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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
Ltd. Shahi Exports Pvt. and Third Eyesight (an industry consulting agency). linked to the Ministry of Textiles). Company G of Group R. linked to the Ministry of Textiles. Several other agencies that are major players in the export garment industry were identified and profiled by the researcher. Online searches yielded some kind of press release or interview for each entity except for Jyoti Apparels.. Managers at six companies and four agencies gave interviews. and others do not disclose financial information beyond approximations of annual turnover and production capacity. Contact information was available on websites.. 2) To identify correlations between labor conditions and businesses characteristics. the Apparel Export Promotions Council (AEPC). the Registrar of Companies (ROC. It is advisable not to send questions via e-mail. the National Institute of Fashion Technology (NIFT. Obtaining the phone number from the agency website and directly calling was the simplest way of setting up interviews. Pearl Global Ltd. These are the Northern India Textile Research Association (NITRA.) were identified using “Mapping First Tier Suppliers in Garment Industry in Delhi. Interviews were obtained in a variety of ways. A management survey was developed using the framework of surveys used in other geographic contexts and updated on the basis of preliminary interviews. Government of India). The sixth company was identified by the researcher through an interview with a representative of the Indian Apparel Export Promotions Council (AEPC).. although some were out of date. Orient Crafts Ltd. Manicandan. Methodology Preliminary research was conducted on the internet. others self-report to financial databases. Five companies (Modelama Exports Ltd. If an interview cannot be conducted in person. display their financial information on the company website. Public limited companies like Pearl Global Ltd. 3) To develop corporate research strategies specific to the Delhi. while asking the same question in person would yield a response.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.” a CEC report submitted by G. Asking a question via e-mail often yielded claims of confidentiality. an interview by telephone would be far more likely to be successful than an information Page 3 . India context. Ministry of Textiles). Four of the six companies profiled and all of the agencies have individual websites. though it proved best to limit the amount of e-mail communication.
which typifies management attitude both towards women and unions: Researcher: Why are your workers mostly female? Are there significant differences in productivity? Manager: No. Women are easier to handle. without which interviews would not have been possible. Ltd.request by e-mail would. They’re more docile. Researcher: I don’t understand. An interview with an anonymous manager produced the following conversation. or productivity schemes. and Orient Craft Ltd. Questionnaire Used by the Researcher The following questionnaire was handwritten in shorthand and brought to the scheduled interviews as notes. However. while others would refuse to state the number of workers in the manufacturing unit. no telephone interviews were conducted in this survey. It was not e-mailed to any of the managers. industrial accidents record. Just. Information on these companies was obtained primarily from top-down management sources. however. even though such a one-sided perspective may not reflect the reality of the situation. Researcher: Did you have problems with employing males in the past? Manager: No—no. The purpose of this research was to obtain information about companies from a management perspective. no significant differences in productivity. Also. and used to establish industry contacts. Managers were surprisingly open in some cases. context and was integral in order to obtain information. 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. 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. as it was not possible in many cases to conduct follow-up visits. Furthermore. The AEPC was instrumental in identifying Jyoti Apparels as a top tier supplier. and NIFT gave updated contact information for Shahi Exports Pvt. What groups? Manager: Oh. I’ll tell you. going as far as to hand over Standard Operating Procedures.S. and as such may be misleading as to actual conditions. easier to control. The attitude and openness of those interviewed are subjectively recorded in the individual profiles. all interviews were in person. I don’t think they ever employed males… Limitations Time constraints limited the consistency and thoroughness of company information. ladies are more focused on work.. time constraints would not permit cross-checking all information with workers and officers at each company. but off the record. and one experience ePage 4 . men together tend to form groups and lobbies because they have spare time. The agencies profiled were primarily interviewed before the export houses.
get order. sourcing. help design.mailing questions proved fruitless in gathering information. package. and Responsibilities of Respondent: Number of Years in the Company: General Upper Management Do you have a brochure saying what products. 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. as there are some questions that an HR manager would know more than a Merchandising Agent. where. discount retailers (Wal-Mart). Ownership of Company.Incorporation of Company) What is the shareholding and ownership makeup of the company? What plans for expansion? Do they cater to domestic market or only export? What share of turnover/sales/production is export? Markets—who. if only a higher level manager could be reached. they often had information regarding each of these areas. EU? Major foreign brands that the company supplies to: length of relationship. However. Name. no input--or more capable. What kind of input— CMT. how fast company delivers products to brand Kinds of buyers—importers. The survey questions were divided into sections according to the position of the respondent. total sales. since a conversational approach proved to yield the most information. CMT.S. if such a program were introduced would be willing to participate if increase wages and committed to labor rights and worker representation?) Problems with seasonality? Manufacture winter clothes? How have vendors changed post-MFA? Have you taken price cuts? Which products? Larger volumes? Different buyers? Deepened relationship? Middlemen? Who are the company’s competitors? Are subcontractors involved and if so at what stages? Which factories/companies? What are the size and scale of these operations? Has this changed post-quota phase out? What effect does the company believe the quota phase-out will have on turnover and the industry in general? Page 5 . The questionnaire was used only as a guide in the interviews as a reminder of what kind of information was needed. vol of product. Designation.. 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. U. I’ve heard of collegiate licensing that would provide steady orders from major brands at higher prices. 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. specialty (GAP). DSP questions.
men. average age of employees. material cost. Have you seen a benefit in productivity since implementation of program? Are there joint worker-manager forums in your organization? If yes. what do these forums do? Get any documents willing to give at any point. Shopfloor Committee.e. labor cost. 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. tailors (skilled. etc. Grievance Committee. Have there been any attempts at unionization in the past? What is the company’s attitude toward unionization? Page 6 . standing orders. checkers. finishers. washers. what is displayed to workers on details of employment.Have they used outside agencies in developing any part of their strategies? Part of AEPC. subcontracting. trainees. semi skilled. who are the members and how are cases handled? Give details. How many women. cutters. total value of exports. Quality Circle? If yes. 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. unskilled). 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. Sexual Harassment Committee. or do they use agencies like Third Eyesight for technology and HR development? How has AEPC or NITRA or NIFT helped them? In what capacity? What are two or three main things holding business back? What are you doing to solve this? How has the central and state government helped the company’s smooth functioning? Or not? Labor laws. pressmen. Productivity Committee. etc. helpers. supervisors. overhead. NITRA. 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. codes of conduct.
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.
in However. in order for a company to be registered with the ROC. Form 20 gets the Director a Director’s Identification number (the number used on the mca.gov. Companies are required to register new events such as a change of directors with the ROC. The Central Government exercises administrative control over these offices through the respective Regional Directors.in/ROC_2003.gov website to access the public disclosure documents).nic.nic. CGO Complex.sb@sb. which are available for inspection by members of public on payment of the prescribed fee. the details of the board of directors/management structure.The financials publicly available include the annual return and balance (for all companies).CHAPTER TWO AGENCY PROFILES 1.in According to the Ministry of Company Affairs website: Registrars of Companies (ROC) appointed under Section 609 of the Companies Act covering the various States and Union: Territories are vested with the primary duty of registering companies floated in the respective states and the Union Territories and ensuring that such companies comply with statutory requirements under the Act. The addresses of each state’s ROC as of 2003 can be found at http://dca.mca. Since Pearl Global is a public limited company. Navrang Saini Addresses: B-Block Paryavaran Bhawan. which is not true for privately owned companies. Form 18. relating to the companies registered with them. New Delhi – 110003 E-Mail: rocjln. According to an interview with the Company Secretary of Pearl Global Ltd.nic.sb@sb. they must submit several forms at incorporation and annually. Such forms include: Form 1. Form 32. the office at Nehru Stadium closed down earlier in the year..in Nehru Stadium. Website of the Ministry of Company Affairs: http://www. REGISTRAR OF COMPANIES (ROC) The Registrar of Companies is a division of the Indian government’s Ministry of Textiles. New Delhi 110003 Phone: 011-24362708 Fax: 011-24364570 E-Mail: rocdel. Page 10 .htm : Delhi & Haryana Regional Director: Dr. These offices function as registry of records. the compliance of companies act. the profit and loss are also publicly available. the address of the registered office and the locations of the business. Form 29 for Pearl Global makes it a public limited company. Lodhi Road.
Furthermore. Not only were entire company files missing. and though there is no formalized rule against this. the process of obtaining public documents. Page 11 . but several did not have up-to-date financial or structural information.The ROC in Delhi is in a process of transitioning to an electronic format of filekeeping. As such. was difficult and did not yield a lot of useful information. of a newly incorporated company detailing the scope of its operations). Information must be copied into a notebook by pencil (pens are not allowed). The researcher attempted to take notes by laptop. etc. photocopying the documents in the file is not permitted unless a fee for a legal copy is paid. it was not permitted either. such as financial information and company Articles and Memorandum of Association (objectives. Documents are publicly available after submitting a form requesting a release of information along with a small fee for each company.
Assistance in development of global sourcing strategy and action plan. Thereafter. competitive and regulatory information. as part of the team that launched the JV. * One of the largest global home products retailers . 4112495 Fax: +91 (124) 2577586 Cell: +91 98111 03494 Email: devangshu. He subsequently worked with an international retailer's joint-venture in India. Sushant Lok-I. and returned to India to his position as General Manager of the Indian business.Strategic assessment of India – insights for a global senior management team to gain a realistic picture of the opportunities and the challenges in India. Support in implementing changes in sourcing strategy and organisation. * Global fibre and chemicals company . food & grocery. Third Eyesight and its team of associates & professionals have worked on a variety of business strategy. home. manager. Gurgaon . THIRD EYESIGHT (INDUSTRY CONSULTING AGENCY) Contact person: Mr.development of India strategy and preliminary business plan including market analysis.strategic inputs for Asia-Pacific top management team to identify emerging opportunities in the Indian textile supply chain * Leading UK Retailer .2. he co-founded a fashion sourcing company in which he remains a shareholder.Carrying out sectoral market studies in retail.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. * Diversified Indian consumer and industrial products conglomerate . assistance in formulating strategy and developing partnerships with International retailers and brands.com Website: www. During his career Devangshu has performed the roles of an entrepreneur. advisor. * International multi-billion dollar apparel brand . 2nd Floor.firstname.lastname@example.org. over the last 16 years. Founder and Director of Third Eyesight A-847. Devangshu began his career with the then-leading Indian national retail chain in buying & merchandising and in store operations. Devangshu Dutta. in marketing and distribution. and product analysis. including fashion. health. trainer and teacher. He then joined a start-up consulting firm and was instrumental during its growth into a multinational consulting firm's joint venture in India. Third Eyesight's project teams consist of professionals who have hands-on experience in various aspects of retail and consumer products businesses. The following are brief descriptions of some of the projects on which Third Eyesight's professionals have worked. assistance in assessment of Indian supply base Page 12 . Benchmarking against global supply chain and product development best practices. 4112494. He was also based in the European practice of this multi-national consulting firm. new business start-up and operations projects with Indian and international clients.122 002 INDIA Tel: +91 (124) 4112493. dining etc.
Content of Interview (5 July 2006) with Director of Third Eyesight: Asked about study. Sibichan Matthew. D. Mentioned another apparent Tier 1 (said they are large and source directly to MNCs).Formulating strategy and assistance in strategic alliance proposal to key European customer. The investment cap was very low. development and delivery of sales & marketing collateral for three consecutive seasons.org). According to him. Mr. Also told the researcher to contact faculty of Pearl Academy of Fashion. this model was phased out. Gave history of market structure in India.Comprehensive comparative study of 7 cities in India and outside to choose location of new garment manufacturing plant * Leading Turkish supplier . you need a separate registration and thus it is easier to simply export (used to be tax-free). and you cannot have large units.org) Advised researcher to contact faculty of the management studies department.K. In the early 90s. as you needed approval from the state government if you were operating a place of business with more than a hundred workers. Much of the fragmentation of companies was really only on paper. * Pioneer luxury brand house in India . who could then direct me to industry management: Dr. labor laws also limited the ability of companies to expand.* Multi-billion dollar Indian consumer goods conglomerate . Since the garment industry is extremely labor intensive. Batra. This is partially why many of the current successful companies (such as Richa Global) are split up into many different companies. Mr. who would be able to help schedule company interviews. * Indian subsidiary of one of the largest sports apparel and footwear brands – Design. Page 13 .Business planning for new brand acquisition. Gave a brief background about salient law regulating the textile and garment industry: The tax laws are such that if you subcontract work but sell to the domestic market. The name is on the WRC disclosure list.Assistance in formulating strategy and developing business with global customers for exports. * One of the largest Indian textile and garment companies . reserves certain sectors for small units. The government thus limited how much you could produce under the reasoning that overcapacity would lead to inefficient use of capita. Matrix. which continues to regulate knit-fabrics. Pradeep Joshi. and the result of this was that a successful company was prevented from expansion. The other reasons for company fragmentation are the nature of quota system and labor laws. The quota system obliged companies to set up under different names. The small-scale reservation system. Initially. Business strategy and plan for current business. it was a licensed economy in which you needed to get government clearance to manufacture in specific capacities. and assistance in seeking new capital infusion. (Website: niftindia. gave contact information for the National Institute of Fashion Technology in Hauz-Khas. Directed researcher to online industry magazine resource (Website: apparelresources.
investment in the industry slowed down. and rather than cultivate a relationship in which the supplier provides input and designs according to a long-standing relationship.” Furthermore. The current model has self-contained worlds instead of cooperation. whereby long-term relationships are cultivated. Because of this. couldn’t see name). and money (wastes that would not be eliminated by greater cooperation. He began to talk about sourcing. strategic sourcing is dramatically different from the current widespread transaction model. From a piecemeal view. He then mentioned that “strategic sourcing” would be much more beneficial to the market. etc. He mentioned that Delhi (mostly womenswear) is only one side of the big picture. total costs would go down because the current transactional model wastes a lot of time. and that Chennai (mostly menswear). 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. as the companies began to listen to the needs of buyers and in 2005. but more menswear). effort. the product is re-done. economic source. it would increase unit prices. worrying that Indian business could not compete with China. he said. Bangalore (roughly equal. saying that the industry had often talked of diversifying. He expressed hope that soon the labor laws would relax some to reflect changing needs of business. which has worse infrastructure but is nevertheless optimistic about business. gets quotes from suppliers.. money is instead wasted on an inefficient process. He stated that “the inconvenience of a labor inspector” pestering and harassing company management was a minor price to pay for business expansion. He said that Delhi is doing extremely well in terms of business and is the largest in terms of exports. the supplier makes the product. but would be greatly minimized). this changed somewhat. for example. but that the outlook of the management may be more pessimistic than Tirupur. then privatized factories. so all the businesses had to pay was labor and overhead.” however that had mostly been talk and no action. the MNC may like it or require additional changes. ships a sample. Page 14 . how the current transactional model is very inefficient insofar as buyer-supplier cooperation goes. but in the strategic long-run. since vendors and suppliers both may have had bad business experiences when attempting to do the same. doesn’t communicate with the designer. 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. he made it clear that somehow they were competing because of their “ability to develop and deliver product. He began to describe the different ways of sourcing. that they were too “over-exposed in China. The MNC gives product specs. material. From 2001-2004. However. In 2004.S. the quotas had restrained India far more than China (showed a graph from a U. and as such is seen as a big risk and many are reluctant to actually work on establishing these relationships. the investment returned. wherein the buyer.one hundred workers is nothing. he said that Indian companies were extremely uncertain about the effects of the MFA phase-out.
Smt. of India. New Delhi) Ex-president.3.. Gen. Vijay Mehta (M/s Intercraft Pvt. (3) To appoint representative. Ltd. develop export of all types of readymade garments. Clothing Manufacturers Association of India.. Amersey (M/s Milton’s Ltd. M/s Handloom and Handicrafts Export Corporation. The main objectives of the AEPC are as follows: (1) To promote. Mr. S. Assan. particularly to undertake market research. N. Garment Exporters Association. Sector 44. B. Ramadorai (Chief Executive. Ltd. to find out the tariff and other restrictive practices of importing countries. New Delhi took a lead in this matter and formed a special ad-hoc committee of the following Members: Mr. Calcutta). Mr. Mr. Bombay) Hon. APPAREL EXPORT PROMOTIONS COUNCIL (AEPC) Office: Apparel House. increase. Ltd. KK Jalan. (2) To undertake all export promotion measures. New Delhi).N.F. to send trade delegations and missions to foreign countries as well as to survey export potential of readymade garments from the country.. jute and hemp. advance. N. 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.P. Mogrelia (M/s Zoro Garments Pvt. Bombay) President. excluding. (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 . quota distribution and allocation. woollen knitwear and garments of leather. Bombay) Vice-President. Shah (M/s Hiralal Gulabchand. Mr. Mr. Premila Wagle (M/s Paville Fashions Pvt. Clothing Mfrs. P. Two leading organisations of readymade garments. Madras). agents or correspondents in foreign markets for the purpose of continuously and regularly reporting the markets prices. According to the Articles and Memorandum of Association: Up till now Cotton Textiles Export Promotion Council was handling the export promotion work of garments.K. of India. New Delhi) President.L. Garments Exporters Association. Banthia (M/s Magnum Enterprises. Clothing Mfrs.aepcindia. Singh (M/s Singh Export Corporation. Bombay and Garments Exporters Association. of India. Secretary. Mr. but now as the garment industry has reached a stature and maturity and has achieved the target of 250 crores. market preferences and latest fashions and designs prevalent in the foreign countries. B. Institutional Area.. Gurgaon 122003 Contact Person: Mr. Clothing Mfrs. Secretary General of AEPC Mobile: 98-9912-4555 Website: http://www. Assn.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. to undertake marketing in individual foreign markets. Assn. to find out the product range and export prices of garments of other countries. to develop new designs and patterns of garments.
(6) To establish design centres. to 200 days. and description of subscribers. designs and techniques and to encourage manufacture of garments for exports. • secondly Bangalore. Page 16 . and • raw material supply (both indigenous and imported). Content of interview (7 July 2006) with the Secretary General of the AEPC: The main issues in the garment industry are labor and infrastructure. He said the three biggest centers for garment production were • firstly Delhi. garment businesses do not have orders. otherwise productivity will remain stagnant and labor costs will remain high. AEPC focuses on three things: • marketing help. • help with training and productivity (14 training institutes). its strengths being better infrastructure. traders and exporters of garments. so that workers can be more easily fired and hired. (8) To obtain from members of the Council and to prepare for the Council as a whole. setting of export targets generally and in relation to specific countries and commodities on an annual basis and for such medium and longer terms as may be considered desirable and to ensure/undertake execution of such plans. to improve the qualities and standards of the fabrics and garments by importing technical know how. action plans for promotion of exports. A specific AEPC goal is to get the government to change the law that states that workers are permanent employees after 100 days. (5) To assist members.for the purpose of continuously and regularly reporting to manufacturers. (7) To undertake training of workers and technical personnel. He stated that the government needs to increase labor flexibility. and lastly Tirupur. to encourage export production of quality garments and to undertake necessary research in fashions. and its specialization in better embroidery and the “India look” (ethnicwear heavy with embellishments and more complex work). address. its strengths being higher levels of worker productivity. generation of production for exports. unit prices have remained stable pre and post quota phase-out. especially. he stated. in the Small Scale Sector by giving assistance in the matter of understanding and implementation of the drawback. as well as the names. rules and procedures. specializing in knitwear. so that businesses who do not get orders during the winter are not hurt by the cost of labor. For three months of the year. import licence facilities provided and how to apply for the facilities. development of export markets. to improve the skill of workers engaged in garment manufacturing in India and to assist in the technological base of the garment industry. to evolve improved design and patterns and garments suitable for export. • lobbying to government to change laws regarding labor and infrastructure (and whatever other business bottlenecks there are). 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). NCR region. He stated that over the industry as a whole.
and • the Eastmen Group (Tirupur). • Gurgi (“biggest industry consultant”—saw this name in the fabric stores in Jyoti Apparels). He mentioned several notable resources. The AEPC did not have company specific financial data.He listed the top ten Indian garment factories as • Shahi Exports (Delhi). • Golkadas Images (Bangalore). • Modelama (Delhi). • Centwin Group (Tirupur). including • an HR training institute-KSA Technopack. as it is self-reported. • a foreign consultant agency Method Workshop (main consultant Roger Thomas). The researcher purchased the newest book of statistics on industry level data that the AEPC had (2003) and a directory of garment exporters. • SPL Industries (Delhi). Page 17 . with a common thread of individual attention to quality control and productivity by hiring consultants and building better facilities. • Golkadas Exports (Bangalore). • Richa Global (Delhi). These businesses have succeeded through a number of different strategies. • Creative Group (Mumbai). • Texports (Mumbai). and • the Cotton Textile Export Promotion Council.
com. Resource Centres. enhancement of critical abilities. professionals.htm Address: NIFT Campus. 26965080. Kolkata and Mumbai. 26965080. Government of India Website: http://www. Chairperson. Hyderabad. management and technology across the globe. These programmes reflect the requirements and Page 18 . NIFT is acknowledged as the premier institute of fashion design. rajeshbheda@niftindia. Extn:306 Contact Person: Professor Rajesh Bheda. 26965059. management practices and manufacturing technologies. 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. also offers short duration part time courses under Continuing Education (CE). 26964771. In addition to classroom learning.4. and entry-level candidates in the form of Continued Education Programmes.com NIFT was set up under the Ministry of Textiles in 1986. leading to upgradation of skills and knowledge. Continuing Education (CE) Programmes: National Institute of Fashion Technology. Gandhinagar (Sub-Centre: Surat). 26964771. According to its CE (Continuing Education) Prospectus 2006-07: NIFT provides quality fashion-education to industry experts. practitioners. and excellence.. which have been developed in consultation with reputed academicians [sic] and industry practitioners. 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. creativity. PhD. advancement of careers. NATIONAL INSTITUTE OF FASHION TECHNOLOGY (NIFT) Ministry of Textiles. They offer a learning environment that encourages innovation. Bangalore. New Delhi-110 016. Hauz Khas Near Gulmohar Park. The Institute has pioneered the evolution of fashion business education across the country through a network of seven centres at New Delhi. 26965059. Extn:306 Fax: 91-11-26851198 Mobile: 9810154829 E-mail: rajeshbheda@gmail. Management and Technology. India Telephone: 26850484. and the evolution of new professionals. Department of Fashion Technology Telephone: 26850484.com/iftf. 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. NIFT has crafted a range of Continuing Education Programmes. and diverse faculty expertise. besides conducting regular professional undergraduate and postgraduate programmes in Design. The centres are professionally managed platforms of the world’s finest design expertise. (Gauri Kumar. and avail of facilities like laboratories with state-of-the-art equipment.niftindia. Director General of NIFT) The Institute: Today. these courses offer a unique opportunity to participate in the lively academic environment of NIFT. Chennai.
manufacturers consolidating capacities. buyers reducing number of suppliers as well as brands. Content of interview (20 July 2006) with Professor Bheda: Professor Bheda has been with NIFT for 16 years. The average Indian garment factory has 100% potential in physical labor productivity. However. • managing their supply chain better. and EU have always been strong markets in India. and they are making efforts to reach good productivity. He teaches classes in quality management.concerns of the industry and have been carefully planned to spur professional growth. Most common is line supervision. With focus on interactive learning. U. Unit prices are down.S. and also to those aspiring to join the industry. trying to get workers’ involvement. Companies are trying to move up the value ladder as product development and design are becoming more important. training managers. suppliers reducing subcontracting. and • hire or train industrial engineers. corporate social responsibility. there could be a 50% improvement in quality. The main characteristics of successful firms include: • recognizing what customers are looking for. The flexible schedule enables the participants to pursue the programme without interrupting their professional activities. Page 19 . as there has not much shift in markets. • have more highly trained workforce. relevant to individuals at different stages of their careers. • BPR manufacturing. and a global overview of the garment industry. The participants receive a NIFT certificate on successful completion of the programme. probably average 70% of India’s market. The library at the NIFT campus is open to anyone. though you cannot take bags inside the doors or check out books. • higher productivity • use the help of consultants. with production planning and scheduling. • better quality product and service. operators. • design development. demand is up. 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. the programmes provide a congenial environment that integrates theory with practice. cost is up. methods monitored. 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. Post-MFA trends have been a consolidation of supply chain and capacities. • offering shorter lead times. If companies put efforts into enacting these measures. quality improvement program. productivity (how to perform time studies). performance-based rewards system.
the AEPC Director of Export Promotions (interviewed him after K. 38th annual: www.com).L. The core group of organizers include Vijay Mathur. so some firms are investing in CSR to the extent they can afford. The researcher obtained a buyer ID and toured the grounds. it would have to be meticulously and carefully implemented.” that retailers are paying lip service to CSR without sharing the cost burden. not because the buyer says the firm has to do it. He does not see a correlation between turnover and CSR programs: “ultimately it comes from within. 2) Shilpayan Craft (Jaipur) 3) Another firm from Jaipur. Mumbai).there is an erosion of the bottom line and companies find it difficult to survive and improve working conditions. Magu (Chairman of Jyoti Apparels). so the researcher asked IIGF workers) were 1) Intercraft (New Delhi).com. Jalan. The award winners for their showcases (announced the previous day.K. H. None of the firms were top ten exporters or easily recognizable. Social programs are a long-term investment.indianapparelfair.K. Page 20 . Regarding corporate social responsibility. driven by price and the customer can walk away at any point. Retailers should start partnering with the brands and rewarding CSR compliant suppliers. it seemed to be a showcase for smaller firms to vie for new buyers and international exposure.indiaapparelfair. K. “suppliers get a feeling of being cheated. and many cannot afford them because there is typically no financial payback. the 37th annual garment fair with 393 exporters/exhibitors at Pragati Maidan. from principles. and are simply passing it on to the suppliers. The day of the interview was the final day of the Indian International Garment Fair (IIGF: www. However. it would be good to invest in social improvement program. Agarwal). and as long as it is ensured that the rewards system cost comes down to the factory floor.K. something like it has been discussed. so suppliers feel they are not committed. Vijay Agarwal (Chairman of AEPC. He gave a contact person to interview from Shahi Exports and up-to-date contact information number for Orient Craft. Everything in the market is transaction-based.” 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.
ISO-14000 Environment Management System. conferences and publications. and Seminars/ Conferences/ Training programs…NITRA has carved a niche and occupied leadership in Package Design Consultancy for effluent treatment and water recovery. Environmental Audit. *HRD activities through training programs. Several prestigious textile units and multinationals are already within its consultancy network. It is linked to the Ministry of Textiles and is recognized by the Department of Scientific and Industrial Research (both government entities). effluents. 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). Machine Design & Development. Maintenance Management. NORTHERN INDIA TEXTILE RESEARCH ASSOCIATION (NITRA) NITRA. 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. *Customized consultancy packages for national and international clients in the areas of Product Development. J. workshops. Energy Audit. Product Diversification. Energy Conservation. P. *Need based cost effective software development. waters. Maintenance Audit and a lot more. V. ISO-9000 Quality Management System. dyes.5. It is the only ISO 9001:2000 accredited textile research organization in India. According to NITRA’s 2006 Prospectus: NITRA’s Multifarious Activities *Job oriented professional courses (full-time and distance learning) in textile. Raj Nagar. leather. Publications. Rao. Process House Study. Design of Effluent Treatment Plants and Water Recovery Plants. Chairman of NITRA. environment and allied areas. Quality Improvement. and plastics. Manpower Planning. *Collection and dissemination of data useful to the textile & garment industry. *Quality Evaluation of textiles. Ghaziabad (UP) 201 002 Website: http://nitratextile. *Research and Development projects and industry specific surveys related to textile & garment industry. Pollution Control. seminars. The Environment division has successfully executed 74 industrial projects with effluent handling capacity of 100 m3/day to 2000m3/day…Environmental division has 40 publications in environment field…The division has organized several seminars/workshops during the last one decade in the following areas for the benefit of Page 21 . Techno-economic Viability Study.org/ Contact person: Dr. garment. chemicals. Cost Reduction. Sector-23.S.
Netherlands. the Bureau of Indian Standards (BIS). has been installed for carrying out treatability studies of biodegradation of industrial effluents through aerobic cum anaerobic route. water. [NITRA’s IT Center] has over 100 [PC’s]. Content of interview (7 July 2006) with Chairman of NITRA: Gave background on the history of the textile industry.. fear of China post-quota. which are essential to conduct such a program…[it] is accredited/ recognized by the National Accreditation Board for Testing and Calibration Laboratories (NABL). TAF).textile and allied industries: waste management. especially the law whereby a worker that is employed for 100 days is considered a permanent employee. He allowed that workers were being exploited. Stated that the fragmentation of the business made quality control an issue... An in-house miniature ETP (effluent treatment plant) of 100 Liters/hour capacity has been installed by NITRA. better access to a supply of power through a cluster system called Scheme for an Integrated Textile Park (SITP). the…library [keeps students connected with] ongoing global developments. he said that unions hurt business. improve infrastructure. There is a shortage of skilled garment workers. from composite textile mills in the 50s-60s to the rise of small scale businesses/ fragmentation. environmental statement…NITRA’s Environment Laboratory is well equipped with Sophisticated Analytical instruments. A programmable ADI Bioreactor System of 3 liters capacity from Applikon Dependable Instruments. but would not elaborate and would only refer to the intractability of trade unions in vague terms. The government is currently working on better infrastructure. which would consolidate factories. energy. NITRA has a wide database of employers [in its placement cell. etc. 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. NITRA helps factories with product development and various audits. and perhaps have relaxed labor laws within these sites. legal compliance. The library also subscribes to 150 [national and international] periodicals. Complained about government infrastructure and labor laws. especially Page 22 . etc. During the 60s-80s. He believes the government should subsidize capital for Indian business like China (mentioned something about a Technology Aggregation Fund. mid term strategies and policies and creating necessary infrastructure. 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. eco-friendly textiles. quality. 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]. Library: Enriched with 5. Access to and the price of power seemed to be a big issue for him. Also stated that it cost businesses more to subcontract because they had to pay for delivery.000 books and journals. and the Haryana State Pollution Control Board (HSPCB). effluent treatment and water recovery plant..
so NITRA conducts training programs for workers that last 3-6 months.machine operators at the shop floor level. he mentioned Vardhmal. Classes are full days. a NITRA Senior Scientific Officer. 10:30 am . Students apply to the program online and are selected on the results of aptitude examinations and interviews. not garment manufacturers). When asked for company names. L and J (seem to be mills.4:30 pm. The researcher obtained a copy of the 2006 prospectus. The course coordinator is Vivek Agarwal. Bilwara. They typically have 4-5 students applying for one seat. Page 23 . Reliance. They conduct in-plant training as well as distance learning programs for middle management at NITRA itself. Arvind. 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.
phase -1 New Delhi -110020. Udyog Vihar Phase -1 Gurgaon. Manicandan’s CEC Report. and G. 7 & 8. I. the company website. 2291131 Fax: 91-124-2290864 Website: www. Haryana. MODELAMA EXPORTS LTD.com E-mail: info@modelamaexport. India Tel: +91-124-2397838-42 fax: +91-124-2397843 1 Initial information obtained from company website.modelamaexports. Merchandising Agent. Okhla Industrial Area. India Tel: +91-11-26810103 fax: +91-11-26817969 Head Office Gurgaon 184. CONTACT INFORMATION1 Contact Person Lovleen Kumar. Page 24 . An ISO 9001:2000 certified company The information in the following company report was obtained from interviews with the Director.com Head Office Delhi B-57. business articles. Haryana.com. Director E-mail: lovleen@modelamaexports. documents given by the HR and production managers including a company profile. Mobile: 9810015693 Corporate Office2 Plot No. ICRIER financial data. and updated telephone numbers from interview. Manesar IMT Gurgaon -122016. India Tel: 91-124-2290993. Sector-5. 2 Unit visited by the researcher.CHAPTER THREE COMPANY PROFILES 1. Human Resources manager.
BASIC PROFILE6 Legal Composition Sole proprietorship. and Pandey. Phase 1 Gurgaon 3. Okhla Industrial Area. Modelama today has ten professionally run production units over 4. Lalit Gulati as a family-run operation. B-57. Udyog Vihar Phase -1 II.000 square feet. phase -1 New Delhi 9.asp?msg=2710&cod=newsindetail&nam=>. Modelama professionalized its management structure and has been consistently upgrading technology in their production facilities. phase -1 New Delhi 8.com/defaultnextone. IMT Manesar. 184. From company website. interview. Okhla Industrial Area. 204. Okhla Industrial Area. In the first year they exported Rs. Vinita. “Build Quality Rather Than Check The Quality.” Apparel Resources. <http://apparelresources. Manesar. 4 3 Page 25 . 200. Phase 1 Gurgaon 2. Plot No-5. 6 From company website. B-80. Gurgaon1 6. 45 lakhs with 50 indigenous sewing machines and a workspace of 4. Phase 1 Gurgaon 4. Sector-5. Sector-4 Gurgaon 5.5 III. Plot No. In 1999. owner is Mr. Modelama places a great emphasis on technology as the secret to its success. 201. phase -1 New Delhi 7. 5 From website. 7 & 8.000 square feet.00. phase -1 10. BRIEF HISTORY Modelama was founded in 1979 by Mr. B-26. Other production sites in untranslated Hindi document.Road Map 3 Production Units4 1. B-33. Lalit Gulati. Okhla Industrial Area.
Colt’s Europe: Etam. La Halle. AMC. and home furnishings. linen. Modafil UK: Laura Ashley. Zellers Australia: Country Road Awards Target Vendor Award of Excellence. Exports/Imports 100% exports. wool). Zara. Westelm. LOP NO. top of beds. A & F. 1992. 2001 Federated Merchandising Group Five Star Award (in Development of Federated Department Stores Private Brands and Labels). which may have contributed to minimizing seasonality issues. 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. Nov. Next. 2000 Page 26 . silk.U I/6921dt28/08/01 RCMC NO. skirts. dresses. Product Mix Areas of specialization include outerwear. Sears Roebuck & Co. and decorative items for loungewear like throws. is an export oriented unit registered with NEPZ.O.4530/2001-100% E. Marks & Spencer. Tommy Hilfiger. Federated Stores (Macy’s). Hudson Bay. 1999. Pottery Barn. synthetics (viscose. H&M. Charming Shoppe Inc. Kohls-Belk. Saks. jute and hemp. Modelama does not manufacture for the domestic market. polyamide). kidswear. knitwear and garments of leather. silk. GUS. Dayton Hudson Corporation. Marmaxx.. Clients USA: GAP (Banana Republic. 1999. and 2002 Associated Merchandising Corporation Outstanding Performance. Uses natural fabrics (cotton. Marshalls. and blends. Chambers. Freemans. drapery. Canada: Eatons. trousers. offering products such as table linen. Eurofiel (Women’s Secret). Target Stores. 1998. etc. Launched Home Textile Collection in 1999.. Lands End.. Sears Roebuck & Co. cushion covers. 2000. nightwear. 1993. shorts. Proffitts. Incorporates ethnic Indian accents and embroidery into design samples. Old Navy). Grattan. Monoprix. Galeries Lafeyette. Villersey & Boch. 2000.AEPC/REG/MER/47569/N/2001) as a manufacturer/ exporter of readymade garments including woolen. Sales Growth and Profitability Vendor Award. Lane Bryant. Added outerwear to their product mix in 2001-2002. William-E-Sonoma. ladies blouses.EOU Information Modelama Exports Ltd. polyester. Mervyns. 1996 Charming Shoppes Inc.
FINANCIALS Turnover 70 Turnover (millions USD) 60 60 50 40 30 20 10 0 1981 1985 1990 1995 2000 2002 2005 projected 15 0.000 per year 25.5cr. 3000/per month Rs. of pieces exported to the US No. 3cr.IV. 500 Rs. 500 Total employment 500 500 Production workers 450 450 Proportion exported directly --Proportion exported indirectly through intermediaries Misc.000 30% Rs. No. VA per employee Rs. 7 ICRIER Data (based on an interview at B-57 Okhla Industrial Area plant in Fall 2005) Page 27 . Rs. 500 500 450 60% 40% 150.5 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. of pieces exported to EU countries Proportion of workforce that is female Average wage for female production workers Average wage for male production workers 2005 200 cr 100% 20% 3cr. 2800/per month.
” Lalit Gulati.75 goes to Modelama. BRAND INFORMATION8 Modelama's Export Market 1% 5% U. “GAP is sourcing worth about $1 billion from India and we are doing more than $10 million with them.99. Brands Casual wear $10-16 USD European Brands High Fashion Retail Markup 4 to 7 times 4 to 7 times Type10 Mostly FOB Mostly FOB From interviews with the Director and Senior Merchandising Agent.99 is the landed cost.com/defaultnextone. which includes not only the factory unit price but the duty cost (AMC and freight). Vinita. <http://apparelresources.asp?msg=2710&cod=newsin detail&nam=>. 60% of that is Target’s profit margin per unit (PMU). 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.S.V. The remaining $3. the unit prices are markedly lower than specialty stores. Modelama Chairman. 9 8 Page 28 .A. ~$2.S. quoted in 9 Pandey. Average Unit Prices (per piece of garment supplied) Unit Price Origin Product Mix $5-7 USD U. Although they get large production volumes from discount retailers.” Apparel Resources. An example given was if the retail price of a given garment manufactured for Target is $9. “Build Quality Rather Than Check The Quality. Europe Others 94% Major Clients Brand Federated Stores (Macy’s) Target Stores GAP (incl. 10 Nearly all brands are FOB with the exception of discount retailers like Target Stores (USA). Of that remaining $3.99.
Vishnu. “My team of designers scans international trends and comes up with a tentative collection of not only designs but also shades.Unit Prices Since MFA Phase-out Unit prices have gone down an estimated 7-10% due to increased global competition.000 pieces. volume.5 0. We then sit down with the stores. V. is one of the principal designers. Then there is some back and forth communication between Modelama and the MNC to reach an agreement in terms of product design.”14 11 12 According to interview with the Director.7 1 1990 1995 2000 2002 2005 projected Design/Sampling Modelama has a fairly large design department. “Indian Fashion Firms Adopt Global Pret and Couture. and delivery times.ittimes. 13 From interview with Director and Senior Merchandising Officer. add a bit. they were manufacturing garment orders for Charming Shoppes Inc. Modelama will present their company profile to the buying agencies of MNCs. 14 Makhijani. and get down to manufacturing. who will then contact them with a development package if their profile fits their needs. From company website and brochure. Some of the orders can be pretty huge . The day the researcher observed the process.) as well as home furnishing products.11 Production System Uses an assembly line system. Marks and Spencer (Style and Co. Typically..4 1985 0. for instance. which varies according to the product. Production Capacity12 9 8 7 6 5 4 3 2 1 0 Number of Garments Produced (milions) 8 4 2. INFRASTRUCTURE Subcontracting Modelama does not appear to subcontract. subtract a bit.asp?em=M&mcode=200602&idx=1083>.1 1981 0. fine-tune the patterns.80.kr/en/node. an alumnus of the National Institute of Fashion Technology (NIFT).co. Page 29 .13 Gayatri Lal.” <http://www.
Pneumatic Button Hemming Stations. PH check. perc based dry cleaning machines. Programmable Sleeve Setter Stations. and number of workers. Air Flotation Tables. Departments17 Production (~800 Workers) There are about 560 tailors. Washing (24 workers) and Finishing/ Pressing (175 workers) The finishing area had lines of workers pressing and folding clothes. 15 16 From company website. at the front of which is displayed an “Hourly Production” dry-erase board with the line number. From interview with Director and Human Resources Manager. tearing strength. In the sewing departments. pitting test. supervisor name. Auto Belt Attaching Stations. Auto Cutter (Lectra). The product was women’s fashion blazers for Style and Co. Site visited by the researcher employs about 1100 workers (including about 15 accounts staff). The floor is laid out in dozens of assembly lines.000 workers in all plants. Differential Feed Machines Needle Feed Machine. output. 17 Information on machinery was primarily taken from the company website. Page 30 . Cutting (50-55 workers) The cutting department had five lines of machines laid out with worker stations. they use internationally standardized procedures like the traffic light quality assurance system. sand blasting. Information on workers and floor layout is specific to the unit visited and is taken from an interview with the HR Manager. etc. laundering and crocking. Tests include tensile strength. Autocad (Lectra). Top. over 90% male. This was the only department with women. Machinery includes Auto Zig Machine. Multifusing with Three Track of Loading (High Performance Macpee). Auto Dart Making Stations. Auto Pocket Welting M/C. and brushing machines (from light softener washes to heavy enzymatic washes). Machinery includes Auto Spreaders.” Modelama emphasizes technology and internationally acclaimed systems to maintain a high level of quality.Quality Control15 Modelama’s motto is “build quality rather than check quality. Band Knife M/Cs. Procedures are based on aql 4 point system by which all fabrics are screened and categorized. The company deploys over 3000 imported sewing machines with customized workstations. An example line was sewing collar parts with a total of 46 tailors and 5 helpers. Differential and Bottom Cylindrical Bed Unison Feed Machine. Modelama has an in-house laboratory that is equipped with testing machines for AATC Standards and has developed in-house grading systems based on ERP. color fastness to light. Washing machinery includes a wet and dry processing unit comprised of micro processor controlled washer extractors. GSM check. Blind Hemmers. Auto Surging Machine. Approximate number of workers16 Modelama employs a total of ~6. input.
Has hand and machine embroidery capabilities. Veit. and line supervisors who perform time studies on particular styles and set worker targets. Because the factory is not near a city. HR Manager boasted that Modelama was the only factory in India to have this machine./month) 3500 From interview with HR Manager. The targets are communicated to workers by line supervisors and dry-erase boards on the production floor that display productivity goals. flatbeds. The Director said that workers are given incentives in productivity schemes if they reach their targets. No workers are involved in these meetings. 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. Embroidery Did not observe embroidery process during visit. management states that they set wages higher than minimum wage to get workers to commute. stressing how much state-of-the-art machinery has contributed to the quality and productivity of the manufacturing process. Productivity Schemes Company has production planning meetings consisting of the HR Manager. Machinery includes 20m length Schiffley Embroidery (Lasser & Saurer). calendaring machines and range of buck shapes and steam irons from manufacturers like MACPII. 2448 per month. dummy presses. Page 31 . and Renzacci. Trevil. The production manager gave the researcher a copy of a time-study conducted for Charming Shoppes. and unskilled minimum wage was Rs. Category Tailors +skilled 18 Average Wage (Rs. the HR manager said that no incentives are given. Inc style. 200 single head and 6 multiple head computer embroidery machines. Production Manager. 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. 3000 per month.Pressing and finishing machinery include multipresses. However. indicating that he would like to develop such a system in the future. VII. Additional Machinery Factory has a special conveyor system that moves products from assembly lines to other departments. the HR manager stated that no punitive measures are taken as it is prohibited by law. If workers cannot reach their targets.
except for worker recruitment for middle management positions.” Labor Turnover Estimated worker turnover per month at 7-10%. Benefits HR Manager indicated that workers receive the social benefits required by law. supervisors conduct time studies evaluating the skill level and productivity of a new hire. VIII. After a three-day period. Overtime Management indicated no more than four hours per week per worker. 19 Information based on interview with HR Manager and documents given by HR Manager and production manager. like China. Expressed dissatisfaction with labor laws requiring double overtime. which is not subject to negotiation. workers are then offered a monthly wage based on this evaluation. stating.+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. HUMAN RESOURCE POLICIES19 There does not appear to be common policies across the plants. HR Manager stated that wages increase after a year. Page 32 . “It should be time-and-a-half. and that workers receive double wages for overtime hours. including ESI and PF. Indicated that there are a few shop floor employees who have remained the two years the factory has been in operation.
the company posts signs on the gate. standing orders. However. Lovleen Kumar Director Ms. grievance procedures.Management Structure Mr. Worker Training This site does not provide training to its workers. For middle management positions. and in nearby worker villages. However. Anil Chauhan HR Manager Management Staff/Accounts Personne Mr. Modelama’s anti-harassment policy. To recruit shop floor employees. K. Recruitment Policy They do not use labor contractors at the unit visited. 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. Page 33 . and vendor codes’ of conduct. Phase-I Gurgaon. Workers are a mix of local villagers and from Gurgaon. while dotted-line boxed positions are factory-specific and subject to variance. according to G. at bus stops. such as the unit located at 200. the company recruits from training centers and placement companies and has a formalized policy that the researcher obtained. Manicandan’s “Mapping First Tier Suppliers in Garment Industry in Delhi.” Modelama uses labor contractors for some of its other units. Lalit Gulati Sole Proprietor Founder/Chairman Mr. Kiran Production Manager Mr. Beneeta Seigal Senior Merchandising Other Upper Management Positions Mr. workers have a brief orientation session during which they are informed of security measures.
The code of conduct for Charming Shoppes Inc. the company usually pays the medical expense.” Worker Committees Since there is no union. nor have there been unionization attempts. Customs Security requirements regarding issues like preventing trespassing.S. an Anti-Harassment Committee. companies have required them to uphold a more stringent counter-terrorism model of security in compliance with U.20 Grievance Policy Procedure If workers have a problem. Medical Care There is a medical room in the factory. and that management works to quickly solve problems in order to maintain an atmosphere of “family. There is a company dentist that comes every Thursday. according to the Customers Trade Partnership Against Terrorism. Received a Hindi copy of policy. Page 34 . but only in English.”21 Corporate Responsibility/ Codes of Conduct Modelama’s Anti-Abuse/Harassment Policy is posted on the factory floors in English and in Hindi. that they can report their grievance to their direct supervisor or upper management. According to G.” but when asked to meet the doctor. “We take care of all their problems. All workers were said to have received medical attention. was displayed on the factory floor. but avoids paying for major injuries and illnesses. and a Sexual Harassment Committee. Security New security measures have been implemented since the quota phase-out. If workers suffer from minor injuries. Union There is no union in the production site visited. the researcher was informed that he was at another production site. they have joint employee-worker committees required by law. There are only six recorded injuries at this site for 2006. tampering. HR Manager indicated that there are very few worker grievances. U.” there are no doctors in two of Modelama’s other production units (200. such as a Health and Safety Committee. Manicandan’s “Mapping First Tier Suppliers in Garment Industry in Delhi. traceability.5 km from the factory. a Works Committee. so there is no need for a union. 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. Work times for employees were also posted.S. in compliance 20 21 Received a Hindi copy of group meeting minutes. and an ESI station 1. or CTPAT model.Dismissal Procedure No information was obtained by the researcher regarding a formalized procedure. The factory locks its doors at night. preferring to dismiss the workers. A resident doctor is “available at all times. Phase-I Gurgaon and B-57 Phase-I Okhla Industrial Area).
the former Director stated: Lalit: We do not consider machines as individual equipment but as a complete workstation. Lalit Gulati. The Director mentioned that seasonality is an issue. BUSINESS BOTTLENECKS Main problems hindering financial success according to the Director are poor relative infrastructure. In 2002. 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.perator. 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.with these measures. it would appear that seasonality should be less of an issue for them than other companies who do not manufacture winter clothing. 25 crore in jackets alone. Vinita. 22 Pandey. 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. Page 35 . the Chairman stated that though the South is better known for it. and government bureaucratic hurdles regarding labor law. IX.” Apparel Resources. and then ship the product from that country. MNCs would present their contract orders to Modelama as an Indian company. The HR Manager. If Modelama has had as much success in outerwear as they have stated in press releases. however. only their department is kept open and the rest of the factory is shut down at 6 pm.asp?msg=2710&cod=newsin detail&nam=>. “Build Quality Rather Than Check The Quality. whose upper management and design departments would remain in India.22 X. the Chairman.” a more developed system of subcontracting modeled on Southeast Asian business strategies. If workers stay for overtime. and Sanjay Gulati. In an interview with Apparel Resources magazine. <http://apparelresources. Lalit: Machines change according to the product requirement…We have to be flexible because the buyer doesn't buy one thing all the time. A business strategy that Modelama is looking into is “triangular shipping. we need operators who can be trained. low relative levels of productivity. 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. relative strength of the Indian rupee to the dollar opposed to weaker Asian currencies. We do not need masters. Modelama would then shift the actual manufacture of the product to either countries with lower labor costs like Sri Lanka or duty-free countries. 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. Modelama successfully invested in the necessary infrastructure to export ~Rs. stated that seasonality was not an issue and that they have orders year-round.com/defaultnextone.
The unit visited is the site of their corporate offices and was built two years ago with the help of industrial engineers. Page 36 . Modelama was the first company to be interviewed by the researcher. The only question that management would not answer was regarding a detailed financial breakdown of the company. but directed the researcher to her colleague. This is likely the factory to which buyers are taken. as it is the most modern. XI. who was not available on the date of the interview. Modelama was very open in disclosing information about the factory unit. PERSONAL EXPERIENCE Modelama used an Italian consulting agency for the design of two of their factories.Sanjay: It is a very unique combination of machines that we have that gives us this flexibility of handling [versatile] product [mixes]. when they began to develop the infrastructure to manufacture outerwear. then was directed to a Senior Merchandising agent. The high level of attention paid to infrastructure and personnel management is probably not typical of their older factories. Contact was made by calling the general inquiry number on the website.
The remaining woven and all knit production sites are located in Bangalore. Divisional Manager of Marketing Mobile: 93-13369269 E-mail: ajay.com Head Office Bangalore Belandur Gate.raman@shahi. Palmprint Textile. Sarjapur Main Road Bangalore 560034. General Manager of Marketing Mobile: 98-18212505 E-mail: ashok. Page 37 .shahiindia. Haryana. I.in Head Office Faridabad23 Industrial Plot 1.co. Harish Ahuja. BRIEF HISTORY Incorporated in 1974 in Delhi. the company website. SHAHI EXPORT HOUSE PVT. II.in Ajay Khanna.com Website: www. is in Ghaziabad. LTD.co. the owner of the company. The information in the following company report was primarily obtained from interviews with the General and Divisional Managers of Marketing. Karnataka Tel: +91-80-28439214/15 Fax: +91-80-28439356 E-mail: email@example.com 23 Unit visited by the researcher. Sector 28 Faridabad 121008. Sector 28. and G. Senior Management Ashok Raman.2. Tel: +91-129-2273970/80 Fax: +91-129-2273485/91 E-Mail: firstname.lastname@example.org Production Units: Plot No. is former vice chairman of the Apparel Exports Promotion Council of India. business articles. Manicandan’s CEC report. Shahi Export House has a total of eighteen manufacturing units.khanna@shahi. CONTACT INFORMATION Contact People J. 1. Faridabad. Giri. Two or three other units are in Delhi (Noida) and a fabric processing unit.D.
yarn dyed single jersey. Up until a year ago. which was printed in 2005 by the Bangalore office. cotton fleece. JC Penny’s. Enzo Lorenzo. jacquard. double mercerized. golfwear. Hollister Co. nor does it currently have plans to do so. flat back rib. Sag Harbor (Sport).The fabrics range includes solids.pdf/$FILE/Fashion _News_05_02_en2_Webb. EOU Information No information was obtained regarding registration and EOU capabilities. Old Navy. jackets. 100% polyester polar fleece. American Eagle.pdf>. Van Heusen. 26 Remaining client names were obtained from interview with Divisional Manager of Marketing. The Children’s Place. Exports/Imports 100% exports. full jacquards. though any exporter of this size must have at least one registered EOU for importing capabilities. TKS Basics. indigo dyed units. No. interlock. Abercrombie & Fitch.lawson. sportswear. <www. textured knits. St. American Khakis. Carolina Blues. It is primarily information taken from the website with a few new passages regarding Human Resources and corporate responsibility. Shahi has expanded to home furnishings in the past year. Page 38 . rib. Place Jeans. pique.III. t-shirts.. Product Mix Areas of specialization are mostly ladies woven tops and men’s tops. sleepwear. polyester viscose. BASIC PROFILE Legal composition of the Company Private Limited Company. Bleu. Family-owned. H & M. Clients Bobbie Brooks (Woman). Ralph Lauren. the sole proprietor was Harish Ahuja. who is now the Managing Director. acrylic wool. mock neck. Liz Claiborne. (Pacific Merchants). but it is a small fraction of turnover ($5-10 million).. and circular woolen knits.com/www/resource. Shahi’s product line covers casual and formal men's and boys'. Seacorn.nsf/pub/Fashion_News_05_02_en2_Webb. Cross-Bow. Natural Issue. Akademiks.25 Wal-Mart. 2005. At Last and Co. Arizona Jeans Co. 2. GAP. Cento Mila. loungewear. ladies' and girls' dresses. 25 From company brochure. polyester cotton. Target Stores. John’s Bay. No Boundaries. tanks tops. Jeans Dynam. heavy jersey in cotton. Cherokee. Shahi does not manufacture for the domestic market. turtlenecks. Euro Open. spun filament. men's and ladies' bottoms. tailored collar polo shirts. Carolina Colours. Von Daniels. A & F. lingerie. engineering stripers. Faded Glory. ladies' & girls' blouses . Solutions (New York).26 24 Fashion Newsletter. The knitwear product range includes 3 button polo shirts.
65 Material Cost Labor Trims and Packing Depreciation Machinery upkeep Overhead Embellishments32 Profit 27 Estimated by General Manager of Marketing.pdf>.11 $0. 31 Based on the company’s average unit price of $6. Percent of sales is based on an average estimate given by the Divisional Manager of Marketing. Page 39 .Awards Wal-Mart International Supplier of the Year 2000 (can’t read others) IV. Turnover estimates varied by tens of millions of dollars between the GM and the Divisional Manager of Marketing. No. 32 Embellishment costs such as embroidery depends on style. 29 Estimated by General Manager of Marketing.65 $0. Did not obtain average retail markup information.30 $0. accessed July 2006. It can be none or most of the unit price. 2005 <www.com/www/resource. so figures cannot be considered accurate. 2. 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 million 14-28 million 1.25 $0.5 USD.13 $0. so they can only be thought of as a rough approximation.8 million 2. 28 Fashion Newsletter.13 $0.07 $0. 30 These figures were estimated by the Divisional Manager of Marketing in the space of 5-10 minutes.lawson.8 million 7-14 million 14 million % of Sales 50% 12-17% 10-20% 1% 2% 2% 5-10% 10% target Per Unit Price31 $3.65-$1.nsf/pub/Fashion_News_05_02_en2_ Webb.033-$0.8-23.4 million 2. though generally it is four to seven times the unit price of the garment.78-$1.pdf/$FILE/Fashion_News_05_02_en2_Webb.
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.
000 Mostly female Mixed Machinery 6. merchandising. The Divisional Manager of Marketing states that they always had incentive schemes. which can be 10-25% of monthly salaries depending on how difficult the style is. while the 60 multihead computerized embroidery machines have a capacity of 800 million stitches per day. double needle-needle feed split bar machines. collar/cuff turning and blocking machines.800 in all of Shahi’s Delhi (Faridabad and Noida) units 750 in production site visited The CAM based cutting department can make 75. and there are quality bonuses if clothes do not need repairs. Hashima and Kannegiesser. shipping staff Total number of workers: 3. pocket machines and automatic pocket welters. Its implementation and form depends on the department. Sampling This is a fairly large department in the production site visited. Productivity Schemes The unit visited has an industrial engineering department with eight staff. feed-off-the-arm machines. incentives depends on how many pieces are finished. The latest CAD software enables quick processing of pattern creation. For example. They conduct production planning meetings jointly with managers and supervisors by department. in which workers get bonuses for exceeding their targets. very little is done by hand. The incentive scheme only applies to skilled and semi-skilled workers. and it was stated that each unit has a similar department. Durkopp Adler. Embroidery Most is done by computer. one for production and another room with rows of computers in which employees work on digitized patterns and samples. enzyme wash . In finishing. They also conduct joint department meetings. It is also equipped with single needle lock stitch programmable machines with UBT. Washing The washing facility puts out over a ton of garments per day through specialized wash treatments such as softener wash.+Supervisors and dpt/line-in-charge 40 Sampling (think incl in production) 50-150 Remaining marketing.000 cuts per day. Ngai Shing.500 in all of Shahi’s production sites 1. Juki. desize soft wash and golf ball wash. in sewing. accounts. stone wash. fusing press. who are not involved in these meetings. but they Page 43 . grading. every hour the target is marked. single needle top and bottom variable feed machines. line supervisors convey target setting to them. The production unit boasts machines from Brother. This department is responsible for timemotion studies and an operation breakdown. marker making and global electronic exchange of pattern data. There are two departments for sampling. These meetings set targets for the shop floor workers. This unit has an incentive scheme for productivity.
when the first shift of workers were getting off. However. and another fifteen-minute tea break between lunch and the end of their shift. these benefits are additional. The workers get a fifteen-minute tea break between the start of work and their half-hour lunch break. 38 According to G. lower labor turnover. Manicandan’s CEC report. VII. an increase in attendance. This early shift seemed to be entirely female.000 Supervisors/Mid Mgmt 10. Manicandan’s CEC report says a supervisor with eight years experience makes Rs.00040 Minimum wage is posted as follows: Category Wage (Rs. and a decrease of waste in the cutting department. Workers use their ID card to clock in and out of the factory. 4200. 39 Stated that these numbers do not include ESI and PF. there was still a strong female presence in the factory.have recently gone through major changes in their implementation. the workers at this unit do not get a tea break. Benefits of the incentive scheme include a 10% increase in productivity in past two years in the sewing department. leaving male sewing operators and some female ones.38 Wages As Estimated by Divisional Manager of Marketing39: Category Average Wage (Rs. 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. 37 The researcher toured the factory around 5 pm. 40 G./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./month) Unskilled helper 2200 Semi-skilled operator 3600 Skilled operator 6. Page 44 .
People who are motivated to excel and trained in different disciplines of garment 41 From interview with the Divisional Manager of Marketing. 7500 are provided with ESI benefits. Page 45 . if overtime is needed. which the researcher observed. Labor Turnover Estimated at 7-10% per month.Wage Setting Procedure Managers interview workers and then take a trial of their work for one day. they are only evaluated to see what category of skill they fall in. Estimated two hours per week per worker in the sewing and finishing departments. Benefits Stated that workers do receive ESI. Shahi’s overtime policies take into account gender. Most sewing operators have been at Shahi for around two years. HUMAN RESOURCE POLICIES41 “Human intelligence is the greatest asset which we possess.” ~Shahi’s website Shahi’s updated brochure includes lengthy passages stating their dedication to innovative Human Resources approaches. The Shahi workforce consists of committed and highly skilled people. 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. Workers who receive less than Rs. and negligible overtime for the other departments. Overtime Stated that there is not a lot of overtime because they plan production with target setting. Workers are then on a three to six month productivity probation. PF. VIII. Workers also have access to an on-site crèche for their children during the workday. they try to have the male workers pick up the extra work instead of the female workers. and a three-month maternity leave.
Manicandan’s CEC report. it is all direct employment. Shahi has invested in a dedicated personnel management division to take care of its labor. the worker forum is a “safe space” in which workers can address any issues they have with managers. Employ more women and uses HR strategies to disempower workers and remove blatant rallying points for workers. Particularly so as clothing corporations the world over are labor intensive and it’s imperative that they are well looked after. Worker Committees Stated that there is a worker forum that managers also attend. Some are skilled. There is also an orientation program for upper level staff. making Shahi one of the most sought after organizations to work for in the garments arena. Worker Training Shahi trains the unskilled operators for a period of a week.manufacturing. Shahi has ensured all systems are in place to make sure that everybody works in an extremely salubrious environment. Labor problems get a kind ear and are followed up on a priority basis. In G. Grievance Policy Procedure Presumably. Recruitment Policy Shahi states that they do not use a labor contractor. Page 46 . so they do not need to train them. 42 The brochure and website both state that human resources are developed using the training procedures of Kurt Salmon Associates. but definitely not. they provide transportation to overcome those issues. Union Didn’t ask directly. They do not recruit for shop floor positions beyond posting signs on their gates and through wordof-mouth. They are able to have female workers because they are in heart of Faridabad. not the outskirts of cities. workers revealed that there had been unionizing attempts that were suppressed by the management. and union organizers were either dismissed or isolated from other employees. 42 From company brochure and website. but it is not necessary to do so here. In the Shahi factories in Bangalore. Dismissal Procedure No information was obtained regarding a formalized procedure. so the labor is here. Training depends on the job description of the worker.
More of these were in both Hindi and English than I’ve seen at other factories. promote. 44 43 Page 47 . Wal-Mart. and a first aid room in the facility. securing of employees’ earnings through e-com (EDI) and ATM cards. Nautica.45 Medical Care There are male and female onsite doctors and nurses in case of industrial accidents. Best employee awards are given for overall discipline.Corporate Responsibility/ Codes of Conduct The company has a biweekly English magazine that publishes news and articles by workers. and support their families in the best way possible. Awareness programs are conducted for employees on health. The company organizes fire drills to keep employees alert in case of emergencies. Strict compliance with anti-child labor law is ensured. seminars.44 Safety measures are given utmost importance. The Limited. From interview with Divisional Manager of Marketing and joint worker-manager magazine. and American Eagle.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. Charming Shoppes Inc. And some of the remarkable provisions for employees include: eligibility of workers for health insurance. Target Stores. There are many signs posted on the factory floor with stating things like “Discipline: Team work is an easier path to excellence. Fire fighters are on high alert at all times and every floor is equipped with the right fire fighting equipment. attendance and productivity.” “Anything worth doing is worth doing well” and one about the importance of personal hygiene. Shahi Export House adheres to International Labor Legislation. personality development through work shops. It aims at providing a conducive environment for employees to protect. Liz Claiborne. American Pacific. Codes of conduct posted in factory include Carafour. Dayton Hudson Corporation. and lectures. A full-fledged Dispensary and Ambulance is provided with a doctor always on standby.” Shahi’s updated brochure includes add-ons regarding treatment of their labor force. educational facilities for children. They have activities for the workers such as an annual cultural week with games and contacts. in fact nearly all had a Hindi translation.. training facilities for employees. 45 From company brochure and website. hygiene. and nutrition related topics. Evaucation boards are put up on all floors along with photographs of fire fighting personnel.
only different season. Also argued for more labor flexibility. Shahi does not have a sexual harassment committee. Manicandan’s CEC report. The picture of the minimum wage was taken by the manager. however said they currently retain workers during the off-season because it becomes a problem to rehire workers.Security System New security measures have been implemented since the quota phase-out. 46 47 From interview with Divisional Manager of Marketing. and there was some controversy a few years back regarding a male manager and a female worker. Supposedly all visitors have to have proof of identity.000 pieces per month. companies have required them to uphold a more stringent counter-terrorism model of security in compliance with U. but I did not have to show it. who reported her case to the police. Shahi is currently constructing a production unit in Bangalore that would have a capacity of manufacturing 200.S.) X.S. The Marketing Managers did not mention any new initiatives taken to deal with the issue. Suppliers have changed post-quota. The production unit was enormous. according to G. and then not working to full capacity during the off-season. However. Customs Security requirements regarding issues like preventing trespassing. BUSINESS BOTTLENECKS Seasonality is an issue. Stated that they need better infrastructure regarding port system. tampering. according to the Customers Trade Partnership Against Terrorism. (Stated that retained incentive schemes and everything off-season. since it takes too much time to get clearance at the ports. U. From interview with Professor Rajesh Bheda of NIFT. PERSONAL EXPERIENCE Obtained contact information from NIFT. Page 48 .1 million PCs during the off-peak season. However Shahi is trying to diversify their product range so that it becomes even less of an issue. Shahi has to decline some orders during peak season (OctoberMay). or CTPAT model. though the researcher was not permitted to take pictures during the tour. before they didn’t have the quota holdings to compete. now they do. It is not a huge issue. IX. as he would not permit the researcher to do so. 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. now they are getting competition from small exporters. traceability. as they produce about 2.47 XI.4 million pieces during the peak season and 2. INDUSTRY COMMENTS Trying to build up capacity to produce outerwear by next year to reduce seasonality issues. The security guards inside were asleep. where the garment industry is over 90% male. Mentioned that Southeast Asia has the same problem of seasonality. Website contact numbers are out-of-date.
110020 (India) Tel: +91-11-26816917. 50 Conversions are based on today’s exchange rate (Rs. he started business in 1977 with an investment of Rs. He had no experience. 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. due to the quota phase-out. BRIEF HISTORY Company established in 1976 by Mr.com Production Units Magsons Exports. 20.K. and an interview with an Assistant Production manager.000 ($444 USD50).111 USD) in the first year. Gurgaon49 The researcher was not able to obtain the addresses of all nine factory sites. who had contacts in the garment and textile industry. a company profile and Standard Operating Procedures given by the Managing Director. Unit visited by the researcher. 26818977. and two are in Okhla Industrial Area (New Delhi).com Manish Mall Assistant Production Manager Mobile: 9899096999 Registered Office48 D-42 Okhla Industrial Area. I. HR strategies and production from Assistant Production Manager. The company’s turnover was Rs. south of Gurgaon). 000 ($11. Magu. II. shop floor observations by the researcher. two are in Manesar (southwest of Delhi. but by networking through his brother. 41/42 Phase IV Udyog Vihar. 26817910 Website: Jyoti Apparels does not have a website. Magu and deceased brother. K. 500. 51 Information on company background from Managing Director. E-mail: jyotiapparels@vsnl. H. L. Page 49 .L. CONTACT INFORMATION Contact People H. 45~$1) and are not adjusted for inflation. Phase-I New Delhi.3. 51 48 49 Unit visited by the researcher. and remaining information is from observations unless otherwise noted. The company has increased sales an estimated 30-40% in the past year. which roughly doubled each year until 1984. 26810804 (D) Fax: +91-11-26819684. Managing Director Senior Vice-Chairman of the AEPC (Apparel Export Promotion Council) Mobile: 9810029999 E-mail: hklmagu@jyotiapparels. of which five are in Gurgaon.
Miss Erica UK: Marks & Spencer. Onyx Denmark: Kompagniet Switzerland: Manor. . Zara-Indtex Awards The researcher was unable to obtain any information on vendor awards. skirts. Otto Australia and New Zealand: Just Jeans. Kishore Magu EOU Information No information was obtained regarding a registered EOU. Phool Fashion Ltd. Brylane. solid dye. Karstadt Netherlands: Wehkamp. Oxford Industries Inc. 52 According to profile (which is out-of-date. K.. L.” it was pre-quota phase-out January 2005). and ethnic handiwork accents. Evans. Exports/Imports 100% exports. Donn Kenny. viscose yarn and denim fabrics. India Imports. with embroidery and beadwork. Tesco France: C. Prenatal. maybe 2004. Brumel. but the majority is summer clothing. and children’s (roughly 15-20%) readymade tops. J D Williams. Reitman Israel: Fenomen Malaysia: Metro Jaya Spain: Mango. Jyoti does not manufacture for the domestic market. Roamans. Freeman’s. Carol Anderson. Charming Shoppes of America (CSI). Europe and Canada. V F Jeanswear (Wrangler). Page 50 .. owners are Mr. Gus. Mexx. Enjoy. Magu and Mr. BASIC PROFILE Legal composition of the Company Partnership firm. Jyoti manufactures some winter clothing (about 20% of production volume). Littlewood. H.III. Zellers. Specialize in high fashion made of exclusive prints. sequins. Debenhams. Lane Bryant. International. gents. Wal*Mart. blouses. Siplec (E Leclerc). (Target Stores. and other garments. The Farmers Trading Co. Primark. Manufactures woven (80%) and knitted (20%) garments using mostly yarn dyes. T. Promod Germany: Neckerman.D. Canada: Hudson Bay Co. Product Mix Areas of specialization include ladies’ (roughy 80% of production volume). Woolrich. Adams. K. House of Frasers. Jyoti’s strengths (and the North in general) are in high fashion garments with embroidery. Clients52 USA: Kellwood (Sagharbor). as it mentions “Quota Holdings: We have sufficient quotas in all categories of USA. Cabella’s. Blair Corporation). British Home Stores. Zeeman Italy: La Rinascente.
56 Average retail markup is four ($20) to six ($30) times the unit price of the garment.50 1. on average. excluding the $12 million USD figure from the company profile.6-2.6-2.5% MNC’s that source from Jyoti.IV. were estimated by the Managing Director on two different occasions. 55 Based on the company’s average unit price of $5 USD.57 V. Latin America.A.6-2. costs. 700.000 (15.6-2.5% Other Manufacturing 1. 57 Since Jyoti’s unit prices are mostly FOB. Page 51 .6 million 10 $0. etc.6 million 10 $0.3 million 60 $3 10-15% Labor 1. so they can only be thought of as a rough approximation.50 1.555 USD)53 Breakdown of Sales Revenue54 Est USD 2006 Per % Retail Garment55 Price56 Material Cost 9.6 million 10 $0. retain 75-84% of the sale of a retail item.S.000. 54 These figures were estimated by the Managing Director in the space of 5-10 minutes. 10% 50% 40% Others (Canada.50 1. which accounts for the inconsistencies.6 million 10 $0. FINANCIALS Turnover 12 million USD (either 2003 or 2004) Current year 18 million USD Other Financials Current year sales Rs. and cannot be used as an indicator of profit.5% Overhead and profit 1.50 1. this figure includes the amount the MNC spends on shipping. BRAND INFORMATION Jyoti's Export Market % of Sales U. Malaysia) Europe 53 Financials.5% Subcontracting Cost 1. Japan. duty.
he stated that unit prices have decreased about 10%. and Gloria Vanderbilt through buying agencies. American Eagle. primarily through the Triburg buying agency. Two of the factories are 2.58 Production System 58 See Standard Operating Procedures for detailed subcontracting information. VI. Did not mention any direct relationships.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. but they do subcontract their fabric sourcing and processing. INFRASTRUCTURE Company has nine production facilities. It is notable that Jyoti subcontracts to a Shahi processing facility. Prices and other sourcing details are negotiated through the buying agencies.000 square meters. four are 1. which is not a production facility). Subcontracting Jyoti does not subcontract the production process. and two are 600 square meters.000 square meters. but later stated that overall they have remained stable. Overall. the company has about 20. Subcontracting has not changed since quota phase-out. Page 52 . Average Unit Prices (per piece of garment supplied) Unit Price Origin Retail Markup $4-5 USD Across the board 4 to 7 times Type Mostly FOB Delivery Time 60-90 days Unit Prices Since MFA Phase-out During the first meeting with the Managing Director. one is 8.000 square feet of land spread over ten different areas (including the registered office.000 square meters.
fusing machines. perk-chloro plants. but primarily just take paper designs from buyers and converts it to clothing. dry cleaning. elastic insertion.Uses an assembly line system. Production Capacity According to profile. washing machines and set of 84 stem boiler irons.000 pieces per month. which varies according to the product.000 pieces per month. 59 60 See SOPs for detailed quality control schemes. belt attaching. between 240.59 Approximate number of workers (in all facilities) Position ~Number of workers Tailors60 1200 Fabric Cutters 125 Thread-cutters (use embroidery machines) 200 Pressers 75 Fabric and Accessories Storage Workers 40 Helpers 50 Accounts personnel 20 Miscellaneous 100 Total number of workers in all facilities: 1400-1800 Machinery (at all sites) Jyoti has 1000 Juki stitching machines. shell stitch (Merrow). Design/Sampling Small design department. feed of the arm. The researcher observed production of ladies’ white blouses for Emma James (Liz Claiborne). usually 80. and brown machine-embroidered skirts for American Eagle. lock stitch single needle and double needle. Managing Director and Assistant Production manager stated they were all skilled. computer embroidery.000-90. cross stitch/lock stitch button/ button hole/ snaps. over locks. At production site visited. Sometimes Jyoti has people from UK and France do designs for them. Page 53 . 8000 woven pieces per day and 1200 knit pieces per day. Quality Control Jyoti Apparels has a quality control assurance team with both an in-house auditing scheme and third-party inspection. According to company profile. piccoting.000 and 300.
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. Page 54 .
Machinery includes one bandknife cutting machine and two straight knife machines. one cutting assistant. etc. two supervisors in an office in the corner. Embroidery (observed 5-7 workers) Workers have to take off shoes before coming in because of “dust. Packing (10-15 workers) Did not observe department during visit. with one cutting master. Production (~180-190 Workers)61 on Second Floor Machinery includes about 200 Juki stitching machines. directly facing cutting tables and below looking up at the finishing department. Cutting (20-30 workers) in Basement There are four lines in the cutting area. There were two workers on the machines. Some of the fans were broken or not on. and the remaining workers helpers. The workers in this department were all male. observations. Checking/ Finishing/ Pressing (40-50 workers) The finishing area had lines of workers pressing and folding clothes. Sampling (15-25 workers) The fabric store had a sign reading “Triburg.” which is the buying agency that many firms deal with. It did not seem as modern a unit as other top tier factories.(Right) A view of the basement and ground floor. Fabric and Accessories Store.” so they are barefoot when operating the computer embroidery machine. Page 55 . is data for production site visited. three thread-cutters.. Document given to Buyer About Shop Floor Management (was displayed on shop floor. This was the only department that had any female workers. Washing (10-15 workers) Washing was located on the topmost floor of the building. There were no fans in this room. The department has one finishing supervisor and one assistant finishing supervisor. the researcher did not have time to write names) Magsons Export (a Jyoti Apparels Production Site) Finishing: One in-charge Finishing: One supervisor Finishing: Pressing Supervisor Finishing Quality Administrator (QA) Finishing Quality Checker (QC) Finishing: Quality and Production Floor After washing 61 Number of workers per department.
000 pieces per month. production manager. The tailors and some finishing employees receive wages on a daily basis. supervisors conduct time studies evaluating the skill level and productivity of a new hire. VII. 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. there is an incentive scheme that depends on monthly shippings. merchant/buyer (for style). Labor Turnover Estimated worker turnover per month at 20%. and gave a copy of the minimum wage scheme for Haryana. Benefits Production manager indicated that workers receive ESI and PF. The production unit visited usually produces 80.Step 1—Care label. and cutting supervisor who set the production lines and targets based on manual time-studies. After one day period. button placement One checker Step 4—Initial Checking Two checkers Two thread-cutters Productivity Schemes There are no incentive schemes according to the Managing Director. workers are offered a wage based on this evaluation. it is all left to selfdiscipline.000-90. Page 56 . First the Assistant Production Manager stated that they do not perform time studies. However. according to the Assistant Production Manager. rather they calculate targets manually by hourly production rate. then the factory will give incentives. which is not subject to negotiation. Then he stated that they conduct production planning meetings with the factory manager. while the rest of the employees receive a monthly salary. extra button. Wise Tag check with care.O. If workers exceed this by 1 lakh. Wage Setting Procedure For shop floor workers. finishing supervisor. security tag Four operators Step 2—Initial Pressing One supervisor Step 3—P.
VIII. Workers do not need experience per se. because otherwise they become permanent and you have to pay them more. Recruitment Policy Jyoti states that they do not use labor contractors. Management Structure Mr. but managers observe productivity and hire skilled workers. L. The Assistant Production Manager stated that if workers are not productive. H. they are given a one month notice so they can find another job and they receive a letter of termination. and the extent of their recruitment is posting signs on their front gates. Worker Training Sometimes Jyoti trains workers during a lean period if there is time. but these tend to be more middle management people. The Managing Director states that they recruit people from Apparel Training and Design Centers. while dotted-line boxed positions are factory-specific and subject to variance. Usually 20-25 tailors take 10-15 days to train. Dismissal Procedure The Managing Director stated that they keep workers for 240 days and then change their workforce. HUMAN RESOURCE POLICIES There are no common policies across the plants. K. though the Director mentioned that workers learn on the job. 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. Page 57 . Magu Partner Founder/Chairman Mr.
Page 58 . The first time security did not take my name in the confusion of finding a manager. companies have required them to uphold a more stringent counter-terrorism model of security in compliance with U. and high transaction charges. no imports because would have to pay landed costs).S. according to the Customers Trade Partnership Against Terrorism. Medical Care There are doctors nearby the factories and first-aid kits in the production sites. but no visitor’s pass. He stated that old employees with a union do not work as hard. ports.S. U. Grievance Policy Procedure/Corporate Responsibility/ Codes of Conduct No information was obtained regarding a formalized grievance policy procedure. but talked about them vaguely and though he stated that he could give me committee minutes.. they cannot transfer goods during “peak hours. or CTPAT model. anti-harassment. Worker Committees The Managing Director stated that they do not have any worker committees. No common policies (with HR. Customs Security requirements regarding issues like preventing trespassing. production. Does not have its own employee code of conduct. traceability. tampering. higher material costs (indigenous. 63 Based on interview with Managing Director. they should run cargo through machines instead. etc). Believes that there should be special customs lines at airports so that everything is not searched. He said they have the joint employee-worker committees required by law since there is no union. though neither of them knew where the medical facilities were located. he moved production to another site (now there is just the accounts staff and some sampling/design). There is a path behind the building to get to the main office over ripped metal sheets over grates. he did not. high rate of interest.) across plants except for buyers code of conduct. For example. etc. which makes it difficult to meet deadlines. but did not give a visitor’s pass. but the Managing Director stated that when the old employees formed a union. labor laws (especially the lack of hire and fire exit policy).Union The corporate office used to be a production site. etc. A lot of money is invested into customs. The production site visited did not have a union. such as environmental. However. the Assistant Production Manager stated that they do have committees.62 Security System New security measures have been implemented since the quota phase-out. and they have monthly meetings. Second time took my name. etc. duties. IX. 62 Based on interview with MD and Asst Production Manager. BUSINESS BOTTLENECKS63 Main problems facing the industry are poor infrastructure (need better highways. lack of good fabric processing machinery.” trucks are only allowed to transport good between 11 and 4.
production manager. Phase out of quota system has brought in new buyers.X. as they still have the edge on labor productivity and good infrastructure. etc. Page 59 . like American Eagle.) or some supervisors do anything. did not see upper management (factory manager. The Assistant Production Manager was almost never at the factory when the researcher came to the production site. etc. because of the late summer. XI. and did nothing the rest of the time. or even leave their air-conditioned offices. This year. as were much of the staff at the production site. INDUSTRY COMMENTS64 Jyoti used to deal with Wal-Mart and Target. the overseas vendors couldn’t sell their inventory. and one of them glanced at a time-study once. Jyoti was an extremely open company in many respects. who also permitted the researcher to take photos. so could not take orders from them anymore. Also.” Jyoti supports “special garment zones. 64 Based on interview with the Managing Director. making access to plants easier. He was very open in disclosing information.” in which infrastructure would be built up by the government. it was difficult to deal in huge quantities because of the possibility of mistakes in such a large order. Companies are very upset with the government’s “bureaucratic hurdles. They played solitaire. They’ve had to become very quality-conscious and price-conscious. Post-quota phase-out resulted in a boom for Indian business. The Managing Director is the Senior Vice-Chairman of the AEPC. PERSONAL EXPERIENCE When observed work at the production site. which is the capacity in which the researcher initially came to interview him. labor laws would be relaxed. but unit prices got too low. China is their main competitor. before couldn’t have more because of quotas. and had everyone borrowing money from the bank and investing in huge factories.
Phase I. 67 Unit visited by the researcher. Udyog Vihar. Udyog Vihar. 225. 68 According to the company website. Udyog Vihar. in 1977. 25172438 Fax: +91-11-25451549. Udyog Vihar. Haryana (India) Tel: 95124-2439701 Mobile: 9313634777 Fax: 0124-2439710-11 Production Units66 The R group of companies has over twenty-two integrated manufacturing units in Delhi. with one woven garments manufacturing unit in Delhi. Phase IV. Phase I. Udyog Vihar. and ironmongery. 236. 69 From an interview with the General Manager of Operations. Ware Housing Scheme Kriti Nagar. black iron. aluminum hardware. Manicandan’s CEC report. 25172437. Udyog Vihar. 151. Gurgaon 3. Gurgaon 2. Noida. Udyog Vihar. Gurgaon 8. and G. Phase-I. Phase III. Phase-I Gurgaon The company profiled has over ten manufacturing units. 208. 25454895 Contact person: Padam Vaish. Mayapuri Industrial Area. Phase I. the current Chairman. General Manager of Operations 236 Udyog Vihar Phase-I. 506. New Delhi 2. Gurgaon. incorporated R and Co. G International was established in 1983 in Delhi and 1996 in Gurgaon. 192.110015 (India) Tel: +91-11-25431408. Page 60 . 133. including: 1. 239.69 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. including: 1. Gurgaon 7. 479. Phase I. Gurgaon 4. and Bangalore. CONTACT INFORMATION65 Registered Office: 2/2. BRIEF HISTORY68 Vijay Uppal. Gurgaon67 6. I. 66 According to company website. New Delhi . an interview with a General Manager of Operations. 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. Gurgaon.4. Phase III. II. B-108. Gurgaon 5. 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. Udyog Vihar. Phase III. Udyog Vihar.
knit. Clients The R Group sources to over fifteen countries. Tommy Hilfiger. Women’s Secret. Exports/Imports 100% exports. It has initiated a backward integration project by starting its own tannery in Hyderabad. Polo Ralph Lauren. Dillard’s Sears. semi anilines. D. Sigrid Olsen. Awards 70 According to the company website. pants and shorts. Timberland. which will specialize in ready-made specialty shirts. Target. The company has set up its own offices in Ludhiana and Tirupur in order to better source fabric. women and children such as jackets. Liz Claiborne. to brands such as GAP.. and leather high fashion garments for men. Lane Bryant. the group includes eight companies.. Mexx.Crew. 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. The company has already started manufacturing leather accessories and is further expanding with a bigger factory planned in Gurgaon. Page 61 . Debhnams. R Global was incorporated in 2002 at Bangalore. cargo pants and shorts.K.1992. Calvin Klein. Including the original R and Co. anilines. BASIC PROFILE70 Legal composition of the Company Virender Uppal is the Managing Director.N. vests. women and children including shirts. Monsoon. Wal-Mart. skirts etc. Spigel. Etams Miss Sixty. pants. trousers. Betty Barclay. skirts.Y. BCBG. Next. J. and Marks & Spencer. waxy distressed/ oily nappaloans. The R Group has recently established a fully integrated production line in Noida. Product Mix Areas of specialization include ready-made woven. May Stores. semi-nubuck. The tannery has modern finishing technology for leather finishes of Sheep. The R Group began producing knitwear when Gaurav Uppal joined the company management. Charming Shoppe. Federated Stores. Inc. Land’s End. The R group does not manufacture for the domestic market. III. Mervyn’s. Cortefiel.. while Vijay Uppal and Gaurav Uppal are Joint Managing Directors. Goat and Cow leather as well as nubuck. antiques. ladies tops.
90% Major Clients Brand GAP Macy’s Wal-Mart Dillards Liz Claiborne Federated Stores 71 72 UK and Japan Origin U.A. From an interview with the General Manager of Operations.S.A. Export Performance Chart71 Other Financials No other financial information was obtained. U. U. FINANCIALS Turnover The R group has an expected annual turnover of US $ 85 million for the year 2005.S.A. U. U.S.S.A. BRAND INFORMATION72 Export Market of the R Gro 10% U. U.S. Page 62 . V.S.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.A.IV.S.A.
75 Production System The R Group uses an assembly line system. Wal-Mart usually orders the largest volume. there has been a 15-20% increase in orders. G International takes indicative orders from the buyer. G International does not use a recruiting agency or a labor contractor. 73 74 Including Wal-Mart. Taken from the company website. or sometimes they embroider in their homes. 75 From an interview with the General Manager of Operations. though there are fewer orders in the fall and winter. shows a sample range. Unit Prices (paid to factory per piece of garment supplied) Avg Retail Markup Type Delivery Time 73 $6-8 USD 4 to 6 times FOB 60 or 120 days Unit Prices Since MFA Phase-out Unit prices have gone down 10-12% post-quota phase-out across the board. The R Group’s leather manufacturing unit has an annual production capacity of 500. and Bangalore. Subcontracting G International subcontracts their hand embroidery. since they often don’t have established offices. though they occasionally take direct orders. INFRASTRUCTURE74 The R Group has over twenty-two integrated manufacturing units in Delhi. Production Capacity The R Group’s woven division has an in-house annual production capacity of 10 million pieces. 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). Quality Control The General Manager of Operations stated they use a “2. R Global. They set up a shelter (“shack”) for local tailors to do the hand embroidery. Smaller companies are more likely to be direct orders. Page 63 . Noida. though not to an established company or to direct employees. Gurgaon.5 APQ” quality check standard across the board. For a more detailed quality control process.Buying Agency or Direct Contracts are mostly negotiated through buying agencies. see company website. 76 From an interview with the General Manager of Operations.000 pieces. However. VI. and the buyer selects and negotiates the contract. has an annual production capacity of 2 million knitted garments. unless otherwise indicated. the company’s knitwear divison.
operator training and skill analysis). They incorporate corporate social responsibility schemes into their productivity ideas. time and motion studies.000. an estimate was approximately Rs. such as medical checkups. 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. 78 From an interview with the General Manager of Operations. with 1200 workers at this site (approximately 95% male. 77 After disclosing this information regarding the number of skilled workers.79 VII. to the production stage (work aids. material flow). Departments No information on specific departments was obtained. the General Manager refused to give any more specific numbers of workers. They have incentive schemes for things like 100% attendance.77 Machinery R Group’s production facilities use machinery at every point in the production process including designing (CAD). to the pre-production stage (layout and machine engineering. operation research). Productivity Schemes The company has production planning meetings in which targets are set and the workers do not participate. 5% female). from the sampling stage (product and pattern engineering.000 workers. G International has a total of 7. and worker welfare programs. Page 64 . WORKING CONDITIONS80 Work timings Lunch break Tea Break From 9:00 am 1:00 pm 4:00 pm to 5:30 pm 1:30 pm 4:15 pm No other working condition information was obtained from the factory.78 The R Group has a Research and Development department for the technical aspects of garment manufacturing. Preliminary worker interviews revealed that this company was considered one of the worst factories to work for in Gurgaon.Approximate number of workers in all facilities The R Group has a staff of over 10. 79 From the company website. Plotters & Automated Cutting Machines) and fabric testing (fully equipped laboratory) and fusing. 700 per month extra. 80 From an interview with the General Manager of Operations. scholarships for workers’ children. cutting (Digitizers.
After a three-day period. which is made on a different date than the regular salary. Virender Uppal Managing Director Founder/Chairman 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. VIII./month) 2600 2750 2344 1893 2341 Wage Setting For shop floor workers. Overtime payment is Rs. 15 per hour. HR Manager stated that wages increase after a year. Category (from pay slip) Tailor Sewing Operator Helper (8 months experience) Unskilled helper Helper (production) Wage (Rs.Wages81 The wage amount excludes overtime payment. workers receive 12% PF and 2% ESI. and 225 UV. HUMAN RESOURCE POLICIES Management Structure Mr. Units visited in his report are Gurgaon Phase-1 192 UV. which is reportedly not always paid. while dotted-line boxed positions are factory-specific and subject to variance. Manicandan’s CEC report. 81 From G. Vijay Uppal Joint Managing Director Mr. 151 UV. which is not subject to negotiation. Page 65 . Gaurav Uppal Joint Managing Director Mr. workers are then offered a monthly wage based on this evaluation. Benefits According to the CEC report. supervisors conduct time studies evaluating the skill level and productivity of a new hire. though they do not always receive their PF once they leave the company. none of which were visited by this researcher.
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. Page 66 . worker committees. interviews applicants. Workers receive a letter of contract. buyer codes of conduct are hurting business because they are more strict. IX. Manicandan’s CEC report. BUSINESS BOTTLENECKS The General Manager stated that buyer requirements like double pay during overtime are holding the industry back. Security System No information was obtained regarding a security system. 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. No other information about the R & D department at this specific facility was given. Researcher: Is labor flexibility or the lack of hire-and-fire policies an issue? General Manager of Operations: No. Training usually takes one or two days and is done through the research and development department. well. we do more incentive programs and get better performance out of our existing workforce. Today. [the R Group] is seen as a highlighted-tech. According to G. 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. He stated that it should be looser. The General Manager stated that there are common policies across the plants. grievance policy. Recruitment Policy The facility posts signs on gates. customer friendly. that they engage in the same kinds of recruitment. These problems are taken care of with labor contractors. More than local labor laws. or a union. Medical Care No information was obtained regarding on-site medical care. not anymore. Company G and the R Group does contract temporary laborers and subcontract to a labor contractor.” The company has a manual code of conduct that the General Manager stated is given to each employee. Researcher: But you said you didn’t use labor contractors. no. then tests worker productivity for an hour and a half.Worker Training The facility sometimes trains workers if the operation is difficult. So how do you overcome these issues? General Manager of Operations: Oh. like the labor norms in China. However.
” The South is also usually single product. General questions about labor laws or productivity issues usually prompt details and complaints. and avoided any other types of follow-up including the suggestion of a phone interview. When asked about the number of skilled workers. Because they are trying to increase productivity. He implied it has limited use after the quota phase-out.X. but he answered questions in a more direct. Virender Uppal (the MD of the R Group) is a former Chairman of the AEPC. the Northern area of India is more embroidery and hand-work intensive and is multiproduct. though several follow-up interviews were scheduled. Furthermore. brief way. he initially would not let it leave the building. who was not at the factory when the researcher visited. In general. every one of them was canceled by the General Manager. They are also setting up a leather accessory factory at Gurgaon. It would be better to simply show up or not leave an option of calling before coming. The researcher was directed to the General Manager at a G International plant for an interview. Page 67 . The General Manager stated that the AEPC was much more useful before the MFA phase-out. He refused to schedule an interview solely with the HR Manager. Although the researcher obtained a employee code of conduct handbook. G International is working on converting to a single product system within the next two or three months (August 2006). especially in regards to quotas. and he was much more reserved and suspicious. The work culture in the south is “different—more productive and efficient. he asked “why do you want to know that” and refused to give much more information past that. XI. as it would tell them new government policies and how to best utilize the system. which makes productivity more difficult to increase. PERSONAL EXPERIENCE The R Group was extremely difficult to both interview with and extract information. INDUSTRY COMMENTS The R Group is in the process of setting up a backward integration project for their knits division.
” The House of Pearl is focused 82 83 Unit visited by the researcher. Manicandan’s CEC report. Gurgaon 3. the company website. BRIEF HISTORY83 Pearl Global was incorporated in 1979. Phase V. 222. Page 68 . Phase V. Gurgaon 2. and its first manufacturing facility was established in 1989. 138. Gurgaon 4. Community Centre Naraina Industrial Area Phase-II New Delhi – 110 028 Tel : 011-51417680-82 Corporate Office82: 446 Udyog Vihar. 870. Chairman deepaks@pearlglobal. The information in the following company report was obtained primarily from an interview with the Chief Finance Officer.5.com Jayant Sood. and an interview with the Company Secretary. The company structure of Pearl Global is extremely unique.com Registered Office: A-3. Udyog Vihar. Udyog Vihar.com Production Units: 1. I. online business publications and press releases. Udyog Vihar. Haryana Tel : 91-124-4004086/87/88/89/90 Fax: 95-124-4004067/85 Website: www. CONTACT INFORMATION Contact People: Deepak Seth.com Rishi Vig. In 1993 it became a public limited company. Phase I. G. Gurgaon II. Phase-V Gurgaon – 122 016. business began in the 1980s. Udyog Vihar. as it includes all parts of the garment industry under the “House of Pearl. 446.pearlglobal. From an interview with the Chief Finance Officer. Chief Finance Officer Tel: 91-124-4308201 rishiv@pearlglobal. PEARL GLOBAL LTD. Company Secretary Tel: 95-124-4308164 E-mail: jayants@pearlglobal. Phase I.
” Its operations in Bangladesh (NorPearl and NorPlanet) focus on more simple sourcing and manufacturing while its offices in India focus on the sourcing and manufacturing of ethnicwear (more production-intensive and complicated clothing).S.S. dresses. Bangladesh: low cost. skirts. Page 69 . Castromen. Pearl Global does not manufacture for the domestic market. Inc.) and a global network of business associates and customers. JC Pennys. is establishing a U. and the UK. as a Special Invitee. It also has businesses in Hong Kong (NorWest) and the UK (Poetic Gem). ethnicwear. Marks and Spencer. children’s and men’s shirts. trousers. which together yield a combined turnover exceeding U. The company recently entered into a business and education partnership with Babson College in the U. warehouse and distribution. Siplec. marketing units in the U.1993.E. brand “Kool Hearts. Liz Claiborne. vests. bottoms.C. Lerros. Esprit. suits. The House of Pearl includes designing and manufacturing units. NorPlanet Pearl Global has manufactured women’s. t-shirts. BASIC PROFILE Legal composition of the Company Public limited company.S.on the apparel sector with manufacturing bases in India (primarily Pearl Global Ltd. Karstadt/Neckermann. Charming Shoppes.P. Pearl Academy of Fashion Domestic. children’s. nightwear dresses. Dillards.. shorts. He has successfully promoted and established the fashion apparel brand "Lerros" in Europe. Kohls. III. The Chairman of Pearl Global established a fashion and design academy. including blouses.E.C. he has been inducted to the Executive Committee of A. 86 From an interview with Chief Finance Officer. George (Wal-Mart). stain sealed garments using goretex and acquatex. and outerwear. H & M85. NorPearl. basic stuff.) for the year 1990 . From company website. $200 million. GAP (including Banana Republic and Old Navy). etc. 84 85 See company website for list of shareholders. It offers full services to large retailers with the chain broken into business units that cater to different product lines. He has been actively involved with the development of readymade garment industry in India. Wal-Mart.84 Exports/Imports 100% exports. Clients Abercrombie & Fitch.P.S. Besides having been elected to the Executive committee of the Apparel Export Promotion Council (A. Product Mix Areas of specialization include: India: woven cotton and value-added cotton. Nex86.
FINANCIALS Turnover $200 million worldwide before quota phase-out.1 crore compared with Rs 7.41 crore in 2004-05].indiatimes. Bombay Stock Exchange Limited 1st Floor. 5th Floor Plot No.88 Net profits are 234% up. Page 70 .” “The company’s operating profit was Rs 17. Ahmedabad .9 per cent to Rs 159. Stock Exchanges where the securities are listed: 1. New Trading Ring. In 2005-06 the company invested Rs 29 crore to augment its production capacities in Gurgaon and setting up a new unit in Chennai. Towers. Ahmedabad Stock Exchange Limited Kamdhenu Complex Opp.9 crore in the previous fiscal]. Dalal Street Mumbai .380015 87 88 From Chairman’s Message on company website.43 crore[ from Rs. G-Block Bandra – Kurla Complex Bandra (E) Mumbai – 400 051 4.com/1060712/asp/business/story_6465123. 89 From an interview with the Company Secretary.telegraphindia.6. Rotunda Building.” The Economic Times: Garments/Textiles.87 $400 million in its worldwide operations post quota phase-out.400 001.”90 See website for detailed financials. 90 “Pearl Global net up 88%.” <http://www. Babson College press release.110 002 2.89 Other Financials “Pearl Global posted 88 per cent year-on-year increase in net profit in 2005-06 to Rs . J. <http://economictimes. 3. 3. The revenue of the company during the year was up 31.com/articleshow/1690384. Sahajanand College Panjarapole.5 crore in the previous year.C/1. 29 June 2006. National Stock Exchange of India Limited Exchange Plaza.cms> and “Corporate Briefs: Pearl Global. P.IV. The Delhi Stock Exchange Association Limited (Regional Stock Exchange) DSE House 3/1 Asaf Ali Road New Delhi . Pearl announced a dividend of 30 per cent for the year [subject to shareholders’ approval].asp>.5 crore [from 120.
Journalist. Inc. They have supported our growth by putting in the infra-structure to service our needs. and jersey product across all ages and genders from a variety of countries in the Far-East and Indian sub-continent. before the cost justified it.they have grown to be our second largest supplier. EU and UK Major Clients Brand JC Pennys GAP (incl ON and BR) Charming Shoppes. George (Wal*Mart) Kohls Dillards Marks and Spencer Esprit Liz Claiborne Nex Length of Relationship 10 years 7 years 7 years 5 years 5 years 5 years 2 years 2 years 2 years 2 years Of the top ten retailers in Asia (would not be more specific). BRAND INFORMATION91 Pearl Global’s Export Market 40% 60% U. “Dear sir. From an initial order in 2001. the Chief Finance Officer stated that they are engaged in strategic partnerships with six of them. To grow the business at this rate Pearl has had to show a "can do" attitude. Our Customer's perception This reply has come from ASDA Walmart to a query of a Sr.knitted. The following is a forwarded e-mail from George Clothing (Wal-Mart) regarding Pearl Global: Subject: Something you should know. They are working on building strategic partnerships with between all of their vendors and suppliers and consolidating them. 91 From an interview with the Chief Finance Officer. woven.V.S. Page 71 .A. They now supply us with a variety of casual. 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. Apologies for the delay in replying. 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.
or supplier. Quality. and delivery have had to be a given. For Pearl to grow their business with us. Mr. * For how long have you been interacting with the House of Pearl and what has been the business relationship? * As a supplier how reliable are they in terms of delivery schedule. I honestly believe that to supply fashion retailers at the volume end is one of the most difficult businesses to be in . quality. has a right to exploit the people who make the product we sell. price. Executive Editor. Business India” Page 72 . it is critical for us as a business to deal in the right way. Deepak Seth has also gone beyond the factory gates to work with the community and put something back. 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.Growth on this scale inevitably creates major head-aches for the supply-chain. Finally. Lancelot Joseph. and where our distribution network has creaked under the pressure. and any issues that have arisen have been resolved immediately and taken as learnings to provide a better service going forward. Below are a few points which I hope you would take time off and reply to at the earliest. Heather Moreton. email@example.com --Original Message-Dear Ms. 1 business publication. ASDA Wal -Mart. Senior Sourcing Manager -Kidswear. offering us product direct from factory or landed delivered if the situation demanded.We want style. no-one whether it be store customer. 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. so Pearl have stepped in to provide solutions and support. As price deflation has become a way of life in the UK clothing market. We pride ourselves at George that our ethical standards are rigorous. UK I am a journalist from India writing for India's No. Thanks and regards. hence would like to have some of your observation/views/comments on the business house and your relationship. Pearl are also helping us to achieve our ambitions to make the George brand a truly Global brand by opening an office in Canada to support the growth of the George brand in Wal-Mart Canada. Currently I am doing a corporate feature on the House of Pearl who is your vendor. Best regards. Allan Quayle General Manager-Strategic Supplier Development George Clothing Phone 00 44 (0)1455 264409 Mobile 07779 700695 e-mail allan. flexibility to change our minds as to what we want right up to the last minute. 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. I feel that we can have an honest conversation with Mr.
who then chooses or modifies the styles. Production Capacity Pearl Global has 20 million pieces in-house capacity and 120 million pieces capacity all across Asia. 5% freight. India: Unit Prices (paid to factory per piece of garment supplied) Range Average Retail Delivery Time Type India U. Sometimes designers from the UK and the U.Buying Agency or Direct They used to contract through buying agencies. two of which are in Bangladesh. They are working on doubling their capacity in the next 2-3 years. A few years ago the delivery/production cycle had to begin 18 months in advance. They have six design factories. Pearl Global uses labor contractors. The embroidery tailors either come into the facilities to perform the work or they send it. Page 73 . 90 incl.S. dyes and chemical are thoroughly checked before they are fed into the manufacturing process. Subcontracting Sometimes Pearl Global subcontracts hand embroidery. INFRASTRUCTURE92 Pearl Global has five or six production facilities in India. The House of Pearl has over 150 factories across Asia. now it is 6 months. Pearl Global then manufactures the style. 50% FOB. The House of Pearl’s research and design department prepares a collection of high fashion styles for each season. Production System Pearl Global uses an assembly line system. Markup (days) High of $10 $6-7 USD 3 to 4 times 60 to manufacture. Design/Sampling and Product Development Designs are mostly developed in-house. but it mostly in-house.S. yarns. 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. Quality Control Raw material including fibres. but now they have developed direct relationships with their long-term business partners. which are shown to buyers in advance. one in Indonesia. are consulted to developed in-house patterns. one in Chennai and the others in Gurgaon. Every stage of the production line has its 92 From an interview with the Chief Finance Officer. VI. and one in China.
ply yarn. Sretch yarn. tensile strength. moisture regain percentage and finish percentage. Productivity Schemes Pearl Global gives out “best worker awards” and “gold stars” for productivity. VII. Udyog Vihar. Phase I. Gurgaon 600 workers 870. WORKING CONDITIONS Wages and Benefits The Chief Finance Officer stated that sometimes Pearl Global pays workers above the minimum wage. Gurgaon 2500-3000 workers 446. Udyog Vihar. viscose tops and special fibre). After workers receive their monthly salary they see a “rise in absenteeism. which is sourced from outside is tested for fibre fitness micron ( fibre diameter). Every set of fibre (polyester. Approximate number of workers in all facilities Pearl Global has approximately 6000 workers in India. Polyster viscose and cotton yarn is tested for count. count strength product (CSP). CRA.” as workers do not have a long-term commitment to the factory. Phase V. and if they have a low level or no absenteeism they also get an incentive. novelty yarns. twist per inch. pilling. fibre bundle strength. Manicandan’s CEC report (and confirmed by the Chief Finance Officer). Gurgaon 2000-3000 workers Machinery Pearl Global has an estimated 2000 machines for every part of the production process. Departments The researcher was not able to obtain information regarding the specific nature of the assembly line or tour the factory. single ply yarn is also checked on the uster machine to ensure consistency in yarn quality confirming to norms of the uster statistics. Phase I. etc. as neither an HR manager nor a production manager was available for interview. but did not give specific numbers. Gurgaon 500-600 workers 222. 93 Numbers for the units at 446 and 870 were estimated by the Chief Finance Officer while the other numbers were obtained from G. If a worker stays for six months they get incentives. fibre composition percentage (blend %). The finished yarn is tested for residual shrinkage. 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.own set of detailed monitoring system. Phase V. Page 74 . drape and fastness to light washing and rubbing and slippage. uster percentage and impurity. Udyog Vihar. Udyog Vihar. Production Unit Number of Workers93 138.
Out of 500-600 workers only about 90 are in the union. Dismissal Procedure. Overtime95 The facility at 222 UV has two shifts and thus there is little overtime. 4000 per month Rs. ESI and PF. Furthermore if “it was all women it would be fine. Bangladesh. 96 From an interview with the Chief Finance Officer.” but there are not enough “available. K. 2006. & Co. if there are no orders or “no work” employees are told not to come.” and it is not convenient as Pearl Global would have to provide transportation. According to G. and Indonesia is lower. but if it is mixed employees then it becomes a problem with issues of sexual harassment. The union is not effective in addressing the problems of the workers.Position Finishing supervisor (7 months experience) Tailor (8 years experience) Tailor (5 years experience) Wages94 Rs. 97 From an interview with the Chief Finance Officer.K. they used a mix of outside agencies and consultants. VIII. They did not have a HR manager before this. who must first pass a hand-eye coordination test and then spend twenty days on the training line. Manicandan’s CEC report. Manicandan’s CEC report. 3000 per month Every year workers receive Rs. HUMAN RESOURCE POLICIES97 A new HR manager is to be hired as of August 15. Worker Training There is a training line for new workers. All but temporary workers are covered by social security schemes. Union and Worker Committees98 There is no job security. though sometimes workers work double shifts and are paid double. 3500 per month Rs. 100 more and a 20% bonus for divali. They want to hire more women like Southern facilities do because women workers are “more efficient. Recruitment Policy Pearl Global uses labor contractors and specifically stated they use R. although being a “permanent” employee will entitle a worker to an identity card.” However they are working on providing the necessary infrastructure (such as transportation) so they would be able to hire more women workers. and Sukumar Pride. Labor Turnover96 The labor turnover in Gurgaon is about 20%. & Company. who are not entitled for ESI and PF. They contract temporary workers through R. 98 According to G. Manicandan’s CEC report. There is no sexual harassment 94 According to G. The labor turnover in Chennai. 95 Page 75 . There is a union in the facility at 138 UV. For their HR strategies. and the head of the union is not an employee at the facility.
etc) helps immensely. as mentioned previously there is a new HR manager slated to begin on August 15. The Company has built-up very effective TEAM WORK…The primary purpose of Corporate Leadership is to create wealth legally and ethically. Seasonality is an issue. and teams are set up to work on weak areas in working conditions. Investors. which is missing in the North but the value-added garments (embroidered. 2006. Page 76 . “ethnicwear” or design. which holds it back. Source the best from the World to deliver the best to the world by following ETHICAL MANUFACTURING AND TRADE PRACTICES. BUSINESS BOTTLENECKS99 The industry is regulated by the supply of cotton. The strength of South India is its efficiency. i.e. which have monthly meetings. The company also operates a school by the name of 'Little Pearls' in Delhi. The Chairman Pearl Global espouses corporate responsibility ideals on its website (Chairman’s Message. From an interview with the Chief Finance Officer. orders are fewer in July and August. Employees. Pearl Global just hired a lawyer to help analyze and plan financial structure. INDUSTRY COMMENTS100 Commented on the strengths of the North. The motto of every Corporate Body is to ensure Predictability. 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. X. Vendors and the Society-at-Large. Labor cost is still competitive (in terms of the world market). The company has set up Pearl Academy of Fashion. Pearl Global has a very effective HRD system they have build an empire highly trained and skilled manpower ready to face the dynamic changes. so they are working on capitalizing upon the existing capacities. Corporate Responsibility/ Codes of Conduct According to the Chief Finance Officer. they have set up a medical treatment facility in the spirit of social responsibility. Deepak Seth): “A future that shall be built with the same strategy that has shaped our past. They want to integrate all offices with an ERP 99 100 From an interview with the Chief Finance Officer. a fashion design and manufacturing technology institute. The House of Pearl has enough infrastructure to double turnover. The unit at 222 UV does not have a union. implying that the AEPC is not as useful post-quota. Working on having uniform HR and productivity strategies. Sustainability and Profitability of revenues year after year. According to the Chief Finance Officer. there are sexual harassment committees.committee. This translates to bringing a high level of satisfaction to five constituencies Customers.” IX. as there is different management at each facility.
London College of Fashion. Retailing.16 equity shares of the company for every share in City Estates was recommended by the board at the meeting. Deepak Seth. Lalit Gulati.com/index.. 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. 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). one of the top two in this field in the world. and is located in the Okhla Industrial Area (Phase II) of New Delhi. It provides training programs in the areas of Fashion Design.” The Economic Times: Garments/Textiles. 7 Feb 2006. 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. <http://economictimes. its alumni hold responsible positions in more than 300 leading organisations. Partner. The House of Pearl is planning to get into retailing and is working on an industrial engineering department and setting up software SAM. Pearl Global. such as the UK's Chelsea College of Art & Design. who constantly review the institute's performance to ensure that the programmes are practical and industry-oriented.htm Advisory board includes: Mr. As a result of the close interaction between the industry and the institute. The Advisory Board of the Academy consists of leading exporters. and Germany's LDT Nagold. It has a validation agreement with the UK's Nottingham Trent University (NTU). It has links with acknowledged international leaders in fashion education. and London Centre for Fashion Studies. Mr. in India and abroad.system.cms>. Merchandising.Virender Uppal. Bolton University. Modelama Exports The Pearl Academy of Fashion was set up in 1993 by Pearl Global Ltd. industrialists and academicians. Hong Kong Polytechnic University. 101 Page 77 .pearlacademy. Chairman. like in “Pearl Global to merge two companies.com/articleshow/1404688. Managing Director. Production and Computer Aided Design…The Academy has opened its second campus in New Delhi. at Naraina.”101 Pearl Academy of Design Education-Pearl Academy of Fashion http://www.indiatimes. The company is setting up new facilities in Dhaka (Bangladesh) and a design center at Chennai. R & Company. Mr.
—a $400 million company exporting garments to Europe and North America—has formed a non-profit educational trust. India. * Faculty report including Babson faculty profiles and approaches to faculty development. Babson’s consulting reports will include: * The general curriculum for undergraduate and graduate programs.” 102 Partnership with Babson College Pearl Global Ltd. Mass. learning. among others.—ranked #1 worldwide in Entrepreneurship Education---will advise Pearl on the strategies.. Orient Craft. have signed a strategic collaboration on a full range of activities to promote world class research and education of entrepreneurship in India. requirements. The Pearl School for Business Studies will grant Bachelor of Business Administration and/or Masters of Business Administration degrees with a focus on entrepreneurship.. Shoppers' Stop and Ebony. advisor to Pearl Global’s education trust. President of Babson’s Alumni Club in India and Chairman of DCW Ltd. joint information sharing. and stipulations of the local region in India.S. Bombay Dyeing. Sonal Garments.. * Student report on the student admissions process and co-curricular activities. has set up a business partnership with Babson College in Boston (U. USA and Pearl Global Ltd. private business management institution at two campuses near New Delhi. The Asia Institute at Babson. Page 78 . Current plans are for first classes to be admitted in the fall of 2008. Research in India Babson College. India last week for the official signing ceremony with Deepak Seth. and Professor Ash Rao will present the final reports to Pearl. processes. traveled to Delhi. Michael Fetters.Benetton. Mafatlal. The Babson college press release: Babson College. links to websites. Babson’s Provost. Babson faculty will provide workshops for Pearl faculty and staffing. Robert Eng. * An overview of the entrepreneurship curriculum. USA. Advises Pearl Global. distance participation in projects.’s premier business school). and assessment standards. Executive Director. India. and will visit regularly to monitor teaching. internship facilitation. Bhupatkar. Pearl Global Ltd. Pearl Global Ltd. on New Business School: Two Form Strategic Collaboration to Promote Entrepreneurship Education. Chairman of Pearl Global and Dr. Ponds (India). Vivek Jain. This trust is in the initial stages of developing a new. workshops. Babson College in Wellesley. The collaboration is designed to expand over the next seven years. Pearl will shape this information into a comprehensive Entrepreneurship curriculum to meet the particular conditions.. Both institutions will identify mutual exchange opportunities—on-line access to library resources. and procedures necessary to build an Entrepreneurial foundation and curriculum. 102 From the website of Pearl Academy of Fashion. was also present. RMX Joss. Richa & Co.
is recognized internationally as a leader in entrepreneurial management education.com/finance/equity/fullstory.S.edu. The Company Secretary was not useful in arranging interviews with other personnel who would be able to answer what he could not. Kool Hearts label. Chandigarh and Lucknow. and grants MBA and custom MS and MBA degrees through the F.” 26 Oct 2005.” said Fetters. growth prospect remaining high.“This collaboration is an important step in Babson’s journey to globalize Entrepreneurship Education. Gurgaon. It was difficult to obtain an interview by calling the numbers on the website. Mass. <http://www3.babson.. <http://sify. a company that shares our vision to advance Entrepreneurship knowledge in India. the recent fall in price makes it an attractive long-term bet.”104 XI. Pearl Global is getting into domestic retailing: “ [Pearl Global]. For information.. an interview was promptly arranged with the Chief Finance Officer.edu/Newsroom/Releases/Babson-and-Pearl. however after e-mailing the Chairman.W. visit www. “According to industry sources. 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. The interview consisted of a powerpoint presentation on the structure and capacities of Pearl Global. 104 “Pearl Global bullish on Q2 numbers. “We are privileged to work with Pearl Global.php?id=13972072>. though the researcher was not able to obtain a copy without signing a confidentiality agreement. “According to market analysts. 103 Babson Newsroom Release. Page 79 . is understood to have chalked up a plan for its presence in domestic retailing.babson. the company is in the process of booking retail outlet spaces in cities across northern region .” Babson College in Wellesley.cfm>. Babson grants BS degrees through its innovative undergraduate program. Olin Graduate School of Business at Babson College.such as Jaipur. which is setting up a joint venture manufacturing facility for soft fabrics in China to secure part of its supplies. Ltd. 24 April 2006. Babson Executive Education offers executive development programs to experienced managers worldwide.103 Domestic and International Retailing In addition to the U. Deepak Seth.
G. mobile: 9871496362 Corporate Office: Orient House F-8 Okhla Industrial Area. Udyog Vihar. Founder/Chairman Personal secretary Meghna. found some tailors to make the shirts. 15000 ($300) from his father. Haryana 4. BRIEF HISTORY106 Business began in 1972.com Production Units: 1. Dhingra borrowed Rs. Khansa Road Sector 37. 14-A Maruti Industrial Complex Sector-18 Udyog Vihar. 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. online business and economic articles. 2341110 2. has no website. Phase IV. From an interview with the Managing Director. Page 80 . Gurgaon-122015. Dhingra was a law graduate from Chandigarh with no experience.6. who asked Dhingra to get 1. Unless otherwise indicated. the largest computer embroidery facility in the Indian subcontinent. Haryana Tel: (+91-124) 5090800. 110020 (India) Tel: (+91-11) 26818247.” E-mail: orient@orientcraft. a company profile given to the researcher by the Managing Director. 68. Managing Director. CONTACT INFORMATION Contact Person: Sudhir Dhingra. There is a preliminary website set up for its embroidery division at http://www. He had a friend from London who was buying from importers and selling the goods to specialty shops. I. and 105 106 First two units visited by the researcher. so he could use the proceeds as seed capital. An ISO 9001-2000 Unit: “Orient Craft Embroidery Division. Manicandan’s CEC report.000 shirts made in India. 2343262 Fax: (+91-124) 2342042. 7-D Maruti Industrial Complex Sector-18 Udyog Vihar. Plot No. Gurgaon. Gurgaon II. and preliminary interviews from Gurgaon workers.ocemb. Udyog Vihar. ORIENT CRAFT LTD. most of the information is from the interview. Haryana105 3. 26818249 Website: Orient Craft Ltd. 13. but it does not contain any information beyond the heading: Orient Craft Limited: Embroidery. Gurgaon.com/. but the company was not incorporated until 1978.
then consolidated supply chain into one roof. In the mid 1980s. During this traveling. though he stated that it was difficult to actually get the money from the government. CII. he was able to observe fashion trends and the kind of things that were selling. The first Gurgaon plant was established in 1993.”107 Biography for Sudhir Dhingra for the International Fashion Technology Forum.000 sq. 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. CMAI. set up a pressing line on the dining table and the production line in the garage. Liz Claiborne sent an American technician to help Orient with worker training and modernization. The first plant in Maruti Industrail complex was the first plant in India that was over 80. 107 Page 81 . and he rented a house. with 3500 people. and others. you had to be a tailor to be in the garment industry. only now it is 136. found another buyer.” Dhingra wanted to move production out of the village and industrialize the area and put as many skills in-house as possible. and Germany buyers. Dhingra wanted to improve the standards of quality and infrastructure to globally competitive standards. And being a tailor is like being a janitor.A. <http://www. National Institute of Fashion Technology. Then. he also encountered some buyers. CIAE. 15000 plus a small portion of the profit (Rs. Orient’s first factory was established in a village in Hauz Marg and it is still there. he obtained a factory processing site of 240 sq.” His father gave him one year to start up business. When his friend repaid him the Rs. ft. he estimated a production capacity of about 150. Dhingra states that others followed Orient Craft’s example. he decided to break into the industry. 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. ASSOCHAM. the Indian-inspired fad went away and he had to spend six to seven months traveling to get rid of inventory stock. with more than 350 modernized factories. when he got back to India. he hired more people. “At the time.shipped them to London.000.A.com/iftf. not like today. In the 1990s Dhingra set up a bigger plant with 100 machines.niftindia. as Gurgaon is the single largest manufacturing sector in India. they’re looked down upon. not just in the limited Indian context. Orient got clients by word-of-mouth from their L. Then while in Germany. they’re not looked up to. yards and outsourced actual manufacturing. When he returned. with 1800 people. During his traveling. 6000 ~ $133). Both were wholesalers who sold to specialty stores.000 pieces and an annual turnover of around $40-50. 200-300 people. and that plant is still there. Dhingra “is also Executive Member of the Advisory Committee of AEPC and an active member of reputed associations such as FICCI.htm>. and restarted business with a trial order of 1200 pieces for a customer in L.000 sq ft. During the first few years. Then after a few years. May 2006. Orient subcontracted until the early 80s.
dresses. kidswear. Ralph Lauren (Lauren. Up until 10 years ago. Kohli. Anoop Thatai EOU Information The company has three 100% export oriented units (which can import all raw materials and trims free of duty). Mr. 2000. J-Crew. Lands End. ropers. knitted shirts/t-shirts. men’s shirts. outerwear. coordinates. Zara. Now he owns 60% of the shares. is looking into breaking into the domestic market. skirts. Marks & Spencer. 2001. Orient Craft Ltd. BASIC PROFILE Legal composition of the Company Orient Craft is a privately owned company but deemed public limited. and gave 20% to his nephew and 20% to his friend. The company does not do that much business with Zara and Miss Sixty (Italy).K. Esprit. Express. and Marks & Spencer. boys’. J. Calvin Klein Jeans. Macy’s. Owners/Directors Mr. because of “language and cultural differences” with the European business partners. Limited. and 2002. Diane von Furstenberg. sportswear. Loft. Ann Taylor. women’s. However.. Dillards Stores.Hook. Marc Jacob. 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. Dockers. shorts. Tommy Hilfiger (men’s. Abercrombie & Fitch.G. Donna Karen. Dhingra states that Orient is the only factory in India to manufacture for Marc Jacobs and Louis Vuitton. Clients Armani Exchange. Jones of New York. pants. Product Mix Areas of specialization include blouses. Orient used to source for Wal-Mart in back in 2003 but has since stopped. Awards Additional information: Orient Craft Ltd. Page 82 . Susan Bristol. Banana Republic. Exports/Imports 100% exports. Liz Claiborne (LizDresses. GAP (kids).III. 1998. Next Retail Ltd. LizWear. Oasis Stores. and jeans). Dhingra was the sole proprietor. Polo Jeans). LizSports). Old Navy (women’s). 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. jackets. K. Sudhir Dhingra (Chairman and Managing Director). Rocawear. ELM Street. Mr.
00 $1.stm>. Kaushik.02 V.00 % Retail Price111 0.bbc.A. 9 per unit) 113 Dhingra stated that Orient usually ends up with half of the target profit. 2 March 2005. Page 83 .20-1. 742 crores) Other Financials Last years profit was $8 million (40 crores). despite more competitive pricing.03 0. <http://news. 110 Based on the company’s average unit price of $10 USD.08-0. Breakdown of Sales Revenue109 Est USD 2006 Material Cost Labor Overhead112 Profit (target)113 82.IV.50 $1. FINANCIALS Turnover FOB USD $105 million for 2002-2003 FOB USD $118 million for 2004-2005108 FOB USD $165 million for 2005-2006 (Rs.8-24.02-0.” BBC News.8 million 16. 111 Average retail markup is five to six times the unit price of the garment.8-24.50 $1.8 million 19.5-99 million 19. “Winners and losers in textile shake-up.00-6. Europe 80% Canada 108 Basu.03 0. 109 These figures were estimated by the Managing Director in the space of 5 minutes. so they can only be thought of as a rough approximation.co. 4 per unit.uk/2/hi/south_asia/4294679. now it is Rs. which has doubled in a year and a half-as mentioned by NITRA president-used to be Rs.5 million % of Sales 50-60 12-15 12-15 10 Per Garment110 $5. 112 Overhead (mostly energy.12 0.S.02-0.20-1. BRAND INFORMATION Orient Craft's Export Market 5% 15% U.
but they will open up their own office soon. There has not been a huge shift in the composition of customers. 114 Dhingra stated that Orient manufactures 80-90% of what Diane von Furstenburg (high-end maternity clothes) sources from India. Page 84 . 116 According to Dhingra.co. but they just opened an office last year.uk/2/hi/south_asia/4294679.) stated that on the date of the author’s visit in 2005. Orient was manufacturing skirts that would be sold for $4 USD per piece. <http://news. There has also been an expansion of volumes and an estimated 15-17% growth in orders. “Winners and losers in textile shake-up.bbc.50 USD (from US companies. however. Limited used to be mostly direct. however an article written for the BBC in 2005 (Basu.” BBC News. Some things have increased greatly. the industry-wide average unit price in India is $3. they made one skirt for Polo Blue that will retail at $1199 (did not state unit price). 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.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. 2 March 2005. however used to source to them about 10 years ago. Marks & Spencer is currently direct. Orient tends to deal in higher quality and higher unit prices and lower volumes. 115 Restarted business with Macy’s 2 years ago. Orient would not take a Wal-Mart order. European companies pay higher unit prices). depending on the quota category and how much they were previously restricted.stm>. Kaushik. Dhingra states that it is easier to deal with buying offices. Recently. Dhingra stated that Orient’s average unit price is $10.
The second plant visited was 380. Orient has put a lot of human resources into product development and now boasts 900 product development personnel at 5 different locations.htm>. Orient has created a niche with their diversified product line (mostly cotton/knits or wovens.121 The average order size is 10-12. Gurgaon.000 pieces. and one large plant is located in Noida.000 or even 100.200.117 Previously.000 per day120 2006: In an average day. (unclear if it is the same facility visited) at the cost of over $10 million USD. whose samples are then sent to potential buyers.”118 Subcontracting Orient does not appear to subcontract. ft.000 knitted per month 2005-2006: 720. companies.S. It picks up fashion from around the globe. in and around Delhi. and creates new designs for each season. but other fabric from silk.VI. which was at the time the “single largest multi-product manufacturing plant in the whole of India. 13. the company had only 17 production facilities spread over 600. even a little bit before. As Dhingra stated. in 2003.000 knitted per month119 2006: More than 125. product development became the key thing that most Western companies were looking for. According to the company profile. Orient makes 130. ft. 120 Biography for Sudhir Dhingra for the International Fashion Technology Forum.000 woven per month. Haryana. 1. National Institute of Fashion Technology. Production Capacity 2002-2003: 480.000 pieces.000 sq. Design/Sampling Orient has ramped up its design department in the past five to seven years using mostly in-house skills with some help from U. Orient also deals in some very small volume orders for high-end buyers like Oil Lily.com/iftf.niftindia. INFRASTRUCTURE Company has 21 production facilities. Orient has a display store in NY on Park Avenue that it opened up 3 yrs ago. May 2006. Udyog Vihar.000sq. gives feedback. 121 According to an interview with the Managing Director. ft.000 woven per month. and employed 5000 people. sometimes 25-45. after 9/11. <http://www. though it does use labor contractors. 117 118 Plot No. Sector 37.000 pieces and production capacity has grown at least 25% over the past year. six in Gurgaon. Khansa Road. 720. as traveling became restricted and Indian companies needed to build a competitive advantage. In 2003 Orient established a manufacturing complex of 340.000 sq. Production System Orient Craft uses an assembly line system. 119 According to the company profile. chiffon to denims and outerwear). of which four are in Delhi. Page 85 .
with very little embellishment. shirts. Bihar. Page 86 . VII. and since Orient produces high-end clothing with lots of embellishments. trousers.” 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. According to G. Departments No information on specific departments was obtained through the interview. washing plants and dry cleaning units. the workers are skilled and come from a tailoring background and are usually from UP. However according to G.000 Machinery Orient has in-house computerized embroidery machines. In 2002-2003. Manicandan’s CEC report and could vary factory to factory.Quality Control The company has in-house lab testing for garments. consisted of 12 production managers each in charge of about 250 workers (tailors and helpers) at 100 machines with 12 line supervisors.” Dhingra stated that 70% of Orient’s workforce is direct employment. Manicandan’s CEC report. they “can’t be like Golkadas. More contract workers and women (especially thread-cutting) are in the finishing department. the company had 7300 sewing machines. “most of the permanent employees are supervisors and perform high-end work such as production in-charge and finishing in-charge. According to Dhingra the “girls” in the South are operators and less skilled. which is generally equal in size to the production department.000 in-house Number of people employed in 2006: 23. Information on work timings was taken from G. Manicandan’s CEC report. The labs are equipped to test for all parameters including color fastness to light. not through a labor contractor. MP and some from Haryana. one facility’s production department. fabrics. workers do not go to lunch at the same time. Approximate number of workers in all facilities Number of people employed in 2002-2003: 12. WORKING CONDITIONS The workers are 80% male and since Delhi and Orient is mostly multiproduct. who manufactures 80-90% jackets/ outerwear. Productivity Schemes Orient uses incentive schemes to reduce absenteeism and has implemented worker welfare schemes. and trims.
semi-skilled and unskilled workers that are hired through labor contractors are paid under a piece-rate system. probably around 8-9% and as Orient is expanding. & Company. no piecerate.000 per month plus ESI and PF. the company's chairman and managing director Sudhir Dhingra dreaded the idea of setting up huge factories . according to G. “particularly [those] working in the Finishing department. the following was mentioned in a business article: “Till a year ago. Some of these contractos are R. and most people are above the minimum wage. The payscale is adjusted twice a year according to inflation. 3000 per month for an unskilled worker salary. Union Though unions were not explicitly mentioned in the interview. K. Dr.” Furthermore. They are trying to start a training school NGO with a founding member of NIFT. Bonuses are given during Divali. but he makes no mention of any other incentives. where workers can be trained and work for other companies if they choose to. Viet Kumar & Company. Sartrushi. Manicandan’s CEC report. the salaries average Rs./month) 2850 2344 2000 2850 Labor Turnover According to Dhingra. labor turnover is decreasing. Category Tailors Helper Trainees Contract Worker Average Wage (Rs. 5-8. However. workers are paid much less than Dhingra asserts. the turnover for Orient Craft is fairly low. Dhingra stated that in the 1980s and 1990s Orient used a piece-rate system. The payments and benefits for contract employees are given to the contractor. With incentive programs for more highly skilled workers. VIII. HUMAN RESOURCE POLICIES Dhingra stated that there are common HR policies and productivity schemes across plants. Worker Training Dhingra stated that all the facilities have training schools and they want to make them more formalized. and Vasisht & Company.Wages The average wage starts at Rs.all for the fear of Page 87 . and in 1993-1994 they started moving away from piece-rate and a few years ago they did away with piece-rate completely. Recruitment Policy Orient Craft employs contract workers for at least 30% of its workforce. who takes a 5% commission before paying the rest to the worker. 60-70% of the workers are unskilled helpers.
Global players are looking for India bases.” Worker Committees/Grievance Policy/Dismissal Procedure Dhingra was reluctant to give specific information regarding worker committees in person. 400 per month. Now she is a finishing manager and gets 123 Rajshekar. Corporate Responsibility Dhingra stated that Orient has a fund to help workers who need to take a day off if they are sick or have to attend a wedding.000 and Orient spent $20.’” They built a four story structure to house the embroidery tailors. There is no grievance policy procedure in place for complains against workers or management. T. workers are fired with no redress.”123 According to G. and Surendar. he stated that such information was confidential and would hurt Orient’s competitive advantage. Thirty years ago we employed a women who worked as a thread-cutter and got paid Rs. Manicandan’s CEC report. But will we be ready in time?” Businessworld. no sexual harassment committees and workers are not involved in wage negotiations or target setting.asp>. stating that he would forward the company’s code of conduct and a list of their worker committees through his personal secretary. But the management suppressed and ousted all the workers who [were] involved in the establishment of a Trade Union. The “village panchayat said that Muslim women can’t go out…but now that they are trained. One woman told me. GAP gave Orient $35. now we have 23.businessworldindia. Twenty years ago we had over 1000 workers. ten years ago we had 5000 people. Orient also helped train 300 women from the nearby village in hand embroidery at international standards. 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. According to G. Punishments are given to workers without any formalized procedure. Since then the company started sourcing their manpower from labour contractor[s]. M. However upon further inquiry. no formalized dismissal procedure. Page 88 .000. Some of our workers are second-generation workers. According to Dhingra. Maruti Industrial Complex unit). Although Dhingra stressed how this was all for the benefit of the women and the community.it’s not just about the bottom line. I have always been very people-centric-. and if a manager finds a worker guilty of an infraction. “if someone asked me what my one single reason for success. This strategy effectively stops any attempt to consolidate workers towards creating a Trade Union.[worker] strikes. Manicandan’s CEC report. Orient had no worker committees at the facility visited. “Preparing for 2005: Dressing up for the party. “around five years ago there was an attempt to establish a trade union (at the 7-D. <http://www. sometimes more than their husbands. Clusters are reinventing themselves.000 building a community welfare center that provides medical care for community members. they feel very proud to bring in income. it would be people.com/apr0504/coverstory01. it’s about what we can do for the community. ‘my husband doesn’t beat me anymore. Sector-18. and that Orient pays in full for the schooling of female children of workers and for 65% of the schooling of male children.
Specifically. which includes a more complex manufacturing process. Pottery Barn. Besides being compliant by the current standards. Donna Karan. in-house fully functional gym and an Executive Club.paid Rs. which eases strain some as well as the other diversification of profits.000). comfort. Macy’s. 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. Dhingra stated there are companies who do $1 billion (mentioned China and Lian Thai from Hong Kong. We have created great recreational areas for workers and middle management by building great cafeterias. in an endeavor to go beyond compliance we have adopted the village next door as one of the community welfare programs under which we are helping the local community build a primary school as well as a garment sewing and embroidery unit. Marks & Spencers. Although happy about Orient’s success. 50. White Co.. and ease of working. since Orient Craft products tend to be high-fashion. highly tailored outfits with additional embellishments like embroidery and special washes. They started producing denim products 5-6 years ago and just started manufacturing men’s suits at a plant for Liz Claiborne and Express. According to the company website: The new complex is designed to create a very worker and management friendly environment in terms of esthetics.000 per month. but Orient has taken up some holiday decoration work. and Orient needs to do competitive pricing to stay in the game and Page 89 .” 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. for Bed Bath and Beyond.000 people. Seasonality is an issue. BUSINESS BOTTLENECKS Productivity is relatively low.” They started up home furnishing about three and a half years ago. and her son is working here… I have always thought about social welfare. he wants to extend the length of time it takes to become a permanent employee to 12 months. Dhingra wants increased flexibilization otherwise it is more difficult to expand and it hurts business. such as home furnishing. “they have 100. IX. It is the soul of our company. as Orient usually doesn’t have as many orders May through August. Labor flexibility is also an issue. we only have 23. “India is still not good at producing fall fabrics. Home furnishings is still smallish industry and comprises about $15-17 million of Orient’s sales.
(despite quota regulations) and India adds to a minuscule 1. At present.124 The machinery from the newly acquired plant will form part of the company’s expansion plan at Manesar. As of now. Kumar. growing by over onefourth from last year.” said Mr Dhingra. India’s lack of worldclass machinery producers domestically has seen a lot of companies look to the West for help. <http://www. and aims to increase it to over 40 lakh units after the expansion. In the changed business scenario. buyers are getting increasingly quality conscious.3 million dollar)…Orient Craft by its own admission acquired the unit because of its superior machinery content.cms>.00. the garment industry presently stands at approximately Rs 15. Noida and Okhla in Delhi.125 124 Dipankar. INDUSTRY COMMENTS Orient recently bought a Levi’s plant in Spain for its technology. PTI Economic Service. X. it is important to have machinery comparing to global standards. “The lifting of quota has brought humongous demands on one side and on the other.curpg-1. Bangladesh and Pakistan. “Garment exporter Orient Craft buys Levi’s plant in Spain for Rs 60 cr.htm>. as they need to grow the base of buyers and price is a compelling reason to do that.” Times News Network. World over. However. near Gurgaon…Levi’s was looking for a buyer due to high maintenance and labour costs in Spain.indeconomist.com/articleshow/msid-1232753. The company’s management is also planning to raise an IPO later this year.” Industrial Economist: Textiles Report.000 crore. 125 Jha. The company expects the expansion plans to boost its revenue generation.5%. And retribution has come in the form of dying sick units in EU which are suffering as a result of lower labour costs in China. From business articles: The company… acquired a Levis unit in Spain in mid 2005 for Rs 60 crore (approximately 13.com/30thjune06p4. the textile industry in India still has a long way to go before it can catch up with Chinese volumes. Orient Craft manufactures and exports about 30 lakh units of garment every month.indiatimes. The company’s deal with Levi’s is the second such significant international venture. 16 September 2005. Mayur Shekhar. The company has since then stripped the Spain unit of its machinery and fitted them in its plant here at Gurgaon. India. “Indian textile companies on acquisition spree. of which China contributes one-sixth.bring in buyers. Since the quota system has been reimposed on China. India is in an advantageous position. Orient came up on the global radar when it started its first overseas facility in New York two years ago. <http://economictimes. Earlier. Page 90 . Orient has 20 production units spread across Gurgaon. The expansion plan envisages setting up of two new facilities at Manesar. Mr Dhingra estimates the annual turnover to be in the excess of Rs 800 crore. Ironically it is the same Indian companies who are buying the units for their machines.
if there is a mall…Real estate is growing.5m worth of textile products in the next couple of years. “Three years ago. and every day a new one is opening up—there’s space available in Karol Bagh. population spend. the Andhra Pradesh Chief Minister. but best linens) are setting up facilities in India and selling back in Europe. Rajasekhara Reddy. The deal is likely to be signed later this month. Now there are 500. From business articles: Orient Craft Ltd plans to develop an exclusive special economic zone (SEZ) for garment units in Andhra Pradesh. Yoshiaki Kamiyama.htm>.S. However. that’s 200 million people. 25 November 2005. He announced the company would be given 10 acres of land at Nacharam to set up a garment manufacturing unit. <http://www.” Italian and French mills are setting up joint ventures in India.126 Orient Craft… has entered into an outsourcing arrangement with Sumukin Bussan (SBC). which is a joint venture of Caramin (France) and Bairb McNutt (Ireland.Emerging opportunities and the road ahead' here on Thursday. the ready-to-wear demand in India is growing. Orient is considering getting into the domestic market now. we ourselves are looking at buying 2-3 lakh pieces from India. etc.” For Orient Craft. but look how large the population is—out of one billion. probably about 80-90% still get clothes from tailors. the company’s MD. Banswala Mills. “An increasing number of Japanese buyers are looking at Indian export houses for their sourcing requirements. So the spending power is in India. As per the arrangement. Chairman and Managing Director of the company. told reporters on the sidelines of the CII conference on `Textiles forum . 126 “Orient Craft plans SEZ for garment units in AP. Dr Y.com/2005/11/25/stories/2005112502590900. if even 5% are rich and 15% have disposable income. The SEZ is likely to come up on a 300-acre plot with an estimated investment of Rs 2. dirt. we aim at scaling our Japanese business up to $30-40m.” he said. Why would people go through rain. Page 91 . That’s more than the people who spend in the U. at present Japan is a relatively smaller market. said the company was "welcome" to set up the SEZ. there were only three shopping malls. the market will contribute a significant share of Orient Craft’s overall business pie. consultant. In 2-3 years. “The tie up with SBC will give us a good foot hold in the Japanese market. only about 60-70 million have disposable income.” The Hindu Business Line Internet Edition. Financial Daily from THE HINDU group of publications. lagging behind US and Europe.— only about 30% of the U. according to Sudhir Dhingra.Though most people in India." Mr Sudhir Dhingra. heat.S. which plans to source $1-1. SBC is the buying arm of Kashiama. delivering the inaugural address. told ET. Orient Craft will be the exclusive suppliers from India to SBC. "The SEZ will house up to 50 companies. retail will explode…People say that Indians don’t have disposable income. SBC.000 crore. a leading Japanese buying house. Earlier.S. the exclusive Japan licensee of some well known international textile brands including Calvin Klein.blonnet. In the next couple of years. where there are higher labor costs. DKNY and Ralph Lauren.
Dhingra was fairly open in his responses. Global players are looking for India bases. and Dhingra was surprisingly available for an interview. Today he is spending Rs 40 crore on a new factory in Gurgaon that would employ 2. 128 Rajshekar.” The Economic Times: Garments Textiles. skill-intensive manufacturing could be a way to compete.asp>. India's biggest exporter Orient Craft has also begun to realise that. Clusters are reinventing themselves. T.000 people. claiming more than three-fourth of the pie. <http://www.cms>. 127 “Orient Craft ties up with Japanese co.about 10 times the size of the Delhi-based Orient Craft. The turnovers of these exporters range from Rs 100 crore to Rs 250 crore. PERSONAL EXPERIENCE Orient Craft does not have a website.all for the fear of strikes. which it may have to take up to over 40 lakh units. The centrally air-conditioned facility will combine all the stages of garment manufacturing. However. we will have to invest in new capacity every year if we have to keep pace with the industry.indiatimes. and smart use of technology. the company's chairman and managing director Sudhir Dhingra dreaded the idea of setting up huge factories . India lags in technology. Till a year ago. which. which made finding up to date contact information difficult. Page 92 . Most are family-run. 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. Others include Gokaldas Exports of Bangalore. Times News Network. Bangladesh churns out as many garments as India from a fifth as many factories. and Shahi Exports. His personal secretary was not useful in obtaining any information.127 The biggest Chinese firms have a turnover of $800 million-1. But what distinguishes them is a relatively larger scale.128 XI. productivity and scale. at Rs 450 crore of revenues. “Preparing for 2005: Dressing up for the party. design to finishing. At present the Indian textile exports to Japan add up to $296m which is just about 1% of the country’s total textile imports. But will we be ready in time?” Businessworld. Clearly. the company may go for a specific capacity expansion. Says Orient Craft's executive director Anoop Dhanda: "For the next few years. Current contact information was finally obtained through a Professor at NIFT." Orient Craft and Fabric & Fibres are among a few who have been pulling ahead of the pack. 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. 20 April 2006.200 million . 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. M. is India's largest garments exporter. <http://economictimes.com/articleshow/1496902. Like most other economies. to cater to new deals in the pipeline. and Surendar.Depending on the volume of the orders.businessworldindia.com/apr0504/coverstory01. Meru Exports and Richa Exports of Delhi. China is the largest exporter to Japan. though he stated that she would be able to forward company codes of conduct and additional information that could not be covered in the interview.
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