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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
Shahi Exports Pvt. and Third Eyesight (an industry consulting agency). Asking a question via e-mail often yielded claims of confidentiality. 2) To identify correlations between labor conditions and businesses characteristics. an interview by telephone would be far more likely to be successful than an information Page 3 . display their financial information on the company website. These are the Northern India Textile Research Association (NITRA.. the Apparel Export Promotions Council (AEPC). If an interview cannot be conducted in person. others self-report to financial databases. although some were out of date. linked to the Ministry of Textiles). Five companies (Modelama Exports Ltd. Obtaining the phone number from the agency website and directly calling was the simplest way of setting up interviews. though it proved best to limit the amount of e-mail communication. Ministry of Textiles). Four of the six companies profiled and all of the agencies have individual websites. linked to the Ministry of Textiles. 3) To develop corporate research strategies specific to the Delhi. Orient Crafts Ltd.. the National Institute of Fashion Technology (NIFT. Ltd. while asking the same question in person would yield a response. Managers at six companies and four agencies gave interviews.. It is advisable not to send questions via e-mail.” a CEC report submitted by G. Pearl Global Ltd. The sixth company was identified by the researcher through an interview with a representative of the Indian Apparel Export Promotions Council (AEPC). Online searches yielded some kind of press release or interview for each entity except for Jyoti Apparels. Manicandan. Several other agencies that are major players in the export garment industry were identified and profiled by the researcher.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. E-mail was also used to a large extent to set up meetings. the Registrar of Companies (ROC. Government of India). India context.) were identified using “Mapping First Tier Suppliers in Garment Industry in Delhi. Contact information was available on websites. Interviews were obtained in a variety of ways. Public limited companies like Pearl Global Ltd. Methodology Preliminary research was conducted on the internet. Company G of Group R. and others do not disclose financial information beyond approximations of annual turnover and production capacity. A management survey was developed using the framework of surveys used in other geographic contexts and updated on the basis of preliminary interviews.
or productivity schemes.S. Just. Researcher: I don’t understand. and one experience ePage 4 . men together tend to form groups and lobbies because they have spare time. but off the record. The agencies profiled were primarily interviewed before the export houses. Managers were surprisingly open in some cases. Researcher: Did you have problems with employing males in the past? Manager: No—no. However. An interview with an anonymous manager produced the following conversation. I’ll tell you. and as such may be misleading as to actual conditions. and used to establish industry contacts. without which interviews would not have been possible.request by e-mail would. and Orient Craft Ltd. context and was integral in order to obtain information. They’re more docile. I don’t think they ever employed males… Limitations Time constraints limited the consistency and thoroughness of company information. while others would refuse to state the number of workers in the manufacturing unit. even though such a one-sided perspective may not reflect the reality of the situation. Also. ladies are more focused on work. 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. time constraints would not permit cross-checking all information with workers and officers at each company. The attitude and openness of those interviewed are subjectively recorded in the individual profiles. 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. Information on these companies was obtained primarily from top-down management sources.. all interviews were in person. Women are easier to handle. Questionnaire Used by the Researcher The following questionnaire was handwritten in shorthand and brought to the scheduled interviews as notes. going as far as to hand over Standard Operating Procedures. Ltd. 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. What groups? Manager: Oh. The AEPC was instrumental in identifying Jyoti Apparels as a top tier supplier. and NIFT gave updated contact information for Shahi Exports Pvt. Furthermore. easier to control. no significant differences in productivity. however. as it was not possible in many cases to conduct follow-up visits. no telephone interviews were conducted in this survey. which typifies management attitude both towards women and unions: Researcher: Why are your workers mostly female? Are there significant differences in productivity? Manager: No. industrial accidents record.
dpt stores (Belks) What is the average price that you get per piece of garment supplied? Do you know the average retail price at the point of sale? By item? At what point of delivery do you get the price (FOB – freight on board. they often had information regarding each of these areas. since a conversational approach proved to yield the most information.. if only a higher level manager could be reached. The survey questions were divided into sections according to the position of the respondent. CMT. 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. DSP questions. how fast company delivers products to brand Kinds of buyers—importers. vol of product.mailing questions proved fruitless in gathering information. get order. 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 . However. no input--or more capable. specialty (GAP). help design. What kind of input— CMT. 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. deliver? Does the company ever have problems with contracts and/or steady orders? (if possible. U. where. as there are some questions that an HR manager would know more than a Merchandising Agent. total sales. and Responsibilities of Respondent: Number of Years in the Company: General Upper Management Do you have a brochure saying what products. EU? Major foreign brands that the company supplies to: length of relationship. The questionnaire was used only as a guide in the interviews as a reminder of what kind of information was needed. Ownership of Company. Name. discount retailers (Wal-Mart). I’ve heard of collegiate licensing that would provide steady orders from major brands at higher prices.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.S. sourcing. Designation. package.
material cost. Have you seen a benefit in productivity since implementation of program? Are there joint worker-manager forums in your organization? If yes. 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. washers. supervisors. who are the members and how are cases handled? Give details. Grievance Committee. tailors (skilled. cutters. standing orders. overhead. helpers. total value of exports. Sexual Harassment Committee. checkers. semi skilled. Productivity Committee. NITRA. 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. labor cost. trainees. 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. finishers.e. etc. Have there been any attempts at unionization in the past? What is the company’s attitude toward unionization? Page 6 . subcontracting. can you give a sample of the contract letter? Is there a procedure for workers to complain about supervisors/management? Are there programs or committees to minimize conflict and improve morale of workers? i. average age of employees. codes of conduct. Quality Circle? If yes. unskilled). what is displayed to workers on details of employment. etc.Have they used outside agencies in developing any part of their strategies? Part of AEPC. 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. pressmen. How many women. what do these forums do? Get any documents willing to give at any point. Shopfloor Committee. men.
Is there a personnel ‘code of conduct’? Is this a company policy or vendor policy? How are these communicated to workers? What employers are covered by: (i) ESI (Employee State Insurance) (ii) PF (Provident Fund) (iii) Gratuity (iv) Maternity benefits (specify) What are the details of employment that are displayed / notified to workers? (i) minimum wage (ii) ESI/PF/Gratuity? What is the average overtime payment to all employees? (i) overtime per month (ii) overtime as a percentage of total wages (iii) rate of overtime payment Ask about industrial accidents, if there is a doctor available, how often, rotate between factories, what is the most common injury, what kinds of safety equipment What is your approach in HR and Productivity/Efficiency? (Get policy document) Do you involve outside agencies in your HR strategies? Do you have common policies across your plants? What are the typical causes of punishment of employees? What are the types of punishment given? (wage cuts/extra work/asked to go home?) Is there a procedure followed for dismissal of employees? Who initiates the procedure? Is the employee given a hearing? Give details? Do you have a legal officer in the company? Do you have an Industrial Relations policy? (any written documents?) What are two or three main things holding business back? production, labor situation, training , quality control, etc. What are you doing to solve this? HR/Production Manager: Get any documents willing to give on productivity schemes, time-study worksheets, productivity numbers, structure of lines, how many supervisors, etc What is your approach in HR and Productivity/Efficiency? (Get policy document) Could you give me a sense of the floor layout of a typical factory; what kind of technology and planning has gone into the factories? What are the different departments? (Floor chart) Department # Workers # Men # Women # Machines What are parts of a Line? Is it an assembly line? How much time does an item take from the beginning to the end of a line? How many supervisors are there on the Line? Is there a productivity scheme in your company? If yes, when was it introduced? What categories of workers are covered? Are workers in any way involved in target setting? Prod planning? How much time does a worker take to achieve the desired productivity? What kinds of productivity schemes? Teams? Line supervisors? How come up with time studies? How conveyed? What have been the benefits from the productivity scheme in terms of (i) increase in productivity (ii) reductions in waste (iii) any others? Does the productivity scheme give incentives to workers? If yes, give details based on category, average incentive, and maximum incentive. How make workers more productive?
What are the typical causes of punishment of employees? What are the types of punishment given? (wage cuts/extra work/asked to go home?) Is there a procedure followed for dismissal of employees? Who initiates the procedure? Is the employee given a hearing? Give details? Has the company ever consulted industrial engineers to design the factory? What was productivity output before and after the consultation? What are the quality check points that the buyer requires? Does the company management have other quality checks? How have they used technology and state of the art equipment to improve quality? What are two or three main things holding business back? production, labor situation, training, quality control, etc. What are you doing to solve this? Types of Sources (other than management interviews) To obtain much of the initial company information, the researcher performed internet searches for the company names, and several common business periodicals showed up several times including: Apparel Resources http://www.apparelresources.com http://www.ittimes.co.kr/ The Economic Times http://economictimes.indiatimes.com/ http://www.sify.com http://www.businessworldindia.com/ http://www.indeconomist.com/ The Hindu Business Line Internet Edition, Financial Daily http://www.blonnet.com/ Most of the companies profiled had company websites, except for Jyoti Apparels and Orient Craft. Once interviewed, the companies typically gave company profiles that they use for potential buyers, which contain information about the composition of the company, the types of clothing it manufactures, production capacity, turnover, and major clients. The agencies profiled, especially the AEPC and NIFT, were vital in obtaining information that would lead to interviews, identification of major players, and important industry resources. Third Eyesight has links to industry-related articles at http://www.3isite.com/index.htm. Although the researcher was not able to research the following sources further, some were featured at an international garment fair and others are commonly used as industry resources for financials: CMAI (www.cmai.info, email@example.com), EBSCO CRIS, INFAC (intranet and internet), INSIGHT, CMIE, RMS, IAS, INDIASTAT, IRA. Information In Company Profiles Contact information includes addresses of known production sites, contact persons, website, and e-mail. Brief history includes relevant information regarding the establishment and incorporation of the company. Basic profile includes the legal composition of the company, export oriented unit information, the breakup of exports and imports of the company (100% exports for all the companies profiled in this report), the product mix, clients, and awards of the company.
Financials section includes the turnover and whatever other financial information could be obtained on the company. Brand information section includes major clients, length of relationship and percentage of turnover, direct or buying agency clients, and unit prices. Infrastructure section includes subcontracting information, the type of production system (all assembly line units), production capacity, the design/sampling department, quality control, specific departmental information, and productivity schemes. Working conditions section includes timings of work, wages, wage-setting procedures, benefits, overtime information, and labor turnover. Human Resource policies section includes management structure, worker training information, recruitment policy, dismissal procedure, union information, worker committee information, grievance policy procedure, corporate social responsibility schemes, codes of conduct, worker medical care information, and security system information. Business bottlenecks section includes whatever setbacks or problems that managers perceive as holding back business. Industry comments section includes strategy, predictions, and other relevant information regarding the growth of the company, its views on the industry as a whole, strategies for expansion, etc. Personal experience section includes miscellaneous description regarding the researcher’s views of the company and its managers and the ability to get an interview.
These offices function as registry of records.gov. New Delhi 110003 Phone: 011-24362708 Fax: 011-24364570 E-Mail: rocdel. the office at Nehru Stadium closed down earlier in the year.CHAPTER TWO AGENCY PROFILES 1. in order for a company to be registered with the ROC.in However. The Central Government exercises administrative control over these offices through the respective Regional Directors. New Delhi – 110003 E-Mail: rocjln. Navrang Saini Addresses: B-Block Paryavaran Bhawan. Website of the Ministry of Company Affairs: http://www.. which is not true for privately owned companies. CGO Complex.in Nehru Stadium.in According to the Ministry of Company Affairs website: Registrars of Companies (ROC) appointed under Section 609 of the Companies Act covering the various States and Union: Territories are vested with the primary duty of registering companies floated in the respective states and the Union Territories and ensuring that such companies comply with statutory requirements under the Act. Form firstname.lastname@example.org/ROC_2003. Page 10 . Form 20 gets the Director a Director’s Identification number (the number used on the mca.The financials publicly available include the annual return and balance (for all companies). Companies are required to register new events such as a change of directors with the ROC. relating to the companies registered with them. Since Pearl Global is a public limited company. According to an interview with the Company Secretary of Pearl Global Ltd.nic. REGISTRAR OF COMPANIES (ROC) The Registrar of Companies is a division of the Indian government’s Ministry of Textiles. the compliance of companies act. Such forms include: Form 1. they must submit several forms at incorporation and annually. Form 32.gov website to access the public disclosure documents). Lodhi Road. the details of the board of directors/management structure.htm : Delhi & Haryana Regional Director: Dr. Form 29 for Pearl Global makes it a public limited company.nic.mca. the profit and loss are also publicly available.sb@sb. The addresses of each state’s ROC as of 2003 can be found at http://dca. which are available for inspection by members of public on payment of the prescribed fee. the address of the registered office and the locations of the business.nic.
such as financial information and company Articles and Memorandum of Association (objectives. the process of obtaining public documents. Page 11 . The researcher attempted to take notes by laptop. of a newly incorporated company detailing the scope of its operations). Not only were entire company files missing. but several did not have up-to-date financial or structural information. Information must be copied into a notebook by pencil (pens are not allowed). 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. was difficult and did not yield a lot of useful information. photocopying the documents in the file is not permitted unless a fee for a legal copy is paid. Furthermore.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. As such. etc.
new business start-up and operations projects with Indian and international clients.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. THIRD EYESIGHT (INDUSTRY CONSULTING AGENCY) Contact person: Mr. and product analysis. home.Assistance in development of global sourcing strategy and action plan. Thereafter. assistance in formulating strategy and developing partnerships with International retailers and brands.122 002 INDIA Tel: +91 (124) 4112493. and returned to India to his position as General Manager of the Indian business. manager. Sushant Lok-I. in marketing and distribution. * Diversified Indian consumer and industrial products conglomerate . * International multi-billion dollar apparel brand . as part of the team that launched the JV. Founder and Director of Third Eyesight A-847.2.Strategic assessment of India – insights for a global senior management team to gain a realistic picture of the opportunities and the challenges in India.Carrying out sectoral market studies in retail. He was also based in the European practice of this multi-national consulting firm.strategic inputs for Asia-Pacific top management team to identify emerging opportunities in the Indian textile supply chain * Leading UK Retailer . Benchmarking against global supply chain and product development best practices. Support in implementing changes in sourcing strategy and organisation. Third Eyesight and its team of associates & professionals have worked on a variety of business strategy. advisor.com Website: www. Third Eyesight's project teams consist of professionals who have hands-on experience in various aspects of retail and consumer products businesses. * One of the largest global home products retailers . dining etc. 2nd Floor. email@example.com of India strategy and preliminary business plan including market analysis. 4112494. Devangshu began his career with the then-leading Indian national retail chain in buying & merchandising and in store operations. food & grocery. Devangshu Dutta. During his career Devangshu has performed the roles of an entrepreneur. He subsequently worked with an international retailer's joint-venture in India. assistance in assessment of Indian supply base Page 12 . trainer and teacher. * Global fibre and chemicals company . over the last 16 years. including fashion. he co-founded a fashion sourcing company in which he remains a shareholder. He then joined a start-up consulting firm and was instrumental during its growth into a multinational consulting firm's joint venture in India. The following are brief descriptions of some of the projects on which Third Eyesight's professionals have worked. competitive and regulatory information. 4112495 Fax: +91 (124) 2577586 Cell: +91 98111 03494 Email: devangshu. Gurgaon .
* Indian subsidiary of one of the largest sports apparel and footwear brands – Design. The name is on the WRC disclosure list. it was a licensed economy in which you needed to get government clearance to manufacture in specific capacities. and you cannot have large units. gave contact information for the National Institute of Fashion Technology in Hauz-Khas. The quota system obliged companies to set up under different names. Much of the fragmentation of companies was really only on paper.org). This is partially why many of the current successful companies (such as Richa Global) are split up into many different companies. Content of Interview (5 July 2006) with Director of Third Eyesight: Asked about study. Gave history of market structure in India. reserves certain sectors for small units. who would be able to help schedule company interviews. * Pioneer luxury brand house in India .K. development and delivery of sales & marketing collateral for three consecutive seasons. The investment cap was very low. According to him. labor laws also limited the ability of companies to expand.* Multi-billion dollar Indian consumer goods conglomerate . Page 13 . Since the garment industry is extremely labor intensive. D.Formulating strategy and assistance in strategic alliance proposal to key European customer. you need a separate registration and thus it is easier to simply export (used to be tax-free). Mentioned another apparent Tier 1 (said they are large and source directly to MNCs). which continues to regulate knit-fabrics. this model was phased out. * One of the largest Indian textile and garment companies . Mr. 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. Initially. Matrix. as you needed approval from the state government if you were operating a place of business with more than a hundred workers. who could then direct me to industry management: Dr. Batra. Mr.org) Advised researcher to contact faculty of the management studies department. Also told the researcher to contact faculty of Pearl Academy of Fashion.Comprehensive comparative study of 7 cities in India and outside to choose location of new garment manufacturing plant * Leading Turkish supplier . The other reasons for company fragmentation are the nature of quota system and labor laws. In the early 90s. Sibichan Matthew. and the result of this was that a successful company was prevented from expansion. (Website: niftindia. Business strategy and plan for current business. Pradeep Joshi. and assistance in seeking new capital infusion.Business planning for new brand acquisition.Assistance in formulating strategy and developing business with global customers for exports. Directed researcher to online industry magazine resource (Website: apparelresources. The small-scale reservation system. The government thus limited how much you could produce under the reasoning that overcapacity would lead to inefficient use of capita.
effort.” Furthermore. saying that the industry had often talked of diversifying. but that the outlook of the management may be more pessimistic than Tirupur. he said. worrying that Indian business could not compete with China. it would increase unit prices. this changed somewhat. However. and that Chennai (mostly menswear). and money (wastes that would not be eliminated by greater cooperation. From a piecemeal view. Bangalore (roughly equal. and as such is seen as a big risk and many are reluctant to actually work on establishing these relationships. the supplier makes the product. gets quotes from suppliers.. ships a sample. The MNC gives product specs. since vendors and suppliers both may have had bad business experiences when attempting to do the same. doesn’t communicate with the designer. 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. He then mentioned that “strategic sourcing” would be much more beneficial to the market. Page 14 . The current model has self-contained worlds instead of cooperation. the MNC may like it or require additional changes. material. couldn’t see name). he said that Indian companies were extremely uncertain about the effects of the MFA phase-out. as it was clear that Indian businesses were gaining from the phase-out and smaller countries like Bangladesh were losing instead. and Tirupur (mostly jersey knits) all have different cultures. etc. which has worse infrastructure but is nevertheless optimistic about business. In 2004. Because of this. wherein the buyer. the investment returned. but would be greatly minimized). the product is re-done. total costs would go down because the current transactional model wastes a lot of time. He began to describe the different ways of sourcing.S. and rather than cultivate a relationship in which the supplier provides input and designs according to a long-standing relationship. He said that Delhi is doing extremely well in terms of business and is the largest in terms of exports. From 2001-2004. so all the businesses had to pay was labor and overhead. He stated that “the inconvenience of a labor inspector” pestering and harassing company management was a minor price to pay for business expansion. but more menswear). how the current transactional model is very inefficient insofar as buyer-supplier cooperation goes. that they were too “over-exposed in China. investment in the industry slowed down. strategic sourcing is dramatically different from the current widespread transaction model. for example. but in the strategic long-run. He began to talk about sourcing. He expressed hope that soon the labor laws would relax some to reflect changing needs of business. the quotas had restrained India far more than China (showed a graph from a U. economic source. money is instead wasted on an inefficient process. then privatized factories.” however that had mostly been talk and no action. whereby long-term relationships are cultivated. as the companies began to listen to the needs of buyers and in 2005.one hundred workers is nothing. He mentioned that Delhi (mostly womenswear) is only one side of the big picture. he made it clear that somehow they were competing because of their “ability to develop and deliver product.
quota distribution and allocation. Ltd. (2) To undertake all export promotion measures. Banthia (M/s Magnum Enterprises. 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. Secretary General of AEPC Mobile: 98-9912-4555 Website: http://www. Mr. Assn. agents or correspondents in foreign markets for the purpose of continuously and regularly reporting the markets prices. increase. Bombay and Garments Exporters Association. Gurgaon 122003 Contact Person: Mr. N. Garment Exporters Association. Institutional Area. Clothing Mfrs. to undertake marketing in individual foreign markets.. The main objectives of the AEPC are as follows: (1) To promote. Vijay Mehta (M/s Intercraft Pvt.. P. of India. Clothing Mfrs. to develop new designs and patterns of garments. Madras).F. Shah (M/s Hiralal Gulabchand. B. Ltd. advance. Mr. but now as the garment industry has reached a stature and maturity and has achieved the target of 250 crores.L. New Delhi). Gen. particularly to undertake market research. Clothing Manufacturers Association of India. N. B. Garments Exporters Association.3. of India. Mr. develop export of all types of readymade garments. of India. (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 .. Smt. Singh (M/s Singh Export Corporation. Mogrelia (M/s Zoro Garments Pvt. Mr. Premila Wagle (M/s Paville Fashions Pvt. (3) To appoint representative. Sector 44. New Delhi took a lead in this matter and formed a special ad-hoc committee of the following Members: Mr. Secretary. S. Ramadorai (Chief Executive. Assn. Bombay) Hon. Ltd. KK Jalan. Mr. New Delhi) Ex-president. excluding.aepcindia. M/s Handloom and Handicrafts Export Corporation. to find out the tariff and other restrictive practices of importing countries. APPAREL EXPORT PROMOTIONS COUNCIL (AEPC) Office: Apparel House. New Delhi) President. Two leading organisations of readymade garments. jute and hemp. Assan. Clothing Mfrs. woollen knitwear and garments of leather. market preferences and latest fashions and designs prevalent in the foreign countries. Amersey (M/s Milton’s Ltd. to send trade delegations and missions to foreign countries as well as to survey export potential of readymade garments from the country. Calcutta). Bombay) Vice-President.K..P.N. According to the Articles and Memorandum of Association: Up till now Cotton Textiles Export Promotion Council was handling the export promotion work of garments. Mr. Bombay) President. to find out the product range and export prices of garments of other countries.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.
(8) To obtain from members of the Council and to prepare for the Council as a whole. AEPC focuses on three things: • marketing help. its strengths being better infrastructure. and • raw material supply (both indigenous and imported). 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. as well as the names. development of export markets. He said the three biggest centers for garment production were • firstly Delhi. to 200 days. address. especially. (7) To undertake training of workers and technical personnel. specializing in knitwear. import licence facilities provided and how to apply for the facilities. traders and exporters of garments. Content of interview (7 July 2006) with the Secretary General of the AEPC: The main issues in the garment industry are labor and infrastructure. and its specialization in better embroidery and the “India look” (ethnicwear heavy with embellishments and more complex work). A specific AEPC goal is to get the government to change the law that states that workers are permanent employees after 100 days. so that workers can be more easily fired and hired. to improve the skill of workers engaged in garment manufacturing in India and to assist in the technological base of the garment industry. in the Small Scale Sector by giving assistance in the matter of understanding and implementation of the drawback. he stated. Page 16 . For three months of the year. (6) To establish design centres. to evolve improved design and patterns and garments suitable for export.for the purpose of continuously and regularly reporting to manufacturers. generation of production for exports. rules and procedures. He stated that over the industry as a whole. (5) To assist members. action plans for promotion of exports. garment businesses do not have orders. • secondly Bangalore. to encourage export production of quality garments and to undertake necessary research in fashions. • lobbying to government to change laws regarding labor and infrastructure (and whatever other business bottlenecks there are). and description of subscribers. so that businesses who do not get orders during the winter are not hurt by the cost of labor. its strengths being higher levels of worker productivity. 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. He stated that the government needs to increase labor flexibility. NCR region. • help with training and productivity (14 training institutes). otherwise productivity will remain stagnant and labor costs will remain high. 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). and lastly Tirupur. designs and techniques and to encourage manufacture of garments for exports.
These businesses have succeeded through a number of different strategies. including • an HR training institute-KSA Technopack. • Richa Global (Delhi). and • the Eastmen Group (Tirupur). He mentioned several notable resources. as it is self-reported. • Golkadas Images (Bangalore).He listed the top ten Indian garment factories as • Shahi Exports (Delhi). with a common thread of individual attention to quality control and productivity by hiring consultants and building better facilities. • Creative Group (Mumbai). and • the Cotton Textile Export Promotion Council. The researcher purchased the newest book of statistics on industry level data that the AEPC had (2003) and a directory of garment exporters. Page 17 . • a foreign consultant agency Method Workshop (main consultant Roger Thomas). • Golkadas Exports (Bangalore). • SPL Industries (Delhi). • Centwin Group (Tirupur). The AEPC did not have company specific financial data. • Modelama (Delhi). • Texports (Mumbai). • Gurgi (“biggest industry consultant”—saw this name in the fabric stores in Jyoti Apparels).
New Delhi-110 016.com. 26965059. Extn:306 Fax: 91-11-26851198 Mobile: 9810154829 E-mail: rajeshbheda@gmail. Chennai. NATIONAL INSTITUTE OF FASHION TECHNOLOGY (NIFT) Ministry of Textiles. and excellence. also offers short duration part time courses under Continuing Education (CE). management practices and manufacturing technologies. professionals. and avail of facilities like laboratories with state-of-the-art equipment. Continuing Education (CE) Programmes: National Institute of Fashion Technology. 26965080. these courses offer a unique opportunity to participate in the lively academic environment of NIFT. 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. and diverse faculty expertise. and entry-level candidates in the form of Continued Education Programmes. creativity. In addition to classroom learning. Resource Centres.. 26965080. enhancement of critical abilities. Department of Fashion Technology Telephone: 26850484. (Gauri Kumar. According to its CE (Continuing Education) Prospectus 2006-07: NIFT provides quality fashion-education to industry experts. and the evolution of new professionals.4. Management and Technology. 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. NIFT has crafted a range of Continuing Education Programmes. Gandhinagar (Sub-Centre: Surat). India Telephone: 26850484. Director General of NIFT) The Institute: Today. rajeshbheda@niftindia. 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. which have been developed in consultation with reputed academicians [sic] and industry practitioners. 26965059.com NIFT was set up under the Ministry of Textiles in 1986. NIFT is acknowledged as the premier institute of fashion design.htm Address: NIFT Campus. They offer a learning environment that encourages innovation. besides conducting regular professional undergraduate and postgraduate programmes in Design. Bangalore. advancement of careers. 26964771. Chairperson. Government of India Website: http://www. Hauz Khas Near Gulmohar Park. Kolkata and Mumbai. These programmes reflect the requirements and Page 18 . PhD. The centres are professionally managed platforms of the world’s finest design expertise. Extn:306 Contact Person: Professor Rajesh Bheda. management and technology across the globe. leading to upgradation of skills and knowledge. practitioners. The Institute has pioneered the evolution of fashion business education across the country through a network of seven centres at New Delhi. Hyderabad.niftindia.com/iftf.
cost is up. though you cannot take bags inside the doors or check out books. trying to get workers’ involvement. there could be a 50% improvement in quality. as there has not much shift in markets. the programmes provide a congenial environment that integrates theory with practice. and they are making efforts to reach good productivity. and a global overview of the garment industry. suppliers reducing subcontracting. with production planning and scheduling. and also to those aspiring to join the industry.S. The average Indian garment factory has 100% potential in physical labor productivity. Page 19 . • managing their supply chain better. training managers. performance-based rewards system. corporate social responsibility. • have more highly trained workforce. • higher productivity • use the help of consultants. Most common is line supervision. Companies are trying to move up the value ladder as product development and design are becoming more important. 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. manufacturers consolidating capacities. methods monitored. • BPR manufacturing. With focus on interactive learning. The flexible schedule enables the participants to pursue the programme without interrupting their professional activities. Post-MFA trends have been a consolidation of supply chain and capacities. The main characteristics of successful firms include: • recognizing what customers are looking for. and EU have always been strong markets in India. The participants receive a NIFT certificate on successful completion of the programme. demand is up. 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. U. operators. and • hire or train industrial engineers. The library at the NIFT campus is open to anyone. • design development.concerns of the industry and have been carefully planned to spur professional growth. productivity (how to perform time studies). • better quality product and service. Content of interview (20 July 2006) with Professor Bheda: Professor Bheda has been with NIFT for 16 years. He teaches classes in quality management. relevant to individuals at different stages of their careers. Unit prices are down. probably average 70% of India’s market. • offering shorter lead times. buyers reducing number of suppliers as well as brands. If companies put efforts into enacting these measures. quality improvement program.
indianapparelfair. and are simply passing it on to the suppliers.there is an erosion of the bottom line and companies find it difficult to survive and improve working conditions.K. Magu (Chairman of Jyoti Apparels). Everything in the market is transaction-based. so the researcher asked IIGF workers) were 1) Intercraft (New Delhi). and many cannot afford them because there is typically no financial payback. driven by price and the customer can walk away at any point.com). the AEPC Director of Export Promotions (interviewed him after K.K. 2) Shilpayan Craft (Jaipur) 3) Another firm from Jaipur. it seemed to be a showcase for smaller firms to vie for new buyers and international exposure. it would have to be meticulously and carefully implemented. The core group of organizers include Vijay Mathur.” The researcher mentioned the United Students Against Sweatshops-proposed Designated Suppliers program and if suppliers would be interested in such a proposal and he said absolutely. it would be good to invest in social improvement program. and as long as it is ensured that the rewards system cost comes down to the factory floor.” that retailers are paying lip service to CSR without sharing the cost burden. He does not see a correlation between turnover and CSR programs: “ultimately it comes from within. Vijay Agarwal (Chairman of AEPC. “suppliers get a feeling of being cheated. The researcher obtained a buyer ID and toured the grounds.K. something like it has been discussed. the 37th annual garment fair with 393 exporters/exhibitors at Pragati Maidan. None of the firms were top ten exporters or easily recognizable.indiaapparelfair. K. from principles. Page 20 . Mumbai). The award winners for their showcases (announced the previous day. H. not because the buyer says the firm has to do it. so some firms are investing in CSR to the extent they can afford. so suppliers feel they are not committed. Jalan.L.com. Agarwal). He gave a contact person to interview from Shahi Exports and up-to-date contact information number for Orient Craft. Regarding corporate social responsibility. 38th annual: www. Social programs are a long-term investment. The day of the interview was the final day of the Indian International Garment Fair (IIGF: www. However. Retailers should start partnering with the brands and rewarding CSR compliant suppliers.
Product Diversification. Maintenance Management. Sector-23. P. 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 . leather. and plastics. Energy Audit. Chairman of NITRA.S. *Collection and dissemination of data useful to the textile & garment industry. Pollution Control. J. Quality Improvement. 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. garment. Process House Study. and Seminars/ Conferences/ Training programs…NITRA has carved a niche and occupied leadership in Package Design Consultancy for effluent treatment and water recovery. NORTHERN INDIA TEXTILE RESEARCH ASSOCIATION (NITRA) NITRA. Environmental Audit. environment and allied areas. workshops. waters. Techno-economic Viability Study. Design of Effluent Treatment Plants and Water Recovery Plants. It is the only ISO 9001:2000 accredited textile research organization in India. Machine Design & Development. *Need based cost effective software development. Ghaziabad (UP) 201 002 Website: http://nitratextile. *HRD activities through training programs. Energy Conservation. V. It is linked to the Ministry of Textiles and is recognized by the Department of Scientific and Industrial Research (both government entities). Several prestigious textile units and multinationals are already within its consultancy network. Maintenance Audit and a lot more. chemicals. Raj Nagar. *Research and Development projects and industry specific surveys related to textile & garment industry. conferences and publications. dyes.5. Cost Reduction. effluents. Publications. 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). According to NITRA’s 2006 Prospectus: NITRA’s Multifarious Activities *Job oriented professional courses (full-time and distance learning) in textile.org/ Contact person: Dr. *Customized consultancy packages for national and international clients in the areas of Product Development. ISO-9000 Quality Management System. Manpower Planning. ISO-14000 Environment Management System. *Quality Evaluation of textiles. Rao. seminars.
environmental statement…NITRA’s Environment Laboratory is well equipped with Sophisticated Analytical instruments. He allowed that workers were being exploited. energy. 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. which are essential to conduct such a program…[it] is accredited/ recognized by the National Accreditation Board for Testing and Calibration Laboratories (NABL). mid term strategies and policies and creating necessary infrastructure. especially Page 22 . effluent treatment and water recovery plant. which would consolidate factories. has been installed for carrying out treatability studies of biodegradation of industrial effluents through aerobic cum anaerobic route. He believes the government should subsidize capital for Indian business like China (mentioned something about a Technology Aggregation Fund. and the Haryana State Pollution Control Board (HSPCB). water. but would not elaborate and would only refer to the intractability of trade unions in vague terms. especially the law whereby a worker that is employed for 100 days is considered a permanent employee.textile and allied industries: waste management. There is a shortage of skilled garment workers. The government is currently working on better infrastructure. Library: Enriched with 5.. Also stated that it cost businesses more to subcontract because they had to pay for delivery. Netherlands. better access to a supply of power through a cluster system called Scheme for an Integrated Textile Park (SITP). and perhaps have relaxed labor laws within these sites. eco-friendly textiles. quality. the Bureau of Indian Standards (BIS). Stated that the fragmentation of the business made quality control an issue. legal compliance. he said that unions hurt business. During the 60s-80s. 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]. Content of interview (7 July 2006) with Chairman of NITRA: Gave background on the history of the textile industry. TAF). from composite textile mills in the 50s-60s to the rise of small scale businesses/ fragmentation. Complained about government infrastructure and labor laws. [NITRA’s IT Center] has over 100 [PC’s]. etc. A programmable ADI Bioreactor System of 3 liters capacity from Applikon Dependable Instruments. Access to and the price of power seemed to be a big issue for him. 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.000 books and journals. fear of China post-quota. The library also subscribes to 150 [national and international] periodicals.. NITRA has a wide database of employers [in its placement cell. NITRA helps factories with product development and various audits. An in-house miniature ETP (effluent treatment plant) of 100 Liters/hour capacity has been installed by NITRA.. improve infrastructure.. etc. the…library [keeps students connected with] ongoing global developments.
When asked for company names. L and J (seem to be mills. he mentioned Vardhmal. so NITRA conducts training programs for workers that last 3-6 months. not garment manufacturers).4:30 pm. Reliance. NITRA’s worker training program’s classes (this year beginning in August) cover mostly productivity issues for middle management such as production managers and line supervisors. They conduct in-plant training as well as distance learning programs for middle management at NITRA itself.machine operators at the shop floor level. Classes are full days. Bilwara. The course coordinator is Vivek Agarwal. They typically have 4-5 students applying for one seat. 10:30 am . a NITRA Senior Scientific Officer. Page 23 . Arvind. Students apply to the program online and are selected on the results of aptitude examinations and interviews. The researcher obtained a copy of the 2006 prospectus.
2 Unit visited by the researcher. Okhla Industrial Area. Page 24 . Udyog Vihar Phase -1 Gurgaon. 7 & 8. business articles. MODELAMA EXPORTS LTD. Haryana. and G. ICRIER financial data.com. Director E-mail: lovleen@modelamaexports. documents given by the HR and production managers including a company profile. India Tel: +91-11-26810103 fax: +91-11-26817969 Head Office Gurgaon 184. Human Resources manager. the company website.modelamaexports.com Head Office Delhi B-57. Manicandan’s CEC Report. India Tel: 91-124-2290993. India Tel: +91-124-2397838-42 fax: +91-124-2397843 1 Initial information obtained from company website. Haryana. Mobile: 9810015693 Corporate Office2 Plot No. Merchandising Agent.com E-mail: info@modelamaexport. An ISO 9001:2000 certified company The information in the following company report was obtained from interviews with the Director. and updated telephone numbers from interview. Sector-5. 2291131 Fax: 91-124-2290864 Website: www. Manesar IMT Gurgaon -122016.CHAPTER THREE COMPANY PROFILES 1. CONTACT INFORMATION1 Contact Person Lovleen Kumar. phase -1 New Delhi -110020. I.
204.com/defaultnextone.Road Map 3 Production Units4 1. IMT Manesar. Udyog Vihar Phase -1 II. Sector-4 Gurgaon 5. Plot No-5. 5 From website.00. B-57. In the first year they exported Rs. 184.5 III. owner is Mr. From company website. B-80. and Pandey. Manesar. Sector-5. 4 3 Page 25 . interview. 45 lakhs with 50 indigenous sewing machines and a workspace of 4. Okhla Industrial Area.” Apparel Resources. In 1999. 7 & 8. Modelama places a great emphasis on technology as the secret to its success. Okhla Industrial Area. Phase 1 Gurgaon 4. 200. Modelama today has ten professionally run production units over 4. Phase 1 Gurgaon 2. phase -1 New Delhi 7. Other production sites in untranslated Hindi document.000 square feet. BASIC PROFILE6 Legal Composition Sole proprietorship. 6 From company website. Lalit Gulati. “Build Quality Rather Than Check The Quality. Phase 1 Gurgaon 3. Lalit Gulati as a family-run operation. Gurgaon1 6. phase -1 10. B-26. phase -1 New Delhi 9. phase -1 New Delhi 8. BRIEF HISTORY Modelama was founded in 1979 by Mr. Okhla Industrial Area. <http://apparelresources. Modelama professionalized its management structure and has been consistently upgrading technology in their production facilities. 201.asp?msg=2710&cod=newsindetail&nam=>. Vinita. B-33.000 square feet. Okhla Industrial Area. Plot No.
1996 Charming Shoppes Inc. Zara. Exports/Imports 100% exports. etc. 2000. Product Mix Areas of specialization include outerwear. Chambers. skirts. drapery. Dayton Hudson Corporation. is an export oriented unit registered with NEPZ. Target Stores.. offering products such as table linen. silk. Modelama does not manufacture for the domestic market. A & F. Mervyns. polyamide). 1992. and home furnishings. Modafil UK: Laura Ashley. LOP NO. Saks. Kohls-Belk.O. and 2002 Associated Merchandising Corporation Outstanding Performance. Pottery Barn. shorts. Lands End. 1999. Freemans. linen. nightwear. William-E-Sonoma. 2000. H&M. Incorporates ethnic Indian accents and embroidery into design samples. synthetics (viscose. Marshalls. dresses. polyester. La Halle. Colt’s Europe: Etam. Lane Bryant. Sears Roebuck & Co. 2001 Federated Merchandising Group Five Star Award (in Development of Federated Department Stores Private Brands and Labels). Villersey & Boch.. Galeries Lafeyette. Eurofiel (Women’s Secret). Tommy Hilfiger.U I/6921dt28/08/01 RCMC NO. Uses natural fabrics (cotton. 1999. knitwear and garments of leather. 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. Clients USA: GAP (Banana Republic. Marmaxx. Old Navy). 1998.4530/2001-100% E. Proffitts. Sears Roebuck & Co. Sales Growth and Profitability Vendor Award. ladies blouses. Launched Home Textile Collection in 1999. silk. Canada: Eatons. Grattan.AEPC/REG/MER/47569/N/2001) as a manufacturer/ exporter of readymade garments including woolen. AMC. wool). jute and hemp. Hudson Bay.. GUS. top of beds. which may have contributed to minimizing seasonality issues.EOU Information Modelama Exports Ltd. Federated Stores (Macy’s). Westelm. and blends. cushion covers. Zellers Australia: Country Road Awards Target Vendor Award of Excellence. 2000 Page 26 . 1993. and decorative items for loungewear like throws. Next. Monoprix. Added outerwear to their product mix in 2001-2002. Marks & Spencer. trousers. kidswear. Nov. Charming Shoppe Inc.
500 500 450 60% 40% 150. VA per employee Rs. 500 Total employment 500 500 Production workers 450 450 Proportion exported directly --Proportion exported indirectly through intermediaries Misc. of pieces exported to the US No. 3cr.5cr.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. No.000 30% Rs. 3000/per month Rs.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.IV. Rs. 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. 7 ICRIER Data (based on an interview at B-57 Okhla Industrial Area plant in Fall 2005) Page 27 . 2800/per month. 500 Rs.
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. Although they get large production volumes from discount retailers. “GAP is sourcing worth about $1 billion from India and we are doing more than $10 million with them. BRAND INFORMATION8 Modelama's Export Market 1% 5% U.com/defaultnextone.S. which includes not only the factory unit price but the duty cost (AMC and freight). 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. An example given was if the retail price of a given garment manufactured for Target is $9.” Lalit Gulati.asp?msg=2710&cod=newsin detail&nam=>. Vinita. “Build Quality Rather Than Check The Quality. The remaining $3. 9 8 Page 28 . Europe Others 94% Major Clients Brand Federated Stores (Macy’s) Target Stores GAP (incl. Of that remaining $3. 10 Nearly all brands are FOB with the exception of discount retailers like Target Stores (USA). Modelama Chairman. quoted in 9 Pandey.99.S. Average Unit Prices (per piece of garment supplied) Unit Price Origin Product Mix $5-7 USD U.A.V.99. 60% of that is Target’s profit margin per unit (PMU).99 is the landed cost. <http://apparelresources. the unit prices are markedly lower than specialty stores. ~$2.” Apparel Resources.75 goes to Modelama.
Marks and Spencer (Style and Co.80. and delivery times. and get down to manufacturing. an alumnus of the National Institute of Fashion Technology (NIFT). which varies according to the product. Typically.5 0. is one of the principal designers. subtract a bit.1 1981 0. Production Capacity12 9 8 7 6 5 4 3 2 1 0 Number of Garments Produced (milions) 8 4 2. Modelama will present their company profile to the buying agencies of MNCs. Some of the orders can be pretty huge . Then there is some back and forth communication between Modelama and the MNC to reach an agreement in terms of product design. for instance.asp?em=M&mcode=200602&idx=1083>.) as well as home furnishing products. volume. who will then contact them with a development package if their profile fits their needs. 13 From interview with Director and Senior Merchandising Officer.Unit Prices Since MFA Phase-out Unit prices have gone down an estimated 7-10% due to increased global competition. Vishnu.ittimes.000 pieces. add a bit. From company website and brochure. The day the researcher observed the process. INFRASTRUCTURE Subcontracting Modelama does not appear to subcontract..co.7 1 1990 1995 2000 2002 2005 projected Design/Sampling Modelama has a fairly large design department.”14 11 12 According to interview with the Director. We then sit down with the stores. “Indian Fashion Firms Adopt Global Pret and Couture. “My team of designers scans international trends and comes up with a tentative collection of not only designs but also shades. they were manufacturing garment orders for Charming Shoppes Inc.13 Gayatri Lal. V.kr/en/node.4 1985 0. 14 Makhijani. fine-tune the patterns.” <http://www.11 Production System Uses an assembly line system. Page 29 .
and brushing machines (from light softener washes to heavy enzymatic washes). This was the only department with women. Band Knife M/Cs. Departments17 Production (~800 Workers) There are about 560 tailors. color fastness to light. From interview with Director and Human Resources Manager. over 90% male. PH check. Site visited by the researcher employs about 1100 workers (including about 15 accounts staff). Auto Belt Attaching Stations. output. 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.” Modelama emphasizes technology and internationally acclaimed systems to maintain a high level of quality. The company deploys over 3000 imported sewing machines with customized workstations. at the front of which is displayed an “Hourly Production” dry-erase board with the line number. pitting test. Procedures are based on aql 4 point system by which all fabrics are screened and categorized. Page 30 . Auto Pocket Welting M/C. Auto Surging Machine.Quality Control15 Modelama’s motto is “build quality rather than check quality. 17 Information on machinery was primarily taken from the company website. Machinery includes Auto Spreaders. Information on workers and floor layout is specific to the unit visited and is taken from an interview with the HR Manager. supervisor name. Washing machinery includes a wet and dry processing unit comprised of micro processor controlled washer extractors. GSM check.000 workers in all plants. Programmable Sleeve Setter Stations. tearing strength. Differential and Bottom Cylindrical Bed Unison Feed Machine. Washing (24 workers) and Finishing/ Pressing (175 workers) The finishing area had lines of workers pressing and folding clothes. The floor is laid out in dozens of assembly lines. Machinery includes Auto Zig Machine. Differential Feed Machines Needle Feed Machine. Top. perc based dry cleaning machines. The product was women’s fashion blazers for Style and Co. they use internationally standardized procedures like the traffic light quality assurance system. and number of workers. Pneumatic Button Hemming Stations. laundering and crocking. Blind Hemmers. 15 16 From company website. Air Flotation Tables. Tests include tensile strength. Multifusing with Three Track of Loading (High Performance Macpee). etc. sand blasting. An example line was sewing collar parts with a total of 46 tailors and 5 helpers. Auto Dart Making Stations. Autocad (Lectra). Approximate number of workers16 Modelama employs a total of ~6. In the sewing departments. Auto Cutter (Lectra). Cutting (50-55 workers) The cutting department had five lines of machines laid out with worker stations. input.
VII. Veit.Pressing and finishing machinery include multipresses. and line supervisors who perform time studies on particular styles and set worker targets. 2448 per month. He talked vaguely about “helping” the worker to reach their targets or perhaps moving them to another department for which they would be better suited. the HR manager stated that no punitive measures are taken as it is prohibited by law. Machinery includes 20m length Schiffley Embroidery (Lasser & Saurer). flatbeds. the HR manager said that no incentives are given. calendaring machines and range of buck shapes and steam irons from manufacturers like MACPII. Page 31 . However. management states that they set wages higher than minimum wage to get workers to commute. Because the factory is not near a city. If workers cannot reach their targets. HR Manager boasted that Modelama was the only factory in India to have this machine. The production manager gave the researcher a copy of a time-study conducted for Charming Shoppes. Trevil. 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. indicating that he would like to develop such a system in the future. Additional Machinery Factory has a special conveyor system that moves products from assembly lines to other departments. The targets are communicated to workers by line supervisors and dry-erase boards on the production floor that display productivity goals. Productivity Schemes Company has production planning meetings consisting of the HR Manager. 3000 per month. stressing how much state-of-the-art machinery has contributed to the quality and productivity of the manufacturing process. and Renzacci. and unskilled minimum wage was Rs. Category Tailors +skilled 18 Average Wage (Rs. Has hand and machine embroidery capabilities. Inc style. dummy presses. No workers are involved in these meetings. 200 single head and 6 multiple head computer embroidery machines./month) 3500 From interview with HR Manager. Embroidery Did not observe embroidery process during visit. The Director said that workers are given incentives in productivity schemes if they reach their targets. Production Manager.
After a three-day period. workers are then offered a monthly wage based on this evaluation. HUMAN RESOURCE POLICIES19 There does not appear to be common policies across the plants. VIII. 19 Information based on interview with HR Manager and documents given by HR Manager and production manager. stating. like China. HR Manager stated that wages increase after a year. Benefits HR Manager indicated that workers receive the social benefits required by law. including ESI and PF.” Labor Turnover Estimated worker turnover per month at 7-10%. except for worker recruitment for middle management positions. “It should be time-and-a-half. and that workers receive double wages for overtime hours. Indicated that there are a few shop floor employees who have remained the two years the factory has been in operation.+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. Page 32 . Expressed dissatisfaction with labor laws requiring double overtime. supervisors conduct time studies evaluating the skill level and productivity of a new hire. Overtime Management indicated no more than four hours per week per worker. which is not subject to negotiation.
and in nearby worker villages. Recruitment Policy They do not use labor contractors at the unit visited. and vendor codes’ of conduct. according to G. 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. at bus stops. the company recruits from training centers and placement companies and has a formalized policy that the researcher obtained. grievance procedures. Workers are a mix of local villagers and from Gurgaon. To recruit shop floor employees.Management Structure Mr. Beneeta Seigal Senior Merchandising Other Upper Management Positions Mr. For middle management positions. Lalit Gulati Sole Proprietor Founder/Chairman Mr. However. standing orders. the company posts signs on the gate. Phase-I Gurgaon.” Modelama uses labor contractors for some of its other units. Manicandan’s “Mapping First Tier Suppliers in Garment Industry in Delhi. However. Anil Chauhan HR Manager Management Staff/Accounts Personne Mr. Worker Training This site does not provide training to its workers. Lovleen Kumar Director Ms. Kiran Production Manager Mr. such as the unit located at 200. K. Page 33 . workers have a brief orientation session during which they are informed of security measures. while dotted-line boxed positions are factory-specific and subject to variance. Modelama’s anti-harassment policy.
Customs Security requirements regarding issues like preventing trespassing.S. in compliance 20 21 Received a Hindi copy of group meeting minutes.” but when asked to meet the doctor. was displayed on the factory floor. nor have there been unionization attempts. According to G. and an ESI station 1.20 Grievance Policy Procedure If workers have a problem.5 km from the factory.Dismissal Procedure No information was obtained by the researcher regarding a formalized procedure. Received a Hindi copy of policy. companies have required them to uphold a more stringent counter-terrorism model of security in compliance with U.” Worker Committees Since there is no union. The code of conduct for Charming Shoppes Inc. they have joint employee-worker committees required by law.” there are no doctors in two of Modelama’s other production units (200. Security New security measures have been implemented since the quota phase-out. that they can report their grievance to their direct supervisor or upper management. Manicandan’s “Mapping First Tier Suppliers in Garment Industry in Delhi. U. but only in English. A resident doctor is “available at all times. HR Manager indicated that there are very few worker grievances. traceability. Medical Care There is a medical room in the factory. “We take care of all their problems. Page 34 .S. the researcher was informed that he was at another production site. tampering. an Anti-Harassment Committee. such as a Health and Safety Committee. preferring to dismiss the workers. The factory locks its doors at night. or CTPAT model. If workers suffer from minor injuries. and a Sexual Harassment Committee. There are only six recorded injuries at this site for 2006. a Works Committee. but avoids paying for major injuries and illnesses. the company usually pays the medical expense. according to the Customers Trade Partnership Against Terrorism. 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. Phase-I Gurgaon and B-57 Phase-I Okhla Industrial Area). Union There is no union in the production site visited. so there is no need for a union. All workers were said to have received medical attention.”21 Corporate Responsibility/ Codes of Conduct Modelama’s Anti-Abuse/Harassment Policy is posted on the factory floors in English and in Hindi. Work times for employees were also posted. There is a company dentist that comes every Thursday. and that management works to quickly solve problems in order to maintain an atmosphere of “family.
and Sanjay Gulati. low relative levels of productivity. A business strategy that Modelama is looking into is “triangular shipping. 25 crore in jackets alone. Vinita. stated that seasonality was not an issue and that they have orders year-round. 22 Pandey. Lalit Gulati. the Chairman. IX.asp?msg=2710&cod=newsin detail&nam=>. the Chairman stated that though the South is better known for it.22 X. The Director mentioned that seasonality is an issue. Page 35 . 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. however. Lalit: Machines change according to the product requirement…We have to be flexible because the buyer doesn't buy one thing all the time.with these measures. <http://apparelresources. and then ship the product from that country. “Build Quality Rather Than Check The Quality. If Modelama has had as much success in outerwear as they have stated in press releases. whose upper management and design departments would remain in India. Modelama successfully invested in the necessary infrastructure to export ~Rs. The HR Manager. 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. We do not need masters. MNCs would present their contract orders to Modelama as an Indian company. If workers stay for overtime. we need operators who can be trained. In 2002.perator. and government bureaucratic hurdles regarding labor law. 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. BUSINESS BOTTLENECKS Main problems hindering financial success according to the Director are poor relative infrastructure. 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. 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. only their department is kept open and the rest of the factory is shut down at 6 pm.com/defaultnextone. Modelama would then shift the actual manufacture of the product to either countries with lower labor costs like Sri Lanka or duty-free countries. it would appear that seasonality should be less of an issue for them than other companies who do not manufacture winter clothing. relative strength of the Indian rupee to the dollar opposed to weaker Asian currencies. the former Director stated: Lalit: We do not consider machines as individual equipment but as a complete workstation. In an interview with Apparel Resources magazine.” a more developed system of subcontracting modeled on Southeast Asian business strategies.
when they began to develop the infrastructure to manufacture outerwear. The only question that management would not answer was regarding a detailed financial breakdown of the company. Modelama was the first company to be interviewed by the researcher. The high level of attention paid to infrastructure and personnel management is probably not typical of their older factories. who was not available on the date of the interview. but directed the researcher to her colleague. Page 36 . The unit visited is the site of their corporate offices and was built two years ago with the help of industrial engineers. then was directed to a Senior Merchandising agent. Contact was made by calling the general inquiry number on the website.Sanjay: It is a very unique combination of machines that we have that gives us this flexibility of handling [versatile] product [mixes]. as it is the most modern. This is likely the factory to which buyers are taken. Modelama was very open in disclosing information about the factory unit. XI. PERSONAL EXPERIENCE Modelama used an Italian consulting agency for the design of two of their factories.
Two or three other units are in Delhi (Noida) and a fabric processing unit. BRIEF HISTORY Incorporated in 1974 in Delhi. Faridabad.raman@shahi. Sector 28 Faridabad 121008. the company website.in Head Office Faridabad23 Industrial Plot 1. SHAHI EXPORT HOUSE PVT.2. Shahi Export House has a total of eighteen manufacturing units. Haryana. Sector 28.shahiindia. the owner of the company. Senior Management Ashok Raman.com Head Office Bangalore Belandur Gate. Harish Ahuja. Divisional Manager of Marketing Mobile: 93-13369269 E-mail: ajay.co. The information in the following company report was primarily obtained from interviews with the General and Divisional Managers of Marketing. Tel: +91-129-2273970/80 Fax: +91-129-2273485/91 E-Mail: seh@vsnl. CONTACT INFORMATION Contact People J.co.com Website: www. is former vice chairman of the Apparel Exports Promotion Council of India. business articles. I. II. The remaining woven and all knit production sites are located in Bangalore.in Ajay Khanna. Sarjapur Main Road Bangalore 560034. Karnataka Tel: +91-80-28439214/15 Fax: +91-80-28439356 E-mail: firstname.lastname@example.org@shahi. Manicandan’s CEC report.com Production Units: Plot No. is in Ghaziabad. Page 37 . 1. General Manager of Marketing Mobile: 98-18212505 E-mail: ashok. Palmprint Textile.24 23 Unit visited by the researcher. LTD.D. and G. Giri.
golfwear.25 Wal-Mart. Euro Open. flat back rib. men's and ladies' bottoms. Cento Mila. Jeans Dynam. JC Penny’s. ladies' and girls' dresses. Natural Issue. mock neck. spun filament. Van Heusen. and circular woolen knits. full jacquards. rib. No.The fabrics range includes solids. Product Mix Areas of specialization are mostly ladies woven tops and men’s tops. but it is a small fraction of turnover ($5-10 million).. jacquard.III. jackets. yarn dyed single jersey.. The knitwear product range includes 3 button polo shirts. Target Stores. interlock.nsf/pub/Fashion_News_05_02_en2_Webb. loungewear. ladies' & girls' blouses . t-shirts.26 24 Fashion Newsletter. nor does it currently have plans to do so. At Last and Co. John’s Bay. 25 From company brochure. Old Navy. though any exporter of this size must have at least one registered EOU for importing capabilities. American Eagle. Family-owned. Hollister Co.pdf/$FILE/Fashion _News_05_02_en2_Webb. 26 Remaining client names were obtained from interview with Divisional Manager of Marketing. <www. BASIC PROFILE Legal composition of the Company Private Limited Company. which was printed in 2005 by the Bangalore office. Seacorn. EOU Information No information was obtained regarding registration and EOU capabilities. H & M. Bleu. Carolina Colours. Page 38 . Up until a year ago. textured knits. pique. Sag Harbor (Sport). Ralph Lauren. double mercerized. the sole proprietor was Harish Ahuja. Shahi has expanded to home furnishings in the past year. No Boundaries. Liz Claiborne. tailored collar polo shirts. polyester viscose.com/www/resource. GAP. Cherokee. Shahi does not manufacture for the domestic market. Faded Glory. Arizona Jeans Co. Clients Bobbie Brooks (Woman). sportswear. TKS Basics. turtlenecks. 2. Abercrombie & Fitch. American Khakis. indigo dyed units. lingerie. who is now the Managing Director. Carolina Blues. engineering stripers. (Pacific Merchants).pdf>. sleepwear. It is primarily information taken from the website with a few new passages regarding Human Resources and corporate responsibility. St. 2005. Shahi’s product line covers casual and formal men's and boys'. Enzo Lorenzo. Von Daniels. A & F. tanks tops. Place Jeans. Exports/Imports 100% exports. polyester cotton. The Children’s Place.lawson. Solutions (New York). 100% polyester polar fleece. heavy jersey in cotton. Cross-Bow. cotton fleece. acrylic wool. Akademiks.
30 These figures were estimated by the Divisional Manager of Marketing in the space of 5-10 minutes. 28 Fashion Newsletter.65 Material Cost Labor Trims and Packing Depreciation Machinery upkeep Overhead Embellishments32 Profit 27 Estimated by General Manager of Marketing.com/www/resource. FINANCIALS Turnover $140 million 2005-200627 $120 million 2004-200528 $90 million 2003-200429 Other Financials Breakdown of Sales Revenue30 Est USD 2006 70 million 16.8-23.65 $0.pdf>.78-$1. No.nsf/pub/Fashion_News_05_02_en2_ Webb. 2.5 USD. 31 Based on the company’s average unit price of $6. accessed July 2006.07 $0. It can be none or most of the unit price. 32 Embellishment costs such as embroidery depends on style.Awards Wal-Mart International Supplier of the Year 2000 (can’t read others) IV.13 $0.11 $0.8 million 7-14 million 14 million % of Sales 50% 12-17% 10-20% 1% 2% 2% 5-10% 10% target Per Unit Price31 $3. Page 39 .13 $0.8 million 14-28 million 1.4 million 2. Did not obtain average retail markup information.30 $0.25 $0. Percent of sales is based on an average estimate given by the Divisional Manager of Marketing.65-$1. so they can only be thought of as a rough approximation. Turnover estimates varied by tens of millions of dollars between the GM and the Divisional Manager of Marketing.pdf/$FILE/Fashion_News_05_02_en2_Webb. though generally it is four to seven times the unit price of the garment. 29 Estimated by General Manager of Marketing. so figures cannot be considered accurate.8 million 2.033-$0.lawson. 2005 <www.
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.
Durkopp Adler. It is also equipped with single needle lock stitch programmable machines with UBT.500 in all of Shahi’s production sites 1. desize soft wash and golf ball wash.800 in all of Shahi’s Delhi (Faridabad and Noida) units 750 in production site visited The CAM based cutting department can make 75. Sampling This is a fairly large department in the production site visited. stone wash. feed-off-the-arm machines. in sewing. Its implementation and form depends on the department. fusing press. This unit has an incentive scheme for productivity.000 cuts per day. pocket machines and automatic pocket welters. and it was stated that each unit has a similar department. Hashima and Kannegiesser. but they Page 43 . accounts. They also conduct joint department meetings. double needle-needle feed split bar machines. There are two departments for sampling. Productivity Schemes The unit visited has an industrial engineering department with eight staff. in which workers get bonuses for exceeding their targets. The latest CAD software enables quick processing of pattern creation. very little is done by hand. one for production and another room with rows of computers in which employees work on digitized patterns and samples. which can be 10-25% of monthly salaries depending on how difficult the style is. and there are quality bonuses if clothes do not need repairs. The incentive scheme only applies to skilled and semi-skilled workers. These meetings set targets for the shop floor workers. single needle top and bottom variable feed machines. shipping staff Total number of workers: 3. collar/cuff turning and blocking machines. The Divisional Manager of Marketing states that they always had incentive schemes. grading. merchandising. while the 60 multihead computerized embroidery machines have a capacity of 800 million stitches per day.+Supervisors and dpt/line-in-charge 40 Sampling (think incl in production) 50-150 Remaining marketing. In finishing. enzyme wash . who are not involved in these meetings. Embroidery Most is done by computer. Juki. line supervisors convey target setting to them. Washing The washing facility puts out over a ton of garments per day through specialized wash treatments such as softener wash. They conduct production planning meetings jointly with managers and supervisors by department. every hour the target is marked. marker making and global electronic exchange of pattern data. The production unit boasts machines from Brother. For example. This department is responsible for timemotion studies and an operation breakdown.000 Mostly female Mixed Machinery 6. Ngai Shing. incentives depends on how many pieces are finished.
VII.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. Benefits of the incentive scheme include a 10% increase in productivity in past two years in the sewing department. these benefits are additional. and another fifteen-minute tea break between lunch and the end of their shift. 40 G.have recently gone through major changes in their implementation. leaving male sewing operators and some female ones. there was still a strong female presence in the factory./month) Unskilled helper 2200 Semi-skilled operator 3600 Skilled operator 6. when the first shift of workers were getting off. Manicandan’s CEC report says a supervisor with eight years experience makes Rs./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. and a decrease of waste in the cutting department. 39 Stated that these numbers do not include ESI and PF. 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. lower labor turnover.000 Supervisors/Mid Mgmt 10. Manicandan’s CEC report. However. 37 The researcher toured the factory around 5 pm. 38 According to G. Workers use their ID card to clock in and out of the factory.38 Wages As Estimated by Divisional Manager of Marketing39: Category Average Wage (Rs. an increase in attendance. Page 44 . 4200. the workers at this unit do not get a tea break. This early shift seemed to be entirely female.
Benefits Stated that workers do receive ESI. they try to have the male workers pick up the extra work instead of the female workers. Most sewing operators have been at Shahi for around two years. Workers are then on a three to six month productivity probation. Shahi’s overtime policies take into account gender.” ~Shahi’s website Shahi’s updated brochure includes lengthy passages stating their dedication to innovative Human Resources approaches. Estimated two hours per week per worker in the sewing and finishing departments.Wage Setting Procedure Managers interview workers and then take a trial of their work for one day. VIII. and negligible overtime for the other departments. PF. Overtime Stated that there is not a lot of overtime because they plan production with target setting. HUMAN RESOURCE POLICIES41 “Human intelligence is the greatest asset which we possess. The Shahi workforce consists of committed and highly skilled people. Workers who receive less than Rs. they are only evaluated to see what category of skill they fall in. 7500 are provided with ESI benefits. which the researcher observed. after which the HR manager will put them into a set wage scale depending on their ability. Wages are fixed and there is no negotiation. if overtime is needed. Labor Turnover Estimated at 7-10% per month. and a three-month maternity leave. People who are motivated to excel and trained in different disciplines of garment 41 From interview with the Divisional Manager of Marketing. Workers also have access to an on-site crèche for their children during the workday. Page 45 .
42 The brochure and website both state that human resources are developed using the training procedures of Kurt Salmon Associates. making Shahi one of the most sought after organizations to work for in the garments arena. Labor problems get a kind ear and are followed up on a priority basis. Shahi has invested in a dedicated personnel management division to take care of its labor. not the outskirts of cities. workers revealed that there had been unionizing attempts that were suppressed by the management. they provide transportation to overcome those issues. but it is not necessary to do so here. Employ more women and uses HR strategies to disempower workers and remove blatant rallying points for workers. They do not recruit for shop floor positions beyond posting signs on their gates and through wordof-mouth. In the Shahi factories in Bangalore. Union Didn’t ask directly. but definitely not. Training depends on the job description of the worker. so they do not need to train them. 42 From company brochure and website. Grievance Policy Procedure Presumably. Worker Committees Stated that there is a worker forum that managers also attend. Particularly so as clothing corporations the world over are labor intensive and it’s imperative that they are well looked after. Page 46 . the worker forum is a “safe space” in which workers can address any issues they have with managers.manufacturing. They are able to have female workers because they are in heart of Faridabad. so the labor is here. Some are skilled. Worker Training Shahi trains the unskilled operators for a period of a week. In G. Recruitment Policy Shahi states that they do not use a labor contractor. Dismissal Procedure No information was obtained regarding a formalized procedure. There is also an orientation program for upper level staff. and union organizers were either dismissed or isolated from other employees. Shahi has ensured all systems are in place to make sure that everybody works in an extremely salubrious environment. it is all direct employment. Manicandan’s CEC report.
More of these were in both Hindi and English than I’ve seen at other factories. There are many signs posted on the factory floor with stating things like “Discipline: Team work is an easier path to excellence.” Shahi’s updated brochure includes add-ons regarding treatment of their labor force. in fact nearly all had a Hindi translation. Evaucation boards are put up on all floors along with photographs of fire fighting personnel. and lectures. Fire fighters are on high alert at all times and every floor is equipped with the right fire fighting equipment. Target Stores. seminars. Charming Shoppes Inc.43 Shahi’s website claims a dedication to the environment and that “waste reduction is practiced to the hilt… the plants are environment friendly with Effluent Treatment Plants at all the wet processing units.. and nutrition related topics. It aims at providing a conducive environment for employees to protect. American Pacific. hygiene. educational facilities for children. Dayton Hudson Corporation.Corporate Responsibility/ Codes of Conduct The company has a biweekly English magazine that publishes news and articles by workers. personality development through work shops. securing of employees’ earnings through e-com (EDI) and ATM cards. Shahi Export House adheres to International Labor Legislation. attendance and productivity. Wal-Mart. 44 43 Page 47 . The Limited. Liz Claiborne. Nautica. Awareness programs are conducted for employees on health. From interview with Divisional Manager of Marketing and joint worker-manager magazine. training facilities for employees. and support their families in the best way possible.” “Anything worth doing is worth doing well” and one about the importance of personal hygiene.44 Safety measures are given utmost importance. and American Eagle. Strict compliance with anti-child labor law is ensured. Codes of conduct posted in factory include Carafour. Best employee awards are given for overall discipline. They have activities for the workers such as an annual cultural week with games and contacts. And some of the remarkable provisions for employees include: eligibility of workers for health insurance. and a first aid room in the facility. 45 From company brochure and website. A full-fledged Dispensary and Ambulance is provided with a doctor always on standby. promote.45 Medical Care There are male and female onsite doctors and nurses in case of industrial accidents. The company organizes fire drills to keep employees alert in case of emergencies.
where the garment industry is over 90% male. U. Suppliers have changed post-quota.000 pieces per month. INDUSTRY COMMENTS Trying to build up capacity to produce outerwear by next year to reduce seasonality issues. (Stated that retained incentive schemes and everything off-season. now they do. Shahi does not have a sexual harassment committee.4 million pieces during the peak season and 2. Also argued for more labor flexibility. Mentioned that Southeast Asia has the same problem of seasonality. Customs Security requirements regarding issues like preventing trespassing. according to the Customers Trade Partnership Against Terrorism. IX. Shahi is notable in that they have a majority female workforce in a place like Delhi.46 Shahi recently opened up a warehouse in New Jersey. The production unit was enormous. 46 47 From interview with Divisional Manager of Marketing. or CTPAT model. The Marketing Managers did not mention any new initiatives taken to deal with the issue. companies have required them to uphold a more stringent counter-terrorism model of security in compliance with U. before they didn’t have the quota holdings to compete. though the researcher was not permitted to take pictures during the tour. as they produce about 2.47 XI.S. Shahi has to decline some orders during peak season (OctoberMay). The security guards inside were asleep. who reported her case to the police. Website contact numbers are out-of-date. however said they currently retain workers during the off-season because it becomes a problem to rehire workers. The picture of the minimum wage was taken by the manager. From interview with Professor Rajesh Bheda of NIFT.S. now they are getting competition from small exporters. since it takes too much time to get clearance at the ports. However Shahi is trying to diversify their product range so that it becomes even less of an issue. Page 48 . Manicandan’s CEC report.1 million PCs during the off-peak season. and then not working to full capacity during the off-season. only different season.Security System New security measures have been implemented since the quota phase-out. It is not a huge issue. Stated that they need better infrastructure regarding port system. However. according to G. traceability. and there was some controversy a few years back regarding a male manager and a female worker. but I did not have to show it. tampering. PERSONAL EXPERIENCE Obtained contact information from NIFT. Supposedly all visitors have to have proof of identity.) X. as he would not permit the researcher to do so. Shahi is currently constructing a production unit in Bangalore that would have a capacity of manufacturing 200. BUSINESS BOTTLENECKS Seasonality is an issue.
who had contacts in the garment and textile industry. Magu. 500. Page 49 . Gurgaon49 The researcher was not able to obtain the addresses of all nine factory sites. and an interview with an Assistant Production manager.000 ($444 USD50).111 USD) in the first year. south of Gurgaon). BRIEF HISTORY Company established in 1976 by Mr. due to the quota phase-out. K. 50 Conversions are based on today’s exchange rate (Rs. shop floor observations by the researcher.K. Magu and deceased brother. 26818977. two are in Manesar (southwest of Delhi.3. The company’s turnover was Rs. he started business in 1977 with an investment of Rs. 110020 (India) Tel: +91-11-26816917. H. 51 48 49 Unit visited by the researcher.com Production Units Magsons Exports. CONTACT INFORMATION Contact People H. II. 51 Information on company background from Managing Director. Managing Director Senior Vice-Chairman of the AEPC (Apparel Export Promotion Council) Mobile: 9810029999 E-mail: hklmagu@jyotiapparels. a company profile and Standard Operating Procedures given by the Managing Director. which roughly doubled each year until 1984. 45~$1) and are not adjusted for inflation. Phase-I New Delhi. He had no experience. and two are in Okhla Industrial Area (New Delhi). L. 26817910 Website: Jyoti Apparels does not have a website. 26810804 (D) Fax: +91-11-26819684. The company has increased sales an estimated 30-40% in the past year. I. 20. 41/42 Phase IV Udyog Vihar. E-mail: jyotiapparels@vsnl. 000 ($11.com Manish Mall Assistant Production Manager Mobile: 9899096999 Registered Office48 D-42 Okhla Industrial Area. 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. but by networking through his brother. and remaining information is from observations unless otherwise noted. HR strategies and production from Assistant Production Manager. Unit visited by the researcher. of which five are in Gurgaon.L.
gents. Otto Australia and New Zealand: Just Jeans. Onyx Denmark: Kompagniet Switzerland: Manor. T.III. Miss Erica UK: Marks & Spencer. Mexx. Brylane. Prenatal. Reitman Israel: Fenomen Malaysia: Metro Jaya Spain: Mango. British Home Stores. Carol Anderson. The Farmers Trading Co. V F Jeanswear (Wrangler). maybe 2004. . owners are Mr. Jyoti manufactures some winter clothing (about 20% of production volume). India Imports. viscose yarn and denim fabrics. H. and children’s (roughly 15-20%) readymade tops. Lane Bryant. sequins. International.. Siplec (E Leclerc). Adams. Gus. K. Phool Fashion Ltd. K. Wal*Mart. Zara-Indtex Awards The researcher was unable to obtain any information on vendor awards. Donn Kenny. Zellers. Page 50 . Exports/Imports 100% exports. Clients52 USA: Kellwood (Sagharbor). and ethnic handiwork accents. with embroidery and beadwork. blouses. L. Charming Shoppes of America (CSI). Manufactures woven (80%) and knitted (20%) garments using mostly yarn dyes. solid dye. Karstadt Netherlands: Wehkamp. Littlewood. Oxford Industries Inc. Primark. Product Mix Areas of specialization include ladies’ (roughy 80% of production volume). (Target Stores. 52 According to profile (which is out-of-date. Debenhams.” it was pre-quota phase-out January 2005).. Jyoti does not manufacture for the domestic market.D. Roamans. Kishore Magu EOU Information No information was obtained regarding a registered EOU. J D Williams. Tesco France: C. BASIC PROFILE Legal composition of the Company Partnership firm. Zeeman Italy: La Rinascente. House of Frasers. Magu and Mr. Brumel. Promod Germany: Neckerman. as it mentions “Quota Holdings: We have sufficient quotas in all categories of USA. Canada: Hudson Bay Co. Enjoy. and other garments. Evans. Cabella’s. Jyoti’s strengths (and the North in general) are in high fashion garments with embroidery. Europe and Canada. skirts. but the majority is summer clothing. Woolrich. Blair Corporation). Specialize in high fashion made of exclusive prints. Freeman’s.
IV. 56 Average retail markup is four ($20) to six ($30) times the unit price of the garment.6 million 10 $0. etc. duty. 54 These figures were estimated by the Managing Director in the space of 5-10 minutes. which accounts for the inconsistencies. excluding the $12 million USD figure from the company profile.50 1.000 (15. retain 75-84% of the sale of a retail item. so they can only be thought of as a rough approximation.6-2. and cannot be used as an indicator of profit. were estimated by the Managing Director on two different occasions. 57 Since Jyoti’s unit prices are mostly FOB. 55 Based on the company’s average unit price of $5 USD. Japan. FINANCIALS Turnover 12 million USD (either 2003 or 2004) Current year 18 million USD Other Financials Current year sales Rs. Malaysia) Europe 53 Financials. Latin America.6 million 10 $0.50 1.6 million 10 $0. costs.57 V.6-2. this figure includes the amount the MNC spends on shipping.5% Other Manufacturing 1.5% MNC’s that source from Jyoti. 10% 50% 40% Others (Canada.555 USD)53 Breakdown of Sales Revenue54 Est USD 2006 Per % Retail Garment55 Price56 Material Cost 9.A.S.50 1. on average. Page 51 .6 million 10 $0.5% Subcontracting Cost 1.6-2.6-2.50 1. BRAND INFORMATION Jyoti's Export Market % of Sales U.5% Overhead and profit 1.3 million 60 $3 10-15% Labor 1.000. 700.
Did not mention any direct relationships.58 Production System 58 See Standard Operating Procedures for detailed subcontracting information. but they do subcontract their fabric sourcing and processing.000 square meters.000 square meters. and Gloria Vanderbilt through buying agencies. 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. Page 52 . VI. INFRASTRUCTURE Company has nine production facilities. he stated that unit prices have decreased about 10%. It is notable that Jyoti subcontracts to a Shahi processing facility. Two of the factories are 2. four are 1. and two are 600 square meters. primarily through the Triburg buying agency. Overall. which is not a production facility). but later stated that overall they have remained stable. Prices and other sourcing details are negotiated through the buying agencies.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. one is 8. the company has about 20. Subcontracting Jyoti does not subcontract the production process.000 square meters. American Eagle. Subcontracting has not changed since quota phase-out.000 square feet of land spread over ten different areas (including the registered office.
000 pieces per month. belt attaching. feed of the arm. According to company profile. washing machines and set of 84 stem boiler irons.000 pieces per month. lock stitch single needle and double needle. At production site visited. perk-chloro plants. Managing Director and Assistant Production manager stated they were all skilled. fusing machines. piccoting. shell stitch (Merrow). dry cleaning.000-90. Page 53 .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. and brown machine-embroidered skirts for American Eagle. Design/Sampling Small design department. cross stitch/lock stitch button/ button hole/ snaps. Production Capacity According to profile. usually 80. The researcher observed production of ladies’ white blouses for Emma James (Liz Claiborne). over locks. 59 60 See SOPs for detailed quality control schemes. which varies according to the product. Quality Control Jyoti Apparels has a quality control assurance team with both an in-house auditing scheme and third-party inspection. 8000 woven pieces per day and 1200 knit pieces per day. Sometimes Jyoti has people from UK and France do designs for them. computer embroidery. but primarily just take paper designs from buyers and converts it to clothing. elastic insertion.Uses an assembly line system.000 and 300. between 240.
Page 54 . and embroidery departments. cutting. though the researcher was not able to obtain a photograph of the plan.Ground Floor Plan Second Floor Plan There is also a basement floor with fabric and accessory storage.
Washing (10-15 workers) Washing was located on the topmost floor of the building. Packing (10-15 workers) Did not observe department during visit. There were no fans in this room. Sampling (15-25 workers) The fabric store had a sign reading “Triburg. etc. is data for production site visited. Production (~180-190 Workers)61 on Second Floor Machinery includes about 200 Juki stitching machines. Machinery includes one bandknife cutting machine and two straight knife machines. observations. Fabric and Accessories Store. with one cutting master. Embroidery (observed 5-7 workers) Workers have to take off shoes before coming in because of “dust. It did not seem as modern a unit as other top tier factories. The workers in this department were all male. This was the only department that had any female workers. Checking/ Finishing/ Pressing (40-50 workers) The finishing area had lines of workers pressing and folding clothes. three thread-cutters. Some of the fans were broken or not on. one cutting assistant.” which is the buying agency that many firms deal with. There were two workers on the machines. and the remaining workers helpers. two supervisors in an office in the corner.(Right) A view of the basement and ground floor. Document given to Buyer About Shop Floor Management (was displayed on shop floor. the researcher did not have time to write names) Magsons Export (a Jyoti Apparels Production Site) Finishing: One in-charge Finishing: One supervisor Finishing: Pressing Supervisor Finishing Quality Administrator (QA) Finishing Quality Checker (QC) Finishing: Quality and Production Floor After washing 61 Number of workers per department. Cutting (20-30 workers) in Basement There are four lines in the cutting area. Page 55 . directly facing cutting tables and below looking up at the finishing department..” so they are barefoot when operating the computer embroidery machine. The department has one finishing supervisor and one assistant finishing supervisor.
merchant/buyer (for style). it is all left to selfdiscipline. supervisors conduct time studies evaluating the skill level and productivity of a new hire. then the factory will give incentives. Page 56 . If workers exceed this by 1 lakh. security tag Four operators Step 2—Initial Pressing One supervisor Step 3—P.O. Labor Turnover Estimated worker turnover per month at 20%. production manager. rather they calculate targets manually by hourly production rate. which is not subject to negotiation.Step 1—Care label. Then he stated that they conduct production planning meetings with the factory manager.000-90. After one day period. The tailors and some finishing employees receive wages on a daily basis. and gave a copy of the minimum wage scheme for Haryana. and cutting supervisor who set the production lines and targets based on manual time-studies. workers are offered a wage based on this evaluation. extra button. The production unit visited usually produces 80.000 pieces per month. VII. Wage Setting Procedure For shop floor workers. Benefits Production manager indicated that workers receive ESI and PF. while the rest of the employees receive a monthly salary. First the Assistant Production Manager stated that they do not perform time studies. there is an incentive scheme that depends on monthly shippings. according to the Assistant Production Manager. However. finishing supervisor. Wise Tag check with care. 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. 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.
but managers observe productivity and hire skilled workers.VIII. K. Worker Training Sometimes Jyoti trains workers during a lean period if there is time. while dotted-line boxed positions are factory-specific and subject to variance. HUMAN RESOURCE POLICIES There are no common policies across the plants. Page 57 . because otherwise they become permanent and you have to pay them more. they are given a one month notice so they can find another job and they receive a letter of termination. Usually 20-25 tailors take 10-15 days to train. Management Structure Mr. Recruitment Policy Jyoti states that they do not use labor contractors. The Assistant Production Manager stated that if workers are not productive. Kishore Magu Partner Other Upper Management? Factory Manager Management Staff/Accounts Personnel Production Manager Manish Mall Assistant Production Manager Line Supervisors Assistant Supervisor (Less skill/experience) Skilled Tailors/Machine Operators Helpers (Unskilled) Boxes with straight-line borders are positions common throughout all production sites. Workers do not need experience per se. though the Director mentioned that workers learn on the job. but these tend to be more middle management people. The Managing Director states that they recruit people from Apparel Training and Design Centers. and the extent of their recruitment is posting signs on their front gates. Dismissal Procedure The Managing Director stated that they keep workers for 240 days and then change their workforce. Magu Partner Founder/Chairman Mr. H. L.
no imports because would have to pay landed costs). they should run cargo through machines instead. Worker Committees The Managing Director stated that they do not have any worker committees. He said they have the joint employee-worker committees required by law since there is no union. There is a path behind the building to get to the main office over ripped metal sheets over grates. The production site visited did not have a union. according to the Customers Trade Partnership Against Terrorism. they cannot transfer goods during “peak hours. and high transaction charges. higher material costs (indigenous. but the Managing Director stated that when the old employees formed a union. and they have monthly meetings. he did not. but did not give a visitor’s pass. Believes that there should be special customs lines at airports so that everything is not searched.” trucks are only allowed to transport good between 11 and 4. ports. Second time took my name. he moved production to another site (now there is just the accounts staff and some sampling/design).. anti-harassment. etc. production. Grievance Policy Procedure/Corporate Responsibility/ Codes of Conduct No information was obtained regarding a formalized grievance policy procedure. Page 58 . though neither of them knew where the medical facilities were located.62 Security System New security measures have been implemented since the quota phase-out. duties. etc. IX. Medical Care There are doctors nearby the factories and first-aid kits in the production sites. etc). No common policies (with HR.S. such as environmental. The first time security did not take my name in the confusion of finding a manager. high rate of interest. lack of good fabric processing machinery. He stated that old employees with a union do not work as hard. companies have required them to uphold a more stringent counter-terrorism model of security in compliance with U. which makes it difficult to meet deadlines. labor laws (especially the lack of hire and fire exit policy). 63 Based on interview with Managing Director.S. etc. but talked about them vaguely and though he stated that he could give me committee minutes. Customs Security requirements regarding issues like preventing trespassing. or CTPAT model.) across plants except for buyers code of conduct. but no visitor’s pass. tampering. However. traceability. the Assistant Production Manager stated that they do have committees. U.Union The corporate office used to be a production site. A lot of money is invested into customs. 62 Based on interview with MD and Asst Production Manager. BUSINESS BOTTLENECKS63 Main problems facing the industry are poor infrastructure (need better highways. Does not have its own employee code of conduct. For example.
as were much of the staff at the production site. it was difficult to deal in huge quantities because of the possibility of mistakes in such a large order. like American Eagle. and one of them glanced at a time-study once. etc.” in which infrastructure would be built up by the government. The Assistant Production Manager was almost never at the factory when the researcher came to the production site. The Managing Director is the Senior Vice-Chairman of the AEPC. as they still have the edge on labor productivity and good infrastructure. and did nothing the rest of the time. so could not take orders from them anymore. INDUSTRY COMMENTS64 Jyoti used to deal with Wal-Mart and Target. etc. before couldn’t have more because of quotas. who also permitted the researcher to take photos. which is the capacity in which the researcher initially came to interview him. Also.) or some supervisors do anything. Page 59 . production manager. Jyoti was an extremely open company in many respects. labor laws would be relaxed. Post-quota phase-out resulted in a boom for Indian business.” Jyoti supports “special garment zones. China is their main competitor. This year. Phase out of quota system has brought in new buyers. and had everyone borrowing money from the bank and investing in huge factories. the overseas vendors couldn’t sell their inventory.X. They played solitaire. He was very open in disclosing information. Companies are very upset with the government’s “bureaucratic hurdles. or even leave their air-conditioned offices. XI. did not see upper management (factory manager. because of the late summer. but unit prices got too low. making access to plants easier. PERSONAL EXPERIENCE When observed work at the production site. 64 Based on interview with the Managing Director. They’ve had to become very quality-conscious and price-conscious.
Phase III. 225. black iron. 68 According to the company website. I. Udyog Vihar. an interview with a General Manager of Operations. New Delhi . Phase I. Gurgaon 8. Phase I. 66 According to company website. 25454895 Contact person: Padam Vaish. 239. BRIEF HISTORY68 Vijay Uppal. Page 60 . Phase I. G International was established in 1983 in Delhi and 1996 in Gurgaon. and G. Mayapuri Industrial Area. Phase I. New Delhi 2. Gurgaon. General Manager of Operations 236 Udyog Vihar Phase-I. Gurgaon 7. Ware Housing Scheme Kriti Nagar. including: 1. 151. Gurgaon 5. 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. aluminum hardware. Udyog Vihar. B-108. Phase III. Udyog Vihar. and ironmongery. Gurgaon 3. the current Chairman. Phase-I. and Bangalore. Udyog Vihar. including: 1. Udyog Vihar.69 The R Group established its own textile mill in the year 65 Disambiguation: There is another company by the same name registered in UP that produces brass hardware. with one woven garments manufacturing unit in Delhi. Gurgaon 2. Udyog Vihar. Udyog Vihar. 69 From an interview with the General Manager of Operations. 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. Noida. Phase IV. Gurgaon 4. Manicandan’s CEC report. CONTACT INFORMATION65 Registered Office: 2/2. 208. Gurgaon67 6. 479. 236. Gurgaon. 25172437.4. Udyog Vihar. 192. Udyog Vihar. incorporated R and Co. 133. Phase III. in 1977. 67 Unit visited by the researcher. 506. Phase-I Gurgaon The company profiled has over ten manufacturing units. II. 25172438 Fax: +91-11-25451549.110015 (India) Tel: +91-11-25431408. 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.
Cortefiel. BASIC PROFILE70 Legal composition of the Company Virender Uppal is the Managing Director. anilines. and leather high fashion garments for men. pants. Federated Stores. BCBG. waxy distressed/ oily nappaloans. skirts. pants and shorts. semi-nubuck.K. Goat and Cow leather as well as nubuck. Etams Miss Sixty. Next. Exports/Imports 100% exports. May Stores. ladies tops. J. It has initiated a backward integration project by starting its own tannery in Hyderabad. III. women and children including shirts. while Vijay Uppal and Gaurav Uppal are Joint Managing Directors. Charming Shoppe.Y. Women’s Secret. antiques. Product Mix Areas of specialization include ready-made woven. Land’s End. Mexx. the group includes eight companies.N. and Marks & Spencer. The company has already started manufacturing leather accessories and is further expanding with a bigger factory planned in Gurgaon. Liz Claiborne. Including the original R and Co. semi anilines. The tannery has modern finishing technology for leather finishes of Sheep. Monsoon. Debhnams. trousers. Awards 70 According to the company website. Sigrid Olsen. R Global was incorporated in 2002 at Bangalore. Inc. Calvin Klein. Clients The R Group sources to over fifteen countries.1992. Target. Page 61 . skirts etc. which will specialize in ready-made specialty shirts. D.. Mervyn’s. knit. The R Group began producing knitwear when Gaurav Uppal joined the company management. Betty Barclay. to brands such as GAP. Wal-Mart.Crew. Spigel. women and children such as jackets.. Polo Ralph Lauren. vests. The R Group has recently established a fully integrated production line in Noida.. cargo pants and shorts. Lane Bryant. Ann Taylor. It specializes in (primarily) outerwear for men. The group launched a leather manufacturing unit in 1989 specializing in high fashion leatherwear under the management of Sunil Kapur. Tommy Hilfiger. The company has set up its own offices in Ludhiana and Tirupur in order to better source fabric. Timberland. Dillard’s Sears. The R group does not manufacture for the domestic market.
A.S. U. 90% Major Clients Brand GAP Macy’s Wal-Mart Dillards Liz Claiborne Federated Stores 71 72 UK and Japan Origin U. BRAND INFORMATION72 Export Market of the R Gro 10% U.S. FINANCIALS Turnover The R group has an expected annual turnover of US $ 85 million for the year 2005.A.A.A. Page 62 . U.S. From an interview with the General Manager of Operations. U.A. U. U.IV.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.S.S. Export Performance Chart71 Other Financials No other financial information was obtained.S.A. V.S.
unless otherwise indicated. Subcontracting G International subcontracts their hand embroidery.5 APQ” quality check standard across the board. For a more detailed quality control process. though they occasionally take direct orders.Buying Agency or Direct Contracts are mostly negotiated through buying agencies.000 pieces. or sometimes they embroider in their homes. has an annual production capacity of 2 million knitted garments. Noida. However. Production Capacity The R Group’s woven division has an in-house annual production capacity of 10 million pieces. G International takes indicative orders from the buyer. G International does not use a recruiting agency or a labor contractor. Smaller companies are more likely to be direct orders. Quality Control The General Manager of Operations stated they use a “2. the company’s knitwear divison. Wal-Mart usually orders the largest volume. since they often don’t have established offices. and the buyer selects and negotiates the contract. R Global. 76 From an interview with the General Manager of Operations. 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. Gurgaon. Taken from the company website. shows a sample range. 75 From an interview with the General Manager of Operations. though there are fewer orders in the fall and winter. there has been a 15-20% increase in orders. They set up a shelter (“shack”) for local tailors to do the hand embroidery. VI. 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). and Bangalore. 73 74 Including Wal-Mart. though not to an established company or to direct employees.75 Production System The R Group uses an assembly line system. INFRASTRUCTURE74 The R Group has over twenty-two integrated manufacturing units in Delhi. The R Group’s leather manufacturing unit has an annual production capacity of 500. Page 63 . see company website.
They have incentive schemes for things like 100% attendance. 78 From an interview with the General Manager of Operations. 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. 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. 77 After disclosing this information regarding the number of skilled workers. Productivity Schemes The company has production planning meetings in which targets are set and the workers do not participate. 700 per month extra. scholarships for workers’ children. time and motion studies. 80 From an interview with the General Manager of Operations.79 VII. material flow). Plotters & Automated Cutting Machines) and fabric testing (fully equipped laboratory) and fusing. cutting (Digitizers.Approximate number of workers in all facilities The R Group has a staff of over 10. operation research). to the pre-production stage (layout and machine engineering.78 The R Group has a Research and Development department for the technical aspects of garment manufacturing.000.77 Machinery R Group’s production facilities use machinery at every point in the production process including designing (CAD). from the sampling stage (product and pattern engineering. an estimate was approximately Rs. and worker welfare programs. Departments No information on specific departments was obtained. 79 From the company website. Preliminary worker interviews revealed that this company was considered one of the worst factories to work for in Gurgaon. Page 64 . the General Manager refused to give any more specific numbers of workers. to the production stage (work aids. They incorporate corporate social responsibility schemes into their productivity ideas. operator training and skill analysis). G International has a total of 7.000 workers. 5% female). with 1200 workers at this site (approximately 95% male. such as medical checkups.
workers receive 12% PF and 2% ESI. which is not subject to negotiation. none of which were visited by this researcher. Overtime payment is Rs. which is made on a different date than the regular salary. Manicandan’s CEC report. 15 per hour. Benefits According to the CEC report. VIII. while dotted-line boxed positions are factory-specific and subject to variance. Page 65 . Vijay Uppal Joint Managing Director Mr. workers are then offered a monthly wage based on this evaluation. 151 UV. HR Manager stated that wages increase after a year. HUMAN RESOURCE POLICIES Management Structure Mr. Gaurav Uppal Joint Managing Director Mr. Padam Vaish General Manager of Operations Factory Managers at each Incorporated Company in the R Group HR Manager Management Staff/Accounts Personnel Production Manager Skilled Production Line Supervisor Assistant Supervisor (Less skill/experience) Skilled Tailors/Machine Operators Helpers (Unskilled) Straight-lined boxes are positions common throughout all production sites. supervisors conduct time studies evaluating the skill level and productivity of a new hire./month) 2600 2750 2344 1893 2341 Wage Setting For shop floor workers. and 225 UV. Category (from pay slip) Tailor Sewing Operator Helper (8 months experience) Unskilled helper Helper (production) Wage (Rs.Wages81 The wage amount excludes overtime payment. 81 From G. though they do not always receive their PF once they leave the company. which is reportedly not always paid. Virender Uppal Managing Director Founder/Chairman Mr. Units visited in his report are Gurgaon Phase-1 192 UV. After a three-day period.
He stated that it should be looser. Security System No information was obtained regarding a security system. Medical Care No information was obtained regarding on-site medical care. More than local labor laws. well. The General Manager stated that there are common policies across the plants. BUSINESS BOTTLENECKS The General Manager stated that buyer requirements like double pay during overtime are holding the industry back. interviews applicants. or a union. IX. not anymore. [the R Group] is seen as a highlighted-tech. Page 66 . Manicandan’s CEC report. grievance policy. like the labor norms in China. However.Worker Training The facility sometimes trains workers if the operation is difficult. Training usually takes one or two days and is done through the research and development department. then tests worker productivity for an hour and a half. 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. According to G. customer friendly. 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. Researcher: But you said you didn’t use labor contractors. Researcher: Is labor flexibility or the lack of hire-and-fire policies an issue? General Manager of Operations: No. buyer codes of conduct are hurting business because they are more strict. So how do you overcome these issues? General Manager of Operations: Oh. These problems are taken care of with labor contractors. that they engage in the same kinds of recruitment. worker committees. No other information about the R & D department at this specific facility was given. Workers receive a letter of contract. we do more incentive programs and get better performance out of our existing workforce. no. Other Human Resource Policies No information was obtained regarding a formalized dismissal procedure. eco-responsive corporate citizen that is Shaping a Better Tomorrow for everyone.” The company has a manual code of conduct that the General Manager stated is given to each employee. Recruitment Policy The facility posts signs on gates. Today.
Furthermore. Although the researcher obtained a employee code of conduct handbook. and avoided any other types of follow-up including the suggestion of a phone interview. especially in regards to quotas. but he answered questions in a more direct. It would be better to simply show up or not leave an option of calling before coming. He refused to schedule an interview solely with the HR Manager. every one of them was canceled by the General Manager. Page 67 . 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. PERSONAL EXPERIENCE The R Group was extremely difficult to both interview with and extract information. who was not at the factory when the researcher visited. The work culture in the south is “different—more productive and efficient. General questions about labor laws or productivity issues usually prompt details and complaints. XI. brief way. the Northern area of India is more embroidery and hand-work intensive and is multiproduct. INDUSTRY COMMENTS The R Group is in the process of setting up a backward integration project for their knits division.” The South is also usually single product. though several follow-up interviews were scheduled. When asked about the number of skilled workers. and he was much more reserved and suspicious. The researcher was directed to the General Manager at a G International plant for an interview. which makes productivity more difficult to increase. Because they are trying to increase productivity. G International is working on converting to a single product system within the next two or three months (August 2006). as it would tell them new government policies and how to best utilize the system. He implied it has limited use after the quota phase-out. he initially would not let it leave the building.X. The General Manager stated that the AEPC was much more useful before the MFA phase-out. In general. Virender Uppal (the MD of the R Group) is a former Chairman of the AEPC.
Chief Finance Officer Tel: 91-124-4308201 email@example.com Jayant Sood. G. Page 68 . Udyog Vihar.pearlglobal. 446. Udyog Vihar. Phase I.” The House of Pearl is focused 82 83 Unit visited by the researcher. PEARL GLOBAL LTD. 138. Gurgaon 4. Phase V. online business publications and press releases. and an interview with the Company Secretary. Gurgaon II. 222. In 1993 it became a public limited company. Phase V.5. as it includes all parts of the garment industry under the “House of Pearl. Phase I. business began in the 1980s. 870. Manicandan’s CEC report.com Production Units: 1. and its first manufacturing facility was established in 1989. Company Secretary Tel: 95-124-4308164 E-mail: firstname.lastname@example.org Registered Office: A-3. Udyog Vihar. Chairman deepaks@pearlglobal. BRIEF HISTORY83 Pearl Global was incorporated in 1979. Udyog Vihar. Phase-V Gurgaon – 122 016. CONTACT INFORMATION Contact People: Deepak Seth. Haryana Tel : 91-124-4004086/87/88/89/90 Fax: 95-124-4004067/85 Website: www.com Rishi Vig. From an interview with the Chief Finance Officer. Gurgaon 2. I. the company website. The company structure of Pearl Global is extremely unique. Community Centre Naraina Industrial Area Phase-II New Delhi – 110 028 Tel : 011-51417680-82 Corporate Office82: 446 Udyog Vihar. The information in the following company report was obtained primarily from an interview with the Chief Finance Officer. Gurgaon 3.
Dillards. From company website. children’s and men’s shirts. etc.1993. marketing units in the U. dresses. 84 85 See company website for list of shareholders. t-shirts. George (Wal-Mart).C. children’s. warehouse and distribution. bottoms.) for the year 1990 . Product Mix Areas of specialization include: India: woven cotton and value-added cotton. It offers full services to large retailers with the chain broken into business units that cater to different product lines. JC Pennys. 86 From an interview with Chief Finance Officer. which together yield a combined turnover exceeding U. Charming Shoppes. NorPearl. as a Special Invitee. ethnicwear. GAP (including Banana Republic and Old Navy). III. H & M85. is establishing a U. Page 69 . he has been inducted to the Executive Committee of A.E. It also has businesses in Hong Kong (NorWest) and the UK (Poetic Gem).C. trousers.84 Exports/Imports 100% exports. Castromen. including blouses. Marks and Spencer. NorPlanet Pearl Global has manufactured women’s. The company recently entered into a business and education partnership with Babson College in the U. Esprit. brand “Kool Hearts. Wal-Mart.S.S.P.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). and the UK. The Chairman of Pearl Global established a fashion and design academy. He has successfully promoted and established the fashion apparel brand "Lerros" in Europe. Pearl Academy of Fashion Domestic. BASIC PROFILE Legal composition of the Company Public limited company. vests. basic stuff. shorts. suits. Liz Claiborne.E. and outerwear. nightwear dresses. $200 million. Lerros. The House of Pearl includes designing and manufacturing units. Pearl Global does not manufacture for the domestic market. Nex86.P. Clients Abercrombie & Fitch. Kohls. Inc.) and a global network of business associates and customers. He has been actively involved with the development of readymade garment industry in India. skirts. Besides having been elected to the Executive committee of the Apparel Export Promotion Council (A.. Karstadt/Neckermann. stain sealed garments using goretex and acquatex. Siplec.S. Bangladesh: low cost.on the apparel sector with manufacturing bases in India (primarily Pearl Global Ltd.
110 002 2.C/1.com/articleshow/1690384. <http://economictimes. The Delhi Stock Exchange Association Limited (Regional Stock Exchange) DSE House 3/1 Asaf Ali Road New Delhi . P. J. Page 70 .asp>.indiatimes.41 crore in 2004-05].43 crore[ from Rs.com/1060712/asp/business/story_6465123.”90 See website for detailed financials.9 per cent to Rs 159.telegraphindia. Babson College press release.cms> and “Corporate Briefs: Pearl Global. The revenue of the company during the year was up 31. FINANCIALS Turnover $200 million worldwide before quota phase-out. 90 “Pearl Global net up 88%. National Stock Exchange of India Limited Exchange Plaza.88 Net profits are 234% up.5 crore in the previous year.” <http://www. Rotunda Building. 89 From an interview with the Company Secretary.” The Economic Times: Garments/Textiles.380015 87 88 From Chairman’s Message on company website. Dalal Street Mumbai . In 2005-06 the company invested Rs 29 crore to augment its production capacities in Gurgaon and setting up a new unit in Chennai. Ahmedabad Stock Exchange Limited Kamdhenu Complex Opp.6.9 crore in the previous fiscal].400 001.1 crore compared with Rs 7. 5th Floor Plot No. 29 June 2006.” “The company’s operating profit was Rs 17. Ahmedabad . Pearl announced a dividend of 30 per cent for the year [subject to shareholders’ approval]. Bombay Stock Exchange Limited 1st Floor. 3. Towers. Stock Exchanges where the securities are listed: 1. G-Block Bandra – Kurla Complex Bandra (E) Mumbai – 400 051 4.5 crore [from 120.87 $400 million in its worldwide operations post quota phase-out.IV.89 Other Financials “Pearl Global posted 88 per cent year-on-year increase in net profit in 2005-06 to Rs . New Trading Ring. Sahajanand College Panjarapole. 3.
Inc. From an initial order in 2001. They now supply us with a variety of casual. woven. 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. 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.A. Our Customer's perception This reply has come from ASDA Walmart to a query of a Sr. To grow the business at this rate Pearl has had to show a "can do" attitude. 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). the Chief Finance Officer stated that they are engaged in strategic partnerships with six of them.knitted. They are working on building strategic partnerships with between all of their vendors and suppliers and consolidating them. They have supported our growth by putting in the infra-structure to service our needs. The following is a forwarded e-mail from George Clothing (Wal-Mart) regarding Pearl Global: Subject: Something you should know. BRAND INFORMATION91 Pearl Global’s Export Market 40% 60% U.S. EU and UK Major Clients Brand JC Pennys GAP (incl ON and BR) Charming Shoppes.they have grown to be our second largest supplier.V. “Dear sir. before the cost justified it. Apologies for the delay in replying. Journalist. and jersey product across all ages and genders from a variety of countries in the Far-East and Indian sub-continent. Page 71 . 91 From an interview with the Chief Finance Officer.
Best regards. 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. and delivery have had to be a given. I feel that we can have an honest conversation with Mr. Currently I am doing a corporate feature on the House of Pearl who is your vendor. it is critical for us as a business to deal in the right way. flexibility to change our minds as to what we want right up to the last minute. has a right to exploit the people who make the product we sell. For Pearl to grow their business with us. Quality. or supplier. Mr. offering us product direct from factory or landed delivered if the situation demanded.We want style.quayle@wal-mart. Allan Quayle General Manager-Strategic Supplier Development George Clothing Phone 00 44 (0)1455 264409 Mobile 07779 700695 e-mail allan. I honestly believe that to supply fashion retailers at the volume end is one of the most difficult businesses to be in . Executive Editor. Thanks and regards. ASDA Wal -Mart. Pearl are also helping us to achieve our ambitions to make the George brand a truly Global brand by opening an office in Canada to support the growth of the George brand in Wal-Mart Canada. 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. price. UK I am a journalist from India writing for India's No. no-one whether it be store customer. * 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. Senior Sourcing Manager -Kidswear. 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. hence would like to have some of your observation/views/comments on the business house and your relationship. We pride ourselves at George that our ethical standards are rigorous. so Pearl have stepped in to provide solutions and support. Finally.com --Original Message-Dear Ms. As price deflation has become a way of life in the UK clothing market. Heather Moreton.Growth on this scale inevitably creates major head-aches for the supply-chain. Business India” Page 72 . 1 business publication. and any issues that have arisen have been resolved immediately and taken as learnings to provide a better service going forward. quality. Deepak Seth has also gone beyond the factory gates to work with the community and put something back. retailer. and where our distribution network has creaked under the pressure. Lancelot Joseph. Below are a few points which I hope you would take time off and reply to at the earliest.
and one in China. are consulted to developed in-house patterns. two of which are in Bangladesh. dyes and chemical are thoroughly checked before they are fed into the manufacturing process. but now they have developed direct relationships with their long-term business partners. one in Chennai and the others in Gurgaon. one in Indonesia. They have six design factories.Buying Agency or Direct They used to contract through buying agencies. The House of Pearl’s research and design department prepares a collection of high fashion styles for each season. Pearl Global then manufactures the style. which are shown to buyers in advance. Production Capacity Pearl Global has 20 million pieces in-house capacity and 120 million pieces capacity all across Asia. shipment 50% landed 30% FOB Bangladesh: Unit Prices (paid to factory per piece of garment supplied) Range Avg Product Mix $4-12 Varies by style Mostly casual No information was obtained regarding a change in unit prices post-quota phase-out. The embroidery tailors either come into the facilities to perform the work or they send it. Markup (days) High of $10 $6-7 USD 3 to 4 times 60 to manufacture. now it is 6 months. 50% FOB. who then chooses or modifies the styles. Sometimes designers from the UK and the U. 90 incl. Quality Control Raw material including fibres. Subcontracting Sometimes Pearl Global subcontracts hand embroidery. Design/Sampling and Product Development Designs are mostly developed in-house. Production System Pearl Global uses an assembly line system. yarns. The House of Pearl has over 150 factories across Asia. INFRASTRUCTURE92 Pearl Global has five or six production facilities in India. Pearl Global uses labor contractors. A few years ago the delivery/production cycle had to begin 18 months in advance. VI.S.S. Every stage of the production line has its 92 From an interview with the Chief Finance Officer. They are working on doubling their capacity in the next 2-3 years. Page 73 . but it mostly in-house. 5% freight. India: Unit Prices (paid to factory per piece of garment supplied) Range Average Retail Delivery Time Type India U.
Gurgaon 500-600 workers 222. WORKING CONDITIONS Wages and Benefits The Chief Finance Officer stated that sometimes Pearl Global pays workers above the minimum wage. tensile strength. uster percentage and impurity. novelty yarns. 93 Numbers for the units at 446 and 870 were estimated by the Chief Finance Officer while the other numbers were obtained from G. viscose tops and special fibre). single ply yarn is also checked on the uster machine to ensure consistency in yarn quality confirming to norms of the uster statistics. Phase V. as neither an HR manager nor a production manager was available for interview. Page 74 . If a worker stays for six months they get incentives. CRA. which is sourced from outside is tested for fibre fitness micron ( fibre diameter). Udyog Vihar. Gurgaon 2000-3000 workers Machinery Pearl Global has an estimated 2000 machines for every part of the production process. Productivity Schemes Pearl Global gives out “best worker awards” and “gold stars” for productivity. Udyog Vihar. The finished yarn is tested for residual shrinkage. but did not give specific numbers. Phase I.” as workers do not have a long-term commitment to the factory. Every set of fibre (polyester. Udyog Vihar. Udyog Vihar. Manicandan’s CEC report (and confirmed by the Chief Finance Officer). pilling. Approximate number of workers in all facilities Pearl Global has approximately 6000 workers in India.own set of detailed monitoring system. and if they have a low level or no absenteeism they also get an incentive. Gurgaon 2500-3000 workers 446. Gurgaon 600 workers 870. ply yarn. Departments The researcher was not able to obtain information regarding the specific nature of the assembly line or tour the factory. Phase I. fibre composition percentage (blend %). VII. 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. Phase V. Polyster viscose and cotton yarn is tested for count. Production Unit Number of Workers93 138. etc. fibre bundle strength. After workers receive their monthly salary they see a “rise in absenteeism. drape and fastness to light washing and rubbing and slippage. twist per inch. moisture regain percentage and finish percentage. count strength product (CSP). Sretch yarn.
Dismissal Procedure. All but temporary workers are covered by social security schemes. 97 From an interview with the Chief Finance Officer. and Indonesia is lower. but if it is mixed employees then it becomes a problem with issues of sexual harassment. 98 According to G. Bangladesh. The union is not effective in addressing the problems of the workers. though sometimes workers work double shifts and are paid double.” However they are working on providing the necessary infrastructure (such as transportation) so they would be able to hire more women workers. 3000 per month Every year workers receive Rs. although being a “permanent” employee will entitle a worker to an identity card. 3500 per month Rs. 96 From an interview with the Chief Finance Officer. Overtime95 The facility at 222 UV has two shifts and thus there is little overtime. & Company. There is no sexual harassment 94 According to G. 95 Page 75 . 100 more and a 20% bonus for divali. The labor turnover in Chennai. They want to hire more women like Southern facilities do because women workers are “more efficient. if there are no orders or “no work” employees are told not to come. K. Recruitment Policy Pearl Global uses labor contractors and specifically stated they use R. who are not entitled for ESI and PF. Furthermore if “it was all women it would be fine. According to G.” but there are not enough “available.” and it is not convenient as Pearl Global would have to provide transportation.Position Finishing supervisor (7 months experience) Tailor (8 years experience) Tailor (5 years experience) Wages94 Rs. Worker Training There is a training line for new workers. For their HR strategies. HUMAN RESOURCE POLICIES97 A new HR manager is to be hired as of August 15. 2006. Manicandan’s CEC report.K. Out of 500-600 workers only about 90 are in the union. 4000 per month Rs. They did not have a HR manager before this. ESI and PF. and Sukumar Pride. they used a mix of outside agencies and consultants. Manicandan’s CEC report. VIII. Labor Turnover96 The labor turnover in Gurgaon is about 20%. There is a union in the facility at 138 UV. Manicandan’s CEC report. Union and Worker Committees98 There is no job security. & Co. and the head of the union is not an employee at the facility. who must first pass a hand-eye coordination test and then spend twenty days on the training line. They contract temporary workers through R.
Working on having uniform HR and productivity strategies. BUSINESS BOTTLENECKS99 The industry is regulated by the supply of cotton. INDUSTRY COMMENTS100 Commented on the strengths of the North. The motto of every Corporate Body is to ensure Predictability. From an interview with the Chief Finance Officer. Deepak Seth): “A future that shall be built with the same strategy that has shaped our past. The House of Pearl has enough infrastructure to double turnover.” IX. they have set up a medical treatment facility in the spirit of social responsibility. The Chairman Pearl Global espouses corporate responsibility ideals on its website (Chairman’s Message. 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. This translates to bringing a high level of satisfaction to five constituencies Customers. Pearl Global just hired a lawyer to help analyze and plan financial structure. The company has set up Pearl Academy of Fashion.committee. as mentioned previously there is a new HR manager slated to begin on August 15. and teams are set up to work on weak areas in working conditions. as there is different management at each facility. Page 76 . there are sexual harassment committees. Labor cost is still competitive (in terms of the world market). The unit at 222 UV does not have a union. which have monthly meetings. which is missing in the North but the value-added garments (embroidered. They want to integrate all offices with an ERP 99 100 From an interview with the Chief Finance Officer. implying that the AEPC is not as useful post-quota. Vendors and the Society-at-Large. etc) helps immensely. Sustainability and Profitability of revenues year after year. Seasonality is an issue. According to the Chief Finance Officer. Source the best from the World to deliver the best to the world by following ETHICAL MANUFACTURING AND TRADE PRACTICES. Investors. “ethnicwear” or design. Corporate Responsibility/ Codes of Conduct According to the Chief Finance Officer. X.e. a fashion design and manufacturing technology institute. The company also operates a school by the name of 'Little Pearls' in Delhi. Employees. The strength of South India is its efficiency. 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. The Company has built-up very effective TEAM WORK…The primary purpose of Corporate Leadership is to create wealth legally and ethically. 2006. which holds it back. i. orders are fewer in July and August.
Lalit Gulati. Bolton University. at Naraina. As a result of the close interaction between the industry and the institute. 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).htm Advisory board includes: Mr. such as the UK's Chelsea College of Art & Design.” The Economic Times: Garments/Textiles. Mr. and Germany's LDT Nagold. It provides training programs in the areas of Fashion Design. like in “Pearl Global to merge two companies. Partner. London College of Fashion.com/index.”101 Pearl Academy of Design Education-Pearl Academy of Fashion http://www. Retailing.pearlacademy. one of the top two in this field in the world.16 equity shares of the company for every share in City Estates was recommended by the board at the meeting. Production and Computer Aided Design…The Academy has opened its second campus in New Delhi. <http://economictimes. The company is setting up new facilities in Dhaka (Bangladesh) and a design center at Chennai. Pearl Global. Chairman. and is located in the Okhla Industrial Area (Phase II) of New Delhi. 7 Feb 2006.indiatimes. who constantly review the institute's performance to ensure that the programmes are practical and industry-oriented. 101 Page 77 . Deepak Seth. The Advisory Board of the Academy consists of leading exporters.. Modelama Exports The Pearl Academy of Fashion was set up in 1993 by Pearl Global Ltd. The House of Pearl is planning to get into retailing and is working on an industrial engineering department and setting up software SAM. industrialists and academicians. Hong Kong Polytechnic University.com/articleshow/1404688. in India and abroad. 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. Mr. It has links with acknowledged international leaders in fashion education.cms>. the Netherlands' Hogeschool van Amsterdam. According to The Economic Times: “Leading apparel group Pearl Global Ltd has decided to merge Pearl Styles Ltd and City Estates Pvt Ltd with itself…A swap ratio of 30. its alumni hold responsible positions in more than 300 leading organisations. and London Centre for Fashion Studies. It has a validation agreement with the UK's Nottingham Trent University (NTU). Merchandising. Managing Director. R & Company.Virender Uppal.system.
President of Babson’s Alumni Club in India and Chairman of DCW Ltd. * Faculty report including Babson faculty profiles and approaches to faculty development. * Student report on the student admissions process and co-curricular activities. has set up a business partnership with Babson College in Boston (U. and assessment standards. Pearl Global Ltd..Benetton. Page 78 . Both institutions will identify mutual exchange opportunities—on-line access to library resources. and procedures necessary to build an Entrepreneurial foundation and curriculum. distance participation in projects.. Chairman of Pearl Global and Dr. Babson College in Wellesley. Mafatlal. Sonal Garments. Bhupatkar.’s premier business school). joint information sharing. Orient Craft. links to websites. 102 From the website of Pearl Academy of Fashion. Richa & Co. The collaboration is designed to expand over the next seven years. Mass. USA. Robert Eng. Executive Director.—ranked #1 worldwide in Entrepreneurship Education---will advise Pearl on the strategies. requirements. Pearl will shape this information into a comprehensive Entrepreneurship curriculum to meet the particular conditions.. Advises Pearl Global. USA and Pearl Global Ltd. internship facilitation. The Babson college press release: Babson College. Shoppers' Stop and Ebony. * An overview of the entrepreneurship curriculum.” 102 Partnership with Babson College Pearl Global Ltd. Babson’s consulting reports will include: * The general curriculum for undergraduate and graduate programs. Babson faculty will provide workshops for Pearl faculty and staffing. and will visit regularly to monitor teaching. among others.—a $400 million company exporting garments to Europe and North America—has formed a non-profit educational trust. This trust is in the initial stages of developing a new. The Asia Institute at Babson. and Professor Ash Rao will present the final reports to Pearl.S. Bombay Dyeing. was also present. processes. Babson’s Provost. India. The Pearl School for Business Studies will grant Bachelor of Business Administration and/or Masters of Business Administration degrees with a focus on entrepreneurship. advisor to Pearl Global’s education trust. private business management institution at two campuses near New Delhi. Current plans are for first classes to be admitted in the fall of 2008. Ponds (India). have signed a strategic collaboration on a full range of activities to promote world class research and education of entrepreneurship in India. Research in India Babson College. India. Vivek Jain. learning. Pearl Global Ltd. India last week for the official signing ceremony with Deepak Seth. and stipulations of the local region in India. on New Business School: Two Form Strategic Collaboration to Promote Entrepreneurship Education.. Michael Fetters. RMX Joss. workshops. traveled to Delhi.
Pearl Global is getting into domestic retailing: “ [Pearl Global]. Olin Graduate School of Business at Babson College.edu/Newsroom/Releases/Babson-and-Pearl.103 Domestic and International Retailing In addition to the U.” Babson College in Wellesley. is recognized internationally as a leader in entrepreneurial management education. and grants MBA and custom MS and MBA degrees through the F.such as Jaipur.“This collaboration is an important step in Babson’s journey to globalize Entrepreneurship Education. The Company Secretary was not useful in arranging interviews with other personnel who would be able to answer what he could not. however after e-mailing the Chairman. 104 “Pearl Global bullish on Q2 numbers. <http://sify. For information.babson. It was difficult to obtain an interview by calling the numbers on the website.W. “According to market analysts. 103 Babson Newsroom Release. growth prospect remaining high.com/finance/equity/fullstory.cfm>. “According to industry sources.” said Fetters. Ltd.. the company is in the process of booking retail outlet spaces in cities across northern region . Page 79 . which is setting up a joint venture manufacturing facility for soft fabrics in China to secure part of its supplies. visit www.”104 XI. Babson grants BS degrees through its innovative undergraduate program. an interview was promptly arranged with the Chief Finance Officer.S.. a company that shares our vision to advance Entrepreneurship knowledge in India. <http://www3. Deepak Seth. “We are privileged to work with Pearl Global. Mass. Chandigarh and Lucknow. Kool Hearts label.” 26 Oct 2005. The interview consisted of a powerpoint presentation on the structure and capacities of Pearl Global. 24 April 2006.babson. Gurgaon. is understood to have chalked up a plan for its presence in domestic retailing.edu. though the researcher was not able to obtain a copy without signing a confidentiality agreement. the recent fall in price makes it an attractive long-term bet. Babson Executive Education offers executive development programs to experienced managers worldwide.php?id=13972072>. 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.
An ISO 9001-2000 Unit: “Orient Craft Embroidery Division. There is a preliminary website set up for its embroidery division at http://www.” E-mail: email@example.com Production Units: 1. mobile: 9871496362 Corporate Office: Orient House F-8 Okhla Industrial Area. From an interview with the Managing Director. He had a friend from London who was buying from importers and selling the goods to specialty shops. 110020 (India) Tel: (+91-11) 26818247.6. 68. I. Phase IV. so he could use the proceeds as seed capital. 15000 ($300) from his father. but it does not contain any information beyond the heading: Orient Craft Limited: Embroidery. Haryana 4. CONTACT INFORMATION Contact Person: Sudhir Dhingra. Haryana Tel: (+91-124) 5090800. Dhingra borrowed Rs. Unless otherwise indicated. most of the information is from the interview. online business and economic articles. 2343262 Fax: (+91-124) 2342042. Haryana105 3. found some tailors to make the shirts. 26818249 Website: Orient Craft Ltd. who asked Dhingra to get 1.com/. but the company was not incorporated until 1978. Dhingra was a law graduate from Chandigarh with no experience. Founder/Chairman Personal secretary Meghna. 2341110 2. 7-D Maruti Industrial Complex Sector-18 Udyog Vihar. Gurgaon. Manicandan’s CEC report. a company profile given to the researcher by the Managing Director. the largest computer embroidery facility in the Indian subcontinent. Gurgaon-122015. BRIEF HISTORY106 Business began in 1972. ORIENT CRAFT LTD. Udyog Vihar. 14-A Maruti Industrial Complex Sector-18 Udyog Vihar. 13.ocemb. Page 80 . Plot No. Khansa Road Sector 37. 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. Phase-1 New Delhi. and preliminary interviews from Gurgaon workers. G. Gurgaon.000 shirts made in India. Udyog Vihar. Managing Director. has no website. Gurgaon II. and 105 106 First two units visited by the researcher.
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. then consolidated supply chain into one roof. Then. 6000 ~ $133). During his traveling.shipped them to London.A. ft.”107 Biography for Sudhir Dhingra for the International Fashion Technology Forum. with 1800 people. Orient got clients by word-of-mouth from their L. found another buyer.niftindia.htm>. the Indian-inspired fad went away and he had to spend six to seven months traveling to get rid of inventory stock. and that plant is still there. Liz Claiborne sent an American technician to help Orient with worker training and modernization. you had to be a tailor to be in the garment industry. “At the time. CMAI. as Gurgaon is the single largest manufacturing sector in India. and others. and restarted business with a trial order of 1200 pieces for a customer in L.” His father gave him one year to start up business. 200-300 people. May 2006. When he returned. with 3500 people. set up a pressing line on the dining table and the production line in the garage. he decided to break into the industry.com/iftf. he also encountered some buyers. During the first few years. Both were wholesalers who sold to specialty stores. 15000 plus a small portion of the profit (Rs. Then after a few years.” Dhingra wanted to move production out of the village and industrialize the area and put as many skills in-house as possible. In the mid 1980s. In the 1990s Dhingra set up a bigger plant with 100 machines. <http://www. with more than 350 modernized factories.000 pieces and an annual turnover of around $40-50. he estimated a production capacity of about 150. The first Gurgaon plant was established in 1993. though he stated that it was difficult to actually get the money from the government.A.000 sq ft. Dhingra states that others followed Orient Craft’s example. and Germany buyers. Orient’s first factory was established in a village in Hauz Marg and it is still there. yards and outsourced actual manufacturing. The first plant in Maruti Industrail complex was the first plant in India that was over 80.000. 107 Page 81 . they’re looked down upon. not just in the limited Indian context. when he got back to India. ASSOCHAM. not like today. CIAE. Then while in Germany. And being a tailor is like being a janitor. CII. he obtained a factory processing site of 240 sq. he hired more people. only now it is 136. Orient subcontracted until the early 80s. During this traveling. and he rented a house. Dhingra wanted to improve the standards of quality and infrastructure to globally competitive standards. National Institute of Fashion Technology.000 sq. Dhingra “is also Executive Member of the Advisory Committee of AEPC and an active member of reputed associations such as FICCI. He “knew [he] had to look at the industry from a global perspective and globally what textile buyers needed and what the competition was from the suppliers. they’re not looked up to. When his friend repaid him the Rs. he was able to observe fashion trends and the kind of things that were selling.
and 2002. Mr. Tommy Hilfiger (men’s. Awards Additional information: Orient Craft Ltd. Marks & Spencer. Limited. K. and jeans). Rocawear. Macy’s. 2000. kidswear. The company does not do that much business with Zara and Miss Sixty (Italy). Liz Claiborne (LizDresses. GAP (kids). Jones of New York. LizWear. Orient Craft 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. coordinates. Marc Jacob. skirts. Now he owns 60% of the shares. Exports/Imports 100% exports. J-Crew. Banana Republic. men’s shirts. sportswear. jackets. boys’. Dhingra was the sole proprietor. shorts. Next Retail Ltd. ELM Street. pants. Dhingra states that Orient is the only factory in India to manufacture for Marc Jacobs and Louis Vuitton. Product Mix Areas of specialization include blouses. Diane von Furstenberg. Ralph Lauren (Lauren. Mr. Oasis Stores. Susan Bristol. Abercrombie & Fitch. Donna Karen. Ann Taylor. Sudhir Dhingra (Chairman and Managing Director). BASIC PROFILE Legal composition of the Company Orient Craft is a privately owned company but deemed public limited. LizSports).G. 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. However. is looking into breaking into the domestic market. dresses. Up until 10 years ago.Hook. ropers. Dillards Stores. Polo Jeans). Esprit.. J. Express. Orient used to source for Wal-Mart in back in 2003 but has since stopped. and Marks & Spencer. Dockers. Page 82 . Anoop Thatai EOU Information The company has three 100% export oriented units (which can import all raw materials and trims free of duty).K. because of “language and cultural differences” with the European business partners. women’s. 2001. Zara. Kohli. knitted shirts/t-shirts. Calvin Klein Jeans. Loft. Lands End. Clients Armani Exchange. and gave 20% to his nephew and 20% to his friend. Old Navy (women’s).III. 1998. outerwear. Owners/Directors Mr.
02-0. despite more competitive pricing. Breakdown of Sales Revenue109 Est USD 2006 Material Cost Labor Overhead112 Profit (target)113 82. <http://news. 2 March 2005.8-24.stm>.00 % Retail Price111 0.00 $1.8 million 16.IV.A.20-1.03 0. which has doubled in a year and a half-as mentioned by NITRA president-used to be Rs.uk/2/hi/south_asia/4294679. 109 These figures were estimated by the Managing Director in the space of 5 minutes. “Winners and losers in textile shake-up.50 $1. 111 Average retail markup is five to six times the unit price of the garment.8-24. 110 Based on the company’s average unit price of $10 USD.co.02 V. now it is Rs.S. Europe 80% Canada 108 Basu.bbc.50 $1. Page 83 .20-1. 742 crores) Other Financials Last years profit was $8 million (40 crores).08-0. Kaushik. 4 per unit. 112 Overhead (mostly energy.12 0.5 million % of Sales 50-60 12-15 12-15 10 Per Garment110 $5.” BBC News.02-0. FINANCIALS Turnover FOB USD $105 million for 2002-2003 FOB USD $118 million for 2004-2005108 FOB USD $165 million for 2005-2006 (Rs.00-6. 9 per unit) 113 Dhingra stated that Orient usually ends up with half of the target profit.03 0. so they can only be thought of as a rough approximation.5-99 million 19. BRAND INFORMATION Orient Craft's Export Market 5% 15% U.8 million 19.
Recently. Some things have increased greatly. 115 Restarted business with Macy’s 2 years ago. There has not been a huge shift in the composition of customers. however an article written for the BBC in 2005 (Basu. European companies pay higher unit prices). but they will open up their own office soon.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. 116 According to Dhingra. Orient was manufacturing skirts that would be sold for $4 USD per piece.50 USD (from US companies. Limited used to be mostly direct. Marks & Spencer is currently direct. Dhingra states that it is easier to deal with buying offices. but they just opened an office last year.uk/2/hi/south_asia/4294679.” BBC News. they made one skirt for Polo Blue that will retail at $1199 (did not state unit price). 2 March 2005. Kaushik. however. however used to source to them about 10 years ago. like cotton pants. Unit Prices (paid to factory per piece of garment supplied) Average116 Retail Markup Avg Retail Price Type $10 USD 5 to 6 times $50 All FOB Unit Prices Since MFA Phase-out There has been an estimated decrease in unit prices of 10-15% across the board in most categories. 114 Dhingra stated that Orient manufactures 80-90% of what Diane von Furstenburg (high-end maternity clothes) sources from India. Orient tends to deal in higher quality and higher unit prices and lower volumes. the industry-wide average unit price in India is $3.) stated that on the date of the author’s visit in 2005. depending on the quota category and how much they were previously restricted. <http://news. Page 84 . “Winners and losers in textile shake-up. There has also been an expansion of volumes and an estimated 15-17% growth in orders.co.bbc.stm>. Dhingra stated that Orient’s average unit price is $10. Orient would not take a Wal-Mart order.
six in Gurgaon. Orient has created a niche with their diversified product line (mostly cotton/knits or wovens. ft. Sector 37. In 2003 Orient established a manufacturing complex of 340.com/iftf.000 pieces. Orient also deals in some very small volume orders for high-end buyers like Oil Lily. chiffon to denims and outerwear).000 sq. the company had only 17 production facilities spread over 600.000 sq.000sq. sometimes 25-45. and employed 5000 people. Production Capacity 2002-2003: 480. ft. and creates new designs for each season. which was at the time the “single largest multi-product manufacturing plant in the whole of India. in and around Delhi.000 knitted per month 2005-2006: 720.VI. National Institute of Fashion Technology. It picks up fashion from around the globe. 13. 121 According to an interview with the Managing Director. 1. Haryana.000 pieces and production capacity has grown at least 25% over the past year. but other fabric from silk.117 Previously. INFRASTRUCTURE Company has 21 production facilities. and one large plant is located in Noida. <http://www.niftindia. companies. even a little bit before. after 9/11.S.200. product development became the key thing that most Western companies were looking for. 120 Biography for Sudhir Dhingra for the International Fashion Technology Forum. Page 85 . Orient has a display store in NY on Park Avenue that it opened up 3 yrs ago. Gurgaon. According to the company profile. 119 According to the company profile. Production System Orient Craft uses an assembly line system. As Dhingra stated. Udyog Vihar. Orient makes 130. of which four are in Delhi. (unclear if it is the same facility visited) at the cost of over $10 million USD. 720.”118 Subcontracting Orient does not appear to subcontract. whose samples are then sent to potential buyers. ft.121 The average order size is 10-12. May 2006. Orient has put a lot of human resources into product development and now boasts 900 product development personnel at 5 different locations.000 woven per month. Khansa Road. gives feedback.000 or even 100.000 per day120 2006: In an average day. 117 118 Plot No.htm>.000 pieces. as traveling became restricted and Indian companies needed to build a competitive advantage. though it does use labor contractors. in 2003. 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.000 knitted per month119 2006: More than 125.000 woven per month. The second plant visited was 380.
and since Orient produces high-end clothing with lots of embellishments. which is generally equal in size to the production department. According to Dhingra the “girls” in the South are operators and less skilled. and trims. Manicandan’s CEC report. Departments No information on specific departments was obtained through the interview. who manufactures 80-90% jackets/ outerwear. the workers are skilled and come from a tailoring background and are usually from UP. Page 86 . Bihar. The labs are equipped to test for all parameters including color fastness to light. Manicandan’s CEC report and could vary factory to factory. trousers. not through a labor contractor. they “can’t be like Golkadas. However according to G. VII.” 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 Machinery Orient has in-house computerized embroidery machines. In 2002-2003. fabrics. the company had 7300 sewing machines. MP and some from Haryana. More contract workers and women (especially thread-cutting) are in the finishing department.000 in-house Number of people employed in 2006: 23. consisted of 12 production managers each in charge of about 250 workers (tailors and helpers) at 100 machines with 12 line supervisors. WORKING CONDITIONS The workers are 80% male and since Delhi and Orient is mostly multiproduct. Approximate number of workers in all facilities Number of people employed in 2002-2003: 12. Information on work timings was taken from G. Manicandan’s CEC report. one facility’s production department. shirts. workers do not go to lunch at the same time. “most of the permanent employees are supervisors and perform high-end work such as production in-charge and finishing in-charge. washing plants and dry cleaning units. with very little embellishment.” Dhingra stated that 70% of Orient’s workforce is direct employment.Quality Control The company has in-house lab testing for garments. Productivity Schemes Orient uses incentive schemes to reduce absenteeism and has implemented worker welfare schemes. According to G.
They are trying to start a training school NGO with a founding member of NIFT. Manicandan’s CEC report. Union Though unions were not explicitly mentioned in the interview. Viet Kumar & Company. Worker Training Dhingra stated that all the facilities have training schools and they want to make them more formalized. Some of these contractos are R. 5-8. The payscale is adjusted twice a year according to inflation. K. who takes a 5% commission before paying the rest to the worker. the following was mentioned in a business article: “Till a year ago. labor turnover is decreasing./month) 2850 2344 2000 2850 Labor Turnover According to Dhingra. the salaries average Rs. Bonuses are given during Divali. but he makes no mention of any other incentives. no piecerate. “particularly [those] working in the Finishing department. the turnover for Orient Craft is fairly low. 3000 per month for an unskilled worker salary. The payments and benefits for contract employees are given to the contractor. and most people are above the minimum wage. HUMAN RESOURCE POLICIES Dhingra stated that there are common HR policies and productivity schemes across plants. Dr.” Furthermore. 60-70% of the workers are unskilled helpers. & Company.Wages The average wage starts at Rs. where workers can be trained and work for other companies if they choose to. according to G. the company's chairman and managing director Sudhir Dhingra dreaded the idea of setting up huge factories . semi-skilled and unskilled workers that are hired through labor contractors are paid under a piece-rate system. Dhingra stated that in the 1980s and 1990s Orient used a piece-rate system. VIII. workers are paid much less than Dhingra asserts. However. and in 1993-1994 they started moving away from piece-rate and a few years ago they did away with piece-rate completely. Sartrushi.000 per month plus ESI and PF. Recruitment Policy Orient Craft employs contract workers for at least 30% of its workforce. probably around 8-9% and as Orient is expanding.all for the fear of Page 87 . Category Tailors Helper Trainees Contract Worker Average Wage (Rs. and Vasisht & Company. With incentive programs for more highly skilled workers.
However upon further inquiry. Punishments are given to workers without any formalized procedure.’” They built a four story structure to house the embroidery tailors. they feel very proud to bring in income. Since then the company started sourcing their manpower from labour contractor[s]. The “village panchayat said that Muslim women can’t go out…but now that they are trained. Manicandan’s CEC report. it’s about what we can do for the community. “if someone asked me what my one single reason for success. no formalized dismissal procedure. Manicandan’s CEC report. This strategy effectively stops any attempt to consolidate workers towards creating a Trade Union. Thirty years ago we employed a women who worked as a thread-cutter and got paid Rs. and if a manager finds a worker guilty of an infraction.com/apr0504/coverstory01. 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.” Worker Committees/Grievance Policy/Dismissal Procedure Dhingra was reluctant to give specific information regarding worker committees in person. Page 88 .[worker] strikes. ‘my husband doesn’t beat me anymore. 400 per month. GAP gave Orient $35. Although Dhingra stressed how this was all for the benefit of the women and the community. But will we be ready in time?” Businessworld. But the management suppressed and ousted all the workers who [were] involved in the establishment of a Trade Union.asp>. workers are fired with no redress. Now she is a finishing manager and gets 123 Rajshekar.”123 According to G. Orient also helped train 300 women from the nearby village in hand embroidery at international standards. I have always been very people-centric-. now we have 23. According to Dhingra. Maruti Industrial Complex unit). Some of our workers are second-generation workers. According to G. ten years ago we had 5000 people. Orient had no worker committees at the facility visited.000. “around five years ago there was an attempt to establish a trade union (at the 7-D. There is no grievance policy procedure in place for complains against workers or management. stating that he would forward the company’s code of conduct and a list of their worker committees through his personal secretary. One woman told me.000 building a community welfare center that provides medical care for community members. it would be people. Clusters are reinventing themselves. he stated that such information was confidential and would hurt Orient’s competitive advantage. no sexual harassment committees and workers are not involved in wage negotiations or target setting.businessworldindia. Global players are looking for India bases. sometimes more than their husbands.it’s not just about the bottom line. Twenty years ago we had over 1000 workers. 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. and that Orient pays in full for the schooling of female children of workers and for 65% of the schooling of male children. M.000 and Orient spent $20. Sector-18. <http://www. and Surendar. T. “Preparing for 2005: Dressing up for the party.
Specifically. which eases strain some as well as the other diversification of profits. Seasonality is an issue. he wants to extend the length of time it takes to become a permanent employee to 12 months. White Co. Donna Karan. “they have 100. as Orient usually doesn’t have as many orders May through August. and her son is working here… I have always thought about social welfare. Besides being compliant by the current standards. Dhingra stated there are companies who do $1 billion (mentioned China and Lian Thai from Hong Kong.paid Rs. which includes a more complex manufacturing process. such as home furnishing. 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. Labor flexibility is also an issue. Macy’s. Marks & Spencers. for Bed Bath and Beyond. They started producing denim products 5-6 years ago and just started manufacturing men’s suits at a plant for Liz Claiborne and Express.000 per month. 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. Although happy about Orient’s success. IX.” 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. It is the soul of our company. According to the company website: The new complex is designed to create a very worker and management friendly environment in terms of esthetics.000). We have created great recreational areas for workers and middle management by building great cafeterias. Pottery Barn. Dhingra wants increased flexibilization otherwise it is more difficult to expand and it hurts business. since Orient Craft products tend to be high-fashion. but Orient has taken up some holiday decoration work.000 people. and ease of working.” They started up home furnishing about three and a half years ago. comfort. 50. and Orient needs to do competitive pricing to stay in the game and Page 89 . Home furnishings is still smallish industry and comprises about $15-17 million of Orient’s sales. highly tailored outfits with additional embellishments like embroidery and special washes. we only have 23. “India is still not good at producing fall fabrics. BUSINESS BOTTLENECKS Productivity is relatively low..
” Times News Network. and aims to increase it to over 40 lakh units after the expansion. Mayur Shekhar. as they need to grow the base of buyers and price is a compelling reason to do that. “Garment exporter Orient Craft buys Levi’s plant in Spain for Rs 60 cr. From business articles: The company… acquired a Levis unit in Spain in mid 2005 for Rs 60 crore (approximately 13. However. The company has since then stripped the Spain unit of its machinery and fitted them in its plant here at Gurgaon. The company’s deal with Levi’s is the second such significant international venture. Since the quota system has been reimposed on China. it is important to have machinery comparing to global standards.” Industrial Economist: Textiles Report. Noida and Okhla in Delhi. India’s lack of worldclass machinery producers domestically has seen a lot of companies look to the West for help. The expansion plan envisages setting up of two new facilities at Manesar.” said Mr Dhingra. Page 90 . As of now.indiatimes. Earlier. 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.124 The machinery from the newly acquired plant will form part of the company’s expansion plan at Manesar. India.htm>.bring in buyers. 16 September 2005. “The lifting of quota has brought humongous demands on one side and on the other. India is in an advantageous position.indeconomist. The company expects the expansion plans to boost its revenue generation. Orient has 20 production units spread across Gurgaon.5%. of which China contributes one-sixth. INDUSTRY COMMENTS Orient recently bought a Levi’s plant in Spain for its technology. World over.com/30thjune06p4. “Indian textile companies on acquisition spree. Orient came up on the global radar when it started its first overseas facility in New York two years ago. the garment industry presently stands at approximately Rs 15. The company’s management is also planning to raise an IPO later this year.cms>. buyers are getting increasingly quality conscious.curpg-1. In the changed business scenario.125 124 Dipankar. (despite quota regulations) and India adds to a minuscule 1. <http://economictimes.com/articleshow/msid-1232753. Kumar. 125 Jha. growing by over onefourth from last year. PTI Economic Service. <http://www.3 million dollar)…Orient Craft by its own admission acquired the unit because of its superior machinery content. near Gurgaon…Levi’s was looking for a buyer due to high maintenance and labour costs in Spain.00. Bangladesh and Pakistan. the textile industry in India still has a long way to go before it can catch up with Chinese volumes. At present. Mr Dhingra estimates the annual turnover to be in the excess of Rs 800 crore. X. Ironically it is the same Indian companies who are buying the units for their machines.000 crore. Orient Craft manufactures and exports about 30 lakh units of garment every month.
consultant. The deal is likely to be signed later this month. The SEZ is likely to come up on a 300-acre plot with an estimated investment of Rs 2.Though most people in India. lagging behind US and Europe. if there is a mall…Real estate is growing. but best linens) are setting up facilities in India and selling back in Europe. SBC is the buying arm of Kashiama.” he said. That’s more than the people who spend in the U. retail will explode…People say that Indians don’t have disposable income. but look how large the population is—out of one billion.” The Hindu Business Line Internet Edition. Yoshiaki Kamiyama. Banswala Mills. which plans to source $1-1. told ET. the market will contribute a significant share of Orient Craft’s overall business pie.S. As per the arrangement. that’s 200 million people. From business articles: Orient Craft Ltd plans to develop an exclusive special economic zone (SEZ) for garment units in Andhra Pradesh. where there are higher labor costs. DKNY and Ralph Lauren. dirt.— only about 30% of the U. 126 “Orient Craft plans SEZ for garment units in AP. we ourselves are looking at buying 2-3 lakh pieces from India.126 Orient Craft… has entered into an outsourcing arrangement with Sumukin Bussan (SBC). we aim at scaling our Japanese business up to $30-40m. only about 60-70 million have disposable income. In the next couple of years. if even 5% are rich and 15% have disposable income." Mr Sudhir Dhingra. heat.000 crore. the exclusive Japan licensee of some well known international textile brands including Calvin Klein. probably about 80-90% still get clothes from tailors. Orient is considering getting into the domestic market now. told reporters on the sidelines of the CII conference on `Textiles forum . So the spending power is in India. Rajasekhara Reddy. Page 91 .htm>. Why would people go through rain.S.Emerging opportunities and the road ahead' here on Thursday. <http://www.” Italian and French mills are setting up joint ventures in India. population spend.blonnet. Now there are 500. at present Japan is a relatively smaller market. “An increasing number of Japanese buyers are looking at Indian export houses for their sourcing requirements. Earlier. Chairman and Managing Director of the company. the company’s MD.5m worth of textile products in the next couple of years. there were only three shopping malls. and every day a new one is opening up—there’s space available in Karol Bagh.com/2005/11/25/stories/2005112502590900. However.S. Financial Daily from THE HINDU group of publications. said the company was "welcome" to set up the SEZ. SBC. etc. the Andhra Pradesh Chief Minister.” For Orient Craft. delivering the inaugural address. Orient Craft will be the exclusive suppliers from India to SBC. which is a joint venture of Caramin (France) and Bairb McNutt (Ireland. the ready-to-wear demand in India is growing. He announced the company would be given 10 acres of land at Nacharam to set up a garment manufacturing unit. Dr Y. a leading Japanese buying house. “Three years ago. "The SEZ will house up to 50 companies. “The tie up with SBC will give us a good foot hold in the Japanese market. according to Sudhir Dhingra. 25 November 2005. In 2-3 years.
Till a year ago. Says Orient Craft's executive director Anoop Dhanda: "For the next few years." Orient Craft and Fabric & Fibres are among a few who have been pulling ahead of the pack. M. Bangladesh churns out as many garments as India from a fifth as many factories. to cater to new deals in the pipeline. <http://www. Orient Craft manufactures and exports about 30 lakh units of garment every month. Thailand does almost the same business as India with a workforce a third the size. 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. Meru Exports and Richa Exports of Delhi. 127 “Orient Craft ties up with Japanese co.indiatimes. and Surendar. The turnovers of these exporters range from Rs 100 crore to Rs 250 crore. India lags in technology. Times News Network. But will we be ready in time?” Businessworld. His personal secretary was not useful in obtaining any information. which it may have to take up to over 40 lakh units. productivity and scale. Page 92 . which.asp>. 128 Rajshekar. and Shahi Exports.all for the fear of strikes. Most are family-run.com/apr0504/coverstory01.Depending on the volume of the orders. and smart use of technology. 20 April 2006. skill-intensive manufacturing could be a way to compete. Dhingra was fairly open in his responses.127 The biggest Chinese firms have a turnover of $800 million-1. 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. “Preparing for 2005: Dressing up for the party. PERSONAL EXPERIENCE Orient Craft does not have a website. claiming more than three-fourth of the pie. China is the largest exporter to Japan. Global players are looking for India bases. India's biggest exporter Orient Craft has also begun to realise that. Current contact information was finally obtained through a Professor at NIFT. Today he is spending Rs 40 crore on a new factory in Gurgaon that would employ 2. But what distinguishes them is a relatively larger scale. we will have to invest in new capacity every year if we have to keep pace with the industry.” The Economic Times: Garments Textiles. <http://economictimes. The centrally air-conditioned facility will combine all the stages of garment manufacturing. T.cms>. At present the Indian textile exports to Japan add up to $296m which is just about 1% of the country’s total textile imports. Clusters are reinventing themselves.about 10 times the size of the Delhi-based Orient Craft. at Rs 450 crore of revenues. Like most other economies.businessworldindia. the company's chairman and managing director Sudhir Dhingra dreaded the idea of setting up huge factories . which made finding up to date contact information difficult. the company may go for a specific capacity expansion.200 million . 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. design to finishing. is India's largest garments exporter.000 people. Clearly.com/articleshow/1496902. However. Others include Gokaldas Exports of Bangalore.128 XI. and Dhingra was surprisingly available for an interview.
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