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INDUSTRY AND COMPANY PERSPECTIVES
A Collaboration Between United Students against Sweatshops Jobs with Justice Society for Labour and Development
TABLE OF CONTENTS
Chapter One: Introduction ............................................................................ 3
1. Methodology ..............................................................................................................3
Chapter Two: Agency Profiles
1. Registrar of Companies (ROC)...........................................................................10 2. Third Eyesight.....................................................................................................12 3. Apparel Export Promotions Council (AEPC).....................................................15 4. National Institute of Fashion Technology (NIFT) ..............................................18 5. Northern India Textile Research Association (NITRA) .....................................21
Chapter Three: Company Profiles
1. Modelama Exports Ltd.
I. II. III. IV. V. VI. VII. VIII. IX. X. XI. Contact Information .........................................................................................24 Brief History ....................................................................................................25 Basic Profile.....................................................................................................25 Financials .........................................................................................................27 Brand Information............................................................................................28 Infrastructure....................................................................................................29 Working Conditions.........................................................................................31 Human Resource Policies ................................................................................32 Business Bottlenecks .......................................................................................35 Industry Comments..........................................................................................35 Personal Experience.........................................................................................36
2. Shahi Exports Pvt. Ltd.
I. II. III. IV. V.
VII. VIII. IX. X. XI.
Contact Information .........................................................................................37 Brief History ....................................................................................................37 Basic Profile.....................................................................................................38 Financials .........................................................................................................39 Brand Information............................................................................................40 Infrastructure....................................................................................................41 Working Conditions.........................................................................................44 Human Resource Policies ................................................................................45 Business Bottlenecks .......................................................................................48 Industry Comments..........................................................................................48 Personal Experience.........................................................................................48
3. Jyoti Apparels
Contact Information .........................................................................................49 Brief History ....................................................................................................49 Basic Profile.....................................................................................................50 Financials .........................................................................................................51
V. VI. VII. VIII. IX. X. XI.
Brand Information............................................................................................51 Infrastructure....................................................................................................52 Working Conditions.........................................................................................56 Human Resource Policies ................................................................................57 Business Bottlenecks .......................................................................................58 Industry Comments..........................................................................................59 Personal Experience.........................................................................................59
4. Company G of R Group of Companies
I. II. III. IV. V. VI. VII. VIII. IX. X. XI. Contact Information .........................................................................................60 Brief History ....................................................................................................60 Basic Profile.....................................................................................................61 Financials .........................................................................................................62 Brand Information............................................................................................62 Infrastructure....................................................................................................63 Working Conditions.........................................................................................64 Human Resource Policies ................................................................................65 Business Bottlenecks .......................................................................................66 Industry Comments..........................................................................................67 Personal Experience.........................................................................................67
5. Pearl Global Ltd.
I. II. III. IV. V. VI. VII. VIII. IX. X. XI. Contact Information .........................................................................................68 Brief History ....................................................................................................68 Basic Profile.....................................................................................................69 Financials .........................................................................................................70 Brand Information............................................................................................71 Infrastructure....................................................................................................73 Working Conditions.........................................................................................74 Human Resource Policies ................................................................................75 Business Bottlenecks .......................................................................................76 Industry Comments..........................................................................................76 Personal Experience.........................................................................................79
6. Orient Craft Ltd.
I. II. III. IV. V. VI. VII. VIII. IX. X. XI. Page Contact Information .........................................................................................80 Brief History ....................................................................................................80 Basic Profile.....................................................................................................82 Financials .........................................................................................................83 Brand Information............................................................................................83 Infrastructure....................................................................................................85 Working Conditions.........................................................................................86 Human Resource Policies ................................................................................87 Business Bottlenecks .......................................................................................89 Industry Comments..........................................................................................90 Personal Experience.........................................................................................92 2
Public limited companies like Pearl Global Ltd. Shahi Exports Pvt. though it proved best to limit the amount of e-mail communication. Interviews were obtained in a variety of ways. Ltd. The sixth company was identified by the researcher through an interview with a representative of the Indian Apparel Export Promotions Council (AEPC). Contact information was available on websites. the Apparel Export Promotions Council (AEPC).) were identified using “Mapping First Tier Suppliers in Garment Industry in Delhi. Several other agencies that are major players in the export garment industry were identified and profiled by the researcher. linked to the Ministry of Textiles. Ministry of Textiles). Online searches yielded some kind of press release or interview for each entity except for Jyoti Apparels. Four of the six companies profiled and all of the agencies have individual websites. Pearl Global Ltd. A management survey was developed using the framework of surveys used in other geographic contexts and updated on the basis of preliminary interviews. 3) To develop corporate research strategies specific to the Delhi. the National Institute of Fashion Technology (NIFT. Company G of Group R. E-mail was also used to a large extent to set up meetings. Asking a question via e-mail often yielded claims of confidentiality. Government of India). It is advisable not to send questions via e-mail. Methodology Preliminary research was conducted on the internet. Obtaining the phone number from the agency website and directly calling was the simplest way of setting up interviews. while asking the same question in person would yield a response.” a CEC report submitted by G. others self-report to financial databases. the Registrar of Companies (ROC. 2) To identify correlations between labor conditions and businesses characteristics. and Third Eyesight (an industry consulting agency). Orient Crafts Ltd. India context. Manicandan. although some were out of date. an interview by telephone would be far more likely to be successful than an information Page 3 . and others do not disclose financial information beyond approximations of annual turnover and production capacity. linked to the Ministry of Textiles). Managers at six companies and four agencies gave interviews.. display their financial information on the company website. These are the Northern India Textile Research Association (NITRA. If an interview cannot be conducted in person. Five companies (Modelama Exports Ltd...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.
What groups? Manager: Oh. men together tend to form groups and lobbies because they have spare time. and one experience ePage 4 . Researcher: Did you have problems with employing males in the past? Manager: No—no. The AEPC was instrumental in identifying Jyoti Apparels as a top tier supplier. The attitude and openness of those interviewed are subjectively recorded in the individual profiles. Ltd. Managers were surprisingly open in some cases.request by e-mail would. Questionnaire Used by the Researcher The following questionnaire was handwritten in shorthand and brought to the scheduled interviews as notes. however. 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. even though such a one-sided perspective may not reflect the reality of the situation. but off the record. while others would refuse to state the number of workers in the manufacturing unit. easier to control. context and was integral in order to obtain information. which typifies management attitude both towards women and unions: Researcher: Why are your workers mostly female? Are there significant differences in productivity? Manager: No. or productivity schemes. Information on these companies was obtained primarily from top-down management sources. no significant differences in productivity. and as such may be misleading as to actual conditions. without which interviews would not have been possible. They’re more docile.S. However. Furthermore. I don’t think they ever employed males… Limitations Time constraints limited the consistency and thoroughness of company information. 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. going as far as to hand over Standard Operating Procedures. ladies are more focused on work. time constraints would not permit cross-checking all information with workers and officers at each company. Women are easier to handle. Also. and used to establish industry contacts. The agencies profiled were primarily interviewed before the export houses. industrial accidents record. as it was not possible in many cases to conduct follow-up visits. I’ll tell you. all interviews were in person. and Orient Craft Ltd. Researcher: I don’t understand.. Just. and NIFT gave updated contact information for Shahi Exports Pvt. no telephone interviews were conducted in this survey. The purpose of this research was to obtain information about companies from a management perspective. It was not e-mailed to any of the managers. An interview with an anonymous manager produced the following conversation.
The survey questions were divided into sections according to the position of the respondent. 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.S. get order. Designation. how fast company delivers products to brand Kinds of buyers—importers. EU? Major foreign brands that the company supplies to: length of relationship.. they often had information regarding each of these areas. help design. 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. deliver? Does the company ever have problems with contracts and/or steady orders? (if possible. I’ve heard of collegiate licensing that would provide steady orders from major brands at higher prices. etc? What products do you manufacture? How many factory locations does the company have? Size and scale? Addresses? Does it have objectives on which it was founded? Articles and Memorandum of Association (Objectives. if such a program were introduced would be willing to participate if increase wages and committed to labor rights and worker representation?) Problems with seasonality? Manufacture winter clothes? How have vendors changed post-MFA? Have you taken price cuts? Which products? Larger volumes? Different buyers? Deepened relationship? Middlemen? Who are the company’s competitors? Are subcontractors involved and if so at what stages? Which factories/companies? What are the size and scale of these operations? Has this changed post-quota phase out? What effect does the company believe the quota phase-out will have on turnover and the industry in general? Page 5 . Name. specialty (GAP). since a conversational approach proved to yield the most information. sourcing. and Responsibilities of Respondent: Number of Years in the Company: General Upper Management Do you have a brochure saying what products. The questionnaire was used only as a guide in the interviews as a reminder of what kind of information was needed. What kind of input— CMT. Ownership of Company. no input--or more capable. vol of product. total sales. CMT. U. package. discount retailers (Wal-Mart). DSP questions. where.mailing questions proved fruitless in gathering information. if only a higher level manager could be reached. However.Incorporation of Company) What is the shareholding and ownership makeup of the company? What plans for expansion? Do they cater to domestic market or only export? What share of turnover/sales/production is export? Markets—who. as there are some questions that an HR manager would know more than a Merchandising Agent.
Productivity Committee. helpers. trainees. Sexual Harassment Committee. etc. pressmen. Grievance Committee. material cost. overhead. NITRA. standing orders. infrastructure How do you manage being so large? Market Related information: Is financial data/ annual reports for the past five years available? Can you give a copy of the latest annual/financial report for the company? Current figures for the company: Total sales. unskilled). 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. codes of conduct. Have you seen a benefit in productivity since implementation of program? Are there joint worker-manager forums in your organization? If yes. what is displayed to workers on details of employment. total value of exports. checkers. labor cost. how long they have stayed in company Are workers in any way involved in wage negotiation or target setting? Target setting-prod planning mtgs? How many years of experience do the workers need to have in ordered to be hired at your company? What is the usual turnover of employees? How do you fill vacancies? Do you use recruiting agencies? Are all employees in the company given a letter of contract? If yes. men. cutters. who are the members and how are cases handled? Give details. average age of employees. etc.Have they used outside agencies in developing any part of their strategies? Part of AEPC. Shopfloor Committee. washers. Quality Circle? If yes. what do these forums do? Get any documents willing to give at any point. subcontracting. tailors (skilled.e. supervisors. finishers. How many women. Have there been any attempts at unionization in the past? What is the company’s attitude toward unionization? Page 6 . semi skilled. or do they use agencies like Third Eyesight for technology and HR development? How has AEPC or NITRA or NIFT helped them? In what capacity? What are two or three main things holding business back? What are you doing to solve this? How has the central and state government helped the company’s smooth functioning? Or not? Labor laws.
Is there a personnel ‘code of conduct’? Is this a company policy or vendor policy? How are these communicated to workers? What employers are covered by: (i) ESI (Employee State Insurance) (ii) PF (Provident Fund) (iii) Gratuity (iv) Maternity benefits (specify) What are the details of employment that are displayed / notified to workers? (i) minimum wage (ii) ESI/PF/Gratuity? What is the average overtime payment to all employees? (i) overtime per month (ii) overtime as a percentage of total wages (iii) rate of overtime payment Ask about industrial accidents, if there is a doctor available, how often, rotate between factories, what is the most common injury, what kinds of safety equipment What is your approach in HR and Productivity/Efficiency? (Get policy document) Do you involve outside agencies in your HR strategies? Do you have common policies across your plants? What are the typical causes of punishment of employees? What are the types of punishment given? (wage cuts/extra work/asked to go home?) Is there a procedure followed for dismissal of employees? Who initiates the procedure? Is the employee given a hearing? Give details? Do you have a legal officer in the company? Do you have an Industrial Relations policy? (any written documents?) What are two or three main things holding business back? production, labor situation, training , quality control, etc. What are you doing to solve this? HR/Production Manager: Get any documents willing to give on productivity schemes, time-study worksheets, productivity numbers, structure of lines, how many supervisors, etc What is your approach in HR and Productivity/Efficiency? (Get policy document) Could you give me a sense of the floor layout of a typical factory; what kind of technology and planning has gone into the factories? What are the different departments? (Floor chart) Department # Workers # Men # Women # Machines What are parts of a Line? Is it an assembly line? How much time does an item take from the beginning to the end of a line? How many supervisors are there on the Line? Is there a productivity scheme in your company? If yes, when was it introduced? What categories of workers are covered? Are workers in any way involved in target setting? Prod planning? How much time does a worker take to achieve the desired productivity? What kinds of productivity schemes? Teams? Line supervisors? How come up with time studies? How conveyed? What have been the benefits from the productivity scheme in terms of (i) increase in productivity (ii) reductions in waste (iii) any others? Does the productivity scheme give incentives to workers? If yes, give details based on category, average incentive, and maximum incentive. How make workers more productive?
What are the typical causes of punishment of employees? What are the types of punishment given? (wage cuts/extra work/asked to go home?) Is there a procedure followed for dismissal of employees? Who initiates the procedure? Is the employee given a hearing? Give details? Has the company ever consulted industrial engineers to design the factory? What was productivity output before and after the consultation? What are the quality check points that the buyer requires? Does the company management have other quality checks? How have they used technology and state of the art equipment to improve quality? What are two or three main things holding business back? production, labor situation, training, quality control, etc. What are you doing to solve this? Types of Sources (other than management interviews) To obtain much of the initial company information, the researcher performed internet searches for the company names, and several common business periodicals showed up several times including: Apparel Resources http://www.apparelresources.com http://www.ittimes.co.kr/ The Economic Times http://economictimes.indiatimes.com/ http://www.sify.com http://www.businessworldindia.com/ http://www.indeconomist.com/ The Hindu Business Line Internet Edition, Financial Daily http://www.blonnet.com/ Most of the companies profiled had company websites, except for Jyoti Apparels and Orient Craft. Once interviewed, the companies typically gave company profiles that they use for potential buyers, which contain information about the composition of the company, the types of clothing it manufactures, production capacity, turnover, and major clients. The agencies profiled, especially the AEPC and NIFT, were vital in obtaining information that would lead to interviews, identification of major players, and important industry resources. Third Eyesight has links to industry-related articles at http://www.3isite.com/index.htm. Although the researcher was not able to research the following sources further, some were featured at an international garment fair and others are commonly used as industry resources for financials: CMAI (www.cmai.info, firstname.lastname@example.org), EBSCO CRIS, INFAC (intranet and internet), INSIGHT, CMIE, RMS, IAS, INDIASTAT, IRA. Information In Company Profiles Contact information includes addresses of known production sites, contact persons, website, and e-mail. Brief history includes relevant information regarding the establishment and incorporation of the company. Basic profile includes the legal composition of the company, export oriented unit information, the breakup of exports and imports of the company (100% exports for all the companies profiled in this report), the product mix, clients, and awards of the company.
Financials section includes the turnover and whatever other financial information could be obtained on the company. Brand information section includes major clients, length of relationship and percentage of turnover, direct or buying agency clients, and unit prices. Infrastructure section includes subcontracting information, the type of production system (all assembly line units), production capacity, the design/sampling department, quality control, specific departmental information, and productivity schemes. Working conditions section includes timings of work, wages, wage-setting procedures, benefits, overtime information, and labor turnover. Human Resource policies section includes management structure, worker training information, recruitment policy, dismissal procedure, union information, worker committee information, grievance policy procedure, corporate social responsibility schemes, codes of conduct, worker medical care information, and security system information. Business bottlenecks section includes whatever setbacks or problems that managers perceive as holding back business. Industry comments section includes strategy, predictions, and other relevant information regarding the growth of the company, its views on the industry as a whole, strategies for expansion, etc. Personal experience section includes miscellaneous description regarding the researcher’s views of the company and its managers and the ability to get an interview.
which are available for inspection by members of public on payment of the prescribed fee.nic. the office at Nehru Stadium closed down earlier in the year.The financials publicly available include the annual return and balance (for all companies). relating to the companies registered with them. Form 20 gets the Director a Director’s Identification number (the number used on the mca. Form 18. New Delhi 110003 Phone: 011-24362708 Fax: 011-24364570 E-Mail: email@example.com Nehru Stadium. The Central Government exercises administrative control over these offices through the respective Regional Directors.. New Delhi – 110003 E-Mail: rocjln. CGO Complex.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. Lodhi Road. Such forms include: Form 1. Website of the Ministry of Company Affairs: http://www. Companies are required to register new events such as a change of directors with the ROC. they must submit several forms at incorporation and annually.gov. Form 29 for Pearl Global makes it a public limited company. According to an interview with the Company Secretary of Pearl Global Ltd. the address of the registered office and the locations of the business. the profit and loss are also publicly available.nic.in However. which is not true for privately owned companies. Page 10 . REGISTRAR OF COMPANIES (ROC) The Registrar of Companies is a division of the Indian government’s Ministry of Textiles. in order for a company to be registered with the ROC. These offices function as registry of records.CHAPTER TWO AGENCY PROFILES 1. Navrang Saini Addresses: B-Block Paryavaran Bhawan.gov website to access the public disclosure documents). Form 32. Since Pearl Global is a public limited company.in/ROC_2003.mca. The addresses of each state’s ROC as of 2003 can be found at http://firstname.lastname@example.org. the compliance of companies act. the details of the board of directors/management structure.htm : Delhi & Haryana Regional Director: Dr.
etc. As such. was difficult and did not yield a lot of useful information. Page 11 . Information must be copied into a notebook by pencil (pens are not allowed). such as financial information and company Articles and Memorandum of Association (objectives. Not only were entire company files missing. photocopying the documents in the file is not permitted unless a fee for a legal copy is paid.The ROC in Delhi is in a process of transitioning to an electronic format of filekeeping. and though there is no formalized rule against this. Furthermore. of a newly incorporated company detailing the scope of its operations). but several did not have up-to-date financial or structural information. it was not permitted either. 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. The researcher attempted to take notes by laptop.
com Website: www. * One of the largest global home products retailers . trainer and teacher. 4112495 Fax: +91 (124) 2577586 Cell: +91 98111 03494 Email: devangshu. THIRD EYESIGHT (INDUSTRY CONSULTING AGENCY) Contact person: Mr. He subsequently worked with an international retailer's joint-venture in India. He then joined a start-up consulting firm and was instrumental during its growth into a multinational consulting firm's joint venture in India. including fashion. Devangshu began his career with the then-leading Indian national retail chain in buying & merchandising and in store operations. 2nd Floor. Benchmarking against global supply chain and product development best practices. manager. 4112494. Third Eyesight's project teams consist of professionals who have hands-on experience in various aspects of retail and consumer products businesses. Sushant Lok-I. and product analysis.2.Strategic assessment of India – insights for a global senior management team to gain a realistic picture of the opportunities and the challenges in India. health. as part of the team that launched the JV. Thereafter. assistance in formulating strategy and developing partnerships with International retailers and brands. * International multi-billion dollar apparel brand . 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.Carrying out sectoral market studies in retail. Third Eyesight and its team of associates & professionals have worked on a variety of business strategy. * Diversified Indian consumer and industrial products conglomerate .122 002 INDIA Tel: +91 (124) 4112493. competitive and regulatory information. he co-founded a fashion sourcing company in which he remains a shareholder. Founder and Director of Third Eyesight A-847. over the last 16 years.Assistance in development of global sourcing strategy and action plan. in marketing and distribution.strategic inputs for Asia-Pacific top management team to identify emerging opportunities in the Indian textile supply chain * Leading UK Retailer .development of India strategy and preliminary business plan including market analysis. dining etc. home. He was also based in the European practice of this multi-national consulting firm. assistance in assessment of Indian supply base Page 12 . new business start-up and operations projects with Indian and international clients.3isite. Devangshu Dutta. Support in implementing changes in sourcing strategy and organisation. advisor. * Global fibre and chemicals company . Gurgaon .dutta@3isite. The following are brief descriptions of some of the projects on which Third Eyesight's professionals have worked. food & grocery.com Third Eyesight's Experience Profile: (from their promotional materials) Third Eyesight was founded in late-2003 by Devangshu Dutta who has worked with retailers and manufacturers from across the world in a variety of consumer products sectors.
who could then direct me to industry management: Dr. * Pioneer luxury brand house in India . Matrix.K. Much of the fragmentation of companies was really only on paper. Content of Interview (5 July 2006) with Director of Third Eyesight: Asked about study. 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. The small-scale reservation system. reserves certain sectors for small units. According to him. Sibichan Matthew. * Indian subsidiary of one of the largest sports apparel and footwear brands – Design. D.Comprehensive comparative study of 7 cities in India and outside to choose location of new garment manufacturing plant * Leading Turkish supplier .Assistance in formulating strategy and developing business with global customers for exports. The quota system obliged companies to set up under different names. Mr. it was a licensed economy in which you needed to get government clearance to manufacture in specific capacities. The government thus limited how much you could produce under the reasoning that overcapacity would lead to inefficient use of capita. and assistance in seeking new capital infusion. * One of the largest Indian textile and garment companies . Pradeep Joshi. this model was phased out. Mentioned another apparent Tier 1 (said they are large and source directly to MNCs). Also told the researcher to contact faculty of Pearl Academy of Fashion. (Website: niftindia. In the early 90s. This is partially why many of the current successful companies (such as Richa Global) are split up into many different companies. you need a separate registration and thus it is easier to simply export (used to be tax-free).org). The name is on the WRC disclosure list. which continues to regulate knit-fabrics. as you needed approval from the state government if you were operating a place of business with more than a hundred workers. who would be able to help schedule company interviews.* Multi-billion dollar Indian consumer goods conglomerate . and you cannot have large units. Directed researcher to online industry magazine resource (Website: apparelresources. Mr. The other reasons for company fragmentation are the nature of quota system and labor laws. Initially. Batra. Gave history of market structure in India. Business strategy and plan for current business. Since the garment industry is extremely labor intensive. Page 13 . labor laws also limited the ability of companies to expand. The investment cap was very low.org) Advised researcher to contact faculty of the management studies department.Business planning for new brand acquisition. gave contact information for the National Institute of Fashion Technology in Hauz-Khas.Formulating strategy and assistance in strategic alliance proposal to key European customer. and the result of this was that a successful company was prevented from expansion. development and delivery of sales & marketing collateral for three consecutive seasons.
The current model has self-contained worlds instead of cooperation. material. money is instead wasted on an inefficient process. Because of this.S. However. it would increase unit prices. economic source. this changed somewhat. whereby long-term relationships are cultivated. From a piecemeal view. and as such is seen as a big risk and many are reluctant to actually work on establishing these relationships. ships a sample. he said. Page 14 . that they were too “over-exposed in China. as the companies began to listen to the needs of buyers and in 2005. the supplier makes the product. He mentioned that Delhi (mostly womenswear) is only one side of the big picture.” however that had mostly been talk and no action. and money (wastes that would not be eliminated by greater cooperation. He expressed hope that soon the labor laws would relax some to reflect changing needs of business. but more menswear).. worrying that Indian business could not compete with China. how the current transactional model is very inefficient insofar as buyer-supplier cooperation goes. strategic sourcing is dramatically different from the current widespread transaction model. so all the businesses had to pay was labor and overhead.one hundred workers is nothing. In 2004. He began to describe the different ways of sourcing. the quotas had restrained India far more than China (showed a graph from a U. investment in the industry slowed down. and Tirupur (mostly jersey knits) all have different cultures. couldn’t see name). for example. effort. etc. total costs would go down because the current transactional model wastes a lot of time. From 2001-2004. the MNC may like it or require additional changes. the investment returned. as it was clear that Indian businesses were gaining from the phase-out and smaller countries like Bangladesh were losing instead. then privatized factories. He said that Delhi is doing extremely well in terms of business and is the largest in terms of exports. but in the strategic long-run. 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. saying that the industry had often talked of diversifying. but would be greatly minimized). which has worse infrastructure but is nevertheless optimistic about business. doesn’t communicate with the designer. He then mentioned that “strategic sourcing” would be much more beneficial to the market.” Furthermore. He stated that “the inconvenience of a labor inspector” pestering and harassing company management was a minor price to pay for business expansion. wherein the buyer. he made it clear that somehow they were competing because of their “ability to develop and deliver product. since vendors and suppliers both may have had bad business experiences when attempting to do the same. and rather than cultivate a relationship in which the supplier provides input and designs according to a long-standing relationship. but that the outlook of the management may be more pessimistic than Tirupur. he said that Indian companies were extremely uncertain about the effects of the MFA phase-out. and that Chennai (mostly menswear). The MNC gives product specs. He began to talk about sourcing. gets quotes from suppliers. Bangalore (roughly equal. the product is re-done.
of India. to find out the product range and export prices of garments of other countries. increase. Vijay Mehta (M/s Intercraft Pvt. 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. Mr. Bombay) President. Bombay) Vice-President. Clothing Mfrs. Gen. Mr. develop export of all types of readymade garments. Assn. B. Calcutta). of India. Secretary. Ltd. Shah (M/s Hiralal Gulabchand. S. Ltd. Two leading organisations of readymade garments. Assn. Ramadorai (Chief Executive. New Delhi) Ex-president. particularly to undertake market research.. P. Ltd.F. quota distribution and allocation. Mr. Clothing Mfrs. Sector 44. B. Amersey (M/s Milton’s Ltd. Clothing Mfrs. M/s Handloom and Handicrafts Export Corporation. advance. New Delhi took a lead in this matter and formed a special ad-hoc committee of the following Members: Mr. Madras).. woollen knitwear and garments of leather. The main objectives of the AEPC are as follows: (1) To promote. Institutional Area.P. Smt. Secretary General of AEPC Mobile: 98-9912-4555 Website: http://www. Singh (M/s Singh Export Corporation.aepcindia. of India. excluding.3.K. Garments Exporters Association. Banthia (M/s Magnum Enterprises. (2) To undertake all export promotion measures. Assan.. N. Garment Exporters Association. Premila Wagle (M/s Paville Fashions Pvt. Mr. N. Mr. Clothing Manufacturers Association of India. New Delhi). market preferences and latest fashions and designs prevalent in the foreign countries. According to the Articles and Memorandum of Association: Up till now Cotton Textiles Export Promotion Council was handling the export promotion work of garments. jute and hemp. to send trade delegations and missions to foreign countries as well as to survey export potential of readymade garments from the country. Gurgaon 122003 Contact Person: Mr. Mr. to undertake marketing in individual foreign markets.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 and Garments Exporters Association.N. agents or correspondents in foreign markets for the purpose of continuously and regularly reporting the markets prices. (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 . to develop new designs and patterns of garments. Mogrelia (M/s Zoro Garments Pvt. Bombay) Hon. KK Jalan. but now as the garment industry has reached a stature and maturity and has achieved the target of 250 crores. New Delhi) President.. APPAREL EXPORT PROMOTIONS COUNCIL (AEPC) Office: Apparel House.L. (3) To appoint representative. to find out the tariff and other restrictive practices of importing countries.
traders and exporters of garments. He said the three biggest centers for garment production were • firstly Delhi. to encourage export production of quality garments and to undertake necessary research in fashions. (6) To establish design centres.for the purpose of continuously and regularly reporting to manufacturers. 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. and lastly Tirupur. as well as the names. in the Small Scale Sector by giving assistance in the matter of understanding and implementation of the drawback. Page 16 . and its specialization in better embroidery and the “India look” (ethnicwear heavy with embellishments and more complex work). and description of subscribers. action plans for promotion of exports. rules and procedures. its strengths being better infrastructure. (7) To undertake training of workers and technical personnel. to improve the skill of workers engaged in garment manufacturing in India and to assist in the technological base of the garment industry. He stated that over the industry as a whole. (5) To assist members. • lobbying to government to change laws regarding labor and infrastructure (and whatever other business bottlenecks there are). otherwise productivity will remain stagnant and labor costs will remain high. to 200 days. so that businesses who do not get orders during the winter are not hurt by the cost of labor. address. so that workers can be more easily fired and hired. NCR region. its strengths being higher levels of worker productivity. designs and techniques and to encourage manufacture of garments for exports. especially. (8) To obtain from members of the Council and to prepare for the Council as a whole. 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. 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). development of export markets. • help with training and productivity (14 training institutes). generation of production for exports. For three months of the year. AEPC focuses on three things: • marketing help. • secondly Bangalore. to evolve improved design and patterns and garments suitable for export. and • raw material supply (both indigenous and imported). he stated. to improve the qualities and standards of the fabrics and garments by importing technical know how. unit prices have remained stable pre and post quota phase-out. Content of interview (7 July 2006) with the Secretary General of the AEPC: The main issues in the garment industry are labor and infrastructure. He stated that the government needs to increase labor flexibility. garment businesses do not have orders. specializing in knitwear.
and • the Eastmen Group (Tirupur).He listed the top ten Indian garment factories as • Shahi Exports (Delhi). These businesses have succeeded through a number of different strategies. • Centwin Group (Tirupur). • Texports (Mumbai). with a common thread of individual attention to quality control and productivity by hiring consultants and building better facilities. • Golkadas Images (Bangalore). • Gurgi (“biggest industry consultant”—saw this name in the fabric stores in Jyoti Apparels). including • an HR training institute-KSA Technopack. The AEPC did not have company specific financial data. The researcher purchased the newest book of statistics on industry level data that the AEPC had (2003) and a directory of garment exporters. • Golkadas Exports (Bangalore). • Modelama (Delhi). and • the Cotton Textile Export Promotion Council. as it is self-reported. Page 17 . • SPL Industries (Delhi). • Richa Global (Delhi). • Creative Group (Mumbai). He mentioned several notable resources. • a foreign consultant agency Method Workshop (main consultant Roger Thomas).
and the evolution of new professionals.com/iftf. advancement of careers. these courses offer a unique opportunity to participate in the lively academic environment of NIFT. and excellence. Chennai. NIFT is acknowledged as the premier institute of fashion design. The centres are professionally managed platforms of the world’s finest design expertise.4. 26964771. In addition to classroom learning.com. According to its CE (Continuing Education) Prospectus 2006-07: NIFT provides quality fashion-education to industry experts. NIFT has crafted a range of Continuing Education Programmes. Gandhinagar (Sub-Centre: Surat). They offer a learning environment that encourages innovation. Extn:306 Fax: 91-11-26851198 Mobile: 9810154829 E-mail: email@example.com Address: NIFT Campus. Hyderabad. management practices and manufacturing technologies. also offers short duration part time courses under Continuing Education (CE). which have been developed in consultation with reputed academicians [sic] and industry practitioners. NATIONAL INSTITUTE OF FASHION TECHNOLOGY (NIFT) Ministry of Textiles. enhancement of critical abilities. rajeshbheda@niftindia. New Delhi-110 016. These programmes reflect the requirements and Page 18 . creativity. 26965080. India Telephone: 26850484. Bangalore. and diverse faculty expertise. leading to upgradation of skills and knowledge. practitioners. management and technology across the globe. besides conducting regular professional undergraduate and postgraduate programmes in Design. Department of Fashion Technology Telephone: 26850484. Management and Technology. Extn:306 Contact Person: Professor Rajesh Bheda. and entry-level candidates in the form of Continued Education Programmes. 26965080. PhD. and avail of facilities like laboratories with state-of-the-art equipment. Government of India Website: http://www. professionals. (Gauri Kumar. Director General of NIFT) The Institute: Today.com NIFT was set up under the Ministry of Textiles in 1986. 26965059. Kolkata and Mumbai. Resource Centres. The Institute has pioneered the evolution of fashion business education across the country through a network of seven centres at New Delhi. Chairperson. Hauz Khas Near Gulmohar Park. 26965059. 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. 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. 26964771. 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.niftindia. Continuing Education (CE) Programmes: National Institute of Fashion Technology..
Unit prices are down. cost is up. demand is up. and they are making efforts to reach good productivity. as there has not much shift in markets. Most common is line supervision. Content of interview (20 July 2006) with Professor Bheda: Professor Bheda has been with NIFT for 16 years. with production planning and scheduling. Post-MFA trends have been a consolidation of supply chain and capacities. If companies put efforts into enacting these measures. the programmes provide a congenial environment that integrates theory with practice. He teaches classes in quality management.concerns of the industry and have been carefully planned to spur professional growth. • higher productivity • use the help of consultants.S. there could be a 50% improvement in quality. methods monitored. • better quality product and service. corporate social responsibility. though you cannot take bags inside the doors or check out books. and EU have always been strong markets in India. The participants receive a NIFT certificate on successful completion of the programme. probably average 70% of India’s market. The library at the NIFT campus is open to anyone. trying to get workers’ involvement. 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. However. Page 19 . • managing their supply chain better. training managers. • offering shorter lead times. performance-based rewards system. • BPR manufacturing. operators. • design development. suppliers reducing subcontracting. productivity (how to perform time studies). buyers reducing number of suppliers as well as brands. • have more highly trained workforce. U. Companies are trying to move up the value ladder as product development and design are becoming more important. relevant to individuals at different stages of their careers. and a global overview of the garment industry. The flexible schedule enables the participants to pursue the programme without interrupting their professional activities. With focus on interactive learning. quality improvement program. and also to those aspiring to join the industry. The average Indian garment factory has 100% potential in physical labor productivity. and • hire or train industrial engineers. The main characteristics of successful firms include: • recognizing what customers are looking for. 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. manufacturers consolidating capacities.
and many cannot afford them because there is typically no financial payback. it would be good to invest in social improvement program. Retailers should start partnering with the brands and rewarding CSR compliant suppliers. Social programs are a long-term investment. something like it has been discussed. Page 20 .com. not because the buyer says the firm has to do it.” that retailers are paying lip service to CSR without sharing the cost burden. Agarwal). The researcher obtained a buyer ID and toured the grounds. 38th annual: www. He gave a contact person to interview from Shahi Exports and up-to-date contact information number for Orient Craft.com). so suppliers feel they are not committed. Regarding corporate social responsibility. from principles. Jalan. the AEPC Director of Export Promotions (interviewed him after K. it would have to be meticulously and carefully implemented.indiaapparelfair.K. Magu (Chairman of Jyoti Apparels). it seemed to be a showcase for smaller firms to vie for new buyers and international exposure. K.” 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 as long as it is ensured that the rewards system cost comes down to the factory floor. and are simply passing it on to the suppliers. The day of the interview was the final day of the Indian International Garment Fair (IIGF: www. Everything in the market is transaction-based.L. The core group of organizers include Vijay Mathur. driven by price and the customer can walk away at any point. the 37th annual garment fair with 393 exporters/exhibitors at Pragati Maidan. He does not see a correlation between turnover and CSR programs: “ultimately it comes from within. H.K. 2) Shilpayan Craft (Jaipur) 3) Another firm from Jaipur.K. Vijay Agarwal (Chairman of AEPC. However. so some firms are investing in CSR to the extent they can afford. “suppliers get a feeling of being cheated. so the researcher asked IIGF workers) were 1) Intercraft (New Delhi). Mumbai). The award winners for their showcases (announced the previous day. None of the firms were top ten exporters or easily recognizable.there is an erosion of the bottom line and companies find it difficult to survive and improve working conditions.indianapparelfair.
*Quality Evaluation of textiles. *Need based cost effective software development. Design of Effluent Treatment Plants and Water Recovery Plants. and plastics. It is linked to the Ministry of Textiles and is recognized by the Department of Scientific and Industrial Research (both government entities). 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. Process House Study. leather. Product Diversification. Pollution Control. NORTHERN INDIA TEXTILE RESEARCH ASSOCIATION (NITRA) NITRA. 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 . chemicals. *HRD activities through training programs. Machine Design & Development. Publications. Rao. Raj Nagar. Several prestigious textile units and multinationals are already within its consultancy network. *Collection and dissemination of data useful to the textile & garment industry. According to NITRA’s 2006 Prospectus: NITRA’s Multifarious Activities *Job oriented professional courses (full-time and distance learning) in textile. It is the only ISO 9001:2000 accredited textile research organization in India. environment and allied areas.S. Manpower Planning. Techno-economic Viability Study. seminars. J. *Customized consultancy packages for national and international clients in the areas of Product Development. P. ISO-14000 Environment Management System. Energy Conservation. ISO-9000 Quality Management System. Quality Improvement. garment. Energy Audit. waters. Maintenance Management. effluents. workshops. Maintenance Audit and a lot more. conferences and publications. Environmental Audit. Cost Reduction. Ghaziabad (UP) 201 002 Website: http://nitratextile. *Research and Development projects and industry specific surveys related to textile & garment industry. and Seminars/ Conferences/ Training programs…NITRA has carved a niche and occupied leadership in Package Design Consultancy for effluent treatment and water recovery. Chairman of NITRA. dyes. 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). V. Sector-23.5.org/ Contact person: Dr.
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 allowed that workers were being exploited. and the Haryana State Pollution Control Board (HSPCB). which are essential to conduct such a program…[it] is accredited/ recognized by the National Accreditation Board for Testing and Calibration Laboratories (NABL). energy. During the 60s-80s. There is a shortage of skilled garment workers.textile and allied industries: waste management. has been installed for carrying out treatability studies of biodegradation of industrial effluents through aerobic cum anaerobic route. [NITRA’s IT Center] has over 100 [PC’s]. NITRA has a wide database of employers [in its placement cell.000 books and journals. Content of interview (7 July 2006) with Chairman of NITRA: Gave background on the history of the textile industry.. The library also subscribes to 150 [national and international] periodicals. from composite textile mills in the 50s-60s to the rise of small scale businesses/ fragmentation. NITRA helps factories with product development and various audits. Complained about government infrastructure and labor laws. water. but would not elaborate and would only refer to the intractability of trade unions in vague terms. 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. environmental statement…NITRA’s Environment Laboratory is well equipped with Sophisticated Analytical instruments.. 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. Stated that the fragmentation of the business made quality control an issue. mid term strategies and policies and creating necessary infrastructure. especially Page 22 . he said that unions hurt business. eco-friendly textiles. effluent treatment and water recovery plant. fear of China post-quota. Access to and the price of power seemed to be a big issue for him. Also stated that it cost businesses more to subcontract because they had to pay for delivery. the…library [keeps students connected with] ongoing global developments. legal compliance. TAF). etc. improve infrastructure. Library: Enriched with 5. etc.. An in-house miniature ETP (effluent treatment plant) of 100 Liters/hour capacity has been installed by NITRA. especially the law whereby a worker that is employed for 100 days is considered a permanent employee. The government is currently working on better infrastructure. Netherlands. quality. the Bureau of Indian Standards (BIS). and perhaps have relaxed labor laws within these sites. better access to a supply of power through a cluster system called Scheme for an Integrated Textile Park (SITP). which would consolidate factories. He believes the government should subsidize capital for Indian business like China (mentioned something about a Technology Aggregation Fund. A programmable ADI Bioreactor System of 3 liters capacity from Applikon Dependable Instruments..
Bilwara. Reliance. When asked for company names. The researcher obtained a copy of the 2006 prospectus. Page 23 . Students apply to the program online and are selected on the results of aptitude examinations and interviews. They typically have 4-5 students applying for one seat. he mentioned Vardhmal. They conduct in-plant training as well as distance learning programs for middle management at NITRA itself. 10:30 am . Arvind. a NITRA Senior Scientific Officer.machine operators at the shop floor level. so NITRA conducts training programs for workers that last 3-6 months. Classes are full days. The course coordinator is Vivek Agarwal. NITRA’s worker training program’s classes (this year beginning in August) cover mostly productivity issues for middle management such as production managers and line supervisors. not garment manufacturers).4:30 pm. L and J (seem to be mills.
An ISO 9001:2000 certified company The information in the following company report was obtained from interviews with the Director. Haryana. documents given by the HR and production managers including a company profile. India Tel: 91-124-2290993. 2291131 Fax: 91-124-2290864 Website: www. India Tel: +91-124-2397838-42 fax: +91-124-2397843 1 Initial information obtained from company website. phase -1 New Delhi -110020.com Head Office Delhi B-57. Manesar IMT Gurgaon -122016. Human Resources manager. ICRIER financial data.CHAPTER THREE COMPANY PROFILES 1. Merchandising Agent. and G. Mobile: 9810015693 Corporate Office2 Plot No. India Tel: +91-11-26810103 fax: +91-11-26817969 Head Office Gurgaon 184. Udyog Vihar Phase -1 Gurgaon. I. and updated telephone numbers from interview. Okhla Industrial Area.com E-mail: info@modelamaexport. MODELAMA EXPORTS LTD. Page 24 . Manicandan’s CEC Report. Sector-5. 2 Unit visited by the researcher. the company website. CONTACT INFORMATION1 Contact Person Lovleen Kumar.com. 7 & 8. Haryana.modelamaexports. business articles. Director E-mail: lovleen@modelamaexports.
” Apparel Resources. Okhla Industrial Area. phase -1 New Delhi 9. Lalit Gulati.Road Map 3 Production Units4 1. Okhla Industrial Area. Phase 1 Gurgaon 4. B-57. IMT Manesar. B-26. Sector-5. B-80.000 square feet. 184. Phase 1 Gurgaon 2. 204. Phase 1 Gurgaon 3. Plot No-5. Udyog Vihar Phase -1 II. Okhla Industrial Area. Gurgaon1 6. In 1999.5 III. 5 From website. BRIEF HISTORY Modelama was founded in 1979 by Mr. phase -1 New Delhi 8. Okhla Industrial Area.00. Modelama today has ten professionally run production units over 4. 7 & 8. <http://apparelresources. 45 lakhs with 50 indigenous sewing machines and a workspace of 4. 4 3 Page 25 . Other production sites in untranslated Hindi document. Modelama places a great emphasis on technology as the secret to its success. Sector-4 Gurgaon 5. and Pandey. From company website. Modelama professionalized its management structure and has been consistently upgrading technology in their production facilities. BASIC PROFILE6 Legal Composition Sole proprietorship. phase -1 New Delhi 7. 6 From company website.000 square feet.com/defaultnextone. 200. Manesar. Lalit Gulati as a family-run operation. B-33. interview. Vinita. “Build Quality Rather Than Check The Quality.asp?msg=2710&cod=newsindetail&nam=>. Plot No. phase -1 10. 201. owner is Mr. In the first year they exported Rs.
Villersey & Boch. Eurofiel (Women’s Secret). Freemans. 2000. and blends. Modelama does not manufacture for the domestic market. Federated Stores (Macy’s). jute and hemp. Next. Modafil UK: Laura Ashley. A & F.. offering products such as table linen. Marshalls. 2000 Page 26 . Westelm. Old Navy). polyamide). Colt’s Europe: Etam.4530/2001-100% E.O. Mervyns. top of beds.EOU Information Modelama Exports Ltd. Sears Roebuck & Co. trousers. Charming Shoppe Inc. Added outerwear to their product mix in 2001-2002. Galeries Lafeyette. is an export oriented unit registered with NEPZ. which may have contributed to minimizing seasonality issues. Target Stores. synthetics (viscose. silk. polyester. Proffitts. Monoprix. Grattan. Incorporates ethnic Indian accents and embroidery into design samples. H&M. Tommy Hilfiger. nightwear. Marmaxx. Saks. Chambers. silk. GUS. William-E-Sonoma. Lane Bryant. LOP NO. Uses natural fabrics (cotton. linen. Canada: Eatons. etc.AEPC/REG/MER/47569/N/2001) as a manufacturer/ exporter of readymade garments including woolen. AMC. Launched Home Textile Collection in 1999. Zara.. skirts. Clients USA: GAP (Banana Republic. La Halle. and home furnishings. Pottery Barn. Product Mix Areas of specialization include outerwear. knitwear and garments of leather. 2000. wool).. shorts. Zellers Australia: Country Road Awards Target Vendor Award of Excellence. Nov. and 2002 Associated Merchandising Corporation Outstanding Performance. Marks & Spencer. Sears Roebuck & Co. and decorative items for loungewear like throws. 1999. Dayton Hudson Corporation. 1996 Charming Shoppes Inc. 1992. 1998. drapery. 2001 Federated Merchandising Group Five Star Award (in Development of Federated Department Stores Private Brands and Labels).U I/6921dt28/08/01 RCMC NO. Lands End. Exports/Imports 100% exports. 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. Kohls-Belk. ladies blouses. 1999. kidswear. cushion covers. 1993. Hudson Bay. dresses. Sales Growth and Profitability Vendor Award.
500 500 450 60% 40% 150. VA per employee Rs.5cr. No.IV. 7 ICRIER Data (based on an interview at B-57 Okhla Industrial Area plant in Fall 2005) Page 27 . 3cr.000 30% Rs. 3000/per month Rs. of pieces exported to the US No. of pieces exported to EU countries Proportion of workforce that is female Average wage for female production workers Average wage for male production workers 2005 200 cr 100% 20% 3cr. 2800/per month. 500 Total employment 500 500 Production workers 450 450 Proportion exported directly --Proportion exported indirectly through intermediaries Misc.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 2.000 per year 25. FINANCIALS Turnover 70 Turnover (millions USD) 60 60 50 40 30 20 10 0 1981 1985 1990 1995 2000 2002 2005 projected 15 0. Rs. 500 Rs.
Of that remaining $3. 60% of that is Target’s profit margin per unit (PMU). 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.V. Although they get large production volumes from discount retailers. 9 8 Page 28 .” Lalit Gulati. Vinita.99. The remaining $3. “GAP is sourcing worth about $1 billion from India and we are doing more than $10 million with them.asp?msg=2710&cod=newsin detail&nam=>. <http://apparelresources. Europe Others 94% Major Clients Brand Federated Stores (Macy’s) Target Stores GAP (incl.75 goes to Modelama.A.com/defaultnextone.S. BRAND INFORMATION8 Modelama's Export Market 1% 5% U.99 is the landed cost. quoted in 9 Pandey. 10 Nearly all brands are FOB with the exception of discount retailers like Target Stores (USA). BR and ON) 9 Tommy Hilfiger Marks & Spencer A&F Colt’s Saks Etam Zara Marks & Spencer H&M Origin USA USA USA USA USA USA USA USA Europe Europe Europe Europe Length of Relationship Since 1975 Since 1975 10 years plus 10 years plus 10 years plus 10 years plus 10 years plus 10 years plus 5-6 years 5-6 years 5-6 years 5-6 years % of Sales 30-40 15 10 ---------- Buying Agency or Direct Most contracts are negotiated through buying agencies. Modelama Chairman. Average Unit Prices (per piece of garment supplied) Unit Price Origin Product Mix $5-7 USD U.99. the unit prices are markedly lower than specialty stores.S. “Build Quality Rather Than Check The Quality. An example given was if the retail price of a given garment manufactured for Target is $9.” Apparel Resources. which includes not only the factory unit price but the duty cost (AMC and freight). ~$2.
ittimes. The day the researcher observed the process. they were manufacturing garment orders for Charming Shoppes Inc. 13 From interview with Director and Senior Merchandising Officer.” <http://www. INFRASTRUCTURE Subcontracting Modelama does not appear to subcontract. Vishnu.kr/en/node..000 pieces. an alumnus of the National Institute of Fashion Technology (NIFT). Page 29 . fine-tune the patterns. We then sit down with the stores.Unit Prices Since MFA Phase-out Unit prices have gone down an estimated 7-10% due to increased global competition. and get down to manufacturing. which varies according to the product. add a bit.4 1985 0.80. Some of the orders can be pretty huge .) as well as home furnishing products. is one of the principal designers. for instance. volume. Modelama will present their company profile to the buying agencies of MNCs.1 1981 0. 14 Makhijani. “My team of designers scans international trends and comes up with a tentative collection of not only designs but also shades. and delivery times. “Indian Fashion Firms Adopt Global Pret and Couture.5 0. Marks and Spencer (Style and Co. Typically.11 Production System Uses an assembly line system. who will then contact them with a development package if their profile fits their needs.”14 11 12 According to interview with the Director. Production Capacity12 9 8 7 6 5 4 3 2 1 0 Number of Garments Produced (milions) 8 4 2.7 1 1990 1995 2000 2002 2005 projected Design/Sampling Modelama has a fairly large design department.asp?em=M&mcode=200602&idx=1083>.13 Gayatri Lal. From company website and brochure. Then there is some back and forth communication between Modelama and the MNC to reach an agreement in terms of product design. subtract a bit. V.co.
tearing strength. Differential and Bottom Cylindrical Bed Unison Feed Machine. Departments17 Production (~800 Workers) There are about 560 tailors. Autocad (Lectra). Auto Dart Making Stations. An example line was sewing collar parts with a total of 46 tailors and 5 helpers. Machinery includes Auto Zig Machine. Auto Pocket Welting M/C. Machinery includes Auto Spreaders. Air Flotation Tables. PH check. color fastness to light. 17 Information on machinery was primarily taken from the company website. GSM check. Band Knife M/Cs.” Modelama emphasizes technology and internationally acclaimed systems to maintain a high level of quality. perc based dry cleaning machines. supervisor name. sand blasting. Page 30 . laundering and crocking. This was the only department with women. Washing machinery includes a wet and dry processing unit comprised of micro processor controlled washer extractors. Auto Surging Machine. and number of workers. Tests include tensile strength. Top. pitting test. and brushing machines (from light softener washes to heavy enzymatic washes). Procedures are based on aql 4 point system by which all fabrics are screened and categorized. Information on workers and floor layout is specific to the unit visited and is taken from an interview with the HR Manager. The product was women’s fashion blazers for Style and Co. 15 16 From company website. Site visited by the researcher employs about 1100 workers (including about 15 accounts staff). Pneumatic Button Hemming Stations. Modelama has an in-house laboratory that is equipped with testing machines for AATC Standards and has developed in-house grading systems based on ERP. The company deploys over 3000 imported sewing machines with customized workstations.000 workers in all plants. input.Quality Control15 Modelama’s motto is “build quality rather than check quality. Programmable Sleeve Setter Stations. Differential Feed Machines Needle Feed Machine. Auto Cutter (Lectra). Approximate number of workers16 Modelama employs a total of ~6. In the sewing departments. etc. The floor is laid out in dozens of assembly lines. over 90% male. Cutting (50-55 workers) The cutting department had five lines of machines laid out with worker stations. at the front of which is displayed an “Hourly Production” dry-erase board with the line number. Auto Belt Attaching Stations. Blind Hemmers. From interview with Director and Human Resources Manager. they use internationally standardized procedures like the traffic light quality assurance system. Washing (24 workers) and Finishing/ Pressing (175 workers) The finishing area had lines of workers pressing and folding clothes. output. Multifusing with Three Track of Loading (High Performance Macpee).
Pressing and finishing machinery include multipresses. indicating that he would like to develop such a system in the future. 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. dummy presses. Because the factory is not near a city. Inc style. Embroidery Did not observe embroidery process during visit. and unskilled minimum wage was Rs. Additional Machinery Factory has a special conveyor system that moves products from assembly lines to other departments. No workers are involved in these meetings. The production manager gave the researcher a copy of a time-study conducted for Charming Shoppes. stressing how much state-of-the-art machinery has contributed to the quality and productivity of the manufacturing process. and Renzacci. flatbeds. Machinery includes 20m length Schiffley Embroidery (Lasser & Saurer). management states that they set wages higher than minimum wage to get workers to commute. Trevil. The Director said that workers are given incentives in productivity schemes if they reach their targets. calendaring machines and range of buck shapes and steam irons from manufacturers like MACPII. 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. Category Tailors +skilled 18 Average Wage (Rs. Production Manager. the HR manager stated that no punitive measures are taken as it is prohibited by law. Page 31 . Has hand and machine embroidery capabilities. and line supervisors who perform time studies on particular styles and set worker targets. Productivity Schemes Company has production planning meetings consisting of the HR Manager. VII./month) 3500 From interview with HR Manager. However. If workers cannot reach their targets. 2448 per month. 200 single head and 6 multiple head computer embroidery machines. HR Manager boasted that Modelama was the only factory in India to have this machine. Veit. The targets are communicated to workers by line supervisors and dry-erase boards on the production floor that display productivity goals. the HR manager said that no incentives are given. 3000 per month.
” Labor Turnover Estimated worker turnover per month at 7-10%. which is not subject to negotiation. HUMAN RESOURCE POLICIES19 There does not appear to be common policies across the plants. 19 Information based on interview with HR Manager and documents given by HR Manager and production manager. HR Manager stated that wages increase after a year. Indicated that there are a few shop floor employees who have remained the two years the factory has been in operation. like China. Expressed dissatisfaction with labor laws requiring double overtime.+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. including ESI and PF. stating. Benefits HR Manager indicated that workers receive the social benefits required by law. except for worker recruitment for middle management positions. and that workers receive double wages for overtime hours. VIII. supervisors conduct time studies evaluating the skill level and productivity of a new hire. After a three-day period. workers are then offered a monthly wage based on this evaluation. Page 32 . “It should be time-and-a-half. Overtime Management indicated no more than four hours per week per worker.
the company recruits from training centers and placement companies and has a formalized policy that the researcher obtained. Manicandan’s “Mapping First Tier Suppliers in Garment Industry in Delhi. K. Worker Training This site does not provide training to its workers. 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. However. and in nearby worker villages. To recruit shop floor employees. Lalit Gulati Sole Proprietor Founder/Chairman Mr. Kiran Production Manager Mr. For middle management positions. Recruitment Policy They do not use labor contractors at the unit visited. Anil Chauhan HR Manager Management Staff/Accounts Personne Mr.” Modelama uses labor contractors for some of its other units. grievance procedures. Lovleen Kumar Director Ms. However. Page 33 . Modelama’s anti-harassment policy.Management Structure Mr. standing orders. according to G. workers have a brief orientation session during which they are informed of security measures. Beneeta Seigal Senior Merchandising Other Upper Management Positions Mr. the company posts signs on the gate. and vendor codes’ of conduct. such as the unit located at 200. Phase-I Gurgaon. Workers are a mix of local villagers and from Gurgaon. while dotted-line boxed positions are factory-specific and subject to variance. at bus stops.
so there is no need for a union. According to G. Union There is no union in the production site visited.” Worker Committees Since there is no union. Phase-I Gurgaon and B-57 Phase-I Okhla Industrial Area). an Anti-Harassment Committee.”21 Corporate Responsibility/ Codes of Conduct Modelama’s Anti-Abuse/Harassment Policy is posted on the factory floors in English and in Hindi. the company usually pays the medical expense. but only in English. All workers were said to have received medical attention. nor have there been unionization attempts.Dismissal Procedure No information was obtained by the researcher regarding a formalized procedure. they have joint employee-worker committees required by law. Medical Care There is a medical room in the factory.20 Grievance Policy Procedure If workers have a problem. Manicandan’s “Mapping First Tier Suppliers in Garment Industry in Delhi. U.” but when asked to meet the doctor. preferring to dismiss the workers. HR Manager indicated that there are very few worker grievances. but avoids paying for major injuries and illnesses. traceability. such as a Health and Safety Committee. “We take care of all their problems.S.S. the researcher was informed that he was at another production site. Work times for employees were also posted. in compliance 20 21 Received a Hindi copy of group meeting minutes. A resident doctor is “available at all times. Page 34 . that they can report their grievance to their direct supervisor or upper management. The code of conduct for Charming Shoppes Inc. Customs Security requirements regarding issues like preventing trespassing. The factory locks its doors at night. If workers suffer from minor injuries. a Works Committee. There is a company dentist that comes every Thursday. was displayed on the factory floor. Security New security measures have been implemented since the quota phase-out. or CTPAT model. There are only six recorded injuries at this site for 2006. Received a Hindi copy of policy. tampering. and an ESI station 1. according to the Customers Trade Partnership Against Terrorism. 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. and a Sexual Harassment Committee.” there are no doctors in two of Modelama’s other production units (200. companies have required them to uphold a more stringent counter-terrorism model of security in compliance with U.5 km from the factory.
The Director mentioned that seasonality is an issue.perator. MNCs would present their contract orders to Modelama as an Indian company. low relative levels of productivity. “Build Quality Rather Than Check The Quality. In an interview with Apparel Resources magazine. and then ship the product from that country. A business strategy that Modelama is looking into is “triangular shipping. the Chairman. it would appear that seasonality should be less of an issue for them than other companies who do not manufacture winter clothing. If workers stay for overtime.com/defaultnextone. Page 35 . 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.asp?msg=2710&cod=newsin detail&nam=>. relative strength of the Indian rupee to the dollar opposed to weaker Asian currencies. IX. 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. 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.” Apparel Resources. we need operators who can be trained. Lalit Gulati. the Chairman stated that though the South is better known for it. In 2002. whose upper management and design departments would remain in India. We do not need masters. Vinita. 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. The HR Manager. If Modelama has had as much success in outerwear as they have stated in press releases. 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. Lalit: Machines change according to the product requirement…We have to be flexible because the buyer doesn't buy one thing all the time. <http://apparelresources.22 X. however. stated that seasonality was not an issue and that they have orders year-round. 25 crore in jackets alone. 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. BUSINESS BOTTLENECKS Main problems hindering financial success according to the Director are poor relative infrastructure. the former Director stated: Lalit: We do not consider machines as individual equipment but as a complete workstation. 22 Pandey. and government bureaucratic hurdles regarding labor law.” a more developed system of subcontracting modeled on Southeast Asian business strategies.with these measures. and Sanjay Gulati. Modelama would then shift the actual manufacture of the product to either countries with lower labor costs like Sri Lanka or duty-free countries.
who was not available on the date of the interview. XI. The only question that management would not answer was regarding a detailed financial breakdown of the company. The unit visited is the site of their corporate offices and was built two years ago with the help of industrial engineers. This is likely the factory to which buyers are taken. then was directed to a Senior Merchandising agent. Page 36 . when they began to develop the infrastructure to manufacture outerwear.Sanjay: It is a very unique combination of machines that we have that gives us this flexibility of handling [versatile] product [mixes]. The high level of attention paid to infrastructure and personnel management is probably not typical of their older factories. as it is the most modern. PERSONAL EXPERIENCE Modelama used an Italian consulting agency for the design of two of their factories. but directed the researcher to her colleague. Modelama was the first company to be interviewed by the researcher. Modelama was very open in disclosing information about the factory unit. Contact was made by calling the general inquiry number on the website.
Page 37 .co.com Website: www.24 23 Unit visited by the researcher. Shahi Export House has a total of eighteen manufacturing units. Giri. BRIEF HISTORY Incorporated in 1974 in Delhi.khanna@shahi. SHAHI EXPORT HOUSE PVT. General Manager of Marketing Mobile: 98-18212505 E-mail: ashok. Palmprint Textile. business articles.com Production Units: Plot No. Karnataka Tel: +91-80-28439214/15 Fax: +91-80-28439356 E-mail: firstname.lastname@example.org Head Office Bangalore Belandur Gate. Haryana. Harish Ahuja. LTD. is former vice chairman of the Apparel Exports Promotion Council of India.D. 1. Tel: +91-129-2273970/80 Fax: +91-129-2273485/91 E-Mail: seh@vsnl. Manicandan’s CEC report. Divisional Manager of Marketing Mobile: 93-13369269 E-mail: ajay. the company website.shahiindia.in Ajay Khanna.in Head Office Faridabad23 Industrial Plot 1. I. CONTACT INFORMATION Contact People J. Sarjapur Main Road Bangalore 560034.2. II. Senior Management Ashok Raman. The remaining woven and all knit production sites are located in Bangalore.raman@shahi. the owner of the company. is in Ghaziabad. Two or three other units are in Delhi (Noida) and a fabric processing unit. The information in the following company report was primarily obtained from interviews with the General and Divisional Managers of Marketing. Faridabad. Sector 28. and G. Sector 28 Faridabad 121008.
polyester cotton. and circular woolen knits. full jacquards. pique. jackets. No Boundaries. John’s Bay. turtlenecks. ladies' & girls' blouses . Abercrombie & Fitch. Page 38 . sportswear. cotton fleece. lingerie. BASIC PROFILE Legal composition of the Company Private Limited Company. who is now the Managing Director. 2. Faded Glory. Cross-Bow. double mercerized.com/www/resource.26 24 Fashion Newsletter. Van Heusen. tanks tops. Place Jeans. spun filament. Carolina Blues. 100% polyester polar fleece. It is primarily information taken from the website with a few new passages regarding Human Resources and corporate responsibility. Seacorn. <www. American Khakis. golfwear.nsf/pub/Fashion_News_05_02_en2_Webb.pdf/$FILE/Fashion _News_05_02_en2_Webb. 26 Remaining client names were obtained from interview with Divisional Manager of Marketing. Sag Harbor (Sport). (Pacific Merchants). Family-owned. Ralph Lauren.pdf>. Von Daniels. nor does it currently have plans to do so. acrylic wool.. Bleu. Target Stores.. Liz Claiborne.The fabrics range includes solids. Exports/Imports 100% exports. H & M. loungewear. indigo dyed units. Solutions (New York).lawson. EOU Information No information was obtained regarding registration and EOU capabilities. mock neck. but it is a small fraction of turnover ($5-10 million). JC Penny’s. which was printed in 2005 by the Bangalore office. Carolina Colours. Arizona Jeans Co. rib. No. The Children’s Place. Up until a year ago. American Eagle. GAP. 25 From company brochure. sleepwear. heavy jersey in cotton. Product Mix Areas of specialization are mostly ladies woven tops and men’s tops. Shahi’s product line covers casual and formal men's and boys'.25 Wal-Mart. the sole proprietor was Harish Ahuja. ladies' and girls' dresses. Clients Bobbie Brooks (Woman). Old Navy. flat back rib.III. 2005. The knitwear product range includes 3 button polo shirts. tailored collar polo shirts. At Last and Co. t-shirts. Natural Issue. Hollister Co. Shahi has expanded to home furnishings in the past year. jacquard. textured knits. though any exporter of this size must have at least one registered EOU for importing capabilities. St. Jeans Dynam. Enzo Lorenzo. interlock. TKS Basics. polyester viscose. A & F. men's and ladies' bottoms. Euro Open. Cento Mila. engineering stripers. Cherokee. Akademiks. yarn dyed single jersey. Shahi does not manufacture for the domestic market.
32 Embellishment costs such as embroidery depends on style.8-23. Turnover estimates varied by tens of millions of dollars between the GM and the Divisional Manager of Marketing.8 million 14-28 million 1. It can be none or most of the unit price.nsf/pub/Fashion_News_05_02_en2_ Webb. Percent of sales is based on an average estimate given by the Divisional Manager of Marketing.30 $0.07 $0. so figures cannot be considered accurate.4 million 2.pdf>. Did not obtain average retail markup information. 29 Estimated by General Manager of Marketing. 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. 31 Based on the company’s average unit price of $6.033-$0. accessed July 2006.8 million 2.25 $0. so they can only be thought of as a rough approximation.lawson.5 USD.com/www/resource.8 million 7-14 million 14 million % of Sales 50% 12-17% 10-20% 1% 2% 2% 5-10% 10% target Per Unit Price31 $3. 2005 <www.pdf/$FILE/Fashion_News_05_02_en2_Webb. Page 39 .65 Material Cost Labor Trims and Packing Depreciation Machinery upkeep Overhead Embellishments32 Profit 27 Estimated by General Manager of Marketing.78-$1.13 $0.65-$1.Awards Wal-Mart International Supplier of the Year 2000 (can’t read others) IV. though generally it is four to seven times the unit price of the garment. 28 Fashion Newsletter.65 $0. 30 These figures were estimated by the Divisional Manager of Marketing in the space of 5-10 minutes.13 $0. No. 2.11 $0.
V. BRAND INFORMATION
Shahi's Export Market 1% 15% Europe U.S.A.
Other Licensees (Japan, Middle East, Australia)
Major Clients Brand Wal-Mart GAP H&M Target Stores JC Penny’s Liz Claiborne Abercrombie and Fitch American Eagle
Origin U.S. U.S. Europe33 U.S. U.S. U.S. U.S. U.S.
Lgth of Relationship 18 years 6 years 6 years 4-5 years 15-16 years 3 years 5 years 4-5 years
% of Turnover 10-14 7-14 5-14 3-8 3-8 3-4 3-4 3-4
Stated that do not have many huge clients; sales are mostly spread out among 15-20 buyers at any point in time. Buyers haven’t changed considerably post-MFA, though they are planning to increase shares in Europe. Buying Agency or Direct About 30% direct relationships, the rest through buying agencies. Stated that it is easier to deal with buying agencies in India than to maintain a direct relationship. Unit Prices (USD paid to factory per piece of garment supplied) Unit Price Range Average Product Mix Type $3.30-$26 $6.50 Casual, High Fashion Mostly FOB34
Delivery Time 60-120 days
Liz Claiborne can be up to $20, A & F can be up to $26, Wal-Mart is usually $4.50. Unit Prices Since MFA Phase-out Unit prices have gone down an estimated 7.5-15%, depending on the product. Prices for pants have dropped more, because of the nature of the quota restrictions.
In the U.S. as well, but the majority of the sales are to the European market. H & M is also the company’s biggest client in Europe. 34 Very few landed costs, though Abercrombie was mentioned as a landed cost buyer.
VI. INFRASTRUCTURE Subcontracting Shahi does not subcontract. Production System Assembly line system. Production Capacity Shahi as a whole: 2.4 -2.8 million PCs per month All Delhi factories: 300,000 PCs per month Production site visited: 150,000 PCs per month The knitwear sewing facility is capable of producing 250,000 pieces per month. Efforts are on to increase the knit production capacity to 0.5 million pieces per month. When the researcher visited the unit, Shahi was producing orders for many different buyers, among them 85000 pieces of peasant blouses with lace trim for GAP (Old Navy), denim jeans for Woodland, and 5,000 pieces of embroidered corduroy fashion blazers for Monsoon company. Design Shahi has two design departments located at the head offices in Delhi and Bangalore. Buyers send a “technopack” and/or samples of the “look” they’re going for, Shahi’s design departments produce a sample range for the buyer, who then shops around until they reach some sort of agreement. Quality Control Shahi has a fabric division that handles knitting, processing, and inspection. Fabrics are sent to in-house testing facilities to ensure that they adhere to STM standards. The laboratory is equipped with a Datacolor Computer Colour Matching System coupled with a Datacolor automatic Dispenser to ameliorate human error as well as a Mathis Padder with Dryer and Steamer and a replica pilot plant of bulk dyeing machines. The lab to bulk co-relation is maintained above 95%. The lab has a Datacolor infra-red dyeing equipment for exhaust dyeing. The color management group handles the product shade sorting and color related defects like listing and end-to-end problem detection. It is equipped with various machines that check tensile strength, tear strength, abrasion resistance, pilling resistance, shrinkage, fabric drape, fastness to various agencies (washing, crocking, perspiration, etc.). Processing Palmprint Textile is Shahi’s wet processing plant in Ghaziabad. Woven fabrics like poplin, twill, canvas, gauze, etc., and made of cotton, linen, rayon, and lycra blends are processed to international standards. Shahi makes prints like reactive, vat color discharge on reactive grounds, and pigments apart from some special printing techniques like burnt out effects on polyester-cotton blends. The unit produces 9000 meters of processed fabric per day. The pre-treatment section houses an Osthoff Gas Singe & Desize machine,
Benninger Continuous Bleaching Range, Ben Dimensa Chainless Merceriser. The Dyeing Section has machinery like a Kusters Cold Pad Batch & Benninger wash range, Continuous Dyeing Range , Jet Dyeing, Benninger Pad-Dry (with Kuster Padder) and Benninger Pad Steam Range. The unit has twelve color rotary Printing Machines, with after treatment machines like continuous Ager, Loop Ager , Star Agers , Polymerisers and Washing Ranges. The designing department is computerized with small yardages tackled on a Baby-Pilot Rotary Machine. The Finishing Section is equipped with Stenters, a Relax Dryer cum baker, Emerising (Peaching) Machine & Preshrinking Range, Speciality finishes (apart from normal silicon or soft finishes) like easy care (Self Smoothening rating 3-3.5), Permanent Hydrophilic, Stain repellant–Teflon , Water repellent, and application of Anti microbe or Permanent Fresh and Permanent Perfume. Knitwear The knitwear sewing facility is equipped with Pegasus top feed, micro processor controlled with automatic trimmers, CF Italia Collar attaching and latest Button Hole Machines capable of handling fine textured knits. Number of workers 15,000 in all of Shahi’s production sites 5,500 in all of Shahi’s Delhi (Faridabad and Noida) units Shahi’s Delhi factories employ 80% female workers, while in the Bangalore factories they are 90% female. Workers at production site visited Department and category Production +Unskilled +Semi-skilled and Skilled sewing operators +Line supervisors Cutting +Unskilled fabric spreaders +Skilled machine operators Centralized Storage35 +Semi-skilled and unskilled +Skilled workers +Staff who manage quality control Washing +Semi-skilled +Skilled machine operators Finishing (incl pressing/checking) +Unskilled (heavy lifting) +Semi-skilled +Skilled
~Number of workers Total 1800 400-500 1100-1300 25 Total 85 60 25 Total 150 120 20 30 Total 150 120 30 600 50 410 100
Gender Mostly female -90% female Mostly male Mostly male ---------Mixed
Stores for Noida production units as well.
fusing press. Juki.+Supervisors and dpt/line-in-charge 40 Sampling (think incl in production) 50-150 Remaining marketing. They also conduct joint department meetings. Hashima and Kannegiesser. but they Page 43 . in sewing. desize soft wash and golf ball wash. while the 60 multihead computerized embroidery machines have a capacity of 800 million stitches per day. shipping staff Total number of workers: 3. Productivity Schemes The unit visited has an industrial engineering department with eight staff. one for production and another room with rows of computers in which employees work on digitized patterns and samples. They conduct production planning meetings jointly with managers and supervisors by department. very little is done by hand. It is also equipped with single needle lock stitch programmable machines with UBT. Embroidery Most is done by computer. The latest CAD software enables quick processing of pattern creation. single needle top and bottom variable feed machines. The Divisional Manager of Marketing states that they always had incentive schemes. There are two departments for sampling. line supervisors convey target setting to them. enzyme wash . The production unit boasts machines from Brother. double needle-needle feed split bar machines. every hour the target is marked. Durkopp Adler. The incentive scheme only applies to skilled and semi-skilled workers. pocket machines and automatic pocket welters.000 cuts per day. accounts. Its implementation and form depends on the department.800 in all of Shahi’s Delhi (Faridabad and Noida) units 750 in production site visited The CAM based cutting department can make 75. These meetings set targets for the shop floor workers. Washing The washing facility puts out over a ton of garments per day through specialized wash treatments such as softener wash. Ngai Shing. grading. in which workers get bonuses for exceeding their targets. who are not involved in these meetings. and there are quality bonuses if clothes do not need repairs. marker making and global electronic exchange of pattern data. For example. stone wash. which can be 10-25% of monthly salaries depending on how difficult the style is.000 Mostly female Mixed Machinery 6. feed-off-the-arm machines. and it was stated that each unit has a similar department. incentives depends on how many pieces are finished. In finishing. This department is responsible for timemotion studies and an operation breakdown. This unit has an incentive scheme for productivity.500 in all of Shahi’s production sites 1. collar/cuff turning and blocking machines. merchandising. Sampling This is a fairly large department in the production site visited.
VII./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. This early shift seemed to be entirely female. 40 G. 38 According to G. 39 Stated that these numbers do not include ESI and PF.38 Wages As Estimated by Divisional Manager of Marketing39: Category Average Wage (Rs. However.have recently gone through major changes in their implementation. and a decrease of waste in the cutting department. there was still a strong female presence in the factory. Workers use their ID card to clock in and out of the factory. 37 The researcher toured the factory around 5 pm. lower labor turnover. the workers at this unit do not get a tea break. 4200. Benefits of the incentive scheme include a 10% increase in productivity in past two years in the sewing department. Manicandan’s CEC report says a supervisor with eight years experience makes Rs. Page 44 . and another fifteen-minute tea break between lunch and the end of their shift./month) Unskilled helper 2200 Semi-skilled operator 3600 Skilled operator 6.000 Supervisors/Mid Mgmt 10.00040 Minimum wage is posted as follows: Category Wage (Rs. The workers get a fifteen-minute tea break between the start of work and their half-hour lunch break. leaving male sewing operators and some female ones. when the first shift of workers were getting off. these benefits are additional. an increase in attendance. Manicandan’s CEC report. 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.
Workers also have access to an on-site crèche for their children during the workday. Benefits Stated that workers do receive ESI. after which the HR manager will put them into a set wage scale depending on their ability. Shahi’s overtime policies take into account gender. Overtime Stated that there is not a lot of overtime because they plan production with target setting. they are only evaluated to see what category of skill they fall in. Workers are then on a three to six month productivity probation. PF. Workers who receive less than Rs. VIII. 7500 are provided with ESI benefits. People who are motivated to excel and trained in different disciplines of garment 41 From interview with the Divisional Manager of Marketing. Wages are fixed and there is no negotiation. Labor Turnover Estimated at 7-10% per month.” ~Shahi’s website Shahi’s updated brochure includes lengthy passages stating their dedication to innovative Human Resources approaches. Page 45 . HUMAN RESOURCE POLICIES41 “Human intelligence is the greatest asset which we possess. Most sewing operators have been at Shahi for around two years. and a three-month maternity leave. The Shahi workforce consists of committed and highly skilled people. and negligible overtime for the other departments. they try to have the male workers pick up the extra work instead of the female workers. which the researcher observed.Wage Setting Procedure Managers interview workers and then take a trial of their work for one day. if overtime is needed. Estimated two hours per week per worker in the sewing and finishing departments.
Grievance Policy Procedure Presumably. Dismissal Procedure No information was obtained regarding a formalized procedure. 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. Shahi has ensured all systems are in place to make sure that everybody works in an extremely salubrious environment. but definitely not. Union Didn’t ask directly. Some are skilled. not the outskirts of cities. workers revealed that there had been unionizing attempts that were suppressed by the management. making Shahi one of the most sought after organizations to work for in the garments arena. it is all direct employment. Manicandan’s CEC report.manufacturing. the worker forum is a “safe space” in which workers can address any issues they have with managers. In the Shahi factories in Bangalore. so they do not need to train them. In G. Training depends on the job description of the worker. so the labor is here. Recruitment Policy Shahi states that they do not use a labor contractor. 42 The brochure and website both state that human resources are developed using the training procedures of Kurt Salmon Associates. There is also an orientation program for upper level staff. and union organizers were either dismissed or isolated from other employees. Worker Training Shahi trains the unskilled operators for a period of a week. Employ more women and uses HR strategies to disempower workers and remove blatant rallying points for workers. they provide transportation to overcome those issues. Labor problems get a kind ear and are followed up on a priority basis. Page 46 . Worker Committees Stated that there is a worker forum that managers also attend. They are able to have female workers because they are in heart of Faridabad. They do not recruit for shop floor positions beyond posting signs on their gates and through wordof-mouth. but it is not necessary to do so here. 42 From company brochure and website.
and American Eagle. and nutrition related topics. A full-fledged Dispensary and Ambulance is provided with a doctor always on standby.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. Liz Claiborne. in fact nearly all had a Hindi translation. and lectures. and support their families in the best way possible. Codes of conduct posted in factory include Carafour. From interview with Divisional Manager of Marketing and joint worker-manager magazine. securing of employees’ earnings through e-com (EDI) and ATM cards. attendance and productivity. There are many signs posted on the factory floor with stating things like “Discipline: Team work is an easier path to excellence. hygiene.Corporate Responsibility/ Codes of Conduct The company has a biweekly English magazine that publishes news and articles by workers.45 Medical Care There are male and female onsite doctors and nurses in case of industrial accidents. 44 43 Page 47 . It aims at providing a conducive environment for employees to protect. seminars. training facilities for employees. Wal-Mart. And some of the remarkable provisions for employees include: eligibility of workers for health insurance. They have activities for the workers such as an annual cultural week with games and contacts.. Nautica.” Shahi’s updated brochure includes add-ons regarding treatment of their labor force. More of these were in both Hindi and English than I’ve seen at other factories. The Limited. The company organizes fire drills to keep employees alert in case of emergencies.44 Safety measures are given utmost importance. Charming Shoppes Inc. Dayton Hudson Corporation. and a first aid room in the facility. Strict compliance with anti-child labor law is ensured.” “Anything worth doing is worth doing well” and one about the importance of personal hygiene. Fire fighters are on high alert at all times and every floor is equipped with the right fire fighting equipment. Awareness programs are conducted for employees on health. educational facilities for children. Shahi Export House adheres to International Labor Legislation. Target Stores. 45 From company brochure and website. Evaucation boards are put up on all floors along with photographs of fire fighting personnel. Best employee awards are given for overall discipline. American Pacific. personality development through work shops. promote.
U. The security guards inside were asleep. The Marketing Managers did not mention any new initiatives taken to deal with the issue. Page 48 . The production unit was enormous. since it takes too much time to get clearance at the ports. now they are getting competition from small exporters. Suppliers have changed post-quota.S. (Stated that retained incentive schemes and everything off-season.47 XI. though the researcher was not permitted to take pictures during the tour. before they didn’t have the quota holdings to compete. only different season. as he would not permit the researcher to do so. However. BUSINESS BOTTLENECKS Seasonality is an issue. 46 47 From interview with Divisional Manager of Marketing. according to G. However Shahi is trying to diversify their product range so that it becomes even less of an issue.46 Shahi recently opened up a warehouse in New Jersey.1 million PCs during the off-peak season. Supposedly all visitors have to have proof of identity.) X. and there was some controversy a few years back regarding a male manager and a female worker. It is not a huge issue. INDUSTRY COMMENTS Trying to build up capacity to produce outerwear by next year to reduce seasonality issues.4 million pieces during the peak season and 2. companies have required them to uphold a more stringent counter-terrorism model of security in compliance with U. now they do. traceability. where the garment industry is over 90% male. Stated that they need better infrastructure regarding port system. IX. Manicandan’s CEC report. according to the Customers Trade Partnership Against Terrorism. or CTPAT model. Also argued for more labor flexibility. tampering.000 pieces per month. From interview with Professor Rajesh Bheda of NIFT. Shahi is currently constructing a production unit in Bangalore that would have a capacity of manufacturing 200. Website contact numbers are out-of-date. The picture of the minimum wage was taken by the manager. who reported her case to the police. but I did not have to show it. however said they currently retain workers during the off-season because it becomes a problem to rehire workers. and then not working to full capacity during the off-season. Shahi does not have a sexual harassment committee. Mentioned that Southeast Asia has the same problem of seasonality. Customs Security requirements regarding issues like preventing trespassing. PERSONAL EXPERIENCE Obtained contact information from NIFT. as they produce about 2. Shahi has to decline some orders during peak season (OctoberMay).S.Security System New security measures have been implemented since the quota phase-out. Shahi is notable in that they have a majority female workforce in a place like Delhi.
BRIEF HISTORY Company established in 1976 by Mr.111 USD) in the first year.com Manish Mall Assistant Production Manager Mobile: 9899096999 Registered Office48 D-42 Okhla Industrial Area. who had contacts in the garment and textile industry. and an interview with an Assistant Production manager. and remaining information is from observations unless otherwise noted. Phase-I New Delhi. Magu and deceased brother. Unit visited by the researcher. Page 49 . two are in Manesar (southwest of Delhi. The company’s turnover was Rs. CONTACT INFORMATION Contact People H. but by networking through his brother. due to the quota phase-out.000 ($444 USD50). The company has increased sales an estimated 30-40% in the past year. south of Gurgaon). 51 48 49 Unit visited by the researcher. which roughly doubled each year until 1984.L. L. HR strategies and production from Assistant Production Manager. 20. 26818977.K.3. 26810804 (D) Fax: +91-11-26819684. a company profile and Standard Operating Procedures given by the Managing Director. 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. 26817910 Website: Jyoti Apparels does not have a website.com Production Units Magsons Exports. He had no experience. 45~$1) and are not adjusted for inflation. 110020 (India) Tel: +91-11-26816917. he started business in 1977 with an investment of Rs. 500. K. 51 Information on company background from Managing Director. II. I. Magu. shop floor observations by the researcher. Managing Director Senior Vice-Chairman of the AEPC (Apparel Export Promotion Council) Mobile: 9810029999 E-mail: hklmagu@jyotiapparels. 000 ($11. 50 Conversions are based on today’s exchange rate (Rs. 41/42 Phase IV Udyog Vihar. H. E-mail: jyotiapparels@vsnl. and two are in Okhla Industrial Area (New Delhi). of which five are in Gurgaon. Gurgaon49 The researcher was not able to obtain the addresses of all nine factory sites.
K. Jyoti’s strengths (and the North in general) are in high fashion garments with embroidery. Blair Corporation). Exports/Imports 100% exports. Debenhams. Zara-Indtex Awards The researcher was unable to obtain any information on vendor awards. Brylane. Karstadt Netherlands: Wehkamp. Specialize in high fashion made of exclusive prints. and children’s (roughly 15-20%) readymade tops. India Imports. Prenatal. Product Mix Areas of specialization include ladies’ (roughy 80% of production volume). L. with embroidery and beadwork.III. Kishore Magu EOU Information No information was obtained regarding a registered EOU. Page 50 . Promod Germany: Neckerman. Carol Anderson. Tesco France: C. Otto Australia and New Zealand: Just Jeans. Primark. 52 According to profile (which is out-of-date. J D Williams. International. Gus. (Target Stores. and ethnic handiwork accents. Wal*Mart. Donn Kenny. Canada: Hudson Bay Co. viscose yarn and denim fabrics. Manufactures woven (80%) and knitted (20%) garments using mostly yarn dyes. owners are Mr. Roamans. Mexx. BASIC PROFILE Legal composition of the Company Partnership firm. Woolrich.” it was pre-quota phase-out January 2005). and other garments. Enjoy. solid dye. T. Brumel. V F Jeanswear (Wrangler).. Evans. Miss Erica UK: Marks & Spencer. but the majority is summer clothing. Charming Shoppes of America (CSI). The Farmers Trading Co. Jyoti manufactures some winter clothing (about 20% of production volume). sequins. Freeman’s. blouses. H. . gents. Jyoti does not manufacture for the domestic market.. skirts. Siplec (E Leclerc). Magu and Mr. as it mentions “Quota Holdings: We have sufficient quotas in all categories of USA. Zellers. Phool Fashion Ltd. Cabella’s. Zeeman Italy: La Rinascente. House of Frasers. K. Oxford Industries Inc. Reitman Israel: Fenomen Malaysia: Metro Jaya Spain: Mango. Europe and Canada. British Home Stores. maybe 2004. Clients52 USA: Kellwood (Sagharbor). Lane Bryant. Littlewood. Onyx Denmark: Kompagniet Switzerland: Manor. Adams.D.
57 Since Jyoti’s unit prices are mostly FOB. so they can only be thought of as a rough approximation. excluding the $12 million USD figure from the company profile. Malaysia) Europe 53 Financials. this figure includes the amount the MNC spends on shipping.50 1. costs.6-2. on average. duty. and cannot be used as an indicator of profit. FINANCIALS Turnover 12 million USD (either 2003 or 2004) Current year 18 million USD Other Financials Current year sales Rs. 54 These figures were estimated by the Managing Director in the space of 5-10 minutes.50 1. retain 75-84% of the sale of a retail item.3 million 60 $3 10-15% Labor 1.IV.6-2.000 (15.000.5% MNC’s that source from Jyoti. etc. 55 Based on the company’s average unit price of $5 USD.6 million 10 $0. which accounts for the inconsistencies. 700. Latin America. 56 Average retail markup is four ($20) to six ($30) times the unit price of the garment.6-2.6 million 10 $0.555 USD)53 Breakdown of Sales Revenue54 Est USD 2006 Per % Retail Garment55 Price56 Material Cost 9.57 V.5% Subcontracting Cost 1.5% Other Manufacturing 1.6-2.A. Page 51 .50 1.5% Overhead and profit 1.6 million 10 $0. Japan. BRAND INFORMATION Jyoti's Export Market % of Sales U. 10% 50% 40% Others (Canada.S.6 million 10 $0. were estimated by the Managing Director on two different occasions.50 1.
000 square meters. four are 1. and two are 600 square meters. which is not a production facility).000 square meters.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. primarily through the Triburg buying agency.000 square feet of land spread over ten different areas (including the registered office. but they do subcontract their fabric sourcing and processing. Subcontracting has not changed since quota phase-out. he stated that unit prices have decreased about 10%.000 square meters. Subcontracting Jyoti does not subcontract the production process. the company has about 20. VI. Two of the factories are 2. American Eagle. one is 8. Prices and other sourcing details are negotiated through the buying agencies. but later stated that overall they have remained stable. Did not mention any direct relationships. and Gloria Vanderbilt through buying agencies. It is notable that Jyoti subcontracts to a Shahi processing facility. Page 52 .58 Production System 58 See Standard Operating Procedures for detailed subcontracting information. INFRASTRUCTURE Company has nine production facilities. 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.
Sometimes Jyoti has people from UK and France do designs for them. Quality Control Jyoti Apparels has a quality control assurance team with both an in-house auditing scheme and third-party inspection. but primarily just take paper designs from buyers and converts it to clothing. feed of the arm. According to company profile. over locks. cross stitch/lock stitch button/ button hole/ snaps. washing machines and set of 84 stem boiler irons. perk-chloro plants. and brown machine-embroidered skirts for American Eagle. The researcher observed production of ladies’ white blouses for Emma James (Liz Claiborne).000 pieces per month.Uses an assembly line system. elastic insertion. shell stitch (Merrow). usually 80. belt attaching. lock stitch single needle and double needle. At production site visited.000-90. Managing Director and Assistant Production manager stated they were all skilled. Page 53 .000 and 300. 59 60 See SOPs for detailed quality control schemes. computer embroidery. between 240.59 Approximate number of workers (in all facilities) Position ~Number of workers Tailors60 1200 Fabric Cutters 125 Thread-cutters (use embroidery machines) 200 Pressers 75 Fabric and Accessories Storage Workers 40 Helpers 50 Accounts personnel 20 Miscellaneous 100 Total number of workers in all facilities: 1400-1800 Machinery (at all sites) Jyoti has 1000 Juki stitching machines. piccoting. Design/Sampling Small design department. Production Capacity According to profile.000 pieces per month. which varies according to the product. 8000 woven pieces per day and 1200 knit pieces per day. dry cleaning. fusing machines.
Ground Floor Plan Second Floor Plan There is also a basement floor with fabric and accessory storage. though the researcher was not able to obtain a photograph of the plan. and embroidery departments. cutting. Page 54 .
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. the researcher did not have time to write names) Magsons Export (a Jyoti Apparels Production Site) Finishing: One in-charge Finishing: One supervisor Finishing: Pressing Supervisor Finishing Quality Administrator (QA) Finishing Quality Checker (QC) Finishing: Quality and Production Floor After washing 61 Number of workers per department. Checking/ Finishing/ Pressing (40-50 workers) The finishing area had lines of workers pressing and folding clothes. This was the only department that had any female workers. three thread-cutters. directly facing cutting tables and below looking up at the finishing department. etc. The workers in this department were all male. Machinery includes one bandknife cutting machine and two straight knife machines. is data for production site visited.(Right) A view of the basement and ground floor. Washing (10-15 workers) Washing was located on the topmost floor of the building. Production (~180-190 Workers)61 on Second Floor Machinery includes about 200 Juki stitching machines. observations. There were no fans in this room.” which is the buying agency that many firms deal with. Document given to Buyer About Shop Floor Management (was displayed on shop floor. It did not seem as modern a unit as other top tier factories. Page 55 . There were two workers on the machines. Packing (10-15 workers) Did not observe department during visit. Sampling (15-25 workers) The fabric store had a sign reading “Triburg. two supervisors in an office in the corner. Some of the fans were broken or not on. with one cutting master. Fabric and Accessories Store. and the remaining workers helpers. Cutting (20-30 workers) in Basement There are four lines in the cutting area. one cutting assistant..” so they are barefoot when operating the computer embroidery machine.
and gave a copy of the minimum wage scheme for Haryana. production manager.O. there is an incentive scheme that depends on monthly shippings.000-90. Wise Tag check with care. First the Assistant Production Manager stated that they do not perform time studies. Then he stated that they conduct production planning meetings with the factory manager. After one day period. which is not subject to negotiation. extra button. Labor Turnover Estimated worker turnover per month at 20%. finishing supervisor. it is all left to selfdiscipline. Page 56 . merchant/buyer (for style). rather they calculate targets manually by hourly production rate. then the factory will give incentives. Benefits Production manager indicated that workers receive ESI and PF. The production unit visited usually produces 80.000 pieces per month. 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. while the rest of the employees receive a monthly salary. VII.Step 1—Care label. and cutting supervisor who set the production lines and targets based on manual time-studies. If workers exceed this by 1 lakh. The tailors and some finishing employees receive wages on a daily basis. Wage Setting Procedure For shop floor workers. according to the Assistant Production Manager. security tag Four operators Step 2—Initial Pressing One supervisor Step 3—P. supervisors conduct time studies evaluating the skill level and productivity of a new hire. 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. workers are offered a wage based on this evaluation. However.
while dotted-line boxed positions are factory-specific and subject to variance. Page 57 . Dismissal Procedure The Managing Director stated that they keep workers for 240 days and then change their workforce. The Assistant Production Manager stated that if workers are not productive. and the extent of their recruitment is posting signs on their front gates. they are given a one month notice so they can find another job and they receive a letter of termination. 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. Recruitment Policy Jyoti states that they do not use labor contractors. H. K. though the Director mentioned that workers learn on the job. because otherwise they become permanent and you have to pay them more.VIII. Usually 20-25 tailors take 10-15 days to train. HUMAN RESOURCE POLICIES There are no common policies across the plants. Management Structure Mr. Workers do not need experience per se. Magu Partner Founder/Chairman Mr. but managers observe productivity and hire skilled workers. The Managing Director states that they recruit people from Apparel Training and Design Centers. but these tend to be more middle management people. L. Worker Training Sometimes Jyoti trains workers during a lean period if there is time.
62 Security System New security measures have been implemented since the quota phase-out. the Assistant Production Manager stated that they do have committees. according to the Customers Trade Partnership Against Terrorism. no imports because would have to pay landed costs). and high transaction charges.S. There is a path behind the building to get to the main office over ripped metal sheets over grates. etc). he moved production to another site (now there is just the accounts staff and some sampling/design). tampering. but talked about them vaguely and though he stated that he could give me committee minutes. higher material costs (indigenous. though neither of them knew where the medical facilities were located. labor laws (especially the lack of hire and fire exit policy). BUSINESS BOTTLENECKS63 Main problems facing the industry are poor infrastructure (need better highways. they cannot transfer goods during “peak hours. which makes it difficult to meet deadlines. and they have monthly meetings. but no visitor’s pass. 63 Based on interview with Managing Director. ports. such as environmental. The first time security did not take my name in the confusion of finding a manager. duties. No common policies (with HR.S. U. He said they have the joint employee-worker committees required by law since there is no union.” trucks are only allowed to transport good between 11 and 4.) across plants except for buyers code of conduct. Second time took my name. For example. The production site visited did not have a union.. production. but did not give a visitor’s pass. He stated that old employees with a union do not work as hard. Page 58 . lack of good fabric processing machinery. or CTPAT model. However.Union The corporate office used to be a production site. traceability. 62 Based on interview with MD and Asst Production Manager. Worker Committees The Managing Director stated that they do not have any worker committees. he did not. A lot of money is invested into customs. anti-harassment. IX. Believes that there should be special customs lines at airports so that everything is not searched. companies have required them to uphold a more stringent counter-terrorism model of security in compliance with U. Medical Care There are doctors nearby the factories and first-aid kits in the production sites. Customs Security requirements regarding issues like preventing trespassing. Grievance Policy Procedure/Corporate Responsibility/ Codes of Conduct No information was obtained regarding a formalized grievance policy procedure. etc. they should run cargo through machines instead. high rate of interest. but the Managing Director stated that when the old employees formed a union. Does not have its own employee code of conduct. etc. etc.
They played solitaire. XI. and had everyone borrowing money from the bank and investing in huge factories. and did nothing the rest of the time. who also permitted the researcher to take photos. it was difficult to deal in huge quantities because of the possibility of mistakes in such a large order. 64 Based on interview with the Managing Director. Page 59 . He was very open in disclosing information. Post-quota phase-out resulted in a boom for Indian business. and one of them glanced at a time-study once.” Jyoti supports “special garment zones. but unit prices got too low. INDUSTRY COMMENTS64 Jyoti used to deal with Wal-Mart and Target. as they still have the edge on labor productivity and good infrastructure. production manager.X. etc. This year. so could not take orders from them anymore. as were much of the staff at the production site. Jyoti was an extremely open company in many respects. like American Eagle. Companies are very upset with the government’s “bureaucratic hurdles. PERSONAL EXPERIENCE When observed work at the production site. The Assistant Production Manager was almost never at the factory when the researcher came to the production site. before couldn’t have more because of quotas. or even leave their air-conditioned offices. because of the late summer. labor laws would be relaxed. The Managing Director is the Senior Vice-Chairman of the AEPC.) or some supervisors do anything.” in which infrastructure would be built up by the government. They’ve had to become very quality-conscious and price-conscious. the overseas vendors couldn’t sell their inventory. making access to plants easier. which is the capacity in which the researcher initially came to interview him. Phase out of quota system has brought in new buyers. etc. China is their main competitor. Also. did not see upper management (factory manager.
Udyog Vihar. 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. Gurgaon67 6. Noida. Gurgaon 5. New Delhi . 67 Unit visited by the researcher. Udyog Vihar. Ware Housing Scheme Kriti Nagar. Gurgaon. 479. Phase I. 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. Page 60 . and Bangalore. Gurgaon 8. Gurgaon 3. 133. Phase IV. BRIEF HISTORY68 Vijay Uppal. Gurgaon 7. Udyog Vihar. an interview with a General Manager of Operations. in 1977. including: 1. New Delhi 2. 506. Phase III. Gurgaon 2. 208. Mayapuri Industrial Area. Udyog Vihar. Gurgaon 4.4. and G. aluminum hardware. General Manager of Operations 236 Udyog Vihar Phase-I. 236. Udyog Vihar. Phase I. black iron. Phase I. 151. 68 According to the company website. I. 25172437. Phase III. Phase III. II. Manicandan’s CEC report. the current Chairman.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. 25172438 Fax: +91-11-25451549. 25454895 Contact person: Padam Vaish. 69 From an interview with the General Manager of Operations. 192.110015 (India) Tel: +91-11-25431408. Phase-I Gurgaon The company profiled has over ten manufacturing units. 66 According to company website. 239. G International was established in 1983 in Delhi and 1996 in Gurgaon. 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. CONTACT INFORMATION65 Registered Office: 2/2. Phase I. with one woven garments manufacturing unit in Delhi. Udyog Vihar. Gurgaon. Udyog Vihar. and ironmongery. including: 1. incorporated R and Co. Phase-I. 225. Udyog Vihar. Udyog Vihar. B-108.
to brands such as GAP.Crew. R Global was incorporated in 2002 at Bangalore.K.. Betty Barclay. waxy distressed/ oily nappaloans. Exports/Imports 100% exports. knit. Ann Taylor. anilines. women and children such as jackets. The R Group began producing knitwear when Gaurav Uppal joined the company management. ladies tops. Debhnams.. BASIC PROFILE70 Legal composition of the Company Virender Uppal is the Managing Director. The company has set up its own offices in Ludhiana and Tirupur in order to better source fabric. It specializes in (primarily) outerwear for men. Monsoon. Goat and Cow leather as well as nubuck.N.. Liz Claiborne. Clients The R Group sources to over fifteen countries. It has initiated a backward integration project by starting its own tannery in Hyderabad. Women’s Secret. Spigel. Land’s End. trousers. Including the original R and Co. Target. Charming Shoppe. J. Next. skirts. Inc. skirts etc. which will specialize in ready-made specialty shirts. Dillard’s Sears. cargo pants and shorts. women and children including shirts. Lane Bryant. Mervyn’s. while Vijay Uppal and Gaurav Uppal are Joint Managing Directors. Tommy Hilfiger. and leather high fashion garments for men. Mexx. Timberland. BCBG. The tannery has modern finishing technology for leather finishes of Sheep. the group includes eight companies. pants. Federated Stores.1992. The group launched a leather manufacturing unit in 1989 specializing in high fashion leatherwear under the management of Sunil Kapur. pants and shorts. Cortefiel. vests. Wal-Mart. The R group does not manufacture for the domestic market. Polo Ralph Lauren. semi anilines. antiques. III. The company has already started manufacturing leather accessories and is further expanding with a bigger factory planned in Gurgaon. Sigrid Olsen. semi-nubuck. and Marks & Spencer. Product Mix Areas of specialization include ready-made woven. May Stores. The R Group has recently established a fully integrated production line in Noida.Y. Etams Miss Sixty. Calvin Klein. Page 61 . D. Awards 70 According to the company website.
Export Performance Chart71 Other Financials No other financial information was obtained.S.A. FINANCIALS Turnover The R group has an expected annual turnover of US $ 85 million for the year 2005. U. U. From an interview with the General Manager of Operations. U.S. V.S.S.S. BRAND INFORMATION72 Export Market of the R Gro 10% U.S.IV. U.S. 90% Major Clients Brand GAP Macy’s Wal-Mart Dillards Liz Claiborne Federated Stores 71 72 UK and Japan Origin U.A. 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. Page 62 .A.A.A. U.A.A.
Production Capacity The R Group’s woven division has an in-house annual production capacity of 10 million pieces. 76 From an interview with the General Manager of Operations. Smaller companies are more likely to be direct orders. unless otherwise indicated. since they often don’t have established offices. and the buyer selects and negotiates the contract. though they occasionally take direct orders. 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). Wal-Mart usually orders the largest volume. Noida. For a more detailed quality control process. though there are fewer orders in the fall and winter. though not to an established company or to direct employees.75 Production System The R Group uses an assembly line system. However.5 APQ” quality check standard across the board.Buying Agency or Direct Contracts are mostly negotiated through buying agencies. see company website. Quality Control The General Manager of Operations stated they use a “2. The R Group’s leather manufacturing unit has an annual production capacity of 500. shows a sample range. 73 74 Including Wal-Mart. Taken from the company website. Unit Prices (paid to factory per piece of garment supplied) Avg Retail Markup Type Delivery Time 73 $6-8 USD 4 to 6 times FOB 60 or 120 days Unit Prices Since MFA Phase-out Unit prices have gone down 10-12% post-quota phase-out across the board. the company’s knitwear divison. VI. and Bangalore. G International takes indicative orders from the buyer. They set up a shelter (“shack”) for local tailors to do the hand embroidery. 75 From an interview with the General Manager of Operations.000 pieces. Page 63 . R Global. or sometimes they embroider in their homes. Gurgaon. Subcontracting G International subcontracts their hand embroidery. has an annual production capacity of 2 million knitted garments. G International does not use a recruiting agency or a labor contractor. there has been a 15-20% increase in orders. INFRASTRUCTURE74 The R Group has over twenty-two integrated manufacturing units in Delhi.
to the pre-production stage (layout and machine engineering. 79 From the company website. from the sampling stage (product and pattern engineering.000 workers. 700 per month extra. material flow).78 The R Group has a Research and Development department for the technical aspects of garment manufacturing. and worker welfare programs. They incorporate corporate social responsibility schemes into their productivity ideas.77 Machinery R Group’s production facilities use machinery at every point in the production process including designing (CAD). scholarships for workers’ children. Page 64 . operator training and skill analysis). 5% female). 77 After disclosing this information regarding the number of skilled workers.000. 78 From an interview with the General Manager of Operations. time and motion studies. to the production stage (work aids.79 VII. an estimate was approximately Rs. with 1200 workers at this site (approximately 95% male. operation research). 80 From an interview with the General Manager of Operations.Approximate number of workers in all facilities The R Group has a staff of over 10. G International has a total of 7. Departments No information on specific departments was obtained. They have incentive schemes for things like 100% attendance. Preliminary worker interviews revealed that this company was considered one of the worst factories to work for in Gurgaon. Plotters & Automated Cutting Machines) and fabric testing (fully equipped laboratory) and fusing. such as medical checkups. Productivity Schemes The company has production planning meetings in which targets are set and the workers do not participate. cutting (Digitizers. the General Manager refused to give any more specific numbers of workers. 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. 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. Virender Uppal Managing Director Founder/Chairman Mr. Overtime payment is Rs.Wages81 The wage amount excludes overtime payment./month) 2600 2750 2344 1893 2341 Wage Setting For shop floor workers. and 225 UV. Vijay Uppal Joint Managing Director Mr. Manicandan’s CEC report. Gaurav Uppal Joint Managing Director Mr. which is made on a different date than the regular salary. After a three-day period. 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. while dotted-line boxed positions are factory-specific and subject to variance. workers receive 12% PF and 2% ESI. 151 UV. HR Manager stated that wages increase after a year. none of which were visited by this researcher. which is reportedly not always paid. Page 65 . supervisors conduct time studies evaluating the skill level and productivity of a new hire. Units visited in his report are Gurgaon Phase-1 192 UV. 81 From G. workers are then offered a monthly wage based on this evaluation. Category (from pay slip) Tailor Sewing Operator Helper (8 months experience) Unskilled helper Helper (production) Wage (Rs. 15 per hour. which is not subject to negotiation. HUMAN RESOURCE POLICIES Management Structure Mr. VIII. though they do not always receive their PF once they leave the company.
no. Today. Page 66 . Workers receive a letter of contract. that they engage in the same kinds of recruitment. interviews applicants. like the labor norms in China. Other Human Resource Policies No information was obtained regarding a formalized dismissal procedure. The General Manager stated that there are common policies across the plants. According to G. IX. grievance policy. we do more incentive programs and get better performance out of our existing workforce. No other information about the R & D department at this specific facility was given. So how do you overcome these issues? General Manager of Operations: Oh. eco-responsive corporate citizen that is Shaping a Better Tomorrow for everyone. well. Researcher: Is labor flexibility or the lack of hire-and-fire policies an issue? General Manager of Operations: No. or a union. then tests worker productivity for an hour and a half. Medical Care No information was obtained regarding on-site medical care. More than local labor laws. He stated that it should be looser. buyer codes of conduct are hurting business because they are more strict. 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. not anymore. Researcher: But you said you didn’t use labor contractors. Recruitment Policy The facility posts signs on gates. Company G and the R Group does contract temporary laborers and subcontract to a labor contractor. 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. Security System No information was obtained regarding a security system. These problems are taken care of with labor contractors.” The company has a manual code of conduct that the General Manager stated is given to each employee. customer friendly. Training usually takes one or two days and is done through the research and development department. BUSINESS BOTTLENECKS The General Manager stated that buyer requirements like double pay during overtime are holding the industry back. Manicandan’s CEC report. [the R Group] is seen as a highlighted-tech.Worker Training The facility sometimes trains workers if the operation is difficult. However. worker committees.
The researcher was directed to the General Manager at a G International plant for an interview. he initially would not let it leave the building. In general. He implied it has limited use after the quota phase-out. and he was much more reserved and suspicious. Virender Uppal (the MD of the R Group) is a former Chairman of the AEPC. brief way. which makes productivity more difficult to increase. but he answered questions in a more direct. Because they are trying to increase productivity. especially in regards to quotas. G International is working on converting to a single product system within the next two or three months (August 2006). PERSONAL EXPERIENCE The R Group was extremely difficult to both interview with and extract information. It would be better to simply show up or not leave an option of calling before coming. the Northern area of India is more embroidery and hand-work intensive and is multiproduct. as it would tell them new government policies and how to best utilize the system. he asked “why do you want to know that” and refused to give much more information past that. They are also setting up a leather accessory factory at Gurgaon.” The South is also usually single product. Page 67 . Furthermore. When asked about the number of skilled workers. He refused to schedule an interview solely with the HR Manager. Although the researcher obtained a employee code of conduct handbook. though several follow-up interviews were scheduled. every one of them was canceled by the General Manager. The work culture in the south is “different—more productive and efficient. and avoided any other types of follow-up including the suggestion of a phone interview. The General Manager stated that the AEPC was much more useful before the MFA phase-out. INDUSTRY COMMENTS The R Group is in the process of setting up a backward integration project for their knits division.X. General questions about labor laws or productivity issues usually prompt details and complaints. XI. who was not at the factory when the researcher visited.
and an interview with the Company Secretary. Udyog Vihar. Gurgaon 2. The company structure of Pearl Global is extremely unique. Gurgaon II. Gurgaon 4. Phase-V Gurgaon – 122 016. Gurgaon 3. 446. Community Centre Naraina Industrial Area Phase-II New Delhi – 110 028 Tel : 011-51417680-82 Corporate Office82: 446 Udyog Vihar. PEARL GLOBAL LTD. and its first manufacturing facility was established in 1989. business began in the 1980s. I.com Registered Office: A-3. 222. Chairman deepaks@pearlglobal. G. Phase I. Manicandan’s CEC report. Phase V.com Jayant Sood. From an interview with the Chief Finance Officer.” The House of Pearl is focused 82 83 Unit visited by the researcher. Page 68 . 870.5. 138. Udyog Vihar. online business publications and press releases. as it includes all parts of the garment industry under the “House of Pearl. In 1993 it became a public limited company.pearlglobal. CONTACT INFORMATION Contact People: Deepak Seth. Chief Finance Officer Tel: 91-124-4308201 rishiv@pearlglobal. Company Secretary Tel: 95-124-4308164 E-mail: jayants@pearlglobal. BRIEF HISTORY83 Pearl Global was incorporated in 1979. The information in the following company report was obtained primarily from an interview with the Chief Finance Officer.com Rishi Vig. Udyog Vihar. Phase I.com Production Units: 1. Udyog Vihar. Haryana Tel : 91-124-4004086/87/88/89/90 Fax: 95-124-4004067/85 Website: www. Phase V. the company website.
etc.E. 84 85 See company website for list of shareholders. Nex86. From company website. Besides having been elected to the Executive committee of the Apparel Export Promotion Council (A. BASIC PROFILE Legal composition of the Company Public limited company. brand “Kool Hearts. bottoms. trousers. It also has businesses in Hong Kong (NorWest) and the UK (Poetic Gem). H & M85.on the apparel sector with manufacturing bases in India (primarily Pearl Global Ltd. including blouses. he has been inducted to the Executive Committee of A. Page 69 . skirts.S. Clients Abercrombie & Fitch. as a Special Invitee. JC Pennys. Product Mix Areas of specialization include: India: woven cotton and value-added cotton. GAP (including Banana Republic and Old Navy). $200 million. The Chairman of Pearl Global established a fashion and design academy. warehouse and distribution. children’s.” 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). Karstadt/Neckermann.) and a global network of business associates and customers. which together yield a combined turnover exceeding U. Charming Shoppes. basic stuff. NorPlanet Pearl Global has manufactured women’s. t-shirts. III.) for the year 1990 ..E. Lerros.C. nightwear dresses.1993. George (Wal-Mart). dresses. and outerwear. marketing units in the U. vests. It offers full services to large retailers with the chain broken into business units that cater to different product lines. The House of Pearl includes designing and manufacturing units. Dillards. suits. Marks and Spencer. ethnicwear. Siplec. Castromen. Inc. NorPearl.S.84 Exports/Imports 100% exports. 86 From an interview with Chief Finance Officer. Wal-Mart. children’s and men’s shirts. He has successfully promoted and established the fashion apparel brand "Lerros" in Europe. Liz Claiborne. and the UK. He has been actively involved with the development of readymade garment industry in India. Pearl Global does not manufacture for the domestic market. Kohls. The company recently entered into a business and education partnership with Babson College in the U.P. stain sealed garments using goretex and acquatex.P. is establishing a U. Esprit. shorts.S.S. Bangladesh: low cost.C. Pearl Academy of Fashion Domestic.
Towers.41 crore in 2004-05].IV.6. FINANCIALS Turnover $200 million worldwide before quota phase-out.5 crore [from 120. J. Rotunda Building.telegraphindia. Dalal Street Mumbai .87 $400 million in its worldwide operations post quota phase-out.com/1060712/asp/business/story_6465123. The revenue of the company during the year was up 31.” <http://www.asp>. New Trading Ring. G-Block Bandra – Kurla Complex Bandra (E) Mumbai – 400 051 4.indiatimes.88 Net profits are 234% up.C/1. Page 70 .380015 87 88 From Chairman’s Message on company website.400 001.com/articleshow/1690384.110 002 2.”90 See website for detailed financials. In 2005-06 the company invested Rs 29 crore to augment its production capacities in Gurgaon and setting up a new unit in Chennai. Bombay Stock Exchange Limited 1st Floor.5 crore in the previous year. 3. Sahajanand College Panjarapole. The Delhi Stock Exchange Association Limited (Regional Stock Exchange) DSE House 3/1 Asaf Ali Road New Delhi .cms> and “Corporate Briefs: Pearl Global.9 per cent to Rs 159. Ahmedabad . Pearl announced a dividend of 30 per cent for the year [subject to shareholders’ approval]. National Stock Exchange of India Limited Exchange Plaza.” “The company’s operating profit was Rs 17.1 crore compared with Rs 7. Babson College press release. 29 June 2006. 89 From an interview with the Company Secretary. Ahmedabad Stock Exchange Limited Kamdhenu Complex Opp.9 crore in the previous fiscal]. 3. P.43 crore[ from Rs.89 Other Financials “Pearl Global posted 88 per cent year-on-year increase in net profit in 2005-06 to Rs .” The Economic Times: Garments/Textiles. <http://economictimes. 5th Floor Plot No. Stock Exchanges where the securities are listed: 1. 90 “Pearl Global net up 88%.
EU and UK Major Clients Brand JC Pennys GAP (incl ON and BR) Charming Shoppes. Journalist. Apologies for the delay in replying.S. “Dear sir. 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. To grow the business at this rate Pearl has had to show a "can do" attitude. They now supply us with a variety of casual. 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. 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). before the cost justified it. From an initial order in 2001. 91 From an interview with the Chief Finance Officer. Inc.A. Our Customer's perception This reply has come from ASDA Walmart to a query of a Sr. They have supported our growth by putting in the infra-structure to service our needs. BRAND INFORMATION91 Pearl Global’s Export Market 40% 60% U. the Chief Finance Officer stated that they are engaged in strategic partnerships with six of them.they have grown to be our second largest supplier. woven. and jersey product across all ages and genders from a variety of countries in the Far-East and Indian sub-continent.knitted. Page 71 . 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.V.
We want style. flexibility to change our minds as to what we want right up to the last minute. Best regards. Currently I am doing a corporate feature on the House of Pearl who is your vendor. * For how long have you been interacting with the House of Pearl and what has been the business relationship? * As a supplier how reliable are they in terms of delivery schedule. I honestly believe that to supply fashion retailers at the volume end is one of the most difficult businesses to be in . For Pearl to grow their business with us. Executive Editor. and where our distribution network has creaked under the pressure. UK I am a journalist from India writing for India's No. Mr. 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.quayle@wal-mart. 1 business publication. I feel that we can have an honest conversation with Mr. and delivery have had to be a given. Senior Sourcing Manager -Kidswear. As price deflation has become a way of life in the UK clothing market. and any issues that have arisen have been resolved immediately and taken as learnings to provide a better service going forward. quality. retailer. ASDA Wal -Mart. Deepak Seth has also gone beyond the factory gates to work with the community and put something back. it is critical for us as a business to deal in the right way. Business India” Page 72 . Allan Quayle General Manager-Strategic Supplier Development George Clothing Phone 00 44 (0)1455 264409 Mobile 07779 700695 e-mail allan. Below are a few points which I hope you would take time off and reply to at the earliest. Lancelot Joseph. has a right to exploit the people who make the product we sell. 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. Finally.com --Original Message-Dear Ms. Heather Moreton. Quality. no-one whether it be store customer. or supplier. We pride ourselves at George that our ethical standards are rigorous. hence would like to have some of your observation/views/comments on the business house and your relationship. offering us product direct from factory or landed delivered if the situation demanded. 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. 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. Thanks and regards. so Pearl have stepped in to provide solutions and support.Growth on this scale inevitably creates major head-aches for the supply-chain. price.
one in Indonesia. VI. 50% FOB. and one in China. Design/Sampling and Product Development Designs are mostly developed in-house.Buying Agency or Direct They used to contract through buying agencies.S. Sometimes designers from the UK and the U. but now they have developed direct relationships with their long-term business partners. Production System Pearl Global uses an assembly line system. 5% freight. The House of Pearl’s research and design department prepares a collection of high fashion styles for each season. The House of Pearl has over 150 factories across Asia. Every stage of the production line has its 92 From an interview with the Chief Finance Officer. They have six design factories. yarns. Markup (days) High of $10 $6-7 USD 3 to 4 times 60 to manufacture. which are shown to buyers in advance. Quality Control Raw material including fibres.S. Pearl Global uses labor contractors. Page 73 . The embroidery tailors either come into the facilities to perform the work or they send it. Subcontracting Sometimes Pearl Global subcontracts hand embroidery. India: Unit Prices (paid to factory per piece of garment supplied) Range Average Retail Delivery Time Type India U. A few years ago the delivery/production cycle had to begin 18 months in advance. now it is 6 months. one in Chennai and the others in Gurgaon. but it mostly in-house. who then chooses or modifies the styles. 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. Production Capacity Pearl Global has 20 million pieces in-house capacity and 120 million pieces capacity all across Asia. INFRASTRUCTURE92 Pearl Global has five or six production facilities in India. are consulted to developed in-house patterns. They are working on doubling their capacity in the next 2-3 years. two of which are in Bangladesh. 90 incl. dyes and chemical are thoroughly checked before they are fed into the manufacturing process. Pearl Global then manufactures the style.
WORKING CONDITIONS Wages and Benefits The Chief Finance Officer stated that sometimes Pearl Global pays workers above the minimum wage.” as workers do not have a long-term commitment to the factory. tensile strength. etc. Manicandan’s CEC report (and confirmed by the Chief Finance Officer). After workers receive their monthly salary they see a “rise in absenteeism.own set of detailed monitoring system. Gurgaon 500-600 workers 222. count strength product (CSP). Every set of fibre (polyester. Departments The researcher was not able to obtain information regarding the specific nature of the assembly line or tour the factory. Udyog Vihar. Gurgaon 2500-3000 workers 446. Udyog Vihar. 93 Numbers for the units at 446 and 870 were estimated by the Chief Finance Officer while the other numbers were obtained from G. novelty yarns. Gurgaon 2000-3000 workers Machinery Pearl Global has an estimated 2000 machines for every part of the production process. Polyster viscose and cotton yarn is tested for count. as neither an HR manager nor a production manager was available for interview. CRA. Udyog Vihar. Phase I. single ply yarn is also checked on the uster machine to ensure consistency in yarn quality confirming to norms of the uster statistics. Productivity Schemes Pearl Global gives out “best worker awards” and “gold stars” for productivity. fibre bundle strength. but did not give specific numbers. which is sourced from outside is tested for fibre fitness micron ( fibre diameter). pilling. uster percentage and impurity. viscose tops and special fibre). Phase I. Approximate number of workers in all facilities Pearl Global has approximately 6000 workers in India. and if they have a low level or no absenteeism they also get an incentive. fibre composition percentage (blend %). Phase V. They are thinking of switching to a piece-rate system instead of a monthly salary because “with the current labor laws” you cannot take disciplinary action for low levels of productivity. Udyog Vihar. twist per inch. moisture regain percentage and finish percentage. Gurgaon 600 workers 870. ply yarn. If a worker stays for six months they get incentives. Sretch yarn. VII. Phase V. Page 74 . Production Unit Number of Workers93 138. drape and fastness to light washing and rubbing and slippage. The finished yarn is tested for residual shrinkage.
ESI and PF. They did not have a HR manager before this. Manicandan’s CEC report. The union is not effective in addressing the problems of the workers. 4000 per month Rs. VIII. if there are no orders or “no work” employees are told not to come.Position Finishing supervisor (7 months experience) Tailor (8 years experience) Tailor (5 years experience) Wages94 Rs. & Company. 98 According to G. 2006.” but there are not enough “available. 96 From an interview with the Chief Finance Officer. 3500 per month Rs. Out of 500-600 workers only about 90 are in the union. 100 more and a 20% bonus for divali. who must first pass a hand-eye coordination test and then spend twenty days on the training line. 3000 per month Every year workers receive Rs. Overtime95 The facility at 222 UV has two shifts and thus there is little overtime. who are not entitled for ESI and PF.” and it is not convenient as Pearl Global would have to provide transportation.” However they are working on providing the necessary infrastructure (such as transportation) so they would be able to hire more women workers. 95 Page 75 . Worker Training There is a training line for new workers. They contract temporary workers through R. There is a union in the facility at 138 UV. 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 used a mix of outside agencies and consultants. Dismissal Procedure. and the head of the union is not an employee at the facility. but if it is mixed employees then it becomes a problem with issues of sexual harassment. though sometimes workers work double shifts and are paid double. Furthermore if “it was all women it would be fine. Manicandan’s CEC report.K. According to G. and Indonesia is lower. For their HR strategies. There is no sexual harassment 94 According to G. and Sukumar Pride. Recruitment Policy Pearl Global uses labor contractors and specifically stated they use R. Union and Worker Committees98 There is no job security. Manicandan’s CEC report. 97 From an interview with the Chief Finance Officer. The labor turnover in Chennai. Bangladesh. although being a “permanent” employee will entitle a worker to an identity card. HUMAN RESOURCE POLICIES97 A new HR manager is to be hired as of August 15. K. & Co. All but temporary workers are covered by social security schemes.
Sustainability and Profitability of revenues year after year. “ethnicwear” or design. so they are working on capitalizing upon the existing capacities. Pearl Global has a very effective HRD system they have build an empire highly trained and skilled manpower ready to face the dynamic changes.committee. Deepak Seth): “A future that shall be built with the same strategy that has shaped our past. etc) helps immensely. as there is different management at each facility. there are sexual harassment committees. The Company has built-up very effective TEAM WORK…The primary purpose of Corporate Leadership is to create wealth legally and ethically. The unit at 222 UV does not have a union. X. According to the Chief Finance Officer. 2006. Investors. This translates to bringing a high level of satisfaction to five constituencies Customers. The House of Pearl has enough infrastructure to double turnover. The Chairman Pearl Global espouses corporate responsibility ideals on its website (Chairman’s Message. Source the best from the World to deliver the best to the world by following ETHICAL MANUFACTURING AND TRADE PRACTICES. Corporate Responsibility/ Codes of Conduct According to the Chief Finance Officer. From an interview with the Chief Finance Officer. The company has set up Pearl Academy of Fashion. as mentioned previously there is a new HR manager slated to begin on August 15. They want to integrate all offices with an ERP 99 100 From an interview with the Chief Finance Officer. INDUSTRY COMMENTS100 Commented on the strengths of the North.” IX. 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. which have monthly meetings. Seasonality is an issue. which holds it back.e. they have set up a medical treatment facility in the spirit of social responsibility. orders are fewer in July and August. and teams are set up to work on weak areas in working conditions. The company also operates a school by the name of 'Little Pearls' in Delhi. Vendors and the Society-at-Large. Employees. which is missing in the North but the value-added garments (embroidered. Working on having uniform HR and productivity strategies. a fashion design and manufacturing technology institute. The motto of every Corporate Body is to ensure Predictability. BUSINESS BOTTLENECKS99 The industry is regulated by the supply of cotton. i. Page 76 . Pearl Global just hired a lawyer to help analyze and plan financial structure. The strength of South India is its efficiency. Labor cost is still competitive (in terms of the world market). implying that the AEPC is not as useful post-quota.
As a result of the close interaction between the industry and the institute. in India and abroad. Hong Kong Polytechnic University. Partner. and Germany's LDT Nagold. like in “Pearl Global to merge two companies. Chairman. The company is setting up new facilities in Dhaka (Bangladesh) and a design center at Chennai. who constantly review the institute's performance to ensure that the programmes are practical and industry-oriented. Deepak Seth. Lalit Gulati.com/index. 101 Page 77 . It has a validation agreement with the UK's Nottingham Trent University (NTU). The House of Pearl is planning to get into retailing and is working on an industrial engineering department and setting up software SAM. the Netherlands' Hogeschool van Amsterdam.pearlacademy. Mr.16 equity shares of the company for every share in City Estates was recommended by the board at the meeting.cms>. its alumni hold responsible positions in more than 300 leading organisations. Managing Director.com/articleshow/1404688. and is located in the Okhla Industrial Area (Phase II) of New Delhi. one of the top two in this field in the world. and London Centre for Fashion Studies. Retailing. at Naraina. Pearl Global. such as the UK's Chelsea College of Art & Design. It provides training programs in the areas of Fashion Design. The Advisory Board of the Academy consists of leading exporters. Mr. industrialists and academicians. <http://economictimes.”101 Pearl Academy of Design Education-Pearl Academy of Fashion http://www. 7 Feb 2006..htm Advisory board includes: Mr. London College of Fashion. 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.system.” The Economic Times: Garments/Textiles. Merchandising. R & Company.Virender Uppal. Modelama Exports The Pearl Academy of Fashion was set up in 1993 by Pearl Global Ltd. It has links with acknowledged international leaders in fashion education. Bolton University. 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. Production and Computer Aided Design…The Academy has opened its second campus in New Delhi.indiatimes. 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).
USA and Pearl Global Ltd. Executive Director. have signed a strategic collaboration on a full range of activities to promote world class research and education of entrepreneurship in India. India.. Mass.—ranked #1 worldwide in Entrepreneurship Education---will advise Pearl on the strategies.” 102 Partnership with Babson College Pearl Global Ltd. Research in India Babson College. Current plans are for first classes to be admitted in the fall of 2008.’s premier business school). traveled to Delhi. Bombay Dyeing. learning. workshops. joint information sharing. Both institutions will identify mutual exchange opportunities—on-line access to library resources. private business management institution at two campuses near New Delhi. and procedures necessary to build an Entrepreneurial foundation and curriculum. has set up a business partnership with Babson College in Boston (U. This trust is in the initial stages of developing a new. India. Advises Pearl Global. requirements. Mafatlal. Sonal Garments. Richa & Co. Babson’s Provost. and Professor Ash Rao will present the final reports to Pearl. was also present. Babson faculty will provide workshops for Pearl faculty and staffing. and assessment standards. Bhupatkar. * An overview of the entrepreneurship curriculum.. links to websites. The collaboration is designed to expand over the next seven years. Orient Craft. and will visit regularly to monitor teaching. Pearl Global Ltd. Chairman of Pearl Global and Dr. Babson’s consulting reports will include: * The general curriculum for undergraduate and graduate programs. Robert Eng. USA.Benetton. The Pearl School for Business Studies will grant Bachelor of Business Administration and/or Masters of Business Administration degrees with a focus on entrepreneurship. Page 78 . advisor to Pearl Global’s education trust. * Student report on the student admissions process and co-curricular activities. on New Business School: Two Form Strategic Collaboration to Promote Entrepreneurship Education. * Faculty report including Babson faculty profiles and approaches to faculty development. processes. The Asia Institute at Babson. Babson College in Wellesley.. internship facilitation. distance participation in projects.. Ponds (India). The Babson college press release: Babson College. Michael Fetters. Vivek Jain. Pearl will shape this information into a comprehensive Entrepreneurship curriculum to meet the particular conditions. Shoppers' Stop and Ebony. and stipulations of the local region in India. India last week for the official signing ceremony with Deepak Seth. 102 From the website of Pearl Academy of Fashion. Pearl Global Ltd. RMX Joss. President of Babson’s Alumni Club in India and Chairman of DCW Ltd.S.—a $400 million company exporting garments to Europe and North America—has formed a non-profit educational trust. among others.
edu/Newsroom/Releases/Babson-and-Pearl.”104 XI.such as Jaipur. The Company Secretary was not useful in arranging interviews with other personnel who would be able to answer what he could not. is understood to have chalked up a plan for its presence in domestic retailing. the recent fall in price makes it an attractive long-term bet. and grants MBA and custom MS and MBA degrees through the F. Olin Graduate School of Business at Babson College. Kool Hearts label. 103 Babson Newsroom Release. It was difficult to obtain an interview by calling the numbers on the website.babson. <http://sify. Babson Executive Education offers executive development programs to experienced managers worldwide.” Babson College in Wellesley. Page 79 . “According to industry sources. “We are privileged to work with Pearl Global.. <http://www3. is recognized internationally as a leader in entrepreneurial management education. a company that shares our vision to advance Entrepreneurship knowledge in India.” said Fetters. the company is in the process of booking retail outlet spaces in cities across northern region .103 Domestic and International Retailing In addition to the U. though the researcher was not able to obtain a copy without signing a confidentiality agreement.cfm>. 24 April 2006. For information. Ltd. visit www.com/finance/equity/fullstory. which is setting up a joint venture manufacturing facility for soft fabrics in China to secure part of its supplies. The interview consisted of a powerpoint presentation on the structure and capacities of Pearl Global. Babson grants BS degrees through its innovative undergraduate program. however after e-mailing the Chairman. growth prospect remaining high. 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.. Pearl Global is getting into domestic retailing: “ [Pearl Global].W. Gurgaon.edu. an interview was promptly arranged with the Chief Finance Officer.“This collaboration is an important step in Babson’s journey to globalize Entrepreneurship Education.” 26 Oct 2005.S. “According to market analysts. Deepak Seth.babson. Mass. Chandigarh and Lucknow.php?id=13972072>. 104 “Pearl Global bullish on Q2 numbers.
7-D Maruti Industrial Complex Sector-18 Udyog Vihar. Udyog Vihar. Managing Director. Phase IV. Gurgaon. 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. 14-A Maruti Industrial Complex Sector-18 Udyog Vihar. 68. Haryana 4.6. He had a friend from London who was buying from importers and selling the goods to specialty shops. 2341110 2. mobile: 9871496362 Corporate Office: Orient House F-8 Okhla Industrial Area. Page 80 . but the company was not incorporated until 1978. 15000 ($300) from his father. Manicandan’s CEC report. I. but it does not contain any information beyond the heading: Orient Craft Limited: Embroidery. Haryana Tel: (+91-124) 5090800. BRIEF HISTORY106 Business began in 1972. and 105 106 First two units visited by the researcher. CONTACT INFORMATION Contact Person: Sudhir Dhingra. Gurgaon. online business and economic articles. found some tailors to make the shirts. Dhingra was a law graduate from Chandigarh with no experience. has no website. the largest computer embroidery facility in the Indian subcontinent. Khansa Road Sector 37. Haryana105 3. most of the information is from the interview. 13.com/. Dhingra borrowed Rs. Udyog Vihar. 110020 (India) Tel: (+91-11) 26818247. Gurgaon II. 26818249 Website: Orient Craft Ltd. An ISO 9001-2000 Unit: “Orient Craft Embroidery Division. so he could use the proceeds as seed capital.000 shirts made in India. 2343262 Fax: (+91-124) 2342042. ORIENT CRAFT LTD. Phase-1 New Delhi. From an interview with the Managing Director. Gurgaon-122015.com Production Units: 1. who asked Dhingra to get 1. Founder/Chairman Personal secretary Meghna. There is a preliminary website set up for its embroidery division at http://www.ocemb. a company profile given to the researcher by the Managing Director. Plot No.” E-mail: orient@orientcraft. Unless otherwise indicated. and preliminary interviews from Gurgaon workers. G.
15000 plus a small portion of the profit (Rs. with more than 350 modernized factories. Then. they’re not looked up to. the Indian-inspired fad went away and he had to spend six to seven months traveling to get rid of inventory stock. ft. ASSOCHAM. Dhingra states that others followed Orient Craft’s example. when he got back to India.com/iftf. 107 Page 81 . found another buyer. he decided to break into the industry. 200-300 people. 6000 ~ $133).” His father gave him one year to start up business. Liz Claiborne sent an American technician to help Orient with worker training and modernization.”107 Biography for Sudhir Dhingra for the International Fashion Technology Forum. as Gurgaon is the single largest manufacturing sector in India.000 pieces and an annual turnover of around $40-50. Then while in Germany. CMAI. he hired more people. When he returned. and others.000 sq ft. Orient subcontracted until the early 80s. he was able to observe fashion trends and the kind of things that were selling. and restarted business with a trial order of 1200 pieces for a customer in L. 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. with 1800 people.A. Dhingra “is also Executive Member of the Advisory Committee of AEPC and an active member of reputed associations such as FICCI. When his friend repaid him the Rs. CII. May 2006. not like today. During his traveling. In the 1990s Dhingra set up a bigger plant with 100 machines. you had to be a tailor to be in the garment industry. though he stated that it was difficult to actually get the money from the government. During this traveling. he estimated a production capacity of about 150. only now it is 136. Both were wholesalers who sold to specialty stores. “At the time. The first plant in Maruti Industrail complex was the first plant in India that was over 80. CIAE. with 3500 people. and he rented a house. 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. and Germany buyers.000 sq. The first Gurgaon plant was established in 1993. set up a pressing line on the dining table and the production line in the garage. he obtained a factory processing site of 240 sq.htm>. <http://www. not just in the limited Indian context. And being a tailor is like being a janitor. Orient’s first factory was established in a village in Hauz Marg and it is still there.niftindia.shipped them to London. yards and outsourced actual manufacturing. Orient got clients by word-of-mouth from their L. then consolidated supply chain into one roof. In the mid 1980s. National Institute of Fashion Technology. they’re looked down upon. Then after a few years.000. and that plant is still there. he also encountered some buyers. During the first few years.A. Dhingra wanted to improve the standards of quality and infrastructure to globally competitive standards.” Dhingra wanted to move production out of the village and industrialize the area and put as many skills in-house as possible.
Oasis Stores. Banana Republic.K. Orient used to source for Wal-Mart in back in 2003 but has since stopped. Susan Bristol. 2001. Page 82 . was set up in 1978 and has been India’s number one garment manufacturer and exporter and is the recipient of the ‘Gold Trophy’ given by the government of India for highest global exports out of the country for 1977. and jeans). men’s shirts. LizWear. Dillards Stores. and gave 20% to his nephew and 20% to his friend. Jones of New York. Liz Claiborne (LizDresses. Marks & Spencer. ropers. J-Crew. K. Ralph Lauren (Lauren. Esprit. outerwear. Tommy Hilfiger (men’s. dresses. Loft. because of “language and cultural differences” with the European business partners. Sudhir Dhingra (Chairman and Managing Director).Hook. Dockers. Mr. Now he owns 60% of the shares. Product Mix Areas of specialization include blouses. knitted shirts/t-shirts. 2000. sportswear. BASIC PROFILE Legal composition of the Company Orient Craft is a privately owned company but deemed public limited. Ann Taylor. and Marks & Spencer. Anoop Thatai EOU Information The company has three 100% export oriented units (which can import all raw materials and trims free of duty). Awards Additional information: Orient Craft Ltd. Dhingra states that Orient is the only factory in India to manufacture for Marc Jacobs and Louis Vuitton. is looking into breaking into the domestic market. skirts. Rocawear. pants. Dhingra was the sole proprietor. ELM Street. 1998. Clients Armani Exchange. coordinates.G. Old Navy (women’s). Limited. women’s. Next Retail Ltd. The company also has a specialized home furnishing division that sources soft furnishing products such as pillow and duvet covers to brands such as William Sonoma. Polo Jeans). Orient Craft Ltd. Zara. However. GAP (kids). shorts.III. and 2002. J. Exports/Imports 100% exports. Express. Calvin Klein Jeans. Diane von Furstenberg. Owners/Directors Mr. Donna Karen. Abercrombie & Fitch. Macy’s. kidswear. Lands End. Mr. Up until 10 years ago.. The company does not do that much business with Zara and Miss Sixty (Italy). Marc Jacob. boys’. jackets. LizSports). Kohli.
02 V.08-0.uk/2/hi/south_asia/4294679. Kaushik. which has doubled in a year and a half-as mentioned by NITRA president-used to be Rs. Europe 80% Canada 108 Basu.S.03 0.8-24.12 0. so they can only be thought of as a rough approximation.02-0.50 $1.20-1.00 $1. BRAND INFORMATION Orient Craft's Export Market 5% 15% U.00 % Retail Price111 0.8 million 16. now it is Rs. 112 Overhead (mostly energy. 9 per unit) 113 Dhingra stated that Orient usually ends up with half of the target profit. 109 These figures were estimated by the Managing Director in the space of 5 minutes. 2 March 2005.A.02-0.co. Breakdown of Sales Revenue109 Est USD 2006 Material Cost Labor Overhead112 Profit (target)113 82.8 million 19.03 0.” BBC News.00-6. 111 Average retail markup is five to six times the unit price of the garment. <http://news.5 million % of Sales 50-60 12-15 12-15 10 Per Garment110 $5.50 $1.IV.20-1.stm>. 110 Based on the company’s average unit price of $10 USD.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. despite more competitive pricing.5-99 million 19. 742 crores) Other Financials Last years profit was $8 million (40 crores).bbc. Page 83 . “Winners and losers in textile shake-up. 4 per unit.
they made one skirt for Polo Blue that will retail at $1199 (did not state unit price). 116 According to Dhingra.uk/2/hi/south_asia/4294679.” BBC News. but they will open up their own office soon.) stated that on the date of the author’s visit in 2005. depending on the quota category and how much they were previously restricted. European companies pay higher unit prices). <http://news. 115 Restarted business with Macy’s 2 years ago. There has also been an expansion of volumes and an estimated 15-17% growth in orders.stm>.50 USD (from US companies. 2 March 2005. Recently.co. like cotton pants. however. Orient tends to deal in higher quality and higher unit prices and lower volumes. 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. but they just opened an office last year. however an article written for the BBC in 2005 (Basu. Dhingra states that it is easier to deal with buying offices. 114 Dhingra stated that Orient manufactures 80-90% of what Diane von Furstenburg (high-end maternity clothes) sources from India. Some things have increased greatly. Dhingra stated that Orient’s average unit price is $10. Marks & Spencer is currently direct. There has not been a huge shift in the composition of customers. Orient would not take a Wal-Mart order. Orient was manufacturing skirts that would be sold for $4 USD per piece.bbc.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. Limited used to be mostly direct. the industry-wide average unit price in India is $3. “Winners and losers in textile shake-up. Kaushik. however used to source to them about 10 years ago. Page 84 .
Orient has put a lot of human resources into product development and now boasts 900 product development personnel at 5 different locations. In 2003 Orient established a manufacturing complex of 340. Udyog Vihar. the company had only 17 production facilities spread over 600. The second plant visited was 380.”118 Subcontracting Orient does not appear to subcontract. According to the company profile. in 2003. sometimes 25-45. 117 118 Plot No.117 Previously. 13. Orient makes 130. but other fabric from silk.VI. Orient has created a niche with their diversified product line (mostly cotton/knits or wovens. As Dhingra stated.000 per day120 2006: In an average day. It picks up fashion from around the globe.000 knitted per month 2005-2006: 720. even a little bit before. as traveling became restricted and Indian companies needed to build a competitive advantage. Haryana. which was at the time the “single largest multi-product manufacturing plant in the whole of India. 720.000 sq. 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.S. and one large plant is located in Noida. though it does use labor contractors. National Institute of Fashion Technology. Production Capacity 2002-2003: 480. 1. May 2006. and creates new designs for each season. <http://www. INFRASTRUCTURE Company has 21 production facilities.000 woven per month.200. whose samples are then sent to potential buyers.000sq. of which four are in Delhi.000 pieces. in and around Delhi. after 9/11. 120 Biography for Sudhir Dhingra for the International Fashion Technology Forum. companies.000 sq.htm>. (unclear if it is the same facility visited) at the cost of over $10 million USD. 121 According to an interview with the Managing Director. ft. product development became the key thing that most Western companies were looking for. 119 According to the company profile.com/iftf. Khansa Road. ft.000 woven per month. gives feedback. Sector 37. Orient also deals in some very small volume orders for high-end buyers like Oil Lily.000 pieces. ft.121 The average order size is 10-12. six in Gurgaon. Page 85 .000 or even 100. Orient has a display store in NY on Park Avenue that it opened up 3 yrs ago. Production System Orient Craft uses an assembly line system.000 pieces and production capacity has grown at least 25% over the past year. chiffon to denims and outerwear). and employed 5000 people. Gurgaon.000 knitted per month119 2006: More than 125.niftindia.
shirts. However according to G. the company had 7300 sewing machines. Bihar. Page 86 . Manicandan’s CEC report. WORKING CONDITIONS The workers are 80% male and since Delhi and Orient is mostly multiproduct. “most of the permanent employees are supervisors and perform high-end work such as production in-charge and finishing in-charge. fabrics. washing plants and dry cleaning units. and since Orient produces high-end clothing with lots of embellishments. Information on work timings was taken from G. consisted of 12 production managers each in charge of about 250 workers (tailors and helpers) at 100 machines with 12 line supervisors. Manicandan’s CEC report and could vary factory to factory. Approximate number of workers in all facilities Number of people employed in 2002-2003: 12. which is generally equal in size to the production department. the workers are skilled and come from a tailoring background and are usually from UP.000 Machinery Orient has in-house computerized embroidery machines. and trims.” 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.000 in-house Number of people employed in 2006: 23. with very little embellishment. Departments No information on specific departments was obtained through the interview. The labs are equipped to test for all parameters including color fastness to light. they “can’t be like Golkadas. Productivity Schemes Orient uses incentive schemes to reduce absenteeism and has implemented worker welfare schemes. not through a labor contractor.” Dhingra stated that 70% of Orient’s workforce is direct employment. workers do not go to lunch at the same time. In 2002-2003. According to Dhingra the “girls” in the South are operators and less skilled. According to G. Manicandan’s CEC report. trousers. one facility’s production department.Quality Control The company has in-house lab testing for garments. VII. who manufactures 80-90% jackets/ outerwear. MP and some from Haryana. More contract workers and women (especially thread-cutting) are in the finishing department.
no piecerate. VIII. semi-skilled and unskilled workers that are hired through labor contractors are paid under a piece-rate system. and in 1993-1994 they started moving away from piece-rate and a few years ago they did away with piece-rate completely. & Company. They are trying to start a training school NGO with a founding member of NIFT. Union Though unions were not explicitly mentioned in the interview. With incentive programs for more highly skilled workers. Recruitment Policy Orient Craft employs contract workers for at least 30% of its workforce. Some of these contractos are R. where workers can be trained and work for other companies if they choose to. Manicandan’s CEC report. and Vasisht & Company. Category Tailors Helper Trainees Contract Worker Average Wage (Rs. Dr. workers are paid much less than Dhingra asserts. Bonuses are given during Divali. Worker Training Dhingra stated that all the facilities have training schools and they want to make them more formalized.all for the fear of Page 87 . HUMAN RESOURCE POLICIES Dhingra stated that there are common HR policies and productivity schemes across plants. Viet Kumar & Company. 5-8. the following was mentioned in a business article: “Till a year ago. the salaries average Rs. Sartrushi. “particularly [those] working in the Finishing department. The payscale is adjusted twice a year according to inflation. K. Dhingra stated that in the 1980s and 1990s Orient used a piece-rate system. probably around 8-9% and as Orient is expanding. 60-70% of the workers are unskilled helpers.” Furthermore. However. 3000 per month for an unskilled worker salary. the turnover for Orient Craft is fairly low./month) 2850 2344 2000 2850 Labor Turnover According to Dhingra. but he makes no mention of any other incentives.Wages The average wage starts at Rs. The payments and benefits for contract employees are given to the contractor.000 per month plus ESI and PF. and most people are above the minimum wage. who takes a 5% commission before paying the rest to the worker. the company's chairman and managing director Sudhir Dhingra dreaded the idea of setting up huge factories . according to G. labor turnover is decreasing.
‘my husband doesn’t beat me anymore. and that Orient pays in full for the schooling of female children of workers and for 65% of the schooling of male children. 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 building a community welfare center that provides medical care for community members. There is no grievance policy procedure in place for complains against workers or management. Since then the company started sourcing their manpower from labour contractor[s]. Clusters are reinventing themselves. and if a manager finds a worker guilty of an infraction. Thirty years ago we employed a women who worked as a thread-cutter and got paid Rs. Orient also helped train 300 women from the nearby village in hand embroidery at international standards. they feel very proud to bring in income. Page 88 . no sexual harassment committees and workers are not involved in wage negotiations or target setting. Punishments are given to workers without any formalized procedure.000. Manicandan’s CEC report. Orient had no worker committees at the facility visited. no formalized dismissal procedure. Sector-18. “Preparing for 2005: Dressing up for the party. workers are fired with no redress. stating that he would forward the company’s code of conduct and a list of their worker committees through his personal secretary. M. Some of our workers are second-generation workers. This strategy effectively stops any attempt to consolidate workers towards creating a Trade Union. “around five years ago there was an attempt to establish a trade union (at the 7-D. Although Dhingra stressed how this was all for the benefit of the women and the community. Manicandan’s CEC report.[worker] strikes. sometimes more than their husbands. I have always been very people-centric-. However upon further inquiry. But will we be ready in time?” Businessworld. According to G.’” They built a four story structure to house the embroidery tailors.”123 According to G. But the management suppressed and ousted all the workers who [were] involved in the establishment of a Trade Union. it’s about what we can do for the community. ten years ago we had 5000 people. 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.asp>. According to Dhingra. “if someone asked me what my one single reason for success.com/apr0504/coverstory01. Twenty years ago we had over 1000 workers. GAP gave Orient $35. and Surendar.businessworldindia.000 and Orient spent $20. One woman told me. now we have 23. it would be people.it’s not just about the bottom line.” Worker Committees/Grievance Policy/Dismissal Procedure Dhingra was reluctant to give specific information regarding worker committees in person. Maruti Industrial Complex unit). The “village panchayat said that Muslim women can’t go out…but now that they are trained. he stated that such information was confidential and would hurt Orient’s competitive advantage. 400 per month. Now she is a finishing manager and gets 123 Rajshekar. Global players are looking for India bases. <http://www.
Specifically. he wants to extend the length of time it takes to become a permanent employee to 12 months. We have created great recreational areas for workers and middle management by building great cafeterias. “India is still not good at producing fall fabrics.paid Rs. BUSINESS BOTTLENECKS Productivity is relatively low. Marks & Spencers. which includes a more complex manufacturing process. Although happy about Orient’s success. Seasonality is an issue. IX. White Co. “they have 100. 50. Pottery Barn. such as home furnishing. It is the soul of our company. Donna Karan. and ease of working.000 people. Labor flexibility is also an issue. as Orient usually doesn’t have as many orders May through August. which eases strain some as well as the other diversification of profits. 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. and Orient needs to do competitive pricing to stay in the game and Page 89 . They started producing denim products 5-6 years ago and just started manufacturing men’s suits at a plant for Liz Claiborne and Express.” 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. in-house fully functional gym and an Executive Club. According to the company website: The new complex is designed to create a very worker and management friendly environment in terms of esthetics. and her son is working here… I have always thought about social welfare. but Orient has taken up some holiday decoration work.000 per month.. we only have 23.” They started up home furnishing about three and a half years ago. Dhingra stated there are companies who do $1 billion (mentioned China and Lian Thai from Hong Kong. Dhingra wants increased flexibilization otherwise it is more difficult to expand and it hurts business. 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. for Bed Bath and Beyond. 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. Macy’s. highly tailored outfits with additional embellishments like embroidery and special washes.000). comfort.
com/30thjune06p4. Earlier. the textile industry in India still has a long way to go before it can catch up with Chinese volumes.00. The company’s management is also planning to raise an IPO later this year.125 124 Dipankar. Bangladesh and Pakistan. The company has since then stripped the Spain unit of its machinery and fitted them in its plant here at Gurgaon. Orient has 20 production units spread across Gurgaon. Orient came up on the global radar when it started its first overseas facility in New York two years ago. However.bring in buyers. the garment industry presently stands at approximately Rs 15.htm>. INDUSTRY COMMENTS Orient recently bought a Levi’s plant in Spain for its technology. growing by over onefourth from last year.5%. In the changed business scenario. (despite quota regulations) and India adds to a minuscule 1. Mayur Shekhar. The company’s deal with Levi’s is the second such significant international venture. PTI Economic Service. 125 Jha. India. Ironically it is the same Indian companies who are buying the units for their machines. Kumar. The expansion plan envisages setting up of two new facilities at Manesar.indiatimes. Since the quota system has been reimposed on China. of which China contributes one-sixth. 16 September 2005.cms>. At present.curpg-1. <http://www. India is in an advantageous position. 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. The company expects the expansion plans to boost its revenue generation.com/articleshow/msid-1232753. <http://economictimes. India’s lack of worldclass machinery producers domestically has seen a lot of companies look to the West for help. From business articles: The company… acquired a Levis unit in Spain in mid 2005 for Rs 60 crore (approximately 13.indeconomist. “Garment exporter Orient Craft buys Levi’s plant in Spain for Rs 60 cr. As of now. Orient Craft manufactures and exports about 30 lakh units of garment every month. near Gurgaon…Levi’s was looking for a buyer due to high maintenance and labour costs in Spain. X.3 million dollar)…Orient Craft by its own admission acquired the unit because of its superior machinery content.000 crore. “The lifting of quota has brought humongous demands on one side and on the other. as they need to grow the base of buyers and price is a compelling reason to do that.” Times News Network. it is important to have machinery comparing to global standards. Noida and Okhla in Delhi.” said Mr Dhingra.124 The machinery from the newly acquired plant will form part of the company’s expansion plan at Manesar. “Indian textile companies on acquisition spree.” Industrial Economist: Textiles Report. and aims to increase it to over 40 lakh units after the expansion. Page 90 . Mr Dhingra estimates the annual turnover to be in the excess of Rs 800 crore. buyers are getting increasingly quality conscious. World over.
if even 5% are rich and 15% have disposable income. retail will explode…People say that Indians don’t have disposable income. etc.000 crore. 25 November 2005. the market will contribute a significant share of Orient Craft’s overall business pie. He announced the company would be given 10 acres of land at Nacharam to set up a garment manufacturing unit. As per the arrangement. Rajasekhara Reddy.” For Orient Craft. "The SEZ will house up to 50 companies. according to Sudhir Dhingra.Though most people in India. the ready-to-wear demand in India is growing. that’s 200 million people. 126 “Orient Craft plans SEZ for garment units in AP.blonnet. That’s more than the people who spend in the U. a leading Japanese buying house. population spend. DKNY and Ralph Lauren." Mr Sudhir Dhingra. In the next couple of years.htm>. but best linens) are setting up facilities in India and selling back in Europe.” The Hindu Business Line Internet Edition. SBC. the company’s MD.— only about 30% of the U. “The tie up with SBC will give us a good foot hold in the Japanese market. Earlier. However. the exclusive Japan licensee of some well known international textile brands including Calvin Klein. “An increasing number of Japanese buyers are looking at Indian export houses for their sourcing requirements.S. Why would people go through rain. only about 60-70 million have disposable income.5m worth of textile products in the next couple of years. <http://www. told ET. Chairman and Managing Director of the company.” Italian and French mills are setting up joint ventures in India. dirt. and every day a new one is opening up—there’s space available in Karol Bagh. The SEZ is likely to come up on a 300-acre plot with an estimated investment of Rs 2. Orient Craft will be the exclusive suppliers from India to SBC. heat. So the spending power is in India. there were only three shopping malls. From business articles: Orient Craft Ltd plans to develop an exclusive special economic zone (SEZ) for garment units in Andhra Pradesh. consultant. at present Japan is a relatively smaller market. said the company was "welcome" to set up the SEZ. “Three years ago.126 Orient Craft… has entered into an outsourcing arrangement with Sumukin Bussan (SBC). Financial Daily from THE HINDU group of publications.Emerging opportunities and the road ahead' here on Thursday. which plans to source $1-1.S. where there are higher labor costs. but look how large the population is—out of one billion. Page 91 . SBC is the buying arm of Kashiama.S. delivering the inaugural address. which is a joint venture of Caramin (France) and Bairb McNutt (Ireland. told reporters on the sidelines of the CII conference on `Textiles forum .com/2005/11/25/stories/2005112502590900. Yoshiaki Kamiyama.” he said. Now there are 500. The deal is likely to be signed later this month. lagging behind US and Europe. In 2-3 years. we ourselves are looking at buying 2-3 lakh pieces from India. we aim at scaling our Japanese business up to $30-40m. the Andhra Pradesh Chief Minister. probably about 80-90% still get clothes from tailors. Orient is considering getting into the domestic market now. Dr Y. Banswala Mills. if there is a mall…Real estate is growing.
Thailand does almost the same business as India with a workforce a third the size.128 XI.” The Economic Times: Garments Textiles.indiatimes. Others include Gokaldas Exports of Bangalore.all for the fear of strikes. But what distinguishes them is a relatively larger scale. 20 April 2006.asp>. Current contact information was finally obtained through a Professor at NIFT. and Shahi Exports. Most are family-run. Clearly. to cater to new deals in the pipeline. which. we will have to invest in new capacity every year if we have to keep pace with the industry. At present the Indian textile exports to Japan add up to $296m which is just about 1% of the country’s total textile imports.000 people. which made finding up to date contact information difficult.about 10 times the size of the Delhi-based Orient Craft. Like most other economies. China is the largest exporter to Japan. though he stated that she would be able to forward company codes of conduct and additional information that could not be covered in the interview. Bangladesh churns out as many garments as India from a fifth as many factories. skill-intensive manufacturing could be a way to compete. The centrally air-conditioned facility will combine all the stages of garment manufacturing. claiming more than three-fourth of the pie. But will we be ready in time?” Businessworld. Times News Network. and Surendar. 128 Rajshekar. <http://www. M. However. and smart use of technology.com/articleshow/1496902. 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. is India's largest garments exporter. Global players are looking for India bases. at Rs 450 crore of revenues. India's biggest exporter Orient Craft has also begun to realise that. the company's chairman and managing director Sudhir Dhingra dreaded the idea of setting up huge factories .businessworldindia. design to finishing. the company may go for a specific capacity expansion. <http://economictimes. Page 92 . His personal secretary was not useful in obtaining any information. Dhingra was fairly open in his responses. Orient Craft manufactures and exports about 30 lakh units of garment every month. Says Orient Craft's executive director Anoop Dhanda: "For the next few years.cms>. Meru Exports and Richa Exports of Delhi. and Dhingra was surprisingly available for an interview. India lags in technology. productivity and scale. The turnovers of these exporters range from Rs 100 crore to Rs 250 crore. Today he is spending Rs 40 crore on a new factory in Gurgaon that would employ 2. Clusters are reinventing themselves. “Preparing for 2005: Dressing up for the party.com/apr0504/coverstory01. 127 “Orient Craft ties up with Japanese co. 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.127 The biggest Chinese firms have a turnover of $800 million-1.200 million . Till a year ago." Orient Craft and Fabric & Fibres are among a few who have been pulling ahead of the pack. PERSONAL EXPERIENCE Orient Craft does not have a website.Depending on the volume of the orders. which it may have to take up to over 40 lakh units. T.
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