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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
Ministry of Textiles).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. A management survey was developed using the framework of surveys used in other geographic contexts and updated on the basis of preliminary interviews. Public limited companies like Pearl Global Ltd. Interviews were obtained in a variety of ways. Methodology Preliminary research was conducted on the internet. an interview by telephone would be far more likely to be successful than an information Page 3 . 2) To identify correlations between labor conditions and businesses characteristics. Several other agencies that are major players in the export garment industry were identified and profiled by the researcher. although some were out of date. Five companies (Modelama Exports Ltd.” a CEC report submitted by G. Asking a question via e-mail often yielded claims of confidentiality. Company G of Group R. 3) To develop corporate research strategies specific to the Delhi.) were identified using “Mapping First Tier Suppliers in Garment Industry in Delhi. It is advisable not to send questions via e-mail. and others do not disclose financial information beyond approximations of annual turnover and production capacity. The sixth company was identified by the researcher through an interview with a representative of the Indian Apparel Export Promotions Council (AEPC). E-mail was also used to a large extent to set up meetings.. If an interview cannot be conducted in person. while asking the same question in person would yield a response. Ltd.. Shahi Exports Pvt. Government of India).. Manicandan. Contact information was available on websites. India context. Online searches yielded some kind of press release or interview for each entity except for Jyoti Apparels. These are the Northern India Textile Research Association (NITRA. and Third Eyesight (an industry consulting agency). the National Institute of Fashion Technology (NIFT. Orient Crafts Ltd. display their financial information on the company website. Four of the six companies profiled and all of the agencies have individual websites. the Apparel Export Promotions Council (AEPC). linked to the Ministry of Textiles. others self-report to financial databases. the Registrar of Companies (ROC. Pearl Global Ltd. linked to the Ministry of Textiles). though it proved best to limit the amount of e-mail communication. Obtaining the phone number from the agency website and directly calling was the simplest way of setting up interviews. Managers at six companies and four agencies gave interviews.
no telephone interviews were conducted in this survey. 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. Managers were surprisingly open in some cases. 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. Women are easier to handle. Researcher: Did you have problems with employing males in the past? Manager: No—no. Also. and Orient Craft Ltd. Questionnaire Used by the Researcher The following questionnaire was handwritten in shorthand and brought to the scheduled interviews as notes. which typifies management attitude both towards women and unions: Researcher: Why are your workers mostly female? Are there significant differences in productivity? Manager: No. The attitude and openness of those interviewed are subjectively recorded in the individual profiles. An interview with an anonymous manager produced the following conversation. without which interviews would not have been possible. or productivity schemes. while others would refuse to state the number of workers in the manufacturing unit. industrial accidents record.S. Just.. however. ladies are more focused on work. They’re more docile. The purpose of this research was to obtain information about companies from a management perspective. easier to control. even though such a one-sided perspective may not reflect the reality of the situation. I don’t think they ever employed males… Limitations Time constraints limited the consistency and thoroughness of company information. Researcher: I don’t understand. What groups? Manager: Oh. Furthermore. and used to establish industry contacts.request by e-mail would. going as far as to hand over Standard Operating Procedures. time constraints would not permit cross-checking all information with workers and officers at each company. It was not e-mailed to any of the managers. context and was integral in order to obtain information. The AEPC was instrumental in identifying Jyoti Apparels as a top tier supplier. The agencies profiled were primarily interviewed before the export houses. However. and NIFT gave updated contact information for Shahi Exports Pvt. men together tend to form groups and lobbies because they have spare time. I’ll tell you. Information on these companies was obtained primarily from top-down management sources. and as such may be misleading as to actual conditions. Ltd. and one experience ePage 4 . no significant differences in productivity. but off the record. all interviews were in person.
and Responsibilities of Respondent: Number of Years in the Company: General Upper Management Do you have a brochure saying what products. if only a higher level manager could be reached. EU? Major foreign brands that the company supplies to: length of relationship. Name. get order. 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. However. The survey questions were divided into sections according to the position of the respondent. how fast company delivers products to brand Kinds of buyers—importers. package. specialty (GAP). U. as there are some questions that an HR manager would know more than a Merchandising Agent. no input--or more capable. vol of product. Ownership of Company.. I’ve heard of collegiate licensing that would provide steady orders from major brands at higher prices. What kind of input— CMT. sourcing. The questionnaire was used only as a guide in the interviews as a reminder of what kind of information was needed.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. discount retailers (Wal-Mart). DSP questions. where. since a conversational approach proved to yield the most information. CMT. deliver? Does the company ever have problems with contracts and/or steady orders? (if possible.mailing questions proved fruitless in gathering information. they often had information regarding each of these areas. total sales. help design. Designation. 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 . 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.S.
Have they used outside agencies in developing any part of their strategies? Part of AEPC. 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. trainees.e. average age of employees. 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. 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. NITRA. unskilled). Have there been any attempts at unionization in the past? What is the company’s attitude toward unionization? Page 6 . How many women. Sexual Harassment Committee. cutters. total value of exports. tailors (skilled. 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. men. etc. finishers. overhead. Have you seen a benefit in productivity since implementation of program? Are there joint worker-manager forums in your organization? If yes. semi skilled. or do they use agencies like Third Eyesight for technology and HR development? How has AEPC or NITRA or NIFT helped them? In what capacity? What are two or three main things holding business back? What are you doing to solve this? How has the central and state government helped the company’s smooth functioning? Or not? Labor laws. what do these forums do? Get any documents willing to give at any point. who are the members and how are cases handled? Give details. standing orders. etc. supervisors. Shopfloor Committee. codes of conduct. material cost. washers. Quality Circle? If yes. Grievance Committee. checkers. helpers. what is displayed to workers on details of employment. labor cost. Productivity Committee. subcontracting. pressmen.
Is there a personnel ‘code of conduct’? Is this a company policy or vendor policy? How are these communicated to workers? What employers are covered by: (i) ESI (Employee State Insurance) (ii) PF (Provident Fund) (iii) Gratuity (iv) Maternity benefits (specify) What are the details of employment that are displayed / notified to workers? (i) minimum wage (ii) ESI/PF/Gratuity? What is the average overtime payment to all employees? (i) overtime per month (ii) overtime as a percentage of total wages (iii) rate of overtime payment Ask about industrial accidents, if there is a doctor available, how often, rotate between factories, what is the most common injury, what kinds of safety equipment What is your approach in HR and Productivity/Efficiency? (Get policy document) Do you involve outside agencies in your HR strategies? Do you have common policies across your plants? What are the typical causes of punishment of employees? What are the types of punishment given? (wage cuts/extra work/asked to go home?) Is there a procedure followed for dismissal of employees? Who initiates the procedure? Is the employee given a hearing? Give details? Do you have a legal officer in the company? Do you have an Industrial Relations policy? (any written documents?) What are two or three main things holding business back? production, labor situation, training , quality control, etc. What are you doing to solve this? HR/Production Manager: Get any documents willing to give on productivity schemes, time-study worksheets, productivity numbers, structure of lines, how many supervisors, etc What is your approach in HR and Productivity/Efficiency? (Get policy document) Could you give me a sense of the floor layout of a typical factory; what kind of technology and planning has gone into the factories? What are the different departments? (Floor chart) Department # Workers # Men # Women # Machines What are parts of a Line? Is it an assembly line? How much time does an item take from the beginning to the end of a line? How many supervisors are there on the Line? Is there a productivity scheme in your company? If yes, when was it introduced? What categories of workers are covered? Are workers in any way involved in target setting? Prod planning? How much time does a worker take to achieve the desired productivity? What kinds of productivity schemes? Teams? Line supervisors? How come up with time studies? How conveyed? What have been the benefits from the productivity scheme in terms of (i) increase in productivity (ii) reductions in waste (iii) any others? Does the productivity scheme give incentives to workers? If yes, give details based on category, average incentive, and maximum incentive. How make workers more productive?
What are the typical causes of punishment of employees? What are the types of punishment given? (wage cuts/extra work/asked to go home?) Is there a procedure followed for dismissal of employees? Who initiates the procedure? Is the employee given a hearing? Give details? Has the company ever consulted industrial engineers to design the factory? What was productivity output before and after the consultation? What are the quality check points that the buyer requires? Does the company management have other quality checks? How have they used technology and state of the art equipment to improve quality? What are two or three main things holding business back? production, labor situation, training, quality control, etc. What are you doing to solve this? Types of Sources (other than management interviews) To obtain much of the initial company information, the researcher performed internet searches for the company names, and several common business periodicals showed up several times including: Apparel Resources http://www.apparelresources.com http://www.ittimes.co.kr/ The Economic Times http://economictimes.indiatimes.com/ http://www.sify.com http://www.businessworldindia.com/ http://www.indeconomist.com/ The Hindu Business Line Internet Edition, Financial Daily http://www.blonnet.com/ Most of the companies profiled had company websites, except for Jyoti Apparels and Orient Craft. Once interviewed, the companies typically gave company profiles that they use for potential buyers, which contain information about the composition of the company, the types of clothing it manufactures, production capacity, turnover, and major clients. The agencies profiled, especially the AEPC and NIFT, were vital in obtaining information that would lead to interviews, identification of major players, and important industry resources. Third Eyesight has links to industry-related articles at http://www.3isite.com/index.htm. Although the researcher was not able to research the following sources further, some were featured at an international garment fair and others are commonly used as industry resources for financials: CMAI (www.cmai.info, email@example.com), EBSCO CRIS, INFAC (intranet and internet), INSIGHT, CMIE, RMS, IAS, INDIASTAT, IRA. Information In Company Profiles Contact information includes addresses of known production sites, contact persons, website, and e-mail. Brief history includes relevant information regarding the establishment and incorporation of the company. Basic profile includes the legal composition of the company, export oriented unit information, the breakup of exports and imports of the company (100% exports for all the companies profiled in this report), the product mix, clients, and awards of the company.
Financials section includes the turnover and whatever other financial information could be obtained on the company. Brand information section includes major clients, length of relationship and percentage of turnover, direct or buying agency clients, and unit prices. Infrastructure section includes subcontracting information, the type of production system (all assembly line units), production capacity, the design/sampling department, quality control, specific departmental information, and productivity schemes. Working conditions section includes timings of work, wages, wage-setting procedures, benefits, overtime information, and labor turnover. Human Resource policies section includes management structure, worker training information, recruitment policy, dismissal procedure, union information, worker committee information, grievance policy procedure, corporate social responsibility schemes, codes of conduct, worker medical care information, and security system information. Business bottlenecks section includes whatever setbacks or problems that managers perceive as holding back business. Industry comments section includes strategy, predictions, and other relevant information regarding the growth of the company, its views on the industry as a whole, strategies for expansion, etc. Personal experience section includes miscellaneous description regarding the researcher’s views of the company and its managers and the ability to get an interview.
New Delhi 110003 Phone: 011-24362708 Fax: 011-24364570 E-Mail: rocdel.The financials publicly available include the annual return and balance (for all companies). they must submit several forms at incorporation and annually. Such forms include: Form 1.sb@sb. relating to the companies registered with them. REGISTRAR OF COMPANIES (ROC) The Registrar of Companies is a division of the Indian government’s Ministry of Textiles. New Delhi – 110003 E-Mail: rocjln.CHAPTER TWO AGENCY PROFILES 1. Form 20 gets the Director a Director’s Identification number (the number used on the mca.sb@sb. The Central Government exercises administrative control over these offices through the respective Regional Directors.mca.gov. Since Pearl Global is a public limited company. CGO Complex. the profit and loss are also publicly available.nic.nic. the address of the registered office and the locations of the business. which are available for inspection by members of public on payment of the prescribed fee. Navrang Saini Addresses: B-Block Paryavaran Bhawan.gov website to access the public disclosure documents). The addresses of each state’s ROC as of 2003 can be found at http://dca.in However.nic. the details of the board of directors/management structure.in According to the Ministry of Company Affairs website: Registrars of Companies (ROC) appointed under Section 609 of the Companies Act covering the various States and Union: Territories are vested with the primary duty of registering companies floated in the respective states and the Union Territories and ensuring that such companies comply with statutory requirements under the Act. Form 32. Lodhi Road.htm : Delhi & Haryana Regional Director: Dr. According to an interview with the Company Secretary of Pearl Global Ltd. the office at Nehru Stadium closed down earlier in the year.in/ROC_2003. Companies are required to register new events such as a change of directors with the ROC. which is not true for privately owned companies. in order for a company to be registered with the ROC. Form 18. Page 10 . These offices function as registry of records.in Nehru Stadium. Website of the Ministry of Company Affairs: http://www. Form 29 for Pearl Global makes it a public limited company. the compliance of companies act..
Page 11 . was difficult and did not yield a lot of useful information. Furthermore. 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. As such. etc. the process of obtaining public documents. but several did not have up-to-date financial or structural information. Information must be copied into a notebook by pencil (pens are not allowed). and though there is no formalized rule against this.The ROC in Delhi is in a process of transitioning to an electronic format of filekeeping. photocopying the documents in the file is not permitted unless a fee for a legal copy is paid. Documents are publicly available after submitting a form requesting a release of information along with a small fee for each company. such as financial information and company Articles and Memorandum of Association (objectives. it was not permitted either.
122 002 INDIA Tel: +91 (124) 4112493. * One of the largest global home products retailers . he co-founded a fashion sourcing company in which he remains a shareholder. and product analysis. 2nd Floor. assistance in formulating strategy and developing partnerships with International retailers and brands. Third Eyesight's project teams consist of professionals who have hands-on experience in various aspects of retail and consumer products businesses.Assistance in development of global sourcing strategy and action plan. Thereafter.Strategic assessment of India – insights for a global senior management team to gain a realistic picture of the opportunities and the challenges in India.com Website: www. * Global fibre and chemicals company .development of India strategy and preliminary business plan including market analysis.com Third Eyesight's Experience Profile: (from their promotional materials) Third Eyesight was founded in late-2003 by Devangshu Dutta who has worked with retailers and manufacturers from across the world in a variety of consumer products sectors.3isite. He then joined a start-up consulting firm and was instrumental during its growth into a multinational consulting firm's joint venture in India. and returned to India to his position as General Manager of the Indian business. During his career Devangshu has performed the roles of an entrepreneur. Devangshu began his career with the then-leading Indian national retail chain in buying & merchandising and in store operations. advisor. dining etc. over the last 16 years. in marketing and distribution. Founder and Director of Third Eyesight A-847. including fashion. 4112495 Fax: +91 (124) 2577586 Cell: +91 98111 03494 Email: devangshu. as part of the team that launched the JV. Devangshu Dutta.Carrying out sectoral market studies in retail. He subsequently worked with an international retailer's joint-venture in India. Benchmarking against global supply chain and product development best practices. Third Eyesight and its team of associates & professionals have worked on a variety of business strategy. Sushant Lok-I. assistance in assessment of Indian supply base Page 12 . 4112494. new business start-up and operations projects with Indian and international clients. The following are brief descriptions of some of the projects on which Third Eyesight's professionals have worked. health. home.2. * International multi-billion dollar apparel brand . * Diversified Indian consumer and industrial products conglomerate . Support in implementing changes in sourcing strategy and organisation. food & grocery.strategic inputs for Asia-Pacific top management team to identify emerging opportunities in the Indian textile supply chain * Leading UK Retailer . THIRD EYESIGHT (INDUSTRY CONSULTING AGENCY) Contact person: Mr. He was also based in the European practice of this multi-national consulting firm.dutta@3isite. manager. trainer and teacher. Gurgaon . competitive and regulatory information.
development and delivery of sales & marketing collateral for three consecutive seasons. Since the garment industry is extremely labor intensive. Directed researcher to online industry magazine resource (Website: apparelresources. it was a licensed economy in which you needed to get government clearance to manufacture in specific capacities.org). * One of the largest Indian textile and garment companies . Gave history of market structure in India.Comprehensive comparative study of 7 cities in India and outside to choose location of new garment manufacturing plant * Leading Turkish supplier . gave contact information for the National Institute of Fashion Technology in Hauz-Khas. who would be able to help schedule company interviews. reserves certain sectors for small units. 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. you need a separate registration and thus it is easier to simply export (used to be tax-free). Sibichan Matthew.Business planning for new brand acquisition. Pradeep Joshi. According to him. Mr. (Website: niftindia. Matrix. as you needed approval from the state government if you were operating a place of business with more than a hundred workers. labor laws also limited the ability of companies to expand. The investment cap was very low. and you cannot have large units. In the early 90s. Page 13 . * Pioneer luxury brand house in India . who could then direct me to industry management: Dr. Mentioned another apparent Tier 1 (said they are large and source directly to MNCs). Mr. and the result of this was that a successful company was prevented from expansion.Assistance in formulating strategy and developing business with global customers for exports. * Indian subsidiary of one of the largest sports apparel and footwear brands – Design. The small-scale reservation system.Formulating strategy and assistance in strategic alliance proposal to key European customer.org) Advised researcher to contact faculty of the management studies department. The government thus limited how much you could produce under the reasoning that overcapacity would lead to inefficient use of capita. The other reasons for company fragmentation are the nature of quota system and labor laws. This is partially why many of the current successful companies (such as Richa Global) are split up into many different companies. D. The name is on the WRC disclosure list. Also told the researcher to contact faculty of Pearl Academy of Fashion. Business strategy and plan for current business. Initially. and assistance in seeking new capital infusion.K. The quota system obliged companies to set up under different names. this model was phased out.* Multi-billion dollar Indian consumer goods conglomerate . Much of the fragmentation of companies was really only on paper. which continues to regulate knit-fabrics. Content of Interview (5 July 2006) with Director of Third Eyesight: Asked about study. Batra.
he said that Indian companies were extremely uncertain about the effects of the MFA phase-out. The MNC gives product specs. gets quotes from suppliers. how the current transactional model is very inefficient insofar as buyer-supplier cooperation goes. saying that the industry had often talked of diversifying. investment in the industry slowed down.one hundred workers is nothing. He said that Delhi is doing extremely well in terms of business and is the largest in terms of exports.” however that had mostly been talk and no action. the supplier makes the product. Bangalore (roughly equal. but more menswear). but would be greatly minimized). doesn’t communicate with the designer. material. economic source.S. so all the businesses had to pay was labor and overhead. for example.. total costs would go down because the current transactional model wastes a lot of time. wherein the buyer. He mentioned that Delhi (mostly womenswear) is only one side of the big picture. the product is re-done. He expressed hope that soon the labor laws would relax some to reflect changing needs of business. the quotas had restrained India far more than China (showed a graph from a U. He began to describe the different ways of sourcing. this changed somewhat. but that the outlook of the management may be more pessimistic than Tirupur. as it was clear that Indian businesses were gaining from the phase-out and smaller countries like Bangladesh were losing instead. Because of this. and that Chennai (mostly menswear). The current model has self-contained worlds instead of cooperation. Page 14 . and money (wastes that would not be eliminated by greater cooperation. then privatized factories. and Tirupur (mostly jersey knits) all have different cultures. couldn’t see name). money is instead wasted on an inefficient process. but in the strategic long-run. he made it clear that somehow they were competing because of their “ability to develop and deliver product. etc. as the companies began to listen to the needs of buyers and in 2005. and as such is seen as a big risk and many are reluctant to actually work on establishing these relationships. However. since vendors and suppliers both may have had bad business experiences when attempting to do the same. that they were too “over-exposed in China. He stated that “the inconvenience of a labor inspector” pestering and harassing company management was a minor price to pay for business expansion. which has worse infrastructure but is nevertheless optimistic about business. effort. worrying that Indian business could not compete with China. He began to talk about sourcing. it would increase unit prices. the investment returned. the MNC may like it or require additional changes. 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. From 2001-2004. From a piecemeal view. In 2004. strategic sourcing is dramatically different from the current widespread transaction model. he said. He then mentioned that “strategic sourcing” would be much more beneficial to the market.” Furthermore. and rather than cultivate a relationship in which the supplier provides input and designs according to a long-standing relationship. whereby long-term relationships are cultivated. ships a sample.
3. agents or correspondents in foreign markets for the purpose of continuously and regularly reporting the markets prices. According to the Articles and Memorandum of Association: Up till now Cotton Textiles Export Promotion Council was handling the export promotion work of garments. Gurgaon 122003 Contact Person: Mr.K. Singh (M/s Singh Export Corporation. Mr.P. N. New Delhi) President. Secretary General of AEPC Mobile: 98-9912-4555 Website: http://www. Bombay) Vice-President.F. APPAREL EXPORT PROMOTIONS COUNCIL (AEPC) Office: Apparel House. Premila Wagle (M/s Paville Fashions Pvt. to find out the tariff and other restrictive practices of importing countries. New Delhi). Ramadorai (Chief Executive. Assn. woollen knitwear and garments of leather. to send trade delegations and missions to foreign countries as well as to survey export potential of readymade garments from the country. develop export of all types of readymade garments. to develop new designs and patterns of garments. New Delhi) Ex-president. of India. Clothing Manufacturers Association of India. P. B. Secretary. of India. (2) To undertake all export promotion measures. Mogrelia (M/s Zoro Garments Pvt. the leaders of the garment industry thought that it would be in the best interests of the garment industry to have a separate export promotion council. jute and hemp. to find out the product range and export prices of garments of other countries. The main objectives of the AEPC are as follows: (1) To promote. Mr. particularly to undertake market research. Clothing Mfrs. Vijay Mehta (M/s Intercraft Pvt. B. (3) To appoint representative. Bombay) Hon. Sector 44.aepcindia. Bombay) President. Clothing Mfrs.. Mr.. Gen. Garments Exporters Association. Banthia (M/s Magnum Enterprises.L. market preferences and latest fashions and designs prevalent in the foreign countries. increase. but now as the garment industry has reached a stature and maturity and has achieved the target of 250 crores. of India. Ltd. advance.N. Institutional Area. N. Calcutta). quota distribution and allocation. Smt. Amersey (M/s Milton’s Ltd. Bombay and Garments Exporters Association. New Delhi took a lead in this matter and formed a special ad-hoc committee of the following Members: Mr. to undertake marketing in individual foreign markets. Assn. S.. Madras). Clothing Mfrs. Mr. KK Jalan. Shah (M/s Hiralal Gulabchand. Garment Exporters Association. Assan..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. (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 . Ltd. Two leading organisations of readymade garments. Mr. M/s Handloom and Handicrafts Export Corporation. excluding. Ltd. Mr.
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. specializing in knitwear. to improve the qualities and standards of the fabrics and garments by importing technical know how. He stated that over the industry as a whole. action plans for promotion of exports. so that businesses who do not get orders during the winter are not hurt by the cost of labor. especially. (5) To assist members. so that workers can be more easily fired and hired. he stated. and description of subscribers. to encourage export production of quality garments and to undertake necessary research in fashions. to evolve improved design and patterns and garments suitable for export. • help with training and productivity (14 training institutes). rules and procedures. (7) To undertake training of workers and technical personnel.for the purpose of continuously and regularly reporting to manufacturers. import licence facilities provided and how to apply for the facilities. (6) To establish design centres. to improve the skill of workers engaged in garment manufacturing in India and to assist in the technological base of the garment industry. address. and • raw material supply (both indigenous and imported). NCR region. Content of interview (7 July 2006) with the Secretary General of the AEPC: The main issues in the garment industry are labor and infrastructure. AEPC focuses on three things: • marketing help. For three months of the year. • lobbying to government to change laws regarding labor and infrastructure (and whatever other business bottlenecks there are). traders and exporters of garments. generation of production for exports. and its specialization in better embroidery and the “India look” (ethnicwear heavy with embellishments and more complex work). Page 16 . development of export markets. unit prices have remained stable pre and post quota phase-out. He said the three biggest centers for garment production were • firstly Delhi. designs and techniques and to encourage manufacture of garments for exports. otherwise productivity will remain stagnant and labor costs will remain high. He stated that the government needs to increase labor flexibility. and lastly Tirupur. setting of export targets generally and in relation to specific countries and commodities on an annual basis and for such medium and longer terms as may be considered desirable and to ensure/undertake execution of such plans. The complete list of the AEPC’s objectives can be found on the company’s website in the Articles and Memorandum of Association (link from main page). as well as the names. to 200 days. • secondly Bangalore. garment businesses do not have orders. A specific AEPC goal is to get the government to change the law that states that workers are permanent employees after 100 days. its strengths being better infrastructure. (8) To obtain from members of the Council and to prepare for the Council as a whole.
and • the Cotton Textile Export Promotion Council. • Golkadas Exports (Bangalore). • Centwin Group (Tirupur). and • the Eastmen Group (Tirupur). The researcher purchased the newest book of statistics on industry level data that the AEPC had (2003) and a directory of garment exporters. • Golkadas Images (Bangalore). as it is self-reported. including • an HR training institute-KSA Technopack. • Richa Global (Delhi). • Creative Group (Mumbai). • Modelama (Delhi). These businesses have succeeded through a number of different strategies. • Gurgi (“biggest industry consultant”—saw this name in the fabric stores in Jyoti Apparels). • Texports (Mumbai). He mentioned several notable resources. • a foreign consultant agency Method Workshop (main consultant Roger Thomas).He listed the top ten Indian garment factories as • Shahi Exports (Delhi). Page 17 . with a common thread of individual attention to quality control and productivity by hiring consultants and building better facilities. • SPL Industries (Delhi). The AEPC did not have company specific financial data.
practitioners. advancement of careers. Hauz Khas Near Gulmohar Park. PhD. NIFT has crafted a range of Continuing Education Programmes. these courses offer a unique opportunity to participate in the lively academic environment of NIFT. 26964771. New Delhi-110 016. Chairperson. Continuing Education (CE) Programmes: National Institute of Fashion Technology. NIFT is acknowledged as the premier institute of fashion design. Director General of NIFT) The Institute: Today.4. Bangalore. India Telephone: 26850484. Management and Technology. and avail of facilities like laboratories with state-of-the-art equipment. rajeshbheda@niftindia. and entry-level candidates in the form of Continued Education Programmes. Department of Fashion Technology Telephone: 26850484. professionals. According to its CE (Continuing Education) Prospectus 2006-07: NIFT provides quality fashion-education to industry experts. These programmes reflect the requirements and Page 18 . and diverse faculty expertise.com NIFT was set up under the Ministry of Textiles in 1986. 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. 26965059. Government of India Website: http://www. which have been developed in consultation with reputed academicians [sic] and industry practitioners.niftindia. Kolkata and Mumbai. creativity. Extn:306 Fax: 91-11-26851198 Mobile: 9810154829 E-mail: rajeshbheda@gmail. and the evolution of new professionals. Gandhinagar (Sub-Centre: Surat). Extn:306 Contact Person: Professor Rajesh Bheda.htm Address: NIFT Campus.com/iftf. Hyderabad. 26964771. The Institute has pioneered the evolution of fashion business education across the country through a network of seven centres at New Delhi. Each of the seven NIFT Centers offers a spectrum of specialized short-term courses that address the dynamics and niche needs of the fashion industry and open windows of opportunity to interested candidates. management practices and manufacturing technologies. Chennai. Resource Centres. also offers short duration part time courses under Continuing Education (CE). 26965080. They offer a learning environment that encourages innovation.com. The centres are professionally managed platforms of the world’s finest design expertise. 26965080. leading to upgradation of skills and knowledge. management and technology across the globe. (Gauri Kumar. 26965059. besides conducting regular professional undergraduate and postgraduate programmes in Design.. and excellence. enhancement of critical abilities. NATIONAL INSTITUTE OF FASHION TECHNOLOGY (NIFT) Ministry of Textiles. 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. In addition to classroom learning.
suppliers reducing subcontracting. cost is up. training managers. The flexible schedule enables the participants to pursue the programme without interrupting their professional activities. He teaches classes in quality management. • higher productivity • use the help of consultants. quality improvement program. and also to those aspiring to join the industry. relevant to individuals at different stages of their careers. and they are making efforts to reach good productivity. buyers reducing number of suppliers as well as brands. With focus on interactive learning. corporate social responsibility. it is a useful resource in identifying the types of materials used in classes and to train managers and HR personnel—one book on HR management that the researcher later purchased had a lengthy passage on labor unions and how to use HR strategies to discourage their formation. the programmes provide a congenial environment that integrates theory with practice. demand is up. If companies put efforts into enacting these measures. and EU have always been strong markets in India. performance-based rewards system. operators. as there has not much shift in markets.S. • better quality product and service. • offering shorter lead times. though you cannot take bags inside the doors or check out books. trying to get workers’ involvement. The CE Certificate Programmes are aimed at complementing the practical knowledge of the industry professionals with formal technical education in their respective areas of work. U. Companies are trying to move up the value ladder as product development and design are becoming more important. and • hire or train industrial engineers. with production planning and scheduling. and a global overview of the garment industry. productivity (how to perform time studies). The main characteristics of successful firms include: • recognizing what customers are looking for. methods monitored. Most common is line supervision. Content of interview (20 July 2006) with Professor Bheda: Professor Bheda has been with NIFT for 16 years. The library at the NIFT campus is open to anyone. Page 19 . Unit prices are down. there could be a 50% improvement in quality. Post-MFA trends have been a consolidation of supply chain and capacities. However. • design development. • BPR manufacturing. probably average 70% of India’s market. The participants receive a NIFT certificate on successful completion of the programme. manufacturers consolidating capacities.concerns of the industry and have been carefully planned to spur professional growth. • have more highly trained workforce. • managing their supply chain better. The average Indian garment factory has 100% potential in physical labor productivity.
not because the buyer says the firm has to do it. it would be good to invest in social improvement program. 38th annual: www. the 37th annual garment fair with 393 exporters/exhibitors at Pragati Maidan.” that retailers are paying lip service to CSR without sharing the cost burden.K. The researcher obtained a buyer ID and toured the grounds. Regarding corporate social responsibility. Agarwal).com. None of the firms were top ten exporters or easily recognizable. He gave a contact person to interview from Shahi Exports and up-to-date contact information number for Orient Craft.com).there is an erosion of the bottom line and companies find it difficult to survive and improve working conditions. The day of the interview was the final day of the Indian International Garment Fair (IIGF: www. Retailers should start partnering with the brands and rewarding CSR compliant suppliers.L. “suppliers get a feeling of being cheated. Mumbai). so some firms are investing in CSR to the extent they can afford. 2) Shilpayan Craft (Jaipur) 3) Another firm from Jaipur. Magu (Chairman of Jyoti Apparels). and are simply passing it on to the suppliers.K. the AEPC Director of Export Promotions (interviewed him after K. and as long as it is ensured that the rewards system cost comes down to the factory floor. He does not see a correlation between turnover and CSR programs: “ultimately it comes from within.” 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. H. Jalan. something like it has been discussed. K. it would have to be meticulously and carefully implemented. Vijay Agarwal (Chairman of AEPC. driven by price and the customer can walk away at any point. it seemed to be a showcase for smaller firms to vie for new buyers and international exposure. The award winners for their showcases (announced the previous day. so the researcher asked IIGF workers) were 1) Intercraft (New Delhi).indiaapparelfair. so suppliers feel they are not committed. However. Social programs are a long-term investment.indianapparelfair. Page 20 . Everything in the market is transaction-based. and many cannot afford them because there is typically no financial payback. from principles. The core group of organizers include Vijay Mathur.K.
*Collection and dissemination of data useful to the textile & garment industry. Chairman of NITRA. According to NITRA’s 2006 Prospectus: NITRA’s Multifarious Activities *Job oriented professional courses (full-time and distance learning) in textile. 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. seminars. *Customized consultancy packages for national and international clients in the areas of Product Development. ISO-9000 Quality Management System. Raj Nagar. Cost Reduction.S. effluents. Product Diversification. It is linked to the Ministry of Textiles and is recognized by the Department of Scientific and Industrial Research (both government entities). Quality Improvement. J. waters. 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. Maintenance Management. Energy Audit. Process House Study. Rao. leather. Energy Conservation. *Quality Evaluation of textiles. environment and allied areas. P. Manpower Planning. V. Design of Effluent Treatment Plants and Water Recovery Plants. conferences and publications. and Seminars/ Conferences/ Training programs…NITRA has carved a niche and occupied leadership in Package Design Consultancy for effluent treatment and water recovery.5. It is the only ISO 9001:2000 accredited textile research organization in India. Sector-23. Machine Design & Development. *Need based cost effective software development. Several prestigious textile units and multinationals are already within its consultancy network. Ghaziabad (UP) 201 002 Website: http://nitratextile. *Research and Development projects and industry specific surveys related to textile & garment industry. *HRD activities through training programs. 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). garment. chemicals. Maintenance Audit and a lot more. ISO-14000 Environment Management System. Environmental Audit. Pollution Control. Publications.org/ Contact person: Dr. Techno-economic Viability Study. NORTHERN INDIA TEXTILE RESEARCH ASSOCIATION (NITRA) NITRA. and plastics. workshops.
Complained about government infrastructure and labor laws. legal compliance. but would not elaborate and would only refer to the intractability of trade unions in vague terms. The library also subscribes to 150 [national and international] periodicals.. Stated that the fragmentation of the business made quality control an issue. fear of China post-quota.. quality. NITRA helps factories with product development and various audits. from composite textile mills in the 50s-60s to the rise of small scale businesses/ fragmentation. mid term strategies and policies and creating necessary infrastructure. Content of interview (7 July 2006) with Chairman of NITRA: Gave background on the history of the textile industry. 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. 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. Access to and the price of power seemed to be a big issue for him.. and the Haryana State Pollution Control Board (HSPCB). 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]. energy. and perhaps have relaxed labor laws within these sites. etc. Also stated that it cost businesses more to subcontract because they had to pay for delivery. NITRA has a wide database of employers [in its placement cell. An in-house miniature ETP (effluent treatment plant) of 100 Liters/hour capacity has been installed by NITRA. has been installed for carrying out treatability studies of biodegradation of industrial effluents through aerobic cum anaerobic route. During the 60s-80s. He allowed that workers were being exploited. TAF). environmental statement…NITRA’s Environment Laboratory is well equipped with Sophisticated Analytical instruments. effluent treatment and water recovery plant. He believes the government should subsidize capital for Indian business like China (mentioned something about a Technology Aggregation Fund. A programmable ADI Bioreactor System of 3 liters capacity from Applikon Dependable Instruments.. There is a shortage of skilled garment workers. which would consolidate factories. especially the law whereby a worker that is employed for 100 days is considered a permanent employee. he said that unions hurt business. eco-friendly textiles. Library: Enriched with 5.000 books and journals. [NITRA’s IT Center] has over 100 [PC’s]. the Bureau of Indian Standards (BIS). especially Page 22 . better access to a supply of power through a cluster system called Scheme for an Integrated Textile Park (SITP). Netherlands. the…library [keeps students connected with] ongoing global developments. water. which are essential to conduct such a program…[it] is accredited/ recognized by the National Accreditation Board for Testing and Calibration Laboratories (NABL). improve infrastructure.textile and allied industries: waste management. etc. The government is currently working on better infrastructure.
Arvind.machine operators at the shop floor level. The course coordinator is Vivek Agarwal. 10:30 am . Students apply to the program online and are selected on the results of aptitude examinations and interviews. not garment manufacturers). The researcher obtained a copy of the 2006 prospectus. Classes are full days. Reliance. Page 23 . he mentioned Vardhmal.4:30 pm. When asked for company names. They typically have 4-5 students applying for one seat. They conduct in-plant training as well as distance learning programs for middle management at NITRA itself. L and J (seem to be mills. 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. Bilwara. so NITRA conducts training programs for workers that last 3-6 months. a NITRA Senior Scientific Officer.
2 Unit visited by the researcher.com E-mail: info@modelamaexport. and updated telephone numbers from interview. Page 24 . Udyog Vihar Phase -1 Gurgaon. Manicandan’s CEC Report. 2291131 Fax: 91-124-2290864 Website: www. Haryana. Sector-5. CONTACT INFORMATION1 Contact Person Lovleen Kumar. An ISO 9001:2000 certified company The information in the following company report was obtained from interviews with the Director. India Tel: +91-11-26810103 fax: +91-11-26817969 Head Office Gurgaon 184.CHAPTER THREE COMPANY PROFILES 1. the company website. MODELAMA EXPORTS LTD.com. Director E-mail: lovleen@modelamaexports. India Tel: +91-124-2397838-42 fax: +91-124-2397843 1 Initial information obtained from company website. I. 7 & 8. Manesar IMT Gurgaon -122016. Haryana.modelamaexports.com Head Office Delhi B-57. phase -1 New Delhi -110020. ICRIER financial data. Merchandising Agent. Mobile: 9810015693 Corporate Office2 Plot No. documents given by the HR and production managers including a company profile. Human Resources manager. India Tel: 91-124-2290993. and G. Okhla Industrial Area. business articles.
Plot No.000 square feet.Road Map 3 Production Units4 1.5 III. B-57. Vinita. Gurgaon1 6. Phase 1 Gurgaon 4. 184. Modelama today has ten professionally run production units over 4. phase -1 New Delhi 8. Modelama professionalized its management structure and has been consistently upgrading technology in their production facilities. phase -1 10. phase -1 New Delhi 7. BRIEF HISTORY Modelama was founded in 1979 by Mr. In the first year they exported Rs. 200. Lalit Gulati. Sector-4 Gurgaon 5. 6 From company website. and Pandey. owner is Mr. Okhla Industrial Area. B-26. IMT Manesar.000 square feet.” Apparel Resources. 4 3 Page 25 . Udyog Vihar Phase -1 II. 7 & 8. Other production sites in untranslated Hindi document. Lalit Gulati as a family-run operation. phase -1 New Delhi 9. Phase 1 Gurgaon 3. Modelama places a great emphasis on technology as the secret to its success. B-80. Okhla Industrial Area. interview. Okhla Industrial Area. BASIC PROFILE6 Legal Composition Sole proprietorship. Plot No-5. 45 lakhs with 50 indigenous sewing machines and a workspace of 4. 201. Sector-5.asp?msg=2710&cod=newsindetail&nam=>. 5 From website. In 1999. B-33. <http://apparelresources.00.com/defaultnextone. “Build Quality Rather Than Check The Quality. 204. From company website. Phase 1 Gurgaon 2. Manesar. Okhla Industrial Area.
cushion covers. Marks & Spencer. Eurofiel (Women’s Secret). 2000. Exports/Imports 100% exports.4530/2001-100% E. 1999. Launched Home Textile Collection in 1999. Grattan. Sears Roebuck & Co. skirts. Clients USA: GAP (Banana Republic. Modelama does not manufacture for the domestic market. top of beds. Saks. Kohls-Belk. linen.AEPC/REG/MER/47569/N/2001) as a manufacturer/ exporter of readymade garments including woolen. Sales Growth and Profitability Vendor Award. Federated Stores (Macy’s). 1998. William-E-Sonoma. Added outerwear to their product mix in 2001-2002. 1999.. Product Mix Areas of specialization include outerwear. 2000 Page 26 . Lands End. Villersey & Boch. AMC. Nov.. Next. Uses natural fabrics (cotton. La Halle. Modafil UK: Laura Ashley. which may have contributed to minimizing seasonality issues. 1993. trousers. drapery.O. and home furnishings. polyester. is an export oriented unit registered with NEPZ. H&M. GUS. and decorative items for loungewear like throws. Lane Bryant. Colt’s Europe: Etam. kidswear. and 2002 Associated Merchandising Corporation Outstanding Performance.. Hudson Bay. silk. Mervyns.U I/6921dt28/08/01 RCMC NO. jute and hemp. dresses. 2000. LOP NO. 1992. shorts. Pottery Barn. Westelm. Galeries Lafeyette. synthetics (viscose. Freemans.EOU Information Modelama Exports Ltd. wool). Target Stores. offering products such as table linen. etc. ladies blouses. Proffitts. Zellers Australia: Country Road Awards Target Vendor Award of Excellence. Tommy Hilfiger. silk. 2001 Federated Merchandising Group Five Star Award (in Development of Federated Department Stores Private Brands and Labels). 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. knitwear and garments of leather. nightwear. Chambers. Canada: Eatons. Sears Roebuck & Co. Marmaxx. Zara. A & F. Charming Shoppe Inc. Marshalls. and blends. Monoprix. Incorporates ethnic Indian accents and embroidery into design samples. 1996 Charming Shoppes Inc. Dayton Hudson Corporation. Old Navy). polyamide).
000 30% Rs. 500 Rs. No. 500 Total employment 500 500 Production workers 450 450 Proportion exported directly --Proportion exported indirectly through intermediaries Misc.IV. 3cr. 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. of pieces exported to the US No.5cr.000 per year 25. VA per employee Rs. 500 500 450 60% 40% 150.5 2 3 5 30 Other Financials7 2003 2004 Total Sales 180 crores 180 cr % of output exported 100% 100% Profits 15% 15% Capital employed 2. 7 ICRIER Data (based on an interview at B-57 Okhla Industrial Area plant in Fall 2005) Page 27 . of pieces exported to EU countries Proportion of workforce that is female Average wage for female production workers Average wage for male production workers 2005 200 cr 100% 20% 3cr. 2800/per month. 3000/per month Rs.
60% of that is Target’s profit margin per unit (PMU). Average Unit Prices (per piece of garment supplied) Unit Price Origin Product Mix $5-7 USD U.V. the unit prices are markedly lower than specialty stores.S.A.asp?msg=2710&cod=newsin detail&nam=>.99.S. 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.” Apparel Resources.75 goes to Modelama.99 is the landed cost. The remaining $3. Of that remaining $3.com/defaultnextone. Although they get large production volumes from discount retailers.99. 9 8 Page 28 . 10 Nearly all brands are FOB with the exception of discount retailers like Target Stores (USA). Modelama Chairman. 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. An example given was if the retail price of a given garment manufactured for Target is $9. “Build Quality Rather Than Check The Quality. which includes not only the factory unit price but the duty cost (AMC and freight). Vinita.” Lalit Gulati. <http://apparelresources. BRAND INFORMATION8 Modelama's Export Market 1% 5% U. “GAP is sourcing worth about $1 billion from India and we are doing more than $10 million with them. quoted in 9 Pandey. Europe Others 94% Major Clients Brand Federated Stores (Macy’s) Target Stores GAP (incl. ~$2.
Modelama will present their company profile to the buying agencies of MNCs. “My team of designers scans international trends and comes up with a tentative collection of not only designs but also shades. is one of the principal designers. an alumnus of the National Institute of Fashion Technology (NIFT). INFRASTRUCTURE Subcontracting Modelama does not appear to subcontract. Typically. fine-tune the patterns. which varies according to the product. The day the researcher observed the process.asp?em=M&mcode=200602&idx=1083>. V. and get down to manufacturing.) as well as home furnishing products. subtract a bit.”14 11 12 According to interview with the Director.5 0. Marks and Spencer (Style and Co.11 Production System Uses an assembly line system..000 pieces.ittimes. 14 Makhijani.13 Gayatri Lal. Production Capacity12 9 8 7 6 5 4 3 2 1 0 Number of Garments Produced (milions) 8 4 2.80.Unit Prices Since MFA Phase-out Unit prices have gone down an estimated 7-10% due to increased global competition. From company website and brochure.1 1981 0. 13 From interview with Director and Senior Merchandising Officer. who will then contact them with a development package if their profile fits their needs. Vishnu. and delivery times. they were manufacturing garment orders for Charming Shoppes Inc.4 1985 0. Then there is some back and forth communication between Modelama and the MNC to reach an agreement in terms of product design. Some of the orders can be pretty huge .” <http://www.7 1 1990 1995 2000 2002 2005 projected Design/Sampling Modelama has a fairly large design department. “Indian Fashion Firms Adopt Global Pret and Couture. volume. for instance. Page 29 . We then sit down with the stores.kr/en/node. add a bit.co.
An example line was sewing collar parts with a total of 46 tailors and 5 helpers. Auto Dart Making Stations. over 90% male. Auto Belt Attaching Stations. they use internationally standardized procedures like the traffic light quality assurance system.” Modelama emphasizes technology and internationally acclaimed systems to maintain a high level of quality. at the front of which is displayed an “Hourly Production” dry-erase board with the line number. In the sewing departments. Auto Surging Machine. Auto Pocket Welting M/C. tearing strength. Band Knife M/Cs.Quality Control15 Modelama’s motto is “build quality rather than check quality. Departments17 Production (~800 Workers) There are about 560 tailors. Machinery includes Auto Spreaders. supervisor name. GSM check. Information on workers and floor layout is specific to the unit visited and is taken from an interview with the HR Manager. Differential Feed Machines Needle Feed Machine. color fastness to light. sand blasting. Differential and Bottom Cylindrical Bed Unison Feed Machine. Multifusing with Three Track of Loading (High Performance Macpee). Auto Cutter (Lectra). and brushing machines (from light softener washes to heavy enzymatic washes). Site visited by the researcher employs about 1100 workers (including about 15 accounts staff). 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. Top. Washing (24 workers) and Finishing/ Pressing (175 workers) The finishing area had lines of workers pressing and folding clothes. The company deploys over 3000 imported sewing machines with customized workstations. Cutting (50-55 workers) The cutting department had five lines of machines laid out with worker stations. Washing machinery includes a wet and dry processing unit comprised of micro processor controlled washer extractors. input. Machinery includes Auto Zig Machine. From interview with Director and Human Resources Manager. Page 30 . Blind Hemmers. Procedures are based on aql 4 point system by which all fabrics are screened and categorized.000 workers in all plants. output. Programmable Sleeve Setter Stations. Autocad (Lectra). pitting test. 17 Information on machinery was primarily taken from the company website. perc based dry cleaning machines. The product was women’s fashion blazers for Style and Co. Tests include tensile strength. Approximate number of workers16 Modelama employs a total of ~6. Air Flotation Tables. The floor is laid out in dozens of assembly lines. PH check. and number of workers. Pneumatic Button Hemming Stations. etc. laundering and crocking. 15 16 From company website. This was the only department with women.
Trevil. Page 31 . The production manager gave the researcher a copy of a time-study conducted for Charming Shoppes. Additional Machinery Factory has a special conveyor system that moves products from assembly lines to other departments. 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. 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. and line supervisors who perform time studies on particular styles and set worker targets. and Renzacci. flatbeds. He talked vaguely about “helping” the worker to reach their targets or perhaps moving them to another department for which they would be better suited. If workers cannot reach their targets./month) 3500 From interview with HR Manager. Production Manager. 3000 per month. The Director said that workers are given incentives in productivity schemes if they reach their targets. Veit. However. calendaring machines and range of buck shapes and steam irons from manufacturers like MACPII. Category Tailors +skilled 18 Average Wage (Rs. HR Manager boasted that Modelama was the only factory in India to have this machine. 2448 per month. indicating that he would like to develop such a system in the future. Has hand and machine embroidery capabilities. 200 single head and 6 multiple head computer embroidery machines. and unskilled minimum wage was Rs. Because the factory is not near a city. dummy presses. VII. No workers are involved in these meetings. stressing how much state-of-the-art machinery has contributed to the quality and productivity of the manufacturing process. Inc style. the HR manager stated that no punitive measures are taken as it is prohibited by law. Productivity Schemes Company has production planning meetings consisting of the HR Manager. Machinery includes 20m length Schiffley Embroidery (Lasser & Saurer). the HR manager said that no incentives are given. management states that they set wages higher than minimum wage to get workers to commute.Pressing and finishing machinery include multipresses.
including ESI and PF. like China. Indicated that there are a few shop floor employees who have remained the two years the factory has been in operation. VIII.” Labor Turnover Estimated worker turnover per month at 7-10%. Overtime Management indicated no more than four hours per week per worker. which is not subject to negotiation. Expressed dissatisfaction with labor laws requiring double overtime. and that workers receive double wages for overtime hours. supervisors conduct time studies evaluating the skill level and productivity of a new hire. HR Manager stated that wages increase after a year. except for worker recruitment for middle management positions. 19 Information based on interview with HR Manager and documents given by HR Manager and production manager. HUMAN RESOURCE POLICIES19 There does not appear to be common policies across the plants. After a three-day period. Page 32 . “It should be time-and-a-half.+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. stating. workers are then offered a monthly wage based on this evaluation. Benefits HR Manager indicated that workers receive the social benefits required by law.
and in nearby worker villages. at bus stops. Page 33 . according to G. Shiv Singh Skilled Production Line Supervisor Assistant Supervisor (Less skill/experience) Skilled Tailors/Machine Operators Helpers (Unskilled) Boxes with straight-line borders are positions common throughout all production sites. Lalit Gulati Sole Proprietor Founder/Chairman Mr. Manicandan’s “Mapping First Tier Suppliers in Garment Industry in Delhi. However. Lovleen Kumar Director Ms. Beneeta Seigal Senior Merchandising Other Upper Management Positions Mr. standing orders. K. such as the unit located at 200. and vendor codes’ of conduct. Recruitment Policy They do not use labor contractors at the unit visited. Worker Training This site does not provide training to its workers. Workers are a mix of local villagers and from Gurgaon. Anil Chauhan HR Manager Management Staff/Accounts Personne Mr. To recruit shop floor employees. grievance procedures. Modelama’s anti-harassment policy. For middle management positions. the company posts signs on the gate.” Modelama uses labor contractors for some of its other units. However.Management Structure Mr. Kiran Production Manager Mr. workers have a brief orientation session during which they are informed of security measures. the company recruits from training centers and placement companies and has a formalized policy that the researcher obtained. Phase-I Gurgaon. while dotted-line boxed positions are factory-specific and subject to variance.
and an ESI station 1.S. in compliance 20 21 Received a Hindi copy of group meeting minutes. but avoids paying for major injuries and illnesses. was displayed on the factory floor. HR Manager indicated that there are very few worker grievances. traceability. the researcher was informed that he was at another production site. According to G. Manicandan’s “Mapping First Tier Suppliers in Garment Industry in Delhi.” there are no doctors in two of Modelama’s other production units (200. Customs Security requirements regarding issues like preventing trespassing. that they can report their grievance to their direct supervisor or upper management. Page 34 . Phase-I Gurgaon and B-57 Phase-I Okhla Industrial Area). All workers were said to have received medical attention. and that management works to quickly solve problems in order to maintain an atmosphere of “family.S. A resident doctor is “available at all times. an Anti-Harassment Committee. The factory locks its doors at night.” but when asked to meet the doctor. they have joint employee-worker committees required by law. or CTPAT model. Union There is no union in the production site visited. There are only six recorded injuries at this site for 2006. a Works Committee. Work times for employees were also posted.” Worker Committees Since there is no union.”21 Corporate Responsibility/ Codes of Conduct Modelama’s Anti-Abuse/Harassment Policy is posted on the factory floors in English and in Hindi. and a Sexual Harassment Committee. Medical Care There is a medical room in the factory. companies have required them to uphold a more stringent counter-terrorism model of security in compliance with U. so there is no need for a union. the company usually pays the medical expense. nor have there been unionization attempts. The code of conduct for Charming Shoppes Inc. preferring to dismiss the workers.5 km from the factory. but only in English. Security New security measures have been implemented since the quota phase-out. according to the Customers Trade Partnership Against Terrorism. If workers suffer from minor injuries. There is a company dentist that comes every Thursday. such as a Health and Safety Committee. 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. “We take care of all their problems.Dismissal Procedure No information was obtained by the researcher regarding a formalized procedure.20 Grievance Policy Procedure If workers have a problem. U. Received a Hindi copy of policy. tampering.
and government bureaucratic hurdles regarding labor law. the Chairman stated that though the South is better known for it.asp?msg=2710&cod=newsin detail&nam=>. Vinita. low relative levels of productivity. stated that seasonality was not an issue and that they have orders year-round. Lalit Gulati. MNCs would present their contract orders to Modelama as an Indian company.with these measures. the former Director stated: Lalit: We do not consider machines as individual equipment but as a complete workstation. <http://apparelresources. relative strength of the Indian rupee to the dollar opposed to weaker Asian currencies. however. 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. it would appear that seasonality should be less of an issue for them than other companies who do not manufacture winter clothing.com/defaultnextone. If workers stay for overtime.” Apparel Resources. whose upper management and design departments would remain in India. “Build Quality Rather Than Check The Quality. and then ship the product from that country. We do not need masters. only their department is kept open and the rest of the factory is shut down at 6 pm. and Sanjay Gulati.perator. Lalit: Machines change according to the product requirement…We have to be flexible because the buyer doesn't buy one thing all the time. 22 Pandey. If Modelama has had as much success in outerwear as they have stated in press releases. A business strategy that Modelama is looking into is “triangular shipping. 25 crore in jackets alone. IX. The Director mentioned that seasonality is an issue. In 2002.22 X. Page 35 . Modelama successfully invested in the necessary infrastructure to export ~Rs. 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. we need operators who can be trained. Modelama would then shift the actual manufacture of the product to either countries with lower labor costs like Sri Lanka or duty-free countries.” a more developed system of subcontracting modeled on Southeast Asian business strategies. advancing the common view that the government should amend labor law to increase worker flexibilization so that companies can more easily fire workers when there are fewer orders in the winter. The idea is to convert a single lockstitch machine into a machine which can do a specialized jobs…so that we do not have to worry about the skill of the o. BUSINESS BOTTLENECKS Main problems hindering financial success according to the Director are poor relative infrastructure. In an interview with Apparel Resources magazine. The HR Manager. 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. the Chairman.
PERSONAL EXPERIENCE Modelama used an Italian consulting agency for the design of two of their factories. The only question that management would not answer was regarding a detailed financial breakdown of the company. Contact was made by calling the general inquiry number on the website. 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. when they began to develop the infrastructure to manufacture outerwear. XI. Page 36 . but directed the researcher to her colleague. The high level of attention paid to infrastructure and personnel management is probably not typical of their older factories. then was directed to a Senior Merchandising agent. who was not available on the date of the interview. Modelama was the first company to be interviewed by the researcher. Modelama was very open in disclosing information about the factory unit. as it is the most modern.Sanjay: It is a very unique combination of machines that we have that gives us this flexibility of handling [versatile] product [mixes].
com Production Units: Plot No.com Website: www. business articles. Page 37 . is former vice chairman of the Apparel Exports Promotion Council of India. I.com Head Office Bangalore Belandur Gate. Palmprint Textile. Sector 28.in Head Office Faridabad23 Industrial Plot 1. II. LTD. Karnataka Tel: +91-80-28439214/15 Fax: +91-80-28439356 E-mail: firstname.lastname@example.org. Two or three other units are in Delhi (Noida) and a fabric processing unit. The information in the following company report was primarily obtained from interviews with the General and Divisional Managers of Marketing. CONTACT INFORMATION Contact People J. Sarjapur Main Road Bangalore 560034. Harish Ahuja.raman@shahi. Manicandan’s CEC report. SHAHI EXPORT HOUSE PVT.co. Senior Management Ashok Raman.shahiindia.co. is in Ghaziabad.in Ajay Khanna. the company website. BRIEF HISTORY Incorporated in 1974 in Delhi.khanna@shahi. the owner of the company. Haryana. Tel: +91-129-2273970/80 Fax: +91-129-2273485/91 E-Mail: seh@vsnl. and G. Faridabad. 1.D.24 23 Unit visited by the researcher. Sector 28 Faridabad 121008. Divisional Manager of Marketing Mobile: 93-13369269 E-mail: ajay. Shahi Export House has a total of eighteen manufacturing units. Giri. General Manager of Marketing Mobile: 98-18212505 E-mail: ashok. The remaining woven and all knit production sites are located in Bangalore.
BASIC PROFILE Legal composition of the Company Private Limited Company. At Last and Co. It is primarily information taken from the website with a few new passages regarding Human Resources and corporate responsibility. Bleu. tanks tops. textured knits.. Euro Open. 100% polyester polar fleece. Ralph Lauren. acrylic wool. ladies' & girls' blouses . Natural Issue.. ladies' and girls' dresses. (Pacific Merchants). turtlenecks. John’s Bay. loungewear. though any exporter of this size must have at least one registered EOU for importing capabilities. 25 From company brochure.25 Wal-Mart. tailored collar polo shirts.pdf>. Exports/Imports 100% exports. yarn dyed single jersey. sportswear. Cross-Bow. cotton fleece. Target Stores. rib. 2005. No Boundaries.26 24 Fashion Newsletter. Enzo Lorenzo. and circular woolen knits.com/www/resource. Hollister Co. but it is a small fraction of turnover ($5-10 million).pdf/$FILE/Fashion _News_05_02_en2_Webb. polyester viscose. engineering stripers.lawson. indigo dyed units. <www. heavy jersey in cotton. sleepwear. Place Jeans. Abercrombie & Fitch. GAP. American Eagle. JC Penny’s. Shahi has expanded to home furnishings in the past year. jacquard. Van Heusen. Solutions (New York). Cento Mila. Carolina Blues. Jeans Dynam. Seacorn. Von Daniels. Shahi’s product line covers casual and formal men's and boys'. mock neck. Product Mix Areas of specialization are mostly ladies woven tops and men’s tops. TKS Basics. The knitwear product range includes 3 button polo shirts. 26 Remaining client names were obtained from interview with Divisional Manager of Marketing. the sole proprietor was Harish Ahuja. flat back rib. Cherokee. No. which was printed in 2005 by the Bangalore office. Up until a year ago. A & F. who is now the Managing Director. t-shirts. Page 38 . polyester cotton. Carolina Colours. EOU Information No information was obtained regarding registration and EOU capabilities. golfwear. Akademiks.The fabrics range includes solids. Shahi does not manufacture for the domestic market. American Khakis. pique. 2. full jacquards. H & M. Old Navy. St. Faded Glory. Sag Harbor (Sport). The Children’s Place. double mercerized. men's and ladies' bottoms. Family-owned. jackets. Liz Claiborne. lingerie.nsf/pub/Fashion_News_05_02_en2_Webb. spun filament. Arizona Jeans Co. interlock. Clients Bobbie Brooks (Woman).III. nor does it currently have plans to do so.
25 $0.8 million 14-28 million 1. Turnover estimates varied by tens of millions of dollars between the GM and the Divisional Manager of Marketing. No.07 $0.Awards Wal-Mart International Supplier of the Year 2000 (can’t read others) IV.033-$0. accessed July 2006.pdf/$FILE/Fashion_News_05_02_en2_Webb.8 million 2. though generally it is four to seven times the unit price of the garment.65 Material Cost Labor Trims and Packing Depreciation Machinery upkeep Overhead Embellishments32 Profit 27 Estimated by General Manager of Marketing.lawson.65-$1.5 USD. Page 39 .8-23. so they can only be thought of as a rough approximation.13 $0.pdf>. It can be none or most of the unit price.nsf/pub/Fashion_News_05_02_en2_ Webb.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.com/www/resource. 32 Embellishment costs such as embroidery depends on style. 28 Fashion Newsletter.30 $0. 31 Based on the company’s average unit price of $6. 2005 <www.13 $0. 29 Estimated by General Manager of Marketing.65 $0.11 $0. Did not obtain average retail markup information. 2.4 million 2. FINANCIALS Turnover $140 million 2005-200627 $120 million 2004-200528 $90 million 2003-200429 Other Financials Breakdown of Sales Revenue30 Est USD 2006 70 million 16. Percent of sales is based on an average estimate given by the Divisional Manager of Marketing. so figures cannot be considered accurate. 30 These figures were estimated by the Divisional Manager of Marketing in the space of 5-10 minutes.78-$1.
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.
For example. Washing The washing facility puts out over a ton of garments per day through specialized wash treatments such as softener wash. It is also equipped with single needle lock stitch programmable machines with UBT. The latest CAD software enables quick processing of pattern creation. The Divisional Manager of Marketing states that they always had incentive schemes. very little is done by hand. but they Page 43 . fusing press. This department is responsible for timemotion studies and an operation breakdown. line supervisors convey target setting to them.500 in all of Shahi’s production sites 1. marker making and global electronic exchange of pattern data. merchandising. in which workers get bonuses for exceeding their targets. double needle-needle feed split bar machines. Ngai Shing.000 cuts per day. In finishing. desize soft wash and golf ball wash. feed-off-the-arm machines.800 in all of Shahi’s Delhi (Faridabad and Noida) units 750 in production site visited The CAM based cutting department can make 75. Its implementation and form depends on the department. The production unit boasts machines from Brother. while the 60 multihead computerized embroidery machines have a capacity of 800 million stitches per day. single needle top and bottom variable feed machines. Productivity Schemes The unit visited has an industrial engineering department with eight staff. accounts. pocket machines and automatic pocket welters.000 Mostly female Mixed Machinery 6. Juki. one for production and another room with rows of computers in which employees work on digitized patterns and samples. There are two departments for sampling.+Supervisors and dpt/line-in-charge 40 Sampling (think incl in production) 50-150 Remaining marketing. shipping staff Total number of workers: 3. enzyme wash . Durkopp Adler. and there are quality bonuses if clothes do not need repairs. collar/cuff turning and blocking machines. Sampling This is a fairly large department in the production site visited. stone wash. The incentive scheme only applies to skilled and semi-skilled workers. which can be 10-25% of monthly salaries depending on how difficult the style is. They also conduct joint department meetings. every hour the target is marked. incentives depends on how many pieces are finished. They conduct production planning meetings jointly with managers and supervisors by department. grading. in sewing. and it was stated that each unit has a similar department. Embroidery Most is done by computer. who are not involved in these meetings. These meetings set targets for the shop floor workers. This unit has an incentive scheme for productivity. Hashima and Kannegiesser.
Manicandan’s CEC report. Benefits of the incentive scheme include a 10% increase in productivity in past two years in the sewing department. Workers use their ID card to clock in and out of the factory. these benefits are additional./month) Unskilled 2448 Semi-skilled 2558 Skilled 2708 Highly skilled 3008 36 Information from interview with the Divisional Manager of Marketing and the researcher’s observations. This early shift seemed to be entirely female.00040 Minimum wage is posted as follows: Category Wage (Rs./month) Unskilled helper 2200 Semi-skilled operator 3600 Skilled operator 6. Manicandan’s CEC report says a supervisor with eight years experience makes Rs. there was still a strong female presence in the factory. the workers at this unit do not get a tea break. and another fifteen-minute tea break between lunch and the end of their shift. leaving male sewing operators and some female ones. an increase in attendance. 38 According to G. Page 44 . However. 37 The researcher toured the factory around 5 pm. The workers get a fifteen-minute tea break between the start of work and their half-hour lunch break. 39 Stated that these numbers do not include ESI and PF. VII.000 Supervisors/Mid Mgmt 10. when the first shift of workers were getting off. 40 G. lower labor turnover.have recently gone through major changes in their implementation.38 Wages As Estimated by Divisional Manager of Marketing39: Category Average Wage (Rs. and a decrease of waste in the cutting department. 4200. 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.
Benefits Stated that workers do receive ESI. People who are motivated to excel and trained in different disciplines of garment 41 From interview with the Divisional Manager of Marketing. PF. Page 45 . Estimated two hours per week per worker in the sewing and finishing departments. after which the HR manager will put them into a set wage scale depending on their ability. they are only evaluated to see what category of skill they fall in. Wages are fixed and there is no negotiation. The Shahi workforce consists of committed and highly skilled people. which the researcher observed.Wage Setting Procedure Managers interview workers and then take a trial of their work for one day. Overtime Stated that there is not a lot of overtime because they plan production with target setting. and negligible overtime for the other departments. they try to have the male workers pick up the extra work instead of the female workers. Workers also have access to an on-site crèche for their children during the workday. Workers are then on a three to six month productivity probation. Labor Turnover Estimated at 7-10% per month.” ~Shahi’s website Shahi’s updated brochure includes lengthy passages stating their dedication to innovative Human Resources approaches. and a three-month maternity leave. Workers who receive less than Rs. VIII. if overtime is needed. HUMAN RESOURCE POLICIES41 “Human intelligence is the greatest asset which we possess. 7500 are provided with ESI benefits. Shahi’s overtime policies take into account gender. Most sewing operators have been at Shahi for around two years.
Worker Committees Stated that there is a worker forum that managers also attend. In G. Particularly so as clothing corporations the world over are labor intensive and it’s imperative that they are well looked after. so the labor is here. Grievance Policy Procedure Presumably.manufacturing. but it is not necessary to do so here. They are able to have female workers because they are in heart of Faridabad. Employ more women and uses HR strategies to disempower workers and remove blatant rallying points for workers. Union Didn’t ask directly. 42 The brochure and website both state that human resources are developed using the training procedures of Kurt Salmon Associates. but definitely not. not the outskirts of cities. In the Shahi factories in Bangalore. Manicandan’s CEC report. Page 46 . Worker Training Shahi trains the unskilled operators for a period of a week. it is all direct employment. Shahi has ensured all systems are in place to make sure that everybody works in an extremely salubrious environment. making Shahi one of the most sought after organizations to work for in the garments arena. There is also an orientation program for upper level staff. Dismissal Procedure No information was obtained regarding a formalized procedure. Recruitment Policy Shahi states that they do not use a labor contractor. they provide transportation to overcome those issues. Labor problems get a kind ear and are followed up on a priority basis. Shahi has invested in a dedicated personnel management division to take care of its labor. the worker forum is a “safe space” in which workers can address any issues they have with managers. Training depends on the job description of the worker. Some are skilled. 42 From company brochure and website. so they do not need to train them. They do not recruit for shop floor positions beyond posting signs on their gates and through wordof-mouth. and union organizers were either dismissed or isolated from other employees. workers revealed that there had been unionizing attempts that were suppressed by the management.
in fact nearly all had a Hindi translation.” “Anything worth doing is worth doing well” and one about the importance of personal hygiene. More of these were in both Hindi and English than I’ve seen at other factories. educational facilities for children. hygiene. Charming Shoppes Inc. The company organizes fire drills to keep employees alert in case of emergencies. American Pacific. There are many signs posted on the factory floor with stating things like “Discipline: Team work is an easier path to excellence. Dayton Hudson Corporation. From interview with Divisional Manager of Marketing and joint worker-manager magazine.” Shahi’s updated brochure includes add-ons regarding treatment of their labor force. Target Stores. securing of employees’ earnings through e-com (EDI) and ATM cards. 45 From company brochure and website.44 Safety measures are given utmost importance. Fire fighters are on high alert at all times and every floor is equipped with the right fire fighting equipment. Awareness programs are conducted for employees on health. A full-fledged Dispensary and Ambulance is provided with a doctor always on standby. Liz Claiborne. Best employee awards are given for overall discipline. They have activities for the workers such as an annual cultural week with games and contacts.45 Medical Care There are male and female onsite doctors and nurses in case of industrial accidents. and nutrition related topics. and a first aid room in the facility. attendance and productivity. seminars. It aims at providing a conducive environment for employees to protect. promote. Nautica.Corporate Responsibility/ Codes of Conduct The company has a biweekly English magazine that publishes news and articles by workers.. Strict compliance with anti-child labor law is ensured. 44 43 Page 47 . Wal-Mart. training facilities for employees. Codes of conduct posted in factory include Carafour. Evaucation boards are put up on all floors along with photographs of fire fighting personnel. The Limited. And some of the remarkable provisions for employees include: eligibility of workers for health insurance. and American Eagle. Shahi Export House adheres to International Labor Legislation. and lectures. and support their families in the best way possible. personality development through work shops.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.
Page 48 . companies have required them to uphold a more stringent counter-terrorism model of security in compliance with U.) X. now they do. Supposedly all visitors have to have proof of identity. traceability.47 XI. as he would not permit the researcher to do so. according to G. but I did not have to show it. and then not working to full capacity during the off-season. Shahi is notable in that they have a majority female workforce in a place like Delhi. and there was some controversy a few years back regarding a male manager and a female worker. according to the Customers Trade Partnership Against Terrorism. Customs Security requirements regarding issues like preventing trespassing. who reported her case to the police.Security System New security measures have been implemented since the quota phase-out. It is not a huge issue. The security guards inside were asleep. Stated that they need better infrastructure regarding port system. From interview with Professor Rajesh Bheda of NIFT.1 million PCs during the off-peak season. PERSONAL EXPERIENCE Obtained contact information from NIFT. now they are getting competition from small exporters. However Shahi is trying to diversify their product range so that it becomes even less of an issue. Website contact numbers are out-of-date.000 pieces per month. Shahi is currently constructing a production unit in Bangalore that would have a capacity of manufacturing 200. Manicandan’s CEC report. Shahi does not have a sexual harassment committee. The production unit was enormous. BUSINESS BOTTLENECKS Seasonality is an issue. Shahi has to decline some orders during peak season (OctoberMay). Mentioned that Southeast Asia has the same problem of seasonality.S. INDUSTRY COMMENTS Trying to build up capacity to produce outerwear by next year to reduce seasonality issues.S. The picture of the minimum wage was taken by the manager. Also argued for more labor flexibility. or CTPAT model. Suppliers have changed post-quota. The Marketing Managers did not mention any new initiatives taken to deal with the issue.46 Shahi recently opened up a warehouse in New Jersey. 46 47 From interview with Divisional Manager of Marketing. only different season. (Stated that retained incentive schemes and everything off-season. before they didn’t have the quota holdings to compete. However. though the researcher was not permitted to take pictures during the tour. since it takes too much time to get clearance at the ports. IX. however said they currently retain workers during the off-season because it becomes a problem to rehire workers. as they produce about 2. U. tampering.4 million pieces during the peak season and 2. where the garment industry is over 90% male.
a company profile and Standard Operating Procedures given by the Managing Director. two are in Manesar (southwest of Delhi. due to the quota phase-out. 51 48 49 Unit visited by the researcher. who had contacts in the garment and textile industry. Managing Director Senior Vice-Chairman of the AEPC (Apparel Export Promotion Council) Mobile: 9810029999 E-mail: email@example.com ($444 USD50). II. Magu and deceased brother. and an interview with an Assistant Production manager. of which five are in Gurgaon. The company’s turnover was Rs. 20.com Production Units Magsons Exports. 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. Page 49 .111 USD) in the first year. Phase-I New Delhi. 51 Information on company background from Managing Director. Magu. Gurgaon49 The researcher was not able to obtain the addresses of all nine factory sites. Unit visited by the researcher. which roughly doubled each year until 1984. 26818977. but by networking through his brother. 45~$1) and are not adjusted for inflation. he started business in 1977 with an investment of Rs. 26817910 Website: Jyoti Apparels does not have a website. BRIEF HISTORY Company established in 1976 by Mr. 500. K. south of Gurgaon). 50 Conversions are based on today’s exchange rate (Rs.3.K. L. and remaining information is from observations unless otherwise noted. CONTACT INFORMATION Contact People H. 110020 (India) Tel: +91-11-26816917. and two are in Okhla Industrial Area (New Delhi). E-mail: jyotiapparels@vsnl. 41/42 Phase IV Udyog Vihar. I.com Manish Mall Assistant Production Manager Mobile: 9899096999 Registered Office48 D-42 Okhla Industrial Area. He had no experience. 000 ($11. 26810804 (D) Fax: +91-11-26819684.L. shop floor observations by the researcher. HR strategies and production from Assistant Production Manager. H. The company has increased sales an estimated 30-40% in the past year.
Page 50 . Woolrich. Blair Corporation).” it was pre-quota phase-out January 2005). Manufactures woven (80%) and knitted (20%) garments using mostly yarn dyes. but the majority is summer clothing. and ethnic handiwork accents. Debenhams. Europe and Canada. (Target Stores. Karstadt Netherlands: Wehkamp. 52 According to profile (which is out-of-date. Adams. Carol Anderson. . The Farmers Trading Co. Brumel. Reitman Israel: Fenomen Malaysia: Metro Jaya Spain: Mango. Zellers. and children’s (roughly 15-20%) readymade tops. Primark. India Imports. V F Jeanswear (Wrangler). Prenatal. International. Exports/Imports 100% exports. Freeman’s. gents. Specialize in high fashion made of exclusive prints.. Lane Bryant. K. House of Frasers. viscose yarn and denim fabrics. Brylane. Mexx. Wal*Mart.. Magu and Mr. Roamans. Donn Kenny. Evans. Jyoti does not manufacture for the domestic market. K.III. Zara-Indtex Awards The researcher was unable to obtain any information on vendor awards. blouses. Enjoy. Onyx Denmark: Kompagniet Switzerland: Manor. Cabella’s. Miss Erica UK: Marks & Spencer. BASIC PROFILE Legal composition of the Company Partnership firm. H. Charming Shoppes of America (CSI). owners are Mr. Canada: Hudson Bay Co. Littlewood. J D Williams. Kishore Magu EOU Information No information was obtained regarding a registered EOU. Jyoti manufactures some winter clothing (about 20% of production volume).D. Phool Fashion Ltd. solid dye. Jyoti’s strengths (and the North in general) are in high fashion garments with embroidery. T. Promod Germany: Neckerman. Clients52 USA: Kellwood (Sagharbor). maybe 2004. British Home Stores. Gus. skirts. as it mentions “Quota Holdings: We have sufficient quotas in all categories of USA. Product Mix Areas of specialization include ladies’ (roughy 80% of production volume). Siplec (E Leclerc). sequins. Tesco France: C. with embroidery and beadwork. Otto Australia and New Zealand: Just Jeans. Oxford Industries Inc. and other garments. L. Zeeman Italy: La Rinascente.
which accounts for the inconsistencies. were estimated by the Managing Director on two different occasions. FINANCIALS Turnover 12 million USD (either 2003 or 2004) Current year 18 million USD Other Financials Current year sales Rs.6 million 10 $0. Japan. excluding the $12 million USD figure from the company profile.000.555 USD)53 Breakdown of Sales Revenue54 Est USD 2006 Per % Retail Garment55 Price56 Material Cost 9.A. retain 75-84% of the sale of a retail item.6-2.50 1. 54 These figures were estimated by the Managing Director in the space of 5-10 minutes. BRAND INFORMATION Jyoti's Export Market % of Sales U.50 1. 56 Average retail markup is four ($20) to six ($30) times the unit price of the garment. this figure includes the amount the MNC spends on shipping. costs.6-2. duty. and cannot be used as an indicator of profit.6 million 10 $0.6-2.000 (15.6 million 10 $0.IV.6 million 10 $0.5% MNC’s that source from Jyoti. 55 Based on the company’s average unit price of $5 USD. 57 Since Jyoti’s unit prices are mostly FOB. Malaysia) Europe 53 Financials. Latin America. 700. so they can only be thought of as a rough approximation.50 1.57 V. on average. Page 51 .3 million 60 $3 10-15% Labor 1. etc.5% Overhead and profit 1.50 1.6-2.5% Other Manufacturing 1.S. 10% 50% 40% Others (Canada.5% Subcontracting Cost 1.
000 square meters. the company has about 20.000 square meters. Overall.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.000 square meters. and two are 600 square meters. and Gloria Vanderbilt through buying agencies. one is 8. Did not mention any direct relationships. primarily through the Triburg buying agency. but they do subcontract their fabric sourcing and processing. which is not a production facility). he stated that unit prices have decreased about 10%. It is notable that Jyoti subcontracts to a Shahi processing facility. Prices and other sourcing details are negotiated through the buying agencies.58 Production System 58 See Standard Operating Procedures for detailed subcontracting information. 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. four are 1. American Eagle. Subcontracting Jyoti does not subcontract the production process. Page 52 .000 square feet of land spread over ten different areas (including the registered office. Subcontracting has not changed since quota phase-out. INFRASTRUCTURE Company has nine production facilities. but later stated that overall they have remained stable. Two of the factories are 2. VI.
000 pieces per month. and brown machine-embroidered skirts for American Eagle. belt attaching. 8000 woven pieces per day and 1200 knit pieces per day.000-90.000 and 300. At production site visited. but primarily just take paper designs from buyers and converts it to clothing. elastic insertion. Managing Director and Assistant Production manager stated they were all skilled. fusing machines. Quality Control Jyoti Apparels has a quality control assurance team with both an in-house auditing scheme and third-party inspection. usually 80. 59 60 See SOPs for detailed quality control schemes. Page 53 . Design/Sampling Small design department. shell stitch (Merrow). perk-chloro plants. between 240. computer embroidery.Uses an assembly line system.59 Approximate number of workers (in all facilities) Position ~Number of workers Tailors60 1200 Fabric Cutters 125 Thread-cutters (use embroidery machines) 200 Pressers 75 Fabric and Accessories Storage Workers 40 Helpers 50 Accounts personnel 20 Miscellaneous 100 Total number of workers in all facilities: 1400-1800 Machinery (at all sites) Jyoti has 1000 Juki stitching machines. piccoting. Sometimes Jyoti has people from UK and France do designs for them. dry cleaning. lock stitch single needle and double needle. The researcher observed production of ladies’ white blouses for Emma James (Liz Claiborne). over locks. feed of the arm. cross stitch/lock stitch button/ button hole/ snaps. Production Capacity According to profile. washing machines and set of 84 stem boiler irons. which varies according to the product. According to company profile.000 pieces per month.
and embroidery departments. cutting. though the researcher was not able to obtain a photograph of the plan. Page 54 .Ground Floor Plan Second Floor Plan There is also a basement floor with fabric and accessory storage.
The department has one finishing supervisor and one assistant finishing supervisor. observations. Washing (10-15 workers) Washing was located on the topmost floor of the building.(Right) A view of the basement and ground floor. the researcher did not have time to write names) Magsons Export (a Jyoti Apparels Production Site) Finishing: One in-charge Finishing: One supervisor Finishing: Pressing Supervisor Finishing Quality Administrator (QA) Finishing Quality Checker (QC) Finishing: Quality and Production Floor After washing 61 Number of workers per department. Document given to Buyer About Shop Floor Management (was displayed on shop floor. three thread-cutters. There were two workers on the machines. Packing (10-15 workers) Did not observe department during visit. Fabric and Accessories Store. Page 55 . The workers in this department were all male. Sampling (15-25 workers) The fabric store had a sign reading “Triburg. with one cutting master. two supervisors in an office in the corner. This was the only department that had any female workers. Some of the fans were broken or not on. Production (~180-190 Workers)61 on Second Floor Machinery includes about 200 Juki stitching machines.” which is the buying agency that many firms deal with. Machinery includes one bandknife cutting machine and two straight knife machines. Cutting (20-30 workers) in Basement There are four lines in the cutting area. It did not seem as modern a unit as other top tier factories. one cutting assistant.” so they are barefoot when operating the computer embroidery machine.. is data for production site visited. Checking/ Finishing/ Pressing (40-50 workers) The finishing area had lines of workers pressing and folding clothes. There were no fans in this room. etc. 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. and the remaining workers helpers.
which is not subject to negotiation. workers are offered a wage based on this evaluation. After one day period. button placement One checker Step 4—Initial Checking Two checkers Two thread-cutters Productivity Schemes There are no incentive schemes according to the Managing Director. according to the Assistant Production Manager. Benefits Production manager indicated that workers receive ESI and PF. and cutting supervisor who set the production lines and targets based on manual time-studies. while the rest of the employees receive a monthly salary. VII. and gave a copy of the minimum wage scheme for Haryana. However.O. extra button. Then he stated that they conduct production planning meetings with the factory manager. finishing supervisor. Labor Turnover Estimated worker turnover per month at 20%. there is an incentive scheme that depends on monthly shippings. security tag Four operators Step 2—Initial Pressing One supervisor Step 3—P. Wise Tag check with care. it is all left to selfdiscipline. The tailors and some finishing employees receive wages on a daily basis. Wage Setting Procedure For shop floor workers.Step 1—Care label. Page 56 . First the Assistant Production Manager stated that they do not perform time studies.000 pieces per month. 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. production manager. merchant/buyer (for style).000-90. rather they calculate targets manually by hourly production rate. supervisors conduct time studies evaluating the skill level and productivity of a new hire. If workers exceed this by 1 lakh. The production unit visited usually produces 80. then the factory will give incentives.
though the Director mentioned that workers learn on the job. The Assistant Production Manager stated that if workers are not productive. H. K. The Managing Director states that they recruit people from Apparel Training and Design Centers.VIII. Magu Partner Founder/Chairman Mr. Worker Training Sometimes Jyoti trains workers during a lean period if there is time. Page 57 . HUMAN RESOURCE POLICIES There are no common policies across the plants. because otherwise they become permanent and you have to pay them more. Recruitment Policy Jyoti states that they do not use labor contractors. Dismissal Procedure The Managing Director stated that they keep workers for 240 days and then change their workforce. 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. but these tend to be more middle management people. but managers observe productivity and hire skilled workers. they are given a one month notice so they can find another job and they receive a letter of termination. and the extent of their recruitment is posting signs on their front gates. Workers do not need experience per se. L. Management Structure Mr. while dotted-line boxed positions are factory-specific and subject to variance. Usually 20-25 tailors take 10-15 days to train.
Does not have its own employee code of conduct. ports.. but the Managing Director stated that when the old employees formed a union. There is a path behind the building to get to the main office over ripped metal sheets over grates. but no visitor’s pass. such as environmental. etc. traceability. No common policies (with HR. Customs Security requirements regarding issues like preventing trespassing. BUSINESS BOTTLENECKS63 Main problems facing the industry are poor infrastructure (need better highways. companies have required them to uphold a more stringent counter-terrorism model of security in compliance with U. high rate of interest. A lot of money is invested into customs. they cannot transfer goods during “peak hours. they should run cargo through machines instead. tampering. and they have monthly meetings. which makes it difficult to meet deadlines.S. etc). but talked about them vaguely and though he stated that he could give me committee minutes. higher material costs (indigenous.Union The corporate office used to be a production site. he moved production to another site (now there is just the accounts staff and some sampling/design). Medical Care There are doctors nearby the factories and first-aid kits in the production sites. etc. labor laws (especially the lack of hire and fire exit policy). Page 58 . For example. The production site visited did not have a union. production. anti-harassment. The first time security did not take my name in the confusion of finding a manager. He stated that old employees with a union do not work as hard. IX. etc. However. he did not. or CTPAT model. Second time took my name. 62 Based on interview with MD and Asst Production Manager.S. 63 Based on interview with Managing Director. according to the Customers Trade Partnership Against Terrorism. U.62 Security System New security measures have been implemented since the quota phase-out. Believes that there should be special customs lines at airports so that everything is not searched. though neither of them knew where the medical facilities were located. the Assistant Production Manager stated that they do have committees. duties. no imports because would have to pay landed costs). and high transaction charges. Worker Committees The Managing Director stated that they do not have any worker committees. but did not give a visitor’s pass. He said they have the joint employee-worker committees required by law since there is no union. lack of good fabric processing machinery. Grievance Policy Procedure/Corporate Responsibility/ Codes of Conduct No information was obtained regarding a formalized grievance policy procedure.) across plants except for buyers code of conduct.” trucks are only allowed to transport good between 11 and 4.
They’ve had to become very quality-conscious and price-conscious. Jyoti was an extremely open company in many respects. as were much of the staff at the production site. making access to plants easier. The Managing Director is the Senior Vice-Chairman of the AEPC. Page 59 . Also. but unit prices got too low. like American Eagle. did not see upper management (factory manager. Post-quota phase-out resulted in a boom for Indian business.X. and one of them glanced at a time-study once. China is their main competitor. etc. 64 Based on interview with the Managing Director. or even leave their air-conditioned offices.” Jyoti supports “special garment zones. as they still have the edge on labor productivity and good infrastructure. XI. Companies are very upset with the government’s “bureaucratic hurdles. and had everyone borrowing money from the bank and investing in huge factories. production manager.) or some supervisors do anything. He was very open in disclosing information. who also permitted the researcher to take photos.” in which infrastructure would be built up by the government. Phase out of quota system has brought in new buyers. before couldn’t have more because of quotas. and did nothing the rest of the time. This year. The Assistant Production Manager was almost never at the factory when the researcher came to the production site. so could not take orders from them anymore. the overseas vendors couldn’t sell their inventory. which is the capacity in which the researcher initially came to interview him. it was difficult to deal in huge quantities because of the possibility of mistakes in such a large order. labor laws would be relaxed. INDUSTRY COMMENTS64 Jyoti used to deal with Wal-Mart and Target. because of the late summer. etc. PERSONAL EXPERIENCE When observed work at the production site. They played solitaire.
General Manager of Operations 236 Udyog Vihar Phase-I. an interview with a General Manager of Operations. Phase IV. 133. Phase I. 239. and ironmongery. 151. Gurgaon 8. 68 According to the company website. 506. Udyog Vihar. Gurgaon 3. including: 1. 192. Phase I. Udyog Vihar. G International was established in 1983 in Delhi and 1996 in Gurgaon.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. Gurgaon67 6. B-108. Noida. II. and G. Phase-I. Gurgaon 7. 69 From an interview with the General Manager of Operations. aluminum hardware. CONTACT INFORMATION65 Registered Office: 2/2. New Delhi 2. Gurgaon 2. Manicandan’s CEC report. black iron. BRIEF HISTORY68 Vijay Uppal. Gurgaon. 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 4. and Bangalore. Page 60 . the current Chairman. Ware Housing Scheme Kriti Nagar. 236. Udyog Vihar. 67 Unit visited by the researcher. 25454895 Contact person: Padam Vaish. 479. Udyog Vihar. Udyog Vihar. Phase-I Gurgaon The company profiled has over ten manufacturing units. Udyog Vihar. Phase III. Phase I. New Delhi . including: 1. incorporated R and Co. Mayapuri Industrial Area. Udyog Vihar. Gurgaon 5. I. Phase III. Gurgaon. Udyog Vihar. G INTERNATIONAL OF R GROUP OF COMPANIES Indian Government Recognized Export House The information in the following company report was primarily obtained from the company website. Phase I. 66 According to company website. 25172438 Fax: +91-11-25451549. in 1977. 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. 25172437. Phase III. 225.4. with one woven garments manufacturing unit in Delhi. 208.110015 (India) Tel: +91-11-25431408.
trousers. The R Group has recently established a fully integrated production line in Noida. pants and shorts. Polo Ralph Lauren. D.1992. Calvin Klein. Timberland. The company has already started manufacturing leather accessories and is further expanding with a bigger factory planned in Gurgaon. The tannery has modern finishing technology for leather finishes of Sheep.. Charming Shoppe. Betty Barclay. Monsoon. Ann Taylor. skirts. while Vijay Uppal and Gaurav Uppal are Joint Managing Directors. Land’s End. Sigrid Olsen. and Marks & Spencer. The group launched a leather manufacturing unit in 1989 specializing in high fashion leatherwear under the management of Sunil Kapur.. women and children such as jackets. It has initiated a backward integration project by starting its own tannery in Hyderabad. to brands such as GAP. vests. Page 61 . Target. Women’s Secret. Debhnams. Tommy Hilfiger. The R group does not manufacture for the domestic market. BASIC PROFILE70 Legal composition of the Company Virender Uppal is the Managing Director. Wal-Mart.Y. semi anilines. The company has set up its own offices in Ludhiana and Tirupur in order to better source fabric. Mervyn’s. ladies tops. Spigel.Crew. Etams Miss Sixty. R Global was incorporated in 2002 at Bangalore. Product Mix Areas of specialization include ready-made woven. Mexx. It specializes in (primarily) outerwear for men. Clients The R Group sources to over fifteen countries. Exports/Imports 100% exports. Inc. which will specialize in ready-made specialty shirts. J. knit. III. Liz Claiborne. May Stores. anilines. Federated Stores. women and children including shirts. waxy distressed/ oily nappaloans. the group includes eight companies. The R Group began producing knitwear when Gaurav Uppal joined the company management. semi-nubuck. Dillard’s Sears. Cortefiel. Including the original R and Co. and leather high fashion garments for men. antiques. Goat and Cow leather as well as nubuck. Awards 70 According to the company website. Lane Bryant. Next.N.K. pants. skirts etc.. cargo pants and shorts. BCBG.
Export Performance Chart71 Other Financials No other financial information was obtained. BRAND INFORMATION72 Export Market of the R Gro 10% U.A. U. U.A.S.A. U.S.S. 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. 90% Major Clients Brand GAP Macy’s Wal-Mart Dillards Liz Claiborne Federated Stores 71 72 UK and Japan Origin U. V.IV.S. From an interview with the General Manager of Operations.A.S. U.A.S.S. FINANCIALS Turnover The R group has an expected annual turnover of US $ 85 million for the year 2005.A.A. Page 62 .
Taken from the company website. though they occasionally take direct orders.75 Production System The R Group uses an assembly line system. Smaller companies are more likely to be direct orders. there has been a 15-20% increase in orders.Buying Agency or Direct Contracts are mostly negotiated through buying agencies. 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. and the buyer selects and negotiates the contract. since they often don’t have established offices. Page 63 . However. They set up a shelter (“shack”) for local tailors to do the hand embroidery. Quality Control The General Manager of Operations stated they use a “2. VI. Wal-Mart usually orders the largest volume. 73 74 Including Wal-Mart. R Global. The R Group’s leather manufacturing unit has an annual production capacity of 500. Gurgaon. G International does not use a recruiting agency or a labor contractor. see company website. For a more detailed quality control process. or sometimes they embroider in their homes. Noida.000 pieces. though there are fewer orders in the fall and winter. G International takes indicative orders from the buyer. INFRASTRUCTURE74 The R Group has over twenty-two integrated manufacturing units in Delhi. Subcontracting G International subcontracts their hand embroidery. 75 From an interview with the General Manager of Operations. Design/Sampling76 The design department for G International and the entire R Group is located at Kriti Nagar (presumably at the site of its registered office). and Bangalore. the company’s knitwear divison. 76 From an interview with the General Manager of Operations. though not to an established company or to direct employees. unless otherwise indicated. Production Capacity The R Group’s woven division has an in-house annual production capacity of 10 million pieces. has an annual production capacity of 2 million knitted garments. shows a sample range.5 APQ” quality check standard across the board.
cutting (Digitizers. to the pre-production stage (layout and machine engineering. 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. Productivity Schemes The company has production planning meetings in which targets are set and the workers do not participate. time and motion studies.Approximate number of workers in all facilities The R Group has a staff of over 10. operation research). such as medical checkups.000 workers. scholarships for workers’ children. 80 From an interview with the General Manager of Operations. 700 per month extra. the General Manager refused to give any more specific numbers of workers. 77 After disclosing this information regarding the number of skilled workers. G International has a total of 7. with 1200 workers at this site (approximately 95% male. Preliminary worker interviews revealed that this company was considered one of the worst factories to work for in Gurgaon.77 Machinery R Group’s production facilities use machinery at every point in the production process including designing (CAD). 5% female).79 VII. Plotters & Automated Cutting Machines) and fabric testing (fully equipped laboratory) and fusing. an estimate was approximately Rs. material flow). 78 From an interview with the General Manager of Operations. They incorporate corporate social responsibility schemes into their productivity ideas. from the sampling stage (product and pattern engineering. operator training and skill analysis). Page 64 .000.78 The R Group has a Research and Development department for the technical aspects of garment manufacturing. Departments No information on specific departments was obtained. They have incentive schemes for things like 100% attendance. 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. 79 From the company website. to the production stage (work aids. and worker welfare programs.
none of which were visited by this researcher. Virender Uppal Managing Director Founder/Chairman Mr. Manicandan’s CEC report. which is reportedly not always paid.Wages81 The wage amount excludes overtime payment. 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. and 225 UV. Page 65 . Category (from pay slip) Tailor Sewing Operator Helper (8 months experience) Unskilled helper Helper (production) Wage (Rs. which is made on a different date than the regular salary. supervisors conduct time studies evaluating the skill level and productivity of a new hire. HUMAN RESOURCE POLICIES Management Structure Mr. 15 per hour. Benefits According to the CEC report./month) 2600 2750 2344 1893 2341 Wage Setting For shop floor workers. Overtime payment is Rs. 151 UV. Units visited in his report are Gurgaon Phase-1 192 UV. though they do not always receive their PF once they leave the company. workers are then offered a monthly wage based on this evaluation. which is not subject to negotiation. Vijay Uppal Joint Managing Director Mr. 81 From G. VIII. After a three-day period. HR Manager stated that wages increase after a year. workers receive 12% PF and 2% ESI. Gaurav Uppal Joint Managing Director Mr. while dotted-line boxed positions are factory-specific and subject to variance.
Security System No information was obtained regarding a security system. Manicandan’s CEC report.Worker Training The facility sometimes trains workers if the operation is difficult. The General Manager stated that there are common policies across the plants. Page 66 . However. like the labor norms in China. 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. Workers receive a letter of contract. More than local labor laws. no. interviews applicants. No other information about the R & D department at this specific facility was given. an interview with a G International worker in a Gurgaon plant revealed that he had never seen or heard of the employee code of conduct manual. According to G. Company G and the R Group does contract temporary laborers and subcontract to a labor contractor. BUSINESS BOTTLENECKS The General Manager stated that buyer requirements like double pay during overtime are holding the industry back. we do more incentive programs and get better performance out of our existing workforce. worker committees. Today. that they engage in the same kinds of recruitment. well. or a union. customer friendly. Medical Care No information was obtained regarding on-site medical care. not anymore. grievance policy. IX. [the R Group] is seen as a highlighted-tech. eco-responsive corporate citizen that is Shaping a Better Tomorrow for everyone. Researcher: Is labor flexibility or the lack of hire-and-fire policies an issue? General Manager of Operations: No. Researcher: But you said you didn’t use labor contractors.” The company has a manual code of conduct that the General Manager stated is given to each employee. then tests worker productivity for an hour and a half. Training usually takes one or two days and is done through the research and development department. He stated that it should be looser. buyer codes of conduct are hurting business because they are more strict. Recruitment Policy The facility posts signs on gates. So how do you overcome these issues? General Manager of Operations: Oh. Other Human Resource Policies No information was obtained regarding a formalized dismissal procedure. These problems are taken care of with labor contractors.
the Northern area of India is more embroidery and hand-work intensive and is multiproduct. especially in regards to quotas. though several follow-up interviews were scheduled. every one of them was canceled by the General Manager. brief way. When asked about the number of skilled workers. It would be better to simply show up or not leave an option of calling before coming. The General Manager stated that the AEPC was much more useful before the MFA phase-out. INDUSTRY COMMENTS The R Group is in the process of setting up a backward integration project for their knits division. The work culture in the south is “different—more productive and efficient. 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. Page 67 . Because they are trying to increase productivity. he initially would not let it leave the building. General questions about labor laws or productivity issues usually prompt details and complaints. and he was much more reserved and suspicious. but he answered questions in a more direct. who was not at the factory when the researcher visited. Furthermore.” The South is also usually single product. which makes productivity more difficult to increase. as it would tell them new government policies and how to best utilize the system. PERSONAL EXPERIENCE The R Group was extremely difficult to both interview with and extract information. Virender Uppal (the MD of the R Group) is a former Chairman of the AEPC. He refused to schedule an interview solely with the HR Manager. and avoided any other types of follow-up including the suggestion of a phone interview. XI.X. Although the researcher obtained a employee code of conduct handbook. In general. The researcher was directed to the General Manager at a G International plant for an interview. They are also setting up a leather accessory factory at Gurgaon. He implied it has limited use after the quota phase-out.
Phase I. Gurgaon 4. Phase I.com Production Units: 1.com Jayant Sood. 870.5. Phase V. In 1993 it became a public limited company. Gurgaon 2. Community Centre Naraina Industrial Area Phase-II New Delhi – 110 028 Tel : 011-51417680-82 Corporate Office82: 446 Udyog Vihar. BRIEF HISTORY83 Pearl Global was incorporated in 1979. as it includes all parts of the garment industry under the “House of Pearl. the company website. The information in the following company report was obtained primarily from an interview with the Chief Finance Officer. Phase-V Gurgaon – 122 016. CONTACT INFORMATION Contact People: Deepak Seth. Manicandan’s CEC report. Gurgaon II. Chairman deepaks@pearlglobal.” The House of Pearl is focused 82 83 Unit visited by the researcher. Company Secretary Tel: 95-124-4308164 E-mail: jayants@pearlglobal. and its first manufacturing facility was established in 1989. and an interview with the Company Secretary. Udyog Vihar. Udyog Vihar. Phase V. I. Chief Finance Officer Tel: 91-124-4308201 rishiv@pearlglobal. Udyog Vihar. 446. Haryana Tel : 91-124-4004086/87/88/89/90 Fax: 95-124-4004067/85 Website: www. 222.com Registered Office: A-3. PEARL GLOBAL LTD.pearlglobal. Gurgaon 3. business began in the 1980s. G. Udyog Vihar. 138. online business publications and press releases. Page 68 . The company structure of Pearl Global is extremely unique. From an interview with the Chief Finance Officer.com Rishi Vig.
E.” Its operations in Bangladesh (NorPearl and NorPlanet) focus on more simple sourcing and manufacturing while its offices in India focus on the sourcing and manufacturing of ethnicwear (more production-intensive and complicated clothing).S. children’s. Kohls. H & M85. Page 69 . Marks and Spencer. basic stuff. The Chairman of Pearl Global established a fashion and design academy. Charming Shoppes. The company recently entered into a business and education partnership with Babson College in the U. t-shirts. Bangladesh: low cost. ethnicwear. 86 From an interview with Chief Finance Officer. Liz Claiborne. shorts. 84 85 See company website for list of shareholders.1993. It also has businesses in Hong Kong (NorWest) and the UK (Poetic Gem).P.E. including blouses. children’s and men’s shirts. brand “Kool Hearts.84 Exports/Imports 100% exports. Wal-Mart. vests. Inc. Castromen. NorPlanet Pearl Global has manufactured women’s. marketing units in the U.S. stain sealed garments using goretex and acquatex. Siplec. It offers full services to large retailers with the chain broken into business units that cater to different product lines. Product Mix Areas of specialization include: India: woven cotton and value-added cotton. Esprit.P. From company website. George (Wal-Mart).on the apparel sector with manufacturing bases in India (primarily Pearl Global Ltd. bottoms.C. and outerwear. III. skirts. etc. Pearl Academy of Fashion Domestic. dresses. warehouse and distribution. Clients Abercrombie & Fitch. The House of Pearl includes designing and manufacturing units. He has successfully promoted and established the fashion apparel brand "Lerros" in Europe.) and a global network of business associates and customers. Karstadt/Neckermann. which together yield a combined turnover exceeding U. he has been inducted to the Executive Committee of A.) for the year 1990 . Nex86. He has been actively involved with the development of readymade garment industry in India..S. Lerros. trousers. Besides having been elected to the Executive committee of the Apparel Export Promotion Council (A. and the UK.C.S. GAP (including Banana Republic and Old Navy). NorPearl. Pearl Global does not manufacture for the domestic market. is establishing a U. as a Special Invitee. suits. Dillards. nightwear dresses. JC Pennys. $200 million. BASIC PROFILE Legal composition of the Company Public limited company.
Ahmedabad . 29 June 2006.110 002 2.87 $400 million in its worldwide operations post quota phase-out. 5th Floor Plot No.5 crore in the previous year. Page 70 . P.9 per cent to Rs 159.”90 See website for detailed financials. 3.C/1. In 2005-06 the company invested Rs 29 crore to augment its production capacities in Gurgaon and setting up a new unit in Chennai.89 Other Financials “Pearl Global posted 88 per cent year-on-year increase in net profit in 2005-06 to Rs . <http://economictimes.41 crore in 2004-05].asp>.IV. J. The revenue of the company during the year was up 31. The Delhi Stock Exchange Association Limited (Regional Stock Exchange) DSE House 3/1 Asaf Ali Road New Delhi .telegraphindia. Ahmedabad Stock Exchange Limited Kamdhenu Complex Opp.” The Economic Times: Garments/Textiles.380015 87 88 From Chairman’s Message on company website.88 Net profits are 234% up. G-Block Bandra – Kurla Complex Bandra (E) Mumbai – 400 051 4.6. FINANCIALS Turnover $200 million worldwide before quota phase-out.5 crore [from 120.indiatimes.com/articleshow/1690384.” “The company’s operating profit was Rs 17.400 001.9 crore in the previous fiscal]. 89 From an interview with the Company Secretary.com/1060712/asp/business/story_6465123.43 crore[ from Rs. Sahajanand College Panjarapole. Dalal Street Mumbai .” <http://www. 90 “Pearl Global net up 88%.1 crore compared with Rs 7. Babson College press release. Stock Exchanges where the securities are listed: 1. Towers. Bombay Stock Exchange Limited 1st Floor. New Trading Ring. Rotunda Building.cms> and “Corporate Briefs: Pearl Global. 3. Pearl announced a dividend of 30 per cent for the year [subject to shareholders’ approval]. National Stock Exchange of India Limited Exchange Plaza.
“Dear sir. BRAND INFORMATION91 Pearl Global’s Export Market 40% 60% U. and jersey product across all ages and genders from a variety of countries in the Far-East and Indian sub-continent. From an initial order in 2001. They now supply us with a variety of casual. woven. before the cost justified it. George (Wal*Mart) Kohls Dillards Marks and Spencer Esprit Liz Claiborne Nex Length of Relationship 10 years 7 years 7 years 5 years 5 years 5 years 2 years 2 years 2 years 2 years Of the top ten retailers in Asia (would not be more specific). The following is a forwarded e-mail from George Clothing (Wal-Mart) regarding Pearl Global: Subject: Something you should know. 91 From an interview with the Chief Finance Officer. To grow the business at this rate Pearl has had to show a "can do" attitude.S. They have supported our growth by putting in the infra-structure to service our needs. Journalist. 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. Apologies for the delay in replying.V.they have grown to be our second largest supplier. Inc. EU and UK Major Clients Brand JC Pennys GAP (incl ON and BR) Charming Shoppes. the Chief Finance Officer stated that they are engaged in strategic partnerships with six of them. They are working on building strategic partnerships with between all of their vendors and suppliers and consolidating them. Page 71 .A.knitted. Our Customer's perception This reply has come from ASDA Walmart to a query of a Sr. 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.
I feel that we can have an honest conversation with Mr. and any issues that have arisen have been resolved immediately and taken as learnings to provide a better service going forward. 1 business publication. * 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.We want style. As price deflation has become a way of life in the UK clothing market. ASDA Wal -Mart. UK I am a journalist from India writing for India's No. has a right to exploit the people who make the product we sell. retailer.com --Original Message-Dear Ms. I honestly believe that to supply fashion retailers at the volume end is one of the most difficult businesses to be in . Senior Sourcing Manager -Kidswear. quality etc? * As compared to other supplier where do they stand? Please feel free to add whatever else you would like to express/say on the business house. Thanks and regards. Below are a few points which I hope you would take time off and reply to at the earliest.quayle@wal-mart. Finally. quality. 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. For Pearl to grow their business with us. hence would like to have some of your observation/views/comments on the business house and your relationship. no-one whether it be store customer. price. Heather Moreton. Best regards. flexibility to change our minds as to what we want right up to the last minute. Allan Quayle General Manager-Strategic Supplier Development George Clothing Phone 00 44 (0)1455 264409 Mobile 07779 700695 e-mail allan. and where our distribution network has creaked under the pressure. offering us product direct from factory or landed delivered if the situation demanded. Quality. and delivery have had to be a given. We pride ourselves at George that our ethical standards are rigorous. so Pearl have stepped in to provide solutions and support. Lancelot Joseph. 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. Mr. Deepak Seth has also gone beyond the factory gates to work with the community and put something back. Executive Editor.Growth on this scale inevitably creates major head-aches for the supply-chain. Business India” Page 72 . it is critical for us as a business to deal in the right way. or supplier. Currently I am doing a corporate feature on the House of Pearl who is your vendor. 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.
Production Capacity Pearl Global has 20 million pieces in-house capacity and 120 million pieces capacity all across Asia. who then chooses or modifies the styles. The embroidery tailors either come into the facilities to perform the work or they send it. one in Indonesia. Every stage of the production line has its 92 From an interview with the Chief Finance Officer. Quality Control Raw material including fibres. The House of Pearl’s research and design department prepares a collection of high fashion styles for each season.S. 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. two of which are in Bangladesh. Design/Sampling and Product Development Designs are mostly developed in-house. yarns. are consulted to developed in-house patterns. Subcontracting Sometimes Pearl Global subcontracts hand embroidery. and one in China. but now they have developed direct relationships with their long-term business partners. A few years ago the delivery/production cycle had to begin 18 months in advance. They have six design factories.S. which are shown to buyers in advance. INFRASTRUCTURE92 Pearl Global has five or six production facilities in India. Pearl Global then manufactures the style.Buying Agency or Direct They used to contract through buying agencies. dyes and chemical are thoroughly checked before they are fed into the manufacturing process. VI. Markup (days) High of $10 $6-7 USD 3 to 4 times 60 to manufacture. Sometimes designers from the UK and the U. 50% FOB. 5% freight. but it mostly in-house. Production System Pearl Global uses an assembly line system. now it is 6 months. 90 incl. The House of Pearl has over 150 factories across Asia. India: Unit Prices (paid to factory per piece of garment supplied) Range Average Retail Delivery Time Type India U. Page 73 . Pearl Global uses labor contractors. one in Chennai and the others in Gurgaon. They are working on doubling their capacity in the next 2-3 years.
Udyog Vihar. fibre bundle strength. Phase I. Manicandan’s CEC report (and confirmed by the Chief Finance Officer). which is sourced from outside is tested for fibre fitness micron ( fibre diameter). Phase I. Phase V. count strength product (CSP). The finished yarn is tested for residual shrinkage. CRA. VII. Productivity Schemes Pearl Global gives out “best worker awards” and “gold stars” for productivity. and if they have a low level or no absenteeism they also get an incentive. Page 74 . pilling. but did not give specific numbers. moisture regain percentage and finish percentage. Every set of fibre (polyester. WORKING CONDITIONS Wages and Benefits The Chief Finance Officer stated that sometimes Pearl Global pays workers above the minimum wage. Udyog Vihar. Gurgaon 500-600 workers 222. Production Unit Number of Workers93 138.own set of detailed monitoring system. twist per inch. Phase V. Udyog Vihar. Gurgaon 2000-3000 workers Machinery Pearl Global has an estimated 2000 machines for every part of the production process. viscose tops and special fibre). etc. Sretch yarn.” as workers do not have a long-term commitment to the factory. as neither an HR manager nor a production manager was available for interview. single ply yarn is also checked on the uster machine to ensure consistency in yarn quality confirming to norms of the uster statistics. drape and fastness to light washing and rubbing and slippage. Gurgaon 600 workers 870. After workers receive their monthly salary they see a “rise in absenteeism. Udyog Vihar. 93 Numbers for the units at 446 and 870 were estimated by the Chief Finance Officer while the other numbers were obtained from G. fibre composition percentage (blend %). 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. uster percentage and impurity. tensile strength. ply yarn. Gurgaon 2500-3000 workers 446. Polyster viscose and cotton yarn is tested for count. novelty yarns. If a worker stays for six months they get incentives. Departments The researcher was not able to obtain information regarding the specific nature of the assembly line or tour the factory. Approximate number of workers in all facilities Pearl Global has approximately 6000 workers in India.
3000 per month Every year workers receive Rs. VIII.” but there are not enough “available. who must first pass a hand-eye coordination test and then spend twenty days on the training line. All but temporary workers are covered by social security schemes. but if it is mixed employees then it becomes a problem with issues of sexual harassment. K. although being a “permanent” employee will entitle a worker to an identity card. HUMAN RESOURCE POLICIES97 A new HR manager is to be hired as of August 15. & Company. There is a union in the facility at 138 UV. though sometimes workers work double shifts and are paid double. Union and Worker Committees98 There is no job security. 2006. 95 Page 75 . There is no sexual harassment 94 According to G. and Sukumar Pride. Recruitment Policy Pearl Global uses labor contractors and specifically stated they use R. 4000 per month Rs. 97 From an interview with the Chief Finance Officer. According to G. who are not entitled for ESI and PF. The labor turnover in Chennai. and Indonesia is lower. Bangladesh.Position Finishing supervisor (7 months experience) Tailor (8 years experience) Tailor (5 years experience) Wages94 Rs. Worker Training There is a training line for new workers. Dismissal Procedure. For their HR strategies. they used a mix of outside agencies and consultants. 96 From an interview with the Chief Finance Officer. 3500 per month Rs. The union is not effective in addressing the problems of the workers. Manicandan’s CEC report. & Co. 100 more and a 20% bonus for divali. and the head of the union is not an employee at the facility. Overtime95 The facility at 222 UV has two shifts and thus there is little overtime. ESI and PF. if there are no orders or “no work” employees are told not to come. They contract temporary workers through R. Labor Turnover96 The labor turnover in Gurgaon is about 20%. Manicandan’s CEC report. 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. They want to hire more women like Southern facilities do because women workers are “more efficient.K. Furthermore if “it was all women it would be fine. Out of 500-600 workers only about 90 are in the union.” and it is not convenient as Pearl Global would have to provide transportation. Manicandan’s CEC report. They did not have a HR manager before this.
Corporate Responsibility/ Codes of Conduct According to the Chief Finance Officer. 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. as there is different management at each facility. The strength of South India is its efficiency. According to the Chief Finance Officer. which have monthly meetings. 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. INDUSTRY COMMENTS100 Commented on the strengths of the North. orders are fewer in July and August. Page 76 .committee. Pearl Global just hired a lawyer to help analyze and plan financial structure. etc) helps immensely. 2006. Source the best from the World to deliver the best to the world by following ETHICAL MANUFACTURING AND TRADE PRACTICES. X. and teams are set up to work on weak areas in working conditions. This translates to bringing a high level of satisfaction to five constituencies Customers. i. From an interview with the Chief Finance Officer. so they are working on capitalizing upon the existing capacities. Sustainability and Profitability of revenues year after year. Employees. a fashion design and manufacturing technology institute.” IX. there are sexual harassment committees.e. which holds it back. The company has set up Pearl Academy of Fashion. Labor cost is still competitive (in terms of the world market). The Company has built-up very effective TEAM WORK…The primary purpose of Corporate Leadership is to create wealth legally and ethically. The company also operates a school by the name of 'Little Pearls' in Delhi. BUSINESS BOTTLENECKS99 The industry is regulated by the supply of cotton. The unit at 222 UV does not have a union. “ethnicwear” or design. implying that the AEPC is not as useful post-quota. They want to integrate all offices with an ERP 99 100 From an interview with the Chief Finance Officer. The House of Pearl has enough infrastructure to double turnover. they have set up a medical treatment facility in the spirit of social responsibility. as mentioned previously there is a new HR manager slated to begin on August 15. which is missing in the North but the value-added garments (embroidered. The Chairman Pearl Global espouses corporate responsibility ideals on its website (Chairman’s Message. Deepak Seth): “A future that shall be built with the same strategy that has shaped our past. Investors. Vendors and the Society-at-Large. Working on having uniform HR and productivity strategies. The motto of every Corporate Body is to ensure Predictability.
the Netherlands' Hogeschool van Amsterdam. Lalit Gulati.cms>. The Advisory Board of the Academy consists of leading exporters. 101 Page 77 . The company is setting up new facilities in Dhaka (Bangladesh) and a design center at Chennai. and is located in the Okhla Industrial Area (Phase II) of New Delhi. It provides training programs in the areas of Fashion Design. its alumni hold responsible positions in more than 300 leading organisations.htm Advisory board includes: Mr. As a result of the close interaction between the industry and the institute. 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.indiatimes. in India and abroad.com/articleshow/1404688.” The Economic Times: Garments/Textiles. R & Company. industrialists and academicians. Chairman. 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.pearlacademy. Mr. Managing Director.com/index. Pearl Global. Modelama Exports The Pearl Academy of Fashion was set up in 1993 by Pearl Global Ltd. like in “Pearl Global to merge two companies. It has a validation agreement with the UK's Nottingham Trent University (NTU). Merchandising. Mr. <http://economictimes. Partner.Virender Uppal.system. Deepak Seth. 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). who constantly review the institute's performance to ensure that the programmes are practical and industry-oriented.. It has links with acknowledged international leaders in fashion education.”101 Pearl Academy of Design Education-Pearl Academy of Fashion http://www.16 equity shares of the company for every share in City Estates was recommended by the board at the meeting. Production and Computer Aided Design…The Academy has opened its second campus in New Delhi. and London Centre for Fashion Studies. Hong Kong Polytechnic University. 7 Feb 2006. London College of Fashion. The House of Pearl is planning to get into retailing and is working on an industrial engineering department and setting up software SAM. Bolton University. one of the top two in this field in the world. and Germany's LDT Nagold. Retailing. such as the UK's Chelsea College of Art & Design. at Naraina.
Executive Director. Babson College in Wellesley. Shoppers' Stop and Ebony. 102 From the website of Pearl Academy of Fashion. Chairman of Pearl Global and Dr. Robert Eng. and assessment standards. RMX Joss. and stipulations of the local region in India. Bombay Dyeing.Benetton. President of Babson’s Alumni Club in India and Chairman of DCW Ltd. learning. Pearl Global Ltd. Michael Fetters. Mass. and will visit regularly to monitor teaching. distance participation in projects. The Babson college press release: Babson College. requirements.’s premier business school). Babson’s Provost. * An overview of the entrepreneurship curriculum. This trust is in the initial stages of developing a new. Page 78 . workshops. was also present. and Professor Ash Rao will present the final reports to Pearl. among others. joint information sharing. Bhupatkar. Babson faculty will provide workshops for Pearl faculty and staffing.. internship facilitation. Orient Craft. Research in India Babson College.S. India. USA. The Asia Institute at Babson. private business management institution at two campuses near New Delhi. Both institutions will identify mutual exchange opportunities—on-line access to library resources. Advises Pearl Global. Richa & Co. Babson’s consulting reports will include: * The general curriculum for undergraduate and graduate programs.—ranked #1 worldwide in Entrepreneurship Education---will advise Pearl on the strategies. Ponds (India). and procedures necessary to build an Entrepreneurial foundation and curriculum. advisor to Pearl Global’s education trust. traveled to Delhi. Mafatlal.” 102 Partnership with Babson College Pearl Global Ltd. The Pearl School for Business Studies will grant Bachelor of Business Administration and/or Masters of Business Administration degrees with a focus on entrepreneurship. The collaboration is designed to expand over the next seven years. USA and Pearl Global Ltd.—a $400 million company exporting garments to Europe and North America—has formed a non-profit educational trust. India. has set up a business partnership with Babson College in Boston (U. Pearl Global Ltd. links to websites. Sonal Garments. * Faculty report including Babson faculty profiles and approaches to faculty development.. India last week for the official signing ceremony with Deepak Seth. have signed a strategic collaboration on a full range of activities to promote world class research and education of entrepreneurship in India. Current plans are for first classes to be admitted in the fall of 2008. Pearl will shape this information into a comprehensive Entrepreneurship curriculum to meet the particular conditions. processes. Vivek Jain... on New Business School: Two Form Strategic Collaboration to Promote Entrepreneurship Education. * Student report on the student admissions process and co-curricular activities.
Ltd. is recognized internationally as a leader in entrepreneurial management education. which is setting up a joint venture manufacturing facility for soft fabrics in China to secure part of its supplies.babson.” said Fetters. “According to market analysts. Mass. an interview was promptly arranged with the Chief Finance Officer. 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. “According to industry sources.”104 XI.. Olin Graduate School of Business at Babson College. <http://sify.” Babson College in Wellesley. 104 “Pearl Global bullish on Q2 numbers. growth prospect remaining high.edu/Newsroom/Releases/Babson-and-Pearl.103 Domestic and International Retailing In addition to the U. 24 April 2006. Gurgaon.cfm>.” 26 Oct 2005. The interview consisted of a powerpoint presentation on the structure and capacities of Pearl Global. Kool Hearts label. Babson grants BS degrees through its innovative undergraduate program. however after e-mailing the Chairman.com/finance/equity/fullstory. and grants MBA and custom MS and MBA degrees through the F.such as Jaipur. a company that shares our vision to advance Entrepreneurship knowledge in India..babson. It was difficult to obtain an interview by calling the numbers on the website. Babson Executive Education offers executive development programs to experienced managers worldwide. Page 79 . Deepak Seth. For information.S.W. visit www.php?id=13972072>. the recent fall in price makes it an attractive long-term bet. though the researcher was not able to obtain a copy without signing a confidentiality agreement. Pearl Global is getting into domestic retailing: “ [Pearl Global]. 103 Babson Newsroom Release. <http://www3. “We are privileged to work with Pearl Global.edu. The Company Secretary was not useful in arranging interviews with other personnel who would be able to answer what he could not. the company is in the process of booking retail outlet spaces in cities across northern region .“This collaboration is an important step in Babson’s journey to globalize Entrepreneurship Education. is understood to have chalked up a plan for its presence in domestic retailing. Chandigarh and Lucknow.
68. 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. G. 7-D Maruti Industrial Complex Sector-18 Udyog Vihar. most of the information is from the interview. Khansa Road Sector 37.ocemb. Udyog Vihar. Haryana 4. Dhingra borrowed Rs. ORIENT CRAFT LTD. a company profile given to the researcher by the Managing Director. but it does not contain any information beyond the heading: Orient Craft Limited: Embroidery. the largest computer embroidery facility in the Indian subcontinent. who asked Dhingra to get 1. 2341110 2. 110020 (India) Tel: (+91-11) 26818247. Founder/Chairman Personal secretary Meghna. CONTACT INFORMATION Contact Person: Sudhir Dhingra. An ISO 9001-2000 Unit: “Orient Craft Embroidery Division.com/. 2343262 Fax: (+91-124) 2342042. has no website. 15000 ($300) from his father. 26818249 Website: Orient Craft Ltd. and preliminary interviews from Gurgaon workers.com Production Units: 1. Manicandan’s CEC report. Haryana105 3. Gurgaon II. Phase IV. mobile: 9871496362 Corporate Office: Orient House F-8 Okhla Industrial Area. 14-A Maruti Industrial Complex Sector-18 Udyog Vihar. Page 80 . I. Gurgaon. Dhingra was a law graduate from Chandigarh with no experience. Plot No. Udyog Vihar. found some tailors to make the shirts.6. Unless otherwise indicated. Managing Director. Haryana Tel: (+91-124) 5090800.” E-mail: orient@orientcraft. He had a friend from London who was buying from importers and selling the goods to specialty shops. but the company was not incorporated until 1978. BRIEF HISTORY106 Business began in 1972. From an interview with the Managing Director. 13. and 105 106 First two units visited by the researcher. Phase-1 New Delhi. so he could use the proceeds as seed capital.000 shirts made in India. online business and economic articles. There is a preliminary website set up for its embroidery division at http://www. Gurgaon-122015. Gurgaon.
When he returned. ASSOCHAM.” Dhingra wanted to move production out of the village and industrialize the area and put as many skills in-house as possible. they’re looked down upon. Orient got clients by word-of-mouth from their L. ft. yards and outsourced actual manufacturing. <http://www. and that plant is still there. not like today. And being a tailor is like being a janitor. he obtained a factory processing site of 240 sq. the Indian-inspired fad went away and he had to spend six to seven months traveling to get rid of inventory stock. The first plant in Maruti Industrail complex was the first plant in India that was over 80. CMAI. when he got back to India. he estimated a production capacity of about 150. and others. “At the time. Then after a few years. National Institute of Fashion Technology.com/iftf. he also encountered some buyers.000 pieces and an annual turnover of around $40-50. During the first few years. During this traveling. During his traveling. though he stated that it was difficult to actually get the money from the government. only now it is 136. not just in the limited Indian context. and Germany buyers.”107 Biography for Sudhir Dhingra for the International Fashion Technology Forum. Dhingra “is also Executive Member of the Advisory Committee of AEPC and an active member of reputed associations such as FICCI. with 1800 people. he decided to break into the industry. and restarted business with a trial order of 1200 pieces for a customer in L. When his friend repaid him the Rs.000 sq. Then. Orient’s first factory was established in a village in Hauz Marg and it is still there.000 sq ft. 6000 ~ $133). 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. 200-300 people. found another buyer.htm>. with more than 350 modernized factories. CII. In the mid 1980s. 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.” His father gave him one year to start up business. CIAE. then consolidated supply chain into one roof. Both were wholesalers who sold to specialty stores.A.niftindia.A. Dhingra wanted to improve the standards of quality and infrastructure to globally competitive standards. The first Gurgaon plant was established in 1993. they’re not looked up to. he was able to observe fashion trends and the kind of things that were selling. and he rented a house. with 3500 people. 15000 plus a small portion of the profit (Rs. Then while in Germany. Dhingra states that others followed Orient Craft’s example. May 2006.shipped them to London. 107 Page 81 . you had to be a tailor to be in the garment industry.000. as Gurgaon is the single largest manufacturing sector in India. Liz Claiborne sent an American technician to help Orient with worker training and modernization. Orient subcontracted until the early 80s. set up a pressing line on the dining table and the production line in the garage. he hired more people. In the 1990s Dhingra set up a bigger plant with 100 machines.
Macy’s. is looking into breaking into the domestic market. and Marks & Spencer. and jeans). Zara. outerwear. Now he owns 60% of the shares. and gave 20% to his nephew and 20% to his friend. Sudhir Dhingra (Chairman and Managing Director). Loft. men’s shirts. Banana Republic. Page 82 . Up until 10 years ago.Hook. Orient used to source for Wal-Mart in back in 2003 but has since stopped. Orient Craft Ltd. Dhingra was the sole proprietor. Tommy Hilfiger (men’s. Liz Claiborne (LizDresses. ropers.. Marc Jacob. Esprit. 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. Jones of New York. knitted shirts/t-shirts. Clients Armani Exchange. dresses. Owners/Directors Mr. Express. Exports/Imports 100% exports. jackets. Product Mix Areas of specialization include blouses. The company does not do that much business with Zara and Miss Sixty (Italy). Susan Bristol. Lands End. Diane von Furstenberg. Rocawear. boys’. Awards Additional information: Orient Craft Ltd. LizSports).III. Next Retail Ltd. K. Mr. Oasis Stores. Donna Karen. ELM Street. pants. Marks & Spencer. Kohli. skirts. Polo Jeans). LizWear. 1998. Calvin Klein Jeans. J-Crew. shorts. Anoop Thatai EOU Information The company has three 100% export oriented units (which can import all raw materials and trims free of duty). Dockers. women’s. coordinates. J. because of “language and cultural differences” with the European business partners. and 2002. BASIC PROFILE Legal composition of the Company Orient Craft is a privately owned company but deemed public limited. 2001. Abercrombie & Fitch. Dhingra states that Orient is the only factory in India to manufacture for Marc Jacobs and Louis Vuitton. Limited. GAP (kids). 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. Old Navy (women’s). Dillards Stores. kidswear. However. 2000.K. Ralph Lauren (Lauren. sportswear. Ann Taylor.G. Mr.
which has doubled in a year and a half-as mentioned by NITRA president-used to be Rs.8-24.stm>. Europe 80% Canada 108 Basu.12 0. despite more competitive pricing.IV.” BBC News. 4 per unit.5 million % of Sales 50-60 12-15 12-15 10 Per Garment110 $5.8-24.00 % Retail Price111 0.20-1.03 0. BRAND INFORMATION Orient Craft's Export Market 5% 15% U.02-0. <http://news.02-0. 9 per unit) 113 Dhingra stated that Orient usually ends up with half of the target profit.A. 110 Based on the company’s average unit price of $10 USD.uk/2/hi/south_asia/4294679. 742 crores) Other Financials Last years profit was $8 million (40 crores).20-1.08-0. Page 83 . now it is Rs.00-6. Breakdown of Sales Revenue109 Est USD 2006 Material Cost Labor Overhead112 Profit (target)113 82.00 $1. 111 Average retail markup is five to six times the unit price of the garment.bbc. 112 Overhead (mostly energy. FINANCIALS Turnover FOB USD $105 million for 2002-2003 FOB USD $118 million for 2004-2005108 FOB USD $165 million for 2005-2006 (Rs.03 0.50 $1. 109 These figures were estimated by the Managing Director in the space of 5 minutes. 2 March 2005.5-99 million 19. so they can only be thought of as a rough approximation. “Winners and losers in textile shake-up.02 V.8 million 16.50 $1. Kaushik.co.8 million 19.S.
stm>. Some things have increased greatly. 2 March 2005. European companies pay higher unit prices).bbc. Orient was manufacturing skirts that would be sold for $4 USD per piece. Limited used to be mostly direct.) stated that on the date of the author’s visit in 2005. <http://news. however. they made one skirt for Polo Blue that will retail at $1199 (did not state unit price). There has not been a huge shift in the composition of customers. Kaushik.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. Recently. 115 Restarted business with Macy’s 2 years ago. however used to source to them about 10 years ago. Dhingra states that it is easier to deal with buying offices. 114 Dhingra stated that Orient manufactures 80-90% of what Diane von Furstenburg (high-end maternity clothes) sources from India. Unit Prices (paid to factory per piece of garment supplied) Average116 Retail Markup Avg Retail Price Type $10 USD 5 to 6 times $50 All FOB Unit Prices Since MFA Phase-out There has been an estimated decrease in unit prices of 10-15% across the board in most categories. but they will open up their own office soon. Dhingra stated that Orient’s average unit price is $10. “Winners and losers in textile shake-up. the industry-wide average unit price in India is $3. Page 84 . 116 According to Dhingra. depending on the quota category and how much they were previously restricted.50 USD (from US companies. There has also been an expansion of volumes and an estimated 15-17% growth in orders. but they just opened an office last year. Orient would not take a Wal-Mart order.co.uk/2/hi/south_asia/4294679. like cotton pants. however an article written for the BBC in 2005 (Basu.” BBC News. Orient tends to deal in higher quality and higher unit prices and lower volumes. Marks & Spencer is currently direct.
120 Biography for Sudhir Dhingra for the International Fashion Technology Forum.121 The average order size is 10-12. Udyog Vihar. of which four are in Delhi. National Institute of Fashion Technology. It picks up fashion from around the globe. 117 118 Plot No. May 2006. Gurgaon. <http://www. six in Gurgaon. ft. 13.com/iftf. The second plant visited was 380. after 9/11. 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. though it does use labor contractors.”118 Subcontracting Orient does not appear to subcontract. Page 85 .000 sq. but other fabric from silk. which was at the time the “single largest multi-product manufacturing plant in the whole of India. Orient has a display store in NY on Park Avenue that it opened up 3 yrs ago. Orient has created a niche with their diversified product line (mostly cotton/knits or wovens.000 pieces and production capacity has grown at least 25% over the past year. (unclear if it is the same facility visited) at the cost of over $10 million USD. ft.000 knitted per month119 2006: More than 125. 720. in 2003.000 pieces. As Dhingra stated. and employed 5000 people. and creates new designs for each season.000 woven per month. Haryana.S. Orient also deals in some very small volume orders for high-end buyers like Oil Lily. in and around Delhi.niftindia.000 sq. the company had only 17 production facilities spread over 600. 1. In 2003 Orient established a manufacturing complex of 340. gives feedback. chiffon to denims and outerwear). whose samples are then sent to potential buyers. Khansa Road.117 Previously. Orient has put a lot of human resources into product development and now boasts 900 product development personnel at 5 different locations.000sq. Orient makes 130.000 per day120 2006: In an average day.200. product development became the key thing that most Western companies were looking for. Sector 37.000 knitted per month 2005-2006: 720. sometimes 25-45. Production Capacity 2002-2003: 480.htm>. INFRASTRUCTURE Company has 21 production facilities. 119 According to the company profile. and one large plant is located in Noida. ft.000 or even 100. Production System Orient Craft uses an assembly line system. 121 According to an interview with the Managing Director.VI.000 woven per month. as traveling became restricted and Indian companies needed to build a competitive advantage. companies. even a little bit before.000 pieces. According to the company profile.
“most of the permanent employees are supervisors and perform high-end work such as production in-charge and finishing in-charge. Productivity Schemes Orient uses incentive schemes to reduce absenteeism and has implemented worker welfare schemes.” Dhingra stated that 70% of Orient’s workforce is direct employment. Departments No information on specific departments was obtained through the interview.” 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. and trims. Manicandan’s CEC report. The labs are equipped to test for all parameters including color fastness to light. with very little embellishment. Manicandan’s CEC report and could vary factory to factory. Bihar. washing plants and dry cleaning units. and since Orient produces high-end clothing with lots of embellishments. VII. In 2002-2003. not through a labor contractor. According to Dhingra the “girls” in the South are operators and less skilled. Information on work timings was taken from G. shirts. However according to G. WORKING CONDITIONS The workers are 80% male and since Delhi and Orient is mostly multiproduct. they “can’t be like Golkadas. According to G.Quality Control The company has in-house lab testing for garments. trousers. who manufactures 80-90% jackets/ outerwear. workers do not go to lunch at the same time. Approximate number of workers in all facilities Number of people employed in 2002-2003: 12. Page 86 . the company had 7300 sewing machines. Manicandan’s CEC report.000 in-house Number of people employed in 2006: 23. the workers are skilled and come from a tailoring background and are usually from UP. fabrics. MP and some from Haryana.000 Machinery Orient has in-house computerized embroidery machines. More contract workers and women (especially thread-cutting) are in the finishing department. one facility’s production department. which is generally equal in size to the production department. consisted of 12 production managers each in charge of about 250 workers (tailors and helpers) at 100 machines with 12 line supervisors.
000 per month plus ESI and PF. where workers can be trained and work for other companies if they choose to. With incentive programs for more highly skilled workers. The payments and benefits for contract employees are given to the contractor. 60-70% of the workers are unskilled helpers. Some of these contractos are R. Bonuses are given during Divali. 3000 per month for an unskilled worker salary. 5-8. Worker Training Dhingra stated that all the facilities have training schools and they want to make them more formalized. the following was mentioned in a business article: “Till a year ago. Sartrushi. and in 1993-1994 they started moving away from piece-rate and a few years ago they did away with piece-rate completely. Union Though unions were not explicitly mentioned in the interview.all for the fear of Page 87 . VIII. & Company. the turnover for Orient Craft is fairly low. “particularly [those] working in the Finishing department. semi-skilled and unskilled workers that are hired through labor contractors are paid under a piece-rate system. Viet Kumar & Company. who takes a 5% commission before paying the rest to the worker. Dr. and most people are above the minimum wage. labor turnover is decreasing. the company's chairman and managing director Sudhir Dhingra dreaded the idea of setting up huge factories . Dhingra stated that in the 1980s and 1990s Orient used a piece-rate system. They are trying to start a training school NGO with a founding member of NIFT./month) 2850 2344 2000 2850 Labor Turnover According to Dhingra. probably around 8-9% and as Orient is expanding. according to G. K.” Furthermore. Manicandan’s CEC report. The payscale is adjusted twice a year according to inflation. Recruitment Policy Orient Craft employs contract workers for at least 30% of its workforce. and Vasisht & Company. the salaries average Rs. but he makes no mention of any other incentives. workers are paid much less than Dhingra asserts.Wages The average wage starts at Rs. HUMAN RESOURCE POLICIES Dhingra stated that there are common HR policies and productivity schemes across plants. Category Tailors Helper Trainees Contract Worker Average Wage (Rs. no piecerate. However.
<http://www. 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. The “village panchayat said that Muslim women can’t go out…but now that they are trained.” Worker Committees/Grievance Policy/Dismissal Procedure Dhingra was reluctant to give specific information regarding worker committees in person. One woman told me. Some of our workers are second-generation workers. Although Dhingra stressed how this was all for the benefit of the women and the community. However upon further inquiry. “if someone asked me what my one single reason for success. Maruti Industrial Complex unit). Now she is a finishing manager and gets 123 Rajshekar. sometimes more than their husbands. and if a manager finds a worker guilty of an infraction. Twenty years ago we had over 1000 workers. and that Orient pays in full for the schooling of female children of workers and for 65% of the schooling of male children. There is no grievance policy procedure in place for complains against workers or management. According to G. and Surendar.asp>. Punishments are given to workers without any formalized procedure. But will we be ready in time?” Businessworld.it’s not just about the bottom line. now we have 23. Thirty years ago we employed a women who worked as a thread-cutter and got paid Rs. stating that he would forward the company’s code of conduct and a list of their worker committees through his personal secretary. “Preparing for 2005: Dressing up for the party.000 building a community welfare center that provides medical care for community members. Page 88 .com/apr0504/coverstory01. I have always been very people-centric-. no sexual harassment committees and workers are not involved in wage negotiations or target setting. 400 per month.000.[worker] strikes. “around five years ago there was an attempt to establish a trade union (at the 7-D. Orient also helped train 300 women from the nearby village in hand embroidery at international standards. it’s about what we can do for the community.businessworldindia.’” They built a four story structure to house the embroidery tailors. ten years ago we had 5000 people. Orient had no worker committees at the facility visited.000 and Orient spent $20. This strategy effectively stops any attempt to consolidate workers towards creating a Trade Union. GAP gave Orient $35. Global players are looking for India bases. it would be people. workers are fired with no redress. Manicandan’s CEC report. they feel very proud to bring in income. Sector-18. M. 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. Manicandan’s CEC report. But the management suppressed and ousted all the workers who [were] involved in the establishment of a Trade Union. no formalized dismissal procedure. According to Dhingra. T. Clusters are reinventing themselves.”123 According to G. Since then the company started sourcing their manpower from labour contractor[s]. he stated that such information was confidential and would hurt Orient’s competitive advantage. ‘my husband doesn’t beat me anymore.
Dhingra stated there are companies who do $1 billion (mentioned China and Lian Thai from Hong Kong. BUSINESS BOTTLENECKS Productivity is relatively low.paid Rs. in an endeavor to go beyond compliance we have adopted the village next door as one of the community welfare programs under which we are helping the local community build a primary school as well as a garment sewing and embroidery unit. and Orient needs to do competitive pricing to stay in the game and Page 89 . highly tailored outfits with additional embellishments like embroidery and special washes. which eases strain some as well as the other diversification of profits. Donna Karan. Specifically. “they have 100. IX. 50. Home furnishings is still smallish industry and comprises about $15-17 million of Orient’s sales. and her son is working here… I have always thought about social welfare.000).000 people. as Orient usually doesn’t have as many orders May through August. Dhingra wants increased flexibilization otherwise it is more difficult to expand and it hurts business. which includes a more complex manufacturing process. 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. Seasonality is an issue. since Orient Craft products tend to be high-fashion.. Pottery Barn. We have created great recreational areas for workers and middle management by building great cafeterias. Besides being compliant by the current standards. comfort. in-house fully functional gym and an Executive Club. They started producing denim products 5-6 years ago and just started manufacturing men’s suits at a plant for Liz Claiborne and Express. According to the company website: The new complex is designed to create a very worker and management friendly environment in terms of esthetics.” 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. such as home furnishing. we only have 23. It is the soul of our company. and ease of working. Labor flexibility is also an issue. Marks & Spencers. Although happy about Orient’s success. Macy’s. but Orient has taken up some holiday decoration work. for Bed Bath and Beyond. White Co.” They started up home furnishing about three and a half years ago. “India is still not good at producing fall fabrics. he wants to extend the length of time it takes to become a permanent employee to 12 months.
” Times News Network. Bangladesh and Pakistan. the textile industry in India still has a long way to go before it can catch up with Chinese volumes. “Garment exporter Orient Craft buys Levi’s plant in Spain for Rs 60 cr. The expansion plan envisages setting up of two new facilities at Manesar.” Industrial Economist: Textiles Report.000 crore. 125 Jha. The company’s management is also planning to raise an IPO later this year. and aims to increase it to over 40 lakh units after the expansion. buyers are getting increasingly quality conscious.3 million dollar)…Orient Craft by its own admission acquired the unit because of its superior machinery content. Kumar.com/articleshow/msid-1232753. Earlier. In the changed business scenario. <http://www. At present. 16 September 2005. (despite quota regulations) and India adds to a minuscule 1. However. Noida and Okhla in Delhi.curpg-1. And retribution has come in the form of dying sick units in EU which are suffering as a result of lower labour costs in China. The company has since then stripped the Spain unit of its machinery and fitted them in its plant here at Gurgaon. PTI Economic Service. <http://economictimes. it is important to have machinery comparing to global standards. of which China contributes one-sixth. Ironically it is the same Indian companies who are buying the units for their machines. As of now.5%. INDUSTRY COMMENTS Orient recently bought a Levi’s plant in Spain for its technology. World over. The company expects the expansion plans to boost its revenue generation.125 124 Dipankar.indeconomist. India’s lack of worldclass machinery producers domestically has seen a lot of companies look to the West for help. Mr Dhingra estimates the annual turnover to be in the excess of Rs 800 crore. From business articles: The company… acquired a Levis unit in Spain in mid 2005 for Rs 60 crore (approximately 13. as they need to grow the base of buyers and price is a compelling reason to do that. Orient came up on the global radar when it started its first overseas facility in New York two years ago. The company’s deal with Levi’s is the second such significant international venture. “Indian textile companies on acquisition spree. “The lifting of quota has brought humongous demands on one side and on the other. Orient has 20 production units spread across Gurgaon.00.indiatimes.” said Mr Dhingra. near Gurgaon…Levi’s was looking for a buyer due to high maintenance and labour costs in Spain. Page 90 . Mayur Shekhar. India. India is in an advantageous position.bring in buyers. Orient Craft manufactures and exports about 30 lakh units of garment every month. the garment industry presently stands at approximately Rs 15. X.htm>. growing by over onefourth from last year.cms>.124 The machinery from the newly acquired plant will form part of the company’s expansion plan at Manesar. Since the quota system has been reimposed on China.com/30thjune06p4.
126 “Orient Craft plans SEZ for garment units in AP. Page 91 . SBC is the buying arm of Kashiama. probably about 80-90% still get clothes from tailors. Chairman and Managing Director of the company. So the spending power is in India. at present Japan is a relatively smaller market. Dr Y.5m worth of textile products in the next couple of years.S. delivering the inaugural address.000 crore. Banswala Mills. In 2-3 years. DKNY and Ralph Lauren. the market will contribute a significant share of Orient Craft’s overall business pie. Now there are 500. Rajasekhara Reddy. In the next couple of years. Yoshiaki Kamiyama. Why would people go through rain. lagging behind US and Europe. “Three years ago.” he said. which plans to source $1-1.126 Orient Craft… has entered into an outsourcing arrangement with Sumukin Bussan (SBC). Orient Craft will be the exclusive suppliers from India to SBC. that’s 200 million people. “An increasing number of Japanese buyers are looking at Indian export houses for their sourcing requirements. Financial Daily from THE HINDU group of publications. That’s more than the people who spend in the U. if even 5% are rich and 15% have disposable income." Mr Sudhir Dhingra. there were only three shopping malls. Orient is considering getting into the domestic market now. the Andhra Pradesh Chief Minister. retail will explode…People say that Indians don’t have disposable income. told ET. a leading Japanese buying house. but best linens) are setting up facilities in India and selling back in Europe. if there is a mall…Real estate is growing.S. etc. "The SEZ will house up to 50 companies. we ourselves are looking at buying 2-3 lakh pieces from India. The SEZ is likely to come up on a 300-acre plot with an estimated investment of Rs 2. the ready-to-wear demand in India is growing. “The tie up with SBC will give us a good foot hold in the Japanese market. However.blonnet. 25 November 2005. the exclusive Japan licensee of some well known international textile brands including Calvin Klein. Earlier.” Italian and French mills are setting up joint ventures in India. population spend. only about 60-70 million have disposable income. according to Sudhir Dhingra.” For Orient Craft.Though most people in India.htm>. and every day a new one is opening up—there’s space available in Karol Bagh. told reporters on the sidelines of the CII conference on `Textiles forum .” The Hindu Business Line Internet Edition. but look how large the population is—out of one billion. From business articles: Orient Craft Ltd plans to develop an exclusive special economic zone (SEZ) for garment units in Andhra Pradesh.com/2005/11/25/stories/2005112502590900. As per the arrangement. which is a joint venture of Caramin (France) and Bairb McNutt (Ireland. we aim at scaling our Japanese business up to $30-40m. heat. <http://www. SBC.Emerging opportunities and the road ahead' here on Thursday. the company’s MD. said the company was "welcome" to set up the SEZ. where there are higher labor costs. consultant. dirt. The deal is likely to be signed later this month.— only about 30% of the U. He announced the company would be given 10 acres of land at Nacharam to set up a garment manufacturing unit.S.
“Preparing for 2005: Dressing up for the party. <http://www. we will have to invest in new capacity every year if we have to keep pace with the industry.200 million . design to finishing. Dhingra was fairly open in his responses. Times News Network. However. T. 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.000 people. 128 Rajshekar. Clearly. which. and smart use of technology. Most are family-run. <http://economictimes. His personal secretary was not useful in obtaining any information. 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. Meru Exports and Richa Exports of Delhi. Orient Craft manufactures and exports about 30 lakh units of garment every month. to cater to new deals in the pipeline. Current contact information was finally obtained through a Professor at NIFT.com/apr0504/coverstory01. Till a year ago. PERSONAL EXPERIENCE Orient Craft does not have a website. productivity and scale. at Rs 450 crore of revenues. the company's chairman and managing director Sudhir Dhingra dreaded the idea of setting up huge factories . skill-intensive manufacturing could be a way to compete. Clusters are reinventing themselves. 127 “Orient Craft ties up with Japanese co. the company may go for a specific capacity expansion.indiatimes. Global players are looking for India bases. Bangladesh churns out as many garments as India from a fifth as many factories. The centrally air-conditioned facility will combine all the stages of garment manufacturing. Today he is spending Rs 40 crore on a new factory in Gurgaon that would employ 2. The turnovers of these exporters range from Rs 100 crore to Rs 250 crore. claiming more than three-fourth of the pie.businessworldindia.Depending on the volume of the orders.com/articleshow/1496902. Others include Gokaldas Exports of Bangalore. and Surendar. which made finding up to date contact information difficult. which it may have to take up to over 40 lakh units. and Shahi Exports. 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. India lags in technology. Page 92 . Says Orient Craft's executive director Anoop Dhanda: "For the next few years. M. But what distinguishes them is a relatively larger scale.about 10 times the size of the Delhi-based Orient Craft.” The Economic Times: Garments Textiles.asp>. At present the Indian textile exports to Japan add up to $296m which is just about 1% of the country’s total textile imports. But will we be ready in time?” Businessworld. India's biggest exporter Orient Craft has also begun to realise that.128 XI.127 The biggest Chinese firms have a turnover of $800 million-1. Like most other economies. China is the largest exporter to Japan." Orient Craft and Fabric & Fibres are among a few who have been pulling ahead of the pack. 20 April 2006.cms>. is India's largest garments exporter.all for the fear of strikes.