FIRST TIER GARMENT EXPORTERS IN DELHI

:
INDUSTRY AND COMPANY PERSPECTIVES

A Collaboration Between United Students against Sweatshops Jobs with Justice Society for Labour and Development

March 2007

TABLE OF CONTENTS

PAGE NUMBER

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.
VI.

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
I. II.
III.

IV.

Contact Information .........................................................................................49 Brief History ....................................................................................................49 Basic Profile.....................................................................................................50 Financials .........................................................................................................51

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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

It is advisable not to send questions via e-mail. linked to the Ministry of Textiles). others self-report to financial databases. Online searches yielded some kind of press release or interview for each entity except for Jyoti Apparels. Several other agencies that are major players in the export garment industry were identified and profiled by the researcher. and Third Eyesight (an industry consulting agency). The sixth company was identified by the researcher through an interview with a representative of the Indian Apparel Export Promotions Council (AEPC). Obtaining the phone number from the agency website and directly calling was the simplest way of setting up interviews. Pearl Global Ltd. though it proved best to limit the amount of e-mail communication. Manicandan. Asking a question via e-mail often yielded claims of confidentiality. These are the Northern India Textile Research Association (NITRA. If an interview cannot be conducted in person. Public limited companies like Pearl Global Ltd. A management survey was developed using the framework of surveys used in other geographic contexts and updated on the basis of preliminary interviews.. Four of the six companies profiled and all of the agencies have individual websites. the Apparel Export Promotions Council (AEPC). linked to the Ministry of Textiles.) were identified using “Mapping First Tier Suppliers in Garment Industry in Delhi. Ltd. the Registrar of Companies (ROC. Methodology Preliminary research was conducted on the internet.” a CEC report submitted by G. Orient Crafts Ltd. and others do not disclose financial information beyond approximations of annual turnover and production capacity. E-mail was also used to a large extent to set up meetings. Government of India). while asking the same question in person would yield a response. although some were out of date.. India context. the National Institute of Fashion Technology (NIFT. Ministry of Textiles). 2) To identify correlations between labor conditions and businesses characteristics.. an interview by telephone would be far more likely to be successful than an information Page 3 . Company G of Group R. Five companies (Modelama Exports Ltd.CHAPTER ONE INTRODUCTION The identification and profiling of top tier Indian garment exporters was undertaken for the following purposes: 1) To identify common Human Resource strategies used to suppress union organizing in the export garment sector. Managers at six companies and four agencies gave interviews. Interviews were obtained in a variety of ways. 3) To develop corporate research strategies specific to the Delhi. Shahi Exports Pvt. display their financial information on the company website. Contact information was available on websites.

Ltd. men together tend to form groups and lobbies because they have spare time. Also. which typifies management attitude both towards women and unions: Researcher: Why are your workers mostly female? Are there significant differences in productivity? Manager: No. Researcher: Did you have problems with employing males in the past? Manager: No—no. industrial accidents record. An interview with an anonymous manager produced the following conversation. context and was integral in order to obtain information. The attitude and openness of those interviewed are subjectively recorded in the individual profiles. Researcher: I don’t understand. 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. and one experience ePage 4 . I don’t think they ever employed males… Limitations Time constraints limited the consistency and thoroughness of company information. Furthermore.request by e-mail would. no significant differences in productivity. ladies are more focused on work. Questionnaire Used by the Researcher The following questionnaire was handwritten in shorthand and brought to the scheduled interviews as notes. going as far as to hand over Standard Operating Procedures. Women are easier to handle. no telephone interviews were conducted in this survey. Information on these companies was obtained primarily from top-down management sources. easier to control. as it was not possible in many cases to conduct follow-up visits.. and used to establish industry contacts. Just. They’re more docile. 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. all interviews were in person. even though such a one-sided perspective may not reflect the reality of the situation. without which interviews would not have been possible. but off the record. Managers were surprisingly open in some cases. However. and Orient Craft Ltd. and NIFT gave updated contact information for Shahi Exports Pvt. I’ll tell you. and as such may be misleading as to actual conditions. The purpose of this research was to obtain information about companies from a management perspective. however. or productivity schemes. while others would refuse to state the number of workers in the manufacturing unit. time constraints would not permit cross-checking all information with workers and officers at each company. It was not e-mailed to any of the managers. The agencies profiled were primarily interviewed before the export houses. What groups? Manager: Oh.S. The AEPC was instrumental in identifying Jyoti Apparels as a top tier supplier.

vol of product. discount retailers (Wal-Mart). they often had information regarding each of these areas. Designation. Ownership of Company. where. U. What kind of input— CMT. sourcing. and Responsibilities of Respondent: Number of Years in the Company: General Upper Management Do you have a brochure saying what products. help design.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. deliver? Does the company ever have problems with contracts and/or steady orders? (if possible. Name.mailing questions proved fruitless in gathering information. 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. no input--or more capable. how fast company delivers products to brand Kinds of buyers—importers. package. if only a higher level manager could be reached.S. 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. if such a program were introduced would be willing to participate if increase wages and committed to labor rights and worker representation?) Problems with seasonality? Manufacture winter clothes? How have vendors changed post-MFA? Have you taken price cuts? Which products? Larger volumes? Different buyers? Deepened relationship? Middlemen? Who are the company’s competitors? Are subcontractors involved and if so at what stages? Which factories/companies? What are the size and scale of these operations? Has this changed post-quota phase out? What effect does the company believe the quota phase-out will have on turnover and the industry in general? Page 5 . However. 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. The survey questions were divided into sections according to the position of the respondent. get order.. total sales. I’ve heard of collegiate licensing that would provide steady orders from major brands at higher prices. since a conversational approach proved to yield the most information. as there are some questions that an HR manager would know more than a Merchandising Agent. DSP questions. EU? Major foreign brands that the company supplies to: length of relationship. CMT. The questionnaire was used only as a guide in the interviews as a reminder of what kind of information was needed. specialty (GAP).

checkers. etc. cutters. Have there been any attempts at unionization in the past? What is the company’s attitude toward unionization? Page 6 . material cost. trainees. Productivity Committee. finishers. helpers. washers. semi skilled. etc. labor cost. Have you seen a benefit in productivity since implementation of program? Are there joint worker-manager forums in your organization? If yes. Quality Circle? If yes. can you give a sample of the contract letter? Is there a procedure for workers to complain about supervisors/management? Are there programs or committees to minimize conflict and improve morale of workers? i. codes of conduct. tailors (skilled. or do they use agencies like Third Eyesight for technology and HR development? How has AEPC or NITRA or NIFT helped them? In what capacity? What are two or three main things holding business back? What are you doing to solve this? How has the central and state government helped the company’s smooth functioning? Or not? Labor laws. 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. Grievance Committee. supervisors. men.e. 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. overhead. standing orders. what is displayed to workers on details of employment. what do these forums do? Get any documents willing to give at any point. subcontracting. 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. average age of employees. total value of exports. unskilled).Have they used outside agencies in developing any part of their strategies? Part of AEPC. Shopfloor Committee. who are the members and how are cases handled? Give details. How many women. Sexual Harassment Committee. pressmen. NITRA.

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?

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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, cmai@hathway.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.

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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.

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Since Pearl Global is a public limited company. According to an interview with the Company Secretary of Pearl Global Ltd.in/ROC_2003. Such forms include: Form 1. Form 29 for Pearl Global makes it a public limited company. they must submit several forms at incorporation and annually. CGO Complex. Website of the Ministry of Company Affairs: http://www. which is not true for privately owned companies. New Delhi 110003 Phone: 011-24362708 Fax: 011-24364570 E-Mail: rocdel.gov website to access the public disclosure documents).The financials publicly available include the annual return and balance (for all companies).sb@sb. REGISTRAR OF COMPANIES (ROC) The Registrar of Companies is a division of the Indian government’s Ministry of Textiles.htm : Delhi & Haryana Regional Director: Dr.nic. Form 20 gets the Director a Director’s Identification number (the number used on the mca. the details of the board of directors/management structure. the address of the registered office and the locations of the business. These offices function as registry of records. the compliance of companies act.mca.sb@sb.gov. which are available for inspection by members of public on payment of the prescribed fee. Form 32.in However.in Nehru Stadium. the office at Nehru Stadium closed down earlier in the year. Companies are required to register new events such as a change of directors with the ROC. The addresses of each state’s ROC as of 2003 can be found at http://dca. The Central Government exercises administrative control over these offices through the respective Regional Directors. Navrang Saini Addresses: B-Block Paryavaran Bhawan.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 profit and loss are also publicly available. New Delhi – 110003 E-Mail: rocjln. Lodhi Road. Form 18. in order for a company to be registered with the ROC.nic. relating to the companies registered with them.nic. Page 10 .CHAPTER TWO AGENCY PROFILES 1..

but several did not have up-to-date financial or structural information. and though there is no formalized rule against this. the process of obtaining public documents. Not only were entire company files missing. The researcher attempted to take notes by laptop. etc. was difficult and did not yield a lot of useful information. Documents are publicly available after submitting a form requesting a release of information along with a small fee for each company. such as financial information and company Articles and Memorandum of Association (objectives. Furthermore. Page 11 . photocopying the documents in the file is not permitted unless a fee for a legal copy is paid.The ROC in Delhi is in a process of transitioning to an electronic format of filekeeping. Information must be copied into a notebook by pencil (pens are not allowed). As such. it was not permitted either. of a newly incorporated company detailing the scope of its operations).

* One of the largest global home products retailers . Sushant Lok-I. He then joined a start-up consulting firm and was instrumental during its growth into a multinational consulting firm's joint venture in India. assistance in assessment of Indian supply base Page 12 .Strategic assessment of India – insights for a global senior management team to gain a realistic picture of the opportunities and the challenges in India. 2nd Floor. competitive and regulatory information. and returned to India to his position as General Manager of the Indian business. Devangshu Dutta. He subsequently worked with an international retailer's joint-venture in India. * Diversified Indian consumer and industrial products conglomerate . During his career Devangshu has performed the roles of an entrepreneur. health. advisor. 4112495 Fax: +91 (124) 2577586 Cell: +91 98111 03494 Email: devangshu. Thereafter. in marketing and distribution. Gurgaon .122 002 INDIA Tel: +91 (124) 4112493. THIRD EYESIGHT (INDUSTRY CONSULTING AGENCY) Contact person: Mr. assistance in formulating strategy and developing partnerships with International retailers and brands. home. new business start-up and operations projects with Indian and international clients.Assistance in development of global sourcing strategy and action plan. Third Eyesight and its team of associates & professionals have worked on a variety of business strategy. 4112494. as part of the team that launched the JV. * International multi-billion dollar apparel brand . Devangshu began his career with the then-leading Indian national retail chain in buying & merchandising and in store operations. The following are brief descriptions of some of the projects on which Third Eyesight's professionals have worked.dutta@3isite. Third Eyesight's project teams consist of professionals who have hands-on experience in various aspects of retail and consumer products businesses. trainer and teacher.Carrying out sectoral market studies in retail.com Website: www. and product analysis.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. Support in implementing changes in sourcing strategy and organisation. Founder and Director of Third Eyesight A-847. Benchmarking against global supply chain and product development best practices. He was also based in the European practice of this multi-national consulting firm. manager.development of India strategy and preliminary business plan including market analysis. including fashion. he co-founded a fashion sourcing company in which he remains a shareholder. * Global fibre and chemicals company .strategic inputs for Asia-Pacific top management team to identify emerging opportunities in the Indian textile supply chain * Leading UK Retailer .2. food & grocery. over the last 16 years. dining etc.3isite.

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. Page 13 . Since the garment industry is extremely labor intensive. Directed researcher to online industry magazine resource (Website: apparelresources. and assistance in seeking new capital infusion. Pradeep Joshi. as you needed approval from the state government if you were operating a place of business with more than a hundred workers.Formulating strategy and assistance in strategic alliance proposal to key European customer. The government thus limited how much you could produce under the reasoning that overcapacity would lead to inefficient use of capita. The small-scale reservation system. This is partially why many of the current successful companies (such as Richa Global) are split up into many different companies. The investment cap was very low.Comprehensive comparative study of 7 cities in India and outside to choose location of new garment manufacturing plant * Leading Turkish supplier . The quota system obliged companies to set up under different names. Mentioned another apparent Tier 1 (said they are large and source directly to MNCs). Mr. this model was phased out. Business strategy and plan for current business.org). D. which continues to regulate knit-fabrics.Assistance in formulating strategy and developing business with global customers for exports. Batra. and you cannot have large units. * Pioneer luxury brand house in India . (Website: niftindia. Much of the fragmentation of companies was really only on paper.* Multi-billion dollar Indian consumer goods conglomerate .org) Advised researcher to contact faculty of the management studies department. Also told the researcher to contact faculty of Pearl Academy of Fashion. who would be able to help schedule company interviews. gave contact information for the National Institute of Fashion Technology in Hauz-Khas. it was a licensed economy in which you needed to get government clearance to manufacture in specific capacities. you need a separate registration and thus it is easier to simply export (used to be tax-free). Sibichan Matthew. In the early 90s. The name is on the WRC disclosure list. Gave history of market structure in India. labor laws also limited the ability of companies to expand. reserves certain sectors for small units. Initially.K. and the result of this was that a successful company was prevented from expansion. development and delivery of sales & marketing collateral for three consecutive seasons. Mr. who could then direct me to industry management: Dr. Content of Interview (5 July 2006) with Director of Third Eyesight: Asked about study. * One of the largest Indian textile and garment companies . The other reasons for company fragmentation are the nature of quota system and labor laws. Matrix. * Indian subsidiary of one of the largest sports apparel and footwear brands – Design.Business planning for new brand acquisition. According to him.

Page 14 . and money (wastes that would not be eliminated by greater cooperation. the product is re-done. for example. but in the strategic long-run. He mentioned that Delhi (mostly womenswear) is only one side of the big picture. and Tirupur (mostly jersey knits) all have different cultures. The current model has self-contained worlds instead of cooperation. Because of this. Bangalore (roughly equal. this changed somewhat. 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. total costs would go down because the current transactional model wastes a lot of time. and as such is seen as a big risk and many are reluctant to actually work on establishing these relationships. the supplier makes the product. worrying that Indian business could not compete with China. He began to describe the different ways of sourcing. which has worse infrastructure but is nevertheless optimistic about business. From 2001-2004. saying that the industry had often talked of diversifying. wherein the buyer. and rather than cultivate a relationship in which the supplier provides input and designs according to a long-standing relationship. material. strategic sourcing is dramatically different from the current widespread transaction model. The MNC gives product specs. whereby long-term relationships are cultivated.one hundred workers is nothing. couldn’t see name). it would increase unit prices. but more menswear). he made it clear that somehow they were competing because of their “ability to develop and deliver product. From a piecemeal view. He began to talk about sourcing. etc. He expressed hope that soon the labor laws would relax some to reflect changing needs of business. the quotas had restrained India far more than China (showed a graph from a U. so all the businesses had to pay was labor and overhead. In 2004. economic source. as it was clear that Indian businesses were gaining from the phase-out and smaller countries like Bangladesh were losing instead. gets quotes from suppliers. He said that Delhi is doing extremely well in terms of business and is the largest in terms of exports.” Furthermore. that they were too “over-exposed in China. how the current transactional model is very inefficient insofar as buyer-supplier cooperation goes. investment in the industry slowed down. effort. but that the outlook of the management may be more pessimistic than Tirupur.S. doesn’t communicate with the designer. However. the MNC may like it or require additional changes. ships a sample.” however that had mostly been talk and no action. He then mentioned that “strategic sourcing” would be much more beneficial to the market. then privatized factories. 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. money is instead wasted on an inefficient process. but would be greatly minimized). he said that Indian companies were extremely uncertain about the effects of the MFA phase-out. the investment returned. as the companies began to listen to the needs of buyers and in 2005. since vendors and suppliers both may have had bad business experiences when attempting to do the same.. and that Chennai (mostly menswear).

B. APPAREL EXPORT PROMOTIONS COUNCIL (AEPC) Office: Apparel House. to find out the product range and export prices of garments of other countries. The main objectives of the AEPC are as follows: (1) To promote. to find out the tariff and other restrictive practices of importing countries. Ltd. (2) To undertake all export promotion measures. Mr. Banthia (M/s Magnum Enterprises. Gurgaon 122003 Contact Person: Mr. M/s Handloom and Handicrafts Export Corporation. Mr.3. to undertake marketing in individual foreign markets. Secretary General of AEPC Mobile: 98-9912-4555 Website: http://www. N. B. (4) To conduct propaganda and publicity regularly and continuously so as to bring to the notice of the importers and the public in foreign countries the advantages of trade and commerce with India and to create a liking for the various types of garments markets Page 15 . woollen knitwear and garments of leather. Bombay and Garments Exporters Association. (3) To appoint representative.K. to develop new designs and patterns of garments. Mogrelia (M/s Zoro Garments Pvt. Ramadorai (Chief Executive. Gen.. New Delhi) Ex-president. of India. Garments Exporters Association. Sector 44.F. Institutional Area. New Delhi took a lead in this matter and formed a special ad-hoc committee of the following Members: Mr. New Delhi) President. market preferences and latest fashions and designs prevalent in the foreign countries. particularly to undertake market research. KK Jalan. Mr. Premila Wagle (M/s Paville Fashions Pvt. Assn. develop export of all types of readymade garments. 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.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.P. S. Ltd. Vijay Mehta (M/s Intercraft Pvt. of India. N. quota distribution and allocation.N. of India. Bombay) President. Calcutta). Clothing Mfrs. Secretary. Shah (M/s Hiralal Gulabchand. excluding. P. Amersey (M/s Milton’s Ltd. jute and hemp. Assan. New Delhi). agents or correspondents in foreign markets for the purpose of continuously and regularly reporting the markets prices. Garment Exporters Association. Assn. According to the Articles and Memorandum of Association: Up till now Cotton Textiles Export Promotion Council was handling the export promotion work of garments. Clothing Mfrs. Mr. Smt. Bombay) Vice-President. but now as the garment industry has reached a stature and maturity and has achieved the target of 250 crores. Singh (M/s Singh Export Corporation. Mr. advance. Ltd. Clothing Mfrs.aepcindia. Madras). Mr... Two leading organisations of readymade garments.. increase. Bombay) Hon.L. Clothing Manufacturers Association of India. to send trade delegations and missions to foreign countries as well as to survey export potential of readymade garments from the country.

• help with training and productivity (14 training institutes). Page 16 . Content of interview (7 July 2006) with the Secretary General of the AEPC: The main issues in the garment industry are labor and infrastructure. garment businesses do not have orders. rules and procedures. so that workers can be more easily fired and hired. so that businesses who do not get orders during the winter are not hurt by the cost of labor. (6) To establish design centres. • lobbying to government to change laws regarding labor and infrastructure (and whatever other business bottlenecks there are). traders and exporters of garments. NCR region. development of export markets. as well as the names. He stated that over the industry as a whole. to improve the skill of workers engaged in garment manufacturing in India and to assist in the technological base of the garment industry. generation of production for exports. • secondly Bangalore. action plans for promotion of exports. he stated. and • raw material supply (both indigenous and imported). (5) To assist members. address. import licence facilities provided and how to apply for the facilities. specializing in knitwear. its strengths being higher levels of worker productivity. 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). He stated that the government needs to increase labor flexibility. to improve the qualities and standards of the fabrics and garments by importing technical know how. to 200 days. 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. A specific AEPC goal is to get the government to change the law that states that workers are permanent employees after 100 days. to encourage export production of quality garments and to undertake necessary research in fashions. its strengths being better infrastructure. especially. in the Small Scale Sector by giving assistance in the matter of understanding and implementation of the drawback. (8) To obtain from members of the Council and to prepare for the Council as a whole. and its specialization in better embroidery and the “India look” (ethnicwear heavy with embellishments and more complex work).for the purpose of continuously and regularly reporting to manufacturers. designs and techniques and to encourage manufacture of garments for exports. unit prices have remained stable pre and post quota phase-out. to evolve improved design and patterns and garments suitable for export. For three months of the year. and description of subscribers. otherwise productivity will remain stagnant and labor costs will remain high. (7) To undertake training of workers and technical personnel. He said the three biggest centers for garment production were • firstly Delhi. AEPC focuses on three things: • marketing help. and lastly Tirupur.

• Golkadas Images (Bangalore).He listed the top ten Indian garment factories as • Shahi Exports (Delhi). as it is self-reported. He mentioned several notable resources. • SPL Industries (Delhi). • a foreign consultant agency Method Workshop (main consultant Roger Thomas). • Modelama (Delhi). • Gurgi (“biggest industry consultant”—saw this name in the fabric stores in Jyoti Apparels). • Creative Group (Mumbai). These businesses have succeeded through a number of different strategies. and • the Cotton Textile Export Promotion Council. and • the Eastmen Group (Tirupur). • Richa Global (Delhi). • Centwin Group (Tirupur). The AEPC did not have company specific financial data. • Texports (Mumbai). • Golkadas Exports (Bangalore). The researcher purchased the newest book of statistics on industry level data that the AEPC had (2003) and a directory of garment exporters. including • an HR training institute-KSA Technopack. with a common thread of individual attention to quality control and productivity by hiring consultants and building better facilities. Page 17 .

com NIFT was set up under the Ministry of Textiles in 1986. these courses offer a unique opportunity to participate in the lively academic environment of NIFT. Chennai. practitioners. Extn:306 Fax: 91-11-26851198 Mobile: 9810154829 E-mail: rajeshbheda@gmail. Hauz Khas Near Gulmohar Park. In addition to classroom learning.niftindia. creativity. PhD. advancement of careers.htm Address: NIFT Campus. NIFT has set academic standards and excelled in thought leadership by providing a pool of creative genius and technical competence to the fashion industry nationally as well as globally. New Delhi-110 016. According to its CE (Continuing Education) Prospectus 2006-07: NIFT provides quality fashion-education to industry experts. Bangalore. Extn:306 Contact Person: Professor Rajesh Bheda. The centres are professionally managed platforms of the world’s finest design expertise. Government of India Website: http://www. Department of Fashion Technology Telephone: 26850484. These programmes reflect the requirements and Page 18 . Hyderabad. which have been developed in consultation with reputed academicians [sic] and industry practitioners. leading to upgradation of skills and knowledge. 26964771. Kolkata and Mumbai. besides conducting regular professional undergraduate and postgraduate programmes in Design. Continuing Education (CE) Programmes: National Institute of Fashion Technology. management and technology across the globe. 26965080. and excellence. rajeshbheda@niftindia. 26965059. NIFT is acknowledged as the premier institute of fashion design. India Telephone: 26850484. and avail of facilities like laboratories with state-of-the-art equipment. and the evolution of new professionals. Resource Centres. NATIONAL INSTITUTE OF FASHION TECHNOLOGY (NIFT) Ministry of Textiles. They offer a learning environment that encourages innovation. Chairperson. professionals.com. 26965080. The Institute has pioneered the evolution of fashion business education across the country through a network of seven centres at New Delhi. Gandhinagar (Sub-Centre: Surat). Director General of NIFT) The Institute: Today. (Gauri Kumar.. NIFT has crafted a range of Continuing Education Programmes. also offers short duration part time courses under Continuing Education (CE). 26965059.4. Management and Technology. 26964771. Each of the seven NIFT Centers offers a spectrum of specialized short-term courses that address the dynamics and niche needs of the fashion industry and open windows of opportunity to interested candidates. management practices and manufacturing technologies. 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.com/iftf. and entry-level candidates in the form of Continued Education Programmes. and diverse faculty expertise. enhancement of critical abilities.

cost is up. If companies put efforts into enacting these measures. The main characteristics of successful firms include: • recognizing what customers are looking for.S. and • hire or train industrial engineers. with production planning and scheduling.concerns of the industry and have been carefully planned to spur professional growth. The library at the NIFT campus is open to anyone. • have more highly trained workforce. Companies are trying to move up the value ladder as product development and design are becoming more important. Unit prices are down. training managers. quality improvement program. • managing their supply chain better. • design development. With focus on interactive learning. productivity (how to perform time studies). • higher productivity • use the help of consultants. Page 19 . probably average 70% of India’s market. there could be a 50% improvement in quality. However. relevant to individuals at different stages of their careers. trying to get workers’ involvement. U. methods monitored. Post-MFA trends have been a consolidation of supply chain and capacities. • BPR manufacturing. He teaches classes in quality management. and also to those aspiring to join the industry. and EU have always been strong markets in India. • better quality product and service. manufacturers consolidating capacities. Most common is line supervision. Content of interview (20 July 2006) with Professor Bheda: Professor Bheda has been with NIFT for 16 years. and a global overview of the garment industry. • offering shorter lead times. and they are making efforts to reach good productivity. The participants receive a NIFT certificate on successful completion of the programme. The flexible schedule enables the participants to pursue the programme without interrupting their professional activities. 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. buyers reducing number of suppliers as well as brands. operators. though you cannot take bags inside the doors or check out books. the programmes provide a congenial environment that integrates theory with practice. 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. The average Indian garment factory has 100% potential in physical labor productivity. suppliers reducing subcontracting. performance-based rewards system. corporate social responsibility. demand is up. as there has not much shift in markets.

K. it seemed to be a showcase for smaller firms to vie for new buyers and international exposure. it would be good to invest in social improvement program. something like it has been discussed. The core group of organizers include Vijay Mathur. The award winners for their showcases (announced the previous day.K. so the researcher asked IIGF workers) were 1) Intercraft (New Delhi). the 37th annual garment fair with 393 exporters/exhibitors at Pragati Maidan. and are simply passing it on to the suppliers.” that retailers are paying lip service to CSR without sharing the cost burden.L.” The researcher mentioned the United Students Against Sweatshops-proposed Designated Suppliers program and if suppliers would be interested in such a proposal and he said absolutely. and many cannot afford them because there is typically no financial payback. 38th annual: www. H. He gave a contact person to interview from Shahi Exports and up-to-date contact information number for Orient Craft. Mumbai).K. driven by price and the customer can walk away at any point. Retailers should start partnering with the brands and rewarding CSR compliant suppliers. K. Regarding corporate social responsibility. the AEPC Director of Export Promotions (interviewed him after K. from principles. However. None of the firms were top ten exporters or easily recognizable. so some firms are investing in CSR to the extent they can afford. 2) Shilpayan Craft (Jaipur) 3) Another firm from Jaipur. The researcher obtained a buyer ID and toured the grounds. Social programs are a long-term investment. it would have to be meticulously and carefully implemented. He does not see a correlation between turnover and CSR programs: “ultimately it comes from within.there is an erosion of the bottom line and companies find it difficult to survive and improve working conditions. The day of the interview was the final day of the Indian International Garment Fair (IIGF: www. so suppliers feel they are not committed. Page 20 . Vijay Agarwal (Chairman of AEPC. Magu (Chairman of Jyoti Apparels).indiaapparelfair. and as long as it is ensured that the rewards system cost comes down to the factory floor.com. Jalan. Agarwal).indianapparelfair. “suppliers get a feeling of being cheated. Everything in the market is transaction-based.com). not because the buyer says the firm has to do it.

org/ Contact person: Dr. Energy Conservation. Pollution Control.5. environment and allied areas. Maintenance Audit and a lot more. According to NITRA’s 2006 Prospectus: NITRA’s Multifarious Activities *Job oriented professional courses (full-time and distance learning) in textile. Sector-23. Publications. *Quality Evaluation of textiles. Cost Reduction. *HRD activities through training programs. Environmental Audit. P. and plastics. conferences and publications. effluents. dyes. Process House Study.S. Techno-economic Viability Study. Quality Improvement. V. Machine Design & Development. 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. Manpower Planning. Chairman of NITRA. It is the only ISO 9001:2000 accredited textile research organization in India. *Research and Development projects and industry specific surveys related to textile & garment industry. 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 . J. Design of Effluent Treatment Plants and Water Recovery Plants. leather. *Need based cost effective software development. Energy Audit. ISO-9000 Quality Management System. Rao. and Seminars/ Conferences/ Training programs…NITRA has carved a niche and occupied leadership in Package Design Consultancy for effluent treatment and water recovery. Raj Nagar. Ghaziabad (UP) 201 002 Website: http://nitratextile. *Customized consultancy packages for national and international clients in the areas of Product Development. Maintenance Management. garment. 0120 278-3638 NITRA was established jointly by the industry and the Indian government (Ministry of Textiles) in 1975 with the objective “to carry out scientific research in the field of textile as well as to promote and foster scientific research studies for the extension of knowledge related to or connected with textile industry” (NITRA’s website). It is linked to the Ministry of Textiles and is recognized by the Department of Scientific and Industrial Research (both government entities). waters. NORTHERN INDIA TEXTILE RESEARCH ASSOCIATION (NITRA) NITRA. ISO-14000 Environment Management System. workshops. Product Diversification. Several prestigious textile units and multinationals are already within its consultancy network. chemicals. seminars. *Collection and dissemination of data useful to the textile & garment industry.

Also stated that it cost businesses more to subcontract because they had to pay for delivery. etc. The government is currently working on better infrastructure. legal compliance. effluent treatment and water recovery plant.. especially the law whereby a worker that is employed for 100 days is considered a permanent employee. Stated that the fragmentation of the business made quality control an issue. energy. NITRA has a wide database of employers [in its placement cell. has been installed for carrying out treatability studies of biodegradation of industrial effluents through aerobic cum anaerobic route. He believes the government should subsidize capital for Indian business like China (mentioned something about a Technology Aggregation Fund. which would consolidate factories. Content of interview (7 July 2006) with Chairman of NITRA: Gave background on the history of the textile industry. especially Page 22 . 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. the…library [keeps students connected with] ongoing global developments. A programmable ADI Bioreactor System of 3 liters capacity from Applikon Dependable Instruments. fear of China post-quota. mid term strategies and policies and creating necessary infrastructure. he said that unions hurt business. quality. An in-house miniature ETP (effluent treatment plant) of 100 Liters/hour capacity has been installed by NITRA. Access to and the price of power seemed to be a big issue for him. water. [NITRA’s IT Center] has over 100 [PC’s]. Complained about government infrastructure and labor laws. During the 60s-80s. Netherlands.textile and allied industries: waste management. He allowed that workers were being exploited. etc. from composite textile mills in the 50s-60s to the rise of small scale businesses/ fragmentation.. Library: Enriched with 5. and perhaps have relaxed labor laws within these sites. the Bureau of Indian Standards (BIS). environmental statement…NITRA’s Environment Laboratory is well equipped with Sophisticated Analytical instruments. The library also subscribes to 150 [national and international] periodicals. but would not elaborate and would only refer to the intractability of trade unions in vague terms.. improve infrastructure. to build the careers of its students and] monitors the current trends and requirements in the job market [by keeping in constant touch with prospective recruiters]. and the Haryana State Pollution Control Board (HSPCB). TAF). eco-friendly textiles. There is a shortage of skilled garment workers. 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. which are essential to conduct such a program…[it] is accredited/ recognized by the National Accreditation Board for Testing and Calibration Laboratories (NABL).000 books and journals. better access to a supply of power through a cluster system called Scheme for an Integrated Textile Park (SITP).. NITRA helps factories with product development and various audits.

Reliance. They conduct in-plant training as well as distance learning programs for middle management at NITRA itself. They typically have 4-5 students applying for one seat. he mentioned Vardhmal. Arvind. Page 23 . so NITRA conducts training programs for workers that last 3-6 months. L and J (seem to be mills. When asked for company names. 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.machine operators at the shop floor level. Classes are full days. a NITRA Senior Scientific Officer. 10:30 am .4:30 pm. Students apply to the program online and are selected on the results of aptitude examinations and interviews. The researcher obtained a copy of the 2006 prospectus. The course coordinator is Vivek Agarwal. Bilwara. not garment manufacturers).

CONTACT INFORMATION1 Contact Person Lovleen Kumar. Okhla Industrial Area. Mobile: 9810015693 Corporate Office2 Plot No. Page 24 . 2291131 Fax: 91-124-2290864 Website: www. Udyog Vihar Phase -1 Gurgaon.com.com E-mail: info@modelamaexport. ICRIER financial data. Merchandising Agent. India Tel: +91-11-26810103 fax: +91-11-26817969 Head Office Gurgaon 184. Director E-mail: lovleen@modelamaexports. and updated telephone numbers from interview. MODELAMA EXPORTS LTD. phase -1 New Delhi -110020. the company website. An ISO 9001:2000 certified company The information in the following company report was obtained from interviews with the Director. Manicandan’s CEC Report.modelamaexports. 2 Unit visited by the researcher. I.com Head Office Delhi B-57. Sector-5. Human Resources manager. Manesar IMT Gurgaon -122016. and G. business articles.CHAPTER THREE COMPANY PROFILES 1. Haryana. documents given by the HR and production managers including a company profile. Haryana. 7 & 8. India Tel: 91-124-2290993. India Tel: +91-124-2397838-42 fax: +91-124-2397843 1 Initial information obtained from company website.

Road Map 3 Production Units4 1. Okhla Industrial Area. 6 From company website. phase -1 10.” Apparel Resources. Udyog Vihar Phase -1 II. In the first year they exported Rs. Lalit Gulati as a family-run operation. 200. Modelama professionalized its management structure and has been consistently upgrading technology in their production facilities. B-80. B-57. BRIEF HISTORY Modelama was founded in 1979 by Mr. phase -1 New Delhi 8. Sector-4 Gurgaon 5.000 square feet. 204.asp?msg=2710&cod=newsindetail&nam=>.5 III. Phase 1 Gurgaon 4. “Build Quality Rather Than Check The Quality. Phase 1 Gurgaon 2. Modelama today has ten professionally run production units over 4.com/defaultnextone. 5 From website. Other production sites in untranslated Hindi document. 184. B-33. <http://apparelresources. Okhla Industrial Area. Gurgaon1 6. Modelama places a great emphasis on technology as the secret to its success.00. In 1999. Okhla Industrial Area. 45 lakhs with 50 indigenous sewing machines and a workspace of 4. Plot No. B-26. interview. phase -1 New Delhi 9. Lalit Gulati.000 square feet. Phase 1 Gurgaon 3. Manesar. 201. and Pandey. IMT Manesar. Okhla Industrial Area. Vinita. owner is Mr. Plot No-5. 7 & 8. Sector-5. phase -1 New Delhi 7. 4 3 Page 25 . BASIC PROFILE6 Legal Composition Sole proprietorship. From company website.

Zellers Australia: Country Road Awards Target Vendor Award of Excellence. 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. which may have contributed to minimizing seasonality issues. dresses. offering products such as table linen. polyamide). linen.AEPC/REG/MER/47569/N/2001) as a manufacturer/ exporter of readymade garments including woolen. Marmaxx. 1992. Uses natural fabrics (cotton. Incorporates ethnic Indian accents and embroidery into design samples. is an export oriented unit registered with NEPZ. GUS. Marks & Spencer. Exports/Imports 100% exports. Modafil UK: Laura Ashley. Villersey & Boch. 1999. Colt’s Europe: Etam. synthetics (viscose. H&M. Canada: Eatons. and blends. shorts. Charming Shoppe Inc. William-E-Sonoma. drapery. top of beds. 1993. polyester. Next. skirts. Sales Growth and Profitability Vendor Award. Westelm. Sears Roebuck & Co.O. wool). silk. Added outerwear to their product mix in 2001-2002. ladies blouses. jute and hemp. Marshalls. knitwear and garments of leather. Nov. 1998. Proffitts. kidswear. Lane Bryant. nightwear. 2000. 1996 Charming Shoppes Inc. Kohls-Belk. Saks. Monoprix. Grattan. and 2002 Associated Merchandising Corporation Outstanding Performance. LOP NO.U I/6921dt28/08/01 RCMC NO. Zara. Pottery Barn. Launched Home Textile Collection in 1999. cushion covers. Sears Roebuck & Co. Tommy Hilfiger. Old Navy). Galeries Lafeyette. Product Mix Areas of specialization include outerwear. AMC. Clients USA: GAP (Banana Republic.EOU Information Modelama Exports Ltd.. silk. Hudson Bay. Eurofiel (Women’s Secret). 2001 Federated Merchandising Group Five Star Award (in Development of Federated Department Stores Private Brands and Labels). Modelama does not manufacture for the domestic market. Mervyns.4530/2001-100% E. La Halle.. and home furnishings. 2000. etc. Lands End. 2000 Page 26 . Freemans. Federated Stores (Macy’s). trousers. Dayton Hudson Corporation. Chambers. Target Stores. A & F. and decorative items for loungewear like throws. 1999..

of pieces exported to EU countries Proportion of workforce that is female Average wage for female production workers Average wage for male production workers 2005 200 cr 100% 20% 3cr. 3000/per month Rs.5cr. 500 Rs. 500 Total employment 500 500 Production workers 450 450 Proportion exported directly --Proportion exported indirectly through intermediaries Misc. VA per employee Rs. No. 3cr. FINANCIALS Turnover 70 Turnover (millions USD) 60 60 50 40 30 20 10 0 1981 1985 1990 1995 2000 2002 2005 projected 15 0. 7 ICRIER Data (based on an interview at B-57 Okhla Industrial Area plant in Fall 2005) Page 27 .5 2 3 5 30 Other Financials7 2003 2004 Total Sales 180 crores 180 cr % of output exported 100% 100% Profits 15% 15% Capital employed 2.000 per year 25. 2800/per month. of pieces exported to the US No.IV. Rs. 500 500 450 60% 40% 150.000 30% Rs.

75 goes to Modelama. Europe Others 94% Major Clients Brand Federated Stores (Macy’s) Target Stores GAP (incl. 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. 60% of that is Target’s profit margin per unit (PMU). ~$2. the unit prices are markedly lower than specialty stores. quoted in 9 Pandey.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. Modelama Chairman. An example given was if the retail price of a given garment manufactured for Target is $9. Vinita. Although they get large production volumes from discount retailers. Of that remaining $3. 10 Nearly all brands are FOB with the exception of discount retailers like Target Stores (USA). “GAP is sourcing worth about $1 billion from India and we are doing more than $10 million with them.99 is the landed cost. which includes not only the factory unit price but the duty cost (AMC and freight).com/defaultnextone. <http://apparelresources. BRAND INFORMATION8 Modelama's Export Market 1% 5% U.S. 9 8 Page 28 .asp?msg=2710&cod=newsin detail&nam=>.V.99.” Apparel Resources. “Build Quality Rather Than Check The Quality. The remaining $3.A. Average Unit Prices (per piece of garment supplied) Unit Price Origin Product Mix $5-7 USD U.” Lalit Gulati.S.

V. Production Capacity12 9 8 7 6 5 4 3 2 1 0 Number of Garments Produced (milions) 8 4 2. Then there is some back and forth communication between Modelama and the MNC to reach an agreement in terms of product design.80. Page 29 .kr/en/node. 13 From interview with Director and Senior Merchandising Officer. “My team of designers scans international trends and comes up with a tentative collection of not only designs but also shades. fine-tune the patterns. Modelama will present their company profile to the buying agencies of MNCs. who will then contact them with a development package if their profile fits their needs. is one of the principal designers.) as well as home furnishing products. for instance.4 1985 0.asp?em=M&mcode=200602&idx=1083>.. Marks and Spencer (Style and Co. Some of the orders can be pretty huge .”14 11 12 According to interview with the Director. We then sit down with the stores. The day the researcher observed the process.7 1 1990 1995 2000 2002 2005 projected Design/Sampling Modelama has a fairly large design department. an alumnus of the National Institute of Fashion Technology (NIFT). Vishnu. add a bit.1 1981 0. “Indian Fashion Firms Adopt Global Pret and Couture.11 Production System Uses an assembly line system.13 Gayatri Lal. and delivery times.5 0.Unit Prices Since MFA Phase-out Unit prices have gone down an estimated 7-10% due to increased global competition. which varies according to the product. INFRASTRUCTURE Subcontracting Modelama does not appear to subcontract. Typically. and get down to manufacturing.” <http://www. subtract a bit.ittimes.000 pieces. they were manufacturing garment orders for Charming Shoppes Inc. From company website and brochure. volume.co. 14 Makhijani.

supervisor name. Blind Hemmers. Machinery includes Auto Spreaders. Autocad (Lectra). Differential Feed Machines Needle Feed Machine. 17 Information on machinery was primarily taken from the company website. laundering and crocking. Washing (24 workers) and Finishing/ Pressing (175 workers) The finishing area had lines of workers pressing and folding clothes. and number of workers. output. This was the only department with women. PH check.” Modelama emphasizes technology and internationally acclaimed systems to maintain a high level of quality. Multifusing with Three Track of Loading (High Performance Macpee). Approximate number of workers16 Modelama employs a total of ~6. The floor is laid out in dozens of assembly lines. tearing strength. Auto Cutter (Lectra). Air Flotation Tables. An example line was sewing collar parts with a total of 46 tailors and 5 helpers. they use internationally standardized procedures like the traffic light quality assurance system. Auto Dart Making Stations. The product was women’s fashion blazers for Style and Co. Differential and Bottom Cylindrical Bed Unison Feed Machine. and brushing machines (from light softener washes to heavy enzymatic washes). Top.000 workers in all plants. perc based dry cleaning machines.Quality Control15 Modelama’s motto is “build quality rather than check quality. 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. Departments17 Production (~800 Workers) There are about 560 tailors. Washing machinery includes a wet and dry processing unit comprised of micro processor controlled washer extractors. Procedures are based on aql 4 point system by which all fabrics are screened and categorized. at the front of which is displayed an “Hourly Production” dry-erase board with the line number. GSM check. etc. Information on workers and floor layout is specific to the unit visited and is taken from an interview with the HR Manager. Site visited by the researcher employs about 1100 workers (including about 15 accounts staff). color fastness to light. Programmable Sleeve Setter Stations. Auto Pocket Welting M/C. The company deploys over 3000 imported sewing machines with customized workstations. Tests include tensile strength. In the sewing departments. Machinery includes Auto Zig Machine. Auto Belt Attaching Stations. Page 30 . 15 16 From company website. Pneumatic Button Hemming Stations. over 90% male. sand blasting. Auto Surging Machine. input. Cutting (50-55 workers) The cutting department had five lines of machines laid out with worker stations. From interview with Director and Human Resources Manager. Band Knife M/Cs. pitting test.

200 single head and 6 multiple head computer embroidery machines. Trevil. VII. the HR manager stated that no punitive measures are taken as it is prohibited by law. the HR manager said that no incentives are given. Productivity Schemes Company has production planning meetings consisting of the HR Manager.Pressing and finishing machinery include multipresses. The production manager gave the researcher a copy of a time-study conducted for Charming Shoppes. flatbeds. and Renzacci. Inc style. calendaring machines and range of buck shapes and steam irons from manufacturers like MACPII. 2448 per month. indicating that he would like to develop such a system in the future. The Director said that workers are given incentives in productivity schemes if they reach their targets. Has hand and machine embroidery capabilities. 3000 per month. He talked vaguely about “helping” the worker to reach their targets or perhaps moving them to another department for which they would be better suited. If workers cannot reach their targets. Production Manager. dummy presses. The targets are communicated to workers by line supervisors and dry-erase boards on the production floor that display productivity goals. However./month) 3500 From interview with HR Manager. Machinery includes 20m length Schiffley Embroidery (Lasser & Saurer). management states that they set wages higher than minimum wage to get workers to commute. and line supervisors who perform time studies on particular styles and set worker targets. Page 31 . Because the factory is not near a city. HR Manager boasted that Modelama was the only factory in India to have this machine. Category Tailors +skilled 18 Average Wage (Rs. 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. No workers are involved in these meetings. Additional Machinery Factory has a special conveyor system that moves products from assembly lines to other departments. stressing how much state-of-the-art machinery has contributed to the quality and productivity of the manufacturing process. and unskilled minimum wage was Rs. Veit. Embroidery Did not observe embroidery process during visit.

stating. Page 32 . including ESI and PF. 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. Overtime Management indicated no more than four hours per week per worker. HR Manager stated that wages increase after a year. After a three-day period.” Labor Turnover Estimated worker turnover per month at 7-10%. “It should be time-and-a-half. and that workers receive double wages for overtime hours. Expressed dissatisfaction with labor laws requiring double overtime. HUMAN RESOURCE POLICIES19 There does not appear to be common policies across the plants.+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. which is not subject to negotiation. workers are then offered a monthly wage based on this evaluation. Indicated that there are a few shop floor employees who have remained the two years the factory has been in operation. except for worker recruitment for middle management positions. VIII. like China. 19 Information based on interview with HR Manager and documents given by HR Manager and production manager.

the company recruits from training centers and placement companies and has a formalized policy that the researcher obtained. according to G.Management Structure Mr. 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. Kiran Production Manager Mr. Anil Chauhan HR Manager Management Staff/Accounts Personne Mr. Phase-I Gurgaon. Lalit Gulati Sole Proprietor Founder/Chairman Mr. However. workers have a brief orientation session during which they are informed of security measures. For middle management positions. standing orders. However. Page 33 . Beneeta Seigal Senior Merchandising Other Upper Management Positions Mr. the company posts signs on the gate. Manicandan’s “Mapping First Tier Suppliers in Garment Industry in Delhi. Recruitment Policy They do not use labor contractors at the unit visited. and in nearby worker villages. To recruit shop floor employees. K.” Modelama uses labor contractors for some of its other units. Lovleen Kumar Director Ms. at bus stops. Workers are a mix of local villagers and from Gurgaon. and vendor codes’ of conduct. while dotted-line boxed positions are factory-specific and subject to variance. Modelama’s anti-harassment policy. such as the unit located at 200. grievance procedures. Worker Training This site does not provide training to its workers.

or CTPAT model. All workers were said to have received medical attention. Manicandan’s “Mapping First Tier Suppliers in Garment Industry in Delhi. a Works Committee. according to the Customers Trade Partnership Against Terrorism.20 Grievance Policy Procedure If workers have a problem.S. but avoids paying for major injuries and illnesses.” but when asked to meet the doctor.S. in compliance 20 21 Received a Hindi copy of group meeting minutes. Received a Hindi copy of policy. companies have required them to uphold a more stringent counter-terrorism model of security in compliance with U. U. an Anti-Harassment Committee. preferring to dismiss the workers. There are only six recorded injuries at this site for 2006.” Worker Committees Since there is no union. the company usually pays the medical expense. and a Sexual Harassment Committee. so there is no need for a union. “We take care of all their problems. Security New security measures have been implemented since the quota phase-out. The factory locks its doors at night. Phase-I Gurgaon and B-57 Phase-I Okhla Industrial Area).5 km from the factory. and that management works to quickly solve problems in order to maintain an atmosphere of “family. the researcher was informed that he was at another production site.”21 Corporate Responsibility/ Codes of Conduct Modelama’s Anti-Abuse/Harassment Policy is posted on the factory floors in English and in Hindi. was displayed on the factory floor. tampering.Dismissal Procedure No information was obtained by the researcher regarding a formalized procedure. Union There is no union in the production site visited. Customs Security requirements regarding issues like preventing trespassing. that they can report their grievance to their direct supervisor or upper management. and an ESI station 1. Medical Care There is a medical room in the factory. There is a company dentist that comes every Thursday. 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. If workers suffer from minor injuries. but only in English. traceability. such as a Health and Safety Committee. The code of conduct for Charming Shoppes Inc. Page 34 . According to G. nor have there been unionization attempts. HR Manager indicated that there are very few worker grievances. they have joint employee-worker committees required by law. A resident doctor is “available at all times.” there are no doctors in two of Modelama’s other production units (200.

Lalit Gulati.” a more developed system of subcontracting modeled on Southeast Asian business strategies. “Build Quality Rather Than Check The Quality.perator. the Chairman. stated that seasonality was not an issue and that they have orders year-round. MNCs would present their contract orders to Modelama as an Indian company. This can be achieved by deskilling operations to the simplest and most automatic level…We convert the machine with the help of our in-house engineers into individual units by developing different work-aids that convert a normal lockstitch machine into a workstation. however. 25 crore in jackets alone. IX. we need operators who can be trained. the former Director stated: Lalit: We do not consider machines as individual equipment but as a complete workstation. 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 would then shift the actual manufacture of the product to either countries with lower labor costs like Sri Lanka or duty-free countries. only their department is kept open and the rest of the factory is shut down at 6 pm. Modelama successfully invested in the necessary infrastructure to export ~Rs. Vinita. whose upper management and design departments would remain in India.asp?msg=2710&cod=newsin detail&nam=>. A business strategy that Modelama is looking into is “triangular shipping.22 X. 22 Pandey. 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. BUSINESS BOTTLENECKS Main problems hindering financial success according to the Director are poor relative infrastructure. In an interview with Apparel Resources magazine. In 2002. it would appear that seasonality should be less of an issue for them than other companies who do not manufacture winter clothing. Sanjay: …We have to train the operators to work on these re-engineered machines and I myself have worked on the machines eight hours to familiarize myself. <http://apparelresources. the Chairman stated that though the South is better known for it.com/defaultnextone. The HR Manager. 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. relative strength of the Indian rupee to the dollar opposed to weaker Asian currencies. and government bureaucratic hurdles regarding labor law.with these measures. Lalit: Machines change according to the product requirement…We have to be flexible because the buyer doesn't buy one thing all the time. and then ship the product from that country.” Apparel Resources. low relative levels of productivity. We do not need masters. The Director mentioned that seasonality is an issue. If workers stay for overtime. Page 35 . and Sanjay Gulati. If Modelama has had as much success in outerwear as they have stated in press releases.

XI. Modelama was very open in disclosing information about the factory unit. who was not available on the date of the interview. This is likely the factory to which buyers are taken. then was directed to a Senior Merchandising agent. The unit visited is the site of their corporate offices and was built two years ago with the help of industrial engineers. The only question that management would not answer was regarding a detailed financial breakdown of the company. Contact was made by calling the general inquiry number on the website. Page 36 . as it is the most modern. when they began to develop the infrastructure to manufacture outerwear. 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]. The high level of attention paid to infrastructure and personnel management is probably not typical of their older factories. but directed the researcher to her colleague. Modelama was the first company to be interviewed by the researcher.

Giri. CONTACT INFORMATION Contact People J. General Manager of Marketing Mobile: 98-18212505 E-mail: ashok. Palmprint Textile. Sector 28.D.com Head Office Bangalore Belandur Gate. Two or three other units are in Delhi (Noida) and a fabric processing unit.2.co.24 23 Unit visited by the researcher. The remaining woven and all knit production sites are located in Bangalore.co. Senior Management Ashok Raman. the owner of the company.com Production Units: Plot No.raman@shahi.shahiindia.khanna@shahi. Harish Ahuja. Page 37 . SHAHI EXPORT HOUSE PVT. Tel: +91-129-2273970/80 Fax: +91-129-2273485/91 E-Mail: seh@vsnl. Sarjapur Main Road Bangalore 560034. business articles. the company website. Karnataka Tel: +91-80-28439214/15 Fax: +91-80-28439356 E-mail: shahiblr@vsnl.in Head Office Faridabad23 Industrial Plot 1.in Ajay Khanna. II. Sector 28 Faridabad 121008. I. and G. Haryana. The information in the following company report was primarily obtained from interviews with the General and Divisional Managers of Marketing. is in Ghaziabad. Shahi Export House has a total of eighteen manufacturing units. Faridabad. is former vice chairman of the Apparel Exports Promotion Council of India. LTD.com Website: www. Manicandan’s CEC report. BRIEF HISTORY Incorporated in 1974 in Delhi. 1. Divisional Manager of Marketing Mobile: 93-13369269 E-mail: ajay.

lawson. Arizona Jeans Co. sportswear.26 24 Fashion Newsletter. Natural Issue. golfwear. Solutions (New York). mock neck. Von Daniels. nor does it currently have plans to do so.III. who is now the Managing Director. H & M. textured knits. Page 38 . (Pacific Merchants). polyester viscose. tanks tops. Jeans Dynam. and circular woolen knits. 100% polyester polar fleece. The knitwear product range includes 3 button polo shirts. GAP. indigo dyed units. Bleu.nsf/pub/Fashion_News_05_02_en2_Webb. Abercrombie & Fitch. flat back rib. full jacquards. t-shirts. Place Jeans.. Liz Claiborne. It is primarily information taken from the website with a few new passages regarding Human Resources and corporate responsibility. Up until a year ago. ladies' & girls' blouses .com/www/resource.25 Wal-Mart. EOU Information No information was obtained regarding registration and EOU capabilities. Seacorn. sleepwear. John’s Bay. jackets. acrylic wool. men's and ladies' bottoms. 2005. pique. loungewear. jacquard. polyester cotton. St. Enzo Lorenzo. heavy jersey in cotton. American Eagle. Faded Glory. Product Mix Areas of specialization are mostly ladies woven tops and men’s tops. yarn dyed single jersey. The Children’s Place. which was printed in 2005 by the Bangalore office. but it is a small fraction of turnover ($5-10 million). tailored collar polo shirts. A & F. Ralph Lauren. 2. lingerie. interlock. spun filament. American Khakis. No Boundaries. TKS Basics. Shahi does not manufacture for the domestic market. <www. cotton fleece. Van Heusen. Clients Bobbie Brooks (Woman). Cento Mila. the sole proprietor was Harish Ahuja. 25 From company brochure. though any exporter of this size must have at least one registered EOU for importing capabilities. Carolina Colours. Euro Open. 26 Remaining client names were obtained from interview with Divisional Manager of Marketing. Target Stores. turtlenecks. engineering stripers.pdf>. Sag Harbor (Sport). Family-owned. BASIC PROFILE Legal composition of the Company Private Limited Company.The fabrics range includes solids. No. At Last and Co.pdf/$FILE/Fashion _News_05_02_en2_Webb. Exports/Imports 100% exports. Old Navy. double mercerized. Shahi has expanded to home furnishings in the past year.. Carolina Blues. rib. Shahi’s product line covers casual and formal men's and boys'. Akademiks. Cross-Bow. Cherokee. ladies' and girls' dresses. JC Penny’s. Hollister Co.

07 $0. 32 Embellishment costs such as embroidery depends on style.65-$1.8-23.5 USD.pdf>. though generally it is four to seven times the unit price of the garment.8 million 7-14 million 14 million % of Sales 50% 12-17% 10-20% 1% 2% 2% 5-10% 10% target Per Unit Price31 $3.pdf/$FILE/Fashion_News_05_02_en2_Webb.65 $0.033-$0.8 million 2. so figures cannot be considered accurate. 30 These figures were estimated by the Divisional Manager of Marketing in the space of 5-10 minutes. 28 Fashion Newsletter. accessed July 2006. 31 Based on the company’s average unit price of $6.nsf/pub/Fashion_News_05_02_en2_ Webb.com/www/resource.8 million 14-28 million 1.13 $0. Did not obtain average retail markup information. 29 Estimated by General Manager of Marketing.4 million 2. Page 39 . 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. 2.78-$1.30 $0.65 Material Cost Labor Trims and Packing Depreciation Machinery upkeep Overhead Embellishments32 Profit 27 Estimated by General Manager of Marketing. Turnover estimates varied by tens of millions of dollars between the GM and the Divisional Manager of Marketing.13 $0. No.25 $0. Percent of sales is based on an average estimate given by the Divisional Manager of Marketing. 2005 <www.11 $0.lawson.Awards Wal-Mart International Supplier of the Year 2000 (can’t read others) IV. It can be none or most of the unit price. so they can only be thought of as a rough approximation.

V. BRAND INFORMATION
Shahi's Export Market 1% 15% Europe U.S.A.

84%

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.
33

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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,

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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
35

~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.

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000 cuts per day. pocket machines and automatic pocket welters. single needle top and bottom variable feed machines. incentives depends on how many pieces are finished. It is also equipped with single needle lock stitch programmable machines with UBT.+Supervisors and dpt/line-in-charge 40 Sampling (think incl in production) 50-150 Remaining marketing. There are two departments for sampling.500 in all of Shahi’s production sites 1.000 Mostly female Mixed Machinery 6.800 in all of Shahi’s Delhi (Faridabad and Noida) units 750 in production site visited The CAM based cutting department can make 75. In finishing. grading. This department is responsible for timemotion studies and an operation breakdown. who are not involved in these meetings. and there are quality bonuses if clothes do not need repairs. The Divisional Manager of Marketing states that they always had incentive schemes. The incentive scheme only applies to skilled and semi-skilled workers. collar/cuff turning and blocking machines. For example. They conduct production planning meetings jointly with managers and supervisors by department. very little is done by hand. Juki. while the 60 multihead computerized embroidery machines have a capacity of 800 million stitches per day. in which workers get bonuses for exceeding their targets. but they Page 43 . Ngai Shing. line supervisors convey target setting to them. The production unit boasts machines from Brother. Sampling This is a fairly large department in the production site visited. Washing The washing facility puts out over a ton of garments per day through specialized wash treatments such as softener wash. Embroidery Most is done by computer. double needle-needle feed split bar machines. stone wash. feed-off-the-arm machines. which can be 10-25% of monthly salaries depending on how difficult the style is. They also conduct joint department meetings. Durkopp Adler. enzyme wash . accounts. shipping staff Total number of workers: 3. and it was stated that each unit has a similar department. This unit has an incentive scheme for productivity. merchandising. in sewing. Its implementation and form depends on the department. These meetings set targets for the shop floor workers. Productivity Schemes The unit visited has an industrial engineering department with eight staff. marker making and global electronic exchange of pattern data. desize soft wash and golf ball wash. Hashima and Kannegiesser. The latest CAD software enables quick processing of pattern creation. one for production and another room with rows of computers in which employees work on digitized patterns and samples. every hour the target is marked. fusing press.

Page 44 . lower labor turnover. Manicandan’s CEC report says a supervisor with eight years experience makes Rs.00040 Minimum wage is posted as follows: Category Wage (Rs. 40 G. there was still a strong female presence in the factory. 4200. an increase in attendance./month) Unskilled helper 2200 Semi-skilled operator 3600 Skilled operator 6. and a decrease of waste in the cutting department. 37 The researcher toured the factory around 5 pm.000 Supervisors/Mid Mgmt 10. the workers at this unit do not get a tea break.38 Wages As Estimated by Divisional Manager of Marketing39: Category Average Wage (Rs. Manicandan’s CEC report. This early shift seemed to be entirely female. and another fifteen-minute tea break between lunch and the end of their shift. VII. these benefits are additional. Benefits of the incentive scheme include a 10% increase in productivity in past two years in the sewing department. when the first shift of workers were getting off. Workers use their ID card to clock in and out of the factory./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. leaving male sewing operators and some female ones. The workers get a fifteen-minute tea break between the start of work and their half-hour lunch break.have recently gone through major changes in their implementation. 38 According to G. However. 39 Stated that these numbers do not include ESI and PF. WORKING CONDITIONS36 to From Work timings (Shift 1) 8:30 am 5:00 pm37 Shift 2 9:00 am 5:30 pm Shift 3 9:30 am 6:00 pm The office opens at 9:30 and closes at 6:00.

Labor Turnover Estimated at 7-10% per month. Benefits Stated that workers do receive ESI. VIII. after which the HR manager will put them into a set wage scale depending on their ability. Overtime Stated that there is not a lot of overtime because they plan production with target setting.” ~Shahi’s website Shahi’s updated brochure includes lengthy passages stating their dedication to innovative Human Resources approaches. they try to have the male workers pick up the extra work instead of the female workers. People who are motivated to excel and trained in different disciplines of garment 41 From interview with the Divisional Manager of Marketing. Workers who receive less than Rs. PF. and a three-month maternity leave.Wage Setting Procedure Managers interview workers and then take a trial of their work for one day. if overtime is needed. Shahi’s overtime policies take into account gender. Page 45 . Most sewing operators have been at Shahi for around two years. which the researcher observed. and negligible overtime for the other departments. Wages are fixed and there is no negotiation. they are only evaluated to see what category of skill they fall in. Workers are then on a three to six month productivity probation. The Shahi workforce consists of committed and highly skilled people. Estimated two hours per week per worker in the sewing and finishing departments. 7500 are provided with ESI benefits. HUMAN RESOURCE POLICIES41 “Human intelligence is the greatest asset which we possess. Workers also have access to an on-site crèche for their children during the workday.

Shahi has ensured all systems are in place to make sure that everybody works in an extremely salubrious environment. There is also an orientation program for upper level staff. Employ more women and uses HR strategies to disempower workers and remove blatant rallying points for workers. Union Didn’t ask directly. so the labor is here. and union organizers were either dismissed or isolated from other employees. not the outskirts of cities. Page 46 . Training depends on the job description of the worker. but definitely not. it is all direct employment. They do not recruit for shop floor positions beyond posting signs on their gates and through wordof-mouth. 42 The brochure and website both state that human resources are developed using the training procedures of Kurt Salmon Associates. Shahi has invested in a dedicated personnel management division to take care of its labor. so they do not need to train them. Dismissal Procedure No information was obtained regarding a formalized procedure. Manicandan’s CEC report. They are able to have female workers because they are in heart of Faridabad. Recruitment Policy Shahi states that they do not use a labor contractor. Worker Training Shahi trains the unskilled operators for a period of a week. making Shahi one of the most sought after organizations to work for in the garments arena. workers revealed that there had been unionizing attempts that were suppressed by the management. Grievance Policy Procedure Presumably. In the Shahi factories in Bangalore. Worker Committees Stated that there is a worker forum that managers also attend. In G. Labor problems get a kind ear and are followed up on a priority basis. but it is not necessary to do so here. Some are skilled. Particularly so as clothing corporations the world over are labor intensive and it’s imperative that they are well looked after. the worker forum is a “safe space” in which workers can address any issues they have with managers.manufacturing. they provide transportation to overcome those issues. 42 From company brochure and website.

Shahi Export House adheres to International Labor Legislation. training facilities for employees. There are many signs posted on the factory floor with stating things like “Discipline: Team work is an easier path to excellence. promote. More of these were in both Hindi and English than I’ve seen at other factories.” “Anything worth doing is worth doing well” and one about the importance of personal hygiene. Codes of conduct posted in factory include Carafour. Strict compliance with anti-child labor law is ensured. educational facilities for children. and American Eagle.” Shahi’s updated brochure includes add-ons regarding treatment of their labor force. From interview with Divisional Manager of Marketing and joint worker-manager magazine.44 Safety measures are given utmost importance. Fire fighters are on high alert at all times and every floor is equipped with the right fire fighting equipment. They have activities for the workers such as an annual cultural week with games and contacts. Evaucation boards are put up on all floors along with photographs of fire fighting personnel. and lectures. Dayton Hudson Corporation..45 Medical Care There are male and female onsite doctors and nurses in case of industrial accidents.Corporate Responsibility/ Codes of Conduct The company has a biweekly English magazine that publishes news and articles by workers. American Pacific. 44 43 Page 47 . The company organizes fire drills to keep employees alert in case of emergencies. Liz Claiborne. Target Stores. Wal-Mart. And some of the remarkable provisions for employees include: eligibility of workers for health insurance. attendance and productivity. and a first aid room in the facility. A full-fledged Dispensary and Ambulance is provided with a doctor always on standby. securing of employees’ earnings through e-com (EDI) and ATM cards. Best employee awards are given for overall discipline. and support their families in the best way possible. in fact nearly all had a Hindi translation. The Limited. and nutrition related topics. Nautica. Awareness programs are conducted for employees on health. personality development through work shops. hygiene. seminars. Charming Shoppes Inc. It aims at providing a conducive environment for employees to protect. 45 From company brochure and website.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.

4 million pieces during the peak season and 2. Supposedly all visitors have to have proof of identity.46 Shahi recently opened up a warehouse in New Jersey. The picture of the minimum wage was taken by the manager. Shahi is currently constructing a production unit in Bangalore that would have a capacity of manufacturing 200. Shahi is notable in that they have a majority female workforce in a place like Delhi. though the researcher was not permitted to take pictures during the tour.1 million PCs during the off-peak season. However. and there was some controversy a few years back regarding a male manager and a female worker. The security guards inside were asleep. However Shahi is trying to diversify their product range so that it becomes even less of an issue. tampering. now they are getting competition from small exporters. PERSONAL EXPERIENCE Obtained contact information from NIFT.S.000 pieces per month. Manicandan’s CEC report. U. IX. Shahi has to decline some orders during peak season (OctoberMay). according to the Customers Trade Partnership Against Terrorism. Mentioned that Southeast Asia has the same problem of seasonality. Shahi does not have a sexual harassment committee. or CTPAT model. Customs Security requirements regarding issues like preventing trespassing.Security System New security measures have been implemented since the quota phase-out. It is not a huge issue. who reported her case to the police. INDUSTRY COMMENTS Trying to build up capacity to produce outerwear by next year to reduce seasonality issues. Website contact numbers are out-of-date. as they produce about 2. companies have required them to uphold a more stringent counter-terrorism model of security in compliance with U. (Stated that retained incentive schemes and everything off-season. Suppliers have changed post-quota. Also argued for more labor flexibility.47 XI. according to G. as he would not permit the researcher to do so. however said they currently retain workers during the off-season because it becomes a problem to rehire workers. since it takes too much time to get clearance at the ports. and then not working to full capacity during the off-season. BUSINESS BOTTLENECKS Seasonality is an issue. traceability. 46 47 From interview with Divisional Manager of Marketing.) X. Page 48 . The Marketing Managers did not mention any new initiatives taken to deal with the issue. where the garment industry is over 90% male. Stated that they need better infrastructure regarding port system. before they didn’t have the quota holdings to compete.S. From interview with Professor Rajesh Bheda of NIFT. but I did not have to show it. only different season. now they do. The production unit was enormous.

000 ($11. 500. Unit visited by the researcher. 26817910 Website: Jyoti Apparels does not have a website. The company has increased sales an estimated 30-40% in the past year. south of Gurgaon). L. 26818977. 51 Information on company background from Managing Director.K. I.000 ($444 USD50). BRIEF HISTORY Company established in 1976 by Mr.3. due to the quota phase-out. 20. and two are in Okhla Industrial Area (New Delhi). H. 41/42 Phase IV Udyog Vihar. Phase-I New Delhi. which roughly doubled each year until 1984. who had contacts in the garment and textile industry. K. HR strategies and production from Assistant Production Manager. 110020 (India) Tel: +91-11-26816917. 50 Conversions are based on today’s exchange rate (Rs.L. Magu and deceased brother. 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. and an interview with an Assistant Production manager. 45~$1) and are not adjusted for inflation. The company’s turnover was Rs.111 USD) in the first year. Managing Director Senior Vice-Chairman of the AEPC (Apparel Export Promotion Council) Mobile: 9810029999 E-mail: hklmagu@jyotiapparels. II. but by networking through his brother. he started business in 1977 with an investment of Rs. He had no experience. and remaining information is from observations unless otherwise noted. E-mail: jyotiapparels@vsnl. Magu. Gurgaon49 The researcher was not able to obtain the addresses of all nine factory sites. Page 49 . of which five are in Gurgaon. a company profile and Standard Operating Procedures given by the Managing Director. shop floor observations by the researcher. 26810804 (D) Fax: +91-11-26819684. 51 48 49 Unit visited by the researcher.com Manish Mall Assistant Production Manager Mobile: 9899096999 Registered Office48 D-42 Okhla Industrial Area. two are in Manesar (southwest of Delhi. CONTACT INFORMATION Contact People H.com Production Units Magsons Exports.

skirts. owners are Mr. (Target Stores. blouses. Zara-Indtex Awards The researcher was unable to obtain any information on vendor awards. Exports/Imports 100% exports. Gus. Miss Erica UK: Marks & Spencer.. V F Jeanswear (Wrangler). L. J D Williams. Specialize in high fashion made of exclusive prints. as it mentions “Quota Holdings: We have sufficient quotas in all categories of USA.III. Jyoti does not manufacture for the domestic market. Debenhams. Europe and Canada. British Home Stores. and ethnic handiwork accents. Littlewood. . Page 50 . Carol Anderson.” it was pre-quota phase-out January 2005).D. Prenatal. Tesco France: C. Otto Australia and New Zealand: Just Jeans. Cabella’s. Evans. House of Frasers. Charming Shoppes of America (CSI). 52 According to profile (which is out-of-date. Magu and Mr. Brumel. viscose yarn and denim fabrics. Onyx Denmark: Kompagniet Switzerland: Manor. gents. Zeeman Italy: La Rinascente. H. Roamans. BASIC PROFILE Legal composition of the Company Partnership firm. K. with embroidery and beadwork. maybe 2004. Kishore Magu EOU Information No information was obtained regarding a registered EOU. The Farmers Trading Co. International. Reitman Israel: Fenomen Malaysia: Metro Jaya Spain: Mango. Lane Bryant. India Imports. Siplec (E Leclerc). Primark. Jyoti’s strengths (and the North in general) are in high fashion garments with embroidery. Clients52 USA: Kellwood (Sagharbor). Brylane. Promod Germany: Neckerman. Adams. Oxford Industries Inc. Jyoti manufactures some winter clothing (about 20% of production volume). Enjoy. Donn Kenny. sequins. Karstadt Netherlands: Wehkamp. and children’s (roughly 15-20%) readymade tops. Freeman’s. K. Zellers. and other garments. Phool Fashion Ltd. Product Mix Areas of specialization include ladies’ (roughy 80% of production volume). Canada: Hudson Bay Co. but the majority is summer clothing. Mexx. Blair Corporation). solid dye. Woolrich.. Manufactures woven (80%) and knitted (20%) garments using mostly yarn dyes. T. Wal*Mart.

50 1.5% Subcontracting Cost 1. 54 These figures were estimated by the Managing Director in the space of 5-10 minutes.6-2.6 million 10 $0.5% Other Manufacturing 1.6 million 10 $0.3 million 60 $3 10-15% Labor 1.6-2.50 1. Latin America. 700. 55 Based on the company’s average unit price of $5 USD. 57 Since Jyoti’s unit prices are mostly FOB. Malaysia) Europe 53 Financials. Page 51 .50 1. 56 Average retail markup is four ($20) to six ($30) times the unit price of the garment. and cannot be used as an indicator of profit.57 V. 10% 50% 40% Others (Canada.A.6 million 10 $0. excluding the $12 million USD figure from the company profile. FINANCIALS Turnover 12 million USD (either 2003 or 2004) Current year 18 million USD Other Financials Current year sales Rs. which accounts for the inconsistencies. this figure includes the amount the MNC spends on shipping.000.6-2.5% Overhead and profit 1.6 million 10 $0. BRAND INFORMATION Jyoti's Export Market % of Sales U. were estimated by the Managing Director on two different occasions. retain 75-84% of the sale of a retail item.000 (15. costs.5% MNC’s that source from Jyoti. duty. etc.IV. Japan. so they can only be thought of as a rough approximation. on average.50 1.6-2.S.555 USD)53 Breakdown of Sales Revenue54 Est USD 2006 Per % Retail Garment55 Price56 Material Cost 9.

Page 52 .000 square meters. Subcontracting Jyoti does not subcontract the production process. the company has about 20. It is notable that Jyoti subcontracts to a Shahi processing facility. 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.58 Production System 58 See Standard Operating Procedures for detailed subcontracting information. which is not a production facility). he stated that unit prices have decreased about 10%. Overall. Prices and other sourcing details are negotiated through the buying agencies.000 square meters.000 square meters. INFRASTRUCTURE Company has nine production facilities. and Gloria Vanderbilt through buying agencies. VI. and two are 600 square meters. but they do subcontract their fabric sourcing and processing. Subcontracting has not changed since quota phase-out.000 square feet of land spread over ten different areas (including the registered office. primarily through the Triburg buying agency. Two of the factories are 2. four are 1.Major Clients Brand India Imports Lane Bryant Marks & Spencer Mode Liz Claiborne American Eagle Tesco Adams Littlewood Sainsbury Okaidi Orchestra Origin UK USA Holland USA USA UK UK UK UK France France Length of Relationship 29 years 10 years 2 years 1 year 1 year 15 years 15 years 10 years 4 years 3 years 2 years Total: % of Turnover 10 10 10 10 10 5 5 5 5 }5 75 Buying Agency or Direct The company does business with MNCs such as Liz Claiborne. one is 8. American Eagle. Did not mention any direct relationships. but later stated that overall they have remained stable.

Sometimes Jyoti has people from UK and France do designs for them. over locks. At production site visited. lock stitch single needle and double needle. Design/Sampling Small design department. fusing machines. 59 60 See SOPs for detailed quality control schemes. Page 53 .000-90. Quality Control Jyoti Apparels has a quality control assurance team with both an in-house auditing scheme and third-party inspection. 8000 woven pieces per day and 1200 knit pieces per day. computer embroidery.000 and 300.59 Approximate number of workers (in all facilities) Position ~Number of workers Tailors60 1200 Fabric Cutters 125 Thread-cutters (use embroidery machines) 200 Pressers 75 Fabric and Accessories Storage Workers 40 Helpers 50 Accounts personnel 20 Miscellaneous 100 Total number of workers in all facilities: 1400-1800 Machinery (at all sites) Jyoti has 1000 Juki stitching machines. piccoting. cross stitch/lock stitch button/ button hole/ snaps. Production Capacity According to profile. elastic insertion. Managing Director and Assistant Production manager stated they were all skilled. but primarily just take paper designs from buyers and converts it to clothing. between 240. According to company profile. perk-chloro plants. dry cleaning. shell stitch (Merrow). washing machines and set of 84 stem boiler irons. usually 80.000 pieces per month. belt attaching. and brown machine-embroidered skirts for American Eagle. The researcher observed production of ladies’ white blouses for Emma James (Liz Claiborne).000 pieces per month.Uses an assembly line system. feed of the arm. which varies according to the product.

and embroidery departments. Page 54 . 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.

observations. It did not seem as modern a unit as other top tier factories. Document given to Buyer About Shop Floor Management (was displayed on shop floor. There were two workers on the machines. Fabric and Accessories Store.” which is the buying agency that many firms deal with. 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. Checking/ Finishing/ Pressing (40-50 workers) The finishing area had lines of workers pressing and folding clothes. Embroidery (observed 5-7 workers) Workers have to take off shoes before coming in because of “dust. The department has one finishing supervisor and one assistant finishing supervisor. Packing (10-15 workers) Did not observe department during visit.. This was the only department that had any female workers.” so they are barefoot when operating the computer embroidery machine. Sampling (15-25 workers) The fabric store had a sign reading “Triburg. 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. Page 55 .(Right) A view of the basement and ground floor. with one cutting master. one cutting assistant. Production (~180-190 Workers)61 on Second Floor Machinery includes about 200 Juki stitching machines. three thread-cutters. is data for production site visited. and the remaining workers helpers. two supervisors in an office in the corner. Washing (10-15 workers) Washing was located on the topmost floor of the building. Some of the fans were broken or not on. Machinery includes one bandknife cutting machine and two straight knife machines. There were no fans in this room. The workers in this department were all male. etc.

security tag Four operators Step 2—Initial Pressing One supervisor Step 3—P. and gave a copy of the minimum wage scheme for Haryana. Labor Turnover Estimated worker turnover per month at 20%. First the Assistant Production Manager stated that they do not perform time studies. The production unit visited usually produces 80. finishing supervisor. extra button. 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. and cutting supervisor who set the production lines and targets based on manual time-studies.Step 1—Care label. according to the Assistant Production Manager. which is not subject to negotiation. workers are offered a wage based on this evaluation. Then he stated that they conduct production planning meetings with the factory manager. rather they calculate targets manually by hourly production rate. it is all left to selfdiscipline. Page 56 .000 pieces per month. there is an incentive scheme that depends on monthly shippings. then the factory will give incentives. merchant/buyer (for style). The tailors and some finishing employees receive wages on a daily basis.O. production manager. Benefits Production manager indicated that workers receive ESI and PF. while the rest of the employees receive a monthly salary. Wise Tag check with care. supervisors conduct time studies evaluating the skill level and productivity of a new hire. VII. After one day period. Wage Setting Procedure For shop floor workers. WORKING CONDITIONS From 9:15 am 11:00 am 1:00 pm 4:00 pm to 6:00 pm 11:15 am 1:30 pm 4:15 pm Work timings Tea Break Lunch break Tea Break Wages HR Manager stated that employees receive the minimum wage. However. If workers exceed this by 1 lakh.000-90.

Worker Training Sometimes Jyoti trains workers during a lean period if there is time.VIII. L. but these tend to be more middle management people. Page 57 . Management Structure Mr. Kishore Magu Partner Other Upper Management? Factory Manager Management Staff/Accounts Personnel Production Manager Manish Mall Assistant Production Manager Line Supervisors Assistant Supervisor (Less skill/experience) Skilled Tailors/Machine Operators Helpers (Unskilled) Boxes with straight-line borders are positions common throughout all production sites. and the extent of their recruitment is posting signs on their front gates. though the Director mentioned that workers learn on the job. Magu Partner Founder/Chairman Mr. The Managing Director states that they recruit people from Apparel Training and Design Centers. HUMAN RESOURCE POLICIES There are no common policies across the plants. Usually 20-25 tailors take 10-15 days to train. The Assistant Production Manager stated that if workers are not productive. H. but managers observe productivity and hire skilled workers. because otherwise they become permanent and you have to pay them more. Dismissal Procedure The Managing Director stated that they keep workers for 240 days and then change their workforce. Recruitment Policy Jyoti states that they do not use labor contractors. they are given a one month notice so they can find another job and they receive a letter of termination. while dotted-line boxed positions are factory-specific and subject to variance. K. Workers do not need experience per se.

companies have required them to uphold a more stringent counter-terrorism model of security in compliance with U. and they have monthly meetings. Second time took my name. No common policies (with HR. lack of good fabric processing machinery. high rate of interest. higher material costs (indigenous. etc. BUSINESS BOTTLENECKS63 Main problems facing the industry are poor infrastructure (need better highways. He stated that old employees with a union do not work as hard.S. the Assistant Production Manager stated that they do have committees. 62 Based on interview with MD and Asst Production Manager. they cannot transfer goods during “peak hours. The production site visited did not have a union. labor laws (especially the lack of hire and fire exit policy). he moved production to another site (now there is just the accounts staff and some sampling/design). He said they have the joint employee-worker committees required by law since there is no union. Customs Security requirements regarding issues like preventing trespassing. U. For example. such as environmental. he did not. but talked about them vaguely and though he stated that he could give me committee minutes.) across plants except for buyers code of conduct. but no visitor’s pass. tampering. they should run cargo through machines instead. etc. Medical Care There are doctors nearby the factories and first-aid kits in the production sites. or CTPAT model. duties. Believes that there should be special customs lines at airports so that everything is not searched. IX. A lot of money is invested into customs. ports. However. etc). but did not give a visitor’s pass. Worker Committees The Managing Director stated that they do not have any worker committees.. and high transaction charges. traceability. Does not have its own employee code of conduct. The first time security did not take my name in the confusion of finding a manager. There is a path behind the building to get to the main office over ripped metal sheets over grates. no imports because would have to pay landed costs). etc. production. which makes it difficult to meet deadlines.S. but the Managing Director stated that when the old employees formed a union. anti-harassment. according to the Customers Trade Partnership Against Terrorism.Union The corporate office used to be a production site.62 Security System New security measures have been implemented since the quota phase-out. Page 58 . though neither of them knew where the medical facilities were located.” trucks are only allowed to transport good between 11 and 4. Grievance Policy Procedure/Corporate Responsibility/ Codes of Conduct No information was obtained regarding a formalized grievance policy procedure. 63 Based on interview with Managing Director.

PERSONAL EXPERIENCE When observed work at the production site. and one of them glanced at a time-study once. 64 Based on interview with the Managing Director. INDUSTRY COMMENTS64 Jyoti used to deal with Wal-Mart and Target. The Assistant Production Manager was almost never at the factory when the researcher came to the production site. production manager. it was difficult to deal in huge quantities because of the possibility of mistakes in such a large order. making access to plants easier. Post-quota phase-out resulted in a boom for Indian business. which is the capacity in which the researcher initially came to interview him. He was very open in disclosing information. The Managing Director is the Senior Vice-Chairman of the AEPC. or even leave their air-conditioned offices. labor laws would be relaxed. and had everyone borrowing money from the bank and investing in huge factories. like American Eagle. China is their main competitor. Jyoti was an extremely open company in many respects. so could not take orders from them anymore.” in which infrastructure would be built up by the government. Companies are very upset with the government’s “bureaucratic hurdles.) or some supervisors do anything.X. etc. who also permitted the researcher to take photos. before couldn’t have more because of quotas. Also. XI. but unit prices got too low. They played solitaire. did not see upper management (factory manager. Page 59 .” Jyoti supports “special garment zones. and did nothing the rest of the time. as were much of the staff at the production site. the overseas vendors couldn’t sell their inventory. Phase out of quota system has brought in new buyers. because of the late summer. etc. as they still have the edge on labor productivity and good infrastructure. This year. They’ve had to become very quality-conscious and price-conscious.

Gurgaon 8. Udyog Vihar. 225. 151. Gurgaon 7. and G. and Bangalore. in 1977. and ironmongery. BRIEF HISTORY68 Vijay Uppal. an interview with a General Manager of Operations. Phase-I Gurgaon The company profiled has over ten manufacturing units. Gurgaon67 6. Manicandan’s CEC report. Udyog Vihar. 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. Udyog Vihar. the current Chairman. including: 1. II. Phase I. Udyog Vihar. Udyog Vihar. Page 60 . 25172437. Gurgaon. G INTERNATIONAL OF R GROUP OF COMPANIES Indian Government Recognized Export House The information in the following company report was primarily obtained from the company website. Phase III. black iron. 25172438 Fax: +91-11-25451549. Udyog Vihar. I. Udyog Vihar. 69 From an interview with the General Manager of Operations. CONTACT INFORMATION65 Registered Office: 2/2. General Manager of Operations 236 Udyog Vihar Phase-I.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. 67 Unit visited by the researcher. New Delhi . Gurgaon 4. with one woven garments manufacturing unit in Delhi. Phase I. Gurgaon. aluminum hardware. Gurgaon 3. including: 1. 25454895 Contact person: Padam Vaish.4. Phase I.110015 (India) Tel: +91-11-25431408. 239. 208. B-108. Noida. 66 According to company website. 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. Phase III. 506. 236. Ware Housing Scheme Kriti Nagar. 68 According to the company website. Phase IV. Phase III. Phase I. 479. incorporated R and Co. Gurgaon 2. Udyog Vihar. Mayapuri Industrial Area. G International was established in 1983 in Delhi and 1996 in Gurgaon. Phase-I. Udyog Vihar. 192. New Delhi 2. Gurgaon 5. 133.

pants and shorts. The company has set up its own offices in Ludhiana and Tirupur in order to better source fabric. Lane Bryant. BCBG. Cortefiel. antiques. Awards 70 According to the company website. knit. ladies tops. skirts. Polo Ralph Lauren. pants. R Global was incorporated in 2002 at Bangalore. vests. waxy distressed/ oily nappaloans. Ann Taylor. Federated Stores. The R group does not manufacture for the domestic market. while Vijay Uppal and Gaurav Uppal are Joint Managing Directors. Sigrid Olsen. cargo pants and shorts. skirts etc. semi-nubuck.. The R Group has recently established a fully integrated production line in Noida. Tommy Hilfiger. Target. Including the original R and Co. Women’s Secret.Y. Monsoon. Mervyn’s. BASIC PROFILE70 Legal composition of the Company Virender Uppal is the Managing Director. Wal-Mart. Timberland. Charming Shoppe. women and children including shirts. Exports/Imports 100% exports.N. Land’s End. The R Group began producing knitwear when Gaurav Uppal joined the company management. Inc. May Stores. Betty Barclay. III. Debhnams. The tannery has modern finishing technology for leather finishes of Sheep.. Clients The R Group sources to over fifteen countries. Liz Claiborne. which will specialize in ready-made specialty shirts. The company has already started manufacturing leather accessories and is further expanding with a bigger factory planned in Gurgaon. Goat and Cow leather as well as nubuck. Spigel. the group includes eight companies. D.. to brands such as GAP. semi anilines. Calvin Klein. Etams Miss Sixty. anilines. It has initiated a backward integration project by starting its own tannery in Hyderabad. and leather high fashion garments for men. Product Mix Areas of specialization include ready-made woven. women and children such as jackets. Page 61 . trousers. Dillard’s Sears. and Marks & Spencer. Next.K. The group launched a leather manufacturing unit in 1989 specializing in high fashion leatherwear under the management of Sunil Kapur.1992. J. Mexx.Crew. It specializes in (primarily) outerwear for men.

Page 62 .A.A. U.A.IV. BRAND INFORMATION72 Export Market of the R Gro 10% U. V.S.A.A.A. U.S. 90% Major Clients Brand GAP Macy’s Wal-Mart Dillards Liz Claiborne Federated Stores 71 72 UK and Japan Origin U.S. U. FINANCIALS Turnover The R group has an expected annual turnover of US $ 85 million for the year 2005.S. U.S.S. Export Performance Chart71 Other Financials No other financial information was obtained.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. From an interview with the General Manager of Operations. U.S.

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). the company’s knitwear divison. and Bangalore. 76 From an interview with the General Manager of Operations. though they occasionally take direct orders. Production Capacity The R Group’s woven division has an in-house annual production capacity of 10 million pieces. 73 74 Including Wal-Mart. Noida. The R Group’s leather manufacturing unit has an annual production capacity of 500. INFRASTRUCTURE74 The R Group has over twenty-two integrated manufacturing units in Delhi. there has been a 15-20% increase in orders. see company website. They set up a shelter (“shack”) for local tailors to do the hand embroidery. Smaller companies are more likely to be direct orders. shows a sample range. though there are fewer orders in the fall and winter. VI. 75 From an interview with the General Manager of Operations. For a more detailed quality control process. and the buyer selects and negotiates the contract. R Global.Buying Agency or Direct Contracts are mostly negotiated through buying agencies. Subcontracting G International subcontracts their hand embroidery.5 APQ” quality check standard across the board. Quality Control The General Manager of Operations stated they use a “2. G International takes indicative orders from the buyer. or sometimes they embroider in their homes. 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. though not to an established company or to direct employees. Page 63 . G International does not use a recruiting agency or a labor contractor. Taken from the company website. However. since they often don’t have established offices. has an annual production capacity of 2 million knitted garments.75 Production System The R Group uses an assembly line system.000 pieces. Gurgaon. Wal-Mart usually orders the largest volume. unless otherwise indicated.

Preliminary worker interviews revealed that this company was considered one of the worst factories to work for in Gurgaon.78 The R Group has a Research and Development department for the technical aspects of garment manufacturing. Plotters & Automated Cutting Machines) and fabric testing (fully equipped laboratory) and fusing.77 Machinery R Group’s production facilities use machinery at every point in the production process including designing (CAD).000. 79 From the company website. such as medical checkups. Departments No information on specific departments was obtained. time and motion studies. an estimate was approximately Rs. material flow). to the pre-production stage (layout and machine engineering. Productivity Schemes The company has production planning meetings in which targets are set and the workers do not participate. 700 per month extra. from the sampling stage (product and pattern engineering.000 workers. 5% female). operator training and skill analysis). G International has a total of 7.79 VII.Approximate number of workers in all facilities The R Group has a staff of over 10. cutting (Digitizers. scholarships for workers’ children. operation research). 77 After disclosing this information regarding the number of skilled workers. WORKING CONDITIONS80 Work timings Lunch break Tea Break From 9:00 am 1:00 pm 4:00 pm to 5:30 pm 1:30 pm 4:15 pm No other working condition information was obtained from the factory. with 1200 workers at this site (approximately 95% male. to the production stage (work aids. 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. They incorporate corporate social responsibility schemes into their productivity ideas. They have incentive schemes for things like 100% attendance. the General Manager refused to give any more specific numbers of workers. Page 64 . 80 From an interview with the General Manager of Operations. and worker welfare programs. 78 From an interview with the General Manager of Operations.

/month) 2600 2750 2344 1893 2341 Wage Setting For shop floor workers. Units visited in his report are Gurgaon Phase-1 192 UV. which is made on a different date than the regular salary. workers receive 12% PF and 2% ESI. 81 From G. Benefits According to the CEC report. Vijay Uppal Joint Managing Director Mr. Gaurav Uppal Joint Managing Director Mr. while dotted-line boxed positions are factory-specific and subject to variance. none of which were visited by this researcher. 15 per hour. Virender Uppal Managing Director Founder/Chairman Mr. Category (from pay slip) Tailor Sewing Operator Helper (8 months experience) Unskilled helper Helper (production) Wage (Rs. Manicandan’s CEC report. workers are then offered a monthly wage based on this evaluation. and 225 UV. though they do not always receive their PF once they leave the company. HR Manager stated that wages increase after a year. HUMAN RESOURCE POLICIES Management Structure Mr. Overtime payment is Rs. 151 UV. 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. After a three-day period. Page 65 . which is reportedly not always paid.Wages81 The wage amount excludes overtime payment. which is not subject to negotiation. supervisors conduct time studies evaluating the skill level and productivity of a new hire.

Today. BUSINESS BOTTLENECKS The General Manager stated that buyer requirements like double pay during overtime are holding the industry back. According to G. 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. then tests worker productivity for an hour and a half. Security System No information was obtained regarding a security system. worker committees. He stated that it should be looser. Other Human Resource Policies No information was obtained regarding a formalized dismissal procedure. 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. Page 66 . or a union. Recruitment Policy The facility posts signs on gates. However. buyer codes of conduct are hurting business because they are more strict. Medical Care No information was obtained regarding on-site medical care. IX. [the R Group] is seen as a highlighted-tech. we do more incentive programs and get better performance out of our existing workforce. eco-responsive corporate citizen that is Shaping a Better Tomorrow for everyone.Worker Training The facility sometimes trains workers if the operation is difficult. Workers receive a letter of contract. that they engage in the same kinds of recruitment. These problems are taken care of with labor contractors. no. Training usually takes one or two days and is done through the research and development department. No other information about the R & D department at this specific facility was given.” The company has a manual code of conduct that the General Manager stated is given to each employee. Researcher: Is labor flexibility or the lack of hire-and-fire policies an issue? General Manager of Operations: No. The General Manager stated that there are common policies across the plants. interviews applicants. customer friendly. So how do you overcome these issues? General Manager of Operations: Oh. like the labor norms in China. Manicandan’s CEC report. not anymore. Company G and the R Group does contract temporary laborers and subcontract to a labor contractor. grievance policy. well. More than local labor laws. Researcher: But you said you didn’t use labor contractors.

though several follow-up interviews were scheduled. The researcher was directed to the General Manager at a G International plant for an interview.X. The work culture in the south is “different—more productive and efficient. In general. and he was much more reserved and suspicious. and avoided any other types of follow-up including the suggestion of a phone interview. The General Manager stated that the AEPC was much more useful before the MFA phase-out. They are also setting up a leather accessory factory at Gurgaon. he initially would not let it leave the building. He implied it has limited use after the quota phase-out. as it would tell them new government policies and how to best utilize the system. especially in regards to quotas. but he answered questions in a more direct. It would be better to simply show up or not leave an option of calling before coming. Furthermore. PERSONAL EXPERIENCE The R Group was extremely difficult to both interview with and extract information. every one of them was canceled by the General Manager. INDUSTRY COMMENTS The R Group is in the process of setting up a backward integration project for their knits division. XI. Page 67 . He refused to schedule an interview solely with the HR Manager. Virender Uppal (the MD of the R Group) is a former Chairman of the AEPC. Although the researcher obtained a employee code of conduct handbook. brief way. When asked about the number of skilled workers. which makes productivity more difficult to increase. who was not at the factory when the researcher visited. he asked “why do you want to know that” and refused to give much more information past that. the Northern area of India is more embroidery and hand-work intensive and is multiproduct. General questions about labor laws or productivity issues usually prompt details and complaints.” The South is also usually single product. G International is working on converting to a single product system within the next two or three months (August 2006). Because they are trying to increase productivity.

Gurgaon 4. CONTACT INFORMATION Contact People: Deepak Seth. PEARL GLOBAL LTD. Udyog Vihar.com Registered Office: A-3. Udyog Vihar.com Jayant Sood. Page 68 . G. Gurgaon 2. Gurgaon II.com Production Units: 1. Udyog Vihar. and an interview with the Company Secretary. BRIEF HISTORY83 Pearl Global was incorporated in 1979. Chairman deepaks@pearlglobal. 138.5. The company structure of Pearl Global is extremely unique. In 1993 it became a public limited company. Chief Finance Officer Tel: 91-124-4308201 rishiv@pearlglobal. From an interview with the Chief Finance Officer. Company Secretary Tel: 95-124-4308164 E-mail: jayants@pearlglobal. Phase V. 870. Gurgaon 3. Haryana Tel : 91-124-4004086/87/88/89/90 Fax: 95-124-4004067/85 Website: www. Phase-V Gurgaon – 122 016. Phase I. online business publications and press releases. Phase V. 446. as it includes all parts of the garment industry under the “House of Pearl. Community Centre Naraina Industrial Area Phase-II New Delhi – 110 028 Tel : 011-51417680-82 Corporate Office82: 446 Udyog Vihar. Manicandan’s CEC report. and its first manufacturing facility was established in 1989. Phase I. the company website.pearlglobal. 222. The information in the following company report was obtained primarily from an interview with the Chief Finance Officer. business began in the 1980s. I.” The House of Pearl is focused 82 83 Unit visited by the researcher. Udyog Vihar.com Rishi Vig.

dresses. which together yield a combined turnover exceeding U. Marks and Spencer. Siplec. III. is establishing a U. nightwear dresses. Wal-Mart. BASIC PROFILE Legal composition of the Company Public limited company. Clients Abercrombie & Fitch.) for the year 1990 . 86 From an interview with Chief Finance Officer. marketing units in the U. as a Special Invitee. The House of Pearl includes designing and manufacturing units.C. stain sealed garments using goretex and acquatex. Besides having been elected to the Executive committee of the Apparel Export Promotion Council (A. $200 million.S. JC Pennys. skirts. NorPlanet Pearl Global has manufactured women’s.S. suits.S. He has been actively involved with the development of readymade garment industry in India. bottoms. From company website.) and a global network of business associates and customers. Esprit. Pearl Academy of Fashion Domestic.E. It also has businesses in Hong Kong (NorWest) and the UK (Poetic Gem).” 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). children’s and men’s shirts. Dillards. warehouse and distribution. 84 85 See company website for list of shareholders. Castromen. NorPearl. Kohls. Inc.E.P. children’s. Nex86. It offers full services to large retailers with the chain broken into business units that cater to different product lines.on the apparel sector with manufacturing bases in India (primarily Pearl Global Ltd. Karstadt/Neckermann. brand “Kool Hearts. etc. The company recently entered into a business and education partnership with Babson College in the U. Pearl Global does not manufacture for the domestic market. GAP (including Banana Republic and Old Navy).84 Exports/Imports 100% exports. and outerwear. Bangladesh: low cost.1993. The Chairman of Pearl Global established a fashion and design academy. he has been inducted to the Executive Committee of A.P.S. including blouses. Product Mix Areas of specialization include: India: woven cotton and value-added cotton. H & M85.C. Lerros. ethnicwear. Page 69 . He has successfully promoted and established the fashion apparel brand "Lerros" in Europe.. t-shirts. trousers. shorts. Charming Shoppes. George (Wal-Mart). basic stuff. and the UK. Liz Claiborne. vests.

Ahmedabad .5 crore [from 120. 3.C/1.6.380015 87 88 From Chairman’s Message on company website. 3.” <http://www.cms> and “Corporate Briefs: Pearl Global.9 crore in the previous fiscal]. <http://economictimes. National Stock Exchange of India Limited Exchange Plaza. The Delhi Stock Exchange Association Limited (Regional Stock Exchange) DSE House 3/1 Asaf Ali Road New Delhi . 5th Floor Plot No. 29 June 2006.110 002 2. P.43 crore[ from Rs. G-Block Bandra – Kurla Complex Bandra (E) Mumbai – 400 051 4.9 per cent to Rs 159. New Trading Ring.indiatimes. Rotunda Building.87 $400 million in its worldwide operations post quota phase-out.88 Net profits are 234% up. Bombay Stock Exchange Limited 1st Floor. Babson College press release.com/1060712/asp/business/story_6465123.IV.telegraphindia.” “The company’s operating profit was Rs 17. Page 70 . Stock Exchanges where the securities are listed: 1.400 001. Ahmedabad Stock Exchange Limited Kamdhenu Complex Opp. In 2005-06 the company invested Rs 29 crore to augment its production capacities in Gurgaon and setting up a new unit in Chennai. J. Sahajanand College Panjarapole.asp>.89 Other Financials “Pearl Global posted 88 per cent year-on-year increase in net profit in 2005-06 to Rs .1 crore compared with Rs 7. 90 “Pearl Global net up 88%. The revenue of the company during the year was up 31.”90 See website for detailed financials. FINANCIALS Turnover $200 million worldwide before quota phase-out.com/articleshow/1690384.41 crore in 2004-05].” The Economic Times: Garments/Textiles.5 crore in the previous year. Dalal Street Mumbai . Pearl announced a dividend of 30 per cent for the year [subject to shareholders’ approval]. 89 From an interview with the Company Secretary. Towers.

The following is a forwarded e-mail from George Clothing (Wal-Mart) regarding Pearl Global: Subject: Something you should know. 91 From an interview with the Chief Finance Officer. 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). They now supply us with a variety of casual. “Dear sir. Our Customer's perception This reply has come from ASDA Walmart to a query of a Sr. Apologies for the delay in replying. They are working on building strategic partnerships with between all of their vendors and suppliers and consolidating them. From an initial order in 2001. BRAND INFORMATION91 Pearl Global’s Export Market 40% 60% U. and jersey product across all ages and genders from a variety of countries in the Far-East and Indian sub-continent. 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.V. They have supported our growth by putting in the infra-structure to service our needs.knitted.A.they have grown to be our second largest supplier. Journalist. woven. To grow the business at this rate Pearl has had to show a "can do" attitude. before the cost justified it. the Chief Finance Officer stated that they are engaged in strategic partnerships with six of them. Page 71 . we have been moving our office location over the last two weeks We have been dealing with the Pearl Group for the last 5 years.S. EU and UK Major Clients Brand JC Pennys GAP (incl ON and BR) Charming Shoppes. Inc.

hence would like to have some of your observation/views/comments on the business house and your relationship. 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. Finally. and any issues that have arisen have been resolved immediately and taken as learnings to provide a better service going forward.Growth on this scale inevitably creates major head-aches for the supply-chain. and where our distribution network has creaked under the pressure. ASDA Wal -Mart. 1 business publication. Executive Editor. offering us product direct from factory or landed delivered if the situation demanded. flexibility to change our minds as to what we want right up to the last minute. Below are a few points which I hope you would take time off and reply to at the earliest. Currently I am doing a corporate feature on the House of Pearl who is your vendor. * For how long have you been interacting with the House of Pearl and what has been the business relationship? * As a supplier how reliable are they in terms of delivery schedule. Lancelot Joseph. or supplier. retailer.quayle@wal-mart. For Pearl to grow their business with us. I feel that we can have an honest conversation with Mr. Quality. price. Deepak Seth has also gone beyond the factory gates to work with the community and put something back. and delivery have had to be a given. Mr. so Pearl have stepped in to provide solutions and support. no-one whether it be store customer.com --Original Message-Dear Ms. Allan Quayle General Manager-Strategic Supplier Development George Clothing Phone 00 44 (0)1455 264409 Mobile 07779 700695 e-mail allan. We pride ourselves at George that our ethical standards are rigorous. it is critical for us as a business to deal in the right way. Heather Moreton. 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. 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. Best regards. Thanks and regards. quality. As price deflation has become a way of life in the UK clothing market. UK I am a journalist from India writing for India's No. Senior Sourcing Manager -Kidswear. I honestly believe that to supply fashion retailers at the volume end is one of the most difficult businesses to be in . 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. Business India” Page 72 .We want style. has a right to exploit the people who make the product we sell.

now it is 6 months. yarns. A few years ago the delivery/production cycle had to begin 18 months in advance. INFRASTRUCTURE92 Pearl Global has five or six production facilities in India. but now they have developed direct relationships with their long-term business partners. dyes and chemical are thoroughly checked before they are fed into the manufacturing process.S. which are shown to buyers in advance. 50% FOB. The House of Pearl’s research and design department prepares a collection of high fashion styles for each season.Buying Agency or Direct They used to contract through buying agencies. 5% freight. Subcontracting Sometimes Pearl Global subcontracts hand embroidery. Pearl Global uses labor contractors. Quality Control Raw material including fibres. Design/Sampling and Product Development Designs are mostly developed in-house. but it mostly in-house. Pearl Global then manufactures the style. who then chooses or modifies the styles. Markup (days) High of $10 $6-7 USD 3 to 4 times 60 to manufacture.S. Production Capacity Pearl Global has 20 million pieces in-house capacity and 120 million pieces capacity all across Asia. and one in China. two of which are in Bangladesh. VI. one in Chennai and the others in Gurgaon. shipment 50% landed 30% FOB Bangladesh: Unit Prices (paid to factory per piece of garment supplied) Range Avg Product Mix $4-12 Varies by style Mostly casual No information was obtained regarding a change in unit prices post-quota phase-out. Production System Pearl Global uses an assembly line system. Every stage of the production line has its 92 From an interview with the Chief Finance Officer. They have six design factories. are consulted to developed in-house patterns. The embroidery tailors either come into the facilities to perform the work or they send it. 90 incl. The House of Pearl has over 150 factories across Asia. India: Unit Prices (paid to factory per piece of garment supplied) Range Average Retail Delivery Time Type India U. They are working on doubling their capacity in the next 2-3 years. Page 73 . Sometimes designers from the UK and the U. one in Indonesia.

Udyog Vihar. twist per inch. Page 74 . Departments The researcher was not able to obtain information regarding the specific nature of the assembly line or tour the factory. uster percentage and impurity. The finished yarn is tested for residual shrinkage. Phase I. Udyog Vihar. Gurgaon 500-600 workers 222. VII. Phase V. Phase V. which is sourced from outside is tested for fibre fitness micron ( fibre diameter). etc.own set of detailed monitoring system. Polyster viscose and cotton yarn is tested for count. Gurgaon 600 workers 870. single ply yarn is also checked on the uster machine to ensure consistency in yarn quality confirming to norms of the uster statistics.” as workers do not have a long-term commitment to the factory. and if they have a low level or no absenteeism they also get an incentive. 93 Numbers for the units at 446 and 870 were estimated by the Chief Finance Officer while the other numbers were obtained from G. moisture regain percentage and finish percentage. Udyog Vihar. Gurgaon 2500-3000 workers 446. WORKING CONDITIONS Wages and Benefits The Chief Finance Officer stated that sometimes Pearl Global pays workers above the minimum wage. Productivity Schemes Pearl Global gives out “best worker awards” and “gold stars” for productivity. 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. After workers receive their monthly salary they see a “rise in absenteeism. Manicandan’s CEC report (and confirmed by the Chief Finance Officer). Sretch yarn. pilling. Phase I. Approximate number of workers in all facilities Pearl Global has approximately 6000 workers in India. If a worker stays for six months they get incentives. Every set of fibre (polyester. Production Unit Number of Workers93 138. fibre bundle strength. Udyog Vihar. ply yarn. CRA. novelty yarns. fibre composition percentage (blend %). drape and fastness to light washing and rubbing and slippage. tensile strength. as neither an HR manager nor a production manager was available for interview. viscose tops and special fibre). but did not give specific numbers. count strength product (CSP). Gurgaon 2000-3000 workers Machinery Pearl Global has an estimated 2000 machines for every part of the production process.

who are not entitled for ESI and PF.K.” However they are working on providing the necessary infrastructure (such as transportation) so they would be able to hire more women workers. HUMAN RESOURCE POLICIES97 A new HR manager is to be hired as of August 15. Manicandan’s CEC report. They contract temporary workers through R. Labor Turnover96 The labor turnover in Gurgaon is about 20%. 95 Page 75 . 2006. They did not have a HR manager before this. 3500 per month Rs. According to G. 3000 per month Every year workers receive Rs. There is no sexual harassment 94 According to G. The union is not effective in addressing the problems of the workers. & Company. 97 From an interview with the Chief Finance Officer. 100 more and a 20% bonus for divali. For their HR strategies. Dismissal Procedure.” but there are not enough “available. Bangladesh. although being a “permanent” employee will entitle a worker to an identity card. ESI and PF. K. Manicandan’s CEC report. & Co. and Sukumar Pride. Union and Worker Committees98 There is no job security. but if it is mixed employees then it becomes a problem with issues of sexual harassment. who must first pass a hand-eye coordination test and then spend twenty days on the training line. Worker Training There is a training line for new workers. Furthermore if “it was all women it would be fine. 96 From an interview with the Chief Finance Officer. Manicandan’s CEC report. 98 According to G. There is a union in the facility at 138 UV. if there are no orders or “no work” employees are told not to come. All but temporary workers are covered by social security schemes. Overtime95 The facility at 222 UV has two shifts and thus there is little overtime.Position Finishing supervisor (7 months experience) Tailor (8 years experience) Tailor (5 years experience) Wages94 Rs. Recruitment Policy Pearl Global uses labor contractors and specifically stated they use R. and Indonesia is lower. 4000 per month Rs. though sometimes workers work double shifts and are paid double. VIII. They want to hire more women like Southern facilities do because women workers are “more efficient.” and it is not convenient as Pearl Global would have to provide transportation. they used a mix of outside agencies and consultants. The labor turnover in Chennai. and the head of the union is not an employee at the facility. Out of 500-600 workers only about 90 are in the union.

The company also operates a school by the name of 'Little Pearls' in Delhi. 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. INDUSTRY COMMENTS100 Commented on the strengths of the North. From an interview with the Chief Finance Officer. The company has set up Pearl Academy of Fashion. Vendors and the Society-at-Large.e. so they are working on capitalizing upon the existing capacities. Pearl Global just hired a lawyer to help analyze and plan financial structure. they have set up a medical treatment facility in the spirit of social responsibility. Employees. According to the Chief Finance Officer. The unit at 222 UV does not have a union. and teams are set up to work on weak areas in working conditions. there are sexual harassment committees. i. The motto of every Corporate Body is to ensure Predictability. etc) helps immensely. a fashion design and manufacturing technology institute. implying that the AEPC is not as useful post-quota. Investors. BUSINESS BOTTLENECKS99 The industry is regulated by the supply of cotton. Corporate Responsibility/ Codes of Conduct According to the Chief Finance Officer. The Chairman Pearl Global espouses corporate responsibility ideals on its website (Chairman’s Message. Deepak Seth): “A future that shall be built with the same strategy that has shaped our past. X. Working on having uniform HR and productivity strategies. The House of Pearl has enough infrastructure to double turnover. Seasonality is an issue.committee. This translates to bringing a high level of satisfaction to five constituencies Customers. Source the best from the World to deliver the best to the world by following ETHICAL MANUFACTURING AND TRADE PRACTICES. Pearl Global has a very effective HRD system they have build an empire highly trained and skilled manpower ready to face the dynamic changes. orders are fewer in July and August. The strength of South India is its efficiency.” IX. which holds it back. “ethnicwear” or design. as mentioned previously there is a new HR manager slated to begin on August 15. which have monthly meetings. They want to integrate all offices with an ERP 99 100 From an interview with the Chief Finance Officer. as there is different management at each facility. Sustainability and Profitability of revenues year after year. 2006. Labor cost is still competitive (in terms of the world market). Page 76 . which is missing in the North but the value-added garments (embroidered. The Company has built-up very effective TEAM WORK…The primary purpose of Corporate Leadership is to create wealth legally and ethically.

<http://economictimes. It provides training programs in the areas of Fashion Design. As a result of the close interaction between the industry and the institute. industrialists and academicians. one of the top two in this field in the world. who constantly review the institute's performance to ensure that the programmes are practical and industry-oriented. Retailing.16 equity shares of the company for every share in City Estates was recommended by the board at the meeting. at Naraina.cms>. Mr. Chairman..” The Economic Times: Garments/Textiles. R & Company. 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). The House of Pearl is planning to get into retailing and is working on an industrial engineering department and setting up software SAM. and is located in the Okhla Industrial Area (Phase II) of New Delhi.system.htm Advisory board includes: Mr. in India and abroad. Bolton University. Hong Kong Polytechnic University.Virender Uppal. Deepak Seth. its alumni hold responsible positions in more than 300 leading organisations. London College of Fashion.indiatimes. and Germany's LDT Nagold. It has links with acknowledged international leaders in fashion education. Mr. Lalit Gulati. It has a validation agreement with the UK's Nottingham Trent University (NTU). the Netherlands' Hogeschool van Amsterdam. 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. The Advisory Board of the Academy consists of leading exporters. Production and Computer Aided Design…The Academy has opened its second campus in New Delhi. Partner. The company is setting up new facilities in Dhaka (Bangladesh) and a design center at Chennai. such as the UK's Chelsea College of Art & Design. 7 Feb 2006. like in “Pearl Global to merge two companies.”101 Pearl Academy of Design Education-Pearl Academy of Fashion http://www. Merchandising.com/articleshow/1404688. and London Centre for Fashion Studies.com/index. 101 Page 77 . Pearl Global. Modelama Exports The Pearl Academy of Fashion was set up in 1993 by Pearl Global Ltd. 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. Managing Director.pearlacademy.

102 From the website of Pearl Academy of Fashion. USA. The Pearl School for Business Studies will grant Bachelor of Business Administration and/or Masters of Business Administration degrees with a focus on entrepreneurship. Bhupatkar. Bombay Dyeing. Advises Pearl Global. Current plans are for first classes to be admitted in the fall of 2008. and will visit regularly to monitor teaching. traveled to Delhi. and Professor Ash Rao will present the final reports to Pearl. among others. Robert Eng. The Babson college press release: Babson College.—a $400 million company exporting garments to Europe and North America—has formed a non-profit educational trust. * Student report on the student admissions process and co-curricular activities. has set up a business partnership with Babson College in Boston (U. and procedures necessary to build an Entrepreneurial foundation and curriculum. * Faculty report including Babson faculty profiles and approaches to faculty development. advisor to Pearl Global’s education trust. requirements. Babson’s consulting reports will include: * The general curriculum for undergraduate and graduate programs.” 102 Partnership with Babson College Pearl Global Ltd. President of Babson’s Alumni Club in India and Chairman of DCW Ltd. and assessment standards. USA and Pearl Global Ltd. and stipulations of the local region in India. Page 78 . Mass. RMX Joss.’s premier business school). Both institutions will identify mutual exchange opportunities—on-line access to library resources. Sonal Garments. Vivek Jain. private business management institution at two campuses near New Delhi. India last week for the official signing ceremony with Deepak Seth.. Babson College in Wellesley. Research in India Babson College. Shoppers' Stop and Ebony. Richa & Co. Mafatlal. Babson’s Provost.—ranked #1 worldwide in Entrepreneurship Education---will advise Pearl on the strategies. Orient Craft.Benetton.... The Asia Institute at Babson. Chairman of Pearl Global and Dr. have signed a strategic collaboration on a full range of activities to promote world class research and education of entrepreneurship in India. Executive Director. processes. joint information sharing. on New Business School: Two Form Strategic Collaboration to Promote Entrepreneurship Education. distance participation in projects. Pearl Global Ltd. internship facilitation. The collaboration is designed to expand over the next seven years. India. This trust is in the initial stages of developing a new. was also present. links to websites.S. Babson faculty will provide workshops for Pearl faculty and staffing. Michael Fetters. Pearl Global Ltd. workshops. * An overview of the entrepreneurship curriculum. learning. Pearl will shape this information into a comprehensive Entrepreneurship curriculum to meet the particular conditions. Ponds (India). India.

“We are privileged to work with Pearl Global. “According to industry sources. however after e-mailing the Chairman..edu. Page 79 . Babson grants BS degrees through its innovative undergraduate program.“This collaboration is an important step in Babson’s journey to globalize Entrepreneurship Education. growth prospect remaining high.”104 XI. Babson Executive Education offers executive development programs to experienced managers worldwide. The interview consisted of a powerpoint presentation on the structure and capacities of Pearl Global.W. 104 “Pearl Global bullish on Q2 numbers. is recognized internationally as a leader in entrepreneurial management education. Pearl Global is getting into domestic retailing: “ [Pearl Global]. visit www. “According to market analysts. Olin Graduate School of Business at Babson College. Deepak Seth.cfm>. 103 Babson Newsroom Release.com/finance/equity/fullstory.” 26 Oct 2005. Mass. For information. The Company Secretary was not useful in arranging interviews with other personnel who would be able to answer what he could not.babson.babson. <http://sify. Chandigarh and Lucknow. 24 April 2006. an interview was promptly arranged with the Chief Finance Officer.S. the recent fall in price makes it an attractive long-term bet. Kool Hearts label. which is setting up a joint venture manufacturing facility for soft fabrics in China to secure part of its supplies. 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. It was difficult to obtain an interview by calling the numbers on the website.” Babson College in Wellesley. <http://www3.. the company is in the process of booking retail outlet spaces in cities across northern region . a company that shares our vision to advance Entrepreneurship knowledge in India.edu/Newsroom/Releases/Babson-and-Pearl.php?id=13972072>. and grants MBA and custom MS and MBA degrees through the F.103 Domestic and International Retailing In addition to the U. Gurgaon. is understood to have chalked up a plan for its presence in domestic retailing. though the researcher was not able to obtain a copy without signing a confidentiality agreement.such as Jaipur. Ltd.” said Fetters.

Udyog Vihar. 13. and preliminary interviews from Gurgaon workers. Haryana Tel: (+91-124) 5090800. 7-D Maruti Industrial Complex Sector-18 Udyog Vihar. 2341110 2. Unless otherwise indicated. found some tailors to make the shirts. Manicandan’s CEC report. 15000 ($300) from his father. CONTACT INFORMATION Contact Person: Sudhir Dhingra.com/. BRIEF HISTORY106 Business began in 1972. online business and economic articles. I. has no website. ORIENT CRAFT LTD. Gurgaon II. Phase-1 New Delhi. Khansa Road Sector 37. Phase IV. 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. Founder/Chairman Personal secretary Meghna. Haryana 4. There is a preliminary website set up for its embroidery division at http://www. Plot No. G.ocemb. but it does not contain any information beyond the heading: Orient Craft Limited: Embroidery. the largest computer embroidery facility in the Indian subcontinent. Gurgaon-122015. An ISO 9001-2000 Unit: “Orient Craft Embroidery Division. Udyog Vihar. Gurgaon. but the company was not incorporated until 1978. most of the information is from the interview.com Production Units: 1. 68. 110020 (India) Tel: (+91-11) 26818247. Managing Director. 26818249 Website: Orient Craft Ltd. so he could use the proceeds as seed capital. and 105 106 First two units visited by the researcher. who asked Dhingra to get 1. Dhingra borrowed Rs. Haryana105 3. Gurgaon. a company profile given to the researcher by the Managing Director.000 shirts made in India. Page 80 . Dhingra was a law graduate from Chandigarh with no experience.6. 2343262 Fax: (+91-124) 2342042. From an interview with the Managing Director. mobile: 9871496362 Corporate Office: Orient House F-8 Okhla Industrial Area.” E-mail: orient@orientcraft. He had a friend from London who was buying from importers and selling the goods to specialty shops. 14-A Maruti Industrial Complex Sector-18 Udyog Vihar.

When his friend repaid him the Rs. he hired more people. Orient subcontracted until the early 80s. In the mid 1980s.com/iftf. During the first few years. Dhingra states that others followed Orient Craft’s example. And being a tailor is like being a janitor.A. He “knew [he] had to look at the industry from a global perspective and globally what textile buyers needed and what the competition was from the suppliers. Orient’s first factory was established in a village in Hauz Marg and it is still there. National Institute of Fashion Technology.htm>. he obtained a factory processing site of 240 sq. <http://www.000 sq ft. Liz Claiborne sent an American technician to help Orient with worker training and modernization. During this traveling.000. not like today. set up a pressing line on the dining table and the production line in the garage. 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. CII. only now it is 136. and that plant is still there. 6000 ~ $133). ft. they’re looked down upon. Then after a few years. and others.niftindia. May 2006. In the 1990s Dhingra set up a bigger plant with 100 machines. with more than 350 modernized factories. When he returned. The first plant in Maruti Industrail complex was the first plant in India that was over 80. when he got back to India. though he stated that it was difficult to actually get the money from the government. he decided to break into the industry. 200-300 people.” His father gave him one year to start up business. he also encountered some buyers. Then while in Germany. Dhingra wanted to improve the standards of quality and infrastructure to globally competitive standards. CIAE. and restarted business with a trial order of 1200 pieces for a customer in L. Then. then consolidated supply chain into one roof.”107 Biography for Sudhir Dhingra for the International Fashion Technology Forum.000 pieces and an annual turnover of around $40-50. ASSOCHAM. Dhingra “is also Executive Member of the Advisory Committee of AEPC and an active member of reputed associations such as FICCI. and Germany buyers. with 3500 people.shipped them to London. The first Gurgaon plant was established in 1993.” Dhingra wanted to move production out of the village and industrialize the area and put as many skills in-house as possible. found another buyer. he estimated a production capacity of about 150. with 1800 people. Both were wholesalers who sold to specialty stores. Orient got clients by word-of-mouth from their L. 107 Page 81 . they’re not looked up to. “At the time. not just in the limited Indian context.A. he was able to observe fashion trends and the kind of things that were selling. you had to be a tailor to be in the garment industry. the Indian-inspired fad went away and he had to spend six to seven months traveling to get rid of inventory stock. yards and outsourced actual manufacturing.000 sq. CMAI. 15000 plus a small portion of the profit (Rs. as Gurgaon is the single largest manufacturing sector in India. and he rented a house. During his traveling.

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. because of “language and cultural differences” with the European business partners. However. GAP (kids). Diane von Furstenberg. skirts. Tommy Hilfiger (men’s. and jeans). Product Mix Areas of specialization include blouses. outerwear. Ann Taylor. coordinates. is looking into breaking into the domestic market. Next Retail Ltd. sportswear. Dhingra states that Orient is the only factory in India to manufacture for Marc Jacobs and Louis Vuitton. Up until 10 years ago. Dhingra was the sole proprietor. Loft. 1998. Oasis Stores. Banana Republic. pants.G. Donna Karen. Mr. Zara. Exports/Imports 100% exports. boys’. ELM Street. and Marks & Spencer. dresses. Susan Bristol. Limited. Marc Jacob. Abercrombie & Fitch. LizSports). Anoop Thatai EOU Information The company has three 100% export oriented units (which can import all raw materials and trims free of duty).III. 2001. LizWear.Hook. and 2002. Macy’s. and gave 20% to his nephew and 20% to his friend. kidswear. Orient Craft Ltd. Liz Claiborne (LizDresses. jackets. Calvin Klein Jeans. men’s shirts. Now he owns 60% of the shares. Old Navy (women’s).K. Lands End. shorts. Polo Jeans).. Marks & Spencer. Esprit. Owners/Directors Mr. 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. The company does not do that much business with Zara and Miss Sixty (Italy). Express. BASIC PROFILE Legal composition of the Company Orient Craft is a privately owned company but deemed public limited. Dillards Stores. Mr. Kohli. Sudhir Dhingra (Chairman and Managing Director). Page 82 . 2000. Jones of New York. women’s. Ralph Lauren (Lauren. ropers. Orient used to source for Wal-Mart in back in 2003 but has since stopped. K. J-Crew. Dockers. knitted shirts/t-shirts. Awards Additional information: Orient Craft Ltd. Rocawear. Clients Armani Exchange. J.

03 0.00 $1.50 $1. Kaushik. so they can only be thought of as a rough approximation.” BBC News. 110 Based on the company’s average unit price of $10 USD. 4 per unit.uk/2/hi/south_asia/4294679.co. 2 March 2005.20-1.8-24. 742 crores) Other Financials Last years profit was $8 million (40 crores).12 0.08-0. Breakdown of Sales Revenue109 Est USD 2006 Material Cost Labor Overhead112 Profit (target)113 82.02-0.50 $1. 112 Overhead (mostly energy. Europe 80% Canada 108 Basu.20-1.8 million 16. “Winners and losers in textile shake-up. 111 Average retail markup is five to six times the unit price of the garment.stm>.A.00 % Retail Price111 0. BRAND INFORMATION Orient Craft's Export Market 5% 15% U.IV.8 million 19.5 million % of Sales 50-60 12-15 12-15 10 Per Garment110 $5.bbc. which has doubled in a year and a half-as mentioned by NITRA president-used to be Rs.03 0. despite more competitive pricing.00-6. 9 per unit) 113 Dhingra stated that Orient usually ends up with half of the target profit.02 V.8-24. 109 These figures were estimated by the Managing Director in the space of 5 minutes. now it is Rs. Page 83 .02-0.S. FINANCIALS Turnover FOB USD $105 million for 2002-2003 FOB USD $118 million for 2004-2005108 FOB USD $165 million for 2005-2006 (Rs.5-99 million 19. <http://news.

“Winners and losers in textile shake-up. 2 March 2005. however used to source to them about 10 years ago. 116 According to Dhingra. There has also been an expansion of volumes and an estimated 15-17% growth in orders. Marks & Spencer is currently direct. but they will open up their own office soon.co. Some things have increased greatly.) stated that on the date of the author’s visit in 2005. 115 Restarted business with Macy’s 2 years ago.uk/2/hi/south_asia/4294679. Orient would not take a Wal-Mart order.bbc.50 USD (from US companies. Page 84 . Dhingra states that it is easier to deal with buying offices. 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). European companies pay higher unit prices). however. Kaushik.stm>. 114 Dhingra stated that Orient manufactures 80-90% of what Diane von Furstenburg (high-end maternity clothes) sources from India. depending on the quota category and how much they were previously restricted. Orient tends to deal in higher quality and higher unit prices and lower volumes. Recently. Orient was manufacturing skirts that would be sold for $4 USD per piece. There has not been a huge shift in the composition of customers. <http://news. but they just opened an office last year. 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. Limited used to be mostly direct. Dhingra stated that Orient’s average unit price is $10.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. like cotton pants. however an article written for the BBC in 2005 (Basu.” BBC News.

as traveling became restricted and Indian companies needed to build a competitive advantage. Orient also deals in some very small volume orders for high-end buyers like Oil Lily. (unclear if it is the same facility visited) at the cost of over $10 million USD. 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. 117 118 Plot No. Production System Orient Craft uses an assembly line system. in and around Delhi. Gurgaon.000 sq.com/iftf. chiffon to denims and outerwear). Udyog Vihar. 119 According to the company profile.”118 Subcontracting Orient does not appear to subcontract. sometimes 25-45. It picks up fashion from around the globe.121 The average order size is 10-12. and creates new designs for each season. companies. after 9/11. As Dhingra stated. 1. 13.niftindia. Haryana. gives feedback. In 2003 Orient established a manufacturing complex of 340.000 pieces. which was at the time the “single largest multi-product manufacturing plant in the whole of India. Orient has created a niche with their diversified product line (mostly cotton/knits or wovens. The second plant visited was 380. ft.117 Previously.200. though it does use labor contractors. Sector 37.000 knitted per month 2005-2006: 720.000sq. Orient makes 130. 121 According to an interview with the Managing Director. <http://www.000 pieces. Orient has put a lot of human resources into product development and now boasts 900 product development personnel at 5 different locations. According to the company profile. six in Gurgaon. May 2006. product development became the key thing that most Western companies were looking for. the company had only 17 production facilities spread over 600. whose samples are then sent to potential buyers. of which four are in Delhi.000 or even 100.000 woven per month.S. Page 85 .000 knitted per month119 2006: More than 125.000 per day120 2006: In an average day. National Institute of Fashion Technology.htm>.VI.000 woven per month. INFRASTRUCTURE Company has 21 production facilities. but other fabric from silk. 120 Biography for Sudhir Dhingra for the International Fashion Technology Forum. 720. in 2003. Production Capacity 2002-2003: 480. even a little bit before. Khansa Road.000 sq. ft. and employed 5000 people. and one large plant is located in Noida.000 pieces and production capacity has grown at least 25% over the past year. Orient has a display store in NY on Park Avenue that it opened up 3 yrs ago. ft.

Productivity Schemes Orient uses incentive schemes to reduce absenteeism and has implemented worker welfare schemes.” 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. which is generally equal in size to the production department. fabrics. one facility’s production department. shirts. VII. “most of the permanent employees are supervisors and perform high-end work such as production in-charge and finishing in-charge. and since Orient produces high-end clothing with lots of embellishments. Manicandan’s CEC report. not through a labor contractor. MP and some from Haryana. the company had 7300 sewing machines. Page 86 . Approximate number of workers in all facilities Number of people employed in 2002-2003: 12. and trims. The labs are equipped to test for all parameters including color fastness to light. In 2002-2003.000 Machinery Orient has in-house computerized embroidery machines. Departments No information on specific departments was obtained through the interview. with very little embellishment. trousers. workers do not go to lunch at the same time.” Dhingra stated that 70% of Orient’s workforce is direct employment. Bihar. WORKING CONDITIONS The workers are 80% male and since Delhi and Orient is mostly multiproduct.000 in-house Number of people employed in 2006: 23. they “can’t be like Golkadas. Information on work timings was taken from G. Manicandan’s CEC report and could vary factory to factory. Manicandan’s CEC report. However according to G. According to G.Quality Control The company has in-house lab testing for garments. More contract workers and women (especially thread-cutting) are in the finishing department. consisted of 12 production managers each in charge of about 250 workers (tailors and helpers) at 100 machines with 12 line supervisors. the workers are skilled and come from a tailoring background and are usually from UP. According to Dhingra the “girls” in the South are operators and less skilled. who manufactures 80-90% jackets/ outerwear. washing plants and dry cleaning units.

according to G. Worker Training Dhingra stated that all the facilities have training schools and they want to make them more formalized. The payments and benefits for contract employees are given to the contractor. the company's chairman and managing director Sudhir Dhingra dreaded the idea of setting up huge factories .000 per month plus ESI and PF. Recruitment Policy Orient Craft employs contract workers for at least 30% of its workforce. the turnover for Orient Craft is fairly low. but he makes no mention of any other incentives. Bonuses are given during Divali. However. Dhingra stated that in the 1980s and 1990s Orient used a piece-rate system.Wages The average wage starts at Rs. K. Category Tailors Helper Trainees Contract Worker Average Wage (Rs. 5-8. 60-70% of the workers are unskilled helpers. With incentive programs for more highly skilled workers. Some of these contractos are R.all for the fear of Page 87 . & Company. They are trying to start a training school NGO with a founding member of NIFT. labor turnover is decreasing. and in 1993-1994 they started moving away from piece-rate and a few years ago they did away with piece-rate completely. the following was mentioned in a business article: “Till a year ago. workers are paid much less than Dhingra asserts. and Vasisht & Company.” Furthermore. VIII. where workers can be trained and work for other companies if they choose to./month) 2850 2344 2000 2850 Labor Turnover According to Dhingra. Viet Kumar & Company. The payscale is adjusted twice a year according to inflation. who takes a 5% commission before paying the rest to the worker. no piecerate. Union Though unions were not explicitly mentioned in the interview. and most people are above the minimum wage. 3000 per month for an unskilled worker salary. Sartrushi. HUMAN RESOURCE POLICIES Dhingra stated that there are common HR policies and productivity schemes across plants. “particularly [those] working in the Finishing department. the salaries average Rs. probably around 8-9% and as Orient is expanding. semi-skilled and unskilled workers that are hired through labor contractors are paid under a piece-rate system. Manicandan’s CEC report. Dr.

Page 88 . Since then the company started sourcing their manpower from labour contractor[s]. <http://www.000. 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.”123 According to G.com/apr0504/coverstory01. “Preparing for 2005: Dressing up for the party. Punishments are given to workers without any formalized procedure. Manicandan’s CEC report.it’s not just about the bottom line. Global players are looking for India bases. According to G. stating that he would forward the company’s code of conduct and a list of their worker committees through his personal secretary.’” They built a four story structure to house the embroidery tailors. But the management suppressed and ousted all the workers who [were] involved in the establishment of a Trade Union. “around five years ago there was an attempt to establish a trade union (at the 7-D. he stated that such information was confidential and would hurt Orient’s competitive advantage. I have always been very people-centric-. T. GAP gave Orient $35. Now she is a finishing manager and gets 123 Rajshekar. 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. Some of our workers are second-generation workers. it would be people. M.” Worker Committees/Grievance Policy/Dismissal Procedure Dhingra was reluctant to give specific information regarding worker committees in person.businessworldindia.000 and Orient spent $20. Twenty years ago we had over 1000 workers. One woman told me. workers are fired with no redress. ten years ago we had 5000 people. and if a manager finds a worker guilty of an infraction. Sector-18.asp>. The “village panchayat said that Muslim women can’t go out…but now that they are trained. it’s about what we can do for the community. no formalized dismissal procedure. now we have 23. Thirty years ago we employed a women who worked as a thread-cutter and got paid Rs. Manicandan’s CEC report. Although Dhingra stressed how this was all for the benefit of the women and the community. no sexual harassment committees and workers are not involved in wage negotiations or target setting. There is no grievance policy procedure in place for complains against workers or management. and that Orient pays in full for the schooling of female children of workers and for 65% of the schooling of male children. sometimes more than their husbands. Maruti Industrial Complex unit).000 building a community welfare center that provides medical care for community members. ‘my husband doesn’t beat me anymore. and Surendar. However upon further inquiry. But will we be ready in time?” Businessworld. This strategy effectively stops any attempt to consolidate workers towards creating a Trade Union. 400 per month. According to Dhingra. they feel very proud to bring in income. Clusters are reinventing themselves.[worker] strikes. “if someone asked me what my one single reason for success. Orient also helped train 300 women from the nearby village in hand embroidery at international standards. Orient had no worker committees at the facility visited.

in-house fully functional gym and an Executive Club.. and ease of working. but Orient has taken up some holiday decoration work. as Orient usually doesn’t have as many orders May through August. “they have 100. we only have 23. highly tailored outfits with additional embellishments like embroidery and special washes. 50. Besides being compliant by the current standards. Although happy about Orient’s success.000). such as home furnishing. 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. since Orient Craft products tend to be high-fashion.paid Rs. Donna Karan. BUSINESS BOTTLENECKS Productivity is relatively low. Dhingra wants increased flexibilization otherwise it is more difficult to expand and it hurts business.000 per month. Specifically. in an endeavor to go beyond compliance we have adopted the village next door as one of the community welfare programs under which we are helping the local community build a primary school as well as a garment sewing and embroidery unit. and 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. We have created great recreational areas for workers and middle management by building great cafeterias. Home furnishings is still smallish industry and comprises about $15-17 million of Orient’s sales. Labor flexibility is also an issue. and Orient needs to do competitive pricing to stay in the game and Page 89 . Macy’s. According to the company website: The new complex is designed to create a very worker and management friendly environment in terms of esthetics. Pottery Barn.000 people. It is the soul of our company. Seasonality is an issue. They started producing denim products 5-6 years ago and just started manufacturing men’s suits at a plant for Liz Claiborne and Express. comfort. Marks & Spencers. which eases strain some as well as the other diversification of profits. White Co. for Bed Bath and Beyond. IX.” They started up home furnishing about three and a half years ago.” 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. which includes a more complex manufacturing process. Dhingra stated there are companies who do $1 billion (mentioned China and Lian Thai from Hong Kong. “India is still not good at producing fall fabrics.

and aims to increase it to over 40 lakh units after the expansion. The expansion plan envisages setting up of two new facilities at Manesar.3 million dollar)…Orient Craft by its own admission acquired the unit because of its superior machinery content. “Indian textile companies on acquisition spree. The company’s deal with Levi’s is the second such significant international venture. Bangladesh and Pakistan. the textile industry in India still has a long way to go before it can catch up with Chinese volumes.cms>. In the changed business scenario. the garment industry presently stands at approximately Rs 15. Earlier. The company has since then stripped the Spain unit of its machinery and fitted them in its plant here at Gurgaon. Ironically it is the same Indian companies who are buying the units for their machines.htm>. World over.curpg-1. X. Orient came up on the global radar when it started its first overseas facility in New York two years ago.bring in buyers. From business articles: The company… acquired a Levis unit in Spain in mid 2005 for Rs 60 crore (approximately 13. Since the quota system has been reimposed on China. 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.” Times News Network. Orient Craft manufactures and exports about 30 lakh units of garment every month. At present. <http://www. India is in an advantageous position. The company expects the expansion plans to boost its revenue generation. The company’s management is also planning to raise an IPO later this year. it is important to have machinery comparing to global standards. buyers are getting increasingly quality conscious. near Gurgaon…Levi’s was looking for a buyer due to high maintenance and labour costs in Spain. <http://economictimes. 16 September 2005. “Garment exporter Orient Craft buys Levi’s plant in Spain for Rs 60 cr. Mr Dhingra estimates the annual turnover to be in the excess of Rs 800 crore.125 124 Dipankar. As of now.” said Mr Dhingra. Page 90 . 125 Jha.indiatimes.com/articleshow/msid-1232753. However.00. Noida and Okhla in Delhi.124 The machinery from the newly acquired plant will form part of the company’s expansion plan at Manesar. Kumar.000 crore. “The lifting of quota has brought humongous demands on one side and on the other.indeconomist. INDUSTRY COMMENTS Orient recently bought a Levi’s plant in Spain for its technology. India. Orient has 20 production units spread across Gurgaon. India’s lack of worldclass machinery producers domestically has seen a lot of companies look to the West for help.” Industrial Economist: Textiles Report. Mayur Shekhar.5%. (despite quota regulations) and India adds to a minuscule 1. as they need to grow the base of buyers and price is a compelling reason to do that.com/30thjune06p4. growing by over onefourth from last year. of which China contributes one-sixth. PTI Economic Service.

retail will explode…People say that Indians don’t have disposable income. Banswala Mills. Page 91 . there were only three shopping malls. the Andhra Pradesh Chief Minister. a leading Japanese buying house. Financial Daily from THE HINDU group of publications.— only about 30% of the U. From business articles: Orient Craft Ltd plans to develop an exclusive special economic zone (SEZ) for garment units in Andhra Pradesh. As per the arrangement. SBC is the buying arm of Kashiama. He announced the company would be given 10 acres of land at Nacharam to set up a garment manufacturing unit. The deal is likely to be signed later this month.Though most people in India. the company’s MD. “An increasing number of Japanese buyers are looking at Indian export houses for their sourcing requirements. if there is a mall…Real estate is growing. at present Japan is a relatively smaller market. etc. where there are higher labor costs.S. told ET. we ourselves are looking at buying 2-3 lakh pieces from India. Orient is considering getting into the domestic market now.S.” The Hindu Business Line Internet Edition. However. but best linens) are setting up facilities in India and selling back in Europe." Mr Sudhir Dhingra. Why would people go through rain. 126 “Orient Craft plans SEZ for garment units in AP. Yoshiaki Kamiyama. delivering the inaugural address.Emerging opportunities and the road ahead' here on Thursday. we aim at scaling our Japanese business up to $30-40m. In the next couple of years.” Italian and French mills are setting up joint ventures in India. "The SEZ will house up to 50 companies. “The tie up with SBC will give us a good foot hold in the Japanese market. consultant. that’s 200 million people. Dr Y.” he said. the exclusive Japan licensee of some well known international textile brands including Calvin Klein. That’s more than the people who spend in the U. heat. In 2-3 years. 25 November 2005. lagging behind US and Europe. but look how large the population is—out of one billion. said the company was "welcome" to set up the SEZ. population spend.000 crore. So the spending power is in India. the ready-to-wear demand in India is growing. probably about 80-90% still get clothes from tailors.blonnet.S. <http://www.126 Orient Craft… has entered into an outsourcing arrangement with Sumukin Bussan (SBC). according to Sudhir Dhingra. DKNY and Ralph Lauren. Chairman and Managing Director of the company.5m worth of textile products in the next couple of years. which is a joint venture of Caramin (France) and Bairb McNutt (Ireland. Rajasekhara Reddy. which plans to source $1-1. Orient Craft will be the exclusive suppliers from India to SBC. Earlier. the market will contribute a significant share of Orient Craft’s overall business pie. only about 60-70 million have disposable income.com/2005/11/25/stories/2005112502590900.htm>.” For Orient Craft. and every day a new one is opening up—there’s space available in Karol Bagh. Now there are 500. if even 5% are rich and 15% have disposable income. told reporters on the sidelines of the CII conference on `Textiles forum . “Three years ago. dirt. The SEZ is likely to come up on a 300-acre plot with an estimated investment of Rs 2. SBC.

Like most other economies. we will have to invest in new capacity every year if we have to keep pace with the industry. the company may go for a specific capacity expansion. 128 Rajshekar. T.asp>. The turnovers of these exporters range from Rs 100 crore to Rs 250 crore. Most are family-run.cms>. and Dhingra was surprisingly available for an interview. M. India's biggest exporter Orient Craft has also begun to realise that. Says Orient Craft's executive director Anoop Dhanda: "For the next few years. PERSONAL EXPERIENCE Orient Craft does not have a website. 127 “Orient Craft ties up with Japanese co. 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. Global players are looking for India bases. which made finding up to date contact information difficult. and Surendar. skill-intensive manufacturing could be a way to compete. Thailand does almost the same business as India with a workforce a third the size.all for the fear of strikes.about 10 times the size of the Delhi-based Orient Craft. Meru Exports and Richa Exports of Delhi. which it may have to take up to over 40 lakh units. Dhingra was fairly open in his responses. The centrally air-conditioned facility will combine all the stages of garment manufacturing.com/articleshow/1496902.Depending on the volume of the orders. “Preparing for 2005: Dressing up for the party. 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. the company's chairman and managing director Sudhir Dhingra dreaded the idea of setting up huge factories . claiming more than three-fourth of the pie.businessworldindia. Today he is spending Rs 40 crore on a new factory in Gurgaon that would employ 2. and Shahi Exports. at Rs 450 crore of revenues. India lags in technology. His personal secretary was not useful in obtaining any information. is India's largest garments exporter. <http://www.200 million . But what distinguishes them is a relatively larger scale. Current contact information was finally obtained through a Professor at NIFT. Till a year ago. Orient Craft manufactures and exports about 30 lakh units of garment every month. Clusters are reinventing themselves. productivity and scale. to cater to new deals in the pipeline. But will we be ready in time?” Businessworld. However.com/apr0504/coverstory01. probably because most of the specific questions about workers and working conditions were asked after he was giving his views on the industry and general strategies for expansion. At present the Indian textile exports to Japan add up to $296m which is just about 1% of the country’s total textile imports. Clearly. design to finishing. China is the largest exporter to Japan. Others include Gokaldas Exports of Bangalore.” The Economic Times: Garments Textiles." Orient Craft and Fabric & Fibres are among a few who have been pulling ahead of the pack. which. <http://economictimes.127 The biggest Chinese firms have a turnover of $800 million-1.128 XI.000 people. 20 April 2006. Bangladesh churns out as many garments as India from a fifth as many factories.indiatimes. Page 92 . Times News Network. and smart use of technology.

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