher obtained. Modelama’s anti-harassment policy. Anil Chauhan HR Manager Management Staff/Accounts Personne Mr.Management Structure Mr. Lovleen Kumar Director Ms. while dotted-line boxed positions are factory-specific and subject to variance. Phase-I Gurgaon. and vendor codes’ of conduct. For middle management positions.
Received a Hindi copy of policy. Work times for employees were also posted. Security New security measures have been implemented since the quota phase-out. All workers were said to have received medical attention.”21 Corporate Responsibility/ Codes of Conduct Modelama’s Anti-Abuse/Harassment Policy is posted on the factory floors in English and in Hindi. so there is no need for a union. According to G. HR Manager indicated that there are very few worker grievances. the company usually pays the medical expense.S. Phase-I Gurgaon and B-57 Phase-I Okhla Industrial Area).” but when asked to meet the doctor. according to the Customers Trade Partnership Against Terrorism. “We take care of all their problems. they have joint employee-worker committees required by law. Page 34 . an Anti-Harassment Committee. If workers suffer from minor injuries. Manicandan’s “Mapping First Tier Suppliers in Garment Industry in Delhi.S. in compliance 20 21 Received a Hindi copy of group meeting minutes. U. but avoids paying for major injuries and illnesses. preferring to dismiss the workers. but only in English. There is a company dentist that comes every Thursday. a Works Committee. The code of conduct for Charming Shoppes Inc.” there are no doctors in two of Modelama’s other production units (200. was displayed on the factory floor. Union There is no union in the production site visited. and an ESI station 1.Dismissal Procedure No information was obtained by the researcher regarding a formalized procedure. tampering. A resident doctor is “available at all times. There are only six recorded injuries at this site for 2006. and a Sexual Harassment Committee. The factory locks its doors at night. the researcher was informed that he was at another production site. or CTPAT model. Medical Care There is a medical room in the factory.” Worker Committees Since there is no union. traceability. such as a Health and Safety Committee. nor have there been unionization attempts. Customs Security requirements regarding issues like preventing trespassing. companies have required them to uphold a more stringent counter-terrorism model of security in compliance with U.20 Grievance Policy Procedure If workers have a problem. that they can report their grievance to their direct supervisor or upper management. and that management works to quickly solve problems in order to maintain an atmosphere of “family. 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.5 km from the factory.
” Apparel Resources. Lalit: Machines change according to the product requirement…We have to be flexible because the buyer doesn't buy one thing all the time. The HR Manager. <http://apparelresources.asp?msg=2710&cod=newsin detail&nam=>. however. Vinita. In an interview with Apparel Resources magazine. it would appear that seasonality should be less of an issue for them than other companies who do not manufacture winter clothing. In 2002. We do not need masters. low relative levels of productivity. 22 Pandey. 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.com/defaultnextone. whose upper management and design departments would remain in India. and Sanjay Gulati. 25 crore in jackets alone. we need operators who can be trained. 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. BUSINESS BOTTLENECKS Main problems hindering financial success according to the Director are poor relative infrastructure. Modelama would then shift the actual manufacture of the product to either countries with lower labor costs like Sri Lanka or duty-free countries. 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. A business strategy that Modelama is looking into is “triangular shipping.22 X. IX. If Modelama has had as much success in outerwear as they have stated in press releases. only their department is kept open and the rest of the factory is shut down at 6 pm. Modelama successfully invested in the necessary infrastructure to export ~Rs. MNCs would present their contract orders to Modelama as an Indian company.perator. Lalit Gulati. and then ship the product from that country. relative strength of the Indian rupee to the dollar opposed to weaker Asian currencies. 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. The Director mentioned that seasonality is an issue. the Chairman. the Chairman stated that though the South is better known for it. the former Director stated: Lalit: We do not consider machines as individual equipment but as a complete workstation.with these measures. “Build Quality Rather Than Check The Quality.” a more developed system of subcontracting modeled on Southeast Asian business strategies. and government bureaucratic hurdles regarding labor law. Page 35 . stated that seasonality was not an issue and that they have orders year-round. 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. If workers stay for overtime.
PERSONAL EXPERIENCE Modelama used an Italian consulting agency for the design of two of their factories. who was not available on the date of the interview. Page 36 .Sanjay: It is a very unique combination of machines that we have that gives us this flexibility of handling [versatile] product [mixes]. but directed the researcher to her colleague. The high level of attention paid to infrastructure and personnel management is probably not typical of their older factories. Contact was made by calling the general inquiry number on the website. XI. Modelama was the first company to be interviewed by the researcher. when they began to develop the infrastructure to manufacture outerwear. as it is the most modern. The only question that management would not answer was regarding a detailed financial breakdown of the company. This is likely the factory to which buyers are taken. The unit visited is the site of their corporate offices and was built two years ago with the help of industrial engineers. Modelama was very open in disclosing information about the factory unit. then was directed to a Senior Merchandising agent.
in Head Office Faridabad23 Industrial Plot 1. is former vice chairman of the Apparel Exports Promotion Council of India. Sarjapur Main Road Bangalore 560034.2.com Production Units: Plot No.com Website: www. BRIEF HISTORY Incorporated in 1974 in Delhi. Divisional Manager of Marketing Mobile: 93-13369269 E-mail: ajay. Shahi Export House has a total of eighteen manufacturing units.raman@shahi. The information in the following company report was primarily obtained from interviews with the General and Divisional Managers of Marketing. is in Ghaziabad. Faridabad. Senior Management Ashok Raman. business articles.D.shahiindia.24 23 Unit visited by the researcher. Page 37 . 1. Two or three other units are in Delhi (Noida) and a fabric processing unit. Karnataka Tel: +91-80-28439214/15 Fax: +91-80-28439356 E-mail: shahiblr@vsnl. and G. CONTACT INFORMATION Contact People J. Harish Ahuja. I. II. Palmprint Textile.khanna@shahi. The remaining woven and all knit production sites are located in Bangalore. the owner of the company.in Ajay Khanna.co.co. Sector 28 Faridabad 121008. the company website. General Manager of Marketing Mobile: 98-18212505 E-mail: ashok. Sector 28. SHAHI EXPORT HOUSE PVT. Haryana.com Head Office Bangalore Belandur Gate. Tel: +91-129-2273970/80 Fax: +91-129-2273485/91 E-Mail: seh@vsnl. LTD. Giri. Manicandan’s CEC report.
25 Wal-Mart. spun filament. The Children’s Place. interlock. Family-owned. It is primarily information taken from the website with a few new passages regarding Human Resources and corporate responsibility. Von Daniels. though any exporter of this size must have at least one registered EOU for importing capabilities. nor does it currently have plans to do so. 26 Remaining client names were obtained from interview with Divisional Manager of Marketing. John’s Bay. Old Navy. but it is a small fraction of turnover ($5-10 million). <www. sleepwear. jackets. H & M. and circular woolen knits. Page 38 . TKS Basics. tanks tops. textured knits. American Khakis.pdf/$FILE/Fashion _News_05_02_en2_Webb.The fabrics range includes solids. Place Jeans. 2005. 100% polyester polar fleece. which was printed in 2005 by the Bangalore office. lingerie. Sag Harbor (Sport). yarn dyed single jersey. loungewear. golfwear. Cherokee. EOU Information No information was obtained regarding registration and EOU capabilities. engineering stripers. heavy jersey in cotton.com/www/resource. tailored collar polo shirts. full jacquards. double mercerized. No Boundaries. Shahi has expanded to home furnishings in the past year. who is now the Managing Director. Liz Claiborne. (Pacific Merchants). cotton fleece. Van Heusen. Hollister Co. BASIC PROFILE Legal composition of the Company Private Limited Company. No.pdf>. the sole proprietor was Harish Ahuja. ladies' and girls' dresses. Cento Mila.. American Eagle. JC Penny’s. jacquard. Ralph Lauren. Product Mix Areas of specialization are mostly ladies woven tops and men’s tops. rib. Natural Issue. Target Stores. Bleu. acrylic wool. St. polyester viscose. mock neck. At Last and Co. turtlenecks. t-shirts.26 24 Fashion Newsletter. polyester cotton. Cross-Bow. Carolina Colours.nsf/pub/Fashion_News_05_02_en2_Webb.. The knitwear product range includes 3 button polo shirts. A & F.lawson. Up until a year ago. Abercrombie & Fitch.III. Akademiks. Euro Open. Exports/Imports 100% exports. Shahi does not manufacture for the domestic market. Clients Bobbie Brooks (Woman). flat back rib. Shahi’s product line covers casual and formal men's and boys'. Arizona Jeans Co. Faded Glory. 25 From company brochure. Carolina Blues. Solutions (New York). Enzo Lorenzo. 2. GAP. pique. ladies' & girls' blouses . sportswear. Jeans Dynam. men's and ladies' bottoms. indigo dyed units. Seacorn.
31 Based on the company’s average unit price of $6.033-$0. accessed July 2006.8 million 14-28 million 1.65-$1.pdf>. 29 Estimated by General Manager of Marketing.5 USD.4 million 2.pdf/$FILE/Fashion_News_05_02_en2_Webb.25 $0.com/www/resource.11 $0. 30 These figures were estimated by the Divisional Manager of Marketing in the space of 5-10 minutes. 2.65 $0. 2005 <www.nsf/pub/Fashion_News_05_02_en2_ Webb.30 $0.13 $0. It can be none or most of the unit price.lawson.13 $0. 28 Fashion Newsletter.65 Material Cost Labor Trims and Packing Depreciation Machinery upkeep Overhead Embellishments32 Profit 27 Estimated by General 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.Awards Wal-Mart International Supplier of the Year 2000 (can’t read others) IV.8-23. though generally it is four to seven times the unit price of the garment. Page 39 . Percent of sales is based on an average estimate given by the Divisional Manager of Marketing.8 million 2.07 $0. Did not obtain average retail markup information. 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. No. Turnover estimates varied by tens of millions of dollars between the GM and the Divisional Manager of Marketing. so figures cannot be considered accurate.78-$1. 32 Embellishment costs such as embroidery depends on style. so they can only be thought of as a rough approximation.
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.
who are not involved in these meetings. one for production and another room with rows of computers in which employees work on digitized patterns and samples. very little is done by hand. and there are quality bonuses if clothes do not need repairs. pocket machines and automatic pocket welters. feed-off-the-arm machines. merchandising. in which workers get bonuses for exceeding their targets. For example. The latest CAD software enables quick processing of pattern creation. shipping staff Total number of workers: 3. in sewing. Productivity Schemes The unit visited has an industrial engineering department with eight staff. Juki. which can be 10-25% of monthly salaries depending on how difficult the style is. collar/cuff turning and blocking machines. The incentive scheme only applies to skilled and semi-skilled workers. line supervisors convey target setting to them. They also conduct joint department meetings. Its implementation and form depends on the department.+Supervisors and dpt/line-in-charge 40 Sampling (think incl in production) 50-150 Remaining marketing. The Divisional Manager of Marketing states that they always had incentive schemes. Hashima and Kannegiesser.000 Mostly female Mixed Machinery 6. The production unit boasts machines from Brother. enzyme wash . 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. accounts. Ngai Shing. but they Page 43 . stone wash. marker making and global electronic exchange of pattern data. This unit has an incentive scheme for productivity. These meetings set targets for the shop floor workers. Sampling This is a fairly large department in the production site visited. double needle-needle feed split bar machines. incentives depends on how many pieces are finished. and it was stated that each unit has a similar department.500 in all of Shahi’s production sites 1. every hour the target is marked. grading. single needle top and bottom variable feed machines. They conduct production planning meetings jointly with managers and supervisors by department. This department is responsible for timemotion studies and an operation breakdown. desize soft wash and golf ball wash. It is also equipped with single needle lock stitch programmable machines with UBT.800 in all of Shahi’s Delhi (Faridabad and Noida) units 750 in production site visited The CAM based cutting department can make 75. There are two departments for sampling. fusing press. Durkopp Adler.000 cuts per day. while the 60 multihead computerized embroidery machines have a capacity of 800 million stitches per day. In finishing.
However.00040 Minimum wage is posted as follows: Category Wage (Rs. 4200. The workers get a fifteen-minute tea break between the start of work and their half-hour lunch break. and another fifteen-minute tea break between lunch and the end of their shift. lower labor turnover. Page 44 . Workers use their ID card to clock in and out of the factory. 40 G. leaving male sewing operators and some female ones. 38 According to G.000 Supervisors/Mid Mgmt 10./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. these benefits are additional. Manicandan’s CEC report. 37 The researcher toured the factory around 5 pm. Benefits of the incentive scheme include a 10% increase in productivity in past two years in the sewing department. and a decrease of waste in the cutting department. VII. when the first shift of workers were getting off./month) Unskilled helper 2200 Semi-skilled operator 3600 Skilled operator 6. This early shift seemed to be entirely female.38 Wages As Estimated by Divisional Manager of Marketing39: Category Average Wage (Rs. 39 Stated that these numbers do not include ESI and PF.have recently gone through major changes in their implementation. an increase in attendance. 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. there was still a strong female presence in the factory. Manicandan’s CEC report says a supervisor with eight years experience makes Rs. the workers at this unit do not get a tea break.
Workers are then on a three to six month productivity probation. Benefits Stated that workers do receive ESI. HUMAN RESOURCE POLICIES41 “Human intelligence is the greatest asset which we possess. Estimated two hours per week per worker in the sewing and finishing departments. Most sewing operators have been at Shahi for around two years. Wages are fixed and there is no negotiation. Overtime Stated that there is not a lot of overtime because they plan production with target setting. The Shahi workforce consists of committed and highly skilled people. 7500 are provided with ESI benefits.” ~Shahi’s website Shahi’s updated brochure includes lengthy passages stating their dedication to innovative Human Resources approaches. and negligible overtime for the other departments. they are only evaluated to see what category of skill they fall in. PF. they try to have the male workers pick up the extra work instead of the female workers.Wage Setting Procedure Managers interview workers and then take a trial of their work for one day. VIII. after which the HR manager will put them into a set wage scale depending on their ability. Workers also have access to an on-site crèche for their children during the workday. Page 45 . which the researcher observed. Labor Turnover Estimated at 7-10% per month. and a three-month maternity leave. Shahi’s overtime policies take into account gender. if overtime is needed. People who are motivated to excel and trained in different disciplines of garment 41 From interview with the Divisional Manager of Marketing. Workers who receive less than Rs.
In G. They do not recruit for shop floor positions beyond posting signs on their gates and through wordof-mouth. 42 The brochure and website both state that human resources are developed using the training procedures of Kurt Salmon Associates. Worker Training Shahi trains the unskilled operators for a period of a week. Grievance Policy Procedure Presumably. so they do not need to train them. Union Didn’t ask directly. Manicandan’s CEC report. There is also an orientation program for upper level staff. but it is not necessary to do so here. Training depends on the job description of the worker. but definitely not. Recruitment Policy Shahi states that they do not use a labor contractor. Employ more women and uses HR strategies to disempower workers and remove blatant rallying points for workers. Dismissal Procedure No information was obtained regarding a formalized procedure. the worker forum is a “safe space” in which workers can address any issues they have with managers.manufacturing. workers revealed that there had been unionizing attempts that were suppressed by the management. Worker Committees Stated that there is a worker forum that managers also attend. Some are skilled. Labor problems get a kind ear and are followed up on a priority basis. so the labor is here. and union organizers were either dismissed or isolated from other employees. In the Shahi factories in Bangalore. 42 From company brochure and website. they provide transportation to overcome those issues. not the outskirts of cities. They are able to have female workers because they are in heart of Faridabad. Page 46 . Shahi has invested in a dedicated personnel management division to take care of its labor. Particularly so as clothing corporations the world over are labor intensive and it’s imperative that they are well looked after. making Shahi one of the most sought after organizations to work for in the garments arena. it is all direct employment. Shahi has ensured all systems are in place to make sure that everybody works in an extremely salubrious environment.
Shahi Export House adheres to International Labor Legislation. They have activities for the workers such as an annual cultural week with games and contacts. in fact nearly all had a Hindi translation. attendance and productivity. training facilities for employees. 45 From company brochure and website. and American Eagle. There are many signs posted on the factory floor with stating things like “Discipline: Team work is an easier path to excellence. seminars. Charming Shoppes Inc. and nutrition related topics.45 Medical Care There are male and female onsite doctors and nurses in case of industrial accidents.. and a first aid room in the facility.44 Safety measures are given utmost importance. More of these were in both Hindi and English than I’ve seen at other factories.” Shahi’s updated brochure includes add-ons regarding treatment of their labor force. From interview with Divisional Manager of Marketing and joint worker-manager magazine. educational facilities for children.” “Anything worth doing is worth doing well” and one about the importance of personal hygiene. Best employee awards are given for overall discipline. Strict compliance with anti-child labor law is ensured.Corporate Responsibility/ Codes of Conduct The company has a biweekly English magazine that publishes news and articles by workers. Liz Claiborne. promote. A full-fledged Dispensary and Ambulance is provided with a doctor always on standby. securing of employees’ earnings through e-com (EDI) and ATM cards. and lectures. Nautica. Evaucation boards are put up on all floors along with photographs of fire fighting personnel. Fire fighters are on high alert at all times and every floor is equipped with the right fire fighting equipment. Codes of conduct posted in factory include Carafour. American Pacific. Wal-Mart. It aims at providing a conducive environment for employees to protect. personality development through work shops. The company organizes fire drills to keep employees alert in case of emergencies. Target Stores. 44 43 Page 47 . hygiene.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. And some of the remarkable provisions for employees include: eligibility of workers for health insurance. Dayton Hudson Corporation. and support their families in the best way possible. Awareness programs are conducted for employees on health. The Limited.
now they are getting competition from small exporters. however said they currently retain workers during the off-season because it becomes a problem to rehire workers. U. Website contact numbers are out-of-date. 46 47 From interview with Divisional Manager of Marketing. However Shahi is trying to diversify their product range so that it becomes even less of an issue. PERSONAL EXPERIENCE Obtained contact information from NIFT. before they didn’t have the quota holdings to compete. Shahi is currently constructing a production unit in Bangalore that would have a capacity of manufacturing 200. as they produce about 2. and then not working to full capacity during the off-season. or CTPAT model. Shahi is notable in that they have a majority female workforce in a place like Delhi. The picture of the minimum wage was taken by the manager. according to the Customers Trade Partnership Against Terrorism. according to G. The security guards inside were asleep.) X. Shahi has to decline some orders during peak season (OctoberMay).47 XI. From interview with Professor Rajesh Bheda of NIFT. where the garment industry is over 90% male. traceability. Shahi does not have a sexual harassment committee. INDUSTRY COMMENTS Trying to build up capacity to produce outerwear by next year to reduce seasonality issues. BUSINESS BOTTLENECKS Seasonality is an issue. The Marketing Managers did not mention any new initiatives taken to deal with the issue.1 million PCs during the off-peak season. who reported her case to the police. only different season. as he would not permit the researcher to do so. Also argued for more labor flexibility.4 million pieces during the peak season and 2. Customs Security requirements regarding issues like preventing trespassing. However. Supposedly all visitors have to have proof of identity.S. It is not a huge issue. now they do. Mentioned that Southeast Asia has the same problem of seasonality.46 Shahi recently opened up a warehouse in New Jersey. companies have required them to uphold a more stringent counter-terrorism model of security in compliance with U. IX. tampering. The production unit was enormous. since it takes too much time to get clearance at the ports. Suppliers have changed post-quota. and there was some controversy a few years back regarding a male manager and a female worker. (Stated that retained incentive schemes and everything off-season. though the researcher was not permitted to take pictures during the tour. but I did not have to show it.Security System New security measures have been implemented since the quota phase-out.S. Manicandan’s CEC report.000 pieces per month. Page 48 . Stated that they need better infrastructure regarding port system.
com Production Units Magsons Exports.3. BRIEF HISTORY Company established in 1976 by Mr. shop floor observations by the researcher.L. Magu and deceased brother. who had contacts in the garment and textile industry. HR strategies and production from Assistant Production Manager. two are in Manesar (southwest of Delhi. E-mail: jyotiapparels@vsnl. K. south of Gurgaon). 20. 26818977. a company profile and Standard Operating Procedures given by the Managing Director. The company’s turnover was Rs.111 USD) in the first year. Managing Director Senior Vice-Chairman of the AEPC (Apparel Export Promotion Council) Mobile: 9810029999 E-mail: hklmagu@jyotiapparels. H. I. 110020 (India) Tel: +91-11-26816917. 51 48 49 Unit visited by the researcher.com Manish Mall Assistant Production Manager Mobile: 9899096999 Registered Office48 D-42 Okhla Industrial Area. which roughly doubled each year until 1984. 000 ($11. Phase-I New Delhi. Page 49 . 26810804 (D) Fax: +91-11-26819684. 50 Conversions are based on today’s exchange rate (Rs. 41/42 Phase IV Udyog Vihar. Magu. L. He had no experience. 26817910 Website: Jyoti Apparels does not have a website. and an interview with an Assistant Production manager. he started business in 1977 with an investment of Rs. Gurgaon49 The researcher was not able to obtain the addresses of all nine factory sites. CONTACT INFORMATION Contact People H. The company has increased sales an estimated 30-40% in the past year. 45~$1) and are not adjusted for inflation. II. Unit visited by the researcher. due to the quota phase-out. 51 Information on company background from Managing Director.000 ($444 USD50). 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.K. but by networking through his brother. and remaining information is from observations unless otherwise noted. 500. and two are in Okhla Industrial Area (New Delhi). of which five are in Gurgaon.
Manufactures woven (80%) and knitted (20%) garments using mostly yarn dyes. Reitman Israel: Fenomen Malaysia: Metro Jaya Spain: Mango. Jyoti manufactures some winter clothing (about 20% of production volume). Wal*Mart. Product Mix Areas of specialization include ladies’ (roughy 80% of production volume). Tesco France: C. K. Evans. Woolrich. viscose yarn and denim fabrics. Exports/Imports 100% exports. owners are Mr. Kishore Magu EOU Information No information was obtained regarding a registered EOU. L. Adams. House of Frasers. Donn Kenny. Brumel. V F Jeanswear (Wrangler). Enjoy.” it was pre-quota phase-out January 2005). Prenatal. Europe and Canada. Jyoti does not manufacture for the domestic market. Brylane. solid dye. Zeeman Italy: La Rinascente. and ethnic handiwork accents. BASIC PROFILE Legal composition of the Company Partnership firm. maybe 2004. K. and children’s (roughly 15-20%) readymade tops. with embroidery and beadwork. International. Cabella’s. Specialize in high fashion made of exclusive prints. Magu and Mr.D. Miss Erica UK: Marks & Spencer. Debenhams. Zellers. Lane Bryant. Karstadt Netherlands: Wehkamp. T. . Zara-Indtex Awards The researcher was unable to obtain any information on vendor awards. Oxford Industries Inc. Mexx. Roamans. Page 50 . blouses. Otto Australia and New Zealand: Just Jeans. skirts. India Imports. sequins. Gus. Primark. Carol Anderson. British Home Stores. Siplec (E Leclerc). gents. but the majority is summer clothing. as it mentions “Quota Holdings: We have sufficient quotas in all categories of USA. Freeman’s. Onyx Denmark: Kompagniet Switzerland: Manor. (Target Stores. and other garments. Canada: Hudson Bay Co.. Blair Corporation). 52 According to profile (which is out-of-date. H.. Jyoti’s strengths (and the North in general) are in high fashion garments with embroidery. Phool Fashion Ltd.III. Promod Germany: Neckerman. Clients52 USA: Kellwood (Sagharbor). Charming Shoppes of America (CSI). The Farmers Trading Co. J D Williams. Littlewood.
Japan.6 million 10 $0.50 1.A. retain 75-84% of the sale of a retail item. were estimated by the Managing Director on two different occasions.5% Other Manufacturing 1. this figure includes the amount the MNC spends on shipping. 54 These figures were estimated by the Managing Director in the space of 5-10 minutes. and cannot be used as an indicator of profit.57 V.6 million 10 $0.6-2. 56 Average retail markup is four ($20) to six ($30) times the unit price of the garment. 10% 50% 40% Others (Canada. excluding the $12 million USD figure from the company profile.50 1.555 USD)53 Breakdown of Sales Revenue54 Est USD 2006 Per % Retail Garment55 Price56 Material Cost 9. which accounts for the inconsistencies.5% MNC’s that source from Jyoti.6-2.6-2.000.3 million 60 $3 10-15% Labor 1. Page 51 . FINANCIALS Turnover 12 million USD (either 2003 or 2004) Current year 18 million USD Other Financials Current year sales Rs.6 million 10 $0.50 1. 700.5% Overhead and profit 1.S. Latin America.000 (15.6-2.IV. BRAND INFORMATION Jyoti's Export Market % of Sales U. 57 Since Jyoti’s unit prices are mostly FOB.6 million 10 $0. duty. etc. Malaysia) Europe 53 Financials. costs.5% Subcontracting Cost 1. on average.50 1. so they can only be thought of as a rough approximation. 55 Based on the company’s average unit price of $5 USD.
VI. primarily through the Triburg buying agency. but they do subcontract their fabric sourcing and processing. Did not mention any direct relationships. Two of the factories are 2. American Eagle. four are 1.000 square feet of land spread over ten different areas (including the registered office. Page 52 . 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. It is notable that Jyoti subcontracts to a Shahi processing facility. Subcontracting has not changed since quota phase-out.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. Overall.000 square meters. but later stated that overall they have remained stable. and Gloria Vanderbilt through buying agencies.58 Production System 58 See Standard Operating Procedures for detailed subcontracting information. he stated that unit prices have decreased about 10%. and two are 600 square meters. which is not a production facility). Prices and other sourcing details are negotiated through the buying agencies. INFRASTRUCTURE Company has nine production facilities.000 square meters. Subcontracting Jyoti does not subcontract the production process. the company has about 20. one is 8.000 square meters.
8000 woven pieces per day and 1200 knit pieces per day. over locks.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.Uses an assembly line system. computer embroidery. Page 53 . lock stitch single needle and double needle.000 and 300.000 pieces per month. Quality Control Jyoti Apparels has a quality control assurance team with both an in-house auditing scheme and third-party inspection. feed of the arm. Managing Director and Assistant Production manager stated they were all skilled. shell stitch (Merrow). Production Capacity According to profile.000 pieces per month. washing machines and set of 84 stem boiler irons.000-90. perk-chloro plants. fusing machines. According to company profile. which varies according to the product. At production site visited. between 240. 59 60 See SOPs for detailed quality control schemes. belt attaching. cross stitch/lock stitch button/ button hole/ snaps. The researcher observed production of ladies’ white blouses for Emma James (Liz Claiborne). but primarily just take paper designs from buyers and converts it to clothing. and brown machine-embroidered skirts for American Eagle. Design/Sampling Small design department. usually 80. dry cleaning. piccoting. Sometimes Jyoti has people from UK and France do designs for them. elastic insertion.
and embroidery departments. though the researcher was not able to obtain a photograph of the plan. cutting. Page 54 .Ground Floor Plan Second Floor Plan There is also a basement floor with fabric and accessory storage.
Packing (10-15 workers) Did not observe department during visit. Checking/ Finishing/ Pressing (40-50 workers) The finishing area had lines of workers pressing and folding clothes. 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.” which is the buying agency that many firms deal with.(Right) A view of the basement and ground floor. two supervisors in an office in the corner. Machinery includes one bandknife cutting machine and two straight knife machines. three thread-cutters. and the remaining workers helpers. is data for production site visited. one cutting assistant. with one cutting master.” so they are barefoot when operating the computer embroidery machine. Production (~180-190 Workers)61 on Second Floor Machinery includes about 200 Juki stitching machines. Fabric and Accessories Store. There were two workers on the machines. This was the only department that had any female workers. Some of the fans were broken or not on. Page 55 . It did not seem as modern a unit as other top tier factories. Embroidery (observed 5-7 workers) Workers have to take off shoes before coming in because of “dust. The department has one finishing supervisor and one assistant finishing supervisor. Washing (10-15 workers) Washing was located on the topmost floor of the building. The workers in this department were all male. observations. Document given to Buyer About Shop Floor Management (was displayed on shop floor. etc.. Cutting (20-30 workers) in Basement There are four lines in the cutting area. directly facing cutting tables and below looking up at the finishing department. Sampling (15-25 workers) The fabric store had a sign reading “Triburg. There were no fans in this room.
VII. Labor Turnover Estimated worker turnover per month at 20%. which is not subject to negotiation. then the factory will give incentives.000-90. extra button. workers are offered a wage based on this evaluation. production manager. it is all left to selfdiscipline. according to the Assistant Production Manager. finishing supervisor.O. First the Assistant Production Manager stated that they do not perform time studies. and cutting supervisor who set the production lines and targets based on manual time-studies. there is an incentive scheme that depends on monthly shippings.000 pieces per month.Step 1—Care label. The production unit visited usually produces 80. After one day period. 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. However. Then he stated that they conduct production planning meetings with the factory manager. security tag Four operators Step 2—Initial Pressing One supervisor Step 3—P. Wise Tag check with care. Wage Setting Procedure For shop floor workers. 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. The tailors and some finishing employees receive wages on a daily basis. merchant/buyer (for style). Page 56 . If workers exceed this by 1 lakh. Benefits Production manager indicated that workers receive ESI and PF. rather they calculate targets manually by hourly production rate. and gave a copy of the minimum wage scheme for Haryana. supervisors conduct time studies evaluating the skill level and productivity of a new hire. while the rest of the employees receive a monthly salary.
L. Dismissal Procedure The Managing Director stated that they keep workers for 240 days and then change their workforce. while dotted-line boxed positions are factory-specific and subject to variance. Management Structure Mr. because otherwise they become permanent and you have to pay them more. Worker Training Sometimes Jyoti trains workers during a lean period if there is time. though the Director mentioned that workers learn on the job. Page 57 . they are given a one month notice so they can find another job and they receive a letter of termination. HUMAN RESOURCE POLICIES There are no common policies across the plants. 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. and the extent of their recruitment is posting signs on their front gates. Recruitment Policy Jyoti states that they do not use labor contractors. K. but managers observe productivity and hire skilled workers. The Managing Director states that they recruit people from Apparel Training and Design Centers. Workers do not need experience per se. H.VIII. The Assistant Production Manager stated that if workers are not productive. Magu Partner Founder/Chairman Mr. Usually 20-25 tailors take 10-15 days to train. but these tend to be more middle management people.
according to the Customers Trade Partnership Against Terrorism. He stated that old employees with a union do not work as hard. The production site visited did not have a union. labor laws (especially the lack of hire and fire exit policy). though neither of them knew where the medical facilities were located. etc. He said they have the joint employee-worker committees required by law since there is no union. Grievance Policy Procedure/Corporate Responsibility/ Codes of Conduct No information was obtained regarding a formalized grievance policy procedure. 63 Based on interview with Managing Director. which makes it difficult to meet deadlines. and high transaction charges. high rate of interest. but did not give a visitor’s pass. he moved production to another site (now there is just the accounts staff and some sampling/design). The first time security did not take my name in the confusion of finding a manager. he did not.) across plants except for buyers code of conduct. IX. the Assistant Production Manager stated that they do have committees. U. higher material costs (indigenous. For example. but talked about them vaguely and though he stated that he could give me committee minutes. such as environmental. Worker Committees The Managing Director stated that they do not have any worker committees. and they have monthly meetings. Medical Care There are doctors nearby the factories and first-aid kits in the production sites. but no visitor’s pass. No common policies (with HR. BUSINESS BOTTLENECKS63 Main problems facing the industry are poor infrastructure (need better highways. duties. anti-harassment. no imports because would have to pay landed costs). companies have required them to uphold a more stringent counter-terrorism model of security in compliance with U.” trucks are only allowed to transport good between 11 and 4. production.S. ports. Page 58 . Second time took my name. traceability. Customs Security requirements regarding issues like preventing trespassing. A lot of money is invested into customs. 62 Based on interview with MD and Asst Production Manager. tampering. they should run cargo through machines instead. Does not have its own employee code of conduct. lack of good fabric processing machinery. etc.Union The corporate office used to be a production site.62 Security System New security measures have been implemented since the quota phase-out. etc. etc). Believes that there should be special customs lines at airports so that everything is not searched. but the Managing Director stated that when the old employees formed a union. However. There is a path behind the building to get to the main office over ripped metal sheets over grates..S. they cannot transfer goods during “peak hours. or CTPAT model.
etc. who also permitted the researcher to take photos. because of the late summer. and did nothing the rest of the time. labor laws would be relaxed. Also. They’ve had to become very quality-conscious and price-conscious. Jyoti was an extremely open company in many respects. Post-quota phase-out resulted in a boom for Indian business. He was very open in disclosing information. the overseas vendors couldn’t sell their inventory. China is their main competitor. This year. or even leave their air-conditioned offices. did not see upper management (factory manager. before couldn’t have more because of quotas. INDUSTRY COMMENTS64 Jyoti used to deal with Wal-Mart and Target. as they still have the edge on labor productivity and good infrastructure. The Assistant Production Manager was almost never at the factory when the researcher came to the production site. They played solitaire. which is the capacity in which the researcher initially came to interview him. and had everyone borrowing money from the bank and investing in huge factories.X. etc. The Managing Director is the Senior Vice-Chairman of the AEPC.” in which infrastructure would be built up by the government. 64 Based on interview with the Managing Director.” Jyoti supports “special garment zones. but unit prices got too low. Companies are very upset with the government’s “bureaucratic hurdles. making access to plants easier. Page 59 .) or some supervisors do anything. PERSONAL EXPERIENCE When observed work at the production site. so could not take orders from them anymore. production manager. XI. 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. and one of them glanced at a time-study once. Phase out of quota system has brought in new buyers. like American Eagle.
Page 60 . 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.4. New Delhi 2. Udyog Vihar. 25172438 Fax: +91-11-25451549. Gurgaon 3. Gurgaon. 25172437. G International was established in 1983 in Delhi and 1996 in Gurgaon. Mayapuri Industrial Area. Udyog Vihar. Udyog Vihar. 506. Phase I. 236. Manicandan’s CEC report. 208. I. CONTACT INFORMATION65 Registered Office: 2/2. Phase I. 66 According to company website. Gurgaon67 6. Udyog Vihar. Udyog Vihar. and G. New Delhi . 67 Unit visited by the researcher. Udyog Vihar. Gurgaon 7. BRIEF HISTORY68 Vijay Uppal. Phase III. 479. with one woven garments manufacturing unit in Delhi. 69 From an interview with the General Manager of Operations. Phase III. Noida. 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.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. II. Gurgaon 4. Gurgaon. the current Chairman. 192. Phase-I. Udyog Vihar. Gurgaon 2. including: 1. Udyog Vihar. 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. 68 According to the company website. 225. Phase IV. 239. Udyog Vihar. Phase I. including: 1. Phase-I Gurgaon The company profiled has over ten manufacturing units. Phase I. General Manager of Operations 236 Udyog Vihar Phase-I. and ironmongery. in 1977. and Bangalore. 133. B-108. black iron.110015 (India) Tel: +91-11-25431408. Gurgaon 5. 151. incorporated R and Co. 25454895 Contact person: Padam Vaish. an interview with a General Manager of Operations. Ware Housing Scheme Kriti Nagar. aluminum hardware. Phase III. Gurgaon 8.
Etams Miss Sixty. Women’s Secret. Sigrid Olsen. which will specialize in ready-made specialty shirts. to brands such as GAP. Page 61 . The R Group has recently established a fully integrated production line in Noida. It has initiated a backward integration project by starting its own tannery in Hyderabad. Wal-Mart. The company has set up its own offices in Ludhiana and Tirupur in order to better source fabric. Spigel. while Vijay Uppal and Gaurav Uppal are Joint Managing Directors. Liz Claiborne. Next. Ann Taylor. Charming Shoppe. ladies tops. Clients The R Group sources to over fifteen countries. Timberland. Dillard’s Sears. Polo Ralph Lauren. Exports/Imports 100% exports. anilines.N. skirts etc. pants. D. trousers. Mexx. the group includes eight companies. Including the original R and Co. cargo pants and shorts.Crew. R Global was incorporated in 2002 at Bangalore. knit. vests. Inc. The company has already started manufacturing leather accessories and is further expanding with a bigger factory planned in Gurgaon. Land’s End. women and children such as jackets. and Marks & Spencer. Tommy Hilfiger. BCBG. skirts.1992. Betty Barclay. semi-nubuck. and leather high fashion garments for men. Federated Stores. pants and shorts. The group launched a leather manufacturing unit in 1989 specializing in high fashion leatherwear under the management of Sunil Kapur. Calvin Klein. III. Debhnams. Target. Cortefiel.. J. It specializes in (primarily) outerwear for men. waxy distressed/ oily nappaloans. Mervyn’s.. Awards 70 According to the company website. The tannery has modern finishing technology for leather finishes of Sheep. Goat and Cow leather as well as nubuck. Lane Bryant. The R Group began producing knitwear when Gaurav Uppal joined the company management.. semi anilines. Product Mix Areas of specialization include ready-made woven.Y. The R group does not manufacture for the domestic market. women and children including shirts.K. Monsoon. antiques. May Stores. BASIC PROFILE70 Legal composition of the Company Virender Uppal is the Managing Director.
U.S.S.A. U.IV.S. U. U. Page 62 .A. 90% Major Clients Brand GAP Macy’s Wal-Mart Dillards Liz Claiborne Federated Stores 71 72 UK and Japan Origin U.A. V.A.S. U. BRAND INFORMATION72 Export Market of the R Gro 10% U.S. From an interview with the General Manager of Operations. 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.A.A.A.S.S. Export Performance Chart71 Other Financials No other financial information was obtained. FINANCIALS Turnover The R group has an expected annual turnover of US $ 85 million for the year 2005.
Noida. Wal-Mart usually orders the largest volume.Buying Agency or Direct Contracts are mostly negotiated through buying agencies. shows a sample range. G International takes indicative orders from the buyer. 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). VI. Page 63 . since they often don’t have established offices. unless otherwise indicated.75 Production System The R Group uses an assembly line system. 73 74 Including Wal-Mart. The R Group’s leather manufacturing unit has an annual production capacity of 500.5 APQ” quality check standard across the board. They set up a shelter (“shack”) for local tailors to do the hand embroidery. the company’s knitwear divison. though not to an established company or to direct employees. INFRASTRUCTURE74 The R Group has over twenty-two integrated manufacturing units in Delhi. 75 From an interview with the General Manager of Operations. Subcontracting G International subcontracts their hand embroidery. Quality Control The General Manager of Operations stated they use a “2. 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. For a more detailed quality control process. Taken from the company website. has an annual production capacity of 2 million knitted garments.000 pieces. and the buyer selects and negotiates the contract. 76 From an interview with the General Manager of Operations. Gurgaon. Production Capacity The R Group’s woven division has an in-house annual production capacity of 10 million pieces. there has been a 15-20% increase in orders. or sometimes they embroider in their homes. though there are fewer orders in the fall and winter. Smaller companies are more likely to be direct orders. and Bangalore. R Global. see company website. though they occasionally take direct orders. However. G International does not use a recruiting agency or a labor contractor.
an estimate was approximately Rs. to the production stage (work aids. material flow). with 1200 workers at this site (approximately 95% male. Page 64 .000 workers. such as medical checkups. 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. They have incentive schemes for things like 100% attendance.79 VII. time and motion studies. 5% female). 77 After disclosing this information regarding the number of skilled workers. from the sampling stage (product and pattern engineering. scholarships for workers’ children.78 The R Group has a Research and Development department for the technical aspects of garment manufacturing. 79 From the company website. Preliminary worker interviews revealed that this company was considered one of the worst factories to work for in Gurgaon. to the pre-production stage (layout and machine engineering. Plotters & Automated Cutting Machines) and fabric testing (fully equipped laboratory) and fusing. cutting (Digitizers. They incorporate corporate social responsibility schemes into their productivity ideas. 78 From an interview with the General Manager of Operations. Departments No information on specific departments was obtained.000. G International has a total of 7. operator training and skill analysis).Approximate number of workers in all facilities The R Group has a staff of over 10.77 Machinery R Group’s production facilities use machinery at every point in the production process including designing (CAD). 80 From an interview with the General Manager of Operations. and worker welfare programs. Productivity Schemes The company has production planning meetings in which targets are set and the workers do not participate. operation research). 700 per month extra. the General Manager refused to give any more specific numbers of workers. 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.
Benefits According to the CEC report. After a three-day period. none of which were visited by this researcher. Page 65 . 81 From G. 151 UV./month) 2600 2750 2344 1893 2341 Wage Setting For shop floor workers. Units visited in his report are Gurgaon Phase-1 192 UV. Manicandan’s CEC report. which is made on a different date than the regular salary.Wages81 The wage amount excludes overtime payment. Gaurav Uppal Joint Managing Director Mr. HR Manager stated that wages increase after a year. Category (from pay slip) Tailor Sewing Operator Helper (8 months experience) Unskilled helper Helper (production) Wage (Rs. HUMAN RESOURCE POLICIES Management Structure Mr. which is reportedly not always paid. and 225 UV. workers are then offered a monthly wage based on this evaluation. Vijay Uppal Joint Managing Director Mr. 15 per hour. though they do not always receive their PF once they leave the company. which is not subject to negotiation. Virender Uppal Managing Director Founder/Chairman Mr. Overtime payment is 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. supervisors conduct time studies evaluating the skill level and productivity of a new hire. VIII. while dotted-line boxed positions are factory-specific and subject to variance. workers receive 12% PF and 2% ESI.
Manicandan’s CEC report. Researcher: But you said you didn’t use labor contractors. customer friendly. that they engage in the same kinds of recruitment. Researcher: Is labor flexibility or the lack of hire-and-fire policies an issue? General Manager of Operations: No.Worker Training The facility sometimes trains workers if the operation is difficult. No other information about the R & D department at this specific facility was given. like the labor norms in China. no. 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. Training usually takes one or two days and is done through the research and development department. buyer codes of conduct are hurting business because they are more strict. Company G and the R Group does contract temporary laborers and subcontract to a labor contractor. According to G. well. Other Human Resource Policies No information was obtained regarding a formalized dismissal procedure. These problems are taken care of with labor contractors. Today. However. The General Manager stated that there are common policies across the plants. [the R Group] is seen as a highlighted-tech. interviews applicants. Medical Care No information was obtained regarding on-site medical care. we do more incentive programs and get better performance out of our existing workforce. IX. not anymore. So how do you overcome these issues? General Manager of Operations: Oh. Recruitment Policy The facility posts signs on gates. then tests worker productivity for an hour and a half. worker committees. grievance policy. Page 66 . He stated that it should be looser. Security System No information was obtained regarding a security system. 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. or a union. eco-responsive corporate citizen that is Shaping a Better Tomorrow for everyone.” The company has a manual code of conduct that the General Manager stated is given to each employee. More than local labor laws. BUSINESS BOTTLENECKS The General Manager stated that buyer requirements like double pay during overtime are holding the industry back. Workers receive a letter of contract.
In general. Virender Uppal (the MD of the R Group) is a former Chairman of the AEPC. He implied it has limited use after the quota phase-out. he asked “why do you want to know that” and refused to give much more information past that. He refused to schedule an interview solely with the HR Manager. The General Manager stated that the AEPC was much more useful before the MFA phase-out. the Northern area of India is more embroidery and hand-work intensive and is multiproduct. Page 67 . as it would tell them new government policies and how to best utilize the system. They are also setting up a leather accessory factory at Gurgaon. XI.X.” The South is also usually single product. especially in regards to quotas. Because they are trying to increase productivity. PERSONAL EXPERIENCE The R Group was extremely difficult to both interview with and extract information. which makes productivity more difficult to increase. G International is working on converting to a single product system within the next two or three months (August 2006). who was not at the factory when the researcher visited. and avoided any other types of follow-up including the suggestion of a phone interview. Furthermore. When asked about the number of skilled workers. and he was much more reserved and suspicious. INDUSTRY COMMENTS The R Group is in the process of setting up a backward integration project for their knits division. Although the researcher obtained a employee code of conduct handbook. The work culture in the south is “different—more productive and efficient. General questions about labor laws or productivity issues usually prompt details and complaints. he initially would not let it leave the building. The researcher was directed to the General Manager at a G International plant for an interview. every one of them was canceled by the General Manager. It would be better to simply show up or not leave an option of calling before coming. though several follow-up interviews were scheduled. brief way. but he answered questions in a more direct.
870. Gurgaon 4. In 1993 it became a public limited company. PEARL GLOBAL LTD. 138. Company Secretary Tel: 95-124-4308164 E-mail: jayants@pearlglobal. Gurgaon 3.pearlglobal. BRIEF HISTORY83 Pearl Global was incorporated in 1979.com Jayant Sood. as it includes all parts of the garment industry under the “House of Pearl. the company website. Phase-V Gurgaon – 122 016. Gurgaon II. Phase I. Page 68 . Gurgaon 2. Manicandan’s CEC report. Phase I. and an interview with the Company Secretary. Chief Finance Officer Tel: 91-124-4308201 firstname.lastname@example.org. Chairman email@example.com Registered Office: A-3. Udyog Vihar. business began in the 1980s. The information in the following company report was obtained primarily from an interview with the Chief Finance Officer. Udyog Vihar.com Production Units: 1. Phase V. online business publications and press releases. From an interview with the Chief Finance Officer. and its first manufacturing facility was established in 1989. Udyog Vihar. Haryana Tel : 91-124-4004086/87/88/89/90 Fax: 95-124-4004067/85 Website: www. Phase V. G. 222.com Rishi Vig. Udyog Vihar. Community Centre Naraina Industrial Area Phase-II New Delhi – 110 028 Tel : 011-51417680-82 Corporate Office82: 446 Udyog Vihar. The company structure of Pearl Global is extremely unique.” The House of Pearl is focused 82 83 Unit visited by the researcher. I. CONTACT INFORMATION Contact People: Deepak Seth. 446.
86 From an interview with Chief Finance Officer. George (Wal-Mart). Wal-Mart..S.P. skirts. nightwear dresses. vests.E. III. marketing units in the U. which together yield a combined turnover exceeding U. shorts. children’s. Esprit. Product Mix Areas of specialization include: India: woven cotton and value-added cotton. trousers. NorPearl. Bangladesh: low cost.C. stain sealed garments using goretex and acquatex.S. Clients Abercrombie & Fitch. Lerros. BASIC PROFILE Legal composition of the Company Public limited company. Liz Claiborne. bottoms. Inc.” 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).S. JC Pennys.C. he has been inducted to the Executive Committee of A. and outerwear.84 Exports/Imports 100% exports. Nex86. t-shirts. He has successfully promoted and established the fashion apparel brand "Lerros" in Europe. GAP (including Banana Republic and Old Navy). Page 69 . H & M85. The company recently entered into a business and education partnership with Babson College in the U. He has been actively involved with the development of readymade garment industry in India. Karstadt/Neckermann. NorPlanet Pearl Global has manufactured women’s. is establishing a U. It also has businesses in Hong Kong (NorWest) and the UK (Poetic Gem). ethnicwear. Castromen. and the UK.P. suits.1993. brand “Kool Hearts.) for the year 1990 . Pearl Academy of Fashion Domestic.on the apparel sector with manufacturing bases in India (primarily Pearl Global Ltd. The Chairman of Pearl Global established a fashion and design academy. including blouses. From company website. etc. children’s and men’s shirts. Charming Shoppes. warehouse and distribution.E. as a Special Invitee. It offers full services to large retailers with the chain broken into business units that cater to different product lines. dresses. Besides having been elected to the Executive committee of the Apparel Export Promotion Council (A. Marks and Spencer. basic stuff. The House of Pearl includes designing and manufacturing units. $200 million. Siplec.) and a global network of business associates and customers. 84 85 See company website for list of shareholders. Kohls. Dillards. Pearl Global does not manufacture for the domestic market.S.
6. Ahmedabad . 29 June 2006.87 $400 million in its worldwide operations post quota phase-out.5 crore in the previous year.400 001.9 per cent to Rs 159.” <http://www. The Delhi Stock Exchange Association Limited (Regional Stock Exchange) DSE House 3/1 Asaf Ali Road New Delhi . 3. New Trading Ring.1 crore compared with Rs 7. G-Block Bandra – Kurla Complex Bandra (E) Mumbai – 400 051 4. Pearl announced a dividend of 30 per cent for the year [subject to shareholders’ approval]. Rotunda Building.” “The company’s operating profit was Rs 17. J. Page 70 .IV. The revenue of the company during the year was up 31.89 Other Financials “Pearl Global posted 88 per cent year-on-year increase in net profit in 2005-06 to Rs . Stock Exchanges where the securities are listed: 1. In 2005-06 the company invested Rs 29 crore to augment its production capacities in Gurgaon and setting up a new unit in Chennai.88 Net profits are 234% up.5 crore [from 120. National Stock Exchange of India Limited Exchange Plaza.9 crore in the previous fiscal]. 5th Floor Plot No. 3.com/articleshow/1690384.indiatimes. P.”90 See website for detailed financials. Babson College press release.C/1.asp>. 90 “Pearl Global net up 88%. Towers. Ahmedabad Stock Exchange Limited Kamdhenu Complex Opp.com/1060712/asp/business/story_6465123. <http://economictimes.cms> and “Corporate Briefs: Pearl Global. FINANCIALS Turnover $200 million worldwide before quota phase-out.110 002 2. Dalal Street Mumbai .” The Economic Times: Garments/Textiles. 89 From an interview with the Company Secretary. Sahajanand College Panjarapole.41 crore in 2004-05].telegraphindia. Bombay Stock Exchange Limited 1st Floor.380015 87 88 From Chairman’s Message on company website.43 crore[ from Rs.
Our Customer's perception This reply has come from ASDA Walmart to a query of a Sr.V. 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). BRAND INFORMATION91 Pearl Global’s Export Market 40% 60% U. EU and UK Major Clients Brand JC Pennys GAP (incl ON and BR) Charming Shoppes. They have supported our growth by putting in the infra-structure to service our needs. and jersey product across all ages and genders from a variety of countries in the Far-East and Indian sub-continent. 91 From an interview with the Chief Finance Officer. Page 71 . They now supply us with a variety of casual. Journalist. Apologies for the delay in replying. “Dear sir. 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.S. 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. before the cost justified it.A. Inc. 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. The following is a forwarded e-mail from George Clothing (Wal-Mart) regarding Pearl Global: Subject: Something you should know. They are working on building strategic partnerships with between all of their vendors and suppliers and consolidating them. woven.knitted. From an initial order in 2001.they have grown to be our second largest supplier.
Lancelot Joseph. and delivery have had to be a given. Currently I am doing a corporate feature on the House of Pearl who is your vendor. no-one whether it be store customer. Executive Editor. As price deflation has become a way of life in the UK clothing market. and where our distribution network has creaked under the pressure. 1 business publication. 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. For Pearl to grow their business with us. Best regards. Allan Quayle General Manager-Strategic Supplier Development George Clothing Phone 00 44 (0)1455 264409 Mobile 07779 700695 e-mail allan. I honestly believe that to supply fashion retailers at the volume end is one of the most difficult businesses to be in . it is critical for us as a business to deal in the right way.Growth on this scale inevitably creates major head-aches for the supply-chain. I feel that we can have an honest conversation with Mr. so Pearl have stepped in to provide solutions and support. flexibility to change our minds as to what we want right up to the last minute. or supplier. Business India” Page 72 . offering us product direct from factory or landed delivered if the situation demanded. quality. and any issues that have arisen have been resolved immediately and taken as learnings to provide a better service going forward. UK I am a journalist from India writing for India's No. Below are a few points which I hope you would take time off and reply to at the earliest.We want style. Mr. hence would like to have some of your observation/views/comments on the business house and your relationship. 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. Deepak Seth has also gone beyond the factory gates to work with the community and put something back. has a right to exploit the people who make the product we sell. Thanks and regards.quayle@wal-mart. retailer.com --Original Message-Dear Ms. Heather Moreton. Senior Sourcing Manager -Kidswear. 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. 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. ASDA Wal -Mart. Quality. We pride ourselves at George that our ethical standards are rigorous. * 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. Finally. price.
but it mostly in-house. Pearl Global then manufactures the style. Pearl Global uses labor contractors.Buying Agency or Direct They used to contract through buying agencies. and one in China. 5% freight. two of which are in Bangladesh. VI. Subcontracting Sometimes Pearl Global subcontracts hand embroidery. The embroidery tailors either come into the facilities to perform the work or they send it. Production Capacity Pearl Global has 20 million pieces in-house capacity and 120 million pieces capacity all across Asia. India: Unit Prices (paid to factory per piece of garment supplied) Range Average Retail Delivery Time Type India U. Page 73 . are consulted to developed in-house patterns. 90 incl. yarns. Every stage of the production line has its 92 From an interview with the Chief Finance Officer. Design/Sampling and Product Development Designs are mostly developed in-house. They are working on doubling their capacity in the next 2-3 years. Markup (days) High of $10 $6-7 USD 3 to 4 times 60 to manufacture. one in Indonesia. which are shown to buyers in advance. 50% FOB. INFRASTRUCTURE92 Pearl Global has five or six production facilities in India.S. but now they have developed direct relationships with their long-term business partners. Production System Pearl Global uses an assembly line system. The House of Pearl has over 150 factories across Asia. who then chooses or modifies the styles.S. Quality Control Raw material including fibres. now it is 6 months. The House of Pearl’s research and design department prepares a collection of high fashion styles for each season. Sometimes designers from the UK and the U. They have six design factories. dyes and chemical are thoroughly checked before they are fed into the manufacturing process. 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. one in Chennai and the others in Gurgaon.
drape and fastness to light washing and rubbing and slippage. Phase V. novelty yarns. Gurgaon 2500-3000 workers 446. which is sourced from outside is tested for fibre fitness micron ( fibre diameter). Udyog Vihar. Udyog Vihar. viscose tops and special fibre). Polyster viscose and cotton yarn is tested for count.own set of detailed monitoring system. CRA. Every set of fibre (polyester. twist per inch. Approximate number of workers in all facilities Pearl Global has approximately 6000 workers in India. Phase I. Production Unit Number of Workers93 138. count strength product (CSP). fibre composition percentage (blend %). Manicandan’s CEC report (and confirmed by the Chief Finance Officer). 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. If a worker stays for six months they get incentives. as neither an HR manager nor a production manager was available for interview. 93 Numbers for the units at 446 and 870 were estimated by the Chief Finance Officer while the other numbers were obtained from G. The finished yarn is tested for residual shrinkage. After workers receive their monthly salary they see a “rise in absenteeism. Gurgaon 2000-3000 workers Machinery Pearl Global has an estimated 2000 machines for every part of the production process. Phase I. tensile strength. but did not give specific numbers. Productivity Schemes Pearl Global gives out “best worker awards” and “gold stars” for productivity. and if they have a low level or no absenteeism they also get an incentive. Gurgaon 600 workers 870. uster percentage and impurity. moisture regain percentage and finish percentage. Phase V. WORKING CONDITIONS Wages and Benefits The Chief Finance Officer stated that sometimes Pearl Global pays workers above the minimum wage. Gurgaon 500-600 workers 222. fibre bundle strength. Udyog Vihar.” as workers do not have a long-term commitment to the factory. Departments The researcher was not able to obtain information regarding the specific nature of the assembly line or tour the factory. Sretch yarn. Page 74 . etc. pilling. single ply yarn is also checked on the uster machine to ensure consistency in yarn quality confirming to norms of the uster statistics. VII. Udyog Vihar. ply yarn.
3000 per month Every year workers receive Rs. Union and Worker Committees98 There is no job security. Recruitment Policy Pearl Global uses labor contractors and specifically stated they use R. 100 more and a 20% bonus for divali. though sometimes workers work double shifts and are paid double. who are not entitled for ESI and PF. The union is not effective in addressing the problems of the workers. 96 From an interview with the Chief Finance Officer. Bangladesh. VIII. K. According to G. The labor turnover in Chennai. They did not have a HR manager before this. They want to hire more women like Southern facilities do because women workers are “more efficient. Labor Turnover96 The labor turnover in Gurgaon is about 20%. They contract temporary workers through R. There is no sexual harassment 94 According to G. & Company. 97 From an interview with the Chief Finance Officer.” but there are not enough “available. Dismissal Procedure. and Sukumar Pride. Manicandan’s CEC report. & Co. Manicandan’s CEC report. but if it is mixed employees then it becomes a problem with issues of sexual harassment.K. who must first pass a hand-eye coordination test and then spend twenty days on the training line. Manicandan’s CEC report. ESI and PF. Furthermore if “it was all women it would be fine. they used a mix of outside agencies and consultants. and Indonesia is lower. although being a “permanent” employee will entitle a worker to an identity card. There is a union in the facility at 138 UV.” However they are working on providing the necessary infrastructure (such as transportation) so they would be able to hire more women workers.Position Finishing supervisor (7 months experience) Tailor (8 years experience) Tailor (5 years experience) Wages94 Rs. Out of 500-600 workers only about 90 are in the union. and the head of the union is not an employee at the facility. 4000 per month Rs. if there are no orders or “no work” employees are told not to come.” and it is not convenient as Pearl Global would have to provide transportation. 3500 per month Rs. HUMAN RESOURCE POLICIES97 A new HR manager is to be hired as of August 15. 98 According to G. Overtime95 The facility at 222 UV has two shifts and thus there is little overtime. 2006. Worker Training There is a training line for new workers. 95 Page 75 . For their HR strategies. All but temporary workers are covered by social security schemes.
Investors.e. Working on having uniform HR and productivity strategies. BUSINESS BOTTLENECKS99 The industry is regulated by the supply of cotton. orders are fewer in July and August. Source the best from the World to deliver the best to the world by following ETHICAL MANUFACTURING AND TRADE PRACTICES. a fashion design and manufacturing technology institute. 2006. This translates to bringing a high level of satisfaction to five constituencies Customers. X. 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. as mentioned previously there is a new HR manager slated to begin on August 15. Deepak Seth): “A future that shall be built with the same strategy that has shaped our past. implying that the AEPC is not as useful post-quota. The Chairman Pearl Global espouses corporate responsibility ideals on its website (Chairman’s Message. Vendors and the Society-at-Large. The Company has built-up very effective TEAM WORK…The primary purpose of Corporate Leadership is to create wealth legally and ethically. According to the Chief Finance Officer. i. INDUSTRY COMMENTS100 Commented on the strengths of the North. which have monthly meetings. which is missing in the North but the value-added garments (embroidered. Pearl Global has a very effective HRD system they have build an empire highly trained and skilled manpower ready to face the dynamic changes. Page 76 . They want to integrate all offices with an ERP 99 100 From an interview with the Chief Finance Officer. From an interview with the Chief Finance Officer.” IX. they have set up a medical treatment facility in the spirit of social responsibility. Seasonality is an issue. Pearl Global just hired a lawyer to help analyze and plan financial structure. as there is different management at each facility. The House of Pearl has enough infrastructure to double turnover. The company also operates a school by the name of 'Little Pearls' in Delhi.committee. Employees. there are sexual harassment committees. etc) helps immensely. The unit at 222 UV does not have a union. so they are working on capitalizing upon the existing capacities. The company has set up Pearl Academy of Fashion. and teams are set up to work on weak areas in working conditions. which holds it back. The motto of every Corporate Body is to ensure Predictability. Labor cost is still competitive (in terms of the world market). Corporate Responsibility/ Codes of Conduct According to the Chief Finance Officer. “ethnicwear” or design. The strength of South India is its efficiency. Sustainability and Profitability of revenues year after year.
The House of Pearl is planning to get into retailing and is working on an industrial engineering department and setting up software SAM.” The Economic Times: Garments/Textiles. London College of Fashion. Bolton University. Mr.indiatimes. It has links with acknowledged international leaders in fashion education. the Netherlands' Hogeschool van Amsterdam. The company is setting up new facilities in Dhaka (Bangladesh) and a design center at Chennai. It provides training programs in the areas of Fashion Design. Retailing.com/index. 7 Feb 2006. Merchandising. Mr. Production and Computer Aided Design…The Academy has opened its second campus in New Delhi. According to The Economic Times: “Leading apparel group Pearl Global Ltd has decided to merge Pearl Styles Ltd and City Estates Pvt Ltd with itself…A swap ratio of 30. industrialists and academicians.. its alumni hold responsible positions in more than 300 leading organisations. Modelama Exports The Pearl Academy of Fashion was set up in 1993 by Pearl Global Ltd. Chairman. such as the UK's Chelsea College of Art & Design.htm Advisory board includes: Mr. 101 Page 77 . Pearl Global. and London Centre for Fashion Studies. As a result of the close interaction between the industry and the institute.Virender Uppal. at Naraina. Deepak Seth. one of the top two in this field in the world. Partner.16 equity shares of the company for every share in City Estates was recommended by the board at the meeting. 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. and is located in the Okhla Industrial Area (Phase II) of New Delhi.cms>. The Advisory Board of the Academy consists of leading exporters. like in “Pearl Global to merge two companies. and Germany's LDT Nagold.pearlacademy.com/articleshow/1404688. Managing Director.”101 Pearl Academy of Design Education-Pearl Academy of Fashion http://www. R & Company. <http://economictimes. in India and abroad. Lalit Gulati.system. 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). It has a validation agreement with the UK's Nottingham Trent University (NTU). Hong Kong Polytechnic University.
. distance participation in projects. * Student report on the student admissions process and co-curricular activities. joint information sharing. Current plans are for first classes to be admitted in the fall of 2008. have signed a strategic collaboration on a full range of activities to promote world class research and education of entrepreneurship in India. and assessment standards.—a $400 million company exporting garments to Europe and North America—has formed a non-profit educational trust. Sonal Garments. Robert Eng. Babson’s Provost.. The Pearl School for Business Studies will grant Bachelor of Business Administration and/or Masters of Business Administration degrees with a focus on entrepreneurship. was also present. Pearl Global Ltd. Executive Director. and will visit regularly to monitor teaching. India. workshops. President of Babson’s Alumni Club in India and Chairman of DCW Ltd. Vivek Jain. has set up a business partnership with Babson College in Boston (U..’s premier business school). India last week for the official signing ceremony with Deepak Seth. * An overview of the entrepreneurship curriculum. private business management institution at two campuses near New Delhi.Benetton. Both institutions will identify mutual exchange opportunities—on-line access to library resources. Richa & Co. Ponds (India).—ranked #1 worldwide in Entrepreneurship Education---will advise Pearl on the strategies. The Asia Institute at Babson. * Faculty report including Babson faculty profiles and approaches to faculty development.. Mass. requirements. Pearl will shape this information into a comprehensive Entrepreneurship curriculum to meet the particular conditions. The collaboration is designed to expand over the next seven years. traveled to Delhi. learning. Orient Craft. 102 From the website of Pearl Academy of Fashion. USA and Pearl Global Ltd. and procedures necessary to build an Entrepreneurial foundation and curriculum. Pearl Global Ltd. internship facilitation. processes. Babson’s consulting reports will include: * The general curriculum for undergraduate and graduate programs. Page 78 . The Babson college press release: Babson College. India. Research in India Babson College. and stipulations of the local region in India. This trust is in the initial stages of developing a new. on New Business School: Two Form Strategic Collaboration to Promote Entrepreneurship Education. Bhupatkar.” 102 Partnership with Babson College Pearl Global Ltd. and Professor Ash Rao will present the final reports to Pearl. Michael Fetters. Babson faculty will provide workshops for Pearl faculty and staffing. Babson College in Wellesley. Chairman of Pearl Global and Dr. Mafatlal. Bombay Dyeing.S. RMX Joss. links to websites. advisor to Pearl Global’s education trust. Advises Pearl Global. Shoppers' Stop and Ebony. USA. among others.
Deepak Seth. 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. however after e-mailing the Chairman. 104 “Pearl Global bullish on Q2 numbers. Mass. “According to industry sources.” said Fetters. is recognized internationally as a leader in entrepreneurial management education.. The Company Secretary was not useful in arranging interviews with other personnel who would be able to answer what he could not.”104 XI. visit www. which is setting up a joint venture manufacturing facility for soft fabrics in China to secure part of its supplies.babson. is understood to have chalked up a plan for its presence in domestic retailing. The interview consisted of a powerpoint presentation on the structure and capacities of Pearl Global. It was difficult to obtain an interview by calling the numbers on the website. Olin Graduate School of Business at Babson College.edu.W. For information. 103 Babson Newsroom Release.” Babson College in Wellesley. “We are privileged to work with Pearl Global. 24 April 2006.edu/Newsroom/Releases/Babson-and-Pearl. Kool Hearts label. Page 79 .S.103 Domestic and International Retailing In addition to the U. Pearl Global is getting into domestic retailing: “ [Pearl Global]. and grants MBA and custom MS and MBA degrees through the F.“This collaboration is an important step in Babson’s journey to globalize Entrepreneurship Education. growth prospect remaining high. <http://www3. though the researcher was not able to obtain a copy without signing a confidentiality agreement.com/finance/equity/fullstory. a company that shares our vision to advance Entrepreneurship knowledge in India. Babson grants BS degrees through its innovative undergraduate program.such as Jaipur. the recent fall in price makes it an attractive long-term bet. “According to market analysts. Chandigarh and Lucknow.” 26 Oct 2005.babson. an interview was promptly arranged with the Chief Finance Officer. Ltd.. <http://sify.php?id=13972072>. Babson Executive Education offers executive development programs to experienced managers worldwide. the company is in the process of booking retail outlet spaces in cities across northern region .cfm>. Gurgaon.
most of the information is from the interview. BRIEF HISTORY106 Business began in 1972. a company profile given to the researcher by the Managing Director. ORIENT CRAFT LTD.ocemb. and 105 106 First two units visited by the researcher. Gurgaon. From an interview with the Managing Director. but it does not contain any information beyond the heading: Orient Craft Limited: Embroidery. mobile: 9871496362 Corporate Office: Orient House F-8 Okhla Industrial Area. 13. Gurgaon-122015. 110020 (India) Tel: (+91-11) 26818247. 14-A Maruti Industrial Complex Sector-18 Udyog Vihar. Phase-1 New Delhi. CONTACT INFORMATION Contact Person: Sudhir Dhingra. so he could use the proceeds as seed capital. G. Haryana105 3. Haryana Tel: (+91-124) 5090800. Gurgaon. the largest computer embroidery facility in the Indian subcontinent.com Production Units: 1. Gurgaon II. but the company was not incorporated until 1978. He had a friend from London who was buying from importers and selling the goods to specialty shops. Phase IV. found some tailors to make the shirts. Managing Director. Manicandan’s CEC report. Haryana 4. Udyog Vihar. 68.6. 2341110 2. Plot No. An ISO 9001-2000 Unit: “Orient Craft Embroidery Division. 15000 ($300) from his father. Founder/Chairman Personal secretary Meghna. Udyog Vihar. Unless otherwise indicated.000 shirts made in India.” E-mail: orient@orientcraft. who asked Dhingra to get 1. Page 80 . 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. 2343262 Fax: (+91-124) 2342042. There is a preliminary website set up for its embroidery division at http://www. has no website. 7-D Maruti Industrial Complex Sector-18 Udyog Vihar. Khansa Road Sector 37. Dhingra borrowed Rs.com/. Dhingra was a law graduate from Chandigarh with no experience. and preliminary interviews from Gurgaon workers. I. online business and economic articles. 26818249 Website: Orient Craft Ltd.
Then while in Germany. they’re looked down upon. and restarted business with a trial order of 1200 pieces for a customer in L. with 1800 people. and others. though he stated that it was difficult to actually get the money from the government. When he returned.000 sq ft. Dhingra “is also Executive Member of the Advisory Committee of AEPC and an active member of reputed associations such as FICCI.A. In the mid 1980s.” His father gave him one year to start up business. they’re not looked up to. The first Gurgaon plant was established in 1993. 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. 6000 ~ $133). CIAE. when he got back to India. National Institute of Fashion Technology. with 3500 people. During the first few years. May 2006. then consolidated supply chain into one roof. During this traveling. Dhingra wanted to improve the standards of quality and infrastructure to globally competitive standards.000 pieces and an annual turnover of around $40-50.htm>. not just in the limited Indian context. 107 Page 81 . he also encountered some buyers. During his traveling. Liz Claiborne sent an American technician to help Orient with worker training and modernization. with more than 350 modernized factories. he decided to break into the industry. he estimated a production capacity of about 150.niftindia. Then. the Indian-inspired fad went away and he had to spend six to seven months traveling to get rid of inventory stock. Both were wholesalers who sold to specialty stores. as Gurgaon is the single largest manufacturing sector in India. only now it is 136. And being a tailor is like being a janitor. ASSOCHAM. “At the time. <http://www.000 sq. CMAI. he was able to observe fashion trends and the kind of things that were selling. 15000 plus a small portion of the profit (Rs. and that plant is still there. 200-300 people. 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. Orient subcontracted until the early 80s.com/iftf. The first plant in Maruti Industrail complex was the first plant in India that was over 80. Orient got clients by word-of-mouth from their L. ft. he hired more people. not like today. you had to be a tailor to be in the garment industry. Dhingra states that others followed Orient Craft’s example.000. set up a pressing line on the dining table and the production line in the garage. yards and outsourced actual manufacturing. Then after a few years.”107 Biography for Sudhir Dhingra for the International Fashion Technology Forum. When his friend repaid him the Rs.” Dhingra wanted to move production out of the village and industrialize the area and put as many skills in-house as possible. he obtained a factory processing site of 240 sq.shipped them to London. and Germany buyers. and he rented a house. In the 1990s Dhingra set up a bigger plant with 100 machines.A. found another buyer. Orient’s first factory was established in a village in Hauz Marg and it is still there. CII.
outerwear. Clients Armani Exchange. pants. Now he owns 60% of the shares. 2001. Jones of New York. Old Navy (women’s). ropers. coordinates. Lands End. Owners/Directors Mr. Kohli. Abercrombie & Fitch. jackets. J. Macy’s.G. Limited. Marks & Spencer. LizWear. because of “language and cultural differences” with the European business partners. 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. Banana Republic. women’s. Liz Claiborne (LizDresses. Susan Bristol. LizSports). Orient used to source for Wal-Mart in back in 2003 but has since stopped. and gave 20% to his nephew and 20% to his friend. Anoop Thatai EOU Information The company has three 100% export oriented units (which can import all raw materials and trims free of duty). Oasis Stores. skirts. dresses. Ralph Lauren (Lauren. ELM Street. boys’. Page 82 . BASIC PROFILE Legal composition of the Company Orient Craft is a privately owned company but deemed public limited. J-Crew. Esprit. Dhingra was the sole proprietor. However. and 2002. Dillards Stores. 2000. Marc Jacob.K. Exports/Imports 100% exports. 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. Diane von Furstenberg. Express. K. men’s shirts. Calvin Klein Jeans. shorts. Polo Jeans). and jeans). Rocawear. Product Mix Areas of specialization include blouses. Donna Karen. Up until 10 years ago. Dockers.Hook. Awards Additional information: Orient Craft Ltd. Mr. is looking into breaking into the domestic market. GAP (kids). Orient Craft Ltd. The company does not do that much business with Zara and Miss Sixty (Italy). 1998. knitted shirts/t-shirts. and Marks & Spencer. Ann Taylor. Next Retail Ltd.III. Zara. Sudhir Dhingra (Chairman and Managing Director). Loft. Dhingra states that Orient is the only factory in India to manufacture for Marc Jacobs and Louis Vuitton. Mr. Tommy Hilfiger (men’s.. kidswear. sportswear.
Breakdown of Sales Revenue109 Est USD 2006 Material Cost Labor Overhead112 Profit (target)113 82.03 0.uk/2/hi/south_asia/4294679.8 million 19.00-6.8-24.50 $1.50 $1. BRAND INFORMATION Orient Craft's Export Market 5% 15% U.02 V. 4 per unit. despite more competitive pricing.00 $1. 742 crores) Other Financials Last years profit was $8 million (40 crores).8-24. FINANCIALS Turnover FOB USD $105 million for 2002-2003 FOB USD $118 million for 2004-2005108 FOB USD $165 million for 2005-2006 (Rs.IV. Europe 80% Canada 108 Basu.03 0.A.5-99 million 19.00 % Retail Price111 0.08-0.20-1.S.stm>. <http://news. 110 Based on the company’s average unit price of $10 USD. “Winners and losers in textile shake-up.02-0. now it is Rs.8 million 16. 9 per unit) 113 Dhingra stated that Orient usually ends up with half of the target profit.bbc. Kaushik. 109 These figures were estimated by the Managing Director in the space of 5 minutes.12 0.20-1.02-0.5 million % of Sales 50-60 12-15 12-15 10 Per Garment110 $5. 112 Overhead (mostly energy.co. 111 Average retail markup is five to six times the unit price of the garment.” BBC News. Page 83 . 2 March 2005. which has doubled in a year and a half-as mentioned by NITRA president-used to be Rs. so they can only be thought of as a rough approximation.
however an article written for the BBC in 2005 (Basu. 114 Dhingra stated that Orient manufactures 80-90% of what Diane von Furstenburg (high-end maternity clothes) sources from India. however.bbc. 2 March 2005. Dhingra states that it is easier to deal with buying offices. like cotton pants. 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.50 USD (from US companies.stm>. Page 84 . Orient tends to deal in higher quality and higher unit prices and lower volumes. Some things have increased greatly. “Winners and losers in textile shake-up. Recently.co.uk/2/hi/south_asia/4294679. 115 Restarted business with Macy’s 2 years ago. Marks & Spencer is currently direct. Limited used to be mostly direct. European companies pay higher unit prices). Kaushik. There has also been an expansion of volumes and an estimated 15-17% growth in orders. <http://news. but they just opened an office last year.) stated that on the date of the author’s visit in 2005. they made one skirt for Polo Blue that will retail at $1199 (did not state unit price). depending on the quota category and how much they were previously restricted.” BBC News. Orient was manufacturing skirts that would be sold for $4 USD per piece. 116 According to Dhingra.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. Dhingra stated that Orient’s average unit price is $10. the industry-wide average unit price in India is $3. however used to source to them about 10 years ago. There has not been a huge shift in the composition of customers. but they will open up their own office soon. Orient would not take a Wal-Mart order.
and employed 5000 people. ft. According to the company profile. 1. Orient also deals in some very small volume orders for high-end buyers like Oil Lily. Production System Orient Craft uses an assembly line system. after 9/11. Orient has created a niche with their diversified product line (mostly cotton/knits or wovens. 720.000 pieces and production capacity has grown at least 25% over the past year. six in Gurgaon. May 2006. The second plant visited was 380. the company had only 17 production facilities spread over 600.121 The average order size is 10-12. ft.000 woven per month. in and around Delhi. INFRASTRUCTURE Company has 21 production facilities. 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. 13. Page 85 . Sector 37.000 pieces.000 knitted per month 2005-2006: 720. Orient makes 130. of which four are in Delhi.000 per day120 2006: In an average day. <http://www.VI. ft. 121 According to an interview with the Managing Director. In 2003 Orient established a manufacturing complex of 340.000 sq. though it does use labor contractors. (unclear if it is the same facility visited) at the cost of over $10 million USD. Orient has put a lot of human resources into product development and now boasts 900 product development personnel at 5 different locations.000 woven per month. and one large plant is located in Noida. Orient has a display store in NY on Park Avenue that it opened up 3 yrs ago.”118 Subcontracting Orient does not appear to subcontract.000sq. product development became the key thing that most Western companies were looking for. Udyog Vihar.S.000 pieces. companies. as traveling became restricted and Indian companies needed to build a competitive advantage. Khansa Road. As Dhingra stated. Gurgaon. 119 According to the company profile.htm>. but other fabric from silk.200. Haryana. whose samples are then sent to potential buyers. gives feedback. It picks up fashion from around the globe. in 2003.000 knitted per month119 2006: More than 125. which was at the time the “single largest multi-product manufacturing plant in the whole of India.117 Previously. even a little bit before.niftindia.000 sq. sometimes 25-45. National Institute of Fashion Technology. and creates new designs for each season. 117 118 Plot No.com/iftf. Production Capacity 2002-2003: 480.000 or even 100. 120 Biography for Sudhir Dhingra for the International Fashion Technology Forum. chiffon to denims and outerwear).
consisted of 12 production managers each in charge of about 250 workers (tailors and helpers) at 100 machines with 12 line supervisors. In 2002-2003. trousers. MP and some from Haryana. Information on work timings was taken from G. VII. not through a labor contractor. Manicandan’s CEC report. workers do not go to lunch at the same time. who manufactures 80-90% jackets/ outerwear.000 Machinery Orient has in-house computerized embroidery machines.” 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. Approximate number of workers in all facilities Number of people employed in 2002-2003: 12. and trims. the workers are skilled and come from a tailoring background and are usually from UP. According to G. “most of the permanent employees are supervisors and perform high-end work such as production in-charge and finishing in-charge. Productivity Schemes Orient uses incentive schemes to reduce absenteeism and has implemented worker welfare schemes. More contract workers and women (especially thread-cutting) are in the finishing department. WORKING CONDITIONS The workers are 80% male and since Delhi and Orient is mostly multiproduct. which is generally equal in size to the production department. and since Orient produces high-end clothing with lots of embellishments. washing plants and dry cleaning units. Manicandan’s CEC report. Page 86 . However according to G. Bihar. with very little embellishment. one facility’s production department. they “can’t be like Golkadas. Departments No information on specific departments was obtained through the interview.000 in-house Number of people employed in 2006: 23. fabrics.” Dhingra stated that 70% of Orient’s workforce is direct employment. the company had 7300 sewing machines. The labs are equipped to test for all parameters including color fastness to light. Manicandan’s CEC report and could vary factory to factory. According to Dhingra the “girls” in the South are operators and less skilled.Quality Control The company has in-house lab testing for garments. shirts.
HUMAN RESOURCE POLICIES Dhingra stated that there are common HR policies and productivity schemes across plants. 5-8. Worker Training Dhingra stated that all the facilities have training schools and they want to make them more formalized. K. The payscale is adjusted twice a year according to inflation. the turnover for Orient Craft is fairly low./month) 2850 2344 2000 2850 Labor Turnover According to Dhingra.” Furthermore. With incentive programs for more highly skilled workers. where workers can be trained and work for other companies if they choose to. Dhingra stated that in the 1980s and 1990s Orient used a piece-rate system. However. who takes a 5% commission before paying the rest to the worker. Viet Kumar & Company. semi-skilled and unskilled workers that are hired through labor contractors are paid under a piece-rate system. no piecerate. the following was mentioned in a business article: “Till a year ago. workers are paid much less than Dhingra asserts. Union Though unions were not explicitly mentioned in the interview. but he makes no mention of any other incentives.Wages The average wage starts at Rs. Bonuses are given during Divali. VIII. Sartrushi. and in 1993-1994 they started moving away from piece-rate and a few years ago they did away with piece-rate completely. and Vasisht & Company. They are trying to start a training school NGO with a founding member of NIFT. Manicandan’s CEC report. Some of these contractos are R. & Company. Category Tailors Helper Trainees Contract Worker Average Wage (Rs. Dr. labor turnover is decreasing. 3000 per month for an unskilled worker salary. probably around 8-9% and as Orient is expanding.000 per month plus ESI and PF. the company's chairman and managing director Sudhir Dhingra dreaded the idea of setting up huge factories . according to G. Recruitment Policy Orient Craft employs contract workers for at least 30% of its workforce. “particularly [those] working in the Finishing department. 60-70% of the workers are unskilled helpers. and most people are above the minimum wage. the salaries average Rs. The payments and benefits for contract employees are given to the contractor.all for the fear of Page 87 .
GAP gave Orient $35. it would be people. Some of our workers are second-generation workers. Punishments are given to workers without any formalized procedure. Manicandan’s CEC report. Page 88 . Twenty years ago we had over 1000 workers. Maruti Industrial Complex unit). 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.000 and Orient spent $20. and that Orient pays in full for the schooling of female children of workers and for 65% of the schooling of male children. “if someone asked me what my one single reason for success. no sexual harassment committees and workers are not involved in wage negotiations or target setting. 400 per month. There is no grievance policy procedure in place for complains against workers or management. they feel very proud to bring in income. Thirty years ago we employed a women who worked as a thread-cutter and got paid Rs.asp>. According to Dhingra. But will we be ready in time?” Businessworld. However upon further inquiry. Orient also helped train 300 women from the nearby village in hand embroidery at international standards.000 building a community welfare center that provides medical care for community members.’” They built a four story structure to house the embroidery tailors. stating that he would forward the company’s code of conduct and a list of their worker committees through his personal secretary. ten years ago we had 5000 people. Sector-18. 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. T. Orient had no worker committees at the facility visited. Global players are looking for India bases. ‘my husband doesn’t beat me anymore. now we have 23. Manicandan’s CEC report. This strategy effectively stops any attempt to consolidate workers towards creating a Trade Union. he stated that such information was confidential and would hurt Orient’s competitive advantage.it’s not just about the bottom line. “Preparing for 2005: Dressing up for the party.”123 According to G. and Surendar.000. According to G.[worker] strikes. Now she is a finishing manager and gets 123 Rajshekar. and if a manager finds a worker guilty of an infraction. workers are fired with no redress. “around five years ago there was an attempt to establish a trade union (at the 7-D. it’s about what we can do for the community. But the management suppressed and ousted all the workers who [were] involved in the establishment of a Trade Union.” Worker Committees/Grievance Policy/Dismissal Procedure Dhingra was reluctant to give specific information regarding worker committees in person. M. Clusters are reinventing themselves. I have always been very people-centric-.businessworldindia. sometimes more than their husbands. Since then the company started sourcing their manpower from labour contractor[s].com/apr0504/coverstory01. Although Dhingra stressed how this was all for the benefit of the women and the community. no formalized dismissal procedure. <http://www. One woman told me. The “village panchayat said that Muslim women can’t go out…but now that they are trained.
and her son is working here… I have always thought about social welfare. BUSINESS BOTTLENECKS Productivity is relatively low. and ease of working. We have created great recreational areas for workers and middle management by building great cafeterias. 50.” 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. It is the soul of our company. he wants to extend the length of time it takes to become a permanent employee to 12 months. 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. Macy’s. Pottery Barn.000). we only have 23. IX. 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. White Co. for Bed Bath and Beyond. but Orient has taken up some holiday decoration work.paid Rs. as Orient usually doesn’t have as many orders May through August. comfort. “India is still not good at producing fall fabrics. Dhingra wants increased flexibilization otherwise it is more difficult to expand and it hurts business. and Orient needs to do competitive pricing to stay in the game and Page 89 .000 per month.. which includes a more complex manufacturing process. Labor flexibility is also an issue. such as home furnishing.000 people. “they have 100. Home furnishings is still smallish industry and comprises about $15-17 million of Orient’s sales. Besides being compliant by the current standards. since Orient Craft products tend to be high-fashion. which eases strain some as well as the other diversification of profits. in-house fully functional gym and an Executive Club. Specifically. 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. Seasonality is an issue. According to the company website: The new complex is designed to create a very worker and management friendly environment in terms of esthetics. Dhingra stated there are companies who do $1 billion (mentioned China and Lian Thai from Hong Kong. Marks & Spencers. highly tailored outfits with additional embellishments like embroidery and special washes. Donna Karan.” They started up home furnishing about three and a half years ago.
India. The expansion plan envisages setting up of two new facilities at Manesar.” Times News Network. as they need to grow the base of buyers and price is a compelling reason to do that. The company has since then stripped the Spain unit of its machinery and fitted them in its plant here at Gurgaon.htm>.” Industrial Economist: Textiles Report. 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. (despite quota regulations) and India adds to a minuscule 1. “Indian textile companies on acquisition spree.00. Mr Dhingra estimates the annual turnover to be in the excess of Rs 800 crore.bring in buyers. The company expects the expansion plans to boost its revenue generation.124 The machinery from the newly acquired plant will form part of the company’s expansion plan at Manesar.125 124 Dipankar. the textile industry in India still has a long way to go before it can catch up with Chinese volumes. Mayur Shekhar. World over. PTI Economic Service. the garment industry presently stands at approximately Rs 15. “The lifting of quota has brought humongous demands on one side and on the other. growing by over onefourth from last year. In the changed business scenario.000 crore. India’s lack of worldclass machinery producers domestically has seen a lot of companies look to the West for help. X.indeconomist. 125 Jha.” said Mr Dhingra.5%. near Gurgaon…Levi’s was looking for a buyer due to high maintenance and labour costs in Spain. Orient Craft manufactures and exports about 30 lakh units of garment every month. Noida and Okhla in Delhi.indiatimes. buyers are getting increasingly quality conscious. At present.com/articleshow/msid-1232753. Bangladesh and Pakistan. Since the quota system has been reimposed on China. Page 90 . Kumar. Ironically it is the same Indian companies who are buying the units for their machines. India is in an advantageous position. INDUSTRY COMMENTS Orient recently bought a Levi’s plant in Spain for its technology. The company’s management is also planning to raise an IPO later this year. Earlier. and aims to increase it to over 40 lakh units after the expansion. From business articles: The company… acquired a Levis unit in Spain in mid 2005 for Rs 60 crore (approximately 13.3 million dollar)…Orient Craft by its own admission acquired the unit because of its superior machinery content. of which China contributes one-sixth. The company’s deal with Levi’s is the second such significant international venture. 16 September 2005.curpg-1. “Garment exporter Orient Craft buys Levi’s plant in Spain for Rs 60 cr. Orient has 20 production units spread across Gurgaon.com/30thjune06p4. Orient came up on the global radar when it started its first overseas facility in New York two years ago. As of now.cms>. <http://www. However. it is important to have machinery comparing to global standards. <http://economictimes.
Earlier. told ET. SBC is the buying arm of Kashiama.S. but best linens) are setting up facilities in India and selling back in Europe. Now there are 500. 126 “Orient Craft plans SEZ for garment units in AP. dirt." Mr Sudhir Dhingra. He announced the company would be given 10 acres of land at Nacharam to set up a garment manufacturing unit. only about 60-70 million have disposable income. but look how large the population is—out of one billion. the ready-to-wear demand in India is growing. SBC.” The Hindu Business Line Internet Edition. which plans to source $1-1. “The tie up with SBC will give us a good foot hold in the Japanese market.” Italian and French mills are setting up joint ventures in India. Dr Y. Yoshiaki Kamiyama. Orient is considering getting into the domestic market now. Page 91 . Banswala Mills. retail will explode…People say that Indians don’t have disposable income. the company’s MD.htm>. That’s more than the people who spend in the U. the market will contribute a significant share of Orient Craft’s overall business pie. if there is a mall…Real estate is growing. In the next couple of years.” he said. The deal is likely to be signed later this month. DKNY and Ralph Lauren. The SEZ is likely to come up on a 300-acre plot with an estimated investment of Rs 2. where there are higher labor costs.— only about 30% of the U. there were only three shopping malls. population spend. we aim at scaling our Japanese business up to $30-40m. From business articles: Orient Craft Ltd plans to develop an exclusive special economic zone (SEZ) for garment units in Andhra Pradesh. if even 5% are rich and 15% have disposable income. lagging behind US and Europe. “An increasing number of Japanese buyers are looking at Indian export houses for their sourcing requirements. Chairman and Managing Director of the company.000 crore. according to Sudhir Dhingra. probably about 80-90% still get clothes from tailors.” For Orient Craft. “Three years ago. that’s 200 million people.S. which is a joint venture of Caramin (France) and Bairb McNutt (Ireland. delivering the inaugural address. 25 November 2005. "The SEZ will house up to 50 companies. Orient Craft will be the exclusive suppliers from India to SBC. etc. at present Japan is a relatively smaller market. However. In 2-3 years. <http://www. Financial Daily from THE HINDU group of publications. and every day a new one is opening up—there’s space available in Karol Bagh. consultant.Though most people in India. As per the arrangement. told reporters on the sidelines of the CII conference on `Textiles forum . a leading Japanese buying house. the Andhra Pradesh Chief Minister.126 Orient Craft… has entered into an outsourcing arrangement with Sumukin Bussan (SBC).blonnet. Why would people go through rain. we ourselves are looking at buying 2-3 lakh pieces from India. the exclusive Japan licensee of some well known international textile brands including Calvin Klein.com/2005/11/25/stories/2005112502590900.S.5m worth of textile products in the next couple of years. Rajasekhara Reddy. heat.Emerging opportunities and the road ahead' here on Thursday. So the spending power is in India. said the company was "welcome" to set up the SEZ.
Till a year ago. to cater to new deals in the pipeline. is India's largest garments exporter.200 million . Clearly. Global players are looking for India bases. productivity and scale. T. But what distinguishes them is a relatively larger scale. His personal secretary was not useful in obtaining any information. “Preparing for 2005: Dressing up for the party. Times News Network. the company's chairman and managing director Sudhir Dhingra dreaded the idea of setting up huge factories .asp>. claiming more than three-fourth of the pie. Current contact information was finally obtained through a Professor at NIFT. which it may have to take up to over 40 lakh units. 128 Rajshekar. Thailand does almost the same business as India with a workforce a third the size. 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. we will have to invest in new capacity every year if we have to keep pace with the industry. M.indiatimes.about 10 times the size of the Delhi-based Orient Craft. which made finding up to date contact information difficult.businessworldindia.Depending on the volume of the orders. Meru Exports and Richa Exports of Delhi. and smart use of technology." Orient Craft and Fabric & Fibres are among a few who have been pulling ahead of the pack. However. India's biggest exporter Orient Craft has also begun to realise that.cms>. Bangladesh churns out as many garments as India from a fifth as many factories.127 The biggest Chinese firms have a turnover of $800 million-1. Others include Gokaldas Exports of Bangalore. 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. PERSONAL EXPERIENCE Orient Craft does not have a website. <http://economictimes.com/articleshow/1496902. skill-intensive manufacturing could be a way to compete. 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.all for the fear of strikes. <http://www. 127 “Orient Craft ties up with Japanese co. The turnovers of these exporters range from Rs 100 crore to Rs 250 crore.com/apr0504/coverstory01. Says Orient Craft's executive director Anoop Dhanda: "For the next few years. The centrally air-conditioned facility will combine all the stages of garment manufacturing. Most are family-run. Page 92 .000 people. at Rs 450 crore of revenues. design to finishing. At present the Indian textile exports to Japan add up to $296m which is just about 1% of the country’s total textile imports. 20 April 2006. Like most other economies.128 XI. the company may go for a specific capacity expansion. which. India lags in technology. Orient Craft manufactures and exports about 30 lakh units of garment every month. and Surendar. Today he is spending Rs 40 crore on a new factory in Gurgaon that would employ 2. But will we be ready in time?” Businessworld.” The Economic Times: Garments Textiles. Clusters are reinventing themselves. China is the largest exporter to Japan. and Shahi Exports. Dhingra was fairly open in his responses. and Dhingra was surprisingly available for an interview.
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue listening from where you left off, or restart the preview.