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INDUSTRY AND COMPANY PERSPECTIVES
A Collaboration Between United Students against Sweatshops Jobs with Justice Society for Labour and Development
TABLE OF CONTENTS
Chapter One: Introduction ............................................................................ 3
1. Methodology ..............................................................................................................3
Chapter Two: Agency Profiles
1. Registrar of Companies (ROC)...........................................................................10 2. Third Eyesight.....................................................................................................12 3. Apparel Export Promotions Council (AEPC).....................................................15 4. National Institute of Fashion Technology (NIFT) ..............................................18 5. Northern India Textile Research Association (NITRA) .....................................21
Chapter Three: Company Profiles
1. Modelama Exports Ltd.
I. II. III. IV. V. VI. VII. VIII. IX. X. XI. Contact Information .........................................................................................24 Brief History ....................................................................................................25 Basic Profile.....................................................................................................25 Financials .........................................................................................................27 Brand Information............................................................................................28 Infrastructure....................................................................................................29 Working Conditions.........................................................................................31 Human Resource Policies ................................................................................32 Business Bottlenecks .......................................................................................35 Industry Comments..........................................................................................35 Personal Experience.........................................................................................36
2. Shahi Exports Pvt. Ltd.
I. II. III. IV. V.
VII. VIII. IX. X. XI.
Contact Information .........................................................................................37 Brief History ....................................................................................................37 Basic Profile.....................................................................................................38 Financials .........................................................................................................39 Brand Information............................................................................................40 Infrastructure....................................................................................................41 Working Conditions.........................................................................................44 Human Resource Policies ................................................................................45 Business Bottlenecks .......................................................................................48 Industry Comments..........................................................................................48 Personal Experience.........................................................................................48
3. Jyoti Apparels
Contact Information .........................................................................................49 Brief History ....................................................................................................49 Basic Profile.....................................................................................................50 Financials .........................................................................................................51
V. VI. VII. VIII. IX. X. XI.
Brand Information............................................................................................51 Infrastructure....................................................................................................52 Working Conditions.........................................................................................56 Human Resource Policies ................................................................................57 Business Bottlenecks .......................................................................................58 Industry Comments..........................................................................................59 Personal Experience.........................................................................................59
4. Company G of R Group of Companies
I. II. III. IV. V. VI. VII. VIII. IX. X. XI. Contact Information .........................................................................................60 Brief History ....................................................................................................60 Basic Profile.....................................................................................................61 Financials .........................................................................................................62 Brand Information............................................................................................62 Infrastructure....................................................................................................63 Working Conditions.........................................................................................64 Human Resource Policies ................................................................................65 Business Bottlenecks .......................................................................................66 Industry Comments..........................................................................................67 Personal Experience.........................................................................................67
5. Pearl Global Ltd.
I. II. III. IV. V. VI. VII. VIII. IX. X. XI. Contact Information .........................................................................................68 Brief History ....................................................................................................68 Basic Profile.....................................................................................................69 Financials .........................................................................................................70 Brand Information............................................................................................71 Infrastructure....................................................................................................73 Working Conditions.........................................................................................74 Human Resource Policies ................................................................................75 Business Bottlenecks .......................................................................................76 Industry Comments..........................................................................................76 Personal Experience.........................................................................................79
6. Orient Craft Ltd.
I. II. III. IV. V. VI. VII. VIII. IX. X. XI. Page Contact Information .........................................................................................80 Brief History ....................................................................................................80 Basic Profile.....................................................................................................82 Financials .........................................................................................................83 Brand Information............................................................................................83 Infrastructure....................................................................................................85 Working Conditions.........................................................................................86 Human Resource Policies ................................................................................87 Business Bottlenecks .......................................................................................89 Industry Comments..........................................................................................90 Personal Experience.........................................................................................92 2
) were identified using “Mapping First Tier Suppliers in Garment Industry in Delhi. the Registrar of Companies (ROC. Methodology Preliminary research was conducted on the internet. Several other agencies that are major players in the export garment industry were identified and profiled by the researcher. Interviews were obtained in a variety of ways. Asking a question via e-mail often yielded claims of confidentiality. Ministry of Textiles). Five companies (Modelama Exports Ltd. others self-report to financial databases. and others do not disclose financial information beyond approximations of annual turnover and production capacity. the Apparel Export Promotions Council (AEPC). Four of the six companies profiled and all of the agencies have individual websites. though it proved best to limit the amount of e-mail communication.. E-mail was also used to a large extent to set up meetings. If an interview cannot be conducted in person. linked to the Ministry of Textiles. Ltd. and Third Eyesight (an industry consulting agency).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. Shahi Exports Pvt. an interview by telephone would be far more likely to be successful than an information Page 3 . The sixth company was identified by the researcher through an interview with a representative of the Indian Apparel Export Promotions Council (AEPC). Online searches yielded some kind of press release or interview for each entity except for Jyoti Apparels. Manicandan.” a CEC report submitted by G.. 3) To develop corporate research strategies specific to the Delhi. These are the Northern India Textile Research Association (NITRA. Pearl Global Ltd. 2) To identify correlations between labor conditions and businesses characteristics. A management survey was developed using the framework of surveys used in other geographic contexts and updated on the basis of preliminary interviews. Company G of Group R. Government of India). while asking the same question in person would yield a response. Contact information was available on websites. linked to the Ministry of Textiles). Public limited companies like Pearl Global Ltd. It is advisable not to send questions via e-mail. Orient Crafts Ltd. display their financial information on the company website.. Managers at six companies and four agencies gave interviews. the National Institute of Fashion Technology (NIFT. Obtaining the phone number from the agency website and directly calling was the simplest way of setting up interviews. although some were out of date. India context.
ladies are more focused on work. easier to control. Furthermore. which typifies management attitude both towards women and unions: Researcher: Why are your workers mostly female? Are there significant differences in productivity? Manager: No. Information on these companies was obtained primarily from top-down management sources.request by e-mail would. I don’t think they ever employed males… Limitations Time constraints limited the consistency and thoroughness of company information. all interviews were in person.S. The agencies profiled were primarily interviewed before the export houses. and one experience ePage 4 . and as such may be misleading as to actual conditions. 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. going as far as to hand over Standard Operating Procedures. and used to establish industry contacts. time constraints would not permit cross-checking all information with workers and officers at each company. Managers were surprisingly open in some cases. The attitude and openness of those interviewed are subjectively recorded in the individual profiles. An interview with an anonymous manager produced the following conversation. Also. The purpose of this research was to obtain information about companies from a management perspective. while others would refuse to state the number of workers in the manufacturing unit. Just. Questionnaire Used by the Researcher The following questionnaire was handwritten in shorthand and brought to the scheduled interviews as notes. however. industrial accidents record. but off the record. and NIFT gave updated contact information for Shahi Exports Pvt. Women are easier to handle. without which interviews would not have been possible. I’ll tell you. men together tend to form groups and lobbies because they have spare time.. What groups? Manager: Oh. even though such a one-sided perspective may not reflect the reality of the situation. no telephone interviews were conducted in this survey. Researcher: I don’t understand. Ltd. and Orient Craft Ltd. Researcher: Did you have problems with employing males in the past? Manager: No—no. It was not e-mailed to any of the managers. The AEPC was instrumental in identifying Jyoti Apparels as a top tier supplier. context and was integral in order to obtain information. as it was not possible in many cases to conduct follow-up visits. 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. They’re more docile. no significant differences in productivity. However. or productivity schemes.
total sales. discount retailers (Wal-Mart). U. if only a higher level manager could be reached. as there are some questions that an HR manager would know more than a Merchandising Agent. get order. since a conversational approach proved to yield the most information. The questionnaire was used only as a guide in the interviews as a reminder of what kind of information was needed. Name. Designation. The survey questions were divided into sections according to the position of the respondent. vol of product. package. where. how fast company delivers products to brand Kinds of buyers—importers. help design. DSP questions. CMT.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. 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. and Responsibilities of Respondent: Number of Years in the Company: General Upper Management Do you have a brochure saying what products. EU? Major foreign brands that the company supplies to: length of relationship. What kind of input— CMT. Ownership of Company. 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. I’ve heard of collegiate licensing that would provide steady orders from major brands at higher prices.. no input--or more capable. sourcing. they often had information regarding each of these areas. However. specialty (GAP). 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 . deliver? Does the company ever have problems with contracts and/or steady orders? (if possible. 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.mailing questions proved fruitless in gathering information.S.
Productivity Committee. NITRA.Have they used outside agencies in developing any part of their strategies? Part of AEPC.e. 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. 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. 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. what is displayed to workers on details of employment. cutters. Have you seen a benefit in productivity since implementation of program? Are there joint worker-manager forums in your organization? If yes. semi skilled. Shopfloor Committee. helpers. material cost. subcontracting. unskilled). trainees. Quality Circle? If yes. men. who are the members and how are cases handled? Give details. profit margin HR Manager What are the normal timings of work at the factory? What are the periods of break? Do you use labor contractors? Temporary employees? What benefits are different? How do you train your workers? At what level? How long does the training last? Give figures for the total number of employees and their average wages per month by category and gender. what do these forums do? Get any documents willing to give at any point. standing orders. etc. 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. Have there been any attempts at unionization in the past? What is the company’s attitude toward unionization? Page 6 . pressmen. Sexual Harassment Committee. average age of employees. tailors (skilled. checkers. finishers. codes of conduct. Grievance Committee. etc. washers. total value of exports. labor cost. supervisors. overhead. How many women.
Is there a personnel ‘code of conduct’? Is this a company policy or vendor policy? How are these communicated to workers? What employers are covered by: (i) ESI (Employee State Insurance) (ii) PF (Provident Fund) (iii) Gratuity (iv) Maternity benefits (specify) What are the details of employment that are displayed / notified to workers? (i) minimum wage (ii) ESI/PF/Gratuity? What is the average overtime payment to all employees? (i) overtime per month (ii) overtime as a percentage of total wages (iii) rate of overtime payment Ask about industrial accidents, if there is a doctor available, how often, rotate between factories, what is the most common injury, what kinds of safety equipment What is your approach in HR and Productivity/Efficiency? (Get policy document) Do you involve outside agencies in your HR strategies? Do you have common policies across your plants? What are the typical causes of punishment of employees? What are the types of punishment given? (wage cuts/extra work/asked to go home?) Is there a procedure followed for dismissal of employees? Who initiates the procedure? Is the employee given a hearing? Give details? Do you have a legal officer in the company? Do you have an Industrial Relations policy? (any written documents?) What are two or three main things holding business back? production, labor situation, training , quality control, etc. What are you doing to solve this? HR/Production Manager: Get any documents willing to give on productivity schemes, time-study worksheets, productivity numbers, structure of lines, how many supervisors, etc What is your approach in HR and Productivity/Efficiency? (Get policy document) Could you give me a sense of the floor layout of a typical factory; what kind of technology and planning has gone into the factories? What are the different departments? (Floor chart) Department # Workers # Men # Women # Machines What are parts of a Line? Is it an assembly line? How much time does an item take from the beginning to the end of a line? How many supervisors are there on the Line? Is there a productivity scheme in your company? If yes, when was it introduced? What categories of workers are covered? Are workers in any way involved in target setting? Prod planning? How much time does a worker take to achieve the desired productivity? What kinds of productivity schemes? Teams? Line supervisors? How come up with time studies? How conveyed? What have been the benefits from the productivity scheme in terms of (i) increase in productivity (ii) reductions in waste (iii) any others? Does the productivity scheme give incentives to workers? If yes, give details based on category, average incentive, and maximum incentive. How make workers more productive?
What are the typical causes of punishment of employees? What are the types of punishment given? (wage cuts/extra work/asked to go home?) Is there a procedure followed for dismissal of employees? Who initiates the procedure? Is the employee given a hearing? Give details? Has the company ever consulted industrial engineers to design the factory? What was productivity output before and after the consultation? What are the quality check points that the buyer requires? Does the company management have other quality checks? How have they used technology and state of the art equipment to improve quality? What are two or three main things holding business back? production, labor situation, training, quality control, etc. What are you doing to solve this? Types of Sources (other than management interviews) To obtain much of the initial company information, the researcher performed internet searches for the company names, and several common business periodicals showed up several times including: Apparel Resources http://www.apparelresources.com http://www.ittimes.co.kr/ The Economic Times http://economictimes.indiatimes.com/ http://www.sify.com http://www.businessworldindia.com/ http://www.indeconomist.com/ The Hindu Business Line Internet Edition, Financial Daily http://www.blonnet.com/ Most of the companies profiled had company websites, except for Jyoti Apparels and Orient Craft. Once interviewed, the companies typically gave company profiles that they use for potential buyers, which contain information about the composition of the company, the types of clothing it manufactures, production capacity, turnover, and major clients. The agencies profiled, especially the AEPC and NIFT, were vital in obtaining information that would lead to interviews, identification of major players, and important industry resources. Third Eyesight has links to industry-related articles at http://www.3isite.com/index.htm. Although the researcher was not able to research the following sources further, some were featured at an international garment fair and others are commonly used as industry resources for financials: CMAI (www.cmai.info, firstname.lastname@example.org), EBSCO CRIS, INFAC (intranet and internet), INSIGHT, CMIE, RMS, IAS, INDIASTAT, IRA. Information In Company Profiles Contact information includes addresses of known production sites, contact persons, website, and e-mail. Brief history includes relevant information regarding the establishment and incorporation of the company. Basic profile includes the legal composition of the company, export oriented unit information, the breakup of exports and imports of the company (100% exports for all the companies profiled in this report), the product mix, clients, and awards of the company.
Financials section includes the turnover and whatever other financial information could be obtained on the company. Brand information section includes major clients, length of relationship and percentage of turnover, direct or buying agency clients, and unit prices. Infrastructure section includes subcontracting information, the type of production system (all assembly line units), production capacity, the design/sampling department, quality control, specific departmental information, and productivity schemes. Working conditions section includes timings of work, wages, wage-setting procedures, benefits, overtime information, and labor turnover. Human Resource policies section includes management structure, worker training information, recruitment policy, dismissal procedure, union information, worker committee information, grievance policy procedure, corporate social responsibility schemes, codes of conduct, worker medical care information, and security system information. Business bottlenecks section includes whatever setbacks or problems that managers perceive as holding back business. Industry comments section includes strategy, predictions, and other relevant information regarding the growth of the company, its views on the industry as a whole, strategies for expansion, etc. Personal experience section includes miscellaneous description regarding the researcher’s views of the company and its managers and the ability to get an interview.
New Delhi – 110003 E-Mail: rocjln. Lodhi Road. Navrang Saini Addresses: B-Block Paryavaran Bhawan.CHAPTER TWO AGENCY PROFILES 1. in order for a company to be registered with the ROC. which is not true for privately owned companies. Form 29 for Pearl Global makes it a public limited company. the office at Nehru Stadium closed down earlier in the year. they must submit several forms at incorporation and annually.gov.nic. relating to the companies registered with them.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. Companies are required to register new events such as a change of directors with the ROC. the compliance of companies act. the details of the board of directors/management structure. The Central Government exercises administrative control over these offices through the respective Regional Directors. Form 20 gets the Director a Director’s Identification number (the number used on the mca. Since Pearl Global is a public limited company.sb@sb. Such forms include: Form 1.htm : Delhi & Haryana Regional Director: Dr.in/ROC_2003. CGO Complex.sb@sb. which are available for inspection by members of public on payment of the prescribed fee. According to an interview with the Company Secretary of Pearl Global Ltd.in Nehru Stadium. These offices function as registry of records. Website of the Ministry of Company Affairs: http://www.nic. REGISTRAR OF COMPANIES (ROC) The Registrar of Companies is a division of the Indian government’s Ministry of Textiles. New Delhi 110003 Phone: 011-24362708 Fax: 011-24364570 E-Mail: rocdel. the address of the registered office and the locations of the business..The financials publicly available include the annual return and balance (for all companies). Page 10 . The addresses of each state’s ROC as of 2003 can be found at http://dca. the profit and loss are also publicly available. Form 18.gov website to access the public disclosure documents).in However.mca. Form 32.nic.
Furthermore. Documents are publicly available after submitting a form requesting a release of information along with a small fee for each company. and though there is no formalized rule against this. etc. Information must be copied into a notebook by pencil (pens are not allowed). but several did not have up-to-date financial or structural information. such as financial information and company Articles and Memorandum of Association (objectives. of a newly incorporated company detailing the scope of its operations). Not only were entire company files missing. The researcher attempted to take notes by laptop. Page 11 . As such.The ROC in Delhi is in a process of transitioning to an electronic format of filekeeping. the process of obtaining public documents. photocopying the documents in the file is not permitted unless a fee for a legal copy is paid. was difficult and did not yield a lot of useful information. it was not permitted either.
com Website: www. and returned to India to his position as General Manager of the Indian business. Support in implementing changes in sourcing strategy and organisation. manager.3isite. Benchmarking against global supply chain and product development best practices. Gurgaon . as part of the team that launched the JV. dining etc. in marketing and distribution. competitive and regulatory information. 4112495 Fax: +91 (124) 2577586 Cell: +91 98111 03494 Email: devangshu. 2nd Floor. He then joined a start-up consulting firm and was instrumental during its growth into a multinational consulting firm's joint venture in India. The following are brief descriptions of some of the projects on which Third Eyesight's professionals have worked.2. trainer and teacher. home. and product analysis. Thereafter. 4112494.Strategic assessment of India – insights for a global senior management team to gain a realistic picture of the opportunities and the challenges in India.dutta@3isite. health.strategic inputs for Asia-Pacific top management team to identify emerging opportunities in the Indian textile supply chain * Leading UK Retailer . * Diversified Indian consumer and industrial products conglomerate . assistance in assessment of Indian supply base Page 12 . Third Eyesight's project teams consist of professionals who have hands-on experience in various aspects of retail and consumer products businesses. food & grocery. Devangshu Dutta. * One of the largest global home products retailers . Devangshu began his career with the then-leading Indian national retail chain in buying & merchandising and in store operations.122 002 INDIA Tel: +91 (124) 4112493.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. * Global fibre and chemicals company . including fashion. During his career Devangshu has performed the roles of an entrepreneur. Third Eyesight and its team of associates & professionals have worked on a variety of business strategy. He was also based in the European practice of this multi-national consulting firm. advisor.Carrying out sectoral market studies in retail. he co-founded a fashion sourcing company in which he remains a shareholder. assistance in formulating strategy and developing partnerships with International retailers and brands. Founder and Director of Third Eyesight A-847. new business start-up and operations projects with Indian and international clients. Sushant Lok-I. over the last 16 years. * International multi-billion dollar apparel brand . He subsequently worked with an international retailer's joint-venture in India. THIRD EYESIGHT (INDUSTRY CONSULTING AGENCY) Contact person: Mr.development of India strategy and preliminary business plan including market analysis.Assistance in development of global sourcing strategy and action plan.
you need a separate registration and thus it is easier to simply export (used to be tax-free).Comprehensive comparative study of 7 cities in India and outside to choose location of new garment manufacturing plant * Leading Turkish supplier . Mr. and assistance in seeking new capital infusion. as you needed approval from the state government if you were operating a place of business with more than a hundred workers. it was a licensed economy in which you needed to get government clearance to manufacture in specific capacities. The government thus limited how much you could produce under the reasoning that overcapacity would lead to inefficient use of capita. development and delivery of sales & marketing collateral for three consecutive seasons. Matrix. * One of the largest Indian textile and garment companies . who would be able to help schedule company interviews. Since the garment industry is extremely labor intensive. The quota system obliged companies to set up under different names. (Website: niftindia. and the result of this was that a successful company was prevented from expansion. and you cannot have large units. who could then direct me to industry management: Dr. Content of Interview (5 July 2006) with Director of Third Eyesight: Asked about study.* Multi-billion dollar Indian consumer goods conglomerate .org). Directed researcher to online industry magazine resource (Website: apparelresources. This is partially why many of the current successful companies (such as Richa Global) are split up into many different companies. reserves certain sectors for small units. The investment cap was very low. Page 13 . * Pioneer luxury brand house in India . Gave history of market structure in India.Formulating strategy and assistance in strategic alliance proposal to key European customer.org) Advised researcher to contact faculty of the management studies department. The small-scale reservation system. labor laws also limited the ability of companies to expand. Also told the researcher to contact faculty of Pearl Academy of Fashion. Mr. Business strategy and plan for current business. * Indian subsidiary of one of the largest sports apparel and footwear brands – Design. 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. this model was phased out. Sibichan Matthew. The other reasons for company fragmentation are the nature of quota system and labor laws. According to him. Much of the fragmentation of companies was really only on paper.Assistance in formulating strategy and developing business with global customers for exports. The name is on the WRC disclosure list.K. Mentioned another apparent Tier 1 (said they are large and source directly to MNCs). D.Business planning for new brand acquisition. In the early 90s. which continues to regulate knit-fabrics. Pradeep Joshi. Initially. gave contact information for the National Institute of Fashion Technology in Hauz-Khas. Batra.
the quotas had restrained India far more than China (showed a graph from a U. material. total costs would go down because the current transactional model wastes a lot of time. and money (wastes that would not be eliminated by greater cooperation. ships a sample. then privatized factories. Although he expressed the belief that a market economy cannot compete with a controlled economy like China in that the Chinese government built factories and infrastructure. and Tirupur (mostly jersey knits) all have different cultures.. From 2001-2004. He then mentioned that “strategic sourcing” would be much more beneficial to the market. In 2004. The MNC gives product specs. etc. how the current transactional model is very inefficient insofar as buyer-supplier cooperation goes. money is instead wasted on an inefficient process. but that the outlook of the management may be more pessimistic than Tirupur. investment in the industry slowed down.one hundred workers is nothing. He mentioned that Delhi (mostly womenswear) is only one side of the big picture. wherein the buyer. whereby long-term relationships are cultivated. this changed somewhat. strategic sourcing is dramatically different from the current widespread transaction model. so all the businesses had to pay was labor and overhead.” however that had mostly been talk and no action. as the companies began to listen to the needs of buyers and in 2005. the MNC may like it or require additional changes. the investment returned. for example. Because of this. He said that Delhi is doing extremely well in terms of business and is the largest in terms of exports. the product is re-done. He began to talk about sourcing.” Furthermore. He began to describe the different ways of sourcing. but would be greatly minimized). but in the strategic long-run. he said that Indian companies were extremely uncertain about the effects of the MFA phase-out. gets quotes from suppliers. The current model has self-contained worlds instead of cooperation. couldn’t see name). economic source. it would increase unit prices. doesn’t communicate with the designer. as it was clear that Indian businesses were gaining from the phase-out and smaller countries like Bangladesh were losing instead. but more menswear). he made it clear that somehow they were competing because of their “ability to develop and deliver product. 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. worrying that Indian business could not compete with China. which has worse infrastructure but is nevertheless optimistic about business. effort. Page 14 . the supplier makes the product. Bangalore (roughly equal. and rather than cultivate a relationship in which the supplier provides input and designs according to a long-standing relationship. that they were too “over-exposed in China. and as such is seen as a big risk and many are reluctant to actually work on establishing these relationships. He expressed hope that soon the labor laws would relax some to reflect changing needs of business. since vendors and suppliers both may have had bad business experiences when attempting to do the same. saying that the industry had often talked of diversifying. and that Chennai (mostly menswear). However. From a piecemeal view.S.
P. advance. market preferences and latest fashions and designs prevalent in the foreign countries. Ltd. Bombay) President. Bombay) Hon. Bombay) Vice-President. excluding. of India. According to the Articles and Memorandum of Association: Up till now Cotton Textiles Export Promotion Council was handling the export promotion work of garments. Institutional Area. Clothing Mfrs. Ltd.N. Assan. Garments Exporters Association. Mr. B. Smt. Mr. Assn. agents or correspondents in foreign markets for the purpose of continuously and regularly reporting the markets prices. B. to undertake marketing in individual foreign markets. Madras). Vijay Mehta (M/s Intercraft Pvt. APPAREL EXPORT PROMOTIONS COUNCIL (AEPC) Office: Apparel House. Mr. Sector 44. Calcutta).. Secretary General of AEPC Mobile: 98-9912-4555 Website: http://www.3. quota distribution and allocation. Ltd. Clothing Manufacturers Association of India. Ramadorai (Chief Executive. Singh (M/s Singh Export Corporation. Bombay and Garments Exporters Association. Clothing Mfrs. KK Jalan. Premila Wagle (M/s Paville Fashions Pvt. (3) To appoint representative.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. jute and hemp.P. N. N. The main objectives of the AEPC are as follows: (1) To promote. to develop new designs and patterns of garments. Mr. Mr. New Delhi).F. M/s Handloom and Handicrafts Export Corporation.. S. Secretary. Gen. 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. New Delhi) Ex-president. New Delhi took a lead in this matter and formed a special ad-hoc committee of the following Members: Mr. particularly to undertake market research. Amersey (M/s Milton’s Ltd. to send trade delegations and missions to foreign countries as well as to survey export potential of readymade garments from the country. woollen knitwear and garments of leather.aepcindia.. to find out the product range and export prices of garments of other countries. to find out the tariff and other restrictive practices of importing countries. Mr. New Delhi) President. (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 . Clothing Mfrs. Garment Exporters Association. increase. Banthia (M/s Magnum Enterprises. of India. but now as the garment industry has reached a stature and maturity and has achieved the target of 250 crores. Mogrelia (M/s Zoro Garments Pvt. Gurgaon 122003 Contact Person: Mr. of India. Two leading organisations of readymade garments.K. Shah (M/s Hiralal Gulabchand. (2) To undertake all export promotion measures.. Assn.L. develop export of all types of readymade garments.
• lobbying to government to change laws regarding labor and infrastructure (and whatever other business bottlenecks there are). (5) To assist members. he stated. A specific AEPC goal is to get the government to change the law that states that workers are permanent employees after 100 days. and description of subscribers. designs and techniques and to encourage manufacture of garments for exports. 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. so that businesses who do not get orders during the winter are not hurt by the cost of labor. Content of interview (7 July 2006) with the Secretary General of the AEPC: The main issues in the garment industry are labor and infrastructure.for the purpose of continuously and regularly reporting to manufacturers. so that workers can be more easily fired and hired. • secondly Bangalore. NCR region. (6) To establish design centres. development of export markets. specializing in knitwear. He stated that over the industry as a whole. its strengths being better infrastructure. For three months of the year. otherwise productivity will remain stagnant and labor costs will remain high. as well as the names. 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 encourage export production of quality garments and to undertake necessary research in fashions. unit prices have remained stable pre and post quota phase-out. traders and exporters of garments. generation of production for exports. Page 16 . to improve the qualities and standards of the fabrics and garments by importing technical know how. action plans for promotion of exports. to evolve improved design and patterns and garments suitable for export. He said the three biggest centers for garment production were • firstly Delhi. address. to 200 days. to improve the skill of workers engaged in garment manufacturing in India and to assist in the technological base of the garment industry. (7) To undertake training of workers and technical personnel. rules and procedures. and lastly Tirupur. garment businesses do not have orders. and • raw material supply (both indigenous and imported). and its specialization in better embroidery and the “India look” (ethnicwear heavy with embellishments and more complex work). (8) To obtain from members of the Council and to prepare for the Council as a whole. especially. import licence facilities provided and how to apply for the facilities. AEPC focuses on three things: • marketing help. • help with training and productivity (14 training institutes). its strengths being higher levels of worker productivity. in the Small Scale Sector by giving assistance in the matter of understanding and implementation of the drawback.
The AEPC did not have company specific financial data. • Gurgi (“biggest industry consultant”—saw this name in the fabric stores in Jyoti Apparels). Page 17 . and • the Eastmen Group (Tirupur). He mentioned several notable resources. as it is self-reported. These businesses have succeeded through a number of different strategies. • Modelama (Delhi). • SPL Industries (Delhi). and • the Cotton Textile Export Promotion Council. • Golkadas Images (Bangalore).He listed the top ten Indian garment factories as • Shahi Exports (Delhi). • Texports (Mumbai). • Centwin Group (Tirupur). including • an HR training institute-KSA Technopack. • Creative Group (Mumbai). The researcher purchased the newest book of statistics on industry level data that the AEPC had (2003) and a directory of garment exporters. • Golkadas Exports (Bangalore). • Richa Global (Delhi). with a common thread of individual attention to quality control and productivity by hiring consultants and building better facilities. • a foreign consultant agency Method Workshop (main consultant Roger Thomas).
Extn:306 Contact Person: Professor Rajesh Bheda. rajeshbheda@niftindia. creativity. Kolkata and Mumbai. Government of India Website: http://www. these courses offer a unique opportunity to participate in the lively academic environment of NIFT. professionals. These programmes reflect the requirements and Page 18 . 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. advancement of careers. Management and Technology. also offers short duration part time courses under Continuing Education (CE). Director General of NIFT) The Institute: Today. 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. Hauz Khas Near Gulmohar Park. and entry-level candidates in the form of Continued Education Programmes. and excellence. and the evolution of new professionals. 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.htm Address: NIFT Campus. which have been developed in consultation with reputed academicians [sic] and industry practitioners. 26964771. practitioners.niftindia. 26965080. management and technology across the globe. 26965059. Continuing Education (CE) Programmes: National Institute of Fashion Technology. NATIONAL INSTITUTE OF FASHION TECHNOLOGY (NIFT) Ministry of Textiles. In addition to classroom learning. Bangalore. Extn:306 Fax: 91-11-26851198 Mobile: 9810154829 E-mail: email@example.com. PhD. Department of Fashion Technology Telephone: 26850484. enhancement of critical abilities. 26965080. 26965059. The centres are professionally managed platforms of the world’s finest design expertise. leading to upgradation of skills and knowledge. 26964771. besides conducting regular professional undergraduate and postgraduate programmes in Design. and diverse faculty expertise. They offer a learning environment that encourages innovation. NIFT is acknowledged as the premier institute of fashion design. NIFT has crafted a range of Continuing Education Programmes. Hyderabad.com/iftf. Resource Centres. (Gauri Kumar.com NIFT was set up under the Ministry of Textiles in 1986. The Institute has pioneered the evolution of fashion business education across the country through a network of seven centres at New Delhi. management practices and manufacturing technologies.com. and avail of facilities like laboratories with state-of-the-art equipment. According to its CE (Continuing Education) Prospectus 2006-07: NIFT provides quality fashion-education to industry experts. Chairperson. Chennai. Gandhinagar (Sub-Centre: Surat). India Telephone: 26850484..
The flexible schedule enables the participants to pursue the programme without interrupting their professional activities. The participants receive a NIFT certificate on successful completion of the programme.S. methods monitored. there could be a 50% improvement in quality. • design development. 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. U. • managing their supply chain better. and they are making efforts to reach good productivity. corporate social responsibility. demand is up. operators. If companies put efforts into enacting these measures. and EU have always been strong markets in India. it is a useful resource in identifying the types of materials used in classes and to train managers and HR personnel—one book on HR management that the researcher later purchased had a lengthy passage on labor unions and how to use HR strategies to discourage their formation. productivity (how to perform time studies). The library at the NIFT campus is open to anyone. as there has not much shift in markets. trying to get workers’ involvement. with production planning and scheduling. • BPR manufacturing. • offering shorter lead times. and also to those aspiring to join the industry. buyers reducing number of suppliers as well as brands. training managers. He teaches classes in quality management. quality improvement program. though you cannot take bags inside the doors or check out books. Most common is line supervision. manufacturers consolidating capacities. suppliers reducing subcontracting. However. Page 19 . and • hire or train industrial engineers. • higher productivity • use the help of consultants. • have more highly trained workforce. the programmes provide a congenial environment that integrates theory with practice. The average Indian garment factory has 100% potential in physical labor productivity. relevant to individuals at different stages of their careers. and a global overview of the garment industry.concerns of the industry and have been carefully planned to spur professional growth. • better quality product and service. cost is up. Companies are trying to move up the value ladder as product development and design are becoming more important. Unit prices are down. With focus on interactive learning. Post-MFA trends have been a consolidation of supply chain and capacities. probably average 70% of India’s market. Content of interview (20 July 2006) with Professor Bheda: Professor Bheda has been with NIFT for 16 years. performance-based rewards system. The main characteristics of successful firms include: • recognizing what customers are looking for.
it would have to be meticulously and carefully implemented. The core group of organizers include Vijay Mathur.K. so suppliers feel they are not committed. Retailers should start partnering with the brands and rewarding CSR compliant suppliers. 2) Shilpayan Craft (Jaipur) 3) Another firm from Jaipur. Everything in the market is transaction-based. Magu (Chairman of Jyoti Apparels). it would be good to invest in social improvement program. 38th annual: www. Vijay Agarwal (Chairman of AEPC. the 37th annual garment fair with 393 exporters/exhibitors at Pragati Maidan. K. However. The award winners for their showcases (announced the previous day. None of the firms were top ten exporters or easily recognizable. “suppliers get a feeling of being cheated.L. The researcher obtained a buyer ID and toured the grounds.K.K.indiaapparelfair. Regarding corporate social responsibility. the AEPC Director of Export Promotions (interviewed him after K. Jalan.there is an erosion of the bottom line and companies find it difficult to survive and improve working conditions.” that retailers are paying lip service to CSR without sharing the cost burden. it seemed to be a showcase for smaller firms to vie for new buyers and international exposure. from principles. He does not see a correlation between turnover and CSR programs: “ultimately it comes from within. Mumbai). and as long as it is ensured that the rewards system cost comes down to the factory floor. so some firms are investing in CSR to the extent they can afford. and are simply passing it on to the suppliers.” 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.com). not because the buyer says the firm has to do it. something like it has been discussed. Agarwal). Social programs are a long-term investment.indianapparelfair. so the researcher asked IIGF workers) were 1) Intercraft (New Delhi). The day of the interview was the final day of the Indian International Garment Fair (IIGF: www. Page 20 . and many cannot afford them because there is typically no financial payback. H. He gave a contact person to interview from Shahi Exports and up-to-date contact information number for Orient Craft.com. driven by price and the customer can walk away at any point.
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 . dyes. environment and allied areas. ISO-14000 Environment Management System. leather. Publications. V. Cost Reduction. Rao. ISO-9000 Quality Management System. Pollution Control. Several prestigious textile units and multinationals are already within its consultancy network. seminars. P. Chairman of NITRA. chemicals. *Need based cost effective software development. Maintenance Audit and a lot more. *Collection and dissemination of data useful to the textile & garment industry. It is linked to the Ministry of Textiles and is recognized by the Department of Scientific and Industrial Research (both government entities). *Customized consultancy packages for national and international clients in the areas of Product Development. Product Diversification. Process House Study. Design of Effluent Treatment Plants and Water Recovery Plants. J. 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). Environmental Audit. effluents. Raj Nagar. Ghaziabad (UP) 201 002 Website: http://nitratextile. Manpower Planning. Energy Audit.org/ Contact person: Dr. Energy Conservation. Maintenance Management. NORTHERN INDIA TEXTILE RESEARCH ASSOCIATION (NITRA) NITRA. It is the only ISO 9001:2000 accredited textile research organization in India. garment. conferences and publications. waters. *Quality Evaluation of textiles. and plastics. *Research and Development projects and industry specific surveys related to textile & garment industry. Machine Design & Development.5. and Seminars/ Conferences/ Training programs…NITRA has carved a niche and occupied leadership in Package Design Consultancy for effluent treatment and water recovery. According to NITRA’s 2006 Prospectus: NITRA’s Multifarious Activities *Job oriented professional courses (full-time and distance learning) in textile.S. Techno-economic Viability Study. 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. *HRD activities through training programs. workshops. Quality Improvement. Sector-23.
mid term strategies and policies and creating necessary infrastructure.. from composite textile mills in the 50s-60s to the rise of small scale businesses/ fragmentation. Content of interview (7 July 2006) with Chairman of NITRA: Gave background on the history of the textile industry. especially Page 22 . energy. NITRA helps factories with product development and various audits. quality. He allowed that workers were being exploited. which would consolidate factories. Stated that the fragmentation of the business made quality control an issue. improve infrastructure. Complained about government infrastructure and labor laws. The government is currently working on better infrastructure. [NITRA’s IT Center] has over 100 [PC’s]. Library: Enriched with 5. 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. effluent treatment and water recovery plant. and perhaps have relaxed labor laws within these sites. etc. A programmable ADI Bioreactor System of 3 liters capacity from Applikon Dependable Instruments. An in-house miniature ETP (effluent treatment plant) of 100 Liters/hour capacity has been installed by NITRA. but would not elaborate and would only refer to the intractability of trade unions in vague terms. environmental statement…NITRA’s Environment Laboratory is well equipped with Sophisticated Analytical instruments. fear of China post-quota. which are essential to conduct such a program…[it] is accredited/ recognized by the National Accreditation Board for Testing and Calibration Laboratories (NABL).. he said that unions hurt business. the…library [keeps students connected with] ongoing global developments.. legal compliance.textile and allied industries: waste management.. and the Haryana State Pollution Control Board (HSPCB). 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. TAF). better access to a supply of power through a cluster system called Scheme for an Integrated Textile Park (SITP). 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]. Access to and the price of power seemed to be a big issue for him. Netherlands. the Bureau of Indian Standards (BIS). has been installed for carrying out treatability studies of biodegradation of industrial effluents through aerobic cum anaerobic route. The library also subscribes to 150 [national and international] periodicals. He believes the government should subsidize capital for Indian business like China (mentioned something about a Technology Aggregation Fund. During the 60s-80s. eco-friendly textiles.000 books and journals. etc. NITRA has a wide database of employers [in its placement cell. There is a shortage of skilled garment workers. Also stated that it cost businesses more to subcontract because they had to pay for delivery. especially the law whereby a worker that is employed for 100 days is considered a permanent employee. water.
The researcher obtained a copy of the 2006 prospectus.4:30 pm. so NITRA conducts training programs for workers that last 3-6 months. The course coordinator is Vivek Agarwal. he mentioned Vardhmal. Reliance. 10:30 am . Arvind. a NITRA Senior Scientific Officer. They conduct in-plant training as well as distance learning programs for middle management at NITRA itself. When asked for company names. not garment manufacturers). Page 23 . They typically have 4-5 students applying for one seat. L and J (seem to be mills. Bilwara. Classes are full days. Students apply to the program online and are selected on the results of aptitude examinations and interviews. 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.
An ISO 9001:2000 certified company The information in the following company report was obtained from interviews with the Director. Page 24 . 2291131 Fax: 91-124-2290864 Website: www. India Tel: +91-124-2397838-42 fax: +91-124-2397843 1 Initial information obtained from company website. Okhla Industrial Area. Mobile: 9810015693 Corporate Office2 Plot No. Haryana. Manicandan’s CEC Report. documents given by the HR and production managers including a company profile. and G. Merchandising Agent. Manesar IMT Gurgaon -122016. CONTACT INFORMATION1 Contact Person Lovleen Kumar. and updated telephone numbers from interview. Human Resources manager. Sector-5.com Head Office Delhi B-57. Udyog Vihar Phase -1 Gurgaon. phase -1 New Delhi -110020. Director E-mail: lovleen@modelamaexports. 2 Unit visited by the researcher. business articles. I. the company website. Haryana. MODELAMA EXPORTS LTD. 7 & 8. India Tel: +91-11-26810103 fax: +91-11-26817969 Head Office Gurgaon 184.CHAPTER THREE COMPANY PROFILES 1. India Tel: 91-124-2290993.com E-mail: info@modelamaexport. ICRIER financial data.com.modelamaexports.
phase -1 New Delhi 8. Udyog Vihar Phase -1 II. 7 & 8. In 1999. 184. BRIEF HISTORY Modelama was founded in 1979 by Mr. interview. Okhla Industrial Area. “Build Quality Rather Than Check The Quality. Lalit Gulati. owner is Mr. Plot No-5.Road Map 3 Production Units4 1. Other production sites in untranslated Hindi document. 6 From company website. Phase 1 Gurgaon 2. B-80.asp?msg=2710&cod=newsindetail&nam=>. 200. phase -1 10. B-26. and Pandey. Okhla Industrial Area.000 square feet. <http://apparelresources. BASIC PROFILE6 Legal Composition Sole proprietorship. Sector-5. Okhla Industrial Area. 4 3 Page 25 . Manesar.” Apparel Resources. 5 From website. phase -1 New Delhi 9. 45 lakhs with 50 indigenous sewing machines and a workspace of 4. From company website.00. Phase 1 Gurgaon 4. Lalit Gulati as a family-run operation.000 square feet. In the first year they exported Rs. phase -1 New Delhi 7. Phase 1 Gurgaon 3.5 III. B-33. Gurgaon1 6. Plot No. Sector-4 Gurgaon 5. Okhla Industrial Area. 201.com/defaultnextone. Vinita. Modelama places a great emphasis on technology as the secret to its success. 204. B-57. Modelama professionalized its management structure and has been consistently upgrading technology in their production facilities. Modelama today has ten professionally run production units over 4. IMT Manesar.
Added outerwear to their product mix in 2001-2002. 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. Pottery Barn.O. trousers. H&M. 1998. which may have contributed to minimizing seasonality issues. Galeries Lafeyette. LOP NO. Chambers. silk. ladies blouses. William-E-Sonoma. Next. Modelama does not manufacture for the domestic market. skirts. Freemans. 1999. synthetics (viscose. 1992. Product Mix Areas of specialization include outerwear.4530/2001-100% E. Mervyns.EOU Information Modelama Exports Ltd. shorts.. polyester. knitwear and garments of leather. cushion covers. Old Navy). Hudson Bay. nightwear. etc. and 2002 Associated Merchandising Corporation Outstanding Performance. and blends. offering products such as table linen. Lands End. 2000.U I/6921dt28/08/01 RCMC NO. Clients USA: GAP (Banana Republic. 1999. Sears Roebuck & Co. Sears Roebuck & Co. Exports/Imports 100% exports. Monoprix. polyamide).AEPC/REG/MER/47569/N/2001) as a manufacturer/ exporter of readymade garments including woolen. Lane Bryant. Uses natural fabrics (cotton. Charming Shoppe Inc. Saks. dresses. AMC. drapery. Target Stores. 2001 Federated Merchandising Group Five Star Award (in Development of Federated Department Stores Private Brands and Labels). 1996 Charming Shoppes Inc. Villersey & Boch. 2000 Page 26 . and decorative items for loungewear like throws.. 1993. top of beds. A & F. Modafil UK: Laura Ashley. Grattan. Marks & Spencer. Zellers Australia: Country Road Awards Target Vendor Award of Excellence. wool). linen. 2000. Launched Home Textile Collection in 1999. jute and hemp. silk. Incorporates ethnic Indian accents and embroidery into design samples. Canada: Eatons. Tommy Hilfiger. Sales Growth and Profitability Vendor Award. Kohls-Belk. Westelm. Zara. Marmaxx. Eurofiel (Women’s Secret). Proffitts. La Halle. is an export oriented unit registered with NEPZ. Nov. GUS.. Federated Stores (Macy’s). Dayton Hudson Corporation. Colt’s Europe: Etam. and home furnishings. kidswear. Marshalls.
VA per employee Rs. FINANCIALS Turnover 70 Turnover (millions USD) 60 60 50 40 30 20 10 0 1981 1985 1990 1995 2000 2002 2005 projected 15 0. 2800/per month. 7 ICRIER Data (based on an interview at B-57 Okhla Industrial Area plant in Fall 2005) Page 27 . 3000/per month Rs.5 2 3 5 30 Other Financials7 2003 2004 Total Sales 180 crores 180 cr % of output exported 100% 100% Profits 15% 15% Capital employed 2.5cr. of pieces exported to EU countries Proportion of workforce that is female Average wage for female production workers Average wage for male production workers 2005 200 cr 100% 20% 3cr.000 per year 25. 500 500 450 60% 40% 150. 500 Rs. No.IV. Rs. of pieces exported to the US No. 3cr. 500 Total employment 500 500 Production workers 450 450 Proportion exported directly --Proportion exported indirectly through intermediaries Misc.000 30% Rs.
Average Unit Prices (per piece of garment supplied) Unit Price Origin Product Mix $5-7 USD U. The remaining $3.S. Europe Others 94% Major Clients Brand Federated Stores (Macy’s) Target Stores GAP (incl. BRAND INFORMATION8 Modelama's Export Market 1% 5% U. Modelama Chairman. Brands Casual wear $10-16 USD European Brands High Fashion Retail Markup 4 to 7 times 4 to 7 times Type10 Mostly FOB Mostly FOB From interviews with the Director and Senior Merchandising Agent.99 is the landed cost. 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. Vinita. ~$2.S. Although they get large production volumes from discount retailers. 60% of that is Target’s profit margin per unit (PMU).asp?msg=2710&cod=newsin detail&nam=>.V.com/defaultnextone.99. 9 8 Page 28 .99. 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.” Lalit Gulati. the unit prices are markedly lower than specialty stores. <http://apparelresources. quoted in 9 Pandey. Of that remaining $3. “Build Quality Rather Than Check The Quality. which includes not only the factory unit price but the duty cost (AMC and freight).A.” Apparel Resources.75 goes to Modelama. An example given was if the retail price of a given garment manufactured for Target is $9.
ittimes.1 1981 0.co. From company website and brochure. Typically. add a bit.” <http://www.4 1985 0. which varies according to the product.5 0. 13 From interview with Director and Senior Merchandising Officer. Production Capacity12 9 8 7 6 5 4 3 2 1 0 Number of Garments Produced (milions) 8 4 2. Modelama will present their company profile to the buying agencies of MNCs. is one of the principal designers. INFRASTRUCTURE Subcontracting Modelama does not appear to subcontract..) as well as home furnishing products. subtract a bit. volume. Vishnu. V.13 Gayatri Lal. and delivery times. Some of the orders can be pretty huge . Marks and Spencer (Style and Co. who will then contact them with a development package if their profile fits their needs. for instance. Page 29 .kr/en/node.11 Production System Uses an assembly line system.7 1 1990 1995 2000 2002 2005 projected Design/Sampling Modelama has a fairly large design department. and get down to manufacturing. 14 Makhijani. they were manufacturing garment orders for Charming Shoppes Inc. “Indian Fashion Firms Adopt Global Pret and Couture. an alumnus of the National Institute of Fashion Technology (NIFT). The day the researcher observed the process.000 pieces.Unit Prices Since MFA Phase-out Unit prices have gone down an estimated 7-10% due to increased global competition. Then there is some back and forth communication between Modelama and the MNC to reach an agreement in terms of product design.”14 11 12 According to interview with the Director. We then sit down with the stores.asp?em=M&mcode=200602&idx=1083>. fine-tune the patterns.80. “My team of designers scans international trends and comes up with a tentative collection of not only designs but also shades.
Page 30 . 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. Multifusing with Three Track of Loading (High Performance Macpee). Washing (24 workers) and Finishing/ Pressing (175 workers) The finishing area had lines of workers pressing and folding clothes. Auto Cutter (Lectra). Approximate number of workers16 Modelama employs a total of ~6. input. An example line was sewing collar parts with a total of 46 tailors and 5 helpers. laundering and crocking. Differential Feed Machines Needle Feed Machine. Machinery includes Auto Zig Machine. Autocad (Lectra). at the front of which is displayed an “Hourly Production” dry-erase board with the line number. Top. Departments17 Production (~800 Workers) There are about 560 tailors. The product was women’s fashion blazers for Style and Co. Information on workers and floor layout is specific to the unit visited and is taken from an interview with the HR Manager. Auto Dart Making Stations. and number of workers. GSM check. Auto Belt Attaching Stations. In the sewing departments. Machinery includes Auto Spreaders. Pneumatic Button Hemming Stations. color fastness to light. output. Washing machinery includes a wet and dry processing unit comprised of micro processor controlled washer extractors. 17 Information on machinery was primarily taken from the company website. perc based dry cleaning machines. Air Flotation Tables. Site visited by the researcher employs about 1100 workers (including about 15 accounts staff). PH check. etc. Tests include tensile strength. The floor is laid out in dozens of assembly lines. tearing strength. 15 16 From company website.” Modelama emphasizes technology and internationally acclaimed systems to maintain a high level of quality. Auto Pocket Welting M/C. supervisor name. Programmable Sleeve Setter Stations. Band Knife M/Cs. The company deploys over 3000 imported sewing machines with customized workstations. From interview with Director and Human Resources Manager. Auto Surging Machine. over 90% male. Differential and Bottom Cylindrical Bed Unison Feed Machine. This was the only department with women.000 workers in all plants.Quality Control15 Modelama’s motto is “build quality rather than check quality. Cutting (50-55 workers) The cutting department had five lines of machines laid out with worker stations. sand blasting. they use internationally standardized procedures like the traffic light quality assurance system. Procedures are based on aql 4 point system by which all fabrics are screened and categorized. pitting test. and brushing machines (from light softener washes to heavy enzymatic washes). Blind Hemmers.
The targets are communicated to workers by line supervisors and dry-erase boards on the production floor that display productivity goals. Embroidery Did not observe embroidery process during visit. stressing how much state-of-the-art machinery has contributed to the quality and productivity of the manufacturing process. Production Manager. Has hand and machine embroidery capabilities. Machinery includes 20m length Schiffley Embroidery (Lasser & Saurer). 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. the HR manager stated that no punitive measures are taken as it is prohibited by law. Because the factory is not near a city. Category Tailors +skilled 18 Average Wage (Rs. Page 31 . The Director said that workers are given incentives in productivity schemes if they reach their targets. calendaring machines and range of buck shapes and steam irons from manufacturers like MACPII. Inc style.Pressing and finishing machinery include multipresses. The production manager gave the researcher a copy of a time-study conducted for Charming Shoppes. If workers cannot reach their targets. 3000 per month. However. and Renzacci. and line supervisors who perform time studies on particular styles and set worker targets. and unskilled minimum wage was Rs. Additional Machinery Factory has a special conveyor system that moves products from assembly lines to other departments. 2448 per month. the HR manager said that no incentives are given. 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. Veit. HR Manager boasted that Modelama was the only factory in India to have this machine. flatbeds. 200 single head and 6 multiple head computer embroidery machines. indicating that he would like to develop such a system in the future. VII. management states that they set wages higher than minimum wage to get workers to commute. dummy presses. Productivity Schemes Company has production planning meetings consisting of the HR Manager./month) 3500 From interview with HR Manager. Trevil.
HUMAN RESOURCE POLICIES19 There does not appear to be common policies across the plants.” Labor Turnover Estimated worker turnover per month at 7-10%. HR Manager stated that wages increase after a year. like China. Page 32 . 19 Information based on interview with HR Manager and documents given by HR Manager and production manager. including ESI and PF. After a three-day period. Expressed dissatisfaction with labor laws requiring double overtime. VIII. Indicated that there are a few shop floor employees who have remained the two years the factory has been in operation. stating. and that workers receive double wages for overtime hours.+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. Benefits HR Manager indicated that workers receive the social benefits required by law. Overtime Management indicated no more than four hours per week per worker. except for worker recruitment for middle management positions. “It should be time-and-a-half. workers are then offered a monthly wage based on this evaluation. supervisors conduct time studies evaluating the skill level and productivity of a new hire.
Recruitment Policy They do not use labor contractors at the unit visited. and vendor codes’ of conduct. Beneeta Seigal Senior Merchandising Other Upper Management Positions Mr. the company posts signs on the gate. Lovleen Kumar Director Ms. Modelama’s anti-harassment policy.” Modelama uses labor contractors for some of its other units. For middle management positions. Workers are a mix of local villagers and from Gurgaon. To recruit shop floor employees. while dotted-line boxed positions are factory-specific and subject to variance. Lalit Gulati Sole Proprietor Founder/Chairman Mr. Worker Training This site does not provide training to its workers. K. 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. and in nearby worker villages. Phase-I Gurgaon. according to G. grievance procedures. However. workers have a brief orientation session during which they are informed of security measures. standing orders.Management Structure Mr. However. Manicandan’s “Mapping First Tier Suppliers in Garment Industry in Delhi. such as the unit located at 200. the company recruits from training centers and placement companies and has a formalized policy that the researcher obtained. at bus stops. Kiran Production Manager Mr. Page 33 . Anil Chauhan HR Manager Management Staff/Accounts Personne Mr.
According to G. There are only six recorded injuries at this site for 2006. according to the Customers Trade Partnership Against Terrorism. Medical Care There is a medical room in the factory. traceability.” but when asked to meet the doctor. nor have there been unionization attempts. in compliance 20 21 Received a Hindi copy of group meeting minutes. or CTPAT model.” Worker Committees Since there is no union. The code of conduct for Charming Shoppes Inc. and that management works to quickly solve problems in order to maintain an atmosphere of “family.S. preferring to dismiss the workers. was displayed on the factory floor.5 km from the factory. Security New security measures have been implemented since the quota phase-out.” there are no doctors in two of Modelama’s other production units (200. that they can report their grievance to their direct supervisor or upper management. There is a company dentist that comes every Thursday. tampering.S. Work times for employees were also posted. If workers suffer from minor injuries.Dismissal Procedure No information was obtained by the researcher regarding a formalized procedure.”21 Corporate Responsibility/ Codes of Conduct Modelama’s Anti-Abuse/Harassment Policy is posted on the factory floors in English and in Hindi. Customs Security requirements regarding issues like preventing trespassing. 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. a Works Committee. Union There is no union in the production site visited. The factory locks its doors at night. A resident doctor is “available at all times. they have joint employee-worker committees required by law. HR Manager indicated that there are very few worker grievances. Page 34 . the researcher was informed that he was at another production site. so there is no need for a union. but only in English. the company usually pays the medical expense. such as a Health and Safety Committee. Manicandan’s “Mapping First Tier Suppliers in Garment Industry in Delhi. “We take care of all their problems. an Anti-Harassment Committee.20 Grievance Policy Procedure If workers have a problem. Phase-I Gurgaon and B-57 Phase-I Okhla Industrial Area). U. Received a Hindi copy of policy. but avoids paying for major injuries and illnesses. companies have required them to uphold a more stringent counter-terrorism model of security in compliance with U. and an ESI station 1. All workers were said to have received medical attention. and a Sexual Harassment Committee.
only their department is kept open and the rest of the factory is shut down at 6 pm. relative strength of the Indian rupee to the dollar opposed to weaker Asian currencies. the Chairman. the former Director stated: Lalit: We do not consider machines as individual equipment but as a complete workstation. and government bureaucratic hurdles regarding labor law. Vinita. The HR Manager. whose upper management and design departments would remain in India. and then ship the product from that country. If Modelama has had as much success in outerwear as they have stated in press releases. low relative levels of productivity.perator. 22 Pandey. <http://apparelresources. Lalit: Machines change according to the product requirement…We have to be flexible because the buyer doesn't buy one thing all the time. We do not need masters. “Build Quality Rather Than Check The Quality. 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. If workers stay for overtime. however. it would appear that seasonality should be less of an issue for them than other companies who do not manufacture winter clothing. MNCs would present their contract orders to Modelama as an Indian company. IX. stated that seasonality was not an issue and that they have orders year-round. Modelama would then shift the actual manufacture of the product to either countries with lower labor costs like Sri Lanka or duty-free countries.with these measures.” Apparel Resources. BUSINESS BOTTLENECKS Main problems hindering financial success according to the Director are poor relative infrastructure.22 X. 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.” a more developed system of subcontracting modeled on Southeast Asian business strategies. Page 35 . we need operators who can be trained. 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.com/defaultnextone. Lalit Gulati.asp?msg=2710&cod=newsin detail&nam=>. A business strategy that Modelama is looking into is “triangular shipping. 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. 25 crore in jackets alone. Modelama successfully invested in the necessary infrastructure to export ~Rs. The Director mentioned that seasonality is an issue. In 2002. and Sanjay Gulati. In an interview with Apparel Resources magazine. 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. the Chairman stated that though the South is better known for it.
The only question that management would not answer was regarding a detailed financial breakdown of the company. Modelama was very open in disclosing information about the factory unit. Modelama was the first company to be interviewed by the researcher. The high level of attention paid to infrastructure and personnel management is probably not typical of their older factories. as it is the most modern. who was not available on the date of the interview. The unit visited is the site of their corporate offices and was built two years ago with the help of industrial engineers. This is likely the factory to which buyers are taken. but directed the researcher to her colleague. PERSONAL EXPERIENCE Modelama used an Italian consulting agency for the design of two of their factories. Page 36 . when they began to develop the infrastructure to manufacture outerwear. then was directed to a Senior Merchandising agent.Sanjay: It is a very unique combination of machines that we have that gives us this flexibility of handling [versatile] product [mixes]. Contact was made by calling the general inquiry number on the website. XI.
co. Two or three other units are in Delhi (Noida) and a fabric processing unit.co. Karnataka Tel: +91-80-28439214/15 Fax: +91-80-28439356 E-mail: shahiblr@vsnl. is in Ghaziabad.D. The information in the following company report was primarily obtained from interviews with the General and Divisional Managers of Marketing.com Website: www. I. Manicandan’s CEC report. Page 37 .com Head Office Bangalore Belandur Gate. Sector 28.24 23 Unit visited by the researcher. Senior Management Ashok Raman. Sarjapur Main Road Bangalore 560034. and G. 1. General Manager of Marketing Mobile: 98-18212505 E-mail: ashok. Giri. Tel: +91-129-2273970/80 Fax: +91-129-2273485/91 E-Mail: firstname.lastname@example.org Ajay Khanna. the owner of the company.in Head Office Faridabad23 Industrial Plot 1. CONTACT INFORMATION Contact People J. Sector 28 Faridabad 121008.com Production Units: Plot No. Shahi Export House has a total of eighteen manufacturing units. Divisional Manager of Marketing Mobile: 93-13369269 E-mail: ajay.raman@shahi. The remaining woven and all knit production sites are located in Bangalore. Faridabad. SHAHI EXPORT HOUSE PVT. Palmprint Textile. is former vice chairman of the Apparel Exports Promotion Council of India.shahiindia. the company website. Haryana. Harish Ahuja.khanna@shahi. LTD. II. BRIEF HISTORY Incorporated in 1974 in Delhi.2. business articles.
American Eagle. The knitwear product range includes 3 button polo shirts. 2.25 Wal-Mart. Carolina Blues. Ralph Lauren. Liz Claiborne. H & M. double mercerized. who is now the Managing Director. Hollister Co. BASIC PROFILE Legal composition of the Company Private Limited Company.. No Boundaries. Bleu. engineering stripers. TKS Basics. and circular woolen knits. the sole proprietor was Harish Ahuja. Euro Open. JC Penny’s. A & F. (Pacific Merchants). Family-owned. nor does it currently have plans to do so. t-shirts. Cherokee. Clients Bobbie Brooks (Woman). American Khakis. but it is a small fraction of turnover ($5-10 million). cotton fleece. acrylic wool..26 24 Fashion Newsletter.pdf>. EOU Information No information was obtained regarding registration and EOU capabilities. It is primarily information taken from the website with a few new passages regarding Human Resources and corporate responsibility. sportswear. mock neck. golfwear. Shahi does not manufacture for the domestic market. Natural Issue. 2005.The fabrics range includes solids. Arizona Jeans Co. Abercrombie & Fitch. Seacorn. spun filament. Solutions (New York). loungewear. pique. which was printed in 2005 by the Bangalore office. Target Stores. No.pdf/$FILE/Fashion _News_05_02_en2_Webb. Up until a year ago. 26 Remaining client names were obtained from interview with Divisional Manager of Marketing. full jacquards. yarn dyed single jersey. Sag Harbor (Sport). polyester cotton. Carolina Colours. Jeans Dynam. lingerie. Cross-Bow. indigo dyed units. St. Page 38 . men's and ladies' bottoms. Shahi has expanded to home furnishings in the past year. interlock. sleepwear.nsf/pub/Fashion_News_05_02_en2_Webb. Old Navy.com/www/resource. Van Heusen. rib. Enzo Lorenzo.lawson. tailored collar polo shirts. turtlenecks. The Children’s Place. Shahi’s product line covers casual and formal men's and boys'. Place Jeans. 25 From company brochure. textured knits. flat back rib. polyester viscose. Akademiks.III. 100% polyester polar fleece. Product Mix Areas of specialization are mostly ladies woven tops and men’s tops. though any exporter of this size must have at least one registered EOU for importing capabilities. ladies' and girls' dresses. jacquard. tanks tops. Exports/Imports 100% exports. John’s Bay. Von Daniels. Faded Glory. Cento Mila. heavy jersey in cotton. GAP. <www. ladies' & girls' blouses . At Last and Co. jackets.
2.5 USD. 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. Page 39 .13 $0. 32 Embellishment costs such as embroidery depends on style.13 $0.11 $0. It can be none or most of the unit price.lawson.8 million 2.07 $0. Turnover estimates varied by tens of millions of dollars between the GM and the Divisional Manager of Marketing. 29 Estimated by General Manager of Marketing.8 million 14-28 million 1.8 million 7-14 million 14 million % of Sales 50% 12-17% 10-20% 1% 2% 2% 5-10% 10% target Per Unit Price31 $3. Did not obtain average retail markup information.pdf>. No.25 $0.8-23.65-$1. so figures cannot be considered accurate.78-$1.65 Material Cost Labor Trims and Packing Depreciation Machinery upkeep Overhead Embellishments32 Profit 27 Estimated by General Manager of Marketing.033-$0.4 million 2. Percent of sales is based on an average estimate given by the Divisional Manager of Marketing. 30 These figures were estimated by the Divisional Manager of Marketing in the space of 5-10 minutes.com/www/resource. 31 Based on the company’s average unit price of $6.30 $0.Awards Wal-Mart International Supplier of the Year 2000 (can’t read others) IV. 28 Fashion Newsletter.65 $0. so they can only be thought of as a rough approximation.pdf/$FILE/Fashion_News_05_02_en2_Webb.nsf/pub/Fashion_News_05_02_en2_ Webb. though generally it is four to seven times the unit price of the garment. 2005 <www. accessed July 2006.
V. BRAND INFORMATION
Shahi's Export Market 1% 15% Europe U.S.A.
Other Licensees (Japan, Middle East, Australia)
Major Clients Brand Wal-Mart GAP H&M Target Stores JC Penny’s Liz Claiborne Abercrombie and Fitch American Eagle
Origin U.S. U.S. Europe33 U.S. U.S. U.S. U.S. U.S.
Lgth of Relationship 18 years 6 years 6 years 4-5 years 15-16 years 3 years 5 years 4-5 years
% of Turnover 10-14 7-14 5-14 3-8 3-8 3-4 3-4 3-4
Stated that do not have many huge clients; sales are mostly spread out among 15-20 buyers at any point in time. Buyers haven’t changed considerably post-MFA, though they are planning to increase shares in Europe. Buying Agency or Direct About 30% direct relationships, the rest through buying agencies. Stated that it is easier to deal with buying agencies in India than to maintain a direct relationship. Unit Prices (USD paid to factory per piece of garment supplied) Unit Price Range Average Product Mix Type $3.30-$26 $6.50 Casual, High Fashion Mostly FOB34
Delivery Time 60-120 days
Liz Claiborne can be up to $20, A & F can be up to $26, Wal-Mart is usually $4.50. Unit Prices Since MFA Phase-out Unit prices have gone down an estimated 7.5-15%, depending on the product. Prices for pants have dropped more, because of the nature of the quota restrictions.
In the U.S. as well, but the majority of the sales are to the European market. H & M is also the company’s biggest client in Europe. 34 Very few landed costs, though Abercrombie was mentioned as a landed cost buyer.
VI. INFRASTRUCTURE Subcontracting Shahi does not subcontract. Production System Assembly line system. Production Capacity Shahi as a whole: 2.4 -2.8 million PCs per month All Delhi factories: 300,000 PCs per month Production site visited: 150,000 PCs per month The knitwear sewing facility is capable of producing 250,000 pieces per month. Efforts are on to increase the knit production capacity to 0.5 million pieces per month. When the researcher visited the unit, Shahi was producing orders for many different buyers, among them 85000 pieces of peasant blouses with lace trim for GAP (Old Navy), denim jeans for Woodland, and 5,000 pieces of embroidered corduroy fashion blazers for Monsoon company. Design Shahi has two design departments located at the head offices in Delhi and Bangalore. Buyers send a “technopack” and/or samples of the “look” they’re going for, Shahi’s design departments produce a sample range for the buyer, who then shops around until they reach some sort of agreement. Quality Control Shahi has a fabric division that handles knitting, processing, and inspection. Fabrics are sent to in-house testing facilities to ensure that they adhere to STM standards. The laboratory is equipped with a Datacolor Computer Colour Matching System coupled with a Datacolor automatic Dispenser to ameliorate human error as well as a Mathis Padder with Dryer and Steamer and a replica pilot plant of bulk dyeing machines. The lab to bulk co-relation is maintained above 95%. The lab has a Datacolor infra-red dyeing equipment for exhaust dyeing. The color management group handles the product shade sorting and color related defects like listing and end-to-end problem detection. It is equipped with various machines that check tensile strength, tear strength, abrasion resistance, pilling resistance, shrinkage, fabric drape, fastness to various agencies (washing, crocking, perspiration, etc.). Processing Palmprint Textile is Shahi’s wet processing plant in Ghaziabad. Woven fabrics like poplin, twill, canvas, gauze, etc., and made of cotton, linen, rayon, and lycra blends are processed to international standards. Shahi makes prints like reactive, vat color discharge on reactive grounds, and pigments apart from some special printing techniques like burnt out effects on polyester-cotton blends. The unit produces 9000 meters of processed fabric per day. The pre-treatment section houses an Osthoff Gas Singe & Desize machine,
Benninger Continuous Bleaching Range, Ben Dimensa Chainless Merceriser. The Dyeing Section has machinery like a Kusters Cold Pad Batch & Benninger wash range, Continuous Dyeing Range , Jet Dyeing, Benninger Pad-Dry (with Kuster Padder) and Benninger Pad Steam Range. The unit has twelve color rotary Printing Machines, with after treatment machines like continuous Ager, Loop Ager , Star Agers , Polymerisers and Washing Ranges. The designing department is computerized with small yardages tackled on a Baby-Pilot Rotary Machine. The Finishing Section is equipped with Stenters, a Relax Dryer cum baker, Emerising (Peaching) Machine & Preshrinking Range, Speciality finishes (apart from normal silicon or soft finishes) like easy care (Self Smoothening rating 3-3.5), Permanent Hydrophilic, Stain repellant–Teflon , Water repellent, and application of Anti microbe or Permanent Fresh and Permanent Perfume. Knitwear The knitwear sewing facility is equipped with Pegasus top feed, micro processor controlled with automatic trimmers, CF Italia Collar attaching and latest Button Hole Machines capable of handling fine textured knits. Number of workers 15,000 in all of Shahi’s production sites 5,500 in all of Shahi’s Delhi (Faridabad and Noida) units Shahi’s Delhi factories employ 80% female workers, while in the Bangalore factories they are 90% female. Workers at production site visited Department and category Production +Unskilled +Semi-skilled and Skilled sewing operators +Line supervisors Cutting +Unskilled fabric spreaders +Skilled machine operators Centralized Storage35 +Semi-skilled and unskilled +Skilled workers +Staff who manage quality control Washing +Semi-skilled +Skilled machine operators Finishing (incl pressing/checking) +Unskilled (heavy lifting) +Semi-skilled +Skilled
~Number of workers Total 1800 400-500 1100-1300 25 Total 85 60 25 Total 150 120 20 30 Total 150 120 30 600 50 410 100
Gender Mostly female -90% female Mostly male Mostly male ---------Mixed
Stores for Noida production units as well.
Durkopp Adler. in which workers get bonuses for exceeding their targets. double needle-needle feed split bar machines. They conduct production planning meetings jointly with managers and supervisors by department. accounts. It is also equipped with single needle lock stitch programmable machines with UBT. Washing The washing facility puts out over a ton of garments per day through specialized wash treatments such as softener wash. Productivity Schemes The unit visited has an industrial engineering department with eight staff. every hour the target is marked. marker making and global electronic exchange of pattern data. and there are quality bonuses if clothes do not need repairs. enzyme wash . The Divisional Manager of Marketing states that they always had incentive schemes. pocket machines and automatic pocket welters. and it was stated that each unit has a similar department. stone wash. very little is done by hand. There are two departments for sampling.+Supervisors and dpt/line-in-charge 40 Sampling (think incl in production) 50-150 Remaining marketing. The latest CAD software enables quick processing of pattern creation. while the 60 multihead computerized embroidery machines have a capacity of 800 million stitches per day. shipping staff Total number of workers: 3. desize soft wash and golf ball wash. Juki. but they Page 43 . Sampling This is a fairly large department in the production site visited. The production unit boasts machines from Brother. merchandising. In finishing. These meetings set targets for the shop floor workers. collar/cuff turning and blocking machines. Ngai Shing.800 in all of Shahi’s Delhi (Faridabad and Noida) units 750 in production site visited The CAM based cutting department can make 75. For example. one for production and another room with rows of computers in which employees work on digitized patterns and samples.000 Mostly female Mixed Machinery 6. The incentive scheme only applies to skilled and semi-skilled workers. This department is responsible for timemotion studies and an operation breakdown. which can be 10-25% of monthly salaries depending on how difficult the style is. fusing press. Hashima and Kannegiesser. line supervisors convey target setting to them.500 in all of Shahi’s production sites 1. who are not involved in these meetings. single needle top and bottom variable feed machines. incentives depends on how many pieces are finished. grading. Its implementation and form depends on the department. feed-off-the-arm machines.000 cuts per day. in sewing. This unit has an incentive scheme for productivity. Embroidery Most is done by computer. They also conduct joint department meetings.
there was still a strong female presence in the factory. 4200. leaving male sewing operators and some female ones.have recently gone through major changes in their implementation. Workers use their ID card to clock in and out of the factory. Page 44 . an increase in attendance. Manicandan’s CEC report says a supervisor with eight years experience makes Rs./month) Unskilled helper 2200 Semi-skilled operator 3600 Skilled operator 6. Benefits of the incentive scheme include a 10% increase in productivity in past two years in the sewing department. 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. 38 According to G. The workers get a fifteen-minute tea break between the start of work and their half-hour lunch break. these benefits are additional. the workers at this unit do not get a tea break. when the first shift of workers were getting off.000 Supervisors/Mid Mgmt 10. and another fifteen-minute tea break between lunch and the end of their shift. However. and a decrease of waste in the cutting department./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. VII. 40 G.38 Wages As Estimated by Divisional Manager of Marketing39: Category Average Wage (Rs. Manicandan’s CEC report.00040 Minimum wage is posted as follows: Category Wage (Rs. This early shift seemed to be entirely female. lower labor turnover. 39 Stated that these numbers do not include ESI and PF. 37 The researcher toured the factory around 5 pm.
Most sewing operators have been at Shahi for around two years. Wages are fixed and there is no negotiation. Workers also have access to an on-site crèche for their children during the workday. and a three-month maternity leave. Overtime Stated that there is not a lot of overtime because they plan production with target setting. Workers are then on a three to six month productivity probation. Workers who receive less than Rs. Page 45 . PF. Benefits Stated that workers do receive ESI. Labor Turnover Estimated at 7-10% per month. and negligible overtime for the other departments. they are only evaluated to see what category of skill they fall in. if overtime is needed. VIII. People who are motivated to excel and trained in different disciplines of garment 41 From interview with the Divisional Manager of Marketing. The Shahi workforce consists of committed and highly skilled people. 7500 are provided with ESI benefits. HUMAN RESOURCE POLICIES41 “Human intelligence is the greatest asset which we possess. which the researcher observed. Shahi’s overtime policies take into account gender. they try to have the male workers pick up the extra work instead of the female workers.” ~Shahi’s website Shahi’s updated brochure includes lengthy passages stating their dedication to innovative Human Resources approaches. Estimated two hours per week per worker in the sewing and finishing departments.Wage Setting Procedure Managers interview workers and then take a trial of their work for one day. after which the HR manager will put them into a set wage scale depending on their ability.
Shahi has ensured all systems are in place to make sure that everybody works in an extremely salubrious environment. but definitely not. not the outskirts of cities. Dismissal Procedure No information was obtained regarding a formalized procedure. In the Shahi factories in Bangalore. 42 From company brochure and website. They are able to have female workers because they are in heart of Faridabad. but it is not necessary to do so here. Shahi has invested in a dedicated personnel management division to take care of its labor. Union Didn’t ask directly. Worker Committees Stated that there is a worker forum that managers also attend. Page 46 . There is also an orientation program for upper level staff. Worker Training Shahi trains the unskilled operators for a period of a week. Recruitment Policy Shahi states that they do not use a labor contractor. Training depends on the job description of the worker. 42 The brochure and website both state that human resources are developed using the training procedures of Kurt Salmon Associates. Manicandan’s CEC report. they provide transportation to overcome those issues. so the labor is here.manufacturing. Labor problems get a kind ear and are followed up on a priority basis. so they do not need to train them. Grievance Policy Procedure Presumably. the worker forum is a “safe space” in which workers can address any issues they have with managers. Particularly so as clothing corporations the world over are labor intensive and it’s imperative that they are well looked after. Some are skilled. and union organizers were either dismissed or isolated from other employees. making Shahi one of the most sought after organizations to work for in the garments arena. They do not recruit for shop floor positions beyond posting signs on their gates and through wordof-mouth. workers revealed that there had been unionizing attempts that were suppressed by the management. In G. Employ more women and uses HR strategies to disempower workers and remove blatant rallying points for workers. it is all direct employment.
Fire fighters are on high alert at all times and every floor is equipped with the right fire fighting equipment. Strict compliance with anti-child labor law is ensured. Codes of conduct posted in factory include Carafour. and nutrition related topics. hygiene. and lectures. Awareness programs are conducted for employees on health. American Pacific. training facilities for employees. The company organizes fire drills to keep employees alert in case of emergencies. Evaucation boards are put up on all floors along with photographs of fire fighting personnel. There are many signs posted on the factory floor with stating things like “Discipline: Team work is an easier path to excellence. securing of employees’ earnings through e-com (EDI) and ATM cards. It aims at providing a conducive environment for employees to protect. educational facilities for children.Corporate Responsibility/ Codes of Conduct The company has a biweekly English magazine that publishes news and articles by workers. and support their families in the best way possible. Target Stores. promote.” Shahi’s updated brochure includes add-ons regarding treatment of their labor force. Dayton Hudson Corporation. and a first aid room in the facility. More of these were in both Hindi and English than I’ve seen at other factories. Charming Shoppes Inc. 45 From company brochure and website.” “Anything worth doing is worth doing well” and one about the importance of personal hygiene. They have activities for the workers such as an annual cultural week with games and contacts. Liz Claiborne.. A full-fledged Dispensary and Ambulance is provided with a doctor always on standby. personality development through work shops. Nautica.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. Best employee awards are given for overall discipline. And some of the remarkable provisions for employees include: eligibility of workers for health insurance.45 Medical Care There are male and female onsite doctors and nurses in case of industrial accidents. and American Eagle. Wal-Mart. The Limited. Shahi Export House adheres to International Labor Legislation. seminars. attendance and productivity. From interview with Divisional Manager of Marketing and joint worker-manager magazine. 44 43 Page 47 . in fact nearly all had a Hindi translation.44 Safety measures are given utmost importance.
companies have required them to uphold a more stringent counter-terrorism model of security in compliance with U. Mentioned that Southeast Asia has the same problem of seasonality. The Marketing Managers did not mention any new initiatives taken to deal with the issue. where the garment industry is over 90% male.46 Shahi recently opened up a warehouse in New Jersey. and then not working to full capacity during the off-season. since it takes too much time to get clearance at the ports. However. Website contact numbers are out-of-date. now they do. Shahi has to decline some orders during peak season (OctoberMay). tampering. U. however said they currently retain workers during the off-season because it becomes a problem to rehire workers. IX. only different season. Shahi does not have a sexual harassment committee. though the researcher was not permitted to take pictures during the tour. and there was some controversy a few years back regarding a male manager and a female worker. or CTPAT model. (Stated that retained incentive schemes and everything off-season. now they are getting competition from small exporters. Shahi is currently constructing a production unit in Bangalore that would have a capacity of manufacturing 200. The picture of the minimum wage was taken by the manager. From interview with Professor Rajesh Bheda of NIFT.) X.1 million PCs during the off-peak season. Page 48 . who reported her case to the police. It is not a huge issue. Supposedly all visitors have to have proof of identity. PERSONAL EXPERIENCE Obtained contact information from NIFT. The security guards inside were asleep.Security System New security measures have been implemented since the quota phase-out. Customs Security requirements regarding issues like preventing trespassing. as they produce about 2. Manicandan’s CEC report. However Shahi is trying to diversify their product range so that it becomes even less of an issue. according to the Customers Trade Partnership Against Terrorism.4 million pieces during the peak season and 2. Also argued for more labor flexibility. according to G. Stated that they need better infrastructure regarding port system.000 pieces per month. BUSINESS BOTTLENECKS Seasonality is an issue. INDUSTRY COMMENTS Trying to build up capacity to produce outerwear by next year to reduce seasonality issues.S. traceability. Shahi is notable in that they have a majority female workforce in a place like Delhi. but I did not have to show it. The production unit was enormous.S. before they didn’t have the quota holdings to compete.47 XI. Suppliers have changed post-quota. 46 47 From interview with Divisional Manager of Marketing. as he would not permit the researcher to do so.
41/42 Phase IV Udyog Vihar. 51 48 49 Unit visited by the researcher. L. CONTACT INFORMATION Contact People H. 500. 26818977. Page 49 . and remaining information is from observations unless otherwise noted.L. He had no experience. and two are in Okhla Industrial Area (New Delhi). Managing Director Senior Vice-Chairman of the AEPC (Apparel Export Promotion Council) Mobile: 9810029999 E-mail: hklmagu@jyotiapparels. shop floor observations by the researcher. but by networking through his brother. due to the quota phase-out. he started business in 1977 with an investment of Rs. Phase-I New Delhi. I.000 ($444 USD50).111 USD) in the first year. 000 ($11. 45~$1) and are not adjusted for inflation. 50 Conversions are based on today’s exchange rate (Rs. two are in Manesar (southwest of Delhi. H. Unit visited by the researcher.com Production Units Magsons Exports. HR strategies and production from Assistant Production Manager. of which five are in Gurgaon. Magu. II. E-mail: jyotiapparels@vsnl. 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. 26810804 (D) Fax: +91-11-26819684.com Manish Mall Assistant Production Manager Mobile: 9899096999 Registered Office48 D-42 Okhla Industrial Area. Magu and deceased brother.3. south of Gurgaon). and an interview with an Assistant Production manager. Gurgaon49 The researcher was not able to obtain the addresses of all nine factory sites. 26817910 Website: Jyoti Apparels does not have a website. a company profile and Standard Operating Procedures given by the Managing Director. 51 Information on company background from Managing Director. The company has increased sales an estimated 30-40% in the past year. K. 20. BRIEF HISTORY Company established in 1976 by Mr. who had contacts in the garment and textile industry.K. The company’s turnover was Rs. which roughly doubled each year until 1984. 110020 (India) Tel: +91-11-26816917.
sequins. gents. blouses. L. Jyoti does not manufacture for the domestic market. House of Frasers. Phool Fashion Ltd. Donn Kenny. Jyoti’s strengths (and the North in general) are in high fashion garments with embroidery. Onyx Denmark: Kompagniet Switzerland: Manor. skirts.” it was pre-quota phase-out January 2005). J D Williams. Magu and Mr. Charming Shoppes of America (CSI).III. as it mentions “Quota Holdings: We have sufficient quotas in all categories of USA. Brumel. K. maybe 2004. Product Mix Areas of specialization include ladies’ (roughy 80% of production volume). Reitman Israel: Fenomen Malaysia: Metro Jaya Spain: Mango. Otto Australia and New Zealand: Just Jeans. Karstadt Netherlands: Wehkamp. Debenhams. Oxford Industries Inc. solid dye. and ethnic handiwork accents. Promod Germany: Neckerman. Carol Anderson. Prenatal. Miss Erica UK: Marks & Spencer. Europe and Canada. India Imports. H.D. 52 According to profile (which is out-of-date. Littlewood. Evans. Specialize in high fashion made of exclusive prints. Manufactures woven (80%) and knitted (20%) garments using mostly yarn dyes. Jyoti manufactures some winter clothing (about 20% of production volume). but the majority is summer clothing. K. Zara-Indtex Awards The researcher was unable to obtain any information on vendor awards. Blair Corporation). T. The Farmers Trading Co. . Zeeman Italy: La Rinascente. Gus. Page 50 . Enjoy. Kishore Magu EOU Information No information was obtained regarding a registered EOU. with embroidery and beadwork. Clients52 USA: Kellwood (Sagharbor).. Woolrich. Exports/Imports 100% exports. (Target Stores. Primark. BASIC PROFILE Legal composition of the Company Partnership firm. viscose yarn and denim fabrics. Freeman’s. and children’s (roughly 15-20%) readymade tops. Siplec (E Leclerc). Roamans. V F Jeanswear (Wrangler). Zellers.. Wal*Mart. and other garments. Tesco France: C. Brylane. Adams. Mexx. Lane Bryant. British Home Stores. Cabella’s. International. owners are Mr. Canada: Hudson Bay Co.
000. Latin America.6 million 10 $0. BRAND INFORMATION Jyoti's Export Market % of Sales U. Page 51 . this figure includes the amount the MNC spends on shipping.IV. on average. FINANCIALS Turnover 12 million USD (either 2003 or 2004) Current year 18 million USD Other Financials Current year sales Rs. 54 These figures were estimated by the Managing Director in the space of 5-10 minutes.6 million 10 $0. etc. 57 Since Jyoti’s unit prices are mostly FOB.5% Subcontracting Cost 1.5% MNC’s that source from Jyoti.57 V.50 1.50 1. which accounts for the inconsistencies.6-2. 10% 50% 40% Others (Canada.6 million 10 $0. duty. costs. 700. 56 Average retail markup is four ($20) to six ($30) times the unit price of the garment.000 (15.5% Overhead and profit 1. excluding the $12 million USD figure from the company profile.555 USD)53 Breakdown of Sales Revenue54 Est USD 2006 Per % Retail Garment55 Price56 Material Cost 9. Malaysia) Europe 53 Financials. so they can only be thought of as a rough approximation.3 million 60 $3 10-15% Labor 1. and cannot be used as an indicator of profit.50 1. 55 Based on the company’s average unit price of $5 USD. Japan.6-2.5% Other Manufacturing 1.6-2.6 million 10 $0.S. retain 75-84% of the sale of a retail item.6-2.50 1.A. were estimated by the Managing Director on two different occasions.
000 square meters.000 square feet of land spread over ten different areas (including the registered office.000 square meters. which is not a production facility). one is 8. Subcontracting has not changed since quota phase-out. It is notable that Jyoti subcontracts to a Shahi processing facility.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. Two of the factories are 2. Overall. Prices and other sourcing details are negotiated through the buying agencies. but later stated that overall they have remained stable. Subcontracting Jyoti does not subcontract the production process. four are 1. VI. Average Unit Prices (per piece of garment supplied) Unit Price Origin Retail Markup $4-5 USD Across the board 4 to 7 times Type Mostly FOB Delivery Time 60-90 days Unit Prices Since MFA Phase-out During the first meeting with the Managing Director. Page 52 . and Gloria Vanderbilt through buying agencies. but they do subcontract their fabric sourcing and processing. American Eagle. he stated that unit prices have decreased about 10%.000 square meters. Did not mention any direct relationships.58 Production System 58 See Standard Operating Procedures for detailed subcontracting information. primarily through the Triburg buying agency. INFRASTRUCTURE Company has nine production facilities. the company has about 20. and two are 600 square meters.
over locks. Sometimes Jyoti has people from UK and France do designs for them. shell stitch (Merrow). The researcher observed production of ladies’ white blouses for Emma James (Liz Claiborne). At production site visited. 8000 woven pieces per day and 1200 knit pieces per day. fusing machines. Quality Control Jyoti Apparels has a quality control assurance team with both an in-house auditing scheme and third-party inspection. but primarily just take paper designs from buyers and converts it to clothing.000 pieces per month. feed of the arm. Design/Sampling Small design department.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. elastic insertion.000 and 300. 59 60 See SOPs for detailed quality control schemes. piccoting. According to company profile. cross stitch/lock stitch button/ button hole/ snaps.000-90.Uses an assembly line system. washing machines and set of 84 stem boiler irons. perk-chloro plants. and brown machine-embroidered skirts for American Eagle. between 240. Production Capacity According to profile. lock stitch single needle and double needle. dry cleaning. Page 53 .000 pieces per month. usually 80. belt attaching. Managing Director and Assistant Production manager stated they were all skilled. computer embroidery. which varies according to the product.
cutting. and embroidery departments. Page 54 .Ground Floor Plan Second Floor Plan There is also a basement floor with fabric and accessory storage. though the researcher was not able to obtain a photograph of the plan.
It did not seem as modern a unit as other top tier factories.. Machinery includes one bandknife cutting machine and two straight knife machines.” which is the buying agency that many firms deal with. Document given to Buyer About Shop Floor Management (was displayed on shop floor.(Right) A view of the basement and ground floor. is data for production site visited. The department has one finishing supervisor and one assistant finishing supervisor. There were two workers on the machines. and the remaining workers helpers. Washing (10-15 workers) Washing was located on the topmost floor of the building. 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. Sampling (15-25 workers) The fabric store had a sign reading “Triburg. one cutting assistant. This was the only department that had any female workers. Packing (10-15 workers) Did not observe department during visit. with one cutting master. Cutting (20-30 workers) in Basement There are four lines in the cutting area. The workers in this department were all male. 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. directly facing cutting tables and below looking up at the finishing department. Production (~180-190 Workers)61 on Second Floor Machinery includes about 200 Juki stitching machines. Page 55 . two supervisors in an office in the corner. three thread-cutters. observations. Some of the fans were broken or not on. There were no fans in this room.” so they are barefoot when operating the computer embroidery machine. Fabric and Accessories Store. etc.
Then he stated that they conduct production planning meetings with the factory manager. However. workers are offered a wage based on this evaluation. If workers exceed this by 1 lakh. Page 56 . production manager. The production unit visited usually produces 80. it is all left to selfdiscipline.O. merchant/buyer (for style). Wage Setting Procedure For shop floor workers. extra button. which is not subject to negotiation. while the rest of the employees receive a monthly salary. After one day period. then the factory will give incentives.000 pieces per month. there is an incentive scheme that depends on monthly shippings. and cutting supervisor who set the production lines and targets based on manual time-studies. finishing supervisor. 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. Benefits Production manager indicated that workers receive ESI and PF. Wise Tag check with care. First the Assistant Production Manager stated that they do not perform time studies. 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. according to the Assistant Production Manager. and gave a copy of the minimum wage scheme for Haryana. VII. security tag Four operators Step 2—Initial Pressing One supervisor Step 3—P. The tailors and some finishing employees receive wages on a daily basis.000-90. supervisors conduct time studies evaluating the skill level and productivity of a new hire. Labor Turnover Estimated worker turnover per month at 20%.Step 1—Care label. rather they calculate targets manually by hourly production rate.
L. Workers do not need experience per se.VIII. but managers observe productivity and hire skilled workers. Magu Partner Founder/Chairman Mr. Usually 20-25 tailors take 10-15 days to train. Management Structure Mr. Worker Training Sometimes Jyoti trains workers during a lean period if there is time. because otherwise they become permanent and you have to pay them more. but these tend to be more middle management people. The Assistant Production Manager stated that if workers are not productive. Dismissal Procedure The Managing Director stated that they keep workers for 240 days and then change their workforce. HUMAN RESOURCE POLICIES There are no common policies across the plants. Kishore Magu Partner Other Upper Management? Factory Manager Management Staff/Accounts Personnel Production Manager Manish Mall Assistant Production Manager Line Supervisors Assistant Supervisor (Less skill/experience) Skilled Tailors/Machine Operators Helpers (Unskilled) Boxes with straight-line borders are positions common throughout all production sites. Recruitment Policy Jyoti states that they do not use labor contractors. Page 57 . while dotted-line boxed positions are factory-specific and subject to variance. though the Director mentioned that workers learn on the job. H. they are given a one month notice so they can find another job and they receive a letter of termination. The Managing Director states that they recruit people from Apparel Training and Design Centers. and the extent of their recruitment is posting signs on their front gates. K.
duties. and high transaction charges. The production site visited did not have a union. according to the Customers Trade Partnership Against Terrorism. they should run cargo through machines instead. Does not have its own employee code of conduct. such as environmental. tampering.S. Grievance Policy Procedure/Corporate Responsibility/ Codes of Conduct No information was obtained regarding a formalized grievance policy procedure. high rate of interest. but did not give a visitor’s pass. U. Page 58 . etc.62 Security System New security measures have been implemented since the quota phase-out. ports. he did not. Second time took my name.S. they cannot transfer goods during “peak hours. There is a path behind the building to get to the main office over ripped metal sheets over grates. 63 Based on interview with Managing Director.” trucks are only allowed to transport good between 11 and 4. but the Managing Director stated that when the old employees formed a union. etc. no imports because would have to pay landed costs). A lot of money is invested into customs. companies have required them to uphold a more stringent counter-terrorism model of security in compliance with U. 62 Based on interview with MD and Asst Production Manager. though neither of them knew where the medical facilities were located.) across plants except for buyers code of conduct. but talked about them vaguely and though he stated that he could give me committee minutes. he moved production to another site (now there is just the accounts staff and some sampling/design). Believes that there should be special customs lines at airports so that everything is not searched. or CTPAT model. etc). The first time security did not take my name in the confusion of finding a manager. etc. higher material costs (indigenous. No common policies (with HR. Medical Care There are doctors nearby the factories and first-aid kits in the production sites. which makes it difficult to meet deadlines. traceability. For example. However. the Assistant Production Manager stated that they do have committees. lack of good fabric processing machinery. but no visitor’s pass. labor laws (especially the lack of hire and fire exit policy). and they have monthly meetings. He said they have the joint employee-worker committees required by law since there is no union. BUSINESS BOTTLENECKS63 Main problems facing the industry are poor infrastructure (need better highways. IX. He stated that old employees with a union do not work as hard. anti-harassment.. Customs Security requirements regarding issues like preventing trespassing. Worker Committees The Managing Director stated that they do not have any worker committees.Union The corporate office used to be a production site. production.
making access to plants easier. and had everyone borrowing money from the bank and investing in huge factories.X. it was difficult to deal in huge quantities because of the possibility of mistakes in such a large order. and did nothing the rest of the time.” in which infrastructure would be built up by the government. The Managing Director is the Senior Vice-Chairman of the AEPC. or even leave their air-conditioned offices. 64 Based on interview with the Managing Director. and one of them glanced at a time-study once. He was very open in disclosing information. They’ve had to become very quality-conscious and price-conscious. like American Eagle. because of the late summer. Post-quota phase-out resulted in a boom for Indian business. who also permitted the researcher to take photos. Phase out of quota system has brought in new buyers.) or some supervisors do anything. PERSONAL EXPERIENCE When observed work at the production site. but unit prices got too low. Page 59 . the overseas vendors couldn’t sell their inventory. so could not take orders from them anymore. etc. etc. production manager. as they still have the edge on labor productivity and good infrastructure. Jyoti was an extremely open company in many respects. They played solitaire. labor laws would be relaxed. as were much of the staff at the production site. which is the capacity in which the researcher initially came to interview him. Companies are very upset with the government’s “bureaucratic hurdles. before couldn’t have more because of quotas. This year. INDUSTRY COMMENTS64 Jyoti used to deal with Wal-Mart and Target. Also. China is their main competitor. XI. did not see upper management (factory manager. The Assistant Production Manager was almost never at the factory when the researcher came to the production site.” Jyoti supports “special garment zones.
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. the current Chairman. aluminum hardware. Ware Housing Scheme Kriti Nagar. Gurgaon 5. Udyog Vihar. 239. Phase III. Udyog Vihar. Gurgaon 8. Page 60 . General Manager of Operations 236 Udyog Vihar Phase-I. including: 1.110015 (India) Tel: +91-11-25431408. 192. G International was established in 1983 in Delhi and 1996 in Gurgaon. 25172438 Fax: +91-11-25451549. black iron. 133. and ironmongery. 66 According to company website. 236. 225.4. Gurgaon 4. Phase I. Gurgaon 7. and Bangalore. 67 Unit visited by the researcher. Udyog Vihar. BRIEF HISTORY68 Vijay Uppal. an interview with a General Manager of Operations. 25454895 Contact person: Padam Vaish. Phase I. 151. Noida. Udyog Vihar. in 1977. Manicandan’s CEC report. 479. 69 From an interview with the General Manager of Operations. 68 According to the company website. incorporated R and Co. Phase-I Gurgaon The company profiled has over ten manufacturing units. Udyog Vihar. Gurgaon67 6. including: 1. I. Gurgaon The group of companies has several offices throughout India as well as a textile mill in Tiruthani near Chennai and a tannery for leather finishing in Hyderabad. Phase IV. Udyog Vihar. with one woven garments manufacturing unit in Delhi. Udyog Vihar. Phase III. Udyog Vihar. Haryana (India) Tel: 95124-2439701 Mobile: 9313634777 Fax: 0124-2439710-11 Production Units66 The R group of companies has over twenty-two integrated manufacturing units in Delhi. Gurgaon. Mayapuri Industrial Area. II. Phase I. New Delhi . 25172437. 208. Phase III. Phase I. 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. and G. Gurgaon. Gurgaon 3. Phase-I. B-108. New Delhi 2. Udyog Vihar. CONTACT INFORMATION65 Registered Office: 2/2. 506. Gurgaon 2.
The company has set up its own offices in Ludhiana and Tirupur in order to better source fabric. pants and shorts. Liz Claiborne. and Marks & Spencer. Sigrid Olsen. Debhnams. Betty Barclay. III. Land’s End. Goat and Cow leather as well as nubuck. The group launched a leather manufacturing unit in 1989 specializing in high fashion leatherwear under the management of Sunil Kapur. Inc.. knit. women and children such as jackets. Etams Miss Sixty. J. antiques. skirts etc. The R group does not manufacture for the domestic market. and leather high fashion garments for men. Federated Stores.. It has initiated a backward integration project by starting its own tannery in Hyderabad.. Timberland. while Vijay Uppal and Gaurav Uppal are Joint Managing Directors. Polo Ralph Lauren. Women’s Secret. Including the original R and Co. Calvin Klein. Next. Target. semi-nubuck. Cortefiel. R Global was incorporated in 2002 at Bangalore. BCBG. trousers. Spigel. to brands such as GAP. Product Mix Areas of specialization include ready-made woven. waxy distressed/ oily nappaloans. BASIC PROFILE70 Legal composition of the Company Virender Uppal is the Managing Director.1992. Monsoon. D. Tommy Hilfiger. Mexx. The tannery has modern finishing technology for leather finishes of Sheep. Dillard’s Sears. The company has already started manufacturing leather accessories and is further expanding with a bigger factory planned in Gurgaon. women and children including shirts. anilines. which will specialize in ready-made specialty shirts. Lane Bryant. vests. Exports/Imports 100% exports. Mervyn’s. Awards 70 According to the company website. Page 61 .Y. semi anilines. skirts. Ann Taylor.K.N. cargo pants and shorts. May Stores. Clients The R Group sources to over fifteen countries. It specializes in (primarily) outerwear for men. ladies tops. The R Group has recently established a fully integrated production line in Noida. Charming Shoppe. pants. Wal-Mart.Crew. the group includes eight companies. The R Group began producing knitwear when Gaurav Uppal joined the company management.
From an interview with the General Manager of Operations. U.S.A.S.A.A.A.S.S. Export Performance Chart71 Other Financials No other financial information was obtained.S. U.IV. V. U. Length of Relationship 15-20 years 15-20 years 20 years 15-20 years 15-20 years 15-20 years % of Turnover 40 20-25 20 12 7 - Graph taken from the company website.A.S. BRAND INFORMATION72 Export Market of the R Gro 10% U. U. U.A. FINANCIALS Turnover The R group has an expected annual turnover of US $ 85 million for the year 2005.S. Page 62 . 90% Major Clients Brand GAP Macy’s Wal-Mart Dillards Liz Claiborne Federated Stores 71 72 UK and Japan Origin U.A.
75 From an interview with the General Manager of Operations.5 APQ” quality check standard across the board. The R Group’s leather manufacturing unit has an annual production capacity of 500. Wal-Mart usually orders the largest volume. since they often don’t have established offices. or sometimes they embroider in their homes. Taken from the company website. the company’s knitwear divison. Quality Control The General Manager of Operations stated they use a “2.Buying Agency or Direct Contracts are mostly negotiated through buying agencies. there has been a 15-20% increase in orders. Gurgaon. 73 74 Including Wal-Mart. though there are fewer orders in the fall and winter. see company website. and the buyer selects and negotiates the contract. though they occasionally take direct orders. G International takes indicative orders from the buyer. 76 From an interview with the General Manager of Operations. INFRASTRUCTURE74 The R Group has over twenty-two integrated manufacturing units in Delhi. R Global. For a more detailed quality control process. Noida. though not to an established company or to direct employees. shows a sample range.000 pieces. VI. G International does not use a recruiting agency or a labor contractor. Production Capacity The R Group’s woven division has an in-house annual production capacity of 10 million pieces. 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. unless otherwise indicated. Page 63 . has an annual production capacity of 2 million knitted garments. Smaller companies are more likely to be direct orders.75 Production System The R Group uses an assembly line system. They set up a shelter (“shack”) for local tailors to do the hand embroidery. Subcontracting G International subcontracts their hand embroidery. and Bangalore. However. 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).
operation research). an estimate was approximately Rs. time and motion studies. Productivity Schemes The company has production planning meetings in which targets are set and the workers do not participate. such as medical checkups.000 workers.Approximate number of workers in all facilities The R Group has a staff of over 10. Preliminary worker interviews revealed that this company was considered one of the worst factories to work for in Gurgaon. They incorporate corporate social responsibility schemes into their productivity ideas. cutting (Digitizers. from the sampling stage (product and pattern engineering.000. 80 From an interview with the General Manager of Operations. the General Manager refused to give any more specific numbers of workers. operator training and skill analysis).78 The R Group has a Research and Development department for the technical aspects of garment manufacturing. 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. 5% female). 78 From an interview with the General Manager of Operations. 77 After disclosing this information regarding the number of skilled workers. to the production stage (work aids.77 Machinery R Group’s production facilities use machinery at every point in the production process including designing (CAD). scholarships for workers’ children. They have incentive schemes for things like 100% attendance. Page 64 . 700 per month extra. 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. and worker welfare programs. 79 From the company website. G International has a total of 7. Departments No information on specific departments was obtained. to the pre-production stage (layout and machine engineering. Plotters & Automated Cutting Machines) and fabric testing (fully equipped laboratory) and fusing. with 1200 workers at this site (approximately 95% male. material flow).79 VII.
Page 65 . Units visited in his report are Gurgaon Phase-1 192 UV. HUMAN RESOURCE POLICIES Management Structure Mr. workers receive 12% PF and 2% ESI. Gaurav Uppal Joint Managing Director Mr. which is reportedly not always paid. and 225 UV. Category (from pay slip) Tailor Sewing Operator Helper (8 months experience) Unskilled helper Helper (production) Wage (Rs. Benefits According to the CEC report. 151 UV. Virender Uppal Managing Director Founder/Chairman Mr. workers are then offered a monthly wage based on this evaluation. 15 per hour. though they do not always receive their PF once they leave the company. 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. Manicandan’s CEC report. After a three-day period.Wages81 The wage amount excludes overtime payment. which is not subject to negotiation. VIII./month) 2600 2750 2344 1893 2341 Wage Setting For shop floor workers. while dotted-line boxed positions are factory-specific and subject to variance. Vijay Uppal Joint Managing Director Mr. none of which were visited by this researcher. supervisors conduct time studies evaluating the skill level and productivity of a new hire. HR Manager stated that wages increase after a year. 81 From G. which is made on a different date than the regular salary. Overtime payment is Rs.
that they engage in the same kinds of recruitment. The General Manager stated that there are common policies across the plants. According to G. Training usually takes one or two days and is done through the research and development department. Workers receive a letter of contract. like the labor norms in China. then tests worker productivity for an hour and a half. buyer codes of conduct are hurting business because they are more strict. Researcher: Is labor flexibility or the lack of hire-and-fire policies an issue? General Manager of Operations: No. BUSINESS BOTTLENECKS The General Manager stated that buyer requirements like double pay during overtime are holding the industry back. No other information about the R & D department at this specific facility was given. interviews applicants. we do more incentive programs and get better performance out of our existing workforce. not anymore. Today.” The company has a manual code of conduct that the General Manager stated is given to each employee. More than local labor laws. Company G and the R Group does contract temporary laborers and subcontract to a labor contractor. worker committees. customer friendly. However. or a union. Manicandan’s CEC report. Other Human Resource Policies No information was obtained regarding a formalized dismissal procedure. Security System No information was obtained regarding a security system. no. Recruitment Policy The facility posts signs on gates. So how do you overcome these issues? General Manager of Operations: Oh. [the R Group] is seen as a highlighted-tech. He stated that it should be looser.Worker Training The facility sometimes trains workers if the operation is difficult. These problems are taken care of with labor contractors. Researcher: But you said you didn’t use labor contractors. eco-responsive corporate citizen that is Shaping a Better Tomorrow for everyone. 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. grievance policy. Page 66 . Medical Care No information was obtained regarding on-site medical care. well. 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. IX.
” The South is also usually single product. INDUSTRY COMMENTS The R Group is in the process of setting up a backward integration project for their knits division. and avoided any other types of follow-up including the suggestion of a phone interview. He refused to schedule an interview solely with the HR Manager. Page 67 . as it would tell them new government policies and how to best utilize the system. brief way. Although the researcher obtained a employee code of conduct handbook. and he was much more reserved and suspicious. the Northern area of India is more embroidery and hand-work intensive and is multiproduct. He implied it has limited use after the quota phase-out. General questions about labor laws or productivity issues usually prompt details and complaints. who was not at the factory when the researcher visited. When asked about the number of skilled workers. Furthermore. It would be better to simply show up or not leave an option of calling before coming. especially in regards to quotas. PERSONAL EXPERIENCE The R Group was extremely difficult to both interview with and extract information. but he answered questions in a more direct. Virender Uppal (the MD of the R Group) is a former Chairman of the AEPC. he initially would not let it leave the building. XI.X. every one of them was canceled by the General Manager. which makes productivity more difficult to increase. In general. The work culture in the south is “different—more productive and efficient. The General Manager stated that the AEPC was much more useful before the MFA phase-out. G International is working on converting to a single product system within the next two or three months (August 2006). he asked “why do you want to know that” and refused to give much more information past that. The researcher was directed to the General Manager at a G International plant for an interview. Because they are trying to increase productivity. They are also setting up a leather accessory factory at Gurgaon. though several follow-up interviews were scheduled.
Phase V. I. Udyog Vihar. the company website. and an interview with the Company Secretary.pearlglobal. Gurgaon II. 870. Phase V. The company structure of Pearl Global is extremely unique.com Production Units: 1. Gurgaon 2. Manicandan’s CEC report. Page 68 . Chief Finance Officer Tel: 91-124-4308201 rishiv@pearlglobal.” The House of Pearl is focused 82 83 Unit visited by the researcher. online business publications and press releases. From an interview with the Chief Finance Officer. Phase-V Gurgaon – 122 016. business began in the 1980s. PEARL GLOBAL LTD. and its first manufacturing facility was established in 1989. Udyog Vihar. Phase I. Company Secretary Tel: 95-124-4308164 E-mail: jayants@pearlglobal. Phase I. G. Gurgaon 4. 222. Udyog Vihar.com Jayant Sood. Haryana Tel : 91-124-4004086/87/88/89/90 Fax: 95-124-4004067/85 Website: www. as it includes all parts of the garment industry under the “House of Pearl. Gurgaon 3. Udyog Vihar. 138.com Registered Office: A-3. Chairman deepaks@pearlglobal. 446. Community Centre Naraina Industrial Area Phase-II New Delhi – 110 028 Tel : 011-51417680-82 Corporate Office82: 446 Udyog Vihar. The information in the following company report was obtained primarily from an interview with the Chief Finance Officer.5. CONTACT INFORMATION Contact People: Deepak Seth. BRIEF HISTORY83 Pearl Global was incorporated in 1979. In 1993 it became a public limited company.com Rishi Vig.
The company recently entered into a business and education partnership with Babson College in the U. is establishing a U. Esprit.E.P.84 Exports/Imports 100% exports.C. Kohls. $200 million. bottoms.C. Liz Claiborne.S.” Its operations in Bangladesh (NorPearl and NorPlanet) focus on more simple sourcing and manufacturing while its offices in India focus on the sourcing and manufacturing of ethnicwear (more production-intensive and complicated clothing). nightwear dresses. GAP (including Banana Republic and Old Navy). Pearl Global does not manufacture for the domestic market. including blouses. which together yield a combined turnover exceeding U. Marks and Spencer. and the UK. Lerros. brand “Kool Hearts.. Wal-Mart. Charming Shoppes. etc. Nex86. III. t-shirts. Siplec. It offers full services to large retailers with the chain broken into business units that cater to different product lines. From company website. he has been inducted to the Executive Committee of A. dresses.) and a global network of business associates and customers. He has successfully promoted and established the fashion apparel brand "Lerros" in Europe. stain sealed garments using goretex and acquatex. skirts. Castromen. The House of Pearl includes designing and manufacturing units. H & M85. JC Pennys. ethnicwear.S. Besides having been elected to the Executive committee of the Apparel Export Promotion Council (A. 84 85 See company website for list of shareholders. NorPearl. 86 From an interview with Chief Finance Officer. shorts. Product Mix Areas of specialization include: India: woven cotton and value-added cotton.S. Page 69 . Clients Abercrombie & Fitch. Pearl Academy of Fashion Domestic. warehouse and distribution.on the apparel sector with manufacturing bases in India (primarily Pearl Global Ltd. George (Wal-Mart). marketing units in the U. Dillards. trousers. and outerwear. as a Special Invitee. Karstadt/Neckermann. It also has businesses in Hong Kong (NorWest) and the UK (Poetic Gem). vests. The Chairman of Pearl Global established a fashion and design academy. He has been actively involved with the development of readymade garment industry in India. Inc.S. children’s and men’s shirts.E. suits.) for the year 1990 .1993. BASIC PROFILE Legal composition of the Company Public limited company. basic stuff. children’s. NorPlanet Pearl Global has manufactured women’s. Bangladesh: low cost.P.
Sahajanand College Panjarapole. 3. Stock Exchanges where the securities are listed: 1. The Delhi Stock Exchange Association Limited (Regional Stock Exchange) DSE House 3/1 Asaf Ali Road New Delhi . Babson College press release.400 001.” <http://www. 89 From an interview with the Company Secretary.1 crore compared with Rs 7. Ahmedabad .com/1060712/asp/business/story_6465123. In 2005-06 the company invested Rs 29 crore to augment its production capacities in Gurgaon and setting up a new unit in Chennai.9 crore in the previous fiscal]. 5th Floor Plot No. 29 June 2006.110 002 2. Towers.IV.5 crore in the previous year.41 crore in 2004-05]. FINANCIALS Turnover $200 million worldwide before quota phase-out.com/articleshow/1690384.89 Other Financials “Pearl Global posted 88 per cent year-on-year increase in net profit in 2005-06 to Rs .telegraphindia. G-Block Bandra – Kurla Complex Bandra (E) Mumbai – 400 051 4. <http://economictimes. J. Bombay Stock Exchange Limited 1st Floor.9 per cent to Rs 159.6.5 crore [from 120. Rotunda Building. The revenue of the company during the year was up 31. New Trading Ring.”90 See website for detailed financials.87 $400 million in its worldwide operations post quota phase-out.88 Net profits are 234% up.” “The company’s operating profit was Rs 17. 90 “Pearl Global net up 88%.43 crore[ from Rs.” The Economic Times: Garments/Textiles. P.cms> and “Corporate Briefs: Pearl Global. National Stock Exchange of India Limited Exchange Plaza.indiatimes.C/1.asp>. Ahmedabad Stock Exchange Limited Kamdhenu Complex Opp. Pearl announced a dividend of 30 per cent for the year [subject to shareholders’ approval]. Dalal Street Mumbai .380015 87 88 From Chairman’s Message on company website. 3. Page 70 .
From an initial order in 2001. To grow the business at this rate Pearl has had to show a "can do" attitude. BRAND INFORMATION91 Pearl Global’s Export Market 40% 60% U. 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. woven. before the cost justified it.they have grown to be our second largest supplier.V. 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. “Dear sir. 91 From an interview with the Chief Finance Officer.knitted. They now supply us with a variety of casual. They have supported our growth by putting in the infra-structure to service our needs. Our Customer's perception This reply has come from ASDA Walmart to a query of a Sr. and jersey product across all ages and genders from a variety of countries in the Far-East and Indian sub-continent. They are working on building strategic partnerships with between all of their vendors and suppliers and consolidating them. The following is a forwarded e-mail from George Clothing (Wal-Mart) regarding Pearl Global: Subject: Something you should know. Journalist.A. 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). Inc. EU and UK Major Clients Brand JC Pennys GAP (incl ON and BR) Charming Shoppes.S. Apologies for the delay in replying. Page 71 . the Chief Finance Officer stated that they are engaged in strategic partnerships with six of them.
Best regards. ASDA Wal -Mart. and any issues that have arisen have been resolved immediately and taken as learnings to provide a better service going forward. Heather Moreton. quality. UK I am a journalist from India writing for India's No.quayle@wal-mart. Currently I am doing a corporate feature on the House of Pearl who is your vendor. 1 business publication. Business India” Page 72 . Finally. and where our distribution network has creaked under the pressure. For Pearl to grow their business with us. As price deflation has become a way of life in the UK clothing market. flexibility to change our minds as to what we want right up to the last minute. Lancelot Joseph. retailer. offering us product direct from factory or landed delivered if the situation demanded. I honestly believe that to supply fashion retailers at the volume end is one of the most difficult businesses to be in .Growth on this scale inevitably creates major head-aches for the supply-chain. Senior Sourcing Manager -Kidswear. Deepak Seth has also gone beyond the factory gates to work with the community and put something back. 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. Mr. 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. Below are a few points which I hope you would take time off and reply to at the earliest. Thanks and regards. has a right to exploit the people who make the product we sell.We want style. hence would like to have some of your observation/views/comments on the business house and your relationship. * 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. Executive Editor. and delivery have had to be a given.com --Original Message-Dear Ms. it is critical for us as a business to deal in the right way. quality etc? * As compared to other supplier where do they stand? Please feel free to add whatever else you would like to express/say on the business house. so Pearl have stepped in to provide solutions and support. price. I feel that we can have an honest conversation with Mr. 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. Allan Quayle General Manager-Strategic Supplier Development George Clothing Phone 00 44 (0)1455 264409 Mobile 07779 700695 e-mail allan. Quality. or supplier. no-one whether it be store customer. We pride ourselves at George that our ethical standards are rigorous.
5% freight. yarns. 50% FOB. Page 73 . VI. Subcontracting Sometimes Pearl Global subcontracts hand embroidery. Every stage of the production line has its 92 From an interview with the Chief Finance Officer. dyes and chemical are thoroughly checked before they are fed into the manufacturing process. which are shown to buyers in advance. 90 incl. The House of Pearl has over 150 factories across Asia. one in Indonesia. shipment 50% landed 30% FOB Bangladesh: Unit Prices (paid to factory per piece of garment supplied) Range Avg Product Mix $4-12 Varies by style Mostly casual No information was obtained regarding a change in unit prices post-quota phase-out. The House of Pearl’s research and design department prepares a collection of high fashion styles for each season. Pearl Global uses labor contractors. They are working on doubling their capacity in the next 2-3 years. but it mostly in-house. Design/Sampling and Product Development Designs are mostly developed in-house. They have six design factories. Pearl Global then manufactures the style. one in Chennai and the others in Gurgaon. and one in China. Production Capacity Pearl Global has 20 million pieces in-house capacity and 120 million pieces capacity all across Asia. Markup (days) High of $10 $6-7 USD 3 to 4 times 60 to manufacture. two of which are in Bangladesh. but now they have developed direct relationships with their long-term business partners. are consulted to developed in-house patterns. INFRASTRUCTURE92 Pearl Global has five or six production facilities in India. India: Unit Prices (paid to factory per piece of garment supplied) Range Average Retail Delivery Time Type India U. Sometimes designers from the UK and the U.S. A few years ago the delivery/production cycle had to begin 18 months in advance. now it is 6 months.Buying Agency or Direct They used to contract through buying agencies. Quality Control Raw material including fibres. Production System Pearl Global uses an assembly line system. The embroidery tailors either come into the facilities to perform the work or they send it. who then chooses or modifies the styles.S.
Production Unit Number of Workers93 138. single ply yarn is also checked on the uster machine to ensure consistency in yarn quality confirming to norms of the uster statistics. Gurgaon 2000-3000 workers Machinery Pearl Global has an estimated 2000 machines for every part of the production process. WORKING CONDITIONS Wages and Benefits The Chief Finance Officer stated that sometimes Pearl Global pays workers above the minimum wage. Phase V. moisture regain percentage and finish percentage. drape and fastness to light washing and rubbing and slippage. Every set of fibre (polyester. uster percentage and impurity. fibre bundle strength. as neither an HR manager nor a production manager was available for interview. Udyog Vihar. but did not give specific numbers. Gurgaon 500-600 workers 222. tensile strength. VII. Polyster viscose and cotton yarn is tested for count.” as workers do not have a long-term commitment to the factory. novelty yarns. Manicandan’s CEC report (and confirmed by the Chief Finance Officer). After workers receive their monthly salary they see a “rise in absenteeism. Sretch yarn. Phase I. pilling. twist per inch. Phase I. Udyog Vihar. etc. Gurgaon 600 workers 870. Productivity Schemes Pearl Global gives out “best worker awards” and “gold stars” for productivity. If a worker stays for six months they get incentives. 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. The finished yarn is tested for residual shrinkage. count strength product (CSP). viscose tops and special fibre). ply yarn. Page 74 . Udyog Vihar. Gurgaon 2500-3000 workers 446. CRA. Udyog Vihar. which is sourced from outside is tested for fibre fitness micron ( fibre diameter). Approximate number of workers in all facilities Pearl Global has approximately 6000 workers in India. Departments The researcher was not able to obtain information regarding the specific nature of the assembly line or tour the factory. and if they have a low level or no absenteeism they also get an incentive. fibre composition percentage (blend %).own set of detailed monitoring system. Phase V. 93 Numbers for the units at 446 and 870 were estimated by the Chief Finance Officer while the other numbers were obtained from G.
” and it is not convenient as Pearl Global would have to provide transportation. although being a “permanent” employee will entitle a worker to an identity card. but if it is mixed employees then it becomes a problem with issues of sexual harassment. Bangladesh. 95 Page 75 . All but temporary workers are covered by social security schemes. though sometimes workers work double shifts and are paid double. who are not entitled for ESI and PF. & Company. they used a mix of outside agencies and consultants. Manicandan’s CEC report. Union and Worker Committees98 There is no job security. 3000 per month Every year workers receive Rs. 3500 per month Rs. & Co. 96 From an interview with the Chief Finance Officer. ESI and PF.K. 2006. Manicandan’s CEC report. Manicandan’s CEC report. They want to hire more women like Southern facilities do because women workers are “more efficient. Out of 500-600 workers only about 90 are in the union. K. According to G. There is a union in the facility at 138 UV. who must first pass a hand-eye coordination test and then spend twenty days on the training line. and the head of the union is not an employee at the facility. and Indonesia is lower. Dismissal Procedure. 98 According to G.” However they are working on providing the necessary infrastructure (such as transportation) so they would be able to hire more women workers. and Sukumar Pride. if there are no orders or “no work” employees are told not to come. There is no sexual harassment 94 According to G. VIII. Furthermore if “it was all women it would be fine. 97 From an interview with the Chief Finance Officer.” but there are not enough “available. 4000 per month Rs. 100 more and a 20% bonus for divali. Recruitment Policy Pearl Global uses labor contractors and specifically stated they use R. HUMAN RESOURCE POLICIES97 A new HR manager is to be hired as of August 15. The union is not effective in addressing the problems of the workers. Labor Turnover96 The labor turnover in Gurgaon is about 20%. Overtime95 The facility at 222 UV has two shifts and thus there is little overtime. For their HR strategies. They did not have a HR manager before this. Worker Training There is a training line for new workers. They contract temporary workers through R. The labor turnover in Chennai.Position Finishing supervisor (7 months experience) Tailor (8 years experience) Tailor (5 years experience) Wages94 Rs.
The company also operates a school by the name of 'Little Pearls' in Delhi. they have set up a medical treatment facility in the spirit of social responsibility. From an interview with the Chief Finance Officer. Employees. as there is different management at each facility.e. and teams are set up to work on weak areas in working conditions. Sustainability and Profitability of revenues year after year. According to the Chief Finance Officer. “ethnicwear” or design. as mentioned previously there is a new HR manager slated to begin on August 15. etc) helps immensely. Labor cost is still competitive (in terms of the world market). The unit at 222 UV does not have a union. Vendors and the Society-at-Large. The Company has built-up very effective TEAM WORK…The primary purpose of Corporate Leadership is to create wealth legally and ethically. The House of Pearl has enough infrastructure to double turnover. INDUSTRY COMMENTS100 Commented on the strengths of the North. The company has set up Pearl Academy of Fashion. Seasonality is an issue. Pearl Global has a very effective HRD system they have build an empire highly trained and skilled manpower ready to face the dynamic changes. The Chairman Pearl Global espouses corporate responsibility ideals on its website (Chairman’s Message. Investors. The motto of every Corporate Body is to ensure Predictability. orders are fewer in July and August. Pearl Global just hired a lawyer to help analyze and plan financial structure. 2006. which have monthly meetings. Corporate Responsibility/ Codes of Conduct According to the Chief Finance Officer. implying that the AEPC is not as useful post-quota.committee. Page 76 . They want to integrate all offices with an ERP 99 100 From an interview with the Chief Finance Officer. Deepak Seth): “A future that shall be built with the same strategy that has shaped our past. there are sexual harassment committees. X.” IX. Working on having uniform HR and productivity strategies. Source the best from the World to deliver the best to the world by following ETHICAL MANUFACTURING AND TRADE PRACTICES. The strength of South India is its efficiency. which holds it back. a fashion design and manufacturing technology institute. so they are working on capitalizing upon the existing capacities. which is missing in the North but the value-added garments (embroidered. i. 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. This translates to bringing a high level of satisfaction to five constituencies Customers. BUSINESS BOTTLENECKS99 The industry is regulated by the supply of cotton.
The Advisory Board of the Academy consists of leading exporters. It has a validation agreement with the UK's Nottingham Trent University (NTU). The House of Pearl is planning to get into retailing and is working on an industrial engineering department and setting up software SAM.” The Economic Times: Garments/Textiles. Managing Director. Pearl Global. Lalit Gulati.com/articleshow/1404688. Partner. <http://economictimes. Production and Computer Aided Design…The Academy has opened its second campus in New Delhi. Modelama Exports The Pearl Academy of Fashion was set up in 1993 by Pearl Global Ltd. and Germany's LDT Nagold. Mr. 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. They just initiated a subjectivity productivity software analysis system which would analyze the difficulty of manufacturing particular items and adjust productivity goals accordingly (so workers are not “punished” for lower productivity levels if the style is more difficult and it is not their fault). one of the top two in this field in the world.htm Advisory board includes: Mr.com/index.pearlacademy. industrialists and academicians. As a result of the close interaction between the industry and the institute. in India and abroad. like in “Pearl Global to merge two companies. its alumni hold responsible positions in more than 300 leading organisations. at Naraina.16 equity shares of the company for every share in City Estates was recommended by the board at the meeting. Mr. Merchandising. Retailing. who constantly review the institute's performance to ensure that the programmes are practical and industry-oriented. 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.cms>. Hong Kong Polytechnic University.Virender Uppal. It has links with acknowledged international leaders in fashion education.system.indiatimes. R & Company. and is located in the Okhla Industrial Area (Phase II) of New Delhi. Chairman. Bolton University..”101 Pearl Academy of Design Education-Pearl Academy of Fashion http://www. and London Centre for Fashion Studies. 101 Page 77 . Deepak Seth. such as the UK's Chelsea College of Art & Design. The company is setting up new facilities in Dhaka (Bangladesh) and a design center at Chennai. It provides training programs in the areas of Fashion Design. 7 Feb 2006. London College of Fashion.
India last week for the official signing ceremony with Deepak Seth. Bhupatkar. joint information sharing. RMX Joss. The Babson college press release: Babson College. and will visit regularly to monitor teaching. distance participation in projects.’s premier business school). Research in India Babson College..Benetton. and Professor Ash Rao will present the final reports to Pearl. requirements. and assessment standards. among others. Richa & Co. Page 78 . Orient Craft. USA. was also present. This trust is in the initial stages of developing a new. Ponds (India). Pearl Global Ltd. internship facilitation. Shoppers' Stop and Ebony. Vivek Jain. India. 102 From the website of Pearl Academy of Fashion. Babson College in Wellesley. Advises Pearl Global. Executive Director. learning.. * Student report on the student admissions process and co-curricular activities. Michael Fetters. The Pearl School for Business Studies will grant Bachelor of Business Administration and/or Masters of Business Administration degrees with a focus on entrepreneurship. * An overview of the entrepreneurship curriculum. Babson’s consulting reports will include: * The general curriculum for undergraduate and graduate programs. have signed a strategic collaboration on a full range of activities to promote world class research and education of entrepreneurship in India. The collaboration is designed to expand over the next seven years. Current plans are for first classes to be admitted in the fall of 2008. has set up a business partnership with Babson College in Boston (U. India. Both institutions will identify mutual exchange opportunities—on-line access to library resources. * Faculty report including Babson faculty profiles and approaches to faculty development. processes. Bombay Dyeing.. Sonal Garments. The Asia Institute at Babson. Pearl Global Ltd. Robert Eng. Pearl will shape this information into a comprehensive Entrepreneurship curriculum to meet the particular conditions. Mass. Babson’s Provost.. Mafatlal.—ranked #1 worldwide in Entrepreneurship Education---will advise Pearl on the strategies. and stipulations of the local region in India. Babson faculty will provide workshops for Pearl faculty and staffing. and procedures necessary to build an Entrepreneurial foundation and curriculum. workshops. links to websites. on New Business School: Two Form Strategic Collaboration to Promote Entrepreneurship Education.S. advisor to Pearl Global’s education trust.—a $400 million company exporting garments to Europe and North America—has formed a non-profit educational trust.” 102 Partnership with Babson College Pearl Global Ltd. private business management institution at two campuses near New Delhi. President of Babson’s Alumni Club in India and Chairman of DCW Ltd. Chairman of Pearl Global and Dr. USA and Pearl Global Ltd. traveled to Delhi.
is recognized internationally as a leader in entrepreneurial management education. the recent fall in price makes it an attractive long-term bet. <http://www3. “According to market analysts. It was difficult to obtain an interview by calling the numbers on the website. which is setting up a joint venture manufacturing facility for soft fabrics in China to secure part of its supplies.” Babson College in Wellesley.W. The interview consisted of a powerpoint presentation on the structure and capacities of Pearl Global.”104 XI. 103 Babson Newsroom Release. 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. Babson grants BS degrees through its innovative undergraduate program. “According to industry sources.103 Domestic and International Retailing In addition to the U. Kool Hearts label.com/finance/equity/fullstory.cfm>.php?id=13972072>.such as Jaipur. 104 “Pearl Global bullish on Q2 numbers. Page 79 . Babson Executive Education offers executive development programs to experienced managers worldwide.” 26 Oct 2005. is understood to have chalked up a plan for its presence in domestic retailing. <http://sify. a company that shares our vision to advance Entrepreneurship knowledge in India.babson.edu/Newsroom/Releases/Babson-and-Pearl. an interview was promptly arranged with the Chief Finance Officer. and grants MBA and custom MS and MBA degrees through the F. Olin Graduate School of Business at Babson College.” said Fetters. For information. visit www.S.. “We are privileged to work with Pearl Global. The Company Secretary was not useful in arranging interviews with other personnel who would be able to answer what he could not. 24 April 2006. growth prospect remaining high. however after e-mailing the Chairman. Ltd.“This collaboration is an important step in Babson’s journey to globalize Entrepreneurship Education.. Chandigarh and Lucknow.babson. Mass. the company is in the process of booking retail outlet spaces in cities across northern region . Deepak Seth.edu. though the researcher was not able to obtain a copy without signing a confidentiality agreement. Gurgaon. Pearl Global is getting into domestic retailing: “ [Pearl Global].
and preliminary interviews from Gurgaon workers. Haryana Tel: (+91-124) 5090800. Haryana 4. 68. 2341110 2.com Production Units: 1. Udyog Vihar. Khansa Road Sector 37.” E-mail: orient@orientcraft. Manicandan’s CEC report. He had a friend from London who was buying from importers and selling the goods to specialty shops. 13. Udyog Vihar. the largest computer embroidery facility in the Indian subcontinent. and 105 106 First two units visited by the researcher. An ISO 9001-2000 Unit: “Orient Craft Embroidery Division. Gurgaon-122015. but it does not contain any information beyond the heading: Orient Craft Limited: Embroidery.ocemb. There is a preliminary website set up for its embroidery division at http://www. Plot No. 2343262 Fax: (+91-124) 2342042. ORIENT CRAFT LTD. 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. CONTACT INFORMATION Contact Person: Sudhir Dhingra. Phase IV. BRIEF HISTORY106 Business began in 1972. Gurgaon. found some tailors to make the shirts. Gurgaon.6. so he could use the proceeds as seed capital. Haryana105 3. Unless otherwise indicated. Managing Director. 15000 ($300) from his father. Dhingra borrowed Rs. who asked Dhingra to get 1. but the company was not incorporated until 1978. Phase-1 New Delhi.com/. has no website. Page 80 . G. I. Gurgaon II. 26818249 Website: Orient Craft Ltd. 110020 (India) Tel: (+91-11) 26818247. From an interview with the Managing Director. mobile: 9871496362 Corporate Office: Orient House F-8 Okhla Industrial Area. online business and economic articles.000 shirts made in India. most of the information is from the interview. Dhingra was a law graduate from Chandigarh with no experience. 7-D Maruti Industrial Complex Sector-18 Udyog Vihar. 14-A Maruti Industrial Complex Sector-18 Udyog Vihar. a company profile given to the researcher by the Managing Director.
Dhingra states that others followed Orient Craft’s example.niftindia. not just in the limited Indian context. 200-300 people. he obtained a factory processing site of 240 sq. with more than 350 modernized factories.”107 Biography for Sudhir Dhingra for the International Fashion Technology Forum.A. <http://www.htm>. “At the time. he also encountered some buyers. During his traveling. they’re looked down upon. ASSOCHAM. only now it is 136. Then.” His father gave him one year to start up business. with 3500 people. 15000 plus a small portion of the profit (Rs. though he stated that it was difficult to actually get the money from the government. CII. When his friend repaid him the Rs. not like today. ft. set up a pressing line on the dining table and the production line in the garage. Then after a few years. and set up a manufacturing plant in the late 1970s with a assistance of a government program that give 150% of exports sales as incentives to burgeoning enterprises. then consolidated supply chain into one roof.shipped them to London.” Dhingra wanted to move production out of the village and industrialize the area and put as many skills in-house as possible. he decided to break into the industry.000. found another buyer. with 1800 people. Orient got clients by word-of-mouth from their L. Orient’s first factory was established in a village in Hauz Marg and it is still there. and others. and that plant is still there. Dhingra “is also Executive Member of the Advisory Committee of AEPC and an active member of reputed associations such as FICCI. 107 Page 81 . In the mid 1980s.A. During this traveling. Both were wholesalers who sold to specialty stores. 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. Then while in Germany. he was able to observe fashion trends and the kind of things that were selling. he estimated a production capacity of about 150. May 2006. CMAI. the Indian-inspired fad went away and he had to spend six to seven months traveling to get rid of inventory stock. National Institute of Fashion Technology. During the first few years. And being a tailor is like being a janitor. CIAE. In the 1990s Dhingra set up a bigger plant with 100 machines. and restarted business with a trial order of 1200 pieces for a customer in L. Liz Claiborne sent an American technician to help Orient with worker training and modernization. Orient subcontracted until the early 80s.000 sq. and Germany buyers. you had to be a tailor to be in the garment industry. as Gurgaon is the single largest manufacturing sector in India.com/iftf. and he rented a house. he hired more people. when he got back to India.000 sq ft. they’re not looked up to.000 pieces and an annual turnover of around $40-50. 6000 ~ $133). Dhingra wanted to improve the standards of quality and infrastructure to globally competitive standards. The first plant in Maruti Industrail complex was the first plant in India that was over 80. yards and outsourced actual manufacturing. The first Gurgaon plant was established in 1993. When he returned.
and 2002. Mr. Ralph Lauren (Lauren. men’s shirts. because of “language and cultural differences” with the European business partners. Limited. Rocawear. boys’. Product Mix Areas of specialization include blouses. Owners/Directors Mr. Donna Karen. Dhingra was the sole proprietor. Calvin Klein Jeans. Jones of New York.Hook. ropers. ELM Street. 1998. Kohli. Old Navy (women’s). Tommy Hilfiger (men’s. outerwear. and gave 20% to his nephew and 20% to his friend. Dhingra states that Orient is the only factory in India to manufacture for Marc Jacobs and Louis Vuitton. Oasis Stores. kidswear. jackets. Dockers. Clients Armani Exchange. and jeans). Exports/Imports 100% exports. Awards Additional information: Orient Craft Ltd. However. Orient Craft Ltd.G. LizWear.III. 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. Page 82 . was set up in 1978 and has been India’s number one garment manufacturer and exporter and is the recipient of the ‘Gold Trophy’ given by the government of India for highest global exports out of the country for 1977. Macy’s. 2000. Now he owns 60% of the shares. coordinates. LizSports). K. Loft. Next Retail Ltd. Zara. shorts. BASIC PROFILE Legal composition of the Company Orient Craft is a privately owned company but deemed public limited.K. Abercrombie & Fitch. is looking into breaking into the domestic market.. knitted shirts/t-shirts. GAP (kids). Anoop Thatai EOU Information The company has three 100% export oriented units (which can import all raw materials and trims free of duty). J-Crew. 2001. Susan Bristol. J. Orient used to source for Wal-Mart in back in 2003 but has since stopped. Sudhir Dhingra (Chairman and Managing Director). Marc Jacob. Ann Taylor. Up until 10 years ago. Lands End. Diane von Furstenberg. dresses. Mr. Dillards Stores. Marks & Spencer. The company does not do that much business with Zara and Miss Sixty (Italy). Esprit. sportswear. pants. and Marks & Spencer. Banana Republic. skirts. Polo Jeans). Liz Claiborne (LizDresses. women’s. Express.
” BBC News.50 $1.12 0. now it is Rs. BRAND INFORMATION Orient Craft's Export Market 5% 15% U.02-0.03 0. Kaushik. FINANCIALS Turnover FOB USD $105 million for 2002-2003 FOB USD $118 million for 2004-2005108 FOB USD $165 million for 2005-2006 (Rs.00-6. 110 Based on the company’s average unit price of $10 USD. 4 per unit.8 million 19.bbc.A.02-0. Europe 80% Canada 108 Basu. 742 crores) Other Financials Last years profit was $8 million (40 crores).20-1.00 % Retail Price111 0. which has doubled in a year and a half-as mentioned by NITRA president-used to be Rs.08-0.S.8-24.00 $1.5-99 million 19. 111 Average retail markup is five to six times the unit price of the garment.20-1. 2 March 2005.uk/2/hi/south_asia/4294679. despite more competitive pricing.5 million % of Sales 50-60 12-15 12-15 10 Per Garment110 $5. “Winners and losers in textile shake-up. 9 per unit) 113 Dhingra stated that Orient usually ends up with half of the target profit.02 V. <http://news.stm>.co.50 $1.8 million 16. Page 83 .IV. 109 These figures were estimated by the Managing Director in the space of 5 minutes.03 0. so they can only be thought of as a rough approximation. 112 Overhead (mostly energy.8-24. Breakdown of Sales Revenue109 Est USD 2006 Material Cost Labor Overhead112 Profit (target)113 82.
114 Dhingra stated that Orient manufactures 80-90% of what Diane von Furstenburg (high-end maternity clothes) sources from India. Dhingra states that it is easier to deal with buying offices. Limited used to be mostly direct. 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. <http://news. Dhingra stated that Orient’s average unit price is $10. European companies pay higher unit prices). they made one skirt for Polo Blue that will retail at $1199 (did not state unit price). Some things have increased greatly.) stated that on the date of the author’s visit in 2005. the industry-wide average unit price in India is $3. There has not been a huge shift in the composition of customers.Major Clients Brand Diane von Furstenberg114 Macy’s Marc Jacob Marks & Spencer Ann Taylor Loft Ralph Lauren Express The Limited Dillards Tommy Hilfiger GAP Liz Claiborne Length of Relationship 1 and a half years 2 years115 4 years 4 years 4-5 years 4-5 years 4-5 years 6 years 6 years 8 years 8-9 years 12 years 15-16 years Turnover $17-18 million - Buying Agency or Direct Most companies are represented by an agent and very few are direct. 116 According to Dhingra. 115 Restarted business with Macy’s 2 years ago. like cotton pants. “Winners and losers in textile shake-up. There has also been an expansion of volumes and an estimated 15-17% growth in orders. depending on the quota category and how much they were previously restricted.50 USD (from US companies. Orient was manufacturing skirts that would be sold for $4 USD per piece. 2 March 2005. however an article written for the BBC in 2005 (Basu. but they just opened an office last year.stm>. Recently. Kaushik.co.uk/2/hi/south_asia/4294679.” BBC News. Orient tends to deal in higher quality and higher unit prices and lower volumes. however used to source to them about 10 years ago. Orient would not take a Wal-Mart order. Page 84 . however. Marks & Spencer is currently direct.bbc. but they will open up their own office soon.
121 The average order size is 10-12.000 sq.117 Previously. May 2006.000 pieces. sometimes 25-45. In 2003 Orient established a manufacturing complex of 340. It picks up fashion from around the globe. Production Capacity 2002-2003: 480. Orient has created a niche with their diversified product line (mostly cotton/knits or wovens. Production System Orient Craft uses an assembly line system.000 or even 100. Orient has put a lot of human resources into product development and now boasts 900 product development personnel at 5 different locations. product development became the key thing that most Western companies were looking for. 120 Biography for Sudhir Dhingra for the International Fashion Technology Forum. Orient also deals in some very small volume orders for high-end buyers like Oil Lily. and employed 5000 people. (unclear if it is the same facility visited) at the cost of over $10 million USD. As Dhingra stated. Page 85 . Gurgaon. INFRASTRUCTURE Company has 21 production facilities.com/iftf. ft.000 sq. as traveling became restricted and Indian companies needed to build a competitive advantage. ft. even a little bit before. Orient makes 130.”118 Subcontracting Orient does not appear to subcontract. companies. gives feedback. of which four are in Delhi. though it does use labor contractors.niftindia.000sq. Haryana.000 pieces. 119 According to the company profile.000 per day120 2006: In an average day. 1. 117 118 Plot No. and one large plant is located in Noida.200. which was at the time the “single largest multi-product manufacturing plant in the whole of India. 13. six in Gurgaon.000 knitted per month 2005-2006: 720. Khansa Road. in 2003. Design/Sampling Orient has ramped up its design department in the past five to seven years using mostly in-house skills with some help from U.000 woven per month.000 woven per month.S. chiffon to denims and outerwear). whose samples are then sent to potential buyers. ft.000 knitted per month119 2006: More than 125. According to the company profile. and creates new designs for each season. 720.VI. Udyog Vihar. after 9/11. The second plant visited was 380. 121 According to an interview with the Managing Director. <http://www. National Institute of Fashion Technology. the company had only 17 production facilities spread over 600. but other fabric from silk. in and around Delhi.000 pieces and production capacity has grown at least 25% over the past year.htm>. Orient has a display store in NY on Park Avenue that it opened up 3 yrs ago. Sector 37.
Productivity Schemes Orient uses incentive schemes to reduce absenteeism and has implemented worker welfare schemes. Bihar. The labs are equipped to test for all parameters including color fastness to light. consisted of 12 production managers each in charge of about 250 workers (tailors and helpers) at 100 machines with 12 line supervisors. “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. which is generally equal in size to the production department. with very little embellishment. In 2002-2003. trousers. However according to G. According to Dhingra the “girls” in the South are operators and less skilled. who manufactures 80-90% jackets/ outerwear.Quality Control The company has in-house lab testing for garments. Approximate number of workers in all facilities Number of people employed in 2002-2003: 12. washing plants and dry cleaning units. Page 86 .” 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. WORKING CONDITIONS The workers are 80% male and since Delhi and Orient is mostly multiproduct. they “can’t be like Golkadas. fabrics. Manicandan’s CEC report and could vary factory to factory. VII. one facility’s production department. the workers are skilled and come from a tailoring background and are usually from UP.000 Machinery Orient has in-house computerized embroidery machines. not through a labor contractor. Manicandan’s CEC report. Manicandan’s CEC report. MP and some from Haryana. Departments No information on specific departments was obtained through the interview. According to G. Information on work timings was taken from G. More contract workers and women (especially thread-cutting) are in the finishing department.” Dhingra stated that 70% of Orient’s workforce is direct employment. workers do not go to lunch at the same time. shirts. and trims. the company had 7300 sewing machines.000 in-house Number of people employed in 2006: 23.
Dr. 60-70% of the workers are unskilled helpers. the company's chairman and managing director Sudhir Dhingra dreaded the idea of setting up huge factories . VIII. the salaries average Rs. However. Dhingra stated that in the 1980s and 1990s Orient used a piece-rate system. 3000 per month for an unskilled worker salary. Viet Kumar & Company. The payscale is adjusted twice a year according to inflation. Sartrushi. the turnover for Orient Craft is fairly low. the following was mentioned in a business article: “Till a year ago. workers are paid much less than Dhingra asserts.000 per month plus ESI and PF. and Vasisht & Company. “particularly [those] working in the Finishing department. but he makes no mention of any other incentives.all for the fear of Page 87 . The payments and benefits for contract employees are given to the contractor. labor turnover is decreasing. Bonuses are given during Divali. & Company.Wages The average wage starts at Rs. Worker Training Dhingra stated that all the facilities have training schools and they want to make them more formalized. HUMAN RESOURCE POLICIES Dhingra stated that there are common HR policies and productivity schemes across plants. Union Though unions were not explicitly mentioned in the interview.” Furthermore. who takes a 5% commission before paying the rest to the worker. Recruitment Policy Orient Craft employs contract workers for at least 30% of its workforce. Manicandan’s CEC report. 5-8./month) 2850 2344 2000 2850 Labor Turnover According to Dhingra. They are trying to start a training school NGO with a founding member of NIFT. With incentive programs for more highly skilled workers. and most people are above the minimum wage. no piecerate. where workers can be trained and work for other companies if they choose to. according to G. semi-skilled and unskilled workers that are hired through labor contractors are paid under a piece-rate system. and in 1993-1994 they started moving away from piece-rate and a few years ago they did away with piece-rate completely. Category Tailors Helper Trainees Contract Worker Average Wage (Rs. K. Some of these contractos are R. probably around 8-9% and as Orient is expanding.
it’s about what we can do for the community.000. workers are fired with no redress. “Preparing for 2005: Dressing up for the party. Orient also helped train 300 women from the nearby village in hand embroidery at international standards. Global players are looking for India bases.”123 According to G. Although Dhingra stressed how this was all for the benefit of the women and the community. and that Orient pays in full for the schooling of female children of workers and for 65% of the schooling of male children. Punishments are given to workers without any formalized procedure. Sector-18.asp>. Clusters are reinventing themselves. However upon further inquiry. sometimes more than their husbands. But the management suppressed and ousted all the workers who [were] involved in the establishment of a Trade Union. 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.com/apr0504/coverstory01.” Worker Committees/Grievance Policy/Dismissal Procedure Dhingra was reluctant to give specific information regarding worker committees in person. Now she is a finishing manager and gets 123 Rajshekar. and if a manager finds a worker guilty of an infraction. ten years ago we had 5000 people. no formalized dismissal procedure. According to G. it would be people. M. GAP gave Orient $35. Twenty years ago we had over 1000 workers.000 and Orient spent $20. 400 per month. The “village panchayat said that Muslim women can’t go out…but now that they are trained. Thirty years ago we employed a women who worked as a thread-cutter and got paid Rs.’” They built a four story structure to house the embroidery tailors. T. “if someone asked me what my one single reason for success. Some of our workers are second-generation workers. he stated that such information was confidential and would hurt Orient’s competitive advantage. Page 88 . Since then the company started sourcing their manpower from labour contractor[s]. “around five years ago there was an attempt to establish a trade union (at the 7-D. There is no grievance policy procedure in place for complains against workers or management.it’s not just about the bottom line. Maruti Industrial Complex unit). ‘my husband doesn’t beat me anymore.businessworldindia. Manicandan’s CEC report. now we have 23. One woman told me. Orient had no worker committees at the facility visited. This strategy effectively stops any attempt to consolidate workers towards creating a Trade Union.[worker] strikes. and Surendar. they feel very proud to bring in income. stating that he would forward the company’s code of conduct and a list of their worker committees through his personal secretary. <http://www. Manicandan’s CEC report. I have always been very people-centric-. no sexual harassment committees and workers are not involved in wage negotiations or target setting.000 building a community welfare center that provides medical care for community members. But will we be ready in time?” Businessworld. 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. According to Dhingra.
Dhingra stated there are companies who do $1 billion (mentioned China and Lian Thai from Hong Kong.000). Dhingra wants increased flexibilization otherwise it is more difficult to expand and it hurts business. which eases strain some as well as the other diversification of profits. Marks & Spencers.” They started up home furnishing about three and a half years ago. as Orient usually doesn’t have as many orders May through August. Pottery Barn. Macy’s. Donna Karan. 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. They started producing denim products 5-6 years ago and just started manufacturing men’s suits at a plant for Liz Claiborne and Express. in-house fully functional gym and an Executive Club.paid Rs. Seasonality is an issue. which includes a more complex manufacturing process. comfort. IX. but Orient has taken up some holiday decoration work. and ease of working. Besides being compliant by the current standards. for Bed Bath and Beyond. “India is still not good at producing fall fabrics. Although happy about Orient’s success.. since Orient Craft products tend to be high-fashion. Home furnishings is still smallish industry and comprises about $15-17 million of Orient’s sales. we only have 23. highly tailored outfits with additional embellishments like embroidery and special washes. It is the soul of our company. and her son is working here… I have always thought about social welfare. Labor flexibility is also an issue. such as home furnishing.000 people. White Co. 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. Specifically. and Orient needs to do competitive pricing to stay in the game and Page 89 . “they have 100.” 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.000 per month. We have created great recreational areas for workers and middle management by building great cafeterias. he wants to extend the length of time it takes to become a permanent employee to 12 months. 50. According to the company website: The new complex is designed to create a very worker and management friendly environment in terms of esthetics. BUSINESS BOTTLENECKS Productivity is relatively low.
“The lifting of quota has brought humongous demands on one side and on the other.125 124 Dipankar.cms>.indeconomist. X. Ironically it is the same Indian companies who are buying the units for their machines. INDUSTRY COMMENTS Orient recently bought a Levi’s plant in Spain for its technology. India is in an advantageous position. as they need to grow the base of buyers and price is a compelling reason to do that.” Times News Network.” Industrial Economist: Textiles Report. Earlier. the garment industry presently stands at approximately Rs 15.000 crore. As of now. At present. Bangladesh and Pakistan.curpg-1. However. of which China contributes one-sixth. The expansion plan envisages setting up of two new facilities at Manesar.bring in buyers. it is important to have machinery comparing to global standards. Orient has 20 production units spread across Gurgaon. India. Page 90 . The company’s deal with Levi’s is the second such significant international venture. 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.indiatimes. and aims to increase it to over 40 lakh units after the expansion.3 million dollar)…Orient Craft by its own admission acquired the unit because of its superior machinery content. Kumar. near Gurgaon…Levi’s was looking for a buyer due to high maintenance and labour costs in Spain. The company’s management is also planning to raise an IPO later this year.00.124 The machinery from the newly acquired plant will form part of the company’s expansion plan at Manesar. The company has since then stripped the Spain unit of its machinery and fitted them in its plant here at Gurgaon. World over.com/articleshow/msid-1232753. India’s lack of worldclass machinery producers domestically has seen a lot of companies look to the West for help. 125 Jha. Orient Craft manufactures and exports about 30 lakh units of garment every month. buyers are getting increasingly quality conscious. the textile industry in India still has a long way to go before it can catch up with Chinese volumes. <http://www. <http://economictimes. Noida and Okhla in Delhi.5%. growing by over onefourth from last year.” said Mr Dhingra. PTI Economic Service. “Garment exporter Orient Craft buys Levi’s plant in Spain for Rs 60 cr. From business articles: The company… acquired a Levis unit in Spain in mid 2005 for Rs 60 crore (approximately 13.com/30thjune06p4. Mr Dhingra estimates the annual turnover to be in the excess of Rs 800 crore.htm>. In the changed business scenario. 16 September 2005. Since the quota system has been reimposed on China. (despite quota regulations) and India adds to a minuscule 1. Mayur Shekhar. Orient came up on the global radar when it started its first overseas facility in New York two years ago. The company expects the expansion plans to boost its revenue generation. “Indian textile companies on acquisition spree.
Now there are 500. Dr Y. Page 91 . Rajasekhara Reddy. that’s 200 million people. but best linens) are setting up facilities in India and selling back in Europe. Banswala Mills. The deal is likely to be signed later this month. Chairman and Managing Director of the company. the exclusive Japan licensee of some well known international textile brands including Calvin Klein. As per the arrangement.000 crore. delivering the inaugural address. a leading Japanese buying house.” The Hindu Business Line Internet Edition.S. Financial Daily from THE HINDU group of publications. told ET.5m worth of textile products in the next couple of years. Why would people go through rain. "The SEZ will house up to 50 companies. From business articles: Orient Craft Ltd plans to develop an exclusive special economic zone (SEZ) for garment units in Andhra Pradesh. That’s more than the people who spend in the U." Mr Sudhir Dhingra. SBC. heat. Earlier. DKNY and Ralph Lauren.S. the Andhra Pradesh Chief Minister. we ourselves are looking at buying 2-3 lakh pieces from India.blonnet.” he said.” For Orient Craft. but look how large the population is—out of one billion. retail will explode…People say that Indians don’t have disposable income. there were only three shopping malls.S. and every day a new one is opening up—there’s space available in Karol Bagh. at present Japan is a relatively smaller market. which plans to source $1-1. told reporters on the sidelines of the CII conference on `Textiles forum . said the company was "welcome" to set up the SEZ. which is a joint venture of Caramin (France) and Bairb McNutt (Ireland. the ready-to-wear demand in India is growing. dirt. only about 60-70 million have disposable income. if there is a mall…Real estate is growing.126 Orient Craft… has entered into an outsourcing arrangement with Sumukin Bussan (SBC).com/2005/11/25/stories/2005112502590900. probably about 80-90% still get clothes from tailors. consultant.htm>. “An increasing number of Japanese buyers are looking at Indian export houses for their sourcing requirements. He announced the company would be given 10 acres of land at Nacharam to set up a garment manufacturing unit. the company’s MD. Orient Craft will be the exclusive suppliers from India to SBC. In 2-3 years.” Italian and French mills are setting up joint ventures in India. where there are higher labor costs.Emerging opportunities and the road ahead' here on Thursday.— only about 30% of the U. if even 5% are rich and 15% have disposable income. the market will contribute a significant share of Orient Craft’s overall business pie.Though most people in India. “Three years ago. SBC is the buying arm of Kashiama. <http://www. lagging behind US and Europe. Yoshiaki Kamiyama. The SEZ is likely to come up on a 300-acre plot with an estimated investment of Rs 2. we aim at scaling our Japanese business up to $30-40m. 126 “Orient Craft plans SEZ for garment units in AP. In the next couple of years. according to Sudhir Dhingra. So the spending power is in India. 25 November 2005. etc. Orient is considering getting into the domestic market now. population spend. However. “The tie up with SBC will give us a good foot hold in the Japanese market.
the company's chairman and managing director Sudhir Dhingra dreaded the idea of setting up huge factories . India's biggest exporter Orient Craft has also begun to realise that.com/apr0504/coverstory01. Bangladesh churns out as many garments as India from a fifth as many factories.all for the fear of strikes. China is the largest exporter to Japan. Till a year ago. M. Global players are looking for India bases. Times News Network. 127 “Orient Craft ties up with Japanese co.about 10 times the size of the Delhi-based Orient Craft. which.127 The biggest Chinese firms have a turnover of $800 million-1. The centrally air-conditioned facility will combine all the stages of garment manufacturing. which made finding up to date contact information difficult.000 people. to cater to new deals in the pipeline. we will have to invest in new capacity every year if we have to keep pace with the industry.Depending on the volume of the orders.com/articleshow/1496902. skill-intensive manufacturing could be a way to compete. But will we be ready in time?” Businessworld. 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.cms>. However. Like most other economies.200 million . Clearly. design to finishing.indiatimes.128 XI. 20 April 2006. <http://economictimes. 128 Rajshekar. The turnovers of these exporters range from Rs 100 crore to Rs 250 crore. T. Orient Craft manufactures and exports about 30 lakh units of garment every month." Orient Craft and Fabric & Fibres are among a few who have been pulling ahead of the pack. But what distinguishes them is a relatively larger scale. is India's largest garments exporter. PERSONAL EXPERIENCE Orient Craft does not have a website. “Preparing for 2005: Dressing up for the party. productivity and scale.businessworldindia. 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. and Dhingra was surprisingly available for an interview. Most are family-run. and Surendar. Others include Gokaldas Exports of Bangalore. 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. Thailand does almost the same business as India with a workforce a third the size. Clusters are reinventing themselves. 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. Says Orient Craft's executive director Anoop Dhanda: "For the next few years. Page 92 .” The Economic Times: Garments Textiles. Today he is spending Rs 40 crore on a new factory in Gurgaon that would employ 2. His personal secretary was not useful in obtaining any information. and Shahi Exports.asp>. India lags in technology. at Rs 450 crore of revenues. Current contact information was finally obtained through a Professor at NIFT. At present the Indian textile exports to Japan add up to $296m which is just about 1% of the country’s total textile imports. claiming more than three-fourth of the pie. and smart use of technology. the company may go for a specific capacity expansion. <http://www.
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