This action might not be possible to undo. Are you sure you want to continue?
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
and others do not disclose financial information beyond approximations of annual turnover and production capacity. Shahi Exports Pvt. though it proved best to limit the amount of e-mail communication. and Third Eyesight (an industry consulting agency).” a CEC report submitted by G. Public limited companies like Pearl Global Ltd. Manicandan. while asking the same question in person would yield a response.) were identified using “Mapping First Tier Suppliers in Garment Industry in Delhi. Government of India). Asking a question via e-mail often yielded claims of confidentiality. Ministry of Textiles). others self-report to financial databases. India context. Obtaining the phone number from the agency website and directly calling was the simplest way of setting up interviews. the Apparel Export Promotions Council (AEPC). the National Institute of Fashion Technology (NIFT. E-mail was also used to a large extent to set up meetings..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. linked to the Ministry of Textiles. Methodology Preliminary research was conducted on the internet.. Managers at six companies and four agencies gave interviews. Pearl Global Ltd.. display their financial information on the company website. If an interview cannot be conducted in person. an interview by telephone would be far more likely to be successful than an information Page 3 . It is advisable not to send questions via e-mail. These are the Northern India Textile Research Association (NITRA. the Registrar of Companies (ROC. Company G of Group R. 3) To develop corporate research strategies specific to the Delhi. Four of the six companies profiled and all of the agencies have individual websites. A management survey was developed using the framework of surveys used in other geographic contexts and updated on the basis of preliminary interviews. 2) To identify correlations between labor conditions and businesses characteristics. Ltd. Online searches yielded some kind of press release or interview for each entity except for Jyoti Apparels. Several other agencies that are major players in the export garment industry were identified and profiled by the researcher. linked to the Ministry of Textiles). Orient Crafts Ltd. Five companies (Modelama Exports Ltd. although some were out of date. The sixth company was identified by the researcher through an interview with a representative of the Indian Apparel Export Promotions Council (AEPC). Contact information was available on websites. Interviews were obtained in a variety of ways.
which typifies management attitude both towards women and unions: Researcher: Why are your workers mostly female? Are there significant differences in productivity? Manager: No. men together tend to form groups and lobbies because they have spare time. The purpose of this research was to obtain information about companies from a management perspective. no telephone interviews were conducted in this survey. ladies are more focused on work. Just. or productivity schemes. Information on these companies was obtained primarily from top-down management sources. Ltd. Researcher: I don’t understand. What groups? Manager: Oh. and as such may be misleading as to actual conditions. It was not e-mailed to any of the managers. easier to control. Researcher: Did you have problems with employing males in the past? Manager: No—no. and NIFT gave updated contact information for Shahi Exports Pvt. context and was integral in order to obtain information. but off the record. Also. without which interviews would not have been possible. 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. 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. however. no significant differences in productivity. The attitude and openness of those interviewed are subjectively recorded in the individual profiles. Furthermore. as it was not possible in many cases to conduct follow-up visits.request by e-mail would. Questionnaire Used by the Researcher The following questionnaire was handwritten in shorthand and brought to the scheduled interviews as notes. I’ll tell you. The agencies profiled were primarily interviewed before the export houses. However. and used to establish industry contacts. An interview with an anonymous manager produced the following conversation. time constraints would not permit cross-checking all information with workers and officers at each company. Managers were surprisingly open in some cases. going as far as to hand over Standard Operating Procedures. and Orient Craft Ltd. industrial accidents record.S. They’re more docile. even though such a one-sided perspective may not reflect the reality of the situation. The AEPC was instrumental in identifying Jyoti Apparels as a top tier supplier. I don’t think they ever employed males… Limitations Time constraints limited the consistency and thoroughness of company information.. and one experience ePage 4 . Women are easier to handle. while others would refuse to state the number of workers in the manufacturing unit. all interviews were in person.
vol of product. U. total sales. However. since a conversational approach proved to yield the most information. I’ve heard of collegiate licensing that would provide steady orders from major brands at higher prices. DSP questions. Ownership of Company. they often had information regarding each of these areas. specialty (GAP). package. What kind of input— CMT. how fast company delivers products to brand Kinds of buyers—importers.. 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. where. sourcing. if such a program were introduced would be willing to participate if increase wages and committed to labor rights and worker representation?) Problems with seasonality? Manufacture winter clothes? How have vendors changed post-MFA? Have you taken price cuts? Which products? Larger volumes? Different buyers? Deepened relationship? Middlemen? Who are the company’s competitors? Are subcontractors involved and if so at what stages? Which factories/companies? What are the size and scale of these operations? Has this changed post-quota phase out? What effect does the company believe the quota phase-out will have on turnover and the industry in general? Page 5 . The questionnaire was used only as a guide in the interviews as a reminder of what kind of information was needed. The survey questions were divided into sections according to the position of the respondent. as there are some questions that an HR manager would know more than a Merchandising Agent. get order. no input--or more capable. Name. discount retailers (Wal-Mart). CMT.Incorporation of Company) What is the shareholding and ownership makeup of the company? What plans for expansion? Do they cater to domestic market or only export? What share of turnover/sales/production is export? Markets—who. 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. EU? Major foreign brands that the company supplies to: length of relationship.S. deliver? Does the company ever have problems with contracts and/or steady orders? (if possible. etc? What products do you manufacture? How many factory locations does the company have? Size and scale? Addresses? Does it have objectives on which it was founded? Articles and Memorandum of Association (Objectives. and Responsibilities of Respondent: Number of Years in the Company: General Upper Management Do you have a brochure saying what products.mailing questions proved fruitless in gathering information. if only a higher level manager could be reached. help design.
men. Have there been any attempts at unionization in the past? What is the company’s attitude toward unionization? Page 6 . semi skilled. total value of exports. etc.Have they used outside agencies in developing any part of their strategies? Part of AEPC. finishers. codes of conduct. supervisors. 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. standing orders. unskilled). Sexual Harassment Committee. Quality Circle? If yes. subcontracting. cutters. what do these forums do? Get any documents willing to give at any point. who are the members and how are cases handled? Give details. Productivity Committee. how long they have stayed in company Are workers in any way involved in wage negotiation or target setting? Target setting-prod planning mtgs? How many years of experience do the workers need to have in ordered to be hired at your company? What is the usual turnover of employees? How do you fill vacancies? Do you use recruiting agencies? Are all employees in the company given a letter of contract? If yes. can you give a sample of the contract letter? Is there a procedure for workers to complain about supervisors/management? Are there programs or committees to minimize conflict and improve morale of workers? i. Grievance Committee.e. 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. 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. helpers. pressmen. labor cost. NITRA. washers. 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. overhead. Shopfloor Committee. tailors (skilled. material cost. etc. what is displayed to workers on details of employment. trainees. How many women.
Is there a personnel ‘code of conduct’? Is this a company policy or vendor policy? How are these communicated to workers? What employers are covered by: (i) ESI (Employee State Insurance) (ii) PF (Provident Fund) (iii) Gratuity (iv) Maternity benefits (specify) What are the details of employment that are displayed / notified to workers? (i) minimum wage (ii) ESI/PF/Gratuity? What is the average overtime payment to all employees? (i) overtime per month (ii) overtime as a percentage of total wages (iii) rate of overtime payment Ask about industrial accidents, if there is a doctor available, how often, rotate between factories, what is the most common injury, what kinds of safety equipment What is your approach in HR and Productivity/Efficiency? (Get policy document) Do you involve outside agencies in your HR strategies? Do you have common policies across your plants? What are the typical causes of punishment of employees? What are the types of punishment given? (wage cuts/extra work/asked to go home?) Is there a procedure followed for dismissal of employees? Who initiates the procedure? Is the employee given a hearing? Give details? Do you have a legal officer in the company? Do you have an Industrial Relations policy? (any written documents?) What are two or three main things holding business back? production, labor situation, training , quality control, etc. What are you doing to solve this? HR/Production Manager: Get any documents willing to give on productivity schemes, time-study worksheets, productivity numbers, structure of lines, how many supervisors, etc What is your approach in HR and Productivity/Efficiency? (Get policy document) Could you give me a sense of the floor layout of a typical factory; what kind of technology and planning has gone into the factories? What are the different departments? (Floor chart) Department # Workers # Men # Women # Machines What are parts of a Line? Is it an assembly line? How much time does an item take from the beginning to the end of a line? How many supervisors are there on the Line? Is there a productivity scheme in your company? If yes, when was it introduced? What categories of workers are covered? Are workers in any way involved in target setting? Prod planning? How much time does a worker take to achieve the desired productivity? What kinds of productivity schemes? Teams? Line supervisors? How come up with time studies? How conveyed? What have been the benefits from the productivity scheme in terms of (i) increase in productivity (ii) reductions in waste (iii) any others? Does the productivity scheme give incentives to workers? If yes, give details based on category, average incentive, and maximum incentive. How make workers more productive?
What are the typical causes of punishment of employees? What are the types of punishment given? (wage cuts/extra work/asked to go home?) Is there a procedure followed for dismissal of employees? Who initiates the procedure? Is the employee given a hearing? Give details? Has the company ever consulted industrial engineers to design the factory? What was productivity output before and after the consultation? What are the quality check points that the buyer requires? Does the company management have other quality checks? How have they used technology and state of the art equipment to improve quality? What are two or three main things holding business back? production, labor situation, training, quality control, etc. What are you doing to solve this? Types of Sources (other than management interviews) To obtain much of the initial company information, the researcher performed internet searches for the company names, and several common business periodicals showed up several times including: Apparel Resources http://www.apparelresources.com http://www.ittimes.co.kr/ The Economic Times http://economictimes.indiatimes.com/ http://www.sify.com http://www.businessworldindia.com/ http://www.indeconomist.com/ The Hindu Business Line Internet Edition, Financial Daily http://www.blonnet.com/ Most of the companies profiled had company websites, except for Jyoti Apparels and Orient Craft. Once interviewed, the companies typically gave company profiles that they use for potential buyers, which contain information about the composition of the company, the types of clothing it manufactures, production capacity, turnover, and major clients. The agencies profiled, especially the AEPC and NIFT, were vital in obtaining information that would lead to interviews, identification of major players, and important industry resources. Third Eyesight has links to industry-related articles at http://www.3isite.com/index.htm. Although the researcher was not able to research the following sources further, some were featured at an international garment fair and others are commonly used as industry resources for financials: CMAI (www.cmai.info, email@example.com), EBSCO CRIS, INFAC (intranet and internet), INSIGHT, CMIE, RMS, IAS, INDIASTAT, IRA. Information In Company Profiles Contact information includes addresses of known production sites, contact persons, website, and e-mail. Brief history includes relevant information regarding the establishment and incorporation of the company. Basic profile includes the legal composition of the company, export oriented unit information, the breakup of exports and imports of the company (100% exports for all the companies profiled in this report), the product mix, clients, and awards of the company.
Financials section includes the turnover and whatever other financial information could be obtained on the company. Brand information section includes major clients, length of relationship and percentage of turnover, direct or buying agency clients, and unit prices. Infrastructure section includes subcontracting information, the type of production system (all assembly line units), production capacity, the design/sampling department, quality control, specific departmental information, and productivity schemes. Working conditions section includes timings of work, wages, wage-setting procedures, benefits, overtime information, and labor turnover. Human Resource policies section includes management structure, worker training information, recruitment policy, dismissal procedure, union information, worker committee information, grievance policy procedure, corporate social responsibility schemes, codes of conduct, worker medical care information, and security system information. Business bottlenecks section includes whatever setbacks or problems that managers perceive as holding back business. Industry comments section includes strategy, predictions, and other relevant information regarding the growth of the company, its views on the industry as a whole, strategies for expansion, etc. Personal experience section includes miscellaneous description regarding the researcher’s views of the company and its managers and the ability to get an interview.
in Nehru Stadium. Since Pearl Global is a public limited company.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. These offices function as registry of records.in/ROC_2003. they must submit several forms at incorporation and annually.. Form 18. Companies are required to register new events such as a change of directors with the ROC.nic. The Central Government exercises administrative control over these offices through the respective Regional Directors. Website of the Ministry of Company Affairs: http://www. New Delhi – 110003 E-Mail: rocjln. Form 20 gets the Director a Director’s Identification number (the number used on the mca. Form 32. CGO Complex. which is not true for privately owned companies. relating to the companies registered with them.htm : Delhi & Haryana Regional Director: Dr. the office at Nehru Stadium closed down earlier in the year.CHAPTER TWO AGENCY PROFILES 1. Lodhi Road. which are available for inspection by members of public on payment of the prescribed fee. Form 29 for Pearl Global makes it a public limited company. Such forms include: Form 1. The addresses of each state’s ROC as of 2003 can be found at http://dca.gov website to access the public disclosure documents). the details of the board of directors/management structure. According to an interview with the Company Secretary of Pearl Global Ltd.in However.sb@sb. the compliance of companies firstname.lastname@example.org.The financials publicly available include the annual return and balance (for all companies). in order for a company to be registered with the ROC.mca. Page 10 .nic. the address of the registered office and the locations of the business. REGISTRAR OF COMPANIES (ROC) The Registrar of Companies is a division of the Indian government’s Ministry of Textiles. the profit and loss are also publicly available.nic. Navrang Saini Addresses: B-Block Paryavaran Bhawan. New Delhi 110003 Phone: 011-24362708 Fax: 011-24364570 E-Mail: rocdel.
Page 11 . The researcher attempted to take notes by laptop. As such. photocopying the documents in the file is not permitted unless a fee for a legal copy is paid. of a newly incorporated company detailing the scope of its operations). the process of obtaining public documents. it was not permitted either. etc. was difficult and did not yield a lot of useful information. but several did not have up-to-date financial or structural information. Information must be copied into a notebook by pencil (pens are not allowed). Furthermore. Documents are publicly available after submitting a form requesting a release of information along with a small fee for each company.The ROC in Delhi is in a process of transitioning to an electronic format of filekeeping. Not only were entire company files missing. such as financial information and company Articles and Memorandum of Association (objectives. and though there is no formalized rule against this.
Founder and Director of Third Eyesight A-847. 4112494. food & grocery.Assistance in development of global sourcing strategy and action plan. THIRD EYESIGHT (INDUSTRY CONSULTING AGENCY) Contact person: Mr. 4112495 Fax: +91 (124) 2577586 Cell: +91 98111 03494 Email: devangshu. Sushant Lok-I. competitive and regulatory information. During his career Devangshu has performed the roles of an entrepreneur. Benchmarking against global supply chain and product development best practices. 2nd Floor.Strategic assessment of India – insights for a global senior management team to gain a realistic picture of the opportunities and the challenges in India. trainer and teacher. as part of the team that launched the JV. Gurgaon .com Website: www.122 002 INDIA Tel: +91 (124) 4112493.development of India strategy and preliminary business plan including market analysis. over the last 16 years. * International multi-billion dollar apparel brand . Thereafter. home. * Global fibre and chemicals company .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.strategic inputs for Asia-Pacific top management team to identify emerging opportunities in the Indian textile supply chain * Leading UK Retailer . health. * One of the largest global home products retailers . and returned to India to his position as General Manager of the Indian business. Support in implementing changes in sourcing strategy and organisation. assistance in assessment of Indian supply base Page 12 . Devangshu Dutta. assistance in formulating strategy and developing partnerships with International retailers and brands. advisor. new business start-up and operations projects with Indian and international clients.2.3isite. He then joined a start-up consulting firm and was instrumental during its growth into a multinational consulting firm's joint venture in India. in marketing and distribution. he co-founded a fashion sourcing company in which he remains a shareholder. manager. Devangshu began his career with the then-leading Indian national retail chain in buying & merchandising and in store operations. He subsequently worked with an international retailer's joint-venture in India. dining etc. Third Eyesight and its team of associates & professionals have worked on a variety of business strategy. and product analysis. He was also based in the European practice of this multi-national consulting firm. Third Eyesight's project teams consist of professionals who have hands-on experience in various aspects of retail and consumer products businesses.dutta@3isite. The following are brief descriptions of some of the projects on which Third Eyesight's professionals have worked. * Diversified Indian consumer and industrial products conglomerate .Carrying out sectoral market studies in retail. including fashion.
Comprehensive comparative study of 7 cities in India and outside to choose location of new garment manufacturing plant * Leading Turkish supplier . Mr. The government thus limited how much you could produce under the reasoning that overcapacity would lead to inefficient use of capita.org). reserves certain sectors for small units. The investment cap was very low.* Multi-billion dollar Indian consumer goods conglomerate . According to him. * One of the largest Indian textile and garment companies . development and delivery of sales & marketing collateral for three consecutive seasons.Assistance in formulating strategy and developing business with global customers for exports. Gave history of market structure in India. which continues to regulate knit-fabrics.K. Much of the fragmentation of companies was really only on paper. The small-scale reservation system.Business planning for new brand acquisition. Content of Interview (5 July 2006) with Director of Third Eyesight: Asked about study. Business strategy and plan for current business. * Pioneer luxury brand house in India .org) Advised researcher to contact faculty of the management studies department. Matrix. Initially. and assistance in seeking new capital infusion. Pradeep Joshi. Since the garment industry is extremely labor intensive. Mr. Page 13 . labor laws also limited the ability of companies to expand. it was a licensed economy in which you needed to get government clearance to manufacture in specific capacities. 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. who would be able to help schedule company interviews. and the result of this was that a successful company was prevented from expansion. Sibichan Matthew. This is partially why many of the current successful companies (such as Richa Global) are split up into many different companies. Mentioned another apparent Tier 1 (said they are large and source directly to MNCs).Formulating strategy and assistance in strategic alliance proposal to key European customer. The other reasons for company fragmentation are the nature of quota system and labor laws. this model was phased out. Also told the researcher to contact faculty of Pearl Academy of Fashion. The quota system obliged companies to set up under different names. as you needed approval from the state government if you were operating a place of business with more than a hundred workers. The name is on the WRC disclosure list. and you cannot have large units. you need a separate registration and thus it is easier to simply export (used to be tax-free). Directed researcher to online industry magazine resource (Website: apparelresources. Batra. who could then direct me to industry management: Dr. * Indian subsidiary of one of the largest sports apparel and footwear brands – Design. In the early 90s. D. (Website: niftindia. gave contact information for the National Institute of Fashion Technology in Hauz-Khas.
material. but more menswear). money is instead wasted on an inefficient process. wherein the buyer.one hundred workers is nothing. He said that Delhi is doing extremely well in terms of business and is the largest in terms of exports. the investment returned. He expressed hope that soon the labor laws would relax some to reflect changing needs of business. it would increase unit prices. economic source. he said. effort. but would be greatly minimized). investment in the industry slowed down. this changed somewhat. The current model has self-contained worlds instead of cooperation. so all the businesses had to pay was labor and overhead. However. gets quotes from suppliers. He began to talk about sourcing. Bangalore (roughly equal. he said that Indian companies were extremely uncertain about the effects of the MFA phase-out. the supplier makes the product. the MNC may like it or require additional changes. From a piecemeal view. how the current transactional model is very inefficient insofar as buyer-supplier cooperation goes.” Furthermore. The MNC gives product specs. the product is re-done. but that the outlook of the management may be more pessimistic than Tirupur. couldn’t see name). etc. Because of this. Although he expressed the belief that a market economy cannot compete with a controlled economy like China in that the Chinese government built factories and infrastructure. as it was clear that Indian businesses were gaining from the phase-out and smaller countries like Bangladesh were losing instead. He mentioned that Delhi (mostly womenswear) is only one side of the big picture. He stated that “the inconvenience of a labor inspector” pestering and harassing company management was a minor price to pay for business expansion. doesn’t communicate with the designer. ships a sample. that they were too “over-exposed in China.” however that had mostly been talk and no action. as the companies began to listen to the needs of buyers and in 2005. he made it clear that somehow they were competing because of their “ability to develop and deliver product. worrying that Indian business could not compete with China. and as such is seen as a big risk and many are reluctant to actually work on establishing these relationships. the quotas had restrained India far more than China (showed a graph from a U. He then mentioned that “strategic sourcing” would be much more beneficial to the market. for example. and that Chennai (mostly menswear). which has worse infrastructure but is nevertheless optimistic about business. saying that the industry had often talked of diversifying.S. since vendors and suppliers both may have had bad business experiences when attempting to do the same. strategic sourcing is dramatically different from the current widespread transaction model. and rather than cultivate a relationship in which the supplier provides input and designs according to a long-standing relationship. but in the strategic long-run. total costs would go down because the current transactional model wastes a lot of time.. and money (wastes that would not be eliminated by greater cooperation. In 2004. whereby long-term relationships are cultivated. then privatized factories. From 2001-2004. and Tirupur (mostly jersey knits) all have different cultures. He began to describe the different ways of sourcing. Page 14 .
Amersey (M/s Milton’s Ltd. B. Gen. Ltd. Garment Exporters Association. Clothing Manufacturers Association of India.3. Mogrelia (M/s Zoro Garments Pvt. Mr. to send trade delegations and missions to foreign countries as well as to survey export potential of readymade garments from the country. Bombay and Garments Exporters Association. Gurgaon 122003 Contact Person: Mr. (3) To appoint representative. Secretary. Ramadorai (Chief Executive.K. New Delhi).. P. to undertake marketing in individual foreign markets. Institutional Area.L. S. Clothing Mfrs. Madras). New Delhi) Ex-president. to develop new designs and patterns of garments. Calcutta). Assn. Mr. of India. New Delhi) President. Secretary General of AEPC Mobile: 98-9912-4555 Website: http://www.. Mr. Garments Exporters Association. to find out the tariff and other restrictive practices of importing countries. (2) To undertake all export promotion measures. agents or correspondents in foreign markets for the purpose of continuously and regularly reporting the markets prices. Singh (M/s Singh Export Corporation. Assn.com/ The AEPC was originally incorporated in 1978 as the Apparels Export Promotion Council and re-incorporated in 1984 as the Apparel Export Promotion Council. of India. but now as the garment industry has reached a stature and maturity and has achieved the target of 250 crores. Assan. 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. advance. New Delhi took a lead in this matter and formed a special ad-hoc committee of the following Members: Mr. N. Ltd. Clothing Mfrs.aepcindia.F. Two leading organisations of readymade garments. quota distribution and allocation.P. Vijay Mehta (M/s Intercraft Pvt. N. of India. develop export of all types of readymade garments. According to the Articles and Memorandum of Association: Up till now Cotton Textiles Export Promotion Council was handling the export promotion work of garments. Shah (M/s Hiralal Gulabchand. Mr. Ltd. excluding. APPAREL EXPORT PROMOTIONS COUNCIL (AEPC) Office: Apparel House. increase. Mr. Bombay) President. Banthia (M/s Magnum Enterprises. M/s Handloom and Handicrafts Export Corporation. B. Smt. particularly to undertake market research. Bombay) Vice-President. woollen knitwear and garments of leather. Clothing Mfrs. (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 .. Bombay) Hon. Premila Wagle (M/s Paville Fashions Pvt.N. KK Jalan.. Sector 44. to find out the product range and export prices of garments of other countries. jute and hemp. Mr. market preferences and latest fashions and designs prevalent in the foreign countries. The main objectives of the AEPC are as follows: (1) To promote.
He stated that over the industry as a whole. rules and procedures. (7) To undertake training of workers and technical personnel. to improve the skill of workers engaged in garment manufacturing in India and to assist in the technological base of the garment industry. (6) To establish design centres. address. as well as the names. Content of interview (7 July 2006) with the Secretary General of the AEPC: The main issues in the garment industry are labor and infrastructure. • secondly Bangalore. He stated that the government needs to increase labor flexibility. to improve the qualities and standards of the fabrics and garments by importing technical know how. generation of production for exports. action plans for promotion of exports. AEPC focuses on three things: • marketing help. import licence facilities provided and how to apply for the facilities. and lastly Tirupur. to evolve improved design and patterns and garments suitable for export. especially. and description of subscribers. garment businesses do not have orders. unit prices have remained stable pre and post quota phase-out. its strengths being better infrastructure. to 200 days. its strengths being higher levels of worker productivity. to encourage export production of quality garments and to undertake necessary research in fashions. Page 16 . and its specialization in better embroidery and the “India look” (ethnicwear heavy with embellishments and more complex work). A specific AEPC goal is to get the government to change the law that states that workers are permanent employees after 100 days. He said the three biggest centers for garment production were • firstly Delhi. traders and exporters of garments. For three months of the year. in the Small Scale Sector by giving assistance in the matter of understanding and implementation of the drawback. he stated. (5) To assist members. • help with training and productivity (14 training institutes). (8) To obtain from members of the Council and to prepare for the Council as a whole. specializing in knitwear. development of export markets. designs and techniques and to encourage manufacture of garments for exports. so that businesses who do not get orders during the winter are not hurt by the cost of labor.for the purpose of continuously and regularly reporting to manufacturers. setting of export targets generally and in relation to specific countries and commodities on an annual basis and for such medium and longer terms as may be considered desirable and to ensure/undertake execution of such plans. so that workers can be more easily fired and hired. and • raw material supply (both indigenous and imported). NCR region. 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). otherwise productivity will remain stagnant and labor costs will remain high. • lobbying to government to change laws regarding labor and infrastructure (and whatever other business bottlenecks there are).
• a foreign consultant agency Method Workshop (main consultant Roger Thomas). • Creative Group (Mumbai). Page 17 . • Texports (Mumbai). These businesses have succeeded through a number of different strategies. and • the Eastmen Group (Tirupur). • Modelama (Delhi). • SPL Industries (Delhi). He mentioned several notable resources. • Golkadas Exports (Bangalore). as it is self-reported. • Golkadas Images (Bangalore). • Richa Global (Delhi). and • the Cotton Textile Export Promotion Council. • Centwin Group (Tirupur).He listed the top ten Indian garment factories as • Shahi Exports (Delhi). with a common thread of individual attention to quality control and productivity by hiring consultants and building better facilities. The researcher purchased the newest book of statistics on industry level data that the AEPC had (2003) and a directory of garment exporters. • Gurgi (“biggest industry consultant”—saw this name in the fabric stores in Jyoti Apparels). The AEPC did not have company specific financial data. including • an HR training institute-KSA Technopack.
besides conducting regular professional undergraduate and postgraduate programmes in Design. which have been developed in consultation with reputed academicians [sic] and industry practitioners. and avail of facilities like laboratories with state-of-the-art equipment. Extn:306 Contact Person: Professor Rajesh Bheda. practitioners. Chennai.niftindia. 26965059. also offers short duration part time courses under Continuing Education (CE).4. 26965080. 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. These programmes reflect the requirements and Page 18 . Hauz Khas Near Gulmohar Park. 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. and diverse faculty expertise. Bangalore. Resource Centres. The centres are professionally managed platforms of the world’s finest design expertise. NATIONAL INSTITUTE OF FASHION TECHNOLOGY (NIFT) Ministry of Textiles. NIFT is acknowledged as the premier institute of fashion design. Extn:306 Fax: 91-11-26851198 Mobile: 9810154829 E-mail: rajeshbheda@gmail. (Gauri Kumar. Continuing Education (CE) Programmes: National Institute of Fashion Technology. 26965059. Department of Fashion Technology Telephone: 26850484. management practices and manufacturing technologies. PhD. 26964771. NIFT has crafted a range of Continuing Education Programmes. Gandhinagar (Sub-Centre: Surat).com. these courses offer a unique opportunity to participate in the lively academic environment of NIFT. advancement of careers. creativity.com/iftf. They offer a learning environment that encourages innovation. rajeshbheda@niftindia. Kolkata and Mumbai. and the evolution of new professionals. Director General of NIFT) The Institute: Today. New Delhi-110 016. and entry-level candidates in the form of Continued Education Programmes.htm Address: NIFT Campus.. Hyderabad. management and technology across the globe. 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. 26964771. Management and Technology.com NIFT was set up under the Ministry of Textiles in 1986. leading to upgradation of skills and knowledge. Chairperson. Government of India Website: http://www. In addition to classroom learning. enhancement of critical abilities. and excellence. The Institute has pioneered the evolution of fashion business education across the country through a network of seven centres at New Delhi. According to its CE (Continuing Education) Prospectus 2006-07: NIFT provides quality fashion-education to industry experts. India Telephone: 26850484. 26965080. professionals.
The flexible schedule enables the participants to pursue the programme without interrupting their professional activities. training managers. The average Indian garment factory has 100% potential in physical labor productivity. He teaches classes in quality management. Post-MFA trends have been a consolidation of supply chain and capacities. Most common is line supervision. productivity (how to perform time studies). quality improvement program.S. and • hire or train industrial engineers. relevant to individuals at different stages of their careers. The CE Certificate Programmes are aimed at complementing the practical knowledge of the industry professionals with formal technical education in their respective areas of work. The participants receive a NIFT certificate on successful completion of the programme. With focus on interactive learning. there could be a 50% improvement in quality. • design development. • BPR manufacturing. If companies put efforts into enacting these measures.concerns of the industry and have been carefully planned to spur professional growth. with production planning and scheduling. However. trying to get workers’ involvement. 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. cost is up. • higher productivity • use the help of consultants. Content of interview (20 July 2006) with Professor Bheda: Professor Bheda has been with NIFT for 16 years. and a global overview of the garment industry. as there has not much shift in markets. probably average 70% of India’s market. operators. The main characteristics of successful firms include: • recognizing what customers are looking for. • have more highly trained workforce. buyers reducing number of suppliers as well as brands. U. though you cannot take bags inside the doors or check out books. and also to those aspiring to join the industry. methods monitored. Page 19 . The library at the NIFT campus is open to anyone. the programmes provide a congenial environment that integrates theory with practice. demand is up. and they are making efforts to reach good productivity. corporate social responsibility. manufacturers consolidating capacities. Companies are trying to move up the value ladder as product development and design are becoming more important. • better quality product and service. Unit prices are down. and EU have always been strong markets in India. • offering shorter lead times. • managing their supply chain better. performance-based rewards system. suppliers reducing subcontracting.
38th annual: www.” that retailers are paying lip service to CSR without sharing the cost burden. driven by price and the customer can walk away at any point. it would have to be meticulously and carefully implemented. and are simply passing it on to the suppliers. and as long as it is ensured that the rewards system cost comes down to the factory floor.indianapparelfair. the AEPC Director of Export Promotions (interviewed him after K. The day of the interview was the final day of the Indian International Garment Fair (IIGF: www. The award winners for their showcases (announced the previous day. Social programs are a long-term investment.there is an erosion of the bottom line and companies find it difficult to survive and improve working conditions. Jalan.com). “suppliers get a feeling of being cheated. Everything in the market is transaction-based. Retailers should start partnering with the brands and rewarding CSR compliant suppliers.K. Vijay Agarwal (Chairman of AEPC. from principles. Agarwal). so some firms are investing in CSR to the extent they can afford. not because the buyer says the firm has to do it. However. it would be good to invest in social improvement program. something like it has been discussed. the 37th annual garment fair with 393 exporters/exhibitors at Pragati Maidan. None of the firms were top ten exporters or easily recognizable.” 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.indiaapparelfair. Regarding corporate social responsibility. H.K. 2) Shilpayan Craft (Jaipur) 3) Another firm from Jaipur. and many cannot afford them because there is typically no financial payback. The core group of organizers include Vijay Mathur.K. so the researcher asked IIGF workers) were 1) Intercraft (New Delhi). Magu (Chairman of Jyoti Apparels). it seemed to be a showcase for smaller firms to vie for new buyers and international exposure. so suppliers feel they are not committed. K.L. Page 20 .com. The researcher obtained a buyer ID and toured the grounds. He does not see a correlation between turnover and CSR programs: “ultimately it comes from within. He gave a contact person to interview from Shahi Exports and up-to-date contact information number for Orient Craft. Mumbai).
Chairman of NITRA. conferences and publications.org/ Contact person: Dr. NORTHERN INDIA TEXTILE RESEARCH ASSOCIATION (NITRA) NITRA. chemicals. *HRD activities through training programs. Publications. It is linked to the Ministry of Textiles and is recognized by the Department of Scientific and Industrial Research (both government entities). Energy Audit. Sector-23. 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 . Rao.S. Process House Study. and Seminars/ Conferences/ Training programs…NITRA has carved a niche and occupied leadership in Package Design Consultancy for effluent treatment and water recovery. dyes. ISO-14000 Environment Management System. ISO-9000 Quality Management System. It is the only ISO 9001:2000 accredited textile research organization in India. Maintenance Management. Machine Design & Development. *Collection and dissemination of data useful to the textile & garment industry. *Need based cost effective software development. effluents. leather. Raj Nagar. workshops. Manpower Planning. 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. garment. *Quality Evaluation of textiles. J. Several prestigious textile units and multinationals are already within its consultancy network. Maintenance Audit and a lot more. Energy Conservation. P. waters. 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). *Research and Development projects and industry specific surveys related to textile & garment industry. Cost Reduction. Pollution Control. environment and allied areas. Design of Effluent Treatment Plants and Water Recovery Plants. *Customized consultancy packages for national and international clients in the areas of Product Development. According to NITRA’s 2006 Prospectus: NITRA’s Multifarious Activities *Job oriented professional courses (full-time and distance learning) in textile. Ghaziabad (UP) 201 002 Website: http://nitratextile. Techno-economic Viability Study.5. Environmental Audit. seminars. and plastics. Product Diversification. Quality Improvement. V.
to build the careers of its students and] monitors the current trends and requirements in the job market [by keeping in constant touch with prospective recruiters].. Library: Enriched with 5. 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. especially Page 22 . He believes the government should subsidize capital for Indian business like China (mentioned something about a Technology Aggregation Fund. the…library [keeps students connected with] ongoing global developments. Netherlands. and perhaps have relaxed labor laws within these sites. mid term strategies and policies and creating necessary infrastructure. NITRA helps factories with product development and various audits. A programmable ADI Bioreactor System of 3 liters capacity from Applikon Dependable Instruments. energy. The library also subscribes to 150 [national and international] periodicals. etc.textile and allied industries: waste management. NITRA has a wide database of employers [in its placement cell. he said that unions hurt business. eco-friendly textiles. but would not elaborate and would only refer to the intractability of trade unions in vague terms. TAF). etc. fear of China post-quota.000 books and journals. and the Haryana State Pollution Control Board (HSPCB). During the 60s-80s. environmental statement…NITRA’s Environment Laboratory is well equipped with Sophisticated Analytical instruments. There is a shortage of skilled garment workers. 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). He allowed that workers were being exploited. [NITRA’s IT Center] has over 100 [PC’s]. especially the law whereby a worker that is employed for 100 days is considered a permanent employee. better access to a supply of power through a cluster system called Scheme for an Integrated Textile Park (SITP). the Bureau of Indian Standards (BIS). Also stated that it cost businesses more to subcontract because they had to pay for delivery. 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. has been installed for carrying out treatability studies of biodegradation of industrial effluents through aerobic cum anaerobic route. An in-house miniature ETP (effluent treatment plant) of 100 Liters/hour capacity has been installed by NITRA. Access to and the price of power seemed to be a big issue for him. Content of interview (7 July 2006) with Chairman of NITRA: Gave background on the history of the textile industry.. The government is currently working on better infrastructure.. Stated that the fragmentation of the business made quality control an issue. water. Complained about government infrastructure and labor laws. from composite textile mills in the 50s-60s to the rise of small scale businesses/ fragmentation. quality. improve infrastructure.. legal compliance. which would consolidate factories.
10:30 am . They conduct in-plant training as well as distance learning programs for middle management at NITRA itself. L and J (seem to be mills. Students apply to the program online and are selected on the results of aptitude examinations and interviews. he mentioned Vardhmal. 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.4:30 pm. not garment manufacturers). a NITRA Senior Scientific Officer. The course coordinator is Vivek Agarwal. Arvind. Page 23 . They typically have 4-5 students applying for one seat. Reliance. When asked for company names. Bilwara. The researcher obtained a copy of the 2006 prospectus. so NITRA conducts training programs for workers that last 3-6 months. Classes are full days.machine operators at the shop floor level.
Manicandan’s CEC Report.com Head Office Delhi B-57. Sector-5. Udyog Vihar Phase -1 Gurgaon. 7 & 8. India Tel: 91-124-2290993. and updated telephone numbers from interview. Okhla Industrial Area. 2 Unit visited by the researcher.com E-mail: info@modelamaexport. Merchandising Agent.modelamaexports. India Tel: +91-11-26810103 fax: +91-11-26817969 Head Office Gurgaon 184. I. An ISO 9001:2000 certified company The information in the following company report was obtained from interviews with the Director. ICRIER financial data. India Tel: +91-124-2397838-42 fax: +91-124-2397843 1 Initial information obtained from company website.com. MODELAMA EXPORTS LTD. business articles. and G. Manesar IMT Gurgaon -122016. Director E-mail: lovleen@modelamaexports. Page 24 . the company website. Mobile: 9810015693 Corporate Office2 Plot No. documents given by the HR and production managers including a company profile.CHAPTER THREE COMPANY PROFILES 1. 2291131 Fax: 91-124-2290864 Website: www. Haryana. Haryana. Human Resources manager. CONTACT INFORMATION1 Contact Person Lovleen Kumar. phase -1 New Delhi -110020.
phase -1 New Delhi 8. BASIC PROFILE6 Legal Composition Sole proprietorship. Sector-4 Gurgaon 5. owner is Mr. 45 lakhs with 50 indigenous sewing machines and a workspace of 4. 5 From website. Other production sites in untranslated Hindi document. B-57. Modelama today has ten professionally run production units over 4. B-26. Okhla Industrial Area. 4 3 Page 25 . 7 & 8.Road Map 3 Production Units4 1. 201.” Apparel Resources. interview. In the first year they exported Rs. Okhla Industrial Area. “Build Quality Rather Than Check The Quality. Phase 1 Gurgaon 2.asp?msg=2710&cod=newsindetail&nam=>. phase -1 New Delhi 7. phase -1 10. Phase 1 Gurgaon 3. Lalit Gulati. Okhla Industrial Area. <http://apparelresources. phase -1 New Delhi 9. From company website. Okhla Industrial Area. Gurgaon1 6. In 1999. 6 From company website. 200. Modelama places a great emphasis on technology as the secret to its success. BRIEF HISTORY Modelama was founded in 1979 by Mr. IMT Manesar.000 square feet.com/defaultnextone.5 III. Plot No-5. Sector-5. B-80.00. Udyog Vihar Phase -1 II. Plot No. 184. Vinita. and Pandey. B-33. Lalit Gulati as a family-run operation. Manesar. 204. Phase 1 Gurgaon 4.000 square feet. Modelama professionalized its management structure and has been consistently upgrading technology in their production facilities.
EOU Information Modelama Exports Ltd. 1999. Marmaxx. Old Navy). and 2002 Associated Merchandising Corporation Outstanding Performance. 2000. 1998.O. is an export oriented unit registered with NEPZ. Pottery Barn. shorts. Product Mix Areas of specialization include outerwear. and home furnishings. Zellers Australia: Country Road Awards Target Vendor Award of Excellence. Tommy Hilfiger. Colt’s Europe: Etam. 2001 Federated Merchandising Group Five Star Award (in Development of Federated Department Stores Private Brands and Labels). Nov. polyamide). 1999. Galeries Lafeyette. silk. Monoprix.4530/2001-100% E. Villersey & Boch. etc. Charming Shoppe Inc. Chambers. Sears Roebuck & Co. Target Stores. Canada: Eatons.. ladies blouses. 1993. Launched Home Textile Collection in 1999. Proffitts. and blends. AMC. Freemans. Modafil UK: Laura Ashley. Exports/Imports 100% exports. synthetics (viscose. Sales Growth and Profitability Vendor Award. dresses. knitwear and garments of leather. Lands End. drapery. silk. Clients USA: GAP (Banana Republic. kidswear. H&M. 2000 Page 26 .AEPC/REG/MER/47569/N/2001) as a manufacturer/ exporter of readymade garments including woolen. Saks. Westelm. Zara. Grattan. La Halle. Kohls-Belk. Federated Stores (Macy’s). Dayton Hudson Corporation. Hudson Bay. skirts. Mervyns. 4-530/2001-100% EOU/103 dt 14/09/2001 and also registered with the Apparel Export Promotion Council since 03/05/2001 (Registration No. which may have contributed to minimizing seasonality issues. trousers. Uses natural fabrics (cotton. 1996 Charming Shoppes Inc. GUS.. top of beds. linen. Sears Roebuck & Co. Added outerwear to their product mix in 2001-2002. wool). Next. and decorative items for loungewear like throws. Incorporates ethnic Indian accents and embroidery into design samples.. jute and hemp. William-E-Sonoma. offering products such as table linen. 2000. Modelama does not manufacture for the domestic market.U I/6921dt28/08/01 RCMC NO. polyester. 1992. Marshalls. cushion covers. LOP NO. Lane Bryant. Marks & Spencer. A & F. nightwear. Eurofiel (Women’s Secret).
7 ICRIER Data (based on an interview at B-57 Okhla Industrial Area plant in Fall 2005) Page 27 . of pieces exported to EU countries Proportion of workforce that is female Average wage for female production workers Average wage for male production workers 2005 200 cr 100% 20% 3cr. VA per employee Rs.IV. No. 500 500 450 60% 40% 150. FINANCIALS Turnover 70 Turnover (millions USD) 60 60 50 40 30 20 10 0 1981 1985 1990 1995 2000 2002 2005 projected 15 0. of pieces exported to the US No. 2800/per month.000 30% Rs.5cr.000 per year 25.5 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. 3cr. 500 Rs. 3000/per month Rs. Rs. 500 Total employment 500 500 Production workers 450 450 Proportion exported directly --Proportion exported indirectly through intermediaries Misc.
A. Although they get large production volumes from discount retailers. Brands Casual wear $10-16 USD European Brands High Fashion Retail Markup 4 to 7 times 4 to 7 times Type10 Mostly FOB Mostly FOB From interviews with the Director and Senior Merchandising Agent.99 is the landed cost.S. “Build Quality Rather Than Check The Quality. Europe Others 94% Major Clients Brand Federated Stores (Macy’s) Target Stores GAP (incl. “GAP is sourcing worth about $1 billion from India and we are doing more than $10 million with them.75 goes to Modelama. Of that remaining $3. which includes not only the factory unit price but the duty cost (AMC and freight). An example given was if the retail price of a given garment manufactured for Target is $9. Average Unit Prices (per piece of garment supplied) Unit Price Origin Product Mix $5-7 USD U.” Lalit Gulati.asp?msg=2710&cod=newsin detail&nam=>.99.S. The remaining $3. Vinita. 10 Nearly all brands are FOB with the exception of discount retailers like Target Stores (USA). BRAND INFORMATION8 Modelama's Export Market 1% 5% U.” Apparel Resources. quoted in 9 Pandey. ~$2. <http://apparelresources. 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. the unit prices are markedly lower than specialty stores. 60% of that is Target’s profit margin per unit (PMU). Modelama Chairman.V.com/defaultnextone.99. 9 8 Page 28 .
and get down to manufacturing.7 1 1990 1995 2000 2002 2005 projected Design/Sampling Modelama has a fairly large design department. who will then contact them with a development package if their profile fits their needs.5 0. volume.asp?em=M&mcode=200602&idx=1083>. add a bit. INFRASTRUCTURE Subcontracting Modelama does not appear to subcontract.) as well as home furnishing products. From company website and brochure. Then there is some back and forth communication between Modelama and the MNC to reach an agreement in terms of product design.4 1985 0.ittimes. is one of the principal designers. for instance. The day the researcher observed the process. Some of the orders can be pretty huge . they were manufacturing garment orders for Charming Shoppes Inc. fine-tune the patterns. We then sit down with the stores..80.kr/en/node. an alumnus of the National Institute of Fashion Technology (NIFT). Modelama will present their company profile to the buying agencies of MNCs.”14 11 12 According to interview with the Director. subtract a bit. which varies according to the product. Marks and Spencer (Style and Co. 13 From interview with Director and Senior Merchandising Officer. Page 29 .11 Production System Uses an assembly line system. “My team of designers scans international trends and comes up with a tentative collection of not only designs but also shades.co.1 1981 0. Vishnu. V. Production Capacity12 9 8 7 6 5 4 3 2 1 0 Number of Garments Produced (milions) 8 4 2. 14 Makhijani.000 pieces.Unit Prices Since MFA Phase-out Unit prices have gone down an estimated 7-10% due to increased global competition. and delivery times.13 Gayatri Lal. “Indian Fashion Firms Adopt Global Pret and Couture. Typically.” <http://www.
The floor is laid out in dozens of assembly lines. In the sewing departments.Quality Control15 Modelama’s motto is “build quality rather than check quality. Differential Feed Machines Needle Feed Machine. The company deploys over 3000 imported sewing machines with customized workstations. Departments17 Production (~800 Workers) There are about 560 tailors. output. and number of workers. Auto Pocket Welting M/C. Information on workers and floor layout is specific to the unit visited and is taken from an interview with the HR Manager. GSM check. 15 16 From company website. PH check. Blind Hemmers. perc based dry cleaning machines. Procedures are based on aql 4 point system by which all fabrics are screened and categorized. Washing machinery includes a wet and dry processing unit comprised of micro processor controlled washer extractors. Auto Cutter (Lectra). Machinery includes Auto Zig Machine. supervisor name. over 90% male. Page 30 . Air Flotation Tables. Auto Surging Machine. laundering and crocking. From interview with Director and Human Resources Manager. tearing strength. Programmable Sleeve Setter Stations. Top. Differential and Bottom Cylindrical Bed Unison Feed Machine. Washing (24 workers) and Finishing/ Pressing (175 workers) The finishing area had lines of workers pressing and folding clothes. and brushing machines (from light softener washes to heavy enzymatic washes).” Modelama emphasizes technology and internationally acclaimed systems to maintain a high level of quality. An example line was sewing collar parts with a total of 46 tailors and 5 helpers. 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. Band Knife M/Cs. Autocad (Lectra). color fastness to light. sand blasting. Site visited by the researcher employs about 1100 workers (including about 15 accounts staff). pitting test. Approximate number of workers16 Modelama employs a total of ~6. Tests include tensile strength. 17 Information on machinery was primarily taken from the company website. Multifusing with Three Track of Loading (High Performance Macpee). at the front of which is displayed an “Hourly Production” dry-erase board with the line number. Pneumatic Button Hemming Stations. The product was women’s fashion blazers for Style and Co. Machinery includes Auto Spreaders. This was the only department with women. Auto Dart Making Stations. Auto Belt Attaching Stations. input. they use internationally standardized procedures like the traffic light quality assurance system. etc. Cutting (50-55 workers) The cutting department had five lines of machines laid out with worker stations.000 workers in all plants.
HR Manager boasted that Modelama was the only factory in India to have this machine. 2448 per month. Additional Machinery Factory has a special conveyor system that moves products from assembly lines to other departments. Machinery includes 20m length Schiffley Embroidery (Lasser & Saurer). Category Tailors +skilled 18 Average Wage (Rs. The production manager gave the researcher a copy of a time-study conducted for Charming Shoppes. However.Pressing and finishing machinery include multipresses. and line supervisors who perform time studies on particular styles and set worker targets. Embroidery Did not observe embroidery process during visit. and unskilled minimum wage was Rs. the HR manager stated that no punitive measures are taken as it is prohibited by law. 200 single head and 6 multiple head computer embroidery machines. No workers are involved in these meetings. Veit. indicating that he would like to develop such a system in the future. Page 31 ./month) 3500 From interview with HR Manager. management states that they set wages higher than minimum wage to get workers to commute. Inc style. 3000 per month. stressing how much state-of-the-art machinery has contributed to the quality and productivity of the manufacturing process. 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. If workers cannot reach their targets. VII. flatbeds. Trevil. Because the factory is not near a city. dummy presses. and Renzacci. The targets are communicated to workers by line supervisors and dry-erase boards on the production floor that display productivity goals. Production Manager. Has hand and machine embroidery capabilities. the HR manager said that no incentives are given. The Director said that workers are given incentives in productivity schemes if they reach their targets. calendaring machines and range of buck shapes and steam irons from manufacturers like MACPII. Productivity Schemes Company has production planning meetings consisting of the HR Manager.
Page 32 . After a three-day period. and that workers receive double wages for overtime hours. HUMAN RESOURCE POLICIES19 There does not appear to be common policies across the plants. “It should be time-and-a-half. Overtime Management indicated no more than four hours per week per worker. supervisors conduct time studies evaluating the skill level and productivity of a new hire. like China. stating. HR Manager stated that wages increase after a year. Benefits HR Manager indicated that workers receive the social benefits required by law.+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.” Labor Turnover Estimated worker turnover per month at 7-10%. including ESI and PF. except for worker recruitment for middle management positions. Expressed dissatisfaction with labor laws requiring double overtime. VIII. Indicated that there are a few shop floor employees who have remained the two years the factory has been in operation. which is not subject to negotiation. 19 Information based on interview with HR Manager and documents given by HR Manager and production manager.
standing orders. workers have a brief orientation session during which they are informed of security measures. Anil Chauhan HR Manager Management Staff/Accounts Personne Mr. Manicandan’s “Mapping First Tier Suppliers in Garment Industry in Delhi. Modelama’s anti-harassment policy. grievance procedures.” Modelama uses labor contractors for some of its other units. To recruit shop floor employees. Workers are a mix of local villagers and from Gurgaon. Lovleen Kumar Director Ms. Shiv Singh Skilled Production Line Supervisor Assistant Supervisor (Less skill/experience) Skilled Tailors/Machine Operators Helpers (Unskilled) Boxes with straight-line borders are positions common throughout all production sites. Lalit Gulati Sole Proprietor Founder/Chairman Mr. and in nearby worker villages. Page 33 . while dotted-line boxed positions are factory-specific and subject to variance. the company recruits from training centers and placement companies and has a formalized policy that the researcher obtained. For middle management positions. the company posts signs on the gate. Beneeta Seigal Senior Merchandising Other Upper Management Positions Mr. Phase-I Gurgaon. Kiran Production Manager Mr. and vendor codes’ of conduct. such as the unit located at 200. Recruitment Policy They do not use labor contractors at the unit visited. Worker Training This site does not provide training to its workers. However. according to G. at bus stops.Management Structure Mr. However. K.
The factory locks its doors at night. HR Manager indicated that there are very few worker grievances. and that management works to quickly solve problems in order to maintain an atmosphere of “family. Union There is no union in the production site visited. Page 34 . a Works Committee. If workers suffer from minor injuries. All workers were said to have received medical attention. so there is no need for a union. Security New security measures have been implemented since the quota phase-out. nor have there been unionization attempts. according to the Customers Trade Partnership Against Terrorism. the researcher was informed that he was at another production site.S.20 Grievance Policy Procedure If workers have a problem. they have joint employee-worker committees required by law.Dismissal Procedure No information was obtained by the researcher regarding a formalized procedure. There are only six recorded injuries at this site for 2006. tampering. was displayed on the factory floor.5 km from the factory. but avoids paying for major injuries and illnesses. and a Sexual Harassment Committee. There is a company dentist that comes every Thursday.S. Customs Security requirements regarding issues like preventing trespassing. Medical Care There is a medical room in the factory. preferring to dismiss the workers. Work times for employees were also posted. traceability. an Anti-Harassment Committee. companies have required them to uphold a more stringent counter-terrorism model of security in compliance with U.” Worker Committees Since there is no union.” there are no doctors in two of Modelama’s other production units (200. such as a Health and Safety Committee. Phase-I Gurgaon and B-57 Phase-I Okhla Industrial Area).”21 Corporate Responsibility/ Codes of Conduct Modelama’s Anti-Abuse/Harassment Policy is posted on the factory floors in English and in Hindi. Received a Hindi copy of policy. A resident doctor is “available at all times. but only in English. in compliance 20 21 Received a Hindi copy of group meeting minutes. 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. or CTPAT model.” but when asked to meet the doctor. “We take care of all their problems. the company usually pays the medical expense. The code of conduct for Charming Shoppes Inc. and an ESI station 1. Manicandan’s “Mapping First Tier Suppliers in Garment Industry in Delhi. that they can report their grievance to their direct supervisor or upper management. U. According to G.
Lalit: Machines change according to the product requirement…We have to be flexible because the buyer doesn't buy one thing all the time. only their department is kept open and the rest of the factory is shut down at 6 pm. 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. “Build Quality Rather Than Check The Quality.with these measures. Modelama successfully invested in the necessary infrastructure to export ~Rs. If workers stay for overtime. IX.com/defaultnextone. and then ship the product from that country. 22 Pandey. The HR Manager.” a more developed system of subcontracting modeled on Southeast Asian business strategies. low relative levels of productivity. <http://apparelresources. and Sanjay Gulati. MNCs would present their contract orders to Modelama as an Indian company.perator. Vinita. whose upper management and design departments would remain in India.asp?msg=2710&cod=newsin detail&nam=>. A business strategy that Modelama is looking into is “triangular shipping. Lalit Gulati. This can be achieved by deskilling operations to the simplest and most automatic level…We convert the machine with the help of our in-house engineers into individual units by developing different work-aids that convert a normal lockstitch machine into a workstation. we need operators who can be trained.22 X. 25 crore in jackets alone. We do not need masters. If Modelama has had as much success in outerwear as they have stated in press releases. it would appear that seasonality should be less of an issue for them than other companies who do not manufacture winter clothing. the Chairman. 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. In an interview with Apparel Resources magazine. the Chairman stated that though the South is better known for it. 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. relative strength of the Indian rupee to the dollar opposed to weaker Asian currencies. In 2002. stated that seasonality was not an issue and that they have orders year-round. and government bureaucratic hurdles regarding labor law. Modelama would then shift the actual manufacture of the product to either countries with lower labor costs like Sri Lanka or duty-free countries. Page 35 . The Director mentioned that seasonality is an issue. The idea is to convert a single lockstitch machine into a machine which can do a specialized jobs…so that we do not have to worry about the skill of the o. the former Director stated: Lalit: We do not consider machines as individual equipment but as a complete workstation. BUSINESS BOTTLENECKS Main problems hindering financial success according to the Director are poor relative infrastructure. however.
Modelama was very open in disclosing information about the factory unit. Page 36 . Contact was made by calling the general inquiry number on the website. The only question that management would not answer was regarding a detailed financial breakdown of the company. The unit visited is the site of their corporate offices and was built two years ago with the help of industrial engineers. as it is the most modern.Sanjay: It is a very unique combination of machines that we have that gives us this flexibility of handling [versatile] product [mixes]. who was not available on the date of the interview. then was directed to a Senior Merchandising agent. This is likely the factory to which buyers are taken. The high level of attention paid to infrastructure and personnel management is probably not typical of their older factories. but directed the researcher to her colleague. when they began to develop the infrastructure to manufacture outerwear. PERSONAL EXPERIENCE Modelama used an Italian consulting agency for the design of two of their factories. XI. Modelama was the first company to be interviewed by the researcher.
Senior Management Ashok Raman.com Head Office Bangalore Belandur Gate. business articles. Faridabad. LTD.co.D. Manicandan’s CEC report. Tel: +91-129-2273970/80 Fax: +91-129-2273485/91 E-Mail: email@example.com Production Units: Plot No. BRIEF HISTORY Incorporated in 1974 in Delhi. Palmprint Textile.in Head Office Faridabad23 Industrial Plot 1. the owner of the company. Harish Ahuja. and G.com Website: www. II.24 23 Unit visited by the researcher.shahiindia. The remaining woven and all knit production sites are located in Bangalore. the company website.co. Karnataka Tel: +91-80-28439214/15 Fax: +91-80-28439356 E-mail: shahiblr@vsnl. Sector 28.2. is former vice chairman of the Apparel Exports Promotion Council of India. is in Ghaziabad.raman@shahi. 1. General Manager of Marketing Mobile: 98-18212505 E-mail: ashok. Sarjapur Main Road Bangalore 560034. Two or three other units are in Delhi (Noida) and a fabric processing unit. Page 37 . The information in the following company report was primarily obtained from interviews with the General and Divisional Managers of Marketing. Divisional Manager of Marketing Mobile: 93-13369269 E-mail: ajay.khanna@shahi. Shahi Export House has a total of eighteen manufacturing units. SHAHI EXPORT HOUSE PVT. Haryana. Giri. Sector 28 Faridabad 121008.in Ajay Khanna. I. CONTACT INFORMATION Contact People J.
t-shirts.. H & M. GAP. yarn dyed single jersey. indigo dyed units. Hollister Co. Solutions (New York). EOU Information No information was obtained regarding registration and EOU capabilities. cotton fleece. spun filament. jacquard. Van Heusen. Faded Glory. tanks tops. acrylic wool. lingerie. flat back rib. 100% polyester polar fleece. ladies' & girls' blouses . Carolina Colours. Abercrombie & Fitch. Exports/Imports 100% exports. Clients Bobbie Brooks (Woman). TKS Basics. ladies' and girls' dresses. who is now the Managing Director. polyester viscose. No.nsf/pub/Fashion_News_05_02_en2_Webb. Von Daniels. Euro Open. and circular woolen knits. the sole proprietor was Harish Ahuja. pique. textured knits. Cross-Bow. Up until a year ago. men's and ladies' bottoms. mock neck. St. loungewear. Target Stores. <www. rib. Shahi has expanded to home furnishings in the past year. The Children’s Place. A & F. (Pacific Merchants). John’s Bay.lawson. Jeans Dynam. Ralph Lauren.pdf>. jackets. golfwear. Page 38 . American Khakis. American Eagle. Akademiks. Old Navy. 2005. Liz Claiborne. Product Mix Areas of specialization are mostly ladies woven tops and men’s tops. Enzo Lorenzo. Bleu. Sag Harbor (Sport). tailored collar polo shirts. heavy jersey in cotton.pdf/$FILE/Fashion _News_05_02_en2_Webb. Shahi’s product line covers casual and formal men's and boys'. polyester cotton.III. but it is a small fraction of turnover ($5-10 million).com/www/resource. Place Jeans. Arizona Jeans Co. Family-owned. It is primarily information taken from the website with a few new passages regarding Human Resources and corporate responsibility. The knitwear product range includes 3 button polo shirts. Carolina Blues. 25 From company brochure. Shahi does not manufacture for the domestic market. 26 Remaining client names were obtained from interview with Divisional Manager of Marketing. full jacquards. Seacorn.26 24 Fashion Newsletter. engineering stripers.The fabrics range includes solids. though any exporter of this size must have at least one registered EOU for importing capabilities. nor does it currently have plans to do so. turtlenecks. which was printed in 2005 by the Bangalore office. Cento Mila. double mercerized. Cherokee. sleepwear. 2. BASIC PROFILE Legal composition of the Company Private Limited Company. Natural Issue. At Last and Co. No Boundaries. JC Penny’s.25 Wal-Mart.. sportswear. interlock.
pdf/$FILE/Fashion_News_05_02_en2_Webb.25 $0. accessed July 2006.13 $0.Awards Wal-Mart International Supplier of the Year 2000 (can’t read others) IV.4 million 2. so figures cannot be considered accurate.78-$1.8-23.033-$0. so they can only be thought of as a rough approximation. 28 Fashion Newsletter.com/www/resource. 2.07 $0. 2005 <www.nsf/pub/Fashion_News_05_02_en2_ Webb. No. 32 Embellishment costs such as embroidery depends on style. 31 Based on the company’s average unit price of $6.11 $0.8 million 2. Turnover estimates varied by tens of millions of dollars between the GM and the Divisional Manager of Marketing.30 $0.8 million 14-28 million 1. 29 Estimated by General Manager of Marketing. Percent of sales is based on an average estimate given by the Divisional Manager of Marketing.65-$1.65 Material Cost Labor Trims and Packing Depreciation Machinery upkeep Overhead Embellishments32 Profit 27 Estimated by General Manager of Marketing. 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.lawson.65 $0. 30 These figures were estimated by the Divisional Manager of Marketing in the space of 5-10 minutes. though generally it is four to seven times the unit price of the garment. Did not obtain average retail markup information. Page 39 .13 $0.pdf>.5 USD.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. It can be none or most of the unit price.
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.
shipping staff Total number of workers: 3. every hour the target is marked. while the 60 multihead computerized embroidery machines have a capacity of 800 million stitches per day. There are two departments for sampling. but they Page 43 . one for production and another room with rows of computers in which employees work on digitized patterns and samples. very little is done by hand. pocket machines and automatic pocket welters. Ngai Shing. Embroidery Most is done by computer. desize soft wash and golf ball wash. It is also equipped with single needle lock stitch programmable machines with UBT. marker making and global electronic exchange of pattern data. This unit has an incentive scheme for productivity. grading. In finishing. Durkopp Adler. double needle-needle feed split bar machines. who are not involved in these meetings. single needle top and bottom variable feed machines. For example. fusing press.800 in all of Shahi’s Delhi (Faridabad and Noida) units 750 in production site visited The CAM based cutting department can make 75. which can be 10-25% of monthly salaries depending on how difficult the style is. The incentive scheme only applies to skilled and semi-skilled workers. in sewing. They conduct production planning meetings jointly with managers and supervisors by department. Productivity Schemes The unit visited has an industrial engineering department with eight staff. The Divisional Manager of Marketing states that they always had incentive schemes. enzyme wash . feed-off-the-arm machines. Hashima and Kannegiesser. Its implementation and form depends on the department. accounts. This department is responsible for timemotion studies and an operation breakdown. in which workers get bonuses for exceeding their targets.+Supervisors and dpt/line-in-charge 40 Sampling (think incl in production) 50-150 Remaining marketing. Sampling This is a fairly large department in the production site visited. Washing The washing facility puts out over a ton of garments per day through specialized wash treatments such as softener wash.000 Mostly female Mixed Machinery 6. The production unit boasts machines from Brother. merchandising. They also conduct joint department meetings. These meetings set targets for the shop floor workers.000 cuts per day. stone wash. line supervisors convey target setting to them. Juki. collar/cuff turning and blocking machines. and there are quality bonuses if clothes do not need repairs.500 in all of Shahi’s production sites 1. The latest CAD software enables quick processing of pattern creation. incentives depends on how many pieces are finished. and it was stated that each unit has a similar department.
have recently gone through major changes in their implementation. 38 According to G. the workers at this unit do not get a tea break. an increase in attendance. Benefits of the incentive scheme include a 10% increase in productivity in past two years in the sewing department. VII. Manicandan’s CEC report. 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. and a decrease of waste in the cutting department. and another fifteen-minute tea break between lunch and the end of their shift. Workers use their ID card to clock in and out of the factory. these benefits are additional.00040 Minimum wage is posted as follows: Category Wage (Rs. 4200./month) Unskilled helper 2200 Semi-skilled operator 3600 Skilled operator 6. 39 Stated that these numbers do not include ESI and PF. Manicandan’s CEC report says a supervisor with eight years experience makes Rs. Page 44 . 37 The researcher toured the factory around 5 pm.38 Wages As Estimated by Divisional Manager of Marketing39: Category Average Wage (Rs. This early shift seemed to be entirely female./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. 40 G. The workers get a fifteen-minute tea break between the start of work and their half-hour lunch break. there was still a strong female presence in the factory. lower labor turnover. when the first shift of workers were getting off.000 Supervisors/Mid Mgmt 10. However. leaving male sewing operators and some female ones.
and negligible overtime for the other departments. Page 45 . Estimated two hours per week per worker in the sewing and finishing departments. Workers are then on a three to six month productivity probation. they try to have the male workers pick up the extra work instead of the female workers. VIII. they are only evaluated to see what category of skill they fall in.” ~Shahi’s website Shahi’s updated brochure includes lengthy passages stating their dedication to innovative Human Resources approaches. and a three-month maternity leave. Wages are fixed and there is no negotiation. HUMAN RESOURCE POLICIES41 “Human intelligence is the greatest asset which we possess. Shahi’s overtime policies take into account gender.Wage Setting Procedure Managers interview workers and then take a trial of their work for one day. Workers also have access to an on-site crèche for their children during the workday. after which the HR manager will put them into a set wage scale depending on their ability. Most sewing operators have been at Shahi for around two years. PF. Overtime Stated that there is not a lot of overtime because they plan production with target setting. Workers who receive less than Rs. People who are motivated to excel and trained in different disciplines of garment 41 From interview with the Divisional Manager of Marketing. which the researcher observed. The Shahi workforce consists of committed and highly skilled people. Labor Turnover Estimated at 7-10% per month. Benefits Stated that workers do receive ESI. if overtime is needed. 7500 are provided with ESI benefits.
Dismissal Procedure No information was obtained regarding a formalized procedure. the worker forum is a “safe space” in which workers can address any issues they have with managers. but definitely not.manufacturing. Worker Training Shahi trains the unskilled operators for a period of a week. Worker Committees Stated that there is a worker forum that managers also attend. Union Didn’t ask directly. 42 The brochure and website both state that human resources are developed using the training procedures of Kurt Salmon Associates. and union organizers were either dismissed or isolated from other employees. so the labor is here. Manicandan’s CEC report. In the Shahi factories in Bangalore. Shahi has invested in a dedicated personnel management division to take care of its labor. Particularly so as clothing corporations the world over are labor intensive and it’s imperative that they are well looked after. Training depends on the job description of the worker. it is all direct employment. Recruitment Policy Shahi states that they do not use a labor contractor. making Shahi one of the most sought after organizations to work for in the garments arena. so they do not need to train them. In G. not the outskirts of cities. Shahi has ensured all systems are in place to make sure that everybody works in an extremely salubrious environment. Page 46 . they provide transportation to overcome those issues. 42 From company brochure and website. 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. They are able to have female workers because they are in heart of Faridabad. but it is not necessary to do so here. Some are skilled. Labor problems get a kind ear and are followed up on a priority basis. workers revealed that there had been unionizing attempts that were suppressed by the management. They do not recruit for shop floor positions beyond posting signs on their gates and through wordof-mouth. Grievance Policy Procedure Presumably.
More of these were in both Hindi and English than I’ve seen at other factories. Evaucation boards are put up on all floors along with photographs of fire fighting personnel. Dayton Hudson Corporation.” “Anything worth doing is worth doing well” and one about the importance of personal hygiene.. and nutrition related topics. It aims at providing a conducive environment for employees to protect. in fact nearly all had a Hindi translation. From interview with Divisional Manager of Marketing and joint worker-manager magazine.” Shahi’s updated brochure includes add-ons regarding treatment of their labor force. and support their families in the best way possible. and a first aid room in the facility. and lectures. Fire fighters are on high alert at all times and every floor is equipped with the right fire fighting equipment. The company organizes fire drills to keep employees alert in case of emergencies. securing of employees’ earnings through e-com (EDI) and ATM cards.Corporate Responsibility/ Codes of Conduct The company has a biweekly English magazine that publishes news and articles by workers. And some of the remarkable provisions for employees include: eligibility of workers for health insurance.44 Safety measures are given utmost importance. educational facilities for children. Awareness programs are conducted for employees on health. Strict compliance with anti-child labor law is ensured. Wal-Mart. American Pacific.43 Shahi’s website claims a dedication to the environment and that “waste reduction is practiced to the hilt… the plants are environment friendly with Effluent Treatment Plants at all the wet processing units. Charming Shoppes Inc. Shahi Export House adheres to International Labor Legislation. seminars. Codes of conduct posted in factory include Carafour. and American Eagle. They have activities for the workers such as an annual cultural week with games and contacts. There are many signs posted on the factory floor with stating things like “Discipline: Team work is an easier path to excellence. Liz Claiborne. Nautica. 45 From company brochure and website. A full-fledged Dispensary and Ambulance is provided with a doctor always on standby. Target Stores. The Limited. personality development through work shops. promote.45 Medical Care There are male and female onsite doctors and nurses in case of industrial accidents. attendance and productivity. training facilities for employees. hygiene. 44 43 Page 47 . Best employee awards are given for overall discipline.
46 Shahi recently opened up a warehouse in New Jersey. but I did not have to show it. Shahi is currently constructing a production unit in Bangalore that would have a capacity of manufacturing 200. Customs Security requirements regarding issues like preventing trespassing. Page 48 . Shahi does not have a sexual harassment committee. traceability. now they do. now they are getting competition from small exporters. or CTPAT model.Security System New security measures have been implemented since the quota phase-out. The picture of the minimum wage was taken by the manager.S. according to the Customers Trade Partnership Against Terrorism. U. and there was some controversy a few years back regarding a male manager and a female worker. and then not working to full capacity during the off-season.S. It is not a huge issue. Also argued for more labor flexibility. 46 47 From interview with Divisional Manager of Marketing. according to G.47 XI. who reported her case to the police. before they didn’t have the quota holdings to compete. (Stated that retained incentive schemes and everything off-season. however said they currently retain workers during the off-season because it becomes a problem to rehire workers. BUSINESS BOTTLENECKS Seasonality is an issue. Mentioned that Southeast Asia has the same problem of seasonality. Manicandan’s CEC report. The production unit was enormous. The Marketing Managers did not mention any new initiatives taken to deal with the issue.) X. though the researcher was not permitted to take pictures during the tour. since it takes too much time to get clearance at the ports. where the garment industry is over 90% male. From interview with Professor Rajesh Bheda of NIFT. only different season.1 million PCs during the off-peak season. Shahi has to decline some orders during peak season (OctoberMay). INDUSTRY COMMENTS Trying to build up capacity to produce outerwear by next year to reduce seasonality issues. IX. PERSONAL EXPERIENCE Obtained contact information from NIFT. Stated that they need better infrastructure regarding port system.4 million pieces during the peak season and 2.000 pieces per month. However. Suppliers have changed post-quota. as he would not permit the researcher to do so. Shahi is notable in that they have a majority female workforce in a place like Delhi. tampering. as they produce about 2. The security guards inside were asleep. Supposedly all visitors have to have proof of identity. Website contact numbers are out-of-date. companies have required them to uphold a more stringent counter-terrorism model of security in compliance with U. However Shahi is trying to diversify their product range so that it becomes even less of an issue.
Magu. E-mail: firstname.lastname@example.org Manish Mall Assistant Production Manager Mobile: 9899096999 Registered Office48 D-42 Okhla Industrial Area. of which five are in Gurgaon. but by networking through his brother. and an interview with an Assistant Production manager. Gurgaon49 The researcher was not able to obtain the addresses of all nine factory sites. 45~$1) and are not adjusted for inflation. 41/42 Phase IV Udyog Vihar.com Production Units Magsons Exports. He had no experience. L. 110020 (India) Tel: +91-11-26816917. 26818977. II. shop floor observations by the researcher. 51 48 49 Unit visited by the researcher. two are in Manesar (southwest of Delhi. due to the quota phase-out. The company has increased sales an estimated 30-40% in the past year. he started business in 1977 with an investment of Rs. a company profile and Standard Operating Procedures given by the Managing Director. and remaining information is from observations unless otherwise noted. 26817910 Website: Jyoti Apparels does not have a website. CONTACT INFORMATION Contact People H. The company’s turnover was Rs. Magu and deceased brother. and two are in Okhla Industrial Area (New Delhi).K. 26810804 (D) Fax: +91-11-26819684. BRIEF HISTORY Company established in 1976 by Mr. 500. 50 Conversions are based on today’s exchange rate (Rs. who had contacts in the garment and textile industry.111 USD) in the first year. HR strategies and production from Assistant Production Manager.L. south of Gurgaon).000 ($444 USD50). 20.3. 000 ($11. I. which roughly doubled each year until 1984. Page 49 . Unit visited by the researcher. 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. Phase-I New Delhi. Managing Director Senior Vice-Chairman of the AEPC (Apparel Export Promotion Council) Mobile: 9810029999 E-mail: hklmagu@jyotiapparels. K. H. 51 Information on company background from Managing Director.
Zara-Indtex Awards The researcher was unable to obtain any information on vendor awards. Reitman Israel: Fenomen Malaysia: Metro Jaya Spain: Mango. Europe and Canada. with embroidery and beadwork. (Target Stores. Charming Shoppes of America (CSI). . Zeeman Italy: La Rinascente. blouses. 52 According to profile (which is out-of-date. and children’s (roughly 15-20%) readymade tops. Woolrich. Siplec (E Leclerc). as it mentions “Quota Holdings: We have sufficient quotas in all categories of USA. Brylane. Manufactures woven (80%) and knitted (20%) garments using mostly yarn dyes. gents. Phool Fashion Ltd. Magu and Mr. but the majority is summer clothing. Gus. Adams. International. maybe 2004. Miss Erica UK: Marks & Spencer. viscose yarn and denim fabrics. Donn Kenny. Tesco France: C. J D Williams. Canada: Hudson Bay Co. Promod Germany: Neckerman. owners are Mr. and ethnic handiwork accents. H. Exports/Imports 100% exports. Evans. The Farmers Trading Co. Jyoti’s strengths (and the North in general) are in high fashion garments with embroidery. Cabella’s.D. Page 50 . K.” it was pre-quota phase-out January 2005). Clients52 USA: Kellwood (Sagharbor). Kishore Magu EOU Information No information was obtained regarding a registered EOU. and other garments. Brumel. Enjoy. skirts. sequins. solid dye. Jyoti does not manufacture for the domestic market. Carol Anderson. Otto Australia and New Zealand: Just Jeans. T. Roamans. V F Jeanswear (Wrangler). Debenhams.. L. Oxford Industries Inc. Prenatal. India Imports. Freeman’s.III. British Home Stores. Product Mix Areas of specialization include ladies’ (roughy 80% of production volume).. Karstadt Netherlands: Wehkamp. Blair Corporation). Wal*Mart. K. Specialize in high fashion made of exclusive prints. Lane Bryant. Zellers. BASIC PROFILE Legal composition of the Company Partnership firm. Jyoti manufactures some winter clothing (about 20% of production volume). Littlewood. Onyx Denmark: Kompagniet Switzerland: Manor. House of Frasers. Mexx. Primark.
50 1.555 USD)53 Breakdown of Sales Revenue54 Est USD 2006 Per % Retail Garment55 Price56 Material Cost 9. and cannot be used as an indicator of profit.6-2.A. Page 51 . retain 75-84% of the sale of a retail item.6 million 10 $0.S. 56 Average retail markup is four ($20) to six ($30) times the unit price of the garment.57 V. were estimated by the Managing Director on two different occasions.50 1.5% Other Manufacturing 1. Latin America.5% Overhead and profit 1. BRAND INFORMATION Jyoti's Export Market % of Sales U.50 1.5% MNC’s that source from Jyoti. 700. 55 Based on the company’s average unit price of $5 USD. Malaysia) Europe 53 Financials. 54 These figures were estimated by the Managing Director in the space of 5-10 minutes.6-2.5% Subcontracting Cost 1. which accounts for the inconsistencies. so they can only be thought of as a rough approximation.6-2. duty. FINANCIALS Turnover 12 million USD (either 2003 or 2004) Current year 18 million USD Other Financials Current year sales Rs.000.50 1.6 million 10 $0.6 million 10 $0. this figure includes the amount the MNC spends on shipping. costs. on average.IV. Japan. etc.3 million 60 $3 10-15% Labor 1.6-2.000 (15. excluding the $12 million USD figure from the company profile. 10% 50% 40% Others (Canada.6 million 10 $0. 57 Since Jyoti’s unit prices are mostly FOB.
58 Production System 58 See Standard Operating Procedures for detailed subcontracting information. Average Unit Prices (per piece of garment supplied) Unit Price Origin Retail Markup $4-5 USD Across the board 4 to 7 times Type Mostly FOB Delivery Time 60-90 days Unit Prices Since MFA Phase-out During the first meeting with the Managing Director.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. Subcontracting has not changed since quota phase-out. Prices and other sourcing details are negotiated through the buying agencies. four are 1. It is notable that Jyoti subcontracts to a Shahi processing facility.000 square meters. and Gloria Vanderbilt through buying agencies. INFRASTRUCTURE Company has nine production facilities. Subcontracting Jyoti does not subcontract the production process. and two are 600 square meters. VI. Page 52 . one is 8. but later stated that overall they have remained stable. primarily through the Triburg buying agency. the company has about 20. but they do subcontract their fabric sourcing and processing. which is not a production facility). Overall.000 square feet of land spread over ten different areas (including the registered office. Did not mention any direct relationships. he stated that unit prices have decreased about 10%. Two of the factories are 2. American Eagle.000 square meters.000 square meters.
piccoting. 59 60 See SOPs for detailed quality control schemes. According to company profile. Quality Control Jyoti Apparels has a quality control assurance team with both an in-house auditing scheme and third-party inspection. 8000 woven pieces per day and 1200 knit pieces per day. perk-chloro plants. over locks. lock stitch single needle and double needle. belt attaching. The researcher observed production of ladies’ white blouses for Emma James (Liz Claiborne).000 and 300.59 Approximate number of workers (in all facilities) Position ~Number of workers Tailors60 1200 Fabric Cutters 125 Thread-cutters (use embroidery machines) 200 Pressers 75 Fabric and Accessories Storage Workers 40 Helpers 50 Accounts personnel 20 Miscellaneous 100 Total number of workers in all facilities: 1400-1800 Machinery (at all sites) Jyoti has 1000 Juki stitching machines. computer embroidery. fusing machines.Uses an assembly line system. Design/Sampling Small design department. Production Capacity According to profile. usually 80. Page 53 . shell stitch (Merrow). Managing Director and Assistant Production manager stated they were all skilled. Sometimes Jyoti has people from UK and France do designs for them. At production site visited. between 240. feed of the arm. dry cleaning. and brown machine-embroidered skirts for American Eagle.000 pieces per month. which varies according to the product. elastic insertion. washing machines and set of 84 stem boiler irons.000-90. cross stitch/lock stitch button/ button hole/ snaps.000 pieces per month. but primarily just take paper designs from buyers and converts it to clothing.
cutting. Page 54 .Ground Floor Plan Second Floor Plan There is also a basement floor with fabric and accessory storage. and embroidery departments. though the researcher was not able to obtain a photograph of the plan.
two supervisors in an office in the corner. is data for production site visited. There were no fans in this room. There were two workers on the machines. 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. one cutting assistant. Fabric and Accessories Store.” so they are barefoot when operating the computer embroidery machine. three thread-cutters. etc. directly facing cutting tables and below looking up at the finishing department.. Sampling (15-25 workers) The fabric store had a sign reading “Triburg. Production (~180-190 Workers)61 on Second Floor Machinery includes about 200 Juki stitching machines. Checking/ Finishing/ Pressing (40-50 workers) The finishing area had lines of workers pressing and folding clothes. Cutting (20-30 workers) in Basement There are four lines in the cutting area. It did not seem as modern a unit as other top tier factories. Packing (10-15 workers) Did not observe department during visit. Document given to Buyer About Shop Floor Management (was displayed on shop floor. This was the only department that had any female workers. The department has one finishing supervisor and one assistant finishing supervisor. and the remaining workers helpers. Some of the fans were broken or not on. The workers in this department were all male.(Right) A view of the basement and ground floor. observations.” which is the buying agency that many firms deal with. Embroidery (observed 5-7 workers) Workers have to take off shoes before coming in because of “dust. Machinery includes one bandknife cutting machine and two straight knife machines. Washing (10-15 workers) Washing was located on the topmost floor of the building. with one cutting master. Page 55 .
production manager. merchant/buyer (for style). Wage Setting Procedure For shop floor workers. However. while the rest of the employees receive a monthly salary. security tag Four operators Step 2—Initial Pressing One supervisor Step 3—P. workers are offered a wage based on this evaluation. finishing supervisor.O. according to the Assistant Production Manager.Step 1—Care label. 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. then the factory will give incentives. rather they calculate targets manually by hourly production rate. and cutting supervisor who set the production lines and targets based on manual time-studies. After one day period. and gave a copy of the minimum wage scheme for Haryana. there is an incentive scheme that depends on monthly shippings. Page 56 . Labor Turnover Estimated worker turnover per month at 20%. extra button. which is not subject to negotiation. Then he stated that they conduct production planning meetings with the factory manager. 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. If workers exceed this by 1 lakh. First the Assistant Production Manager stated that they do not perform time studies. The tailors and some finishing employees receive wages on a daily basis. VII. it is all left to selfdiscipline.000 pieces per month. supervisors conduct time studies evaluating the skill level and productivity of a new hire. Benefits Production manager indicated that workers receive ESI and PF.000-90. Wise Tag check with care. The production unit visited usually produces 80.
Dismissal Procedure The Managing Director stated that they keep workers for 240 days and then change their workforce. L.VIII. Workers do not need experience per se. Recruitment Policy Jyoti states that they do not use labor contractors. because otherwise they become permanent and you have to pay them more. The Managing Director states that they recruit people from Apparel Training and Design Centers. HUMAN RESOURCE POLICIES There are no common policies across the plants. while dotted-line boxed positions are factory-specific and subject to variance. Magu Partner Founder/Chairman Mr. they are given a one month notice so they can find another job and they receive a letter of termination. Worker Training Sometimes Jyoti trains workers during a lean period if there is time. K. Page 57 . but managers observe productivity and hire skilled workers. Management Structure Mr. H. Usually 20-25 tailors take 10-15 days to train. and the extent of their recruitment is posting signs on their front gates. though the Director mentioned that workers learn on the job. but these tend to be more middle management people. 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.
etc). Page 58 . labor laws (especially the lack of hire and fire exit policy). etc. companies have required them to uphold a more stringent counter-terrorism model of security in compliance with U. high rate of interest. Medical Care There are doctors nearby the factories and first-aid kits in the production sites. The production site visited did not have a union. according to the Customers Trade Partnership Against Terrorism. Customs Security requirements regarding issues like preventing trespassing. However. they should run cargo through machines instead. he moved production to another site (now there is just the accounts staff and some sampling/design).Union The corporate office used to be a production site. No common policies (with HR. etc.62 Security System New security measures have been implemented since the quota phase-out. higher material costs (indigenous. the Assistant Production Manager stated that they do have committees. Does not have its own employee code of conduct. they cannot transfer goods during “peak hours. duties. or CTPAT model.S. traceability. he did not. and they have monthly meetings. anti-harassment. but no visitor’s pass. 63 Based on interview with Managing Director. BUSINESS BOTTLENECKS63 Main problems facing the industry are poor infrastructure (need better highways. etc. lack of good fabric processing machinery. ports. He stated that old employees with a union do not work as hard. production. Second time took my name. tampering. Believes that there should be special customs lines at airports so that everything is not searched.. The first time security did not take my name in the confusion of finding a manager.) across plants except for buyers code of conduct. which makes it difficult to meet deadlines. IX. 62 Based on interview with MD and Asst Production Manager. no imports because would have to pay landed costs). such as environmental. A lot of money is invested into customs.S. There is a path behind the building to get to the main office over ripped metal sheets over grates. and high transaction charges. He said they have the joint employee-worker committees required by law since there is no union. For example. Worker Committees The Managing Director stated that they do not have any worker committees. but the Managing Director stated that when the old employees formed a union. Grievance Policy Procedure/Corporate Responsibility/ Codes of Conduct No information was obtained regarding a formalized grievance policy procedure.” trucks are only allowed to transport good between 11 and 4. but did not give a visitor’s pass. U. but talked about them vaguely and though he stated that he could give me committee minutes. though neither of them knew where the medical facilities were located.
labor laws would be relaxed. They’ve had to become very quality-conscious and price-conscious. PERSONAL EXPERIENCE When observed work at the production site. Post-quota phase-out resulted in a boom for Indian business. who also permitted the researcher to take photos. Page 59 . production manager. but unit prices got too low. so could not take orders from them anymore. China is their main competitor. did not see upper management (factory manager. They played solitaire. INDUSTRY COMMENTS64 Jyoti used to deal with Wal-Mart and Target. etc. etc. Also.” Jyoti supports “special garment zones. before couldn’t have more because of quotas. XI.” in which infrastructure would be built up by the government. The Managing Director is the Senior Vice-Chairman of the AEPC. like American Eagle. which is the capacity in which the researcher initially came to interview him.) or some supervisors do anything. or even leave their air-conditioned offices. Phase out of quota system has brought in new buyers. Companies are very upset with the government’s “bureaucratic hurdles.X. He was very open in disclosing information. as they still have the edge on labor productivity and good infrastructure. as were much of the staff at the production site. the overseas vendors couldn’t sell their inventory. making access to plants easier. Jyoti was an extremely open company in many respects. and did nothing the rest of the time. and had everyone borrowing money from the bank and investing in huge factories. The Assistant Production Manager was almost never at the factory when the researcher came to the production site. 64 Based on interview with the Managing Director. because of the late summer. This year. it was difficult to deal in huge quantities because of the possibility of mistakes in such a large order. and one of them glanced at a time-study once.
an interview with a General Manager of Operations. Gurgaon 4. black iron. BRIEF HISTORY68 Vijay Uppal. I. 479. 208. General Manager of Operations 236 Udyog Vihar Phase-I. Udyog Vihar. Gurgaon. aluminum hardware. 25172437. Page 60 . with one woven garments manufacturing unit in Delhi. Gurgaon 3. Gurgaon67 6. 25454895 Contact person: Padam Vaish. and G. 506. Phase-I Gurgaon The company profiled has over ten manufacturing units. and ironmongery. Phase-I. Ware Housing Scheme Kriti Nagar. Udyog Vihar. Phase I. 239. Udyog Vihar. Gurgaon 8. Gurgaon 5. including: 1. Phase I. Haryana (India) Tel: 95124-2439701 Mobile: 9313634777 Fax: 0124-2439710-11 Production Units66 The R group of companies has over twenty-two integrated manufacturing units in Delhi. Phase III.4. 66 According to company website. New Delhi . Phase IV. Gurgaon The group of companies has several offices throughout India as well as a textile mill in Tiruthani near Chennai and a tannery for leather finishing in Hyderabad. Udyog Vihar. 225. 25172438 Fax: +91-11-25451549. 133. II. Phase III. 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. 68 According to the company website. Udyog Vihar. Mayapuri Industrial Area. Gurgaon 7. Phase I. 69 From an interview with the General Manager of Operations. and Bangalore. 67 Unit visited by the researcher.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. Noida. including: 1.110015 (India) Tel: +91-11-25431408. Udyog Vihar. Udyog Vihar. Phase III. Phase I. 236. incorporated R and Co. Udyog Vihar. 192. Gurgaon. Udyog Vihar. in 1977. the current Chairman. Gurgaon 2. G International was established in 1983 in Delhi and 1996 in Gurgaon. B-108. Manicandan’s CEC report. CONTACT INFORMATION65 Registered Office: 2/2. 151. New Delhi 2.
Crew. Inc. cargo pants and shorts. May Stores. Clients The R Group sources to over fifteen countries. women and children including shirts. and Marks & Spencer. D. Wal-Mart. Polo Ralph Lauren. Including the original R and Co. Spigel. Charming Shoppe. Mervyn’s. The company has set up its own offices in Ludhiana and Tirupur in order to better source fabric. anilines. Product Mix Areas of specialization include ready-made woven. Awards 70 According to the company website. Tommy Hilfiger. Federated Stores. antiques. Women’s Secret. The R group does not manufacture for the domestic market. Page 61 . Exports/Imports 100% exports. waxy distressed/ oily nappaloans. The R Group has recently established a fully integrated production line in Noida. skirts etc.. BASIC PROFILE70 Legal composition of the Company Virender Uppal is the Managing Director. semi-nubuck. vests. The company has already started manufacturing leather accessories and is further expanding with a bigger factory planned in Gurgaon. BCBG. skirts. The group launched a leather manufacturing unit in 1989 specializing in high fashion leatherwear under the management of Sunil Kapur. semi anilines. Betty Barclay. Ann Taylor. Etams Miss Sixty.. Liz Claiborne. the group includes eight companies. Goat and Cow leather as well as nubuck. J. The tannery has modern finishing technology for leather finishes of Sheep. R Global was incorporated in 2002 at Bangalore. knit. Debhnams. and leather high fashion garments for men. Timberland. The R Group began producing knitwear when Gaurav Uppal joined the company management.Y.K. III.1992. ladies tops. while Vijay Uppal and Gaurav Uppal are Joint Managing Directors. Mexx. It specializes in (primarily) outerwear for men. trousers. Sigrid Olsen.. pants and shorts. pants.N. Calvin Klein. Lane Bryant. Cortefiel. Land’s End. Next. to brands such as GAP. Target. which will specialize in ready-made specialty shirts. Monsoon. It has initiated a backward integration project by starting its own tannery in Hyderabad. women and children such as jackets. Dillard’s Sears.
Export Performance Chart71 Other Financials No other financial information was obtained. U.S.S.IV.A. From an interview with the General Manager of Operations.A. 90% Major Clients Brand GAP Macy’s Wal-Mart Dillards Liz Claiborne Federated Stores 71 72 UK and Japan Origin U.S. BRAND INFORMATION72 Export Market of the R Gro 10% U. Page 62 . V.S.S.A.S. 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. U. U. U.A. FINANCIALS Turnover The R group has an expected annual turnover of US $ 85 million for the year 2005.A.S.A.A. U.
Gurgaon. unless otherwise indicated. Taken from the company website. since they often don’t have established offices. 76 From an interview with the General Manager of Operations. INFRASTRUCTURE74 The R Group has over twenty-two integrated manufacturing units in Delhi. 75 From an interview with the General Manager of Operations. VI. there has been a 15-20% increase in orders. Subcontracting G International subcontracts their hand embroidery. However. the company’s knitwear divison. has an annual production capacity of 2 million knitted garments. Wal-Mart usually orders the largest volume. though there are fewer orders in the fall and winter.Buying Agency or Direct Contracts are mostly negotiated through buying agencies. Quality Control The General Manager of Operations stated they use a “2. shows a sample range. Unit Prices (paid to factory per piece of garment supplied) Avg Retail Markup Type Delivery Time 73 $6-8 USD 4 to 6 times FOB 60 or 120 days Unit Prices Since MFA Phase-out Unit prices have gone down 10-12% post-quota phase-out across the board. 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). though not to an established company or to direct employees. Page 63 . or sometimes they embroider in their homes. They set up a shelter (“shack”) for local tailors to do the hand embroidery. The R Group’s leather manufacturing unit has an annual production capacity of 500. Smaller companies are more likely to be direct orders. 73 74 Including Wal-Mart. and the buyer selects and negotiates the contract. Noida. G International takes indicative orders from the buyer. and Bangalore. For a more detailed quality control process. though they occasionally take direct orders. R Global.000 pieces. G International does not use a recruiting agency or a labor contractor. see company website.75 Production System The R Group uses an assembly line system. Production Capacity The R Group’s woven division has an in-house annual production capacity of 10 million pieces.5 APQ” quality check standard across the board.
material flow). 80 From an interview with the General Manager of Operations.000. operator training and skill analysis). Position ~Number of workers *Machine operators 250 -A-grade skilled operator 50 -B-grade 160-170 -C-grade 30-40 There is one supervisor per every 30-40 operators. They have incentive schemes for things like 100% attendance. an estimate was approximately Rs.000 workers.78 The R Group has a Research and Development department for the technical aspects of garment manufacturing. cutting (Digitizers. to the pre-production stage (layout and machine engineering. They incorporate corporate social responsibility schemes into their productivity ideas. 79 From the company website. time and motion studies. with 1200 workers at this site (approximately 95% male. 77 After disclosing this information regarding the number of skilled workers. Page 64 . to the production stage (work aids. G International has a total of 7.79 VII. such as medical checkups. Departments No information on specific departments was obtained. from the sampling stage (product and pattern engineering. 5% female). 78 From an interview with the General Manager of Operations. the General Manager refused to give any more specific numbers of workers. operation research). 700 per month extra.77 Machinery R Group’s production facilities use machinery at every point in the production process including designing (CAD). and worker welfare programs. Preliminary worker interviews revealed that this company was considered one of the worst factories to work for in Gurgaon.Approximate number of workers in all facilities The R Group has a staff of over 10. Productivity Schemes The company has production planning meetings in which targets are set and the workers do not participate. Plotters & Automated Cutting Machines) and fabric testing (fully equipped laboratory) and fusing. scholarships for workers’ children. 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.
none of which were visited by this researcher./month) 2600 2750 2344 1893 2341 Wage Setting For shop floor workers. which is made on a different date than the regular salary. HR Manager stated that wages increase after a year. Units visited in his report are Gurgaon Phase-1 192 UV. though they do not always receive their PF once they leave the company. and 225 UV. 151 UV. supervisors conduct time studies evaluating the skill level and productivity of a new hire. Benefits According to the CEC report.Wages81 The wage amount excludes overtime payment. VIII. Vijay Uppal Joint Managing Director Mr. Virender Uppal Managing Director Founder/Chairman Mr. HUMAN RESOURCE POLICIES Management Structure Mr. Manicandan’s CEC report. while dotted-line boxed positions are factory-specific and subject to variance. which is not subject to negotiation. Overtime payment is Rs. 81 From G. 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. 15 per hour. Page 65 . After a three-day period. workers are then offered a monthly wage based on this evaluation. Gaurav Uppal Joint Managing Director Mr. Category (from pay slip) Tailor Sewing Operator Helper (8 months experience) Unskilled helper Helper (production) Wage (Rs. which is reportedly not always paid. workers receive 12% PF and 2% ESI.
The General Manager stated that there are common policies across the plants. interviews applicants. Company G and the R Group does contract temporary laborers and subcontract to a labor contractor. However. Recruitment Policy The facility posts signs on gates. So how do you overcome these issues? General Manager of Operations: Oh. More than local labor laws. no. then tests worker productivity for an hour and a half. Researcher: Is labor flexibility or the lack of hire-and-fire policies an issue? General Manager of Operations: No. or a union. Medical Care No information was obtained regarding on-site medical care. IX. BUSINESS BOTTLENECKS The General Manager stated that buyer requirements like double pay during overtime are holding the industry back. 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. Manicandan’s CEC report. customer friendly. Researcher: But you said you didn’t use labor contractors.Worker Training The facility sometimes trains workers if the operation is difficult. grievance policy. He stated that it should be looser. like the labor norms in China. Security System No information was obtained regarding a security system. Page 66 . eco-responsive corporate citizen that is Shaping a Better Tomorrow for everyone. According to G. Workers receive a letter of contract. Today. Other Human Resource Policies No information was obtained regarding a formalized dismissal procedure. No other information about the R & D department at this specific facility was given. [the R Group] is seen as a highlighted-tech. These problems are taken care of with labor contractors.” The company has a manual code of conduct that the General Manager stated is given to each employee. not anymore. buyer codes of conduct are hurting business because they are more strict. worker committees. 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. well. that they engage in the same kinds of recruitment. Training usually takes one or two days and is done through the research and development department. we do more incentive programs and get better performance out of our existing workforce.
INDUSTRY COMMENTS The R Group is in the process of setting up a backward integration project for their knits division. He refused to schedule an interview solely with the HR Manager. G International is working on converting to a single product system within the next two or three months (August 2006). Page 67 . but he answered questions in a more direct. The work culture in the south is “different—more productive and efficient. as it would tell them new government policies and how to best utilize the system. XI. brief way. he asked “why do you want to know that” and refused to give much more information past that. which makes productivity more difficult to increase. In general. When asked about the number of skilled workers. every one of them was canceled by the General Manager. Furthermore. he initially would not let it leave the building. They are also setting up a leather accessory factory at Gurgaon. It would be better to simply show up or not leave an option of calling before coming. He implied it has limited use after the quota phase-out. though several follow-up interviews were scheduled.” The South is also usually single product. who was not at the factory when the researcher visited. The researcher was directed to the General Manager at a G International plant for an interview. and he was much more reserved and suspicious. the Northern area of India is more embroidery and hand-work intensive and is multiproduct. Although the researcher obtained a employee code of conduct handbook. The General Manager stated that the AEPC was much more useful before the MFA phase-out. and avoided any other types of follow-up including the suggestion of a phone interview.X. Because they are trying to increase productivity. especially in regards to quotas. General questions about labor laws or productivity issues usually prompt details and complaints. Virender Uppal (the MD of the R Group) is a former Chairman of the AEPC. PERSONAL EXPERIENCE The R Group was extremely difficult to both interview with and extract information.
Gurgaon 3. The information in the following company report was obtained primarily from an interview with the Chief Finance Officer. In 1993 it became a public limited company.5. Company Secretary Tel: 95-124-4308164 E-mail: jayants@pearlglobal. Haryana Tel : 91-124-4004086/87/88/89/90 Fax: 95-124-4004067/85 Website: www.com Rishi Vig. Chairman deepaks@pearlglobal. Udyog Vihar. business began in the 1980s. 446. Page 68 . The company structure of Pearl Global is extremely unique.com Registered Office: A-3.com Jayant Sood. From an interview with the Chief Finance Officer. online business publications and press releases. BRIEF HISTORY83 Pearl Global was incorporated in 1979.” The House of Pearl is focused 82 83 Unit visited by the researcher. Udyog Vihar. Phase V. Phase V. Udyog Vihar. CONTACT INFORMATION Contact People: Deepak Seth. and its first manufacturing facility was established in 1989. the company website. Chief Finance Officer Tel: 91-124-4308201 rishiv@pearlglobal. Udyog Vihar. 870. 222. Phase-V Gurgaon – 122 016. Manicandan’s CEC report. Gurgaon 2. Community Centre Naraina Industrial Area Phase-II New Delhi – 110 028 Tel : 011-51417680-82 Corporate Office82: 446 Udyog Vihar. Gurgaon II. I.com Production Units: 1. and an interview with the Company Secretary.pearlglobal. as it includes all parts of the garment industry under the “House of Pearl. 138. PEARL GLOBAL LTD. G. Phase I. Gurgaon 4. Phase I.
Inc. Marks and Spencer. Charming Shoppes. and the UK. Kohls. children’s and men’s shirts.1993. children’s. Lerros. The Chairman of Pearl Global established a fashion and design academy. It offers full services to large retailers with the chain broken into business units that cater to different product lines. Nex86. The company recently entered into a business and education partnership with Babson College in the U.S. Pearl Global does not manufacture for the domestic market. Siplec. warehouse and distribution.C.) for the year 1990 . Clients Abercrombie & Fitch.S.E. Page 69 . Bangladesh: low cost. NorPearl. and outerwear. 86 From an interview with Chief Finance Officer. From company website. t-shirts. H & M85. stain sealed garments using goretex and acquatex.S. He has successfully promoted and established the fashion apparel brand "Lerros" in Europe. Liz Claiborne. It also has businesses in Hong Kong (NorWest) and the UK (Poetic Gem). vests. He has been actively involved with the development of readymade garment industry in India. NorPlanet Pearl Global has manufactured women’s. $200 million. is establishing a U. he has been inducted to the Executive Committee of A.. brand “Kool Hearts. as a Special Invitee.C. Karstadt/Neckermann. etc.P. Pearl Academy of Fashion Domestic.on the apparel sector with manufacturing bases in India (primarily Pearl Global Ltd.” 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). Esprit.P.S. III.E.) and a global network of business associates and customers. Castromen. BASIC PROFILE Legal composition of the Company Public limited company. marketing units in the U. trousers. ethnicwear. George (Wal-Mart). basic stuff. including blouses. bottoms. Wal-Mart. Product Mix Areas of specialization include: India: woven cotton and value-added cotton.84 Exports/Imports 100% exports. nightwear dresses. Dillards. 84 85 See company website for list of shareholders. shorts. dresses. skirts. Besides having been elected to the Executive committee of the Apparel Export Promotion Council (A. The House of Pearl includes designing and manufacturing units. which together yield a combined turnover exceeding U. GAP (including Banana Republic and Old Navy). suits. JC Pennys.
Dalal Street Mumbai .87 $400 million in its worldwide operations post quota phase-out. Towers. P.IV.cms> and “Corporate Briefs: Pearl Global. 90 “Pearl Global net up 88%.com/articleshow/1690384.”90 See website for detailed financials.C/1. National Stock Exchange of India Limited Exchange Plaza. 89 From an interview with the Company Secretary. In 2005-06 the company invested Rs 29 crore to augment its production capacities in Gurgaon and setting up a new unit in Chennai. Sahajanand College Panjarapole.1 crore compared with Rs 7. 5th Floor Plot No.88 Net profits are 234% up. J.” <http://www.9 per cent to Rs 159. Pearl announced a dividend of 30 per cent for the year [subject to shareholders’ approval].” The Economic Times: Garments/Textiles.” “The company’s operating profit was Rs 17.89 Other Financials “Pearl Global posted 88 per cent year-on-year increase in net profit in 2005-06 to Rs .110 002 2.indiatimes.telegraphindia. FINANCIALS Turnover $200 million worldwide before quota phase-out. Page 70 . Babson College press release.41 crore in 2004-05].9 crore in the previous fiscal].380015 87 88 From Chairman’s Message on company website.com/1060712/asp/business/story_6465123.5 crore [from 120. 3. New Trading Ring. Ahmedabad . <http://economictimes. Rotunda Building.asp>. Bombay Stock Exchange Limited 1st Floor. G-Block Bandra – Kurla Complex Bandra (E) Mumbai – 400 051 4. 29 June 2006. Stock Exchanges where the securities are listed: 1. The Delhi Stock Exchange Association Limited (Regional Stock Exchange) DSE House 3/1 Asaf Ali Road New Delhi . Ahmedabad Stock Exchange Limited Kamdhenu Complex Opp. The revenue of the company during the year was up 31.5 crore in the previous year.6.400 001.43 crore[ from Rs. 3.
before the cost justified it. Page 71 .they have grown to be our second largest supplier. “Dear sir. the Chief Finance Officer stated that they are engaged in strategic partnerships with six of them. From an initial order in 2001. Inc.S. 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). Our Customer's perception This reply has come from ASDA Walmart to a query of a Sr. 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. They now supply us with a variety of casual.V. They have supported our growth by putting in the infra-structure to service our needs. The following is a forwarded e-mail from George Clothing (Wal-Mart) regarding Pearl Global: Subject: Something you should know. BRAND INFORMATION91 Pearl Global’s Export Market 40% 60% U. Apologies for the delay in replying. They are working on building strategic partnerships with between all of their vendors and suppliers and consolidating them. 91 From an interview with the Chief Finance Officer. woven.knitted. and jersey product across all ages and genders from a variety of countries in the Far-East and Indian sub-continent.A. 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. To grow the business at this rate Pearl has had to show a "can do" attitude. Journalist. EU and UK Major Clients Brand JC Pennys GAP (incl ON and BR) Charming Shoppes.
Lancelot Joseph. Mr. quality etc? * As compared to other supplier where do they stand? Please feel free to add whatever else you would like to express/say on the business house. Best regards. retailer. * 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. so Pearl have stepped in to provide solutions and support. offering us product direct from factory or landed delivered if the situation demanded. I feel that we can have an honest conversation with Mr. price. has a right to exploit the people who make the product we sell. As price deflation has become a way of life in the UK clothing market. 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. Executive Editor. 1 business publication. flexibility to change our minds as to what we want right up to the last minute. Allan Quayle General Manager-Strategic Supplier Development George Clothing Phone 00 44 (0)1455 264409 Mobile 07779 700695 e-mail allan. Senior Sourcing Manager -Kidswear.Growth on this scale inevitably creates major head-aches for the supply-chain. Quality. Pearl are also helping us to achieve our ambitions to make the George brand a truly Global brand by opening an office in Canada to support the growth of the George brand in Wal-Mart Canada. Currently I am doing a corporate feature on the House of Pearl who is your vendor. UK I am a journalist from India writing for India's No. I honestly believe that to supply fashion retailers at the volume end is one of the most difficult businesses to be in . hence would like to have some of your observation/views/comments on the business house and your relationship. Deepak Seth has also gone beyond the factory gates to work with the community and put something back. or supplier. For Pearl to grow their business with us. Thanks and regards. ASDA Wal -Mart.quayle@wal-mart. quality. and where our distribution network has creaked under the pressure. We pride ourselves at George that our ethical standards are rigorous. Finally. no-one whether it be store customer.com --Original Message-Dear Ms. Business India” Page 72 . Below are a few points which I hope you would take time off and reply to at the earliest. it is critical for us as a business to deal in the right way. and any issues that have arisen have been resolved immediately and taken as learnings to provide a better service going forward. 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. and delivery have had to be a given.We want style. Heather Moreton.
The House of Pearl’s research and design department prepares a collection of high fashion styles for each season. India: Unit Prices (paid to factory per piece of garment supplied) Range Average Retail Delivery Time Type India U.Buying Agency or Direct They used to contract through buying agencies. The embroidery tailors either come into the facilities to perform the work or they send it. Pearl Global then manufactures the style. are consulted to developed in-house patterns. 5% freight. Every stage of the production line has its 92 From an interview with the Chief Finance Officer. now it is 6 months. Markup (days) High of $10 $6-7 USD 3 to 4 times 60 to manufacture. which are shown to buyers in advance. who then chooses or modifies the styles. yarns. Sometimes designers from the UK and the U. INFRASTRUCTURE92 Pearl Global has five or six production facilities in India. but now they have developed direct relationships with their long-term business partners.S.S. Design/Sampling and Product Development Designs are mostly developed in-house. shipment 50% landed 30% FOB Bangladesh: Unit Prices (paid to factory per piece of garment supplied) Range Avg Product Mix $4-12 Varies by style Mostly casual No information was obtained regarding a change in unit prices post-quota phase-out. Quality Control Raw material including fibres. VI. but it mostly in-house. Pearl Global uses labor contractors. The House of Pearl has over 150 factories across Asia. 50% FOB. They are working on doubling their capacity in the next 2-3 years. one in Indonesia. Production System Pearl Global uses an assembly line system. dyes and chemical are thoroughly checked before they are fed into the manufacturing process. A few years ago the delivery/production cycle had to begin 18 months in advance. They have six design factories. and one in China. Production Capacity Pearl Global has 20 million pieces in-house capacity and 120 million pieces capacity all across Asia. 90 incl. one in Chennai and the others in Gurgaon. two of which are in Bangladesh. Subcontracting Sometimes Pearl Global subcontracts hand embroidery. Page 73 .
93 Numbers for the units at 446 and 870 were estimated by the Chief Finance Officer while the other numbers were obtained from G. 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. count strength product (CSP). moisture regain percentage and finish percentage. and if they have a low level or no absenteeism they also get an incentive. pilling. Every set of fibre (polyester. drape and fastness to light washing and rubbing and slippage. Gurgaon 600 workers 870. Phase I. ply yarn. fibre composition percentage (blend %). which is sourced from outside is tested for fibre fitness micron ( fibre diameter). but did not give specific numbers.own set of detailed monitoring system. Approximate number of workers in all facilities Pearl Global has approximately 6000 workers in India. Gurgaon 2000-3000 workers Machinery Pearl Global has an estimated 2000 machines for every part of the production process. twist per inch. The finished yarn is tested for residual shrinkage. CRA. Manicandan’s CEC report (and confirmed by the Chief Finance Officer). etc. as neither an HR manager nor a production manager was available for interview. If a worker stays for six months they get incentives. Departments The researcher was not able to obtain information regarding the specific nature of the assembly line or tour the factory. Udyog Vihar. Gurgaon 2500-3000 workers 446.” as workers do not have a long-term commitment to the factory. VII. 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. viscose tops and special fibre). fibre bundle strength. Udyog Vihar. Polyster viscose and cotton yarn is tested for count. Gurgaon 500-600 workers 222. novelty yarns. Phase V. After workers receive their monthly salary they see a “rise in absenteeism. Production Unit Number of Workers93 138. Page 74 . Productivity Schemes Pearl Global gives out “best worker awards” and “gold stars” for productivity. Phase I. uster percentage and impurity. Phase V. Udyog Vihar. Sretch yarn. WORKING CONDITIONS Wages and Benefits The Chief Finance Officer stated that sometimes Pearl Global pays workers above the minimum wage.
and Sukumar Pride. Recruitment Policy Pearl Global uses labor contractors and specifically stated they use R. HUMAN RESOURCE POLICIES97 A new HR manager is to be hired as of August 15. Worker Training There is a training line for new workers. VIII. 3000 per month Every year workers receive Rs. 100 more and a 20% bonus for divali.K. 96 From an interview with the Chief Finance Officer. Manicandan’s CEC report. 95 Page 75 . Union and Worker Committees98 There is no job security. All but temporary workers are covered by social security schemes. 3500 per month Rs. They contract temporary workers through R.Position Finishing supervisor (7 months experience) Tailor (8 years experience) Tailor (5 years experience) Wages94 Rs. Dismissal Procedure. The union is not effective in addressing the problems of the workers. if there are no orders or “no work” employees are told not to come. and the head of the union is not an employee at the facility. & Company. Overtime95 The facility at 222 UV has two shifts and thus there is little overtime. they used a mix of outside agencies and consultants. 2006. The labor turnover in Chennai. According to G. who must first pass a hand-eye coordination test and then spend twenty days on the training line. Furthermore if “it was all women it would be fine.” However they are working on providing the necessary infrastructure (such as transportation) so they would be able to hire more women workers. 4000 per month Rs. Out of 500-600 workers only about 90 are in the union. There is a union in the facility at 138 UV. Manicandan’s CEC report. 98 According to G. although being a “permanent” employee will entitle a worker to an identity card.” but there are not enough “available. though sometimes workers work double shifts and are paid double. but if it is mixed employees then it becomes a problem with issues of sexual harassment. For their HR strategies. 97 From an interview with the Chief Finance Officer. There is no sexual harassment 94 According to G. Manicandan’s CEC report. & Co. ESI and PF.” and it is not convenient as Pearl Global would have to provide transportation. who are not entitled for ESI and PF. They did not have a HR manager before this. Labor Turnover96 The labor turnover in Gurgaon is about 20%. and Indonesia is lower. They want to hire more women like Southern facilities do because women workers are “more efficient. Bangladesh. K.
Pearl Global just hired a lawyer to help analyze and plan financial structure. The motto of every Corporate Body is to ensure Predictability. Labor cost is still competitive (in terms of the world market). Employees. The Company has built-up very effective TEAM WORK…The primary purpose of Corporate Leadership is to create wealth legally and ethically. and teams are set up to work on weak areas in working conditions. The Chairman Pearl Global espouses corporate responsibility ideals on its website (Chairman’s Message. i. there are sexual harassment committees. Working on having uniform HR and productivity strategies. as there is different management at each facility. X. The House of Pearl has enough infrastructure to double turnover. 2006. Corporate Responsibility/ Codes of Conduct According to the Chief Finance Officer. etc) helps immensely. Vendors and the Society-at-Large. Pearl Global has a very effective HRD system they have build an empire highly trained and skilled manpower ready to face the dynamic changes. Source the best from the World to deliver the best to the world by following ETHICAL MANUFACTURING AND TRADE PRACTICES. which is missing in the North but the value-added garments (embroidered. 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. a fashion design and manufacturing technology institute. According to the Chief Finance Officer. which have monthly meetings. Deepak Seth): “A future that shall be built with the same strategy that has shaped our past.committee. INDUSTRY COMMENTS100 Commented on the strengths of the North. The strength of South India is its efficiency. This translates to bringing a high level of satisfaction to five constituencies Customers. Page 76 . They want to integrate all offices with an ERP 99 100 From an interview with the Chief Finance Officer. “ethnicwear” or design. The company also operates a school by the name of 'Little Pearls' in Delhi. Seasonality is an issue. which holds it back.e. Sustainability and Profitability of revenues year after year. BUSINESS BOTTLENECKS99 The industry is regulated by the supply of cotton. they have set up a medical treatment facility in the spirit of social responsibility. orders are fewer in July and August.” IX. The company has set up Pearl Academy of Fashion. so they are working on capitalizing upon the existing capacities. From an interview with the Chief Finance Officer. The unit at 222 UV does not have a union. as mentioned previously there is a new HR manager slated to begin on August 15. implying that the AEPC is not as useful post-quota. Investors.
<http://economictimes.16 equity shares of the company for every share in City Estates was recommended by the board at the meeting.Virender Uppal. Production and Computer Aided Design…The Academy has opened its second campus in New Delhi. industrialists and academicians. It provides training programs in the areas of Fashion Design. 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). and London Centre for Fashion Studies. and is located in the Okhla Industrial Area (Phase II) of New Delhi. It has links with acknowledged international leaders in fashion education. like in “Pearl Global to merge two companies. who constantly review the institute's performance to ensure that the programmes are practical and industry-oriented. R & Company.”101 Pearl Academy of Design Education-Pearl Academy of Fashion http://www. The company is setting up new facilities in Dhaka (Bangladesh) and a design center at Chennai.com/index. at Naraina. Chairman. 101 Page 77 . Modelama Exports The Pearl Academy of Fashion was set up in 1993 by Pearl Global Ltd. 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. Deepak Seth. Mr. in India and abroad. 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. such as the UK's Chelsea College of Art & Design. Pearl Global. London College of Fashion. Mr. Managing Director.” The Economic Times: Garments/Textiles.com/articleshow/1404688. 7 Feb 2006. Retailing. and Germany's LDT Nagold.cms>. Merchandising.indiatimes.. As a result of the close interaction between the industry and the institute.system. The House of Pearl is planning to get into retailing and is working on an industrial engineering department and setting up software SAM. Bolton University. one of the top two in this field in the world.htm Advisory board includes: Mr.pearlacademy. The Advisory Board of the Academy consists of leading exporters. the Netherlands' Hogeschool van Amsterdam. Partner. Lalit Gulati. Hong Kong Polytechnic University. It has a validation agreement with the UK's Nottingham Trent University (NTU).
Benetton. Mafatlal. This trust is in the initial stages of developing a new. and stipulations of the local region in India. USA. links to websites. President of Babson’s Alumni Club in India and Chairman of DCW Ltd.—ranked #1 worldwide in Entrepreneurship Education---will advise Pearl on the strategies. Orient Craft.. Babson faculty will provide workshops for Pearl faculty and staffing. Current plans are for first classes to be admitted in the fall of 2008. Shoppers' Stop and Ebony. Research in India Babson College. USA and Pearl Global Ltd. and Professor Ash Rao will present the final reports to Pearl. Mass. Michael Fetters. Pearl Global Ltd. and procedures necessary to build an Entrepreneurial foundation and curriculum.S. India last week for the official signing ceremony with Deepak Seth. and assessment standards. * Student report on the student admissions process and co-curricular activities. The Pearl School for Business Studies will grant Bachelor of Business Administration and/or Masters of Business Administration degrees with a focus on entrepreneurship. Both institutions will identify mutual exchange opportunities—on-line access to library resources. was also present. among others. Bhupatkar. workshops.. The Asia Institute at Babson. Executive Director. * An overview of the entrepreneurship curriculum. Ponds (India). joint information sharing.—a $400 million company exporting garments to Europe and North America—has formed a non-profit educational trust.” 102 Partnership with Babson College Pearl Global Ltd. * Faculty report including Babson faculty profiles and approaches to faculty development. Robert Eng. India. Bombay Dyeing. India. Babson’s Provost. Sonal Garments. private business management institution at two campuses near New Delhi. distance participation in projects. have signed a strategic collaboration on a full range of activities to promote world class research and education of entrepreneurship in India. on New Business School: Two Form Strategic Collaboration to Promote Entrepreneurship Education. Vivek Jain. traveled to Delhi. Pearl will shape this information into a comprehensive Entrepreneurship curriculum to meet the particular conditions. Page 78 . Babson College in Wellesley. Chairman of Pearl Global and Dr. Pearl Global Ltd. The collaboration is designed to expand over the next seven years. internship facilitation. The Babson college press release: Babson College. RMX Joss. Richa & Co. requirements.’s premier business school). advisor to Pearl Global’s education trust. learning. 102 From the website of Pearl Academy of Fashion.. Babson’s consulting reports will include: * The general curriculum for undergraduate and graduate programs. processes. and will visit regularly to monitor teaching.. has set up a business partnership with Babson College in Boston (U. Advises Pearl Global.
babson. growth prospect remaining high. 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..php?id=13972072>. an interview was promptly arranged with the Chief Finance Officer. The Company Secretary was not useful in arranging interviews with other personnel who would be able to answer what he could not. <http://sify. is understood to have chalked up a plan for its presence in domestic retailing. visit www.such as Jaipur.edu/Newsroom/Releases/Babson-and-Pearl. 104 “Pearl Global bullish on Q2 numbers. Mass. Deepak Seth. Babson Executive Education offers executive development programs to experienced managers worldwide. the company is in the process of booking retail outlet spaces in cities across northern region . It was difficult to obtain an interview by calling the numbers on the website. the recent fall in price makes it an attractive long-term bet. Kool Hearts label.com/finance/equity/fullstory. “We are privileged to work with Pearl Global.W.edu.” Babson College in Wellesley. <http://www3. 103 Babson Newsroom Release.”104 XI. Olin Graduate School of Business at Babson College. however after e-mailing the Chairman. a company that shares our vision to advance Entrepreneurship knowledge in India. though the researcher was not able to obtain a copy without signing a confidentiality agreement.babson.cfm>. is recognized internationally as a leader in entrepreneurial management education. Babson grants BS degrees through its innovative undergraduate program. Pearl Global is getting into domestic retailing: “ [Pearl Global]. 24 April 2006. and grants MBA and custom MS and MBA degrees through the F.103 Domestic and International Retailing In addition to the U. Chandigarh and Lucknow.” said Fetters. The interview consisted of a powerpoint presentation on the structure and capacities of Pearl Global. Ltd.S. Page 79 . “According to market analysts. “According to industry sources. which is setting up a joint venture manufacturing facility for soft fabrics in China to secure part of its supplies.. For information.” 26 Oct 2005. Gurgaon.“This collaboration is an important step in Babson’s journey to globalize Entrepreneurship Education.
found some tailors to make the shirts. 15000 ($300) from his father. Managing Director. Haryana105 3. Page 80 . Gurgaon. ORIENT CRAFT LTD. Phase-1 New Delhi. He had a friend from London who was buying from importers and selling the goods to specialty shops. An ISO 9001-2000 Unit: “Orient Craft Embroidery Division.com Production Units: 1. I. 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.ocemb.6. Haryana Tel: (+91-124) 5090800. 110020 (India) Tel: (+91-11) 26818247. Unless otherwise indicated. Phase IV. has no website. From an interview with the Managing Director. 68. Udyog Vihar. and preliminary interviews from Gurgaon workers. 14-A Maruti Industrial Complex Sector-18 Udyog Vihar. online business and economic articles. Gurgaon-122015. but it does not contain any information beyond the heading: Orient Craft Limited: Embroidery. Gurgaon.” E-mail: orient@orientcraft. G. a company profile given to the researcher by the Managing Director. but the company was not incorporated until 1978. Udyog Vihar. 2341110 2. 7-D Maruti Industrial Complex Sector-18 Udyog Vihar. Manicandan’s CEC report. the largest computer embroidery facility in the Indian subcontinent. Dhingra borrowed Rs. who asked Dhingra to get 1. Founder/Chairman Personal secretary Meghna. Khansa Road Sector 37. so he could use the proceeds as seed capital. Dhingra was a law graduate from Chandigarh with no experience. 2343262 Fax: (+91-124) 2342042. There is a preliminary website set up for its embroidery division at http://www. Plot No. 26818249 Website: Orient Craft Ltd.000 shirts made in India. and 105 106 First two units visited by the researcher.com/. BRIEF HISTORY106 Business began in 1972. most of the information is from the interview. 13. CONTACT INFORMATION Contact Person: Sudhir Dhingra. Haryana 4. Gurgaon II. mobile: 9871496362 Corporate Office: Orient House F-8 Okhla Industrial Area.
Orient subcontracted until the early 80s.”107 Biography for Sudhir Dhingra for the International Fashion Technology Forum. you had to be a tailor to be in the garment industry. Liz Claiborne sent an American technician to help Orient with worker training and modernization. not just in the limited Indian context. as Gurgaon is the single largest manufacturing sector in India. CMAI. he obtained a factory processing site of 240 sq. Orient’s first factory was established in a village in Hauz Marg and it is still there.” His father gave him one year to start up business. they’re not looked up to. 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. Dhingra wanted to improve the standards of quality and infrastructure to globally competitive standards. 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. During the first few years. with more than 350 modernized factories.000 sq ft. Dhingra states that others followed Orient Craft’s example.” Dhingra wanted to move production out of the village and industrialize the area and put as many skills in-house as possible. 15000 plus a small portion of the profit (Rs. <http://www. During this traveling. then consolidated supply chain into one roof. In the 1990s Dhingra set up a bigger plant with 100 machines. Then after a few years. and others. and restarted business with a trial order of 1200 pieces for a customer in L. with 3500 people. he estimated a production capacity of about 150. Both were wholesalers who sold to specialty stores. and Germany buyers. CIAE.A.htm>. he decided to break into the industry. Then. 200-300 people. When he returned. set up a pressing line on the dining table and the production line in the garage. Orient got clients by word-of-mouth from their L. they’re looked down upon. The first plant in Maruti Industrail complex was the first plant in India that was over 80. ft. when he got back to India. with 1800 people. “At the time.A.000.com/iftf. yards and outsourced actual manufacturing. When his friend repaid him the Rs.000 pieces and an annual turnover of around $40-50. 107 Page 81 . CII. only now it is 136. and that plant is still there. he was able to observe fashion trends and the kind of things that were selling.000 sq. 6000 ~ $133). In the mid 1980s. May 2006.shipped them to London. During his traveling. Then while in Germany. he hired more people. ASSOCHAM. found another buyer.niftindia. and he rented a house. And being a tailor is like being a janitor. not like today. 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. The first Gurgaon plant was established in 1993. though he stated that it was difficult to actually get the money from the government. National Institute of Fashion Technology. the Indian-inspired fad went away and he had to spend six to seven months traveling to get rid of inventory stock.
Product Mix Areas of specialization include blouses. Dhingra was the sole proprietor. Mr. 2001. and gave 20% to his nephew and 20% to his friend. boys’. because of “language and cultural differences” with the European business partners. Ann Taylor. Marks & Spencer. coordinates. Zara. LizWear. Orient Craft Ltd.III. BASIC PROFILE Legal composition of the Company Orient Craft is a privately owned company but deemed public limited. Tommy Hilfiger (men’s. Abercrombie & Fitch.K.G.Hook. Limited. and jeans). Anoop Thatai EOU Information The company has three 100% export oriented units (which can import all raw materials and trims free of duty). skirts. Jones of New York. Loft. Marc Jacob. Susan Bristol. Banana Republic. Oasis Stores. outerwear. Next Retail Ltd. Macy’s. Ralph Lauren (Lauren. sportswear. jackets. GAP (kids). ropers. J-Crew. is looking into breaking into the domestic market. Old Navy (women’s). ELM Street. Diane von Furstenberg. women’s. 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.. LizSports). The company does not do that much business with Zara and Miss Sixty (Italy). dresses. Esprit. Awards Additional information: Orient Craft Ltd. K. Polo Jeans). Dockers. pants. Rocawear. Orient used to source for Wal-Mart in back in 2003 but has since stopped. Lands End. Kohli. Mr. knitted shirts/t-shirts. Now he owns 60% of the shares. kidswear. Donna Karen. Sudhir Dhingra (Chairman and Managing Director). 1998. Up until 10 years ago. Dillards Stores. Clients Armani Exchange. Owners/Directors Mr. Express. Calvin Klein Jeans. Liz Claiborne (LizDresses. and Marks & Spencer. 2000. 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. However. Exports/Imports 100% exports. Dhingra states that Orient is the only factory in India to manufacture for Marc Jacobs and Louis Vuitton. J. and 2002. Page 82 . men’s shirts. shorts.
8 million 19.02 V. 4 per unit.5-99 million 19.uk/2/hi/south_asia/4294679. despite more competitive pricing.8-24.20-1.02-0.20-1. Europe 80% Canada 108 Basu. FINANCIALS Turnover FOB USD $105 million for 2002-2003 FOB USD $118 million for 2004-2005108 FOB USD $165 million for 2005-2006 (Rs. 109 These figures were estimated by the Managing Director in the space of 5 minutes. 111 Average retail markup is five to six times the unit price of the garment. 9 per unit) 113 Dhingra stated that Orient usually ends up with half of the target profit.50 $1. which has doubled in a year and a half-as mentioned by NITRA president-used to be Rs.03 0. Breakdown of Sales Revenue109 Est USD 2006 Material Cost Labor Overhead112 Profit (target)113 82.08-0.03 0.A.02-0.50 $1. 742 crores) Other Financials Last years profit was $8 million (40 crores). “Winners and losers in textile shake-up. 112 Overhead (mostly energy. BRAND INFORMATION Orient Craft's Export Market 5% 15% U.bbc. now it is Rs. Kaushik.8 million 16.” BBC News.S.co.00 % Retail Price111 0. 110 Based on the company’s average unit price of $10 USD.5 million % of Sales 50-60 12-15 12-15 10 Per Garment110 $5.00-6. <http://news. so they can only be thought of as a rough approximation. 2 March 2005.00 $1. Page 83 .8-24.12 0.stm>.IV.
Dhingra stated that Orient’s average unit price is $10. Orient would not take a Wal-Mart order.uk/2/hi/south_asia/4294679. Orient was manufacturing skirts that would be sold for $4 USD per piece. they made one skirt for Polo Blue that will retail at $1199 (did not state unit price). however used to source to them about 10 years ago. 114 Dhingra stated that Orient manufactures 80-90% of what Diane von Furstenburg (high-end maternity clothes) sources from India. There has not been a huge shift in the composition of customers. Dhingra states that it is easier to deal with buying offices. 2 March 2005.50 USD (from US companies.stm>.co. depending on the quota category and how much they were previously restricted. but they just opened an office last year. Recently. 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. Marks & Spencer is currently direct. There has also been an expansion of volumes and an estimated 15-17% growth in orders.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. Kaushik. the industry-wide average unit price in India is $3. “Winners and losers in textile shake-up. Limited used to be mostly direct. European companies pay higher unit prices). Orient tends to deal in higher quality and higher unit prices and lower volumes.) stated that on the date of the author’s visit in 2005.” BBC News. like cotton pants. however.bbc. 115 Restarted business with Macy’s 2 years ago. but they will open up their own office soon. <http://news. Some things have increased greatly. however an article written for the BBC in 2005 (Basu. Page 84 . 116 According to Dhingra.
but other fabric from silk.000 woven per month. 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. <http://www. whose samples are then sent to potential buyers. (unclear if it is the same facility visited) at the cost of over $10 million USD. chiffon to denims and outerwear).117 Previously.000 sq.000 pieces. 120 Biography for Sudhir Dhingra for the International Fashion Technology Forum. product development became the key thing that most Western companies were looking for. 119 According to the company profile. ft. 1. ft. According to the company profile.VI. Orient makes 130.200.S.000 per day120 2006: In an average day. It picks up fashion from around the globe.”118 Subcontracting Orient does not appear to subcontract. which was at the time the “single largest multi-product manufacturing plant in the whole of India.000sq. Production System Orient Craft uses an assembly line system. six in Gurgaon. 121 According to an interview with the Managing Director. As Dhingra stated.htm>. companies.000 sq. 720.000 or even 100. May 2006. 117 118 Plot No. and employed 5000 people. even a little bit before. Udyog Vihar. in and around Delhi. and one large plant is located in Noida. gives feedback. and creates new designs for each season. of which four are in Delhi. the company had only 17 production facilities spread over 600. Page 85 . sometimes 25-45.000 pieces and production capacity has grown at least 25% over the past year. after 9/11.000 woven per month. Orient also deals in some very small volume orders for high-end buyers like Oil Lily. The second plant visited was 380. Orient has put a lot of human resources into product development and now boasts 900 product development personnel at 5 different locations. INFRASTRUCTURE Company has 21 production facilities. Gurgaon.niftindia. as traveling became restricted and Indian companies needed to build a competitive advantage. Haryana.com/iftf. 13. in 2003. In 2003 Orient established a manufacturing complex of 340. ft.000 knitted per month 2005-2006: 720. Orient has a display store in NY on Park Avenue that it opened up 3 yrs ago. Khansa Road. though it does use labor contractors. Orient has created a niche with their diversified product line (mostly cotton/knits or wovens.121 The average order size is 10-12. National Institute of Fashion Technology.000 knitted per month119 2006: More than 125. Production Capacity 2002-2003: 480. Sector 37.000 pieces.
000 in-house Number of people employed in 2006: 23. which is generally equal in size to the production department. Productivity Schemes Orient uses incentive schemes to reduce absenteeism and has implemented worker welfare schemes. Manicandan’s CEC report.Quality Control The company has in-house lab testing for garments. and trims. the workers are skilled and come from a tailoring background and are usually from UP. washing plants and dry cleaning units.000 Machinery Orient has in-house computerized embroidery machines. Departments No information on specific departments was obtained through the interview. Bihar. who manufactures 80-90% jackets/ outerwear. More contract workers and women (especially thread-cutting) are in the finishing department. According to Dhingra the “girls” in the South are operators and less skilled. However according to G. Manicandan’s CEC report and could vary factory to factory. “most of the permanent employees are supervisors and perform high-end work such as production in-charge and finishing in-charge. According to G. workers do not go to lunch at the same time. Information on work timings was taken from G. shirts. VII. MP and some from Haryana. Page 86 .” Dhingra stated that 70% of Orient’s workforce is direct employment. not through a labor contractor. they “can’t be like Golkadas. trousers. the company had 7300 sewing machines. fabrics. The labs are equipped to test for all parameters including color fastness to light. with very little embellishment. WORKING CONDITIONS The workers are 80% male and since Delhi and Orient is mostly multiproduct. consisted of 12 production managers each in charge of about 250 workers (tailors and helpers) at 100 machines with 12 line supervisors. In 2002-2003. Approximate number of workers in all facilities Number of people employed in 2002-2003: 12.” 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. Manicandan’s CEC report. one facility’s production department. and since Orient produces high-end clothing with lots of embellishments.
the company's chairman and managing director Sudhir Dhingra dreaded the idea of setting up huge factories . 60-70% of the workers are unskilled helpers. Dhingra stated that in the 1980s and 1990s Orient used a piece-rate system. Category Tailors Helper Trainees Contract Worker Average Wage (Rs. and Vasisht & Company. Some of these contractos are R.all for the fear of Page 87 . K. Union Though unions were not explicitly mentioned in the interview. but he makes no mention of any other incentives.Wages The average wage starts at Rs. Recruitment Policy Orient Craft employs contract workers for at least 30% of its workforce. “particularly [those] working in the Finishing department. probably around 8-9% and as Orient is expanding. Sartrushi. labor turnover is decreasing. no piecerate. The payscale is adjusted twice a year according to inflation. Worker Training Dhingra stated that all the facilities have training schools and they want to make them more formalized. the salaries average Rs. HUMAN RESOURCE POLICIES Dhingra stated that there are common HR policies and productivity schemes across plants.” Furthermore. the turnover for Orient Craft is fairly low. Manicandan’s CEC report. workers are paid much less than Dhingra asserts. However. Bonuses are given during Divali. 5-8. Viet Kumar & Company. and most people are above the minimum wage.000 per month plus ESI and PF. and in 1993-1994 they started moving away from piece-rate and a few years ago they did away with piece-rate completely. 3000 per month for an unskilled worker salary. VIII. semi-skilled and unskilled workers that are hired through labor contractors are paid under a piece-rate system. the following was mentioned in a business article: “Till a year ago. & Company. according to G. The payments and benefits for contract employees are given to the contractor. They are trying to start a training school NGO with a founding member of NIFT. Dr./month) 2850 2344 2000 2850 Labor Turnover According to Dhingra. With incentive programs for more highly skilled workers. where workers can be trained and work for other companies if they choose to. who takes a 5% commission before paying the rest to the worker.
Thirty years ago we employed a women who worked as a thread-cutter and got paid Rs. Orient also helped train 300 women from the nearby village in hand embroidery at international standards. Global players are looking for India bases. Twenty years ago we had over 1000 workers. Clusters are reinventing themselves.000. Maruti Industrial Complex unit).’” They built a four story structure to house the embroidery tailors. Sector-18. Since then the company started sourcing their manpower from labour contractor[s]. However upon further inquiry. There is no grievance policy procedure in place for complains against workers or management. T. stating that he would forward the company’s code of conduct and a list of their worker committees through his personal secretary. ‘my husband doesn’t beat me anymore. Manicandan’s CEC report. Punishments are given to workers without any formalized procedure. it’s about what we can do for the community.[worker] strikes. they feel very proud to bring in income. 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. But the management suppressed and ousted all the workers who [were] involved in the establishment of a Trade Union.it’s not just about the bottom line. 400 per month. Now she is a finishing manager and gets 123 Rajshekar. and Surendar. But will we be ready in time?” Businessworld. <http://www. workers are fired with no redress. sometimes more than their husbands. “Preparing for 2005: Dressing up for the party.”123 According to G.businessworldindia. This strategy effectively stops any attempt to consolidate workers towards creating a Trade Union.000 building a community welfare center that provides medical care for community members. The “village panchayat said that Muslim women can’t go out…but now that they are trained.com/apr0504/coverstory01. Orient had no worker committees at the facility visited. he stated that such information was confidential and would hurt Orient’s competitive advantage.000 and Orient spent $20. M. GAP gave Orient $35. no sexual harassment committees and workers are not involved in wage negotiations or target setting. Some of our workers are second-generation workers. and if a manager finds a worker guilty of an infraction.asp>. and that Orient pays in full for the schooling of female children of workers and for 65% of the schooling of male children. According to Dhingra. it would be people.” Worker Committees/Grievance Policy/Dismissal Procedure Dhingra was reluctant to give specific information regarding worker committees in person. According to G. ten years ago we had 5000 people. “if someone asked me what my one single reason for success. Page 88 . “around five years ago there was an attempt to establish a trade union (at the 7-D. now we have 23. no formalized dismissal procedure. I have always been very people-centric-. One woman told me. Although Dhingra stressed how this was all for the benefit of the women and the community. 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.
and her son is working here… I have always thought about social welfare. which eases strain some as well as the other diversification of profits. Seasonality is an issue. Labor flexibility is also an issue.000 per month. in-house fully functional gym and an Executive Club. Dhingra wants increased flexibilization otherwise it is more difficult to expand and it hurts business.” They started up home furnishing about three and a half years ago. “they have 100.000 people. According to the company website: The new complex is designed to create a very worker and management friendly environment in terms of esthetics. Pottery Barn. as Orient usually doesn’t have as many orders May through August. for Bed Bath and Beyond. Macy’s. Specifically. 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. They started producing denim products 5-6 years ago and just started manufacturing men’s suits at a plant for Liz Claiborne and Express. we only have 23. highly tailored outfits with additional embellishments like embroidery and special washes. 50. Marks & Spencers. 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. It is the soul of our company. he wants to extend the length of time it takes to become a permanent employee to 12 months. comfort.. Dhingra stated there are companies who do $1 billion (mentioned China and Lian Thai from Hong Kong.000). White Co. since Orient Craft products tend to be high-fashion. and ease of working. and Orient needs to do competitive pricing to stay in the game and Page 89 . We have created great recreational areas for workers and middle management by building great cafeterias. which includes a more complex manufacturing process. “India is still not good at producing fall fabrics. Although happy about Orient’s success. Besides being compliant by the current standards. Donna Karan. Home furnishings is still smallish industry and comprises about $15-17 million of Orient’s sales. such as home furnishing.paid Rs. but Orient has taken up some holiday decoration work. IX.” 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. BUSINESS BOTTLENECKS Productivity is relatively low.
“The lifting of quota has brought humongous demands on one side and on the other. 125 Jha. <http://www. the garment industry presently stands at approximately Rs 15. as they need to grow the base of buyers and price is a compelling reason to do that. Orient Craft manufactures and exports about 30 lakh units of garment every month. Ironically it is the same Indian companies who are buying the units for their machines. World over. growing by over onefourth from last year.124 The machinery from the newly acquired plant will form part of the company’s expansion plan at Manesar. Orient came up on the global radar when it started its first overseas facility in New York two years ago. The company has since then stripped the Spain unit of its machinery and fitted them in its plant here at Gurgaon. and aims to increase it to over 40 lakh units after the expansion. Kumar. buyers are getting increasingly quality conscious. Since the quota system has been reimposed on China. Noida and Okhla in Delhi. As of now. near Gurgaon…Levi’s was looking for a buyer due to high maintenance and labour costs in Spain. The company’s management is also planning to raise an IPO later this year. At present. (despite quota regulations) and India adds to a minuscule 1. Page 90 . Bangladesh and Pakistan. 16 September 2005. The company expects the expansion plans to boost its revenue generation. 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.cms>. The company’s deal with Levi’s is the second such significant international venture.” said Mr Dhingra. India’s lack of worldclass machinery producers domestically has seen a lot of companies look to the West for help.” Industrial Economist: Textiles Report.000 crore.indeconomist.indiatimes. The expansion plan envisages setting up of two new facilities at Manesar. India. In the changed business scenario. PTI Economic Service. the textile industry in India still has a long way to go before it can catch up with Chinese volumes. However.” Times News Network. From business articles: The company… acquired a Levis unit in Spain in mid 2005 for Rs 60 crore (approximately 13.com/30thjune06p4.125 124 Dipankar. Orient has 20 production units spread across Gurgaon. INDUSTRY COMMENTS Orient recently bought a Levi’s plant in Spain for its technology. “Indian textile companies on acquisition spree. Earlier. it is important to have machinery comparing to global standards. <http://economictimes.5%. “Garment exporter Orient Craft buys Levi’s plant in Spain for Rs 60 cr.bring in buyers.htm>. Mr Dhingra estimates the annual turnover to be in the excess of Rs 800 crore.curpg-1. X.3 million dollar)…Orient Craft by its own admission acquired the unit because of its superior machinery content.00. India is in an advantageous position.com/articleshow/msid-1232753. Mayur Shekhar. of which China contributes one-sixth.
Page 91 . dirt.” he said. but best linens) are setting up facilities in India and selling back in Europe. which plans to source $1-1. Financial Daily from THE HINDU group of publications. if there is a mall…Real estate is growing. we aim at scaling our Japanese business up to $30-40m. at present Japan is a relatively smaller market. and every day a new one is opening up—there’s space available in Karol Bagh. etc. Earlier. probably about 80-90% still get clothes from tailors." Mr Sudhir Dhingra. told ET. In 2-3 years. 25 November 2005. delivering the inaugural address. we ourselves are looking at buying 2-3 lakh pieces from India. As per the arrangement. told reporters on the sidelines of the CII conference on `Textiles forum . Chairman and Managing Director of the company. The deal is likely to be signed later this month. only about 60-70 million have disposable income.S. 126 “Orient Craft plans SEZ for garment units in AP. but look how large the population is—out of one billion. However. Why would people go through rain. <http://www. SBC is the buying arm of Kashiama.htm>. Orient Craft will be the exclusive suppliers from India to SBC. the Andhra Pradesh Chief Minister. The SEZ is likely to come up on a 300-acre plot with an estimated investment of Rs 2. “An increasing number of Japanese buyers are looking at Indian export houses for their sourcing requirements. which is a joint venture of Caramin (France) and Bairb McNutt (Ireland. Dr Y.Though most people in India. a leading Japanese buying house. Yoshiaki Kamiyama.Emerging opportunities and the road ahead' here on Thursday. SBC. In the next couple of years. “The tie up with SBC will give us a good foot hold in the Japanese market. Now there are 500. the market will contribute a significant share of Orient Craft’s overall business pie. He announced the company would be given 10 acres of land at Nacharam to set up a garment manufacturing unit. there were only three shopping malls. population spend. Banswala Mills.blonnet. that’s 200 million people. the company’s MD.— only about 30% of the U. So the spending power is in India. if even 5% are rich and 15% have disposable income. Orient is considering getting into the domestic market now.000 crore.5m worth of textile products in the next couple of years. said the company was "welcome" to set up the SEZ.” For Orient Craft.S. DKNY and Ralph Lauren.126 Orient Craft… has entered into an outsourcing arrangement with Sumukin Bussan (SBC). consultant.com/2005/11/25/stories/2005112502590900. "The SEZ will house up to 50 companies.S.” The Hindu Business Line Internet Edition. Rajasekhara Reddy. where there are higher labor costs. That’s more than the people who spend in the U. according to Sudhir Dhingra. the ready-to-wear demand in India is growing. From business articles: Orient Craft Ltd plans to develop an exclusive special economic zone (SEZ) for garment units in Andhra Pradesh.” Italian and French mills are setting up joint ventures in India. “Three years ago. lagging behind US and Europe. the exclusive Japan licensee of some well known international textile brands including Calvin Klein. heat. retail will explode…People say that Indians don’t have disposable income.
and Shahi Exports.” The Economic Times: Garments Textiles. Meru Exports and Richa Exports of Delhi.asp>. 128 Rajshekar. M. skill-intensive manufacturing could be a way to compete. <http://www. Orient Craft manufactures and exports about 30 lakh units of garment every month. and Dhingra was surprisingly available for an interview.000 people.about 10 times the size of the Delhi-based Orient Craft. to cater to new deals in the pipeline.127 The biggest Chinese firms have a turnover of $800 million-1.com/articleshow/1496902. the company may go for a specific capacity expansion. productivity and scale. Says Orient Craft's executive director Anoop Dhanda: "For the next few years. <http://economictimes. Dhingra was fairly open in his responses. The turnovers of these exporters range from Rs 100 crore to Rs 250 crore. claiming more than three-fourth of the pie. 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. Today he is spending Rs 40 crore on a new factory in Gurgaon that would employ 2. Till a year ago. 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.Depending on the volume of the orders. Thailand does almost the same business as India with a workforce a third the size. His personal secretary was not useful in obtaining any information. design to finishing. Current contact information was finally obtained through a Professor at NIFT.indiatimes. we will have to invest in new capacity every year if we have to keep pace with the industry. 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.cms>. 20 April 2006. which it may have to take up to over 40 lakh units. Clusters are reinventing themselves. at Rs 450 crore of revenues. and Surendar. Bangladesh churns out as many garments as India from a fifth as many factories. Like most other economies. T." Orient Craft and Fabric & Fibres are among a few who have been pulling ahead of the pack. which made finding up to date contact information difficult.businessworldindia. China is the largest exporter to Japan. Times News Network. and smart use of technology. India's biggest exporter Orient Craft has also begun to realise that. But will we be ready in time?” Businessworld. Global players are looking for India bases. Most are family-run.128 XI. PERSONAL EXPERIENCE Orient Craft does not have a website. The centrally air-conditioned facility will combine all the stages of garment manufacturing.200 million . However.com/apr0504/coverstory01. Page 92 . At present the Indian textile exports to Japan add up to $296m which is just about 1% of the country’s total textile imports. Clearly. 127 “Orient Craft ties up with Japanese co. “Preparing for 2005: Dressing up for the party. India lags in technology. But what distinguishes them is a relatively larger scale.all for the fear of strikes. which. the company's chairman and managing director Sudhir Dhingra dreaded the idea of setting up huge factories . is India's largest garments exporter.
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue reading from where you left off, or restart the preview.