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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
Five companies (Modelama Exports Ltd.) were identified using “Mapping First Tier Suppliers in Garment Industry in Delhi. Online searches yielded some kind of press release or interview for each entity except for Jyoti Apparels. Government of India).. while asking the same question in person would yield a response. A management survey was developed using the framework of surveys used in other geographic contexts and updated on the basis of preliminary interviews. Obtaining the phone number from the agency website and directly calling was the simplest way of setting up interviews. though it proved best to limit the amount of e-mail communication.. although some were out of date. Several other agencies that are major players in the export garment industry were identified and profiled by the researcher. the Registrar of Companies (ROC. Asking a question via e-mail often yielded claims of confidentiality. the National Institute of Fashion Technology (NIFT. others self-report to financial databases. linked to the Ministry of Textiles). India context. Ltd. Four of the six companies profiled and all of the agencies have individual websites. It is advisable not to send questions via e-mail. the Apparel Export Promotions Council (AEPC). Public limited companies like Pearl Global Ltd. Interviews were obtained in a variety of ways. Company G of Group R.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. and others do not disclose financial information beyond approximations of annual turnover and production capacity. Pearl Global Ltd. Orient Crafts Ltd. 2) To identify correlations between labor conditions and businesses characteristics. These are the Northern India Textile Research Association (NITRA. Managers at six companies and four agencies gave interviews. Methodology Preliminary research was conducted on the internet.. Contact information was available on websites. If an interview cannot be conducted in person. and Third Eyesight (an industry consulting agency). an interview by telephone would be far more likely to be successful than an information Page 3 .” a CEC report submitted by G. 3) To develop corporate research strategies specific to the Delhi. E-mail was also used to a large extent to set up meetings. Ministry of Textiles). Manicandan. The sixth company was identified by the researcher through an interview with a representative of the Indian Apparel Export Promotions Council (AEPC). display their financial information on the company website. Shahi Exports Pvt. linked to the Ministry of Textiles.
or productivity schemes. and NIFT gave updated contact information for Shahi Exports Pvt. The AEPC was instrumental in identifying Jyoti Apparels as a top tier supplier. ladies are more focused on work. Researcher: Did you have problems with employing males in the past? Manager: No—no..request by e-mail would. Researcher: I don’t understand. going as far as to hand over Standard Operating Procedures. What groups? Manager: Oh. while others would refuse to state the number of workers in the manufacturing unit. without which interviews would not have been possible. no telephone interviews were conducted in this survey. and used to establish industry contacts. Managers were surprisingly open in some cases. as it was not possible in many cases to conduct follow-up visits. Questionnaire Used by the Researcher The following questionnaire was handwritten in shorthand and brought to the scheduled interviews as notes. Ltd.S. no significant differences in productivity. The agencies profiled were primarily interviewed before the export houses. industrial accidents record. However. I’ll tell you. and Orient Craft Ltd. Just. They’re more docile. It was not e-mailed to any of the managers. and one experience ePage 4 . men together tend to form groups and lobbies because they have spare time. and as such may be misleading as to actual conditions. time constraints would not permit cross-checking all information with workers and officers at each company. 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. but off the record. however. The purpose of this research was to obtain information about companies from a management perspective. Women are easier to handle. Information on these companies was obtained primarily from top-down management sources. An interview with an anonymous manager produced the following conversation. I don’t think they ever employed males… Limitations Time constraints limited the consistency and thoroughness of company information. easier to control. even though such a one-sided perspective may not reflect the reality of the situation. all interviews were in person. Also. context and was integral in order to obtain information. Aggressiveness both in pursuing interviews (which could take several phone calls and emails before contacts could be made) and in asking questions during the e-mail was not seen as rude as it would in a U. Furthermore. 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.
CMT. how fast company delivers products to brand Kinds of buyers—importers. and Responsibilities of Respondent: Number of Years in the Company: General Upper Management Do you have a brochure saying what products. The questionnaire was used only as a guide in the interviews as a reminder of what kind of information was needed. discount retailers (Wal-Mart). sourcing. Name. package. 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. deliver? Does the company ever have problems with contracts and/or steady orders? (if possible. total sales. since a conversational approach proved to yield the most information. DSP questions. vol of product. Ownership of Company. Designation. 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.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. they often had information regarding each of these areas. However. help design.. What kind of input— CMT. EU? Major foreign brands that the company supplies to: length of relationship. U. I’ve heard of collegiate licensing that would provide steady orders from major brands at higher prices. 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 . 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.mailing questions proved fruitless in gathering information. get order. specialty (GAP). as there are some questions that an HR manager would know more than a Merchandising Agent. no input--or more capable. The survey questions were divided into sections according to the position of the respondent. where.S. if only a higher level manager could be reached.
subcontracting. How many women. what is displayed to workers on details of employment. Shopfloor Committee. Sexual Harassment Committee. helpers. finishers. etc. 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. etc. Have there been any attempts at unionization in the past? What is the company’s attitude toward unionization? Page 6 . Quality Circle? If yes. can you give a sample of the contract letter? Is there a procedure for workers to complain about supervisors/management? Are there programs or committees to minimize conflict and improve morale of workers? i. overhead. 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. Grievance Committee. cutters. NITRA. 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.Have they used outside agencies in developing any part of their strategies? Part of AEPC. tailors (skilled. men. labor cost. Have you seen a benefit in productivity since implementation of program? Are there joint worker-manager forums in your organization? If yes. average age of employees. standing orders. what do these forums do? Get any documents willing to give at any point. checkers. 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.e. trainees. who are the members and how are cases handled? Give details. Productivity Committee. supervisors. codes of conduct. unskilled). pressmen. total value of exports. material cost. semi skilled. washers.
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.
relating to the companies registered with them.sb@sb. the details of the board of directors/management structure. the profit and loss are also publicly available.The financials publicly available include the annual return and balance (for all companies).gov. they must submit several forms at incorporation and annually.gov website to access the public disclosure documents). Such forms include: Form 1. Navrang Saini Addresses: B-Block Paryavaran Bhawan.nic. Form 29 for Pearl Global makes it a public limited company. New Delhi 110003 Phone: 011-24362708 Fax: 011-24364570 E-Mail: rocdel. The addresses of each state’s ROC as of 2003 can be found at http://dca.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.nic. Companies are required to register new events such as a change of directors with the ROC. These offices function as registry of records. Since Pearl Global is a public limited company. Form 20 gets the Director a Director’s Identification number (the number used on the mca.sb@sb. which are available for inspection by members of public on payment of the prescribed fee. the compliance of companies act.in Nehru Stadium. the office at Nehru Stadium closed down earlier in the year. Lodhi Road. CGO Complex. New Delhi – 110003 E-Mail: rocjln.mca. Form 18..in/ROC_2003.CHAPTER TWO AGENCY PROFILES 1. According to an interview with the Company Secretary of Pearl Global Ltd. Page 10 . in order for a company to be registered with the ROC. Website of the Ministry of Company Affairs: http://www. REGISTRAR OF COMPANIES (ROC) The Registrar of Companies is a division of the Indian government’s Ministry of Textiles. Form 32. The Central Government exercises administrative control over these offices through the respective Regional Directors.nic. the address of the registered office and the locations of the business. which is not true for privately owned companies.htm : Delhi & Haryana Regional Director: Dr.in However.
Furthermore. of a newly incorporated company detailing the scope of its operations). the process of obtaining public documents. Information must be copied into a notebook by pencil (pens are not allowed). Documents are publicly available after submitting a form requesting a release of information along with a small fee for each company. it was not permitted either. such as financial information and company Articles and Memorandum of Association (objectives. but several did not have up-to-date financial or structural information. photocopying the documents in the file is not permitted unless a fee for a legal copy is paid. As such. Page 11 . The researcher attempted to take notes by laptop. Not only were entire company files missing. etc. 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. was difficult and did not yield a lot of useful information.
dutta@3isite. Devangshu Dutta. THIRD EYESIGHT (INDUSTRY CONSULTING AGENCY) Contact person: Mr. Thereafter. and product analysis. he co-founded a fashion sourcing company in which he remains a shareholder. * International multi-billion dollar apparel brand . new business start-up and operations projects with Indian and international clients. including fashion.3isite. as part of the team that launched the JV.Strategic assessment of India – insights for a global senior management team to gain a realistic picture of the opportunities and the challenges in India. * Global fibre and chemicals company . Support in implementing changes in sourcing strategy and organisation.Carrying out sectoral market studies in retail. in marketing and distribution. trainer and teacher. food & grocery. Devangshu began his career with the then-leading Indian national retail chain in buying & merchandising and in store operations.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. assistance in assessment of Indian supply base Page 12 . He then joined a start-up consulting firm and was instrumental during its growth into a multinational consulting firm's joint venture in India. home. over the last 16 years. dining etc.Assistance in development of global sourcing strategy and action plan. * Diversified Indian consumer and industrial products conglomerate . * One of the largest global home products retailers . and returned to India to his position as General Manager of the Indian business.development of India strategy and preliminary business plan including market analysis. Third Eyesight's project teams consist of professionals who have hands-on experience in various aspects of retail and consumer products businesses. manager. 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. 4112494.2. advisor. health. During his career Devangshu has performed the roles of an entrepreneur. competitive and regulatory information. Founder and Director of Third Eyesight A-847. 4112495 Fax: +91 (124) 2577586 Cell: +91 98111 03494 Email: devangshu. The following are brief descriptions of some of the projects on which Third Eyesight's professionals have worked. assistance in formulating strategy and developing partnerships with International retailers and brands. He was also based in the European practice of this multi-national consulting firm. He subsequently worked with an international retailer's joint-venture in India.122 002 INDIA Tel: +91 (124) 4112493. Sushant Lok-I. 2nd Floor. Gurgaon .strategic inputs for Asia-Pacific top management team to identify emerging opportunities in the Indian textile supply chain * Leading UK Retailer .com Website: www.
gave contact information for the National Institute of Fashion Technology in Hauz-Khas. The investment cap was very low. Gave history of market structure in India. development and delivery of sales & marketing collateral for three consecutive seasons. The quota system obliged companies to set up under different names. this model was phased out. Since the garment industry is extremely labor intensive. Mr. The other reasons for company fragmentation are the nature of quota system and labor laws.Formulating strategy and assistance in strategic alliance proposal to key European customer. and the result of this was that a successful company was prevented from expansion. who would be able to help schedule company interviews. Sibichan Matthew. reserves certain sectors for small units. labor laws also limited the ability of companies to expand.Comprehensive comparative study of 7 cities in India and outside to choose location of new garment manufacturing plant * Leading Turkish supplier .* Multi-billion dollar Indian consumer goods conglomerate . * One of the largest Indian textile and garment companies . In the early 90s. Batra. and assistance in seeking new capital infusion.org). 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. Directed researcher to online industry magazine resource (Website: apparelresources. This is partially why many of the current successful companies (such as Richa Global) are split up into many different companies. Page 13 . The government thus limited how much you could produce under the reasoning that overcapacity would lead to inefficient use of capita. Content of Interview (5 July 2006) with Director of Third Eyesight: Asked about study. which continues to regulate knit-fabrics. * Pioneer luxury brand house in India . as you needed approval from the state government if you were operating a place of business with more than a hundred workers. it was a licensed economy in which you needed to get government clearance to manufacture in specific capacities.K. Mentioned another apparent Tier 1 (said they are large and source directly to MNCs). The small-scale reservation system. you need a separate registration and thus it is easier to simply export (used to be tax-free).Business planning for new brand acquisition. Mr. * Indian subsidiary of one of the largest sports apparel and footwear brands – Design. D. The name is on the WRC disclosure list. Initially.Assistance in formulating strategy and developing business with global customers for exports.org) Advised researcher to contact faculty of the management studies department. Pradeep Joshi. who could then direct me to industry management: Dr. According to him. and you cannot have large units. Much of the fragmentation of companies was really only on paper. Business strategy and plan for current business. Also told the researcher to contact faculty of Pearl Academy of Fashion. (Website: niftindia. Matrix.
In 2004.S. saying that the industry had often talked of diversifying. The current model has self-contained worlds instead of cooperation. Page 14 . then privatized factories. but in the strategic long-run. He stated that “the inconvenience of a labor inspector” pestering and harassing company management was a minor price to pay for business expansion. whereby long-term relationships are cultivated. and that Chennai (mostly menswear).one hundred workers is nothing. strategic sourcing is dramatically different from the current widespread transaction model. as the companies began to listen to the needs of buyers and in 2005. From 2001-2004. the investment returned. material. He then mentioned that “strategic sourcing” would be much more beneficial to the market. it would increase unit prices. He mentioned that Delhi (mostly womenswear) is only one side of the big picture. 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. However. but would be greatly minimized). couldn’t see name). Because of this. and as such is seen as a big risk and many are reluctant to actually work on establishing these relationships. economic source.” however that had mostly been talk and no action. but that the outlook of the management may be more pessimistic than Tirupur.. so all the businesses had to pay was labor and overhead. From a piecemeal view. this changed somewhat. which has worse infrastructure but is nevertheless optimistic about business. but more menswear). as it was clear that Indian businesses were gaining from the phase-out and smaller countries like Bangladesh were losing instead. The MNC gives product specs. the supplier makes the product. he made it clear that somehow they were competing because of their “ability to develop and deliver product. etc. the product is re-done.” Furthermore. money is instead wasted on an inefficient process. how the current transactional model is very inefficient insofar as buyer-supplier cooperation goes. the MNC may like it or require additional changes. for example. he said. total costs would go down because the current transactional model wastes a lot of time. investment in the industry slowed down. and rather than cultivate a relationship in which the supplier provides input and designs according to a long-standing relationship. He began to talk about sourcing. he said that Indian companies were extremely uncertain about the effects of the MFA phase-out. that they were too “over-exposed in China. gets quotes from suppliers. effort. He began to describe the different ways of sourcing. Bangalore (roughly equal. and money (wastes that would not be eliminated by greater cooperation. 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. worrying that Indian business could not compete with China. since vendors and suppliers both may have had bad business experiences when attempting to do the same. and Tirupur (mostly jersey knits) all have different cultures. doesn’t communicate with the designer. ships a sample. wherein the buyer. He said that Delhi is doing extremely well in terms of business and is the largest in terms of exports.
The main objectives of the AEPC are as follows: (1) To promote. quota distribution and allocation. Bombay) Vice-President. Vijay Mehta (M/s Intercraft Pvt. Madras). advance. increase. Garments Exporters Association... S. Ltd. N. Secretary. particularly to undertake market research. New Delhi) Ex-president. to find out the tariff and other restrictive practices of importing countries. Garment Exporters Association. Clothing Manufacturers Association of India.K. Gen. Amersey (M/s Milton’s Ltd. to find out the product range and export prices of garments of other countries. P.aepcindia.. APPAREL EXPORT PROMOTIONS COUNCIL (AEPC) Office: Apparel House. Ramadorai (Chief Executive. New Delhi) President. of India. Bombay and Garments Exporters Association. Smt. Singh (M/s Singh Export Corporation. Mr. Banthia (M/s Magnum Enterprises. New Delhi). Two leading organisations of readymade garments.F.3. Mr. Mr. Calcutta). woollen knitwear and garments of leather. Assn. market preferences and latest fashions and designs prevalent in the foreign countries. Mogrelia (M/s Zoro Garments Pvt. Shah (M/s Hiralal Gulabchand. M/s Handloom and Handicrafts Export Corporation. Clothing Mfrs. but now as the garment industry has reached a stature and maturity and has achieved the target of 250 crores.. Premila Wagle (M/s Paville Fashions Pvt. Secretary General of AEPC Mobile: 98-9912-4555 Website: http://www. Assan. develop export of all types of readymade garments. Mr. Mr. According to the Articles and Memorandum of Association: Up till now Cotton Textiles Export Promotion Council was handling the export promotion work of garments. to undertake marketing in individual foreign markets. Ltd. excluding. Institutional Area.L. jute and hemp. Clothing Mfrs. B. Assn. 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. Gurgaon 122003 Contact Person: Mr.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. Bombay) President. of India. Ltd.N. Sector 44. New Delhi took a lead in this matter and formed a special ad-hoc committee of the following Members: Mr. KK Jalan. Mr. to send trade delegations and missions to foreign countries as well as to survey export potential of readymade garments from the country. Bombay) Hon. agents or correspondents in foreign markets for the purpose of continuously and regularly reporting the markets prices. B. (3) To appoint representative. Clothing Mfrs. N. (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 . (2) To undertake all export promotion measures. of India.P. to develop new designs and patterns of garments.
to 200 days. He said the three biggest centers for garment production were • firstly Delhi. He stated that over the industry as a whole.for the purpose of continuously and regularly reporting to manufacturers. in the Small Scale Sector by giving assistance in the matter of understanding and implementation of the drawback. Content of interview (7 July 2006) with the Secretary General of the AEPC: The main issues in the garment industry are labor and infrastructure. • help with training and productivity (14 training institutes). so that businesses who do not get orders during the winter are not hurt by the cost of labor. A specific AEPC goal is to get the government to change the law that states that workers are permanent employees after 100 days. he stated. (7) To undertake training of workers and technical personnel. • secondly Bangalore. to evolve improved design and patterns and garments suitable for export. especially. otherwise productivity will remain stagnant and labor costs will remain high. garment businesses do not have orders. as well as the names. traders and exporters of garments. and lastly Tirupur. specializing in knitwear. to improve the skill of workers engaged in garment manufacturing in India and to assist in the technological base of the garment industry. to encourage export production of quality garments and to undertake necessary research in fashions. (8) To obtain from members of the Council and to prepare for the Council as a whole. development of export markets. to improve the qualities and standards of the fabrics and garments by importing technical know how. For three months of the year. and • raw material supply (both indigenous and imported). rules and procedures. unit prices have remained stable pre and post quota phase-out. and description of subscribers. action plans for promotion of exports. AEPC focuses on three things: • marketing help. NCR region. He stated that the government needs to increase labor flexibility. its strengths being better infrastructure. and its specialization in better embroidery and the “India look” (ethnicwear heavy with embellishments and more complex work). 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). its strengths being higher levels of worker productivity. 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. (5) To assist members. generation of production for exports. designs and techniques and to encourage manufacture of garments for exports. so that workers can be more easily fired and hired. (6) To establish design centres. address. Page 16 . import licence facilities provided and how to apply for the facilities. • lobbying to government to change laws regarding labor and infrastructure (and whatever other business bottlenecks there are).
• Centwin Group (Tirupur). • Texports (Mumbai). as it is self-reported. with a common thread of individual attention to quality control and productivity by hiring consultants and building better facilities. • Golkadas Exports (Bangalore). He mentioned several notable resources. • a foreign consultant agency Method Workshop (main consultant Roger Thomas). including • an HR training institute-KSA Technopack. Page 17 . The researcher purchased the newest book of statistics on industry level data that the AEPC had (2003) and a directory of garment exporters. • Modelama (Delhi). and • the Cotton Textile Export Promotion Council. • SPL Industries (Delhi). These businesses have succeeded through a number of different strategies. • Golkadas Images (Bangalore).He listed the top ten Indian garment factories as • Shahi Exports (Delhi). The AEPC did not have company specific financial data. • Gurgi (“biggest industry consultant”—saw this name in the fabric stores in Jyoti Apparels). • Creative Group (Mumbai). and • the Eastmen Group (Tirupur). • Richa Global (Delhi).
besides conducting regular professional undergraduate and postgraduate programmes in Design. Extn:306 Contact Person: Professor Rajesh Bheda. these courses offer a unique opportunity to participate in the lively academic environment of NIFT.com NIFT was set up under the Ministry of Textiles in 1986.com/iftf. Kolkata and Mumbai. and the evolution of new professionals. which have been developed in consultation with reputed academicians [sic] and industry practitioners. 26964771. and entry-level candidates in the form of Continued Education Programmes. also offers short duration part time courses under Continuing Education (CE).com. and avail of facilities like laboratories with state-of-the-art equipment. According to its CE (Continuing Education) Prospectus 2006-07: NIFT provides quality fashion-education to industry experts. Department of Fashion Technology Telephone: 26850484. Director General of NIFT) The Institute: Today. professionals. Hauz Khas Near Gulmohar Park. 26965080. 26964771. rajeshbheda@niftindia. Gandhinagar (Sub-Centre: Surat). Chairperson. enhancement of critical abilities. Bangalore. Each of the seven NIFT Centers offers a spectrum of specialized short-term courses that address the dynamics and niche needs of the fashion industry and open windows of opportunity to interested candidates. advancement of careers. and diverse faculty expertise. Management and Technology.htm Address: NIFT Campus. practitioners. 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. Resource Centres. PhD.4. Government of India Website: http://www. Continuing Education (CE) Programmes: National Institute of Fashion Technology. Hyderabad. management practices and manufacturing technologies. NATIONAL INSTITUTE OF FASHION TECHNOLOGY (NIFT) Ministry of Textiles. They offer a learning environment that encourages innovation. 26965059.niftindia. (Gauri Kumar. leading to upgradation of skills and knowledge. 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. 26965059. NIFT is acknowledged as the premier institute of fashion design. 26965080.. The centres are professionally managed platforms of the world’s finest design expertise. The Institute has pioneered the evolution of fashion business education across the country through a network of seven centres at New Delhi. creativity. NIFT has crafted a range of Continuing Education Programmes. Extn:306 Fax: 91-11-26851198 Mobile: 9810154829 E-mail: rajeshbheda@gmail. and excellence. management and technology across the globe. India Telephone: 26850484. Chennai. These programmes reflect the requirements and Page 18 . In addition to classroom learning. New Delhi-110 016.
concerns of the industry and have been carefully planned to spur professional growth. • design development. and • hire or train industrial engineers. and EU have always been strong markets in India. performance-based rewards system. 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. Most common is line supervision. demand is up.S. The participants receive a NIFT certificate on successful completion of the programme. Page 19 . He teaches classes in quality management. there could be a 50% improvement in quality. buyers reducing number of suppliers as well as brands. productivity (how to perform time studies). Unit prices are down. corporate social responsibility. cost is up. relevant to individuals at different stages of their careers. U. manufacturers consolidating capacities. suppliers reducing subcontracting. The library at the NIFT campus is open to anyone. • better quality product and service. The main characteristics of successful firms include: • recognizing what customers are looking for. and a global overview of the garment industry. However. trying to get workers’ involvement. quality improvement program. The average Indian garment factory has 100% potential in physical labor productivity. the programmes provide a congenial environment that integrates theory with practice. Post-MFA trends have been a consolidation of supply chain and capacities. • BPR manufacturing. • higher productivity • use the help of consultants. and they are making efforts to reach good productivity. • have more highly trained workforce. • offering shorter lead times. Companies are trying to move up the value ladder as product development and design are becoming more important. and also to those aspiring to join the industry. 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. training managers. Content of interview (20 July 2006) with Professor Bheda: Professor Bheda has been with NIFT for 16 years. with production planning and scheduling. If companies put efforts into enacting these measures. operators. though you cannot take bags inside the doors or check out books. probably average 70% of India’s market. methods monitored. • managing their supply chain better. as there has not much shift in markets. With focus on interactive learning. The flexible schedule enables the participants to pursue the programme without interrupting their professional activities.
The day of the interview was the final day of the Indian International Garment Fair (IIGF: www. the 37th annual garment fair with 393 exporters/exhibitors at Pragati Maidan. so suppliers feel they are not committed. The researcher obtained a buyer ID and toured the grounds.L. driven by price and the customer can walk away at any point. K.” that retailers are paying lip service to CSR without sharing the cost burden. it seemed to be a showcase for smaller firms to vie for new buyers and international exposure. so the researcher asked IIGF workers) were 1) Intercraft (New Delhi).com. Retailers should start partnering with the brands and rewarding CSR compliant suppliers. so some firms are investing in CSR to the extent they can afford. and are simply passing it on to the suppliers.K. Vijay Agarwal (Chairman of AEPC. He does not see a correlation between turnover and CSR programs: “ultimately it comes from within. Regarding corporate social responsibility. Social programs are a long-term investment. not because the buyer says the firm has to do it. However.com). None of the firms were top ten exporters or easily recognizable. H. and as long as it is ensured that the rewards system cost comes down to the factory floor. Page 20 . the AEPC Director of Export Promotions (interviewed him after K. Magu (Chairman of Jyoti Apparels). it would have to be meticulously and carefully implemented.” 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. He gave a contact person to interview from Shahi Exports and up-to-date contact information number for Orient Craft. Mumbai). “suppliers get a feeling of being cheated.indianapparelfair. something like it has been discussed. 38th annual: www. 2) Shilpayan Craft (Jaipur) 3) Another firm from Jaipur.K. Jalan. it would be good to invest in social improvement program. Everything in the market is transaction-based. and many cannot afford them because there is typically no financial payback. The award winners for their showcases (announced the previous day. from principles.indiaapparelfair. Agarwal).K.there is an erosion of the bottom line and companies find it difficult to survive and improve working conditions. The core group of organizers include Vijay Mathur.
Chairman of NITRA. *Customized consultancy packages for national and international clients in the areas of Product Development. workshops. *Need based cost effective software development. Sector-23. NORTHERN INDIA TEXTILE RESEARCH ASSOCIATION (NITRA) NITRA. environment and allied areas. Energy Audit. conferences and publications. Machine Design & Development.org/ Contact person: Dr. Several prestigious textile units and multinationals are already within its consultancy network. Publications. 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.S. *Research and Development projects and industry specific surveys related to textile & garment industry. Rao. and plastics. Design of Effluent Treatment Plants and Water Recovery Plants. Raj Nagar. Maintenance Management. Quality Improvement. *Collection and dissemination of data useful to the textile & garment industry. waters. Techno-economic Viability Study. chemicals. Pollution Control. Cost Reduction. ISO-14000 Environment Management System. leather. Energy Conservation. dyes. Environmental Audit. and Seminars/ Conferences/ Training programs…NITRA has carved a niche and occupied leadership in Package Design Consultancy for effluent treatment and water recovery. J. Ghaziabad (UP) 201 002 Website: http://nitratextile. Maintenance Audit and a lot more. According to NITRA’s 2006 Prospectus: NITRA’s Multifarious Activities *Job oriented professional courses (full-time and distance learning) in textile.5. It is linked to the Ministry of Textiles and is recognized by the Department of Scientific and Industrial Research (both government entities). 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). Manpower Planning. *Quality Evaluation of textiles. It is the only ISO 9001:2000 accredited textile research organization in India. P. Process House Study. effluents. seminars. The Environment division has successfully executed 74 industrial projects with effluent handling capacity of 100 m3/day to 2000m3/day…Environmental division has 40 publications in environment field…The division has organized several seminars/workshops during the last one decade in the following areas for the benefit of Page 21 . garment. *HRD activities through training programs. Product Diversification. ISO-9000 Quality Management System. V.
textile and allied industries: waste management. Stated that the fragmentation of the business made quality control an issue. from composite textile mills in the 50s-60s to the rise of small scale businesses/ fragmentation. Library: Enriched with 5. improve infrastructure. he said that unions hurt business.. the Bureau of Indian Standards (BIS).000 books and journals. NITRA has a wide database of employers [in its placement cell. especially the law whereby a worker that is employed for 100 days is considered a permanent employee. etc. 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]. Also stated that it cost businesses more to subcontract because they had to pay for delivery. He allowed that workers were being exploited. The Committee also guides NITRA to conduct research and provide consultancy to the industry in the areas which are more relevant in the present context. The library also subscribes to 150 [national and international] periodicals. Content of interview (7 July 2006) with Chairman of NITRA: Gave background on the history of the textile industry. There is a shortage of skilled garment workers. He believes the government should subsidize capital for Indian business like China (mentioned something about a Technology Aggregation Fund. mid term strategies and policies and creating necessary infrastructure. eco-friendly textiles. [NITRA’s IT Center] has over 100 [PC’s]. Netherlands. quality. better access to a supply of power through a cluster system called Scheme for an Integrated Textile Park (SITP). TAF). which would consolidate factories. and perhaps have relaxed labor laws within these sites. especially Page 22 . A programmable ADI Bioreactor System of 3 liters capacity from Applikon Dependable Instruments. Complained about government infrastructure and labor laws. Access to and the price of power seemed to be a big issue for him. The government is currently working on better infrastructure. has been installed for carrying out treatability studies of biodegradation of industrial effluents through aerobic cum anaerobic route. water. 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. An in-house miniature ETP (effluent treatment plant) of 100 Liters/hour capacity has been installed by NITRA. and the Haryana State Pollution Control Board (HSPCB). fear of China post-quota. NITRA helps factories with product development and various audits. During the 60s-80s.. the…library [keeps students connected with] ongoing global developments. etc.. effluent treatment and water recovery plant. which are essential to conduct such a program…[it] is accredited/ recognized by the National Accreditation Board for Testing and Calibration Laboratories (NABL).. legal compliance. energy. but would not elaborate and would only refer to the intractability of trade unions in vague terms. environmental statement…NITRA’s Environment Laboratory is well equipped with Sophisticated Analytical instruments.
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. The course coordinator is Vivek Agarwal.4:30 pm. so NITRA conducts training programs for workers that last 3-6 months. a NITRA Senior Scientific Officer. Students apply to the program online and are selected on the results of aptitude examinations and interviews.machine operators at the shop floor level. not garment manufacturers). They conduct in-plant training as well as distance learning programs for middle management at NITRA itself. Arvind. Bilwara. 10:30 am . Classes are full days. They typically have 4-5 students applying for one seat. When asked for company names. Reliance. The researcher obtained a copy of the 2006 prospectus. he mentioned Vardhmal. Page 23 .
ICRIER financial data. 2 Unit visited by the researcher. I. Udyog Vihar Phase -1 Gurgaon. 7 & 8. Okhla Industrial Area. India Tel: +91-11-26810103 fax: +91-11-26817969 Head Office Gurgaon 184. Manicandan’s CEC Report. Haryana. CONTACT INFORMATION1 Contact Person Lovleen Kumar. Human Resources manager. documents given by the HR and production managers including a company profile.CHAPTER THREE COMPANY PROFILES 1. and G. Haryana. India Tel: +91-124-2397838-42 fax: +91-124-2397843 1 Initial information obtained from company website. Merchandising Agent. India Tel: 91-124-2290993. phase -1 New Delhi -110020.com Head Office Delhi B-57. Director E-mail: lovleen@modelamaexports. business articles. An ISO 9001:2000 certified company The information in the following company report was obtained from interviews with the Director. and updated telephone numbers from interview. MODELAMA EXPORTS LTD.modelamaexports. Mobile: 9810015693 Corporate Office2 Plot No.com E-mail: info@modelamaexport. 2291131 Fax: 91-124-2290864 Website: www. the company website. Sector-5. Manesar IMT Gurgaon -122016.com. Page 24 .
interview. In the first year they exported Rs. <http://apparelresources.” Apparel Resources. 7 & 8. 184. Vinita. phase -1 New Delhi 9. B-26. Manesar. Gurgaon1 6. B-80. owner is Mr. B-57. 4 3 Page 25 . 6 From company website. Other production sites in untranslated Hindi document. Modelama places a great emphasis on technology as the secret to its success. “Build Quality Rather Than Check The Quality. Okhla Industrial Area. Udyog Vihar Phase -1 II.000 square feet. Phase 1 Gurgaon 2. Lalit Gulati as a family-run operation. Okhla Industrial Area. From company website. 201. Okhla Industrial Area. and Pandey. IMT Manesar. phase -1 New Delhi 8.5 III. Sector-4 Gurgaon 5. Okhla Industrial Area. Sector-5. Plot No. Plot No-5.000 square feet. 5 From website. phase -1 10. phase -1 New Delhi 7. Phase 1 Gurgaon 4. BRIEF HISTORY Modelama was founded in 1979 by Mr. In 1999. Modelama professionalized its management structure and has been consistently upgrading technology in their production facilities.asp?msg=2710&cod=newsindetail&nam=>.00. Phase 1 Gurgaon 3. Modelama today has ten professionally run production units over 4. 45 lakhs with 50 indigenous sewing machines and a workspace of 4. 200. 204. B-33.Road Map 3 Production Units4 1.com/defaultnextone. BASIC PROFILE6 Legal Composition Sole proprietorship. Lalit Gulati.
LOP NO. 1999. Modelama does not manufacture for the domestic market. and home furnishings. Kohls-Belk. is an export oriented unit registered with NEPZ. Canada: Eatons. polyester.U I/6921dt28/08/01 RCMC NO. silk. Colt’s Europe: Etam.AEPC/REG/MER/47569/N/2001) as a manufacturer/ exporter of readymade garments including woolen. Exports/Imports 100% exports. 2000 Page 26 . cushion covers. Dayton Hudson Corporation. Proffitts. knitwear and garments of leather. Target Stores. GUS. 1998. and blends. Marmaxx. H&M. AMC. Lands End.. Next.4530/2001-100% E. Incorporates ethnic Indian accents and embroidery into design samples. Tommy Hilfiger. trousers. 2000. 2000. Federated Stores (Macy’s). Launched Home Textile Collection in 1999. offering products such as table linen. Marks & Spencer. Clients USA: GAP (Banana Republic. wool). silk. Zara. Hudson Bay. Freemans. shorts. Zellers Australia: Country Road Awards Target Vendor Award of Excellence. Westelm. Marshalls. Nov.. polyamide). skirts. Old Navy). Uses natural fabrics (cotton.O. Chambers. nightwear. Sears Roebuck & Co. ladies blouses. and 2002 Associated Merchandising Corporation Outstanding Performance. Galeries Lafeyette. Sears Roebuck & Co. Added outerwear to their product mix in 2001-2002. Sales Growth and Profitability Vendor Award. Villersey & Boch. 1993. A & F. Product Mix Areas of specialization include outerwear. Lane Bryant.. top of beds. Modafil UK: Laura Ashley. 1999. William-E-Sonoma. 2001 Federated Merchandising Group Five Star Award (in Development of Federated Department Stores Private Brands and Labels). dresses. etc. which may have contributed to minimizing seasonality issues. Charming Shoppe Inc. and decorative items for loungewear like throws. Saks. Grattan. kidswear. jute and hemp. Eurofiel (Women’s Secret). Mervyns. linen. drapery. 1992. La Halle. 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.EOU Information Modelama Exports Ltd. 1996 Charming Shoppes Inc. Monoprix. synthetics (viscose. Pottery Barn.
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. Rs. No.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. FINANCIALS Turnover 70 Turnover (millions USD) 60 60 50 40 30 20 10 0 1981 1985 1990 1995 2000 2002 2005 projected 15 0. 3000/per month Rs.5cr. 7 ICRIER Data (based on an interview at B-57 Okhla Industrial Area plant in Fall 2005) Page 27 . 500 Rs.IV. VA per employee Rs. 3cr.000 30% Rs.000 per year 25. 500 Total employment 500 500 Production workers 450 450 Proportion exported directly --Proportion exported indirectly through intermediaries Misc. 2800/per month. 500 500 450 60% 40% 150. of pieces exported to the US No.
BR and ON) 9 Tommy Hilfiger Marks & Spencer A&F Colt’s Saks Etam Zara Marks & Spencer H&M Origin USA USA USA USA USA USA USA USA Europe Europe Europe Europe Length of Relationship Since 1975 Since 1975 10 years plus 10 years plus 10 years plus 10 years plus 10 years plus 10 years plus 5-6 years 5-6 years 5-6 years 5-6 years % of Sales 30-40 15 10 ---------- Buying Agency or Direct Most contracts are negotiated through buying agencies. Although they get large production volumes from discount retailers. 60% of that is Target’s profit margin per unit (PMU).A. ~$2. “GAP is sourcing worth about $1 billion from India and we are doing more than $10 million with them. 9 8 Page 28 . Europe Others 94% Major Clients Brand Federated Stores (Macy’s) Target Stores GAP (incl. “Build Quality Rather Than Check The Quality. The remaining $3.99 is the landed cost. Modelama Chairman. <http://apparelresources. An example given was if the retail price of a given garment manufactured for Target is $9.99.V. Average Unit Prices (per piece of garment supplied) Unit Price Origin Product Mix $5-7 USD U.S. quoted in 9 Pandey. 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.com/defaultnextone.asp?msg=2710&cod=newsin detail&nam=>. which includes not only the factory unit price but the duty cost (AMC and freight). BRAND INFORMATION8 Modelama's Export Market 1% 5% U. Of that remaining $3. the unit prices are markedly lower than specialty stores.99. 10 Nearly all brands are FOB with the exception of discount retailers like Target Stores (USA).” Apparel Resources.” Lalit Gulati.S. Vinita.75 goes to Modelama.
13 Gayatri Lal.4 1985 0. subtract a bit.) as well as home furnishing products. is one of the principal designers.5 0. and delivery times.11 Production System Uses an assembly line system. they were manufacturing garment orders for Charming Shoppes Inc. Marks and Spencer (Style and Co. which varies according to the product.co. Typically.ittimes.. fine-tune the patterns. We then sit down with the stores. INFRASTRUCTURE Subcontracting Modelama does not appear to subcontract.Unit Prices Since MFA Phase-out Unit prices have gone down an estimated 7-10% due to increased global competition.1 1981 0. Vishnu. “Indian Fashion Firms Adopt Global Pret and Couture.”14 11 12 According to interview with the Director. From company website and brochure. volume. Modelama will present their company profile to the buying agencies of MNCs. for instance. Then there is some back and forth communication between Modelama and the MNC to reach an agreement in terms of product design. 14 Makhijani.kr/en/node. 13 From interview with Director and Senior Merchandising Officer. Some of the orders can be pretty huge .” <http://www. V.asp?em=M&mcode=200602&idx=1083>. who will then contact them with a development package if their profile fits their needs.80. an alumnus of the National Institute of Fashion Technology (NIFT).000 pieces. The day the researcher observed the process. Page 29 . and get down to manufacturing. add a bit. “My team of designers scans international trends and comes up with a tentative collection of not only designs but also shades.7 1 1990 1995 2000 2002 2005 projected Design/Sampling Modelama has a fairly large design department. Production Capacity12 9 8 7 6 5 4 3 2 1 0 Number of Garments Produced (milions) 8 4 2.
Washing machinery includes a wet and dry processing unit comprised of micro processor controlled washer extractors. at the front of which is displayed an “Hourly Production” dry-erase board with the line number. Auto Pocket Welting M/C. Pneumatic Button Hemming Stations. 15 16 From company website. Cutting (50-55 workers) The cutting department had five lines of machines laid out with worker stations.” Modelama emphasizes technology and internationally acclaimed systems to maintain a high level of quality. Machinery includes Auto Spreaders. 17 Information on machinery was primarily taken from the company website. GSM check. Site visited by the researcher employs about 1100 workers (including about 15 accounts staff). Band Knife M/Cs. Air Flotation Tables. 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. The product was women’s fashion blazers for Style and Co. etc. over 90% male. supervisor name. Approximate number of workers16 Modelama employs a total of ~6. Programmable Sleeve Setter Stations. Differential and Bottom Cylindrical Bed Unison Feed Machine. From interview with Director and Human Resources Manager. Machinery includes Auto Zig Machine. input. Procedures are based on aql 4 point system by which all fabrics are screened and categorized. tearing strength. Tests include tensile strength.000 workers in all plants. This was the only department with women. Auto Dart Making Stations. PH check. Multifusing with Three Track of Loading (High Performance Macpee). they use internationally standardized procedures like the traffic light quality assurance system. output. Information on workers and floor layout is specific to the unit visited and is taken from an interview with the HR Manager. color fastness to light. Top. Blind Hemmers. and brushing machines (from light softener washes to heavy enzymatic washes). The company deploys over 3000 imported sewing machines with customized workstations.Quality Control15 Modelama’s motto is “build quality rather than check quality. and number of workers. In the sewing departments. Autocad (Lectra). pitting test. perc based dry cleaning machines. Differential Feed Machines Needle Feed Machine. sand blasting. Auto Surging Machine. laundering and crocking. An example line was sewing collar parts with a total of 46 tailors and 5 helpers. The floor is laid out in dozens of assembly lines. Washing (24 workers) and Finishing/ Pressing (175 workers) The finishing area had lines of workers pressing and folding clothes. Page 30 . Auto Cutter (Lectra). Auto Belt Attaching Stations. Departments17 Production (~800 Workers) There are about 560 tailors.
Embroidery Did not observe embroidery process during visit. No workers are involved in these meetings. Category Tailors +skilled 18 Average Wage (Rs. The targets are communicated to workers by line supervisors and dry-erase boards on the production floor that display productivity goals. 3000 per month. Productivity Schemes Company has production planning meetings consisting of the HR Manager. 200 single head and 6 multiple head computer embroidery machines. indicating that he would like to develop such a system in the future. VII. Page 31 . and line supervisors who perform time studies on particular styles and set worker targets. HR Manager boasted that Modelama was the only factory in India to have this machine. Machinery includes 20m length Schiffley Embroidery (Lasser & Saurer). stressing how much state-of-the-art machinery has contributed to the quality and productivity of the manufacturing process. Because the factory is not near a city. The production manager gave the researcher a copy of a time-study conducted for Charming Shoppes. and Renzacci. However. flatbeds. management states that they set wages higher than minimum wage to get workers to commute. dummy presses./month) 3500 From interview with HR Manager. calendaring machines and range of buck shapes and steam irons from manufacturers like MACPII. the HR manager stated that no punitive measures are taken as it is prohibited by law. Veit. 2448 per month. Trevil. Inc style. The Director said that workers are given incentives in productivity schemes if they reach their targets. 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. 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.Pressing and finishing machinery include multipresses. Has hand and machine embroidery capabilities. Additional Machinery Factory has a special conveyor system that moves products from assembly lines to other departments. If workers cannot reach their targets. the HR manager said that no incentives are given. and unskilled minimum wage was Rs. Production Manager.
Indicated that there are a few shop floor employees who have remained the two years the factory has been in operation. which is not subject to negotiation.” Labor Turnover Estimated worker turnover per month at 7-10%. and that workers receive double wages for overtime hours. 19 Information based on interview with HR Manager and documents given by HR Manager and production manager. “It should be time-and-a-half. After a three-day period. HR Manager stated that wages increase after a year. Benefits HR Manager indicated that workers receive the social benefits required by law. VIII. supervisors conduct time studies evaluating the skill level and productivity of a new hire. except for worker recruitment for middle management positions. HUMAN RESOURCE POLICIES19 There does not appear to be common policies across the plants. like China.+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. workers are then offered a monthly wage based on this evaluation. Overtime Management indicated no more than four hours per week per worker. including ESI and PF. stating. Expressed dissatisfaction with labor laws requiring double overtime. Page 32 .
and in nearby worker villages. Worker Training This site does not provide training to its workers. at bus stops. For middle management positions. However. Manicandan’s “Mapping First Tier Suppliers in Garment Industry in Delhi. Lalit Gulati Sole Proprietor Founder/Chairman Mr. To recruit shop floor employees.Management Structure Mr. Shiv Singh Skilled Production Line Supervisor Assistant Supervisor (Less skill/experience) Skilled Tailors/Machine Operators Helpers (Unskilled) Boxes with straight-line borders are positions common throughout all production sites. Beneeta Seigal Senior Merchandising Other Upper Management Positions Mr. standing orders. grievance procedures. However. Lovleen Kumar Director Ms. Workers are a mix of local villagers and from Gurgaon. according to G. K. the company recruits from training centers and placement companies and has a formalized policy that the researcher obtained.” Modelama uses labor contractors for some of its other units. the company posts signs on the gate. such as the unit located at 200. Recruitment Policy They do not use labor contractors at the unit visited. workers have a brief orientation session during which they are informed of security measures. Phase-I Gurgaon. while dotted-line boxed positions are factory-specific and subject to variance. Anil Chauhan HR Manager Management Staff/Accounts Personne Mr. Modelama’s anti-harassment policy. Page 33 . and vendor codes’ of conduct. Kiran Production Manager Mr.
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.S. so there is no need for a union. Union There is no union in the production site visited. but only in English. U. they have joint employee-worker committees required by law. preferring to dismiss the workers. Manicandan’s “Mapping First Tier Suppliers in Garment Industry in Delhi. and a Sexual Harassment Committee.5 km from the factory. tampering. such as a Health and Safety Committee. Phase-I Gurgaon and B-57 Phase-I Okhla Industrial Area). but avoids paying for major injuries and illnesses. and an ESI station 1. There is a company dentist that comes every Thursday. an Anti-Harassment Committee. Work times for employees were also posted. Page 34 . If workers suffer from minor injuries. companies have required them to uphold a more stringent counter-terrorism model of security in compliance with U. in compliance 20 21 Received a Hindi copy of group meeting minutes.” Worker Committees Since there is no union. the researcher was informed that he was at another production site. that they can report their grievance to their direct supervisor or upper management. A resident doctor is “available at all times.Dismissal Procedure No information was obtained by the researcher regarding a formalized procedure.20 Grievance Policy Procedure If workers have a problem. Security New security measures have been implemented since the quota phase-out. was displayed on the factory floor.” but when asked to meet the doctor. HR Manager indicated that there are very few worker grievances.S. “We take care of all their problems. The factory locks its doors at night. All workers were said to have received medical attention. traceability. There are only six recorded injuries at this site for 2006. or CTPAT model. According to G. Medical Care There is a medical room in the factory.” there are no doctors in two of Modelama’s other production units (200. nor have there been unionization attempts. Received a Hindi copy of policy. according to the Customers Trade Partnership Against Terrorism. The code of conduct for Charming Shoppes Inc. the company usually pays the medical expense. a Works Committee.”21 Corporate Responsibility/ Codes of Conduct Modelama’s Anti-Abuse/Harassment Policy is posted on the factory floors in English and in Hindi. Customs Security requirements regarding issues like preventing trespassing. and that management works to quickly solve problems in order to maintain an atmosphere of “family.
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. 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.” Apparel Resources. BUSINESS BOTTLENECKS Main problems hindering financial success according to the Director are poor relative infrastructure. Lalit: Machines change according to the product requirement…We have to be flexible because the buyer doesn't buy one thing all the time. Lalit Gulati. the Chairman. <http://apparelresources. it would appear that seasonality should be less of an issue for them than other companies who do not manufacture winter clothing. Vinita.asp?msg=2710&cod=newsin detail&nam=>. 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. low relative levels of productivity. “Build Quality Rather Than Check The Quality. A business strategy that Modelama is looking into is “triangular shipping. only their department is kept open and the rest of the factory is shut down at 6 pm.perator. MNCs would present their contract orders to Modelama as an Indian company. 25 crore in jackets alone. the Chairman stated that though the South is better known for it. In 2002. relative strength of the Indian rupee to the dollar opposed to weaker Asian currencies. the former Director stated: Lalit: We do not consider machines as individual equipment but as a complete workstation. and Sanjay Gulati. 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.” a more developed system of subcontracting modeled on Southeast Asian business strategies. The Director mentioned that seasonality is an issue.with these measures. Modelama would then shift the actual manufacture of the product to either countries with lower labor costs like Sri Lanka or duty-free countries. In an interview with Apparel Resources magazine. The HR Manager. If workers stay for overtime. however. 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. and then ship the product from that country. If Modelama has had as much success in outerwear as they have stated in press releases. IX. Page 35 . stated that seasonality was not an issue and that they have orders year-round. Modelama successfully invested in the necessary infrastructure to export ~Rs.com/defaultnextone. whose upper management and design departments would remain in India. We do not need masters.22 X. we need operators who can be trained. 22 Pandey. and government bureaucratic hurdles regarding labor law.
Page 36 . The only question that management would not answer was regarding a detailed financial breakdown of the company. Modelama was very open in disclosing information about the factory unit. but directed the researcher to her colleague. then was directed to a Senior Merchandising agent. This is likely the factory to which buyers are taken. The unit visited is the site of their corporate offices and was built two years ago with the help of industrial engineers. PERSONAL EXPERIENCE Modelama used an Italian consulting agency for the design of two of their factories. Contact was made by calling the general inquiry number on the website. XI.Sanjay: It is a very unique combination of machines that we have that gives us this flexibility of handling [versatile] product [mixes]. The high level of attention paid to infrastructure and personnel management is probably not typical of their older factories. who was not available on the date of the interview. as it is the most modern. when they began to develop the infrastructure to manufacture outerwear. Modelama was the first company to be interviewed by the researcher.
co.in Ajay Khanna. SHAHI EXPORT HOUSE PVT. Palmprint Textile.com Website: www. Sector 28 Faridabad 121008. Manicandan’s CEC report. the company website. is former vice chairman of the Apparel Exports Promotion Council of India. the owner of the company. BRIEF HISTORY Incorporated in 1974 in Delhi. General Manager of Marketing Mobile: 98-18212505 E-mail: ashok.D. Tel: +91-129-2273970/80 Fax: +91-129-2273485/91 E-Mail: seh@vsnl. II. The remaining woven and all knit production sites are located in Bangalore.2.co. Two or three other units are in Delhi (Noida) and a fabric processing unit.com Production Units: Plot No. CONTACT INFORMATION Contact People J. Faridabad. business articles. and G.firstname.lastname@example.org 23 Unit visited by the researcher. Sarjapur Main Road Bangalore 560034. The information in the following company report was primarily obtained from interviews with the General and Divisional Managers of Marketing. Harish Ahuja. 1. Divisional Manager of Marketing Mobile: 93-13369269 E-mail: ajay.com Head Office Bangalore Belandur Gate. Haryana.shahiindia. Karnataka Tel: +91-80-28439214/15 Fax: +91-80-28439356 E-mail: shahiblr@vsnl. LTD. Shahi Export House has a total of eighteen manufacturing units. Page 37 .khanna@shahi. is in Ghaziabad. Sector 28. Senior Management Ashok Raman. Giri.in Head Office Faridabad23 Industrial Plot 1. I.
St. which was printed in 2005 by the Bangalore office. Sag Harbor (Sport). men's and ladies' bottoms. acrylic wool. sleepwear. Faded Glory. ladies' & girls' blouses . polyester cotton. jacquard. TKS Basics. indigo dyed units. Von Daniels. jackets. pique. textured knits. 25 From company brochure. Carolina Colours. Shahi has expanded to home furnishings in the past year. nor does it currently have plans to do so. Bleu. Exports/Imports 100% exports. cotton fleece. 100% polyester polar fleece. turtlenecks.pdf/$FILE/Fashion _News_05_02_en2_Webb. Target Stores.The fabrics range includes solids. It is primarily information taken from the website with a few new passages regarding Human Resources and corporate responsibility. full jacquards. Cento Mila. Jeans Dynam. golfwear. Liz Claiborne.. GAP. Abercrombie & Fitch. tailored collar polo shirts. Ralph Lauren. 2. 26 Remaining client names were obtained from interview with Divisional Manager of Marketing. American Khakis. H & M.26 24 Fashion Newsletter. EOU Information No information was obtained regarding registration and EOU capabilities. heavy jersey in cotton. and circular woolen knits. the sole proprietor was Harish Ahuja. though any exporter of this size must have at least one registered EOU for importing capabilities.III.. Product Mix Areas of specialization are mostly ladies woven tops and men’s tops. Akademiks. John’s Bay. Seacorn. interlock. but it is a small fraction of turnover ($5-10 million). The Children’s Place. yarn dyed single jersey. engineering stripers. Shahi does not manufacture for the domestic market.nsf/pub/Fashion_News_05_02_en2_Webb.pdf>. loungewear. lingerie. Cross-Bow. Hollister Co. Place Jeans. 2005. Shahi’s product line covers casual and formal men's and boys'. JC Penny’s. Arizona Jeans Co. Family-owned. Euro Open. BASIC PROFILE Legal composition of the Company Private Limited Company. No. A & F. rib. American Eagle.com/www/resource. Page 38 . Van Heusen. tanks tops. (Pacific Merchants). At Last and Co. flat back rib. Natural Issue. Old Navy. t-shirts. Carolina Blues. mock neck. Clients Bobbie Brooks (Woman). No Boundaries. sportswear. Enzo Lorenzo. The knitwear product range includes 3 button polo shirts. Up until a year ago. Solutions (New York). <www. who is now the Managing Director.25 Wal-Mart. polyester viscose. ladies' and girls' dresses. spun filament. Cherokee.lawson. double mercerized.
Did not obtain average retail markup information. so figures cannot be considered accurate.Awards Wal-Mart International Supplier of the Year 2000 (can’t read others) IV.com/www/resource. Percent of sales is based on an average estimate given by the Divisional Manager of Marketing.65 Material Cost Labor Trims and Packing Depreciation Machinery upkeep Overhead Embellishments32 Profit 27 Estimated by General Manager of Marketing.13 $0.8 million 14-28 million 1. 2.8 million 7-14 million 14 million % of Sales 50% 12-17% 10-20% 1% 2% 2% 5-10% 10% target Per Unit Price31 $3. 28 Fashion Newsletter.5 USD.25 $0.13 $0. 29 Estimated by General Manager of Marketing.07 $0. accessed July 2006.11 $0.pdf>. 30 These figures were estimated by the Divisional Manager of Marketing in the space of 5-10 minutes.pdf/$FILE/Fashion_News_05_02_en2_Webb.65-$1. though generally it is four to seven times the unit price of the garment. It can be none or most of the unit price.65 $0.nsf/pub/Fashion_News_05_02_en2_ Webb.30 $0.78-$1.lawson.033-$0.4 million 2. No. FINANCIALS Turnover $140 million 2005-200627 $120 million 2004-200528 $90 million 2003-200429 Other Financials Breakdown of Sales Revenue30 Est USD 2006 70 million 16.8 million 2. 32 Embellishment costs such as embroidery depends on style.8-23. Turnover estimates varied by tens of millions of dollars between the GM and the Divisional Manager of Marketing. 31 Based on the company’s average unit price of $6. 2005 <www. so they can only be thought of as a rough approximation. Page 39 .
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.
and there are quality bonuses if clothes do not need repairs. accounts. double needle-needle feed split bar machines. Washing The washing facility puts out over a ton of garments per day through specialized wash treatments such as softener wash. Ngai Shing. For example. marker making and global electronic exchange of pattern data. Durkopp Adler. The latest CAD software enables quick processing of pattern creation. very little is done by hand. feed-off-the-arm machines. This unit has an incentive scheme for productivity. who are not involved in these meetings. in which workers get bonuses for exceeding their targets. collar/cuff turning and blocking machines. stone wash.800 in all of Shahi’s Delhi (Faridabad and Noida) units 750 in production site visited The CAM based cutting department can make 75.500 in all of Shahi’s production sites 1. They also conduct joint department meetings. pocket machines and automatic pocket welters. enzyme wash . Sampling This is a fairly large department in the production site visited. Productivity Schemes The unit visited has an industrial engineering department with eight staff. Juki. line supervisors convey target setting to them. desize soft wash and golf ball wash. incentives depends on how many pieces are finished. Embroidery Most is done by computer. while the 60 multihead computerized embroidery machines have a capacity of 800 million stitches per day. This department is responsible for timemotion studies and an operation breakdown. and it was stated that each unit has a similar department. Its implementation and form depends on the department. shipping staff Total number of workers: 3. which can be 10-25% of monthly salaries depending on how difficult the style is. one for production and another room with rows of computers in which employees work on digitized patterns and samples. In finishing. but they Page 43 . It is also equipped with single needle lock stitch programmable machines with UBT. merchandising. The production unit boasts machines from Brother. grading.+Supervisors and dpt/line-in-charge 40 Sampling (think incl in production) 50-150 Remaining marketing. There are two departments for sampling.000 cuts per day. The Divisional Manager of Marketing states that they always had incentive schemes. They conduct production planning meetings jointly with managers and supervisors by department. The incentive scheme only applies to skilled and semi-skilled workers. in sewing. fusing press. Hashima and Kannegiesser. every hour the target is marked. These meetings set targets for the shop floor workers.000 Mostly female Mixed Machinery 6. single needle top and bottom variable feed machines.
Workers use their ID card to clock in and out of the factory.38 Wages As Estimated by Divisional Manager of Marketing39: Category Average Wage (Rs. these benefits are additional. when the first shift of workers were getting off. 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.have recently gone through major changes in their implementation.000 Supervisors/Mid Mgmt 10. Page 44 . an increase in attendance. Benefits of the incentive scheme include a 10% increase in productivity in past two years in the sewing department. Manicandan’s CEC report.00040 Minimum wage is posted as follows: Category Wage (Rs. The workers get a fifteen-minute tea break between the start of work and their half-hour lunch break. leaving male sewing operators and some female ones./month) Unskilled 2448 Semi-skilled 2558 Skilled 2708 Highly skilled 3008 36 Information from interview with the Divisional Manager of Marketing and the researcher’s observations./month) Unskilled helper 2200 Semi-skilled operator 3600 Skilled operator 6. Manicandan’s CEC report says a supervisor with eight years experience makes Rs. However. lower labor turnover. 40 G. This early shift seemed to be entirely female. the workers at this unit do not get a tea break. 39 Stated that these numbers do not include ESI and PF. there was still a strong female presence in the factory. 38 According to G. VII. and another fifteen-minute tea break between lunch and the end of their shift. and a decrease of waste in the cutting department. 4200. 37 The researcher toured the factory around 5 pm.
they are only evaluated to see what category of skill they fall in. People who are motivated to excel and trained in different disciplines of garment 41 From interview with the Divisional Manager of Marketing. Workers also have access to an on-site crèche for their children during the workday.” ~Shahi’s website Shahi’s updated brochure includes lengthy passages stating their dedication to innovative Human Resources approaches. Benefits Stated that workers do receive ESI. which the researcher observed. The Shahi workforce consists of committed and highly skilled people. they try to have the male workers pick up the extra work instead of the female workers. 7500 are provided with ESI benefits. Workers who receive less than Rs. PF. and negligible overtime for the other departments. Workers are then on a three to six month productivity probation. VIII. Wages are fixed and there is no negotiation. Estimated two hours per week per worker in the sewing and finishing departments. Most sewing operators have been at Shahi for around two years. Labor Turnover Estimated at 7-10% per month. if overtime is needed. and a three-month maternity leave. Overtime Stated that there is not a lot of overtime because they plan production with target setting. Page 45 .Wage Setting Procedure Managers interview workers and then take a trial of their work for one day. after which the HR manager will put them into a set wage scale depending on their ability. Shahi’s overtime policies take into account gender. HUMAN RESOURCE POLICIES41 “Human intelligence is the greatest asset which we possess.
Union Didn’t ask directly. it is all direct employment. Worker Training Shahi trains the unskilled operators for a period of a week. Grievance Policy Procedure Presumably. 42 The brochure and website both state that human resources are developed using the training procedures of Kurt Salmon Associates. Particularly so as clothing corporations the world over are labor intensive and it’s imperative that they are well looked after. Manicandan’s CEC report. Shahi has ensured all systems are in place to make sure that everybody works in an extremely salubrious environment. Recruitment Policy Shahi states that they do not use a labor contractor. not the outskirts of cities. workers revealed that there had been unionizing attempts that were suppressed by the management. and union organizers were either dismissed or isolated from other employees. In the Shahi factories in Bangalore. they provide transportation to overcome those issues. Worker Committees Stated that there is a worker forum that managers also attend. Training depends on the job description of the worker. 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. so the labor is here. They are able to have female workers because they are in heart of Faridabad. Page 46 . making Shahi one of the most sought after organizations to work for in the garments arena. Dismissal Procedure No information was obtained regarding a formalized procedure. Employ more women and uses HR strategies to disempower workers and remove blatant rallying points for workers. There is also an orientation program for upper level staff. so they do not need to train them. but definitely not. They do not recruit for shop floor positions beyond posting signs on their gates and through wordof-mouth. 42 From company brochure and website. In G. Some are skilled. but it is not necessary to do so here. Labor problems get a kind ear and are followed up on a priority basis.manufacturing.
Fire fighters are on high alert at all times and every floor is equipped with the right fire fighting equipment.45 Medical Care There are male and female onsite doctors and nurses in case of industrial accidents. in fact nearly all had a Hindi translation.44 Safety measures are given utmost importance. From interview with Divisional Manager of Marketing and joint worker-manager magazine. 45 From company brochure and website. They have activities for the workers such as an annual cultural week with games and contacts. training facilities for employees. Liz Claiborne. hygiene. And some of the remarkable provisions for employees include: eligibility of workers for health insurance. and nutrition related topics. Charming Shoppes Inc.. Awareness programs are conducted for employees on health. More of these were in both Hindi and English than I’ve seen at other factories. Shahi Export House adheres to International Labor Legislation. and a first aid room in the facility. Best employee awards are given for overall discipline. educational facilities for children. Evaucation boards are put up on all floors along with photographs of fire fighting personnel. The Limited. Nautica. personality development through work shops. and American Eagle. Codes of conduct posted in factory include Carafour. securing of employees’ earnings through e-com (EDI) and ATM cards.” Shahi’s updated brochure includes add-ons regarding treatment of their labor force. A full-fledged Dispensary and Ambulance is provided with a doctor always on standby. attendance and productivity. American Pacific. seminars.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. Target Stores. 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. Strict compliance with anti-child labor law is ensured. The company organizes fire drills to keep employees alert in case of emergencies. promote. and lectures.Corporate Responsibility/ Codes of Conduct The company has a biweekly English magazine that publishes news and articles by workers. 44 43 Page 47 . and support their families in the best way possible. Wal-Mart. It aims at providing a conducive environment for employees to protect.” “Anything worth doing is worth doing well” and one about the importance of personal hygiene.
) X. before they didn’t have the quota holdings to compete. Website contact numbers are out-of-date. Suppliers have changed post-quota. INDUSTRY COMMENTS Trying to build up capacity to produce outerwear by next year to reduce seasonality issues.000 pieces per month. The Marketing Managers did not mention any new initiatives taken to deal with the issue. BUSINESS BOTTLENECKS Seasonality is an issue. Shahi has to decline some orders during peak season (OctoberMay). (Stated that retained incentive schemes and everything off-season.S. or CTPAT model. but I did not have to show it. Supposedly all visitors have to have proof of identity.4 million pieces during the peak season and 2. Stated that they need better infrastructure regarding port system. since it takes too much time to get clearance at the ports. according to the Customers Trade Partnership Against Terrorism. who reported her case to the police. The picture of the minimum wage was taken by the manager. Shahi is currently constructing a production unit in Bangalore that would have a capacity of manufacturing 200.47 XI. where the garment industry is over 90% male. however said they currently retain workers during the off-season because it becomes a problem to rehire workers. and then not working to full capacity during the off-season. companies have required them to uphold a more stringent counter-terrorism model of security in compliance with U. now they are getting competition from small exporters. The security guards inside were asleep. though the researcher was not permitted to take pictures during the tour. according to G. Customs Security requirements regarding issues like preventing trespassing. as he would not permit the researcher to do so. only different season. However. Shahi does not have a sexual harassment committee. Page 48 . as they produce about 2. Manicandan’s CEC report. Mentioned that Southeast Asia has the same problem of seasonality. The production unit was enormous. PERSONAL EXPERIENCE Obtained contact information from NIFT. and there was some controversy a few years back regarding a male manager and a female worker. traceability. However Shahi is trying to diversify their product range so that it becomes even less of an issue. From interview with Professor Rajesh Bheda of NIFT.S.Security System New security measures have been implemented since the quota phase-out. U. tampering.46 Shahi recently opened up a warehouse in New Jersey. 46 47 From interview with Divisional Manager of Marketing. IX. Shahi is notable in that they have a majority female workforce in a place like Delhi. Also argued for more labor flexibility. It is not a huge issue. now they do.1 million PCs during the off-peak season.
000 ($11. Unit visited by the researcher. 45~$1) and are not adjusted for inflation. who had contacts in the garment and textile industry. and two are in Okhla Industrial Area (New Delhi). 26817910 Website: Jyoti Apparels does not have a website. E-mail: jyotiapparels@vsnl. Gurgaon49 The researcher was not able to obtain the addresses of all nine factory sites. H. shop floor observations by the researcher. The company has increased sales an estimated 30-40% in the past year. a company profile and Standard Operating Procedures given by the Managing Director. Magu. CONTACT INFORMATION Contact People H.K. he started business in 1977 with an investment of Rs. Magu and deceased brother. BRIEF HISTORY Company established in 1976 by Mr. 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. 51 Information on company background from Managing Director. II. 26810804 (D) Fax: +91-11-26819684. 51 48 49 Unit visited by the researcher. south of Gurgaon). L. K.111 USD) in the first year. The company’s turnover was Rs. due to the quota phase-out. and an interview with an Assistant Production manager.com Production Units Magsons Exports. 26818977. He had no experience. 50 Conversions are based on today’s exchange rate (Rs.000 ($444 USD50). and remaining information is from observations unless otherwise noted.com Manish Mall Assistant Production Manager Mobile: 9899096999 Registered Office48 D-42 Okhla Industrial Area. HR strategies and production from Assistant Production Manager. 41/42 Phase IV Udyog Vihar. 110020 (India) Tel: +91-11-26816917. which roughly doubled each year until 1984. Phase-I New Delhi. two are in Manesar (southwest of Delhi. 20. Page 49 .3. I. but by networking through his brother. Managing Director Senior Vice-Chairman of the AEPC (Apparel Export Promotion Council) Mobile: 9810029999 E-mail: hklmagu@jyotiapparels. of which five are in Gurgaon.L. 500.
Donn Kenny.. Freeman’s. Miss Erica UK: Marks & Spencer. L. Carol Anderson. Evans. Reitman Israel: Fenomen Malaysia: Metro Jaya Spain: Mango. Jyoti’s strengths (and the North in general) are in high fashion garments with embroidery. owners are Mr. Zellers. maybe 2004. House of Frasers. Gus. Wal*Mart. blouses. Littlewood. Woolrich. Manufactures woven (80%) and knitted (20%) garments using mostly yarn dyes. Exports/Imports 100% exports. Enjoy. and children’s (roughly 15-20%) readymade tops. Blair Corporation). India Imports. Zeeman Italy: La Rinascente. Lane Bryant. T. V F Jeanswear (Wrangler). Promod Germany: Neckerman. and ethnic handiwork accents. Kishore Magu EOU Information No information was obtained regarding a registered EOU. BASIC PROFILE Legal composition of the Company Partnership firm.D. Page 50 . J D Williams. Europe and Canada. skirts. The Farmers Trading Co. with embroidery and beadwork. Magu and Mr. Siplec (E Leclerc). (Target Stores. and other garments. Phool Fashion Ltd. Primark. Clients52 USA: Kellwood (Sagharbor). Cabella’s. British Home Stores. . Adams. Debenhams.. Mexx.” it was pre-quota phase-out January 2005). Brylane. Karstadt Netherlands: Wehkamp. Roamans. Jyoti does not manufacture for the domestic market. Otto Australia and New Zealand: Just Jeans. Brumel. 52 According to profile (which is out-of-date. gents. Jyoti manufactures some winter clothing (about 20% of production volume). Tesco France: C. Onyx Denmark: Kompagniet Switzerland: Manor. Prenatal. Zara-Indtex Awards The researcher was unable to obtain any information on vendor awards. Canada: Hudson Bay Co. Product Mix Areas of specialization include ladies’ (roughy 80% of production volume). but the majority is summer clothing. H. K. Charming Shoppes of America (CSI). International.III. as it mentions “Quota Holdings: We have sufficient quotas in all categories of USA. Oxford Industries Inc. viscose yarn and denim fabrics. sequins. K. Specialize in high fashion made of exclusive prints. solid dye.
54 These figures were estimated by the Managing Director in the space of 5-10 minutes. FINANCIALS Turnover 12 million USD (either 2003 or 2004) Current year 18 million USD Other Financials Current year sales Rs.6 million 10 $0.50 1. 10% 50% 40% Others (Canada.50 1. on average.3 million 60 $3 10-15% Labor 1. excluding the $12 million USD figure from the company profile.50 1. Page 51 .5% Overhead and profit 1.6 million 10 $0.IV.5% Other Manufacturing 1.A. and cannot be used as an indicator of profit. Malaysia) Europe 53 Financials. 57 Since Jyoti’s unit prices are mostly FOB. costs. so they can only be thought of as a rough approximation.6 million 10 $0.6-2.6 million 10 $0. duty.S.6-2.50 1.57 V. 700. retain 75-84% of the sale of a retail item. Latin America.5% Subcontracting Cost 1.000. Japan.6-2. BRAND INFORMATION Jyoti's Export Market % of Sales U. which accounts for the inconsistencies. this figure includes the amount the MNC spends on shipping. 55 Based on the company’s average unit price of $5 USD.000 (15.555 USD)53 Breakdown of Sales Revenue54 Est USD 2006 Per % Retail Garment55 Price56 Material Cost 9. were estimated by the Managing Director on two different occasions.6-2.5% MNC’s that source from Jyoti. 56 Average retail markup is four ($20) to six ($30) times the unit price of the garment. etc.
000 square meters. Page 52 . Two of the factories are 2. he stated that unit prices have decreased about 10%. Prices and other sourcing details are negotiated through the buying agencies. Subcontracting Jyoti does not subcontract the production process. Overall. the company has about 20. INFRASTRUCTURE Company has nine production facilities.000 square meters.000 square feet of land spread over ten different areas (including the registered office. Did not mention any direct relationships.000 square meters. and Gloria Vanderbilt through buying agencies. It is notable that Jyoti subcontracts to a Shahi processing facility. American Eagle.Major Clients Brand India Imports Lane Bryant Marks & Spencer Mode Liz Claiborne American Eagle Tesco Adams Littlewood Sainsbury Okaidi Orchestra Origin UK USA Holland USA USA UK UK UK UK France France Length of Relationship 29 years 10 years 2 years 1 year 1 year 15 years 15 years 10 years 4 years 3 years 2 years Total: % of Turnover 10 10 10 10 10 5 5 5 5 }5 75 Buying Agency or Direct The company does business with MNCs such as Liz Claiborne. but they do subcontract their fabric sourcing and processing. four are 1. VI. and two are 600 square meters. Subcontracting has not changed since quota phase-out. 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. which is not a production facility). primarily through the Triburg buying agency. one is 8. but later stated that overall they have remained stable.58 Production System 58 See Standard Operating Procedures for detailed subcontracting information.
fusing machines. 8000 woven pieces per day and 1200 knit pieces per day.000 pieces per month. and brown machine-embroidered skirts for American Eagle.000-90. feed of the arm. At production site visited. lock stitch single needle and double needle. over locks.Uses an assembly line system. Design/Sampling Small design department. piccoting. Sometimes Jyoti has people from UK and France do designs for them. but primarily just take paper designs from buyers and converts it to clothing. The researcher observed production of ladies’ white blouses for Emma James (Liz Claiborne). Quality Control Jyoti Apparels has a quality control assurance team with both an in-house auditing scheme and third-party inspection. usually 80. which varies according to the product.000 and 300. elastic insertion. washing machines and set of 84 stem boiler irons. dry cleaning. computer embroidery. shell stitch (Merrow).000 pieces per month. Production Capacity According to profile. cross stitch/lock stitch button/ button hole/ snaps. Managing Director and Assistant Production manager stated they were all skilled.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. Page 53 . According to company profile. 59 60 See SOPs for detailed quality control schemes. between 240. belt attaching. perk-chloro plants.
cutting.Ground Floor Plan Second Floor Plan There is also a basement floor with fabric and accessory storage. Page 54 . though the researcher was not able to obtain a photograph of the plan. and embroidery departments.
Machinery includes one bandknife cutting machine and two straight knife machines. This was the only department that had any female workers. Some of the fans were broken or not on.(Right) A view of the basement and ground floor. There were no fans in this room. three thread-cutters. Checking/ Finishing/ Pressing (40-50 workers) The finishing area had lines of workers pressing and folding clothes. Fabric and Accessories Store. Sampling (15-25 workers) The fabric store had a sign reading “Triburg. Washing (10-15 workers) Washing was located on the topmost floor of the building. The workers in this department were all male. Cutting (20-30 workers) in Basement There are four lines in the cutting area.” which is the buying agency that many firms deal with.” so they are barefoot when operating the computer embroidery machine. and the remaining workers helpers. Production (~180-190 Workers)61 on Second Floor Machinery includes about 200 Juki stitching machines. etc. Document given to Buyer About Shop Floor Management (was displayed on shop floor. 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. is data for production site visited. The department has one finishing supervisor and one assistant finishing supervisor. one cutting assistant. There were two workers on the machines. two supervisors in an office in the corner.. with one cutting master. Page 55 . 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. Packing (10-15 workers) Did not observe department during visit. observations. It did not seem as modern a unit as other top tier factories.
Labor Turnover Estimated worker turnover per month at 20%. workers are offered a wage based on this evaluation. After one day period.O. finishing supervisor. The tailors and some finishing employees receive wages on a daily basis. security tag Four operators Step 2—Initial Pressing One supervisor Step 3—P. and cutting supervisor who set the production lines and targets based on manual time-studies. it is all left to selfdiscipline. rather they calculate targets manually by hourly production rate. First the Assistant Production Manager stated that they do not perform time studies. there is an incentive scheme that depends on monthly shippings. If workers exceed this by 1 lakh. 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.000-90. Page 56 . then the factory will give incentives. However.000 pieces per month. supervisors conduct time studies evaluating the skill level and productivity of a new hire. while the rest of the employees receive a monthly salary. extra button. button placement One checker Step 4—Initial Checking Two checkers Two thread-cutters Productivity Schemes There are no incentive schemes according to the Managing Director. VII. Benefits Production manager indicated that workers receive ESI and PF. which is not subject to negotiation. and gave a copy of the minimum wage scheme for Haryana. production manager. Wise Tag check with care. according to the Assistant Production Manager.Step 1—Care label. Then he stated that they conduct production planning meetings with the factory manager. Wage Setting Procedure For shop floor workers. The production unit visited usually produces 80. merchant/buyer (for style).
HUMAN RESOURCE POLICIES There are no common policies across the plants. Recruitment Policy Jyoti states that they do not use labor contractors. Workers do not need experience per se. H. Worker Training Sometimes Jyoti trains workers during a lean period if there is time. The Managing Director states that they recruit people from Apparel Training and Design Centers. The Assistant Production Manager stated that if workers are not productive. Kishore Magu Partner Other Upper Management? Factory Manager Management Staff/Accounts Personnel Production Manager Manish Mall Assistant Production Manager Line Supervisors Assistant Supervisor (Less skill/experience) Skilled Tailors/Machine Operators Helpers (Unskilled) Boxes with straight-line borders are positions common throughout all production sites. Magu Partner Founder/Chairman Mr. Usually 20-25 tailors take 10-15 days to train. Management Structure Mr. but these tend to be more middle management people. K. L.VIII. though the Director mentioned that workers learn on the job. because otherwise they become permanent and you have to pay them more. but managers observe productivity and hire skilled workers. and the extent of their recruitment is posting signs on their front gates. Dismissal Procedure The Managing Director stated that they keep workers for 240 days and then change their workforce. Page 57 . while dotted-line boxed positions are factory-specific and subject to variance. they are given a one month notice so they can find another job and they receive a letter of termination.
no imports because would have to pay landed costs). and they have monthly meetings. Medical Care There are doctors nearby the factories and first-aid kits in the production sites. No common policies (with HR. He stated that old employees with a union do not work as hard. high rate of interest. He said they have the joint employee-worker committees required by law since there is no union. traceability. U. production. according to the Customers Trade Partnership Against Terrorism. etc). or CTPAT model. Customs Security requirements regarding issues like preventing trespassing. he moved production to another site (now there is just the accounts staff and some sampling/design). BUSINESS BOTTLENECKS63 Main problems facing the industry are poor infrastructure (need better highways. IX.) across plants except for buyers code of conduct. Grievance Policy Procedure/Corporate Responsibility/ Codes of Conduct No information was obtained regarding a formalized grievance policy procedure. they cannot transfer goods during “peak hours.. etc. companies have required them to uphold a more stringent counter-terrorism model of security in compliance with U. he did not. higher material costs (indigenous. lack of good fabric processing machinery.S. Worker Committees The Managing Director stated that they do not have any worker committees.S. The first time security did not take my name in the confusion of finding a manager. the Assistant Production Manager stated that they do have committees. etc. However. anti-harassment. tampering. Page 58 . There is a path behind the building to get to the main office over ripped metal sheets over grates. duties. but talked about them vaguely and though he stated that he could give me committee minutes. but did not give a visitor’s pass. For example. Does not have its own employee code of conduct. The production site visited did not have a union. though neither of them knew where the medical facilities were located. labor laws (especially the lack of hire and fire exit policy).Union The corporate office used to be a production site.” trucks are only allowed to transport good between 11 and 4. 63 Based on interview with Managing Director. and high transaction charges. they should run cargo through machines instead. etc. but the Managing Director stated that when the old employees formed a union. Believes that there should be special customs lines at airports so that everything is not searched. but no visitor’s pass. ports.62 Security System New security measures have been implemented since the quota phase-out. 62 Based on interview with MD and Asst Production Manager. A lot of money is invested into customs. which makes it difficult to meet deadlines. such as environmental. Second time took my name.
X. the overseas vendors couldn’t sell their inventory. The Managing Director is the Senior Vice-Chairman of the AEPC. so could not take orders from them anymore. 64 Based on interview with the Managing Director. PERSONAL EXPERIENCE When observed work at the production site. as they still have the edge on labor productivity and good infrastructure. etc. Phase out of quota system has brought in new buyers. Page 59 . because of the late summer. production manager. XI. as were much of the staff at the production site. who also permitted the researcher to take photos. labor laws would be relaxed. Companies are very upset with the government’s “bureaucratic hurdles. making access to plants easier. or even leave their air-conditioned offices. and did nothing the rest of the time. They’ve had to become very quality-conscious and price-conscious. Jyoti was an extremely open company in many respects. The Assistant Production Manager was almost never at the factory when the researcher came to the production site.” in which infrastructure would be built up by the government. before couldn’t have more because of quotas. China is their main competitor. Post-quota phase-out resulted in a boom for Indian business. He was very open in disclosing information. Also.) or some supervisors do anything.” Jyoti supports “special garment zones. and had everyone borrowing money from the bank and investing in huge factories. but unit prices got too low. and one of them glanced at a time-study once. etc. it was difficult to deal in huge quantities because of the possibility of mistakes in such a large order. They played solitaire. which is the capacity in which the researcher initially came to interview him. This year. did not see upper management (factory manager. like American Eagle. INDUSTRY COMMENTS64 Jyoti used to deal with Wal-Mart and Target.
Gurgaon 4. with one woven garments manufacturing unit in Delhi. Phase I. 66 According to company website. 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. Ware Housing Scheme Kriti Nagar. Phase-I. 192. Phase-I Gurgaon The company profiled has over ten manufacturing units. Udyog Vihar. incorporated R and Co. Udyog Vihar.110015 (India) Tel: +91-11-25431408. Phase I. 208. B-108. Phase III. in 1977. Gurgaon 2. Phase I. Udyog Vihar. 25172437. black iron.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. G International was established in 1983 in Delhi and 1996 in Gurgaon. General Manager of Operations 236 Udyog Vihar Phase-I. 236. Gurgaon67 6. Gurgaon 7. Gurgaon. an interview with a General Manager of Operations. Gurgaon. Gurgaon 5. Manicandan’s CEC report. BRIEF HISTORY68 Vijay Uppal. II. including: 1. Gurgaon 3. Gurgaon 8. Noida. 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. 506. Udyog Vihar. aluminum hardware. and Bangalore. Page 60 . Udyog Vihar. 68 According to the company website. the current Chairman. 133. Phase III. 25454895 Contact person: Padam Vaish. 151. 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. CONTACT INFORMATION65 Registered Office: 2/2. New Delhi 2. New Delhi . 479. including: 1. Phase III. 69 From an interview with the General Manager of Operations. 225. 25172438 Fax: +91-11-25451549. and ironmongery. Phase IV. Phase I. Udyog Vihar. 67 Unit visited by the researcher. and G. Udyog Vihar.4. I. Mayapuri Industrial Area. 239. Udyog Vihar. Udyog Vihar.
The company has set up its own offices in Ludhiana and Tirupur in order to better source fabric. ladies tops. Inc.. Ann Taylor. Page 61 . Goat and Cow leather as well as nubuck. while Vijay Uppal and Gaurav Uppal are Joint Managing Directors. and Marks & Spencer.K.1992. Polo Ralph Lauren. Awards 70 According to the company website. The R Group began producing knitwear when Gaurav Uppal joined the company management. The group launched a leather manufacturing unit in 1989 specializing in high fashion leatherwear under the management of Sunil Kapur. Charming Shoppe. Wal-Mart. women and children including shirts. The tannery has modern finishing technology for leather finishes of Sheep. It specializes in (primarily) outerwear for men. Including the original R and Co. the group includes eight companies. pants. It has initiated a backward integration project by starting its own tannery in Hyderabad. Women’s Secret. women and children such as jackets. Clients The R Group sources to over fifteen countries. Product Mix Areas of specialization include ready-made woven. Betty Barclay. Land’s End. R Global was incorporated in 2002 at Bangalore. Timberland. The R group does not manufacture for the domestic market. Liz Claiborne. skirts etc. knit. semi anilines. and leather high fashion garments for men. Mervyn’s. which will specialize in ready-made specialty shirts. Debhnams. Target. J. Monsoon. Sigrid Olsen. BASIC PROFILE70 Legal composition of the Company Virender Uppal is the Managing Director. Etams Miss Sixty.Crew. trousers. waxy distressed/ oily nappaloans.. Federated Stores. The R Group has recently established a fully integrated production line in Noida. Cortefiel. The company has already started manufacturing leather accessories and is further expanding with a bigger factory planned in Gurgaon. Dillard’s Sears. May Stores. cargo pants and shorts. BCBG. Mexx.. skirts. Lane Bryant. anilines. Next. to brands such as GAP. semi-nubuck. pants and shorts. antiques. Calvin Klein. Tommy Hilfiger.Y. III. Spigel.N. D. vests. Exports/Imports 100% exports.
U. 90% Major Clients Brand GAP Macy’s Wal-Mart Dillards Liz Claiborne Federated Stores 71 72 UK and Japan Origin U. Export Performance Chart71 Other Financials No other financial information was obtained. Length of Relationship 15-20 years 15-20 years 20 years 15-20 years 15-20 years 15-20 years % of Turnover 40 20-25 20 12 7 - Graph taken from the company website.A.S.A. FINANCIALS Turnover The R group has an expected annual turnover of US $ 85 million for the year 2005.A. U.A. BRAND INFORMATION72 Export Market of the R Gro 10% U. U. U. U.S.A.S.S.A.A.S.S. Page 62 .IV.S. V. From an interview with the General Manager of Operations.
and Bangalore. has an annual production capacity of 2 million knitted garments. For a more detailed quality control process.75 Production System The R Group uses an assembly line system. Noida. since they often don’t have established offices. G International does not use a recruiting agency or a labor contractor. the company’s knitwear divison. They set up a shelter (“shack”) for local tailors to do the hand embroidery. Subcontracting G International subcontracts their hand embroidery. 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. 75 From an interview with the General Manager of Operations. 76 From an interview with the General Manager of Operations. INFRASTRUCTURE74 The R Group has over twenty-two integrated manufacturing units in Delhi. Smaller companies are more likely to be direct orders. or sometimes they embroider in their homes. 73 74 Including Wal-Mart.Buying Agency or Direct Contracts are mostly negotiated through buying agencies. G International takes indicative orders from the buyer. and the buyer selects and negotiates the contract. Gurgaon. Wal-Mart usually orders the largest volume. Quality Control The General Manager of Operations stated they use a “2. Taken from the company website. However. though not to an established company or to direct employees. The R Group’s leather manufacturing unit has an annual production capacity of 500. though they occasionally take direct orders. Production Capacity The R Group’s woven division has an in-house annual production capacity of 10 million pieces. VI.5 APQ” quality check standard across the board. shows a sample range. 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). see company website. there has been a 15-20% increase in orders.000 pieces. though there are fewer orders in the fall and winter. unless otherwise indicated. R Global. Page 63 .
Approximate number of workers in all facilities The R Group has a staff of over 10. material flow). to the production stage (work aids.77 Machinery R Group’s production facilities use machinery at every point in the production process including designing (CAD). They have incentive schemes for things like 100% attendance. Productivity Schemes The company has production planning meetings in which targets are set and the workers do not participate. 78 From an interview with the General Manager of Operations. Departments No information on specific departments was obtained. G International has a total of 7. cutting (Digitizers. with 1200 workers at this site (approximately 95% male. time and motion studies. WORKING CONDITIONS80 Work timings Lunch break Tea Break From 9:00 am 1:00 pm 4:00 pm to 5:30 pm 1:30 pm 4:15 pm No other working condition information was obtained from the factory. 5% female). operation research). 80 From an interview with the General Manager of Operations.000 workers. 77 After disclosing this information regarding the number of skilled workers. 700 per month extra. scholarships for workers’ children. They incorporate corporate social responsibility schemes into their productivity ideas. and worker welfare programs. 79 From the company website. an estimate was approximately Rs. 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.79 VII. Plotters & Automated Cutting Machines) and fabric testing (fully equipped laboratory) and fusing. such as medical checkups. operator training and skill analysis). Preliminary worker interviews revealed that this company was considered one of the worst factories to work for in Gurgaon.78 The R Group has a Research and Development department for the technical aspects of garment manufacturing.000. the General Manager refused to give any more specific numbers of workers. to the pre-production stage (layout and machine engineering. Page 64 . from the sampling stage (product and pattern engineering.
15 per hour. workers receive 12% PF and 2% ESI. supervisors conduct time studies evaluating the skill level and productivity of a new hire. 151 UV. Units visited in his report are Gurgaon Phase-1 192 UV. Manicandan’s CEC report. VIII. though they do not always receive their PF once they leave the company./month) 2600 2750 2344 1893 2341 Wage Setting For shop floor workers. and 225 UV. Padam Vaish General Manager of Operations Factory Managers at each Incorporated Company in the R Group HR Manager Management Staff/Accounts Personnel Production Manager Skilled Production Line Supervisor Assistant Supervisor (Less skill/experience) Skilled Tailors/Machine Operators Helpers (Unskilled) Straight-lined boxes are positions common throughout all production sites.Wages81 The wage amount excludes overtime payment. HR Manager stated that wages increase after a year. HUMAN RESOURCE POLICIES Management Structure Mr. none of which were visited by this researcher. After a three-day period. Virender Uppal Managing Director Founder/Chairman Mr. workers are then offered a monthly wage based on this evaluation. while dotted-line boxed positions are factory-specific and subject to variance. Category (from pay slip) Tailor Sewing Operator Helper (8 months experience) Unskilled helper Helper (production) Wage (Rs. 81 From G. which is reportedly not always paid. Overtime payment is Rs. Page 65 . Vijay Uppal Joint Managing Director Mr. which is made on a different date than the regular salary. which is not subject to negotiation. Gaurav Uppal Joint Managing Director Mr. Benefits According to the CEC report.
Company G and the R Group does contract temporary laborers and subcontract to a labor contractor. Manicandan’s CEC report. So how do you overcome these issues? General Manager of Operations: Oh. worker committees. well. According to G. [the R Group] is seen as a highlighted-tech. Researcher: But you said you didn’t use labor contractors. However. we do more incentive programs and get better performance out of our existing workforce. 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. like the labor norms in China. These problems are taken care of with labor contractors. More than local labor laws. buyer codes of conduct are hurting business because they are more strict. an interview with a G International worker in a Gurgaon plant revealed that he had never seen or heard of the employee code of conduct manual. IX. He stated that it should be looser. Recruitment Policy The facility posts signs on gates. The General Manager stated that there are common policies across the plants. Other Human Resource Policies No information was obtained regarding a formalized dismissal procedure. that they engage in the same kinds of recruitment.Worker Training The facility sometimes trains workers if the operation is difficult. Training usually takes one or two days and is done through the research and development department. Security System No information was obtained regarding a security system. No other information about the R & D department at this specific facility was given. Page 66 . or a union. Today.” The company has a manual code of conduct that the General Manager stated is given to each employee. grievance policy. eco-responsive corporate citizen that is Shaping a Better Tomorrow for everyone. BUSINESS BOTTLENECKS The General Manager stated that buyer requirements like double pay during overtime are holding the industry back. no. interviews applicants. Medical Care No information was obtained regarding on-site medical care. Researcher: Is labor flexibility or the lack of hire-and-fire policies an issue? General Manager of Operations: No. customer friendly. then tests worker productivity for an hour and a half. not anymore.
He refused to schedule an interview solely with the HR Manager.” The South is also usually single product. he initially would not let it leave the building. He implied it has limited use after the quota phase-out. the Northern area of India is more embroidery and hand-work intensive and is multiproduct. When asked about the number of skilled workers. XI. INDUSTRY COMMENTS The R Group is in the process of setting up a backward integration project for their knits division. who was not at the factory when the researcher visited. Because they are trying to increase productivity. he asked “why do you want to know that” and refused to give much more information past that. and avoided any other types of follow-up including the suggestion of a phone interview. which makes productivity more difficult to increase. G International is working on converting to a single product system within the next two or three months (August 2006). but he answered questions in a more direct. The work culture in the south is “different—more productive and efficient. brief way. It would be better to simply show up or not leave an option of calling before coming. Although the researcher obtained a employee code of conduct handbook. The researcher was directed to the General Manager at a G International plant for an interview. In general. They are also setting up a leather accessory factory at Gurgaon. PERSONAL EXPERIENCE The R Group was extremely difficult to both interview with and extract information. every one of them was canceled by the General Manager. though several follow-up interviews were scheduled. Page 67 . and he was much more reserved and suspicious. as it would tell them new government policies and how to best utilize the system. Furthermore. The General Manager stated that the AEPC was much more useful before the MFA phase-out. especially in regards to quotas. Virender Uppal (the MD of the R Group) is a former Chairman of the AEPC. General questions about labor laws or productivity issues usually prompt details and complaints.X.
Gurgaon 3. I. Gurgaon 2. The company structure of Pearl Global is extremely unique. Phase I. BRIEF HISTORY83 Pearl Global was incorporated in 1979.” The House of Pearl is focused 82 83 Unit visited by the researcher. G. online business publications and press releases. Udyog Vihar. Phase V. Phase I.pearlglobal. Chairman deepaks@pearlglobal. Udyog Vihar. Company Secretary Tel: 95-124-4308164 E-mail: jayants@pearlglobal. Page 68 . and its first manufacturing facility was established in 1989. Gurgaon 4. Udyog Vihar. as it includes all parts of the garment industry under the “House of Pearl. 138. Manicandan’s CEC report.5.com Rishi Vig.com Jayant Sood. CONTACT INFORMATION Contact People: Deepak Seth. and an interview with the Company Secretary. the company website. Community Centre Naraina Industrial Area Phase-II New Delhi – 110 028 Tel : 011-51417680-82 Corporate Office82: 446 Udyog Vihar. PEARL GLOBAL LTD. 870. Gurgaon II. 222. Haryana Tel : 91-124-4004086/87/88/89/90 Fax: 95-124-4004067/85 Website: www. Udyog Vihar. Phase-V Gurgaon – 122 016. business began in the 1980s.com Registered Office: A-3.com Production Units: 1. Phase V. In 1993 it became a public limited company. 446. From an interview with the Chief Finance Officer. The information in the following company report was obtained primarily from an interview with the Chief Finance Officer. Chief Finance Officer Tel: 91-124-4308201 rishiv@pearlglobal.
) for the year 1990 . From company website. 86 From an interview with Chief Finance Officer. Karstadt/Neckermann. Charming Shoppes.1993. and the UK. and outerwear. George (Wal-Mart). Product Mix Areas of specialization include: India: woven cotton and value-added cotton. Kohls. children’s. Nex86. 84 85 See company website for list of shareholders. Lerros. stain sealed garments using goretex and acquatex. Liz Claiborne. He has successfully promoted and established the fashion apparel brand "Lerros" in Europe. as a Special Invitee. brand “Kool Hearts. bottoms. Inc. Clients Abercrombie & Fitch. etc.S. Pearl Academy of Fashion Domestic. Siplec. which together yield a combined turnover exceeding U. Wal-Mart.” 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). H & M85.C. He has been actively involved with the development of readymade garment industry in India.E.S.C. NorPearl. warehouse and distribution.84 Exports/Imports 100% exports. Marks and Spencer. Pearl Global does not manufacture for the domestic market. Dillards. dresses.S. Esprit. It offers full services to large retailers with the chain broken into business units that cater to different product lines. It also has businesses in Hong Kong (NorWest) and the UK (Poetic Gem). $200 million. JC Pennys. Bangladesh: low cost.P.S. including blouses. children’s and men’s shirts. Page 69 . trousers. Besides having been elected to the Executive committee of the Apparel Export Promotion Council (A. nightwear dresses. shorts. The company recently entered into a business and education partnership with Babson College in the U. The Chairman of Pearl Global established a fashion and design academy.) and a global network of business associates and customers.E.on the apparel sector with manufacturing bases in India (primarily Pearl Global Ltd. he has been inducted to the Executive Committee of A. skirts. suits. Castromen. NorPlanet Pearl Global has manufactured women’s. ethnicwear. is establishing a U. basic stuff. GAP (including Banana Republic and Old Navy). BASIC PROFILE Legal composition of the Company Public limited company. The House of Pearl includes designing and manufacturing units. t-shirts. vests.. III.P. marketing units in the U.
IV. 5th Floor Plot No. Stock Exchanges where the securities are listed: 1.380015 87 88 From Chairman’s Message on company website. Ahmedabad .400 001. Dalal Street Mumbai .1 crore compared with Rs 7. J.43 crore[ from Rs. Pearl announced a dividend of 30 per cent for the year [subject to shareholders’ approval]. The Delhi Stock Exchange Association Limited (Regional Stock Exchange) DSE House 3/1 Asaf Ali Road New Delhi .”90 See website for detailed financials.” <http://www. Page 70 .cms> and “Corporate Briefs: Pearl Global. Ahmedabad Stock Exchange Limited Kamdhenu Complex Opp. Bombay Stock Exchange Limited 1st Floor. 89 From an interview with the Company Secretary.com/articleshow/1690384.5 crore [from 120. Rotunda Building.6. In 2005-06 the company invested Rs 29 crore to augment its production capacities in Gurgaon and setting up a new unit in Chennai.telegraphindia.indiatimes.41 crore in 2004-05].110 002 2. 3.C/1. 90 “Pearl Global net up 88%. Towers. P. The revenue of the company during the year was up 31. G-Block Bandra – Kurla Complex Bandra (E) Mumbai – 400 051 4.89 Other Financials “Pearl Global posted 88 per cent year-on-year increase in net profit in 2005-06 to Rs .5 crore in the previous year.” The Economic Times: Garments/Textiles.” “The company’s operating profit was Rs 17.88 Net profits are 234% up. New Trading Ring.9 crore in the previous fiscal]. National Stock Exchange of India Limited Exchange Plaza. FINANCIALS Turnover $200 million worldwide before quota phase-out. Sahajanand College Panjarapole.9 per cent to Rs 159. 3. 29 June 2006. Babson College press release. <http://economictimes.asp>.87 $400 million in its worldwide operations post quota phase-out.com/1060712/asp/business/story_6465123.
V. To put that growth into context George Clothing at Asda has seen its market share more than double in the last 5 years to the point where it is the second largest seller of apparel in the UK on volume. 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. the Chief Finance Officer stated that they are engaged in strategic partnerships with six of them.they have grown to be our second largest supplier. BRAND INFORMATION91 Pearl Global’s Export Market 40% 60% U. Page 71 . “Dear sir.knitted. To grow the business at this rate Pearl has had to show a "can do" attitude. woven. They are working on building strategic partnerships with between all of their vendors and suppliers and consolidating them. EU and UK Major Clients Brand JC Pennys GAP (incl ON and BR) Charming Shoppes. They have supported our growth by putting in the infra-structure to service our needs. From an initial order in 2001. 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). 91 From an interview with the Chief Finance Officer. Apologies for the delay in replying. Our Customer's perception This reply has come from ASDA Walmart to a query of a Sr.A.S. before the cost justified it. Inc. They now supply us with a variety of casual. Journalist. and jersey product across all ages and genders from a variety of countries in the Far-East and Indian sub-continent. The following is a forwarded e-mail from George Clothing (Wal-Mart) regarding Pearl Global: Subject: Something you should know.
has a right to exploit the people who make the product we sell. retailer. Executive Editor. 1 business publication. 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. Best regards. For Pearl to grow their business with us. price. quality. I honestly believe that to supply fashion retailers at the volume end is one of the most difficult businesses to be in . Below are a few points which I hope you would take time off and reply to at the earliest. UK I am a journalist from India writing for India's No. Finally. I feel that we can have an honest conversation with Mr. Lancelot Joseph. and delivery have had to be a given. it is critical for us as a business to deal in the right way. quality etc? * As compared to other supplier where do they stand? Please feel free to add whatever else you would like to express/say on the business house. Currently I am doing a corporate feature on the House of Pearl who is your vendor. Senior Sourcing Manager -Kidswear. Business India” Page 72 . * 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. hence would like to have some of your observation/views/comments on the business house and your relationship. Seth and his son and that there is a trust between us and we look forward to growing together as we set out to be the best clothing brand in the world. offering us product direct from factory or landed delivered if the situation demanded.com --Original Message-Dear Ms. Allan Quayle General Manager-Strategic Supplier Development George Clothing Phone 00 44 (0)1455 264409 Mobile 07779 700695 e-mail allan. Deepak Seth has also gone beyond the factory gates to work with the community and put something back. and any issues that have arisen have been resolved immediately and taken as learnings to provide a better service going forward. and where our distribution network has creaked under the pressure. flexibility to change our minds as to what we want right up to the last minute.We want style. 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. Heather Moreton. ASDA Wal -Mart. no-one whether it be store customer. Thanks and regards. We pride ourselves at George that our ethical standards are rigorous. so Pearl have stepped in to provide solutions and support.Growth on this scale inevitably creates major head-aches for the supply-chain. As price deflation has become a way of life in the UK clothing market. or supplier. Quality.quayle@wal-mart.
Production Capacity Pearl Global has 20 million pieces in-house capacity and 120 million pieces capacity all across Asia. Sometimes designers from the UK and the U. Pearl Global uses labor contractors. Every stage of the production line has its 92 From an interview with the Chief Finance Officer. The embroidery tailors either come into the facilities to perform the work or they send it.S. Page 73 . one in Chennai and the others in Gurgaon. 90 incl. They have six design factories. The House of Pearl has over 150 factories across Asia. which are shown to buyers in advance. Quality Control Raw material including fibres.S.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. 50% FOB. one in Indonesia. who then chooses or modifies the styles. VI. They are working on doubling their capacity in the next 2-3 years. Markup (days) High of $10 $6-7 USD 3 to 4 times 60 to manufacture. A few years ago the delivery/production cycle had to begin 18 months in advance. now it is 6 months. Production System Pearl Global uses an assembly line system. The House of Pearl’s research and design department prepares a collection of high fashion styles for each season. but it mostly in-house. two of which are in Bangladesh. Subcontracting Sometimes Pearl Global subcontracts hand embroidery. and one in China. India: Unit Prices (paid to factory per piece of garment supplied) Range Average Retail Delivery Time Type India U. Design/Sampling and Product Development Designs are mostly developed in-house. 5% freight. 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. INFRASTRUCTURE92 Pearl Global has five or six production facilities in India. are consulted to developed in-house patterns. yarns. Pearl Global then manufactures the style. but now they have developed direct relationships with their long-term business partners.
Sretch yarn. drape and fastness to light washing and rubbing and slippage. Gurgaon 2500-3000 workers 446. Udyog Vihar. Production Unit Number of Workers93 138. tensile strength. single ply yarn is also checked on the uster machine to ensure consistency in yarn quality confirming to norms of the uster statistics. Phase V. twist per inch. fibre bundle strength. etc. but did not give specific numbers. If a worker stays for six months they get incentives. 93 Numbers for the units at 446 and 870 were estimated by the Chief Finance Officer while the other numbers were obtained from G. Udyog Vihar. fibre composition percentage (blend %). VII. Manicandan’s CEC report (and confirmed by the Chief Finance Officer). Productivity Schemes Pearl Global gives out “best worker awards” and “gold stars” for productivity. novelty yarns. Phase I. WORKING CONDITIONS Wages and Benefits The Chief Finance Officer stated that sometimes Pearl Global pays workers above the minimum wage. After workers receive their monthly salary they see a “rise in absenteeism. ply yarn. viscose tops and special fibre). uster percentage and impurity. Every set of fibre (polyester. Gurgaon 600 workers 870. Gurgaon 500-600 workers 222. moisture regain percentage and finish percentage. CRA. 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. Udyog Vihar. Approximate number of workers in all facilities Pearl Global has approximately 6000 workers in India. Udyog Vihar. count strength product (CSP). Departments The researcher was not able to obtain information regarding the specific nature of the assembly line or tour the factory.own set of detailed monitoring system. Page 74 . The finished yarn is tested for residual shrinkage. Phase V. pilling. Polyster viscose and cotton yarn is tested for count.” 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. Gurgaon 2000-3000 workers Machinery Pearl Global has an estimated 2000 machines for every part of the production process. Phase I. and if they have a low level or no absenteeism they also get an incentive. which is sourced from outside is tested for fibre fitness micron ( fibre diameter).
& Co. They contract temporary workers through R. Dismissal Procedure.” but there are not enough “available. Furthermore if “it was all women it would be fine. 98 According to G. They want to hire more women like Southern facilities do because women workers are “more efficient. Labor Turnover96 The labor turnover in Gurgaon is about 20%. 2006. but if it is mixed employees then it becomes a problem with issues of sexual harassment. 97 From an interview with the Chief Finance Officer. For their HR strategies. Out of 500-600 workers only about 90 are in the union.K. and Indonesia is lower. Union and Worker Committees98 There is no job security. 3500 per month Rs. The union is not effective in addressing the problems of the workers. Worker Training There is a training line for new workers. 4000 per month Rs. According to G. who are not entitled for ESI and PF. HUMAN RESOURCE POLICIES97 A new HR manager is to be hired as of August 15. they used a mix of outside agencies and consultants. 100 more and a 20% bonus for divali. although being a “permanent” employee will entitle a worker to an identity card. and the head of the union is not an employee at the facility. 95 Page 75 . 96 From an interview with the Chief Finance Officer. though sometimes workers work double shifts and are paid double. K. & Company.” and it is not convenient as Pearl Global would have to provide transportation. VIII. Overtime95 The facility at 222 UV has two shifts and thus there is little overtime. and Sukumar Pride. The labor turnover in Chennai. There is a union in the facility at 138 UV. ESI and PF. who must first pass a hand-eye coordination test and then spend twenty days on the training line. Manicandan’s CEC report. There is no sexual harassment 94 According to G. Bangladesh. Recruitment Policy Pearl Global uses labor contractors and specifically stated they use R. Manicandan’s CEC report. 3000 per month Every year workers receive Rs. if there are no orders or “no work” employees are told not to come. Manicandan’s CEC report. They did not have a HR manager before this. All but temporary workers are covered by social security schemes.Position Finishing supervisor (7 months experience) Tailor (8 years experience) Tailor (5 years experience) Wages94 Rs.” However they are working on providing the necessary infrastructure (such as transportation) so they would be able to hire more women workers.
From an interview with the Chief Finance Officer. The Company has built-up very effective TEAM WORK…The primary purpose of Corporate Leadership is to create wealth legally and ethically. which have monthly meetings. This translates to bringing a high level of satisfaction to five constituencies Customers. The motto of every Corporate Body is to ensure Predictability. Labor cost is still competitive (in terms of the world market). According to the Chief Finance Officer. The Chairman Pearl Global espouses corporate responsibility ideals on its website (Chairman’s Message. implying that the AEPC is not as useful post-quota. a fashion design and manufacturing technology institute. Page 76 . The strength of South India is its efficiency. and teams are set up to work on weak areas in working conditions.e.committee. The unit at 222 UV does not have a union. so they are working on capitalizing upon the existing capacities. They want to integrate all offices with an ERP 99 100 From an interview with the Chief Finance Officer. The company has set up Pearl Academy of Fashion. 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. BUSINESS BOTTLENECKS99 The industry is regulated by the supply of cotton.” IX. Corporate Responsibility/ Codes of Conduct According to the Chief Finance Officer. “ethnicwear” or design. Employees. Seasonality is an issue. Deepak Seth): “A future that shall be built with the same strategy that has shaped our past. Sustainability and Profitability of revenues year after year. etc) helps immensely. Vendors and the Society-at-Large. which holds it back. Source the best from the World to deliver the best to the world by following ETHICAL MANUFACTURING AND TRADE PRACTICES. they have set up a medical treatment facility in the spirit of social responsibility. orders are fewer in July and August. Investors. The House of Pearl has enough infrastructure to double turnover. The company also operates a school by the name of 'Little Pearls' in Delhi. as mentioned previously there is a new HR manager slated to begin on August 15. Working on having uniform HR and productivity strategies. Pearl Global has a very effective HRD system they have build an empire highly trained and skilled manpower ready to face the dynamic changes. which is missing in the North but the value-added garments (embroidered. INDUSTRY COMMENTS100 Commented on the strengths of the North. X. 2006. Pearl Global just hired a lawyer to help analyze and plan financial structure. i. there are sexual harassment committees. as there is different management at each facility.
The company is setting up new facilities in Dhaka (Bangladesh) and a design center at Chennai. such as the UK's Chelsea College of Art & Design. one of the top two in this field in the world. Managing Director. Mr. and is located in the Okhla Industrial Area (Phase II) of New Delhi. Retailing. Partner. Bolton University.pearlacademy. at Naraina.system. As a result of the close interaction between the industry and the institute.htm Advisory board includes: Mr.Virender Uppal. The House of Pearl is planning to get into retailing and is working on an industrial engineering department and setting up software SAM. It provides training programs in the areas of Fashion Design. in India and abroad. It has links with acknowledged international leaders in fashion education. industrialists and academicians. and London Centre for Fashion Studies. It has a validation agreement with the UK's Nottingham Trent University (NTU). its alumni hold responsible positions in more than 300 leading organisations. 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. Chairman.com/articleshow/1404688. like in “Pearl Global to merge two companies. Lalit Gulati. Pearl Global. who constantly review the institute's performance to ensure that the programmes are practical and industry-oriented. 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).”101 Pearl Academy of Design Education-Pearl Academy of Fashion http://www. Hong Kong Polytechnic University. <http://economictimes. and Germany's LDT Nagold. Production and Computer Aided Design…The Academy has opened its second campus in New Delhi. R & Company. The Advisory Board of the Academy consists of leading exporters.” The Economic Times: Garments/Textiles..16 equity shares of the company for every share in City Estates was recommended by the board at the meeting. the Netherlands' Hogeschool van Amsterdam. Merchandising. 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. London College of Fashion. Modelama Exports The Pearl Academy of Fashion was set up in 1993 by Pearl Global Ltd. Mr. Deepak Seth.cms>. 7 Feb 2006. 101 Page 77 .indiatimes.com/index.
Orient Craft.. USA and Pearl Global Ltd. Richa & Co. * Student report on the student admissions process and co-curricular activities. was also present. requirements. Robert Eng. Research in India Babson College. processes. The Babson college press release: Babson College.. and stipulations of the local region in India. workshops. and procedures necessary to build an Entrepreneurial foundation and curriculum. Babson College in Wellesley. and Professor Ash Rao will present the final reports to Pearl. India. Babson’s consulting reports will include: * The general curriculum for undergraduate and graduate programs. The collaboration is designed to expand over the next seven years.. This trust is in the initial stages of developing a new. private business management institution at two campuses near New Delhi.S. The Asia Institute at Babson. and assessment standards. Bombay Dyeing. advisor to Pearl Global’s education trust. Pearl Global Ltd. * An overview of the entrepreneurship curriculum. The Pearl School for Business Studies will grant Bachelor of Business Administration and/or Masters of Business Administration degrees with a focus on entrepreneurship. traveled to Delhi. Vivek Jain. have signed a strategic collaboration on a full range of activities to promote world class research and education of entrepreneurship in India. Shoppers' Stop and Ebony. Chairman of Pearl Global and Dr. Both institutions will identify mutual exchange opportunities—on-line access to library resources. Pearl will shape this information into a comprehensive Entrepreneurship curriculum to meet the particular conditions. on New Business School: Two Form Strategic Collaboration to Promote Entrepreneurship Education. Mafatlal. RMX Joss. Executive Director. joint information sharing. Babson’s Provost. 102 From the website of Pearl Academy of Fashion. Mass. Current plans are for first classes to be admitted in the fall of 2008. Sonal Garments. Babson faculty will provide workshops for Pearl faculty and staffing. India last week for the official signing ceremony with Deepak Seth. USA. India. links to websites.’s premier business school). Page 78 . Advises Pearl Global. Michael Fetters.Benetton.—ranked #1 worldwide in Entrepreneurship Education---will advise Pearl on the strategies.—a $400 million company exporting garments to Europe and North America—has formed a non-profit educational trust. Bhupatkar. learning. among others. President of Babson’s Alumni Club in India and Chairman of DCW Ltd. Pearl Global Ltd. Ponds (India).” 102 Partnership with Babson College Pearl Global Ltd. has set up a business partnership with Babson College in Boston (U. internship facilitation. * Faculty report including Babson faculty profiles and approaches to faculty development. distance participation in projects.. and will visit regularly to monitor teaching.
Chandigarh and Lucknow. the recent fall in price makes it an attractive long-term bet.”104 XI.” Babson College in Wellesley. Kool Hearts label.“This collaboration is an important step in Babson’s journey to globalize Entrepreneurship Education..edu. 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.com/finance/equity/fullstory. a company that shares our vision to advance Entrepreneurship knowledge in India. 104 “Pearl Global bullish on Q2 numbers. growth prospect remaining high. Ltd. For information. Page 79 . “We are privileged to work with Pearl Global. <http://sify. It was difficult to obtain an interview by calling the numbers on the website. 103 Babson Newsroom Release. 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 . Pearl Global is getting into domestic retailing: “ [Pearl Global]. 24 April 2006. “According to market analysts. an interview was promptly arranged with the Chief Finance Officer. is understood to have chalked up a plan for its presence in domestic retailing. and grants MBA and custom MS and MBA degrees through the F. Babson Executive Education offers executive development programs to experienced managers worldwide.such as Jaipur. however after e-mailing the Chairman. which is setting up a joint venture manufacturing facility for soft fabrics in China to secure part of its supplies.. The interview consisted of a powerpoint presentation on the structure and capacities of Pearl Global.” 26 Oct 2005.php?id=13972072>. Babson grants BS degrees through its innovative undergraduate program. “According to industry sources.babson.” said Fetters. visit www.babson. is recognized internationally as a leader in entrepreneurial management education. <http://www3. Gurgaon. Deepak Seth. though the researcher was not able to obtain a copy without signing a confidentiality agreement.edu/Newsroom/Releases/Babson-and-Pearl.W. Mass. Olin Graduate School of Business at Babson College.103 Domestic and International Retailing In addition to the U.cfm>.S.
Gurgaon-122015. mobile: 9871496362 Corporate Office: Orient House F-8 Okhla Industrial Area. Dhingra borrowed Rs. 2343262 Fax: (+91-124) 2342042.6. but it does not contain any information beyond the heading: Orient Craft Limited: Embroidery. Haryana Tel: (+91-124) 5090800.” E-mail: orient@orientcraft. Udyog Vihar. and 105 106 First two units visited by the researcher. From an interview with the Managing Director. 13. so he could use the proceeds as seed capital. He had a friend from London who was buying from importers and selling the goods to specialty shops. Gurgaon. Managing Director. most of the information is from the interview. 7-D Maruti Industrial Complex Sector-18 Udyog Vihar.com/. 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. Gurgaon II. There is a preliminary website set up for its embroidery division at http://www. G. found some tailors to make the shirts. Khansa Road Sector 37. 110020 (India) Tel: (+91-11) 26818247. Phase-1 New Delhi. a company profile given to the researcher by the Managing Director. the largest computer embroidery facility in the Indian subcontinent. An ISO 9001-2000 Unit: “Orient Craft Embroidery Division. Founder/Chairman Personal secretary Meghna. Udyog Vihar. 68. Manicandan’s CEC report. Page 80 . Plot No. Phase IV. 26818249 Website: Orient Craft Ltd.000 shirts made in India. has no website. online business and economic articles.ocemb. BRIEF HISTORY106 Business began in 1972. Haryana 4. who asked Dhingra to get 1. I. 14-A Maruti Industrial Complex Sector-18 Udyog Vihar. 15000 ($300) from his father. Haryana105 3. ORIENT CRAFT LTD. CONTACT INFORMATION Contact Person: Sudhir Dhingra. but the company was not incorporated until 1978. 2341110 2. Gurgaon.com Production Units: 1. Unless otherwise indicated. and preliminary interviews from Gurgaon workers. Dhingra was a law graduate from Chandigarh with no experience.
CMAI. Then. During the first few years.” His father gave him one year to start up business. In the mid 1980s. he also encountered some buyers. Dhingra “is also Executive Member of the Advisory Committee of AEPC and an active member of reputed associations such as FICCI. with more than 350 modernized factories.A.niftindia.000. only now it is 136. Orient’s first factory was established in a village in Hauz Marg and it is still there. CII.A. Dhingra wanted to improve the standards of quality and infrastructure to globally competitive standards. not just in the limited Indian context. you had to be a tailor to be in the garment industry. 107 Page 81 . he was able to observe fashion trends and the kind of things that were selling. National Institute of Fashion Technology. Orient subcontracted until the early 80s. 6000 ~ $133). The first Gurgaon plant was established in 1993. Liz Claiborne sent an American technician to help Orient with worker training and modernization. with 3500 people. ASSOCHAM.”107 Biography for Sudhir Dhingra for the International Fashion Technology Forum. During his traveling. 15000 plus a small portion of the profit (Rs. not like today. And being a tailor is like being a janitor. with 1800 people. set up a pressing line on the dining table and the production line in the garage. and he rented a house.” Dhingra wanted to move production out of the village and industrialize the area and put as many skills in-house as possible. the Indian-inspired fad went away and he had to spend six to seven months traveling to get rid of inventory stock. he hired more people. May 2006. Both were wholesalers who sold to specialty stores. Dhingra states that others followed Orient Craft’s example.htm>. when he got back to India. Orient got clients by word-of-mouth from their L. as Gurgaon is the single largest manufacturing sector in India. and Germany buyers. When his friend repaid him the Rs. Then while in Germany.000 sq ft. found another buyer.shipped them to London. and restarted business with a trial order of 1200 pieces for a customer in L. yards and outsourced actual manufacturing. In the 1990s Dhingra set up a bigger plant with 100 machines. “At the time.000 sq. though he stated that it was difficult to actually get the money from the government. 200-300 people. he decided to break into the industry. he estimated a production capacity of about 150. The first plant in Maruti Industrail complex was the first plant in India that was over 80. they’re not looked up to. ft. 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. CIAE. he obtained a factory processing site of 240 sq. and set up a manufacturing plant in the late 1970s with a assistance of a government program that give 150% of exports sales as incentives to burgeoning enterprises. then consolidated supply chain into one roof.000 pieces and an annual turnover of around $40-50. and that plant is still there. During this traveling. they’re looked down upon. <http://www. and others.com/iftf. When he returned. Then after a few years.
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. 1998. Now he owns 60% of the shares. outerwear. Kohli. Express. Rocawear. ropers. and 2002.Hook. Old Navy (women’s). is looking into breaking into the domestic market. However. Ralph Lauren (Lauren. Jones of New York. and Marks & Spencer. Marks & Spencer. Polo Jeans). 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. Macy’s.G. ELM Street. Page 82 . Up until 10 years ago. Dhingra was the sole proprietor. BASIC PROFILE Legal composition of the Company Orient Craft is a privately owned company but deemed public limited. Dhingra states that Orient is the only factory in India to manufacture for Marc Jacobs and Louis Vuitton. kidswear.III. Banana Republic. Next Retail Ltd. Abercrombie & Fitch.. K. Dockers. LizSports). Lands End. sportswear. LizWear. Product Mix Areas of specialization include blouses. Tommy Hilfiger (men’s. Esprit. Awards Additional information: Orient Craft Ltd. Clients Armani Exchange. J. pants. Loft. 2000. Marc Jacob. Oasis Stores. Diane von Furstenberg. shorts. coordinates. Dillards Stores.K. Mr. Ann Taylor. Liz Claiborne (LizDresses. jackets. Orient Craft Ltd. 2001. Sudhir Dhingra (Chairman and Managing Director). Mr. women’s. J-Crew. Exports/Imports 100% exports. Calvin Klein Jeans. knitted shirts/t-shirts. Zara. The company does not do that much business with Zara and Miss Sixty (Italy). Donna Karen. because of “language and cultural differences” with the European business partners. men’s shirts. Anoop Thatai EOU Information The company has three 100% export oriented units (which can import all raw materials and trims free of duty). Orient used to source for Wal-Mart in back in 2003 but has since stopped. skirts. GAP (kids). boys’. dresses. and gave 20% to his nephew and 20% to his friend. Owners/Directors Mr. Susan Bristol. and jeans). Limited.
8-24.stm>.00 $1.8 million 16.03 0. 742 crores) Other Financials Last years profit was $8 million (40 crores).8-24.IV.” BBC News. Kaushik. 112 Overhead (mostly energy.50 $1. Breakdown of Sales Revenue109 Est USD 2006 Material Cost Labor Overhead112 Profit (target)113 82.00-6. so they can only be thought of as a rough approximation.08-0.5 million % of Sales 50-60 12-15 12-15 10 Per Garment110 $5.S. BRAND INFORMATION Orient Craft's Export Market 5% 15% U.5-99 million 19.50 $1.20-1. Page 83 .co. “Winners and losers in textile shake-up. FINANCIALS Turnover FOB USD $105 million for 2002-2003 FOB USD $118 million for 2004-2005108 FOB USD $165 million for 2005-2006 (Rs.A.8 million 19. despite more competitive pricing. 9 per unit) 113 Dhingra stated that Orient usually ends up with half of the target profit. 109 These figures were estimated by the Managing Director in the space of 5 minutes. 4 per unit. which has doubled in a year and a half-as mentioned by NITRA president-used to be Rs. 111 Average retail markup is five to six times the unit price of the garment.uk/2/hi/south_asia/4294679.12 0.02-0.00 % Retail Price111 0. <http://news.02-0. 2 March 2005. now it is Rs.20-1. Europe 80% Canada 108 Basu.02 V.03 0. 110 Based on the company’s average unit price of $10 USD.bbc.
There has not been a huge shift in the composition of customers. Dhingra stated that Orient’s average unit price is $10. Orient tends to deal in higher quality and higher unit prices and lower volumes. <http://news. There has also been an expansion of volumes and an estimated 15-17% growth in orders.uk/2/hi/south_asia/4294679. Marks & Spencer is currently direct. “Winners and losers in textile shake-up. depending on the quota category and how much they were previously restricted. 116 According to Dhingra.” BBC News.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. however used to source to them about 10 years ago. European companies pay higher unit prices). they made one skirt for Polo Blue that will retail at $1199 (did not state unit price). 115 Restarted business with Macy’s 2 years ago. the industry-wide average unit price in India is $3. however an article written for the BBC in 2005 (Basu. Some things have increased greatly.) stated that on the date of the author’s visit in 2005.50 USD (from US companies. however. Limited used to be mostly direct. Orient was manufacturing skirts that would be sold for $4 USD per piece. 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 just opened an office last year. 114 Dhingra stated that Orient manufactures 80-90% of what Diane von Furstenburg (high-end maternity clothes) sources from India. Page 84 . Kaushik.co. Dhingra states that it is easier to deal with buying offices. 2 March 2005. but they will open up their own office soon. Orient would not take a Wal-Mart order.bbc.stm>. Recently. like cotton pants.
whose samples are then sent to potential buyers.000 pieces. Production Capacity 2002-2003: 480. six in Gurgaon.htm>. (unclear if it is the same facility visited) at the cost of over $10 million USD. Orient has a display store in NY on Park Avenue that it opened up 3 yrs ago. even a little bit before.121 The average order size is 10-12. 121 According to an interview with the Managing Director. It picks up fashion from around the globe. Gurgaon. the company had only 17 production facilities spread over 600. though it does use labor contractors. ft. Orient makes 130.000 per day120 2006: In an average day.000 pieces. Orient has created a niche with their diversified product line (mostly cotton/knits or wovens. National Institute of Fashion Technology. product development became the key thing that most Western companies were looking for. and one large plant is located in Noida. Page 85 . as traveling became restricted and Indian companies needed to build a competitive advantage.niftindia.000 knitted per month 2005-2006: 720.S. 119 According to the company profile. gives feedback.000 woven per month. The second plant visited was 380. companies. which was at the time the “single largest multi-product manufacturing plant in the whole of India. May 2006. after 9/11.000 woven per month.117 Previously. 1. of which four are in Delhi. Haryana. Orient has put a lot of human resources into product development and now boasts 900 product development personnel at 5 different locations. in 2003.000 sq.VI. Khansa Road.”118 Subcontracting Orient does not appear to subcontract. As Dhingra stated. Sector 37. sometimes 25-45.000 pieces and production capacity has grown at least 25% over the past year.000 or even 100. chiffon to denims and outerwear). ft. INFRASTRUCTURE Company has 21 production facilities. Udyog Vihar.000sq. but other fabric from silk.200. and creates new designs for each season. and employed 5000 people. 13.com/iftf. 117 118 Plot No. Orient also deals in some very small volume orders for high-end buyers like Oil Lily. in and around Delhi. 120 Biography for Sudhir Dhingra for the International Fashion Technology Forum. 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. In 2003 Orient established a manufacturing complex of 340. 720. According to the company profile.000 sq. Production System Orient Craft uses an assembly line system.000 knitted per month119 2006: More than 125. ft. <http://www.
MP and some from Haryana. Approximate number of workers in all facilities Number of people employed in 2002-2003: 12. workers do not go to lunch at the same time. shirts. with very little embellishment. Manicandan’s CEC report and could vary factory to factory. WORKING CONDITIONS The workers are 80% male and since Delhi and Orient is mostly multiproduct.Quality Control The company has in-house lab testing for garments. Manicandan’s CEC report. who manufactures 80-90% jackets/ outerwear. the workers are skilled and come from a tailoring background and are usually from UP. More contract workers and women (especially thread-cutting) are in the finishing department. Bihar. Manicandan’s CEC report. which is generally equal in size to the production department.” 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. the company had 7300 sewing machines. According to G. VII.000 Machinery Orient has in-house computerized embroidery machines. Departments No information on specific departments was obtained through the interview. “most of the permanent employees are supervisors and perform high-end work such as production in-charge and finishing in-charge. washing plants and dry cleaning units. one facility’s production department. Productivity Schemes Orient uses incentive schemes to reduce absenteeism and has implemented worker welfare schemes. consisted of 12 production managers each in charge of about 250 workers (tailors and helpers) at 100 machines with 12 line supervisors. Information on work timings was taken from G.” Dhingra stated that 70% of Orient’s workforce is direct employment. According to Dhingra the “girls” in the South are operators and less skilled. The labs are equipped to test for all parameters including color fastness to light. trousers.000 in-house Number of people employed in 2006: 23. fabrics. not through a labor contractor. and trims. and since Orient produces high-end clothing with lots of embellishments. they “can’t be like Golkadas. However according to G. Page 86 . In 2002-2003.
With incentive programs for more highly skilled workers. and most people are above the minimum wage. “particularly [those] working in the Finishing department. However. Some of these contractos are R. workers are paid much less than Dhingra asserts. K. Viet Kumar & Company. the following was mentioned in a business article: “Till a year ago. 5-8. Sartrushi. semi-skilled and unskilled workers that are hired through labor contractors are paid under a piece-rate system.” Furthermore. Category Tailors Helper Trainees Contract Worker Average Wage (Rs. 3000 per month for an unskilled worker salary. probably around 8-9% and as Orient is expanding. no piecerate. according to G. They are trying to start a training school NGO with a founding member of NIFT. The payments and benefits for contract employees are given to the contractor. where workers can be trained and work for other companies if they choose to. & Company. 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./month) 2850 2344 2000 2850 Labor Turnover According to Dhingra. Dhingra stated that in the 1980s and 1990s Orient used a piece-rate system.all for the fear of Page 87 . Bonuses are given during Divali. Manicandan’s CEC report. who takes a 5% commission before paying the rest to the worker.000 per month plus ESI and PF. VIII. The payscale is adjusted twice a year according to inflation. but he makes no mention of any other incentives. Dr. the salaries average Rs. labor turnover is decreasing. the turnover for Orient Craft is fairly low. and Vasisht & Company. the company's chairman and managing director Sudhir Dhingra dreaded the idea of setting up huge factories . Recruitment Policy Orient Craft employs contract workers for at least 30% of its workforce. Worker Training Dhingra stated that all the facilities have training schools and they want to make them more formalized.Wages The average wage starts at Rs. HUMAN RESOURCE POLICIES Dhingra stated that there are common HR policies and productivity schemes across plants. 60-70% of the workers are unskilled helpers.
Punishments are given to workers without any formalized procedure. Page 88 . One woman told me.”123 According to G. But will we be ready in time?” Businessworld. <http://www. stating that he would forward the company’s code of conduct and a list of their worker committees through his personal secretary.businessworldindia. no formalized dismissal procedure. I have always been very people-centric-. Thirty years ago we employed a women who worked as a thread-cutter and got paid Rs. Since then the company started sourcing their manpower from labour contractor[s]. But the management suppressed and ousted all the workers who [were] involved in the establishment of a Trade Union. no sexual harassment committees and workers are not involved in wage negotiations or target setting.000 building a community welfare center that provides medical care for community members.000. “if someone asked me what my one single reason for success. he stated that such information was confidential and would hurt Orient’s competitive advantage. This strategy effectively stops any attempt to consolidate workers towards creating a Trade Union. According to G. now we have 23. Manicandan’s CEC report. 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. The “village panchayat said that Muslim women can’t go out…but now that they are trained. GAP gave Orient $35. However upon further inquiry. Global players are looking for India bases. Maruti Industrial Complex unit). Now she is a finishing manager and gets 123 Rajshekar.” Worker Committees/Grievance Policy/Dismissal Procedure Dhingra was reluctant to give specific information regarding worker committees in person. sometimes more than their husbands. According to Dhingra.000 and Orient spent $20. “Preparing for 2005: Dressing up for the party.com/apr0504/coverstory01. Clusters are reinventing themselves. Although Dhingra stressed how this was all for the benefit of the women and the community.it’s not just about the bottom line. 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. Some of our workers are second-generation workers. it would be people. 400 per month. “around five years ago there was an attempt to establish a trade union (at the 7-D. Sector-18. Orient also helped train 300 women from the nearby village in hand embroidery at international standards. Orient had no worker committees at the facility visited. Manicandan’s CEC report. and that Orient pays in full for the schooling of female children of workers and for 65% of the schooling of male children. and if a manager finds a worker guilty of an infraction. ten years ago we had 5000 people. M. Twenty years ago we had over 1000 workers. There is no grievance policy procedure in place for complains against workers or management.[worker] strikes.asp>.’” They built a four story structure to house the embroidery tailors. workers are fired with no redress. they feel very proud to bring in income. it’s about what we can do for the community. and Surendar. T. ‘my husband doesn’t beat me anymore.
we only have 23. We have created great recreational areas for workers and middle management by building great cafeterias. “they have 100. since Orient Craft products tend to be high-fashion. “India is still not good at producing fall fabrics. Macy’s. 50.” They started up home furnishing about three and a half years ago. Besides being compliant by the current standards. White Co.000 per month. he wants to extend the length of time it takes to become a permanent employee to 12 months. Marks & Spencers.” 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. Seasonality is an issue. as Orient usually doesn’t have as many orders May through August. Pottery Barn. It is the soul of our company. but Orient has taken up some holiday decoration work. which includes a more complex manufacturing process. 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. such as home furnishing. IX. and Orient needs to do competitive pricing to stay in the game and Page 89 .000 people. Dhingra wants increased flexibilization otherwise it is more difficult to expand and it hurts business.000). comfort. which eases strain some as well as the other diversification of profits. Specifically. Dhingra stated there are companies who do $1 billion (mentioned China and Lian Thai from Hong Kong. highly tailored outfits with additional embellishments like embroidery and special washes. Home furnishings is still smallish industry and comprises about $15-17 million of Orient’s sales. 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. Labor flexibility is also an issue. in-house fully functional gym and an Executive Club. Donna Karan. and her son is working here… I have always thought about social welfare. for Bed Bath and Beyond. They started producing denim products 5-6 years ago and just started manufacturing men’s suits at a plant for Liz Claiborne and Express. and ease of working. According to the company website: The new complex is designed to create a very worker and management friendly environment in terms of esthetics. Although happy about Orient’s success.
and aims to increase it to over 40 lakh units after the expansion.” Industrial Economist: Textiles Report. near Gurgaon…Levi’s was looking for a buyer due to high maintenance and labour costs in Spain. it is important to have machinery comparing to global standards. India’s lack of worldclass machinery producers domestically has seen a lot of companies look to the West for help.” Times News Network. The company has since then stripped the Spain unit of its machinery and fitted them in its plant here at Gurgaon. India is in an advantageous position.indeconomist. INDUSTRY COMMENTS Orient recently bought a Levi’s plant in Spain for its technology. as they need to grow the base of buyers and price is a compelling reason to do that.124 The machinery from the newly acquired plant will form part of the company’s expansion plan at Manesar. Kumar. Bangladesh and Pakistan. However. India.00. From business articles: The company… acquired a Levis unit in Spain in mid 2005 for Rs 60 crore (approximately 13. The expansion plan envisages setting up of two new facilities at Manesar.5%. (despite quota regulations) and India adds to a minuscule 1. 16 September 2005. Mr Dhingra estimates the annual turnover to be in the excess of Rs 800 crore.indiatimes. Ironically it is the same Indian companies who are buying the units for their machines. PTI Economic Service.cms>. Page 90 . The company expects the expansion plans to boost its revenue generation.bring in buyers. 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. In the changed business scenario. 125 Jha. of which China contributes one-sixth. <http://economictimes. As of now. Orient has 20 production units spread across Gurgaon. The company’s deal with Levi’s is the second such significant international venture.3 million dollar)…Orient Craft by its own admission acquired the unit because of its superior machinery content. buyers are getting increasingly quality conscious. At present.com/30thjune06p4. “Garment exporter Orient Craft buys Levi’s plant in Spain for Rs 60 cr. Earlier. the garment industry presently stands at approximately Rs 15. <http://www. “The lifting of quota has brought humongous demands on one side and on the other.curpg-1. X.125 124 Dipankar.com/articleshow/msid-1232753. Mayur Shekhar. Orient Craft manufactures and exports about 30 lakh units of garment every month. Since the quota system has been reimposed on China.” said Mr Dhingra. growing by over onefourth from last year. “Indian textile companies on acquisition spree.000 crore. The company’s management is also planning to raise an IPO later this year. Orient came up on the global radar when it started its first overseas facility in New York two years ago. the textile industry in India still has a long way to go before it can catch up with Chinese volumes.htm>. World over. Noida and Okhla in Delhi.
heat.S. that’s 200 million people. Financial Daily from THE HINDU group of publications. and every day a new one is opening up—there’s space available in Karol Bagh. according to Sudhir Dhingra. Now there are 500. Why would people go through rain. lagging behind US and Europe. Rajasekhara Reddy.Though most people in India. SBC is the buying arm of Kashiama. the exclusive Japan licensee of some well known international textile brands including Calvin Klein. told ET. DKNY and Ralph Lauren. “The tie up with SBC will give us a good foot hold in the Japanese market.126 Orient Craft… has entered into an outsourcing arrangement with Sumukin Bussan (SBC). said the company was "welcome" to set up the SEZ.” The Hindu Business Line Internet Edition. The SEZ is likely to come up on a 300-acre plot with an estimated investment of Rs 2. 25 November 2005.Emerging opportunities and the road ahead' here on Thursday. "The SEZ will house up to 50 companies. at present Japan is a relatively smaller market. probably about 80-90% still get clothes from tailors. delivering the inaugural address. So the spending power is in India. Banswala Mills. <http://www. Dr Y. However. The deal is likely to be signed later this month. 126 “Orient Craft plans SEZ for garment units in AP." Mr Sudhir Dhingra. only about 60-70 million have disposable income. He announced the company would be given 10 acres of land at Nacharam to set up a garment manufacturing unit. the Andhra Pradesh Chief Minister. “An increasing number of Japanese buyers are looking at Indian export houses for their sourcing requirements.htm>. That’s more than the people who spend in the U. which plans to source $1-1. the company’s MD.000 crore.” For Orient Craft. Page 91 . population spend.com/2005/11/25/stories/2005112502590900. the market will contribute a significant share of Orient Craft’s overall business pie. As per the arrangement. we aim at scaling our Japanese business up to $30-40m. retail will explode…People say that Indians don’t have disposable income.blonnet. but best linens) are setting up facilities in India and selling back in Europe. In the next couple of years.5m worth of textile products in the next couple of years. dirt. we ourselves are looking at buying 2-3 lakh pieces from India.” Italian and French mills are setting up joint ventures in India. there were only three shopping malls. if there is a mall…Real estate is growing. etc. Chairman and Managing Director of the company. a leading Japanese buying house. where there are higher labor costs.S. which is a joint venture of Caramin (France) and Bairb McNutt (Ireland. SBC. Yoshiaki Kamiyama. Orient Craft will be the exclusive suppliers from India to SBC. Orient is considering getting into the domestic market now. In 2-3 years. Earlier. the ready-to-wear demand in India is growing.” he said.S. consultant. “Three years ago. From business articles: Orient Craft Ltd plans to develop an exclusive special economic zone (SEZ) for garment units in Andhra Pradesh. if even 5% are rich and 15% have disposable income.— only about 30% of the U. told reporters on the sidelines of the CII conference on `Textiles forum . but look how large the population is—out of one billion.
127 The biggest Chinese firms have a turnover of $800 million-1.Depending on the volume of the orders. Till a year ago. 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. His personal secretary was not useful in obtaining any information. 127 “Orient Craft ties up with Japanese co. China is the largest exporter to Japan. Meru Exports and Richa Exports of Delhi. PERSONAL EXPERIENCE Orient Craft does not have a website.128 XI. Orient Craft manufactures and exports about 30 lakh units of garment every month. India lags in technology.businessworldindia. Times News Network. Global players are looking for India bases. Bangladesh churns out as many garments as India from a fifth as many factories. Clearly. to cater to new deals in the pipeline." Orient Craft and Fabric & Fibres are among a few who have been pulling ahead of the pack. Thailand does almost the same business as India with a workforce a third the size. 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. Others include Gokaldas Exports of Bangalore. and Surendar. which made finding up to date contact information difficult. At present the Indian textile exports to Japan add up to $296m which is just about 1% of the country’s total textile imports. skill-intensive manufacturing could be a way to compete. The turnovers of these exporters range from Rs 100 crore to Rs 250 crore. which it may have to take up to over 40 lakh units. is India's largest garments exporter. <http://economictimes. the company's chairman and managing director Sudhir Dhingra dreaded the idea of setting up huge factories . 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.200 million . Most are family-run. Current contact information was finally obtained through a Professor at NIFT. India's biggest exporter Orient Craft has also begun to realise that. However. Says Orient Craft's executive director Anoop Dhanda: "For the next few years.indiatimes.000 people. we will have to invest in new capacity every year if we have to keep pace with the industry. But will we be ready in time?” Businessworld. Dhingra was fairly open in his responses. the company may go for a specific capacity expansion.all for the fear of strikes. The centrally air-conditioned facility will combine all the stages of garment manufacturing. But what distinguishes them is a relatively larger scale. claiming more than three-fourth of the pie. Today he is spending Rs 40 crore on a new factory in Gurgaon that would employ 2. Page 92 . M. “Preparing for 2005: Dressing up for the party. 20 April 2006. 128 Rajshekar.com/articleshow/1496902. which.cms>. and smart use of technology.” The Economic Times: Garments Textiles. <http://www. Like most other economies. T. at Rs 450 crore of revenues.about 10 times the size of the Delhi-based Orient Craft. design to finishing. and Dhingra was surprisingly available for an interview.com/apr0504/coverstory01. Clusters are reinventing themselves. and Shahi Exports.asp>. productivity and scale.