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MATS Institute of Management & Entrepreneurship


A Report


Organization Study

Conducted at


During November 2010 of


Under the guidance of


Submitted by


ROLL NO : 10A40

Class of : 2010-2012

I, ROHIT KUMAR MALANI (Class of 2010-2012 ,ROLL No 10A40) hereby declare that this

organization study carried out at between 9th and 20th November as a partial requirement for the

award of the Post Graduate Diploma in Management is an original work of mine. This report

does not form a base or extract of any other report / research submitted to any other course of any

other institution. The information submitted is true to the best of my knowledge.




I am extremely thankful to Prof. NVH Krishnan Dean, MATS Institute Of Management and

Entrepreneurship, for providing me the opportunity to be a part of MATS and undertaking the

organization study.

I offer my profound gratitude to my guide Prof. SUDHARSHAN SIR, for providing the

guidance and support, whose steady encouragement led to the successful completion of this


I owe my gratitude to Mr.Selvaraj Head of Finance Department of Salona Cotspin Limited,

Coimbatore, Tamil Nadu, for giving me permission to pursue my organizational study in their

esteemed organization and Mr. AMIT TIWARI for giving his valuable time in guiding me

through the study.

I would also like to thank Mr.VINEET AGARWAL, Mr.DIPENDRA and Mr.ANWAR for

explaining various process of their respective departments.

I humbly acknowledge there is always some scope for further improvement and to that end

sincerely I invite valuable suggestions of you by which my future assignments, projects could be


I again extend my gratitude to all the Faculty members for their help.

Place: Bangalore



Organizational Functioning is an important factor for any organization to achieve the

desired goals and objectives. This requires co-ordination at all levels to smooth functioning. This

report aims to understand the function of Salona Cotspin Ltd, Coimbatore, Tamilnadu in

relation to different departments.

As part of PGDM program at the end of first term, we had to carry on a project in an

organization in order to understand the organization structure and their functions. This was a

great opportunity to get the first hand information and understand the functioning of the various


I did my Organization Study at Salona Cotspin Ltd, Coimbatore. It was a great learning

experience as it is quite necessary for all the management students. The main purpose of doing

the Organization Study was to study the various departments of the organization and understand

their basic functions, their purpose, achievements, competitors and the mission and vision of the

company and their progress towards that.

All general information we get in course is all book knowledge, on which we entirely

cannot depend. It is very important to observe the actual working of an organization and the

overall structure of an organization. The actual professionalism can be studied only through

Organizational Functioning is an important factor for any Organization to achieve
the desired goals and Objectives. This requires Co-ordination at all levels to smooth
functioning. This study is to know the overall efficiency and performance of TEXTILE
Industries and a general study on SALONA COTSPIN LIMITED, Coimbatore, Tamil Nadu.

As a part of two year MBA program at the end of 1 st trimester, we had to carry on a
project in an organization in order to understand the organization structure and their
functions. This was a great opportunity to get the first hand information and understand the
functioning of the various departments


• To know the Indian Scenario.

• To know the global scenario.

• To know the key players in the industry.

• To know the business level functions and Process of the Organization.

• To know the Company Profile.

• To learn about the Organization Culture, Values, Benefits in a practical way.

• To get an exposure to the different functions of the Organization and Understand

how they are performed and coordinated.

• To relate various concepts studied in the first term to a real organizational

The following are the limitations of the study,

As we had a limitation of time, the detailed report about the operations of the
organization was not possible.
The information given by the persons may not be complete because of their busy work
The report suffers from the limitation of meeting only the departmental heads because
of lack of permission to interact with other people.




There were meetings with each of the functional Heads depending upon their convenience

and there was a questionnaire that was followed depending on the situations.


There was a keen sense of observation followed during the study period to follow the various

functions of the company and how they are integrated with each other.


These are all the company’s own data and information which they provided to me.


These are all the data relating to the company or Organization derived from external

sources such as internet and any other types of media services that give a wide picture of the

Organization with respect to the external world.


1. The collected primary and secondary data is being analyzed and some findings and

suggestions have been made.

2. Industry is analyzed using PEST and Porter’s Five Forces analysis while SWOT analysis

is made for the company.



India Textile Industry is one of the leading textile industries in the world. Though was

predominantly unorganized industry even a few years back, but the scenario started changing

after the economic liberalization of Indian economy in 1991. The opening up of economy gave
the much-needed thrust to the Indian textile industry, which has now successfully become one of

the largest in the world.

India textile industry largely depends upon the textile manufacturing and export. It also plays a

major role in the economy of the country. India earns about 27% of its total foreign

exchange through textile exports. Further, the textile industry of India also contributes

nearly 14% of the total industrial production of the country. It also contributes around 3%

to the GDP of the country. India textile industry is also the largest in the country in terms

of employment generation. It not only generates jobs in its own industry, but also opens up

scopes for the other ancillary sectors. India textile industry currently generates employment

to more than 35 million people. It is also estimated that, the industry will generate 12

million new jobs by the year 2010.


The textile and clothing trade is governed by the Multi-Fibre Agreement (MFA) which

came into force on January 1, 1974 replacing short-term and long-term arrangements of the

1960’s which protected US textile producers from booming Japanese textiles exports. Later, it

was extended to other developing countries like India, Korea, Hong Kong, etc. which had

acquired a comparative advantage in textiles. Currently, India has bilateral arrangements under

MFA with USA, Canada, Australia, countries of the European Commission, etc. Under MFA,

foreign trade is subject to relatively high tariffs and export quotas restricting India’s penetration

into these markets. India was interested in the early phasing out of these quotas in the Uruguay
Round of Negotiations but this did not happen due to the reluctance of the developed countries

like the US and EC to open up their textile markets to Third World imports because of high

labour costs. With the removal of quotas, exports of textiles have now to cope with new

challenges in the form of growing non-tariff / non-trade barriers such as growing regionalization

of trade between blocks of nations, child labour, anti-dumping duties, etc.

Nevertheless, it must be realised that the picture is not all rosy. It is now being admitted

universally and even officially that the year 2005 AD is likely to present more of a challenge

than opportunity. If the industry does not pay attention to the very vital needs of modernisation,

quality control, technology up gradation, etc. it is likely to be left behind. Already, its

comparative advantage of cheap labour is being nullified by the use of outmoded machinery.

With the dismantling of the MFA, it becomes imperative for the textile industry to take on

competitors like China, Pakistan, etc., which enjoy lower labour costs. In fact the seriousness of

the situation becomes even more apparent when it is realised that the non-quota exports have not

really risen dramatically over the past few years. The continued dominance of yarn in exports of

cotton, synthetics, and blends, is another cause for worry while exports of fabrics are not

growing. The lack of value added products in textile exports do not augur well for India in a

non-MFA world.

Textile exports alone earn almost 25 percent of foreign exchange for India yet its share in

global trade is dismal, having declined from 10.9 percent in 1955 to 3.23 percent in 1996. More

significantly, the share of China in world trade in textiles, in 1994, was 13.24 percent, up from

4.36 percent in 1980. Hong Kong, too, improved its share from 7.06 percent to 12.65 percent

over the same period. Growth rate, in US$ terms, of exports of textiles, including apparel, was

over 17 percent from 1993-94 to 1995-96. It declined to 10.5 percent in 1996-97 and to 5
percent in 1997-98. Another disconcerting aspect that reflects the declining international

competitiveness of Indian textile industry is the surge in imports in the last two years. Imports

grew by 12 percent in dollar terms in 1997-98, against an average of 5.8 percent for all imports

into India. Imports from China went up by 50 percent while those from Hong Kong jumped by

23 percent.


The history of textiles in India dates back to nearly five thousand years to the days of the

Harappan civilization. Evidences that India has been trading silk in return for spices from the 2nd

century have been found. This shows that textiles are an industry which has existed for centuries

in our country. The history of apparel and textiles in India dates back to the use of mordant dyes

and printing blocks around 3000 BC. The foundations of the India's textile trade with other

countries started as early as the second century BC. A hoard of block printed and resistdyed

fabrics, primarily of Gujarati origin, discovered in the tombs of Fostat, Egypt, are the proof of

large scale Indian export of cotton textiles to the Egypt in medieval periods.

During the 13th century, Indian silk was used as barter for spices from the western countries.

Towards the end of the 17th century, the British East India Company had begun exports of

Indian silks and several other cotton fabrics to other economies. These included the famous fine

Muslin cloth of Bengal, Orissa and Bihar. Painted and printed cottons or chintz was widely

practiced between India, Java, China and the Philippines, long before the arrival of the


The Indian textile industry contributes about 14 per cent to industrial production, 4 per cent to

the country's gross domestic product (GDP) and 17 per cent to the country’s export earnings,

according to the Annual Report 2009-10 of the Ministry of Textiles. It provides direct

employment to over 35 million workers directly and it accounts for 21% of the total employment

generated in the economy and is the second largest provider of employment after agriculture.

Some of the textile clusters in which productions happens are very huge and significant for the

overall industry, for example

 Panipat produces 75% of all blankets produced in India

 Tirupur contributes 80% of the country’s cotton hosiery exports

 Ludhiana makes 95% of total woolen knitwear produced

According to the Ministry of Textiles, Export target in textiles in 2010 at USD is 50 billion.

the cumulative production of cloth during April’09- March’10 has increased by 8.3 per cent as

compared to the corresponding period of the previous year. Moreover, total textile exports have

increased to US$ 18.6 billion during April’09- January’10, from US$ 17.7 billion during the

corresponding period of the previous year, registering an increase of 4.95 per cent in rupee terms.

Further, the share of textile exports in total exports has increased to 12.36 per cent during

April’09-January’10, according to the Ministry of Textiles.

As per the Index of Industrial Production (IIP) data released by the Central Statistical

Organisation (CSO), cotton textiles has registered a growth of 5.5 per cent during April March
2009-10, while wool, silk and man-made fibre textiles have registered a growth of 8.2 per cent

while textile products including wearing apparel have registered a growth of 8.5 per cent.

The textile sector has increased their investment in projects to upgrade their equipment amid

fierce market competition and to meet the growing demand for more textile products. Total

investment in the textile industry between 2004 and 2008 was around Rs.65,478 crore in India,

which is expected to reach Rs.1,50,600 crore by 2012. This enhanced investment would generate

17.37 million jobs-- 12.02 million direct and 5.35 million indirect—by 2012.


India’s share in global exports is only 3% compared to Chinas 13.75% percent. In

addition to China, other developing countries are emerging as serious competitive threats to

India. Looking at export shares, Korea (6%) and Taiwan (5.5%) are ahead of India, while Turkey

(2.9%) has already caught up and others like Thailand (2.3%) and Indonesia (2%) are not much

further behind. The reason for this development is the fact that India lags behind these countries

in investment levels, technology, quality and logistics. If India were competitive in some key

segments it could serve as a basis for building a modern industry, but there is no evidence of

such signs, except to some extent in the spinning industry.


In 2006, the largest apparel manufacturers and exporters were countries from the Asia-

Pacific region which included countries like China, Hong Kong, Phillipines, Malaysia, Indonesia,

Bangladesh, Srilanka, Pakistan, Thailand and India. The other major apparel manufacturing

nations were USA, Italy, Germany and Mexico.


India’s textile industry comprises mostly small-scale, non-integrated spinning, weaving,

finishing, and apparel-making enterprises. The figure below depicts the overall value chain and

the number and type of units within the industry.

Textile Sector – High Level Value Chain


With an installed capacity of 40 million spindles, India accounts for about 22 per cent of the

world’s spindle capacity. In 2005, India’s spinning sector consisted of about 1,161 small-scale

independent firms and 1,566 larger scale independent units. Independent spinning mills account

for about 75 per cent of capacity and 92 per cent of production.

India’s weaving and knitting sector is highly fragmented, small-scale, and labour-intensive. The

woven fabric production industry can be divided into three sectors: powerloom, handloom and

mill sector. In 2005 it consisted of about 3.9 million handlooms, 1.8 million power looms, and

0.1 million looms in the organised sector. The decentralised power loom sector accounts for 95

per cent of the total cloth production. The knitted fabric forms 18 per cent of the total fabric


Processing Units

The processing industry is largely decentralised and marked by hand processing units and

independent processing units. Composite mill sectors are very few falling into the organized

category. Overall, about 2,300 processors are operating in India, including about 2,100

independent units and 200 units that are integrated with spinning, weaving or knitting units.

Garment Manufacturing Units

Small-scale fabricators dominate garment manufacturing. Most garment manufacturing units fare

reasonably well on the technology count. The bulk of apparel is produced by about 77,000 small-

scale units classified as domestic manufacturers, manufacturer exporters, and fabricators

(subcontractors). The fragmented structure of the industry provides the advantage of a large pool

of skilled workers in different areas of textile manufacturing, and also gives scope for entry of

organized integrated textile manufacturers. Small scale units in different sectors can also be

leveraged as a supply base for sourcing materials at low cost. Apart from these advantages, the

industry has also been experiencing consistent growth across different sectors, making it one of

the key potential sectors in India.



With 3.9 million handlooms, India is the highest handloom producing country in the

World. 30% of the total export income is generated by textile alone, it is second largest Employer

industry after agriculture. The textile industry constitutes approximately 14% of country's total

industrial production.


In spite of the Chinese dominance, India has a fair opportunity to grab a substantial stake

in the projected garment market share. According to PHD Chamber of Commerce and Industry

(PHDCCI), post-MFA, India's market share in the US is expected to go up to 15 per cent from

the present 4 per cent. In the EU, the market share increase is expected to be 50 per cent from the

current 6 per cent to 9 per cent .



There is no denying India is competitive enough and will become even more competitive

once its infrastructure issues are sorted out. China has probably already reached its peak and

further improvements may not be as dramatic.

Countries and their positive and negative aspects with regard to textiles


China Efficient, low cost, Growth at the cost of profits

vertically integrated
India, Pakistan Vertically integrated, Lacks economies of scale and

low cost infrastructure support

Mexico (NAFTA), Turkey Proximity to market, Lack of China and Indias

duty and quota free degree of competitiveness

ASEAN (Vietnam, Cheap labor No other cost or locational

Cambodia, Indonesia) advantage

AGOA (African) countries, Quota and tariff free, Lack of integration and China

Bangladesh cheap labor and Indias has degree of

Hong Kong, Korea, Taiwan Trading hubs proximity No cost advantage, protected

to China currently by quotas

USA and EU Non-quota barriers Huge but choosy market

likely to prove irritant to

Indian Textiles targets- 11th Five year Plan (2007-2012)

 Market size of US$ 115 Billion

 Export target US$ 55 Billion

 Domestic market US$ 60 Billion

 India’s market share in world textiles trade to grow from 3% to 8 %

 12 Million additional jobs

 Investment Rs.150,600 Crs

Textiles Export Target (In Billions)

Year ( April March) Target Achievement

2008-09 24.18 24.16
2007-08 21.16 21.14
2006-07 19.73 19.62
2005-06 15.565 17.80
2004-05 15.16 13.04
2003-04 16.31 13.16
2002-03 15.05 12.41
2001-02 13.72 10.76


PEST analysis (political, economical, social, technological) assesses a market, including

competitors, from the standpoint of a particular proposition or a business. This analysis is

essential for an organization before beginning its marketing process. It plays an important role in
any type of business whether large, medium or small concerns and also consists of the internal

environment and external environment.


This is the most important influence on the regulation of textile business are as follows.

• It implies and shows how stable is the political environment

• Influence the Government Policy / Law on the textile business

• Government’s position on textile Marketing Ethics

• Government’s policy on the economy

• Government’s view on culture under religion

• Political System is responsible for Law Making.

– Immediate laws which affect the textile business in general are Central Excise,

Custom duty, Excise duty, Sales Tax/ VAT, Corporate Income Tax, Personal

Income Tax & Service Tax in manufacturing the silk fabrics.

– The Environmental Protection Law should also be considered by the industry

and should also see that the environment is kept clean, reduction of wastages and

should not polluted aggressively which would result of unbalance in environment.

– It Controls the Marketing Strategies which are

• Like Marketing / Advertising of the textile products.

• Control on Pricing on manufacturing of textile products.


• Government outlook towards the following:

– Bank Financing

– Interest Rates

– Exchange Rate Mechanism

– Incentives for Exports

– Restrictions for Imports

– Inflation

– Labour Policies

• Business Cycles are fluctuating in nature and also implies an important role for the


• Energy Availability should be considered as scarce because as the economic conditions

the availability is limited and also to be seen that every one utilizes the energy effectively.

• Cost of Energy is considered as minimum as possible which would result in cost control

and also reduces the operating cost in the industry.


• Demographics

• Distribution of Income

• Social Mobility

• Life Style Changes

• Consumerism

• Educational Levels

• Demographics & Distribution of Income

– Division of population - Male / Female

– Age Group of the Population

– Disposable Family Income

• Disposable Income in the hands of the different Age Groups

• Education Level of the Age Groups

• Life Style Changes & Consumerism

– Attitude to living

• Different Age Groups

• In tune with available disposable income

• Thrust on taking care of present needs by spending than saving for the


• Joint living and nuclear families

• Availability of various media tools

• Reach of the media to the population.


• Advantage of Technology

– In terms of Economies of Scale

• New Discoveries & Innovations

• Speed & Cost of Technology Transfer

• Rate of Obsolescence

• Benefits derived as a result of above R&D: Some of the benefits are betterment of

quality, customer satisfaction, cost reduction and increased efficiency. The Future plan of

action is to make improvement in quality parameters of finished products.


Here we are conducting the Porter’s five forces model to analyze the Textile industry. The

purpose is to arrive at some strategies that BSL Ltd. can adopt in order to be in a better

competitive position.


1. Brand Loyalty

The existing players have been in the industry for a long period of time and have established a

good reputation with their customers in domestic as well as foreign market. This has resulted in

the high brand loyalty by customers. But this will not act as a potential barrier for other

companies because most of the Indian textile companies operate in B-To-B segment and all the

players keep competing among themselves for new consignments from the clients.

2. Absolute cost Advantage

Abundant availability of raw material is one of the key advantages of the Indian textile industry;

this also gives a major opportunity to Indian textile industry and creates a barrier for foreign

players to compete with Indian companies in cost advantage.

 India is more cost competitive vis-à-vis countries like Brazil and South Korea in

manufacture of textiles

 Cost advantage arises mainly from the large pool of low cost but skilled manpower

available in India

 In case of textured yarn and fabric, India is less competitive, which is a result of the

higher tax burden (excise duty) on manmade textiles in the country

 India’s position is strong vis-à-vis other countries in most raw materials

 Largest producer of jute

 Second largest producer of silk

 Third largest producer of cotton, accounting for nearly 16% of global


 Third largest producer of cellulosic fiber/yarn

 Fifth largest producer of synthetic fibers/yarn

 Eleventh largest producer of wool

 Cotton - Predominant fabric used in the industry

 With 4.13 million metric tons of production, country accounts for almost

16% of global production of cotton

 India also leads the world in cultivated area under cotton (roughly 8.82

million hectares)

 Jute - Occupies an important place in the Indian economy

 Has a strong contribution to direct employment as well livelihood in the

tertiary sector and allied activities

 India leads globally in jute with its annual production of 7.5 million bales in


 Silk - Highly remunerative cash crop, with minimum investment and sustained attractive


 India accounts for 18% of world raw silk production (15.74 thousand tones

production in 2008-09)

 India has the unique distinction of being endowed with all 4 varieties of silk -

Mulberry, Eri, Tasar, Muga

 Wool - With its annual production of 50.7 thousand tons of raw wool fiber, India

accounts of roughly 2% of global production

3. Economies of Scale:

 The textile industry across the value chain is largely decentralized

 Units mostly independent and small scale in nature, rather than composite units

undertaking all activities together

 Large scope for entry of organised integrated textile manufacturers

4. Customer switching cost:

As earlier mentioned that the existing players are operating in this industry for a long

period and also have established long term relationship with their customer.. Over a period of

time these companies have customized their products as per the needs of the customers therefore

customers also prefer to still to the existing suppliers rather than moving to others as there is a

high switching cost involved here and if the customers switch to new suppliers than again he

need to train the suppliers as per their requirements

5. Government Regulations:

 Historically the textile industry in India has been reserved for the small scale sector,

which has been exempted from taxes, thus discouraging investments in increasing


 The government, through its various Budget announcements has sought to rationalize


 Budget 2002-03: Textiles brought under the ambit of Cenvat (credit for duties

paid on inputs or capital goods) and introduced on all yarns

 Budget 2003-04: Cenvat extended across the entire textile chain to include

fabrics, made-ups and apparel; excise duty exemptions on many sectors and

processes, specially SSI removed; excise duty rates reduced

 Budget 2004-05: Cenvat made optional - every manufacturer allowed to

choose between a complete exemption from payment of excise duty or adopt

the Cenvat route; excise duties lowered to 4% on cotton textiles and 8% on

non cotton textiles (except man made fibers, polyester filament yarn, nylon

filament yarn) for those claiming Cenvat credit

Always government regulations aimed at improving competitiveness of industry to face a post

quota regime.




 Scheme launched in 1999 to provide firms access low interest loans for technology up

gradation and setting up new units with state-of-art technology

 Scheme has disbursed INR 91.61 bn till 31st December 2008


 Up to 100% foreign direct investment allowed in textile and apparel

manufacturing industry, with approval of the Foreign Investment Promotion Board


 USD 1.02 bn of FDI in the sector approved between 1991 and 2004

 Companies free to set up fully-owned sourcing (liaison) offices, as well as

marketing operations

 “Scheme for Integrated Textile Parks” (SITP), based on public-private partnership

model to build world class infrastructure facilities

 Product specific “Cluster Approach” targeting development of 100 additional

clusters in textiles

 Technology Mission on Cotton (TMC), focusing on cotton R&D, dissemination of

technology to farmers, improvement of market infrastructure and modernization of

ginning and pressing sector.


1. Industry competitive structure:

Since this industry is highly fragmented there is always high probability during the boom phase

that many new players could enter this industry which would lead to a price war and ultimately

end up with the bankruptcy of some players or consolidation of industry. So, this is a threat to the

existing players.

But also the existing players work a lot on cost efficiencies therefore the threat of new entrant is

negated by the cost efficiencies of existing players.

2. Industry Demand:
In the current scenario textile exports have declined drastically and even in domestic demand

there is a little slowdown. Due to which textile companies are working on reducing cost by ways

of reducing the work force, decrease in operation cost etc. Also this will evoke more rivalry

among the existing players as they all will like to maintain their market share in spite of the

slump in industry

3. Exit Barrier:

This is not just a labour intensive industry but even the cost involved in plant setup is very high

along with that with the invent of many new technologies many companies have adapted to

modern techniques to remain competitive in industry as well as to produce better products for

their customers in lesser time and with lesser cost.

Therefore because of high involvement and emotional attachment with the business as it has been

a traditional business for generations for many companies they still prefer to stick and continue

with the business. But in the current scenario many textile mills have closed down because of

deep cut in demand and high operational cost due to severe global crisis.


 Indian textile companies are facing a tough competition from Chinese, Brazilian

and other south east asian countries like Vietnam, Indonesia as they are able to produce at

a lower cost compared to Indian companies

 This industry is fragmented and there are large number of players in the industry,

therefore buyer get the option of choosing from many suppliers

 Indian textile industry is no more just a mass producer of textile rather it has

moved into niece segment and has developed capability to produce finest quality of fabric

which provides them distinctive competencies against other countries as well as small

players who could cater to mass consumers only.

Therefore overall buying power of buyer will defer from company to company. Companies like

Arvind mill, Raymond, Aditya Birla group have achieved certain degree of distinctive

competencies therefore with them buying power of buyer is negated to large extent against their


But many small companies who are mass producer of textile face a strong buying power of



Here again bargaining power of supplier dictated by the segment that they are targeting to, for a

niece players and companies who have achieved operational excellence can dictate terms to

buyers but for small players who just produce for mass consumption do not have much say in the

business deal and the prices are mostly dictated by the buyer.

Textile itself is a very broader term and is a solution to a very basic need of any human being

therefore there is as such no substitute to this but within the textile industry there are many

substitutes to different category of textiles. In India there are various types of textile produced

from cotton, silk, synthetic etc.

There is always a risk of substitution of one type with the other type also there is constant

research carried out to develop new types of textiles but combining different textiles in different

proportion. But in broader perspective there is no substitute to textile.



The Salona Cotspin Ltd was incorporated on 18th January 1994 with the Registrar Of Companies,

Coimbatore, Tamil Nadu. The company’s main objective is to manufacture Combed Hosiery

Cotton Yarn & Knitted Fabrics for Domestic and Export market. At the beginning the

manufacturing unit started with 10,800 Spindles but subsequently enhanced to 24,336 Spindles

of state of the technology is situated at SF.No.74/12 & 75/3, Sathy main road, Pungampalli

Village, Erode district. The Company has installed four turbines with total capacity of 4.85MW

in Tamil Nadu for power generation by wind for own Captive Consumption.

Salona Cotspin Limited consists of Six Directors with Public Shareholdings. The main promoters

of the company are Shri. Shayamlal Agarwala, Managing Director and Shri. Manoj Kumar

Jhajharia, Joint Managing Director. The Promoters have wide experience in Textile Industry,

specializing in yarn marketing.

A family with over four generation of experience in cotton, Cotton waste, Yarn and Fabrics

under the stewardship of Shri Shyamlal Agarwala has promoted the Company. Shri Shyamlal

Agarwala aged about 58 years is a commerce Graduate. He is in the field of Cotton Yarn, Cotton

and Textile goods business as yarn and textile merchant for more than four decades. He was past

president of Coimbatore Yarn Merchants and Brokers Association (CYMBA). He has extensive
knowledge about textile industry and export market. He has vide business and social contacts

with very good experience.

Shri Manoj Kumar Jhajharia aged about 41 years is a Business Management Graduate, and he is

member of Coimbatore Stock Exchange (CSK). He has vide experience in this lane of business.

He is looking after Salona Cotspin Limited as Whole Time Director for last Seven years.

The Company started with a Authorised Share Capital of 60 Lacs Eqity Shares of Rs.10 each.

Out of which Issued & Subscibed Share Capital is 5351100 Shares of Rs.10 each, out of which

paid up share capital was 5262400 of Rs.10 each and remaining as forfeited shares. The company

as on 31.3.2010 has 1750 total number of Share Holders.



The Equity Shares of the company are permitted for trading in

• BSE Indoxnext Segment under Group “S” of The Bombay Stock Exchange Limited,

Phiroze Jeejee Bhoj Towers, Dalal Street, Mumbai – 400 001.

• Coimbatore Stock Exchange, 683-686, CSX Tower, Trichy Road, Coimbatore – 641


• Madras Stock Exchange Limited, Exchange building, Post Box No.183, 11, Second

Line Beach, Chennai -600 001.

• The Calcutta Stock Exchange Association Limited, Lyons Range, Calcutta -700 001.

• The Stock Exchange Ahmedabad, kamadhenu Complex, Opp.Sahajanand College,

Panjarapole, Ahmedabad – 380 015.

The Company has been granted various cash credit facilities towards its working capital

requirement from its bankers as under:

• Union Bank of India

• Catholic Syrian Bank

• State Bank of India

• Oriental Bank of Commerce


With unique insight into consumer behavior, we strive to offer the best. Following distinct

business strategies, the company will continue its tradition of manufacturing the finest products.


Salona Cotspin Limited envisages itself as a trend setter of the textile industry. It is committed to

manufacture 100% Combed Hosiery Cotton Yarn & Knitted Fabrics.



• Wide experience in the textile field.

• Proven track record of the promoters.

• Existing relationship with the big player in textile and apparel trade.

• Backward and forward integration with emphasis on better utilization of inputs and
infrastructure resulting in cost saving.

• Good credibility in the market.

• Strong culture, ethics and values are followed.

• High quality standards are met during the manufacturing process.

• Training personnel for adopting continual improvement methods.

• Process up gradation and review of quality objectives.

• Lot of good-will in the market.

• There are adequate processing facilities for yarn dyeing and production of yarn dyed


 Competition with the local spinning loom units in piece dyed suiting qualities in view of

their lower administering and other cost.

 Adequate availability of raw materials sometimes as the major area under cotton

cultivation is rain-fed.

 Long Decision Making Process because of Corporate Structure.

 In availability of quality cotton.


 World –wide, there is an increasing orientation towards clothing made of organic and

natural fibres.
 There is a continuous increase in demand for cotton garments in both domestic and export


 Supply of quality cotton is expected to be comfortable in 2010-11.


 Opening of Import and Duty Reduction in the Country.

 Competition from existing units.

 The rising rupee is the biggest threat of the Indian textile and garment industry.


The idea of the “Balanced Business Scorecard” is an important one for managing people to
deliver the goals of your business. “Balance” comes from the alignment of financial performance
measures with those related to customers, internal business processes, and innovation and
learning. The Balanced Scorecard is about managing the transmission of strategy, while
leadership is about motivating people to give their best to achieve a worthwhile goal: These two
different approaches work together in high performance organizations.

The Financial Perspective:

They follow the very effective financial strategies to be stable in finance and allocation
of funds as well as sourcing funds.

The Customer Perspective:

They satisfy their customers very effectively and cater the customer requirements very
efficiently. They set goals according to national and international standards and accordingly they
take effective measures to achieve them.

The Process Perspective:

In process perspective also the company have a very specific goals regarding like
production, logistics or sales and then set goals related to such things as quality, time/efficiency,
and cost reduction.

The Innovation and Learning Perspective:

In this area, they are examining measures relating to employee development, retention, and
skills improvement. They also look at measures for research and development. Their focus here
is on continuous improvement and value creation, by using the people resources most effectively
In all these four factors of Balanced Score card approach the company does its
analysis very effectively. It links its vision to all the four factors and does its strategies very
effectively. And accordingly it organizes and improves its activities very efficiently.


The Company’s main product range is 100% Cotton Yarn (20’s, 24’s, 30’s, 40’s ) and Knitted

Fabrics, catering to the needs of Hosiery/ Knitted, Garment Industries.




Functional Structure is a way of putting specialists to work. Under functional structure, a staff
specialist is given command or line authority over other personnel in regard to his special field.
This structure gives staff personnel temporary limited line authority for specified tasks.
Functional organization has an advantage of making full use of expert knowledge. It reduces
bureaucratic delays and enhances organizational flexibility. It ensures increased efficiency and
economy of operation.


It is split into self-contained units, able to react to environmental changes as quickly as small
companies. It encourages team spirit. Each division is likely to have a devolved human resource
function. There is a risk of duplicating activities between head office and divisional human
resource departments and of conflict between staff in successful and unsuccessful divisions. The
divisional function may play a coordinating role, reconciling decisions taken at the corporate and
business unit levels. This results in a complex picture of people management.

One variant of the divisional form which has a particular relevance because of its human
resource implications is the 'federation', a loosely connected arrangement of businesses with a
single holding company or separate firms in alliance. This form of organization has attracted
criticism from stock market analysts who find difficulty in comprehending its subtle informality.


This design establishes a grid, or matrix or authority flows. It is a combination of functional
structure with pure project structure. Authority within functional department flows vertically
while authority that crosses departmental lines flows horizontally. This two way authority flow
creates the matrix. In a matrix organization, team members are responsible to both the project
manager and the head of the functional department to which they are permanently assigned.



Sri Shyamlal Agarwala : Chairman & Managing Director

Sri Manoj Kumar Jhajharia : Joint Managing Director
Sri SP.Sekar : Independent Director
Sri G.V.S. Desikan : Independent Director
Sri Dulichand Pansari : Independent Director
Sri Mahesh Agarwal : Non Executive Director


Production of a yarn from cotton is a long and complicated process. Cotton pass through many

machines and stages before becoming final product. The company buys Ginned Cotton ( Sankar-

6 ) from Gujarat throughout the year. Cotton are measured as candy. Each Candy consists of

355.619 Kgs. The price per Candy are the same as quoted in cotton market.

Raw Material Godown

Blow room



Draw frame

Ring frame

Speed frame



Inspection & packaging

• Raw Material Godown- as name suggests, raw material means cotton is stored in this

godown. Both grey and dyed i.e. fresh and coloured cotton is stored here.
• Blow room- after bringing cotton from RMG it is than feed into blow room to remove all

the impurities like dust and thrash from it. The cotton is separated into small pieces.

• Carding-from blow room the cotton is than feed into carding. This is first stage of thread.

Carding machine than give shape and design to cotton. In this machine the cotton is

converted into long blended rope known as Sliver. These sliver are filled into cans to

transport them to other machines.

• Comber-also known as lefarmer here sliver is made into Lafe. Sliver is combed to remove

all d knots and ties and straighten the thread. After combing it is again made into sliver.

• Draw frame-in drawing machine 8 cans of comber sliver are placed on both side sides of

machine which are than filled into 2 cans of 5000 meters each. This is done to bring

uniformity and quality of product. From such 4 cans 1 can is filled. Such 120 cans are filled

at a time.

• Speed frame- those 120 cans are placed on this machine. This is second stage of yarn.

Here sliver is converted into rowing. Rowing is stored on bobbins. Such 576 bobbins are

placed on the machine at a time.

• Ring frame-on this machine rowing ribbons are placed and thread is made. Single count

yarn is made.

• Auto cone-small bobbins from ring frame are made into one big cone of around 2 kg. wax

is applied to yarn to make it smooth and reduce its friction while moving on other


• Sieger-this machine give steam to thread to retain its moisture and hence strength which is

lost during the earlier stages of processing.

• Packaging and inspection-finally inspection of each and every cone is done carefully and

if they are satisfied they are packed and are ready for shipment.


The head of the marketing department is Mr. V.B. Arrora

Type of marketing: direct marketing & depots wise marketing.

Marketing research tools: Primary data in the form of Questionnaire & Customer Feedback and

internal data.

Integrative Growth Type: Only Forward

Segmentation on the basis of: geographic factors.

The marketing division of Salona cotspin limited plays a major role in the organization. Salona

Cotspin Limited practices direct marketing and depots wise marketing. The company contact

each customer directly and make tailor made product according to there specifications. This is

helping Salona Cotspin Limited to reach almost every geographical locations.

Salona Cotspin Ltd also uses questionnaires to perform the market survey. Questionnaires are the

sources of primary data for Salona Cotspin Ltd. Whether its consumer market research, product
marketing research, brand evaluation or any type of marketing research, it helps Salona Cotspin

Ltd to a great extent.

The Organization also makes use of internal data for its research purpose. After getting all the

data, it is verified and then sends for analysis and implementation. There are special surveys

conducted by Salona Cotspin Ltd. Online surveys are also there at these occasions, which

provide information of customers from urban part of the state.

Salona Cotspin Ltd follows forward Integration. The type of Integration depends upon the

volume and type of the products. Example making fabric from yarns is forward Integrated


Salona Cotspin Ltd does not provides any special offers to the customers as it make product

according to their demand. The company mainly deals with other textile companies and is a raw

material supplier for them.

The customers are segmented on the basis of their volume of demand and geographic factors.

For example, domestic customers and foreign customers i.e .export. domestic customers are

further placed under various depots so as to serve them better.

Salona Cotspin Ltd is very much concerned about customers and customer equity. They want

to build a good repo and relationship with their customers. That is the reason why Salona Cotspin

Ltd have made an arrangement of quality check and customer care. Customers are very much

happy with the service that they are getting from Salona Cotspin Ltd.
The Company also makes use of visual displays in matches, hoardings, banners etc. for its

advertisement and marketing. And for the marketing Intelligence, the company sends manual

trainees in competitor’s retail shop and act as if they are customers.




















• Combed Hosiery Cotton Yarn

• Knitted Fabrics


• Affordable Price

• Discounts

• Credit Options


Segmentation is based on the basis on geographic factor. As the goods are manufactured on

demand and as there is a huge demand in the market, there is a need of warehousing. As goods

are made they are shipped to the customers.


• Hoardings

• Company website

• Newspaper

• Word of mouth publicity


The head of the Accounting Department is Mr.Praveen Jain (CFO)

It is an important part of Salona Cotspin Ltd. Financial Management entails planning for the

future of a business enterprise to ensure a positive cash flow. It includes the administration and

maintenance of financial assets. It covers the process of identifying and managing risks.

The process of financial management associated with financial planning and financial planning

and financial control. Financial planning seeks to quantify various financial resources available

and plan the size and timing of expenditures. Financial control refers to the monitoring of cash


The internal auditing is done on a yearly basis. The Manager of the Finance department performs

this task. Through this it is clear that there is an internal control in Salona Cotspin Ltd.

Budgeting is a continuous exercise at Salona Cotspin Ltd. The annual budget normally depends

on the previous year progress, time limit, improved machinery and increased productivity. And

for all these activities budget is required.

The depreciation policy in Salona Cotspin Ltd, is as per the norms of ICAI. The company

follows Written Down Value method to depreciate its fixed assets.

The Company uses forward exchange contracts to hedge its foreign exchange exposure in

accordance with its forex policy as determined by a Forex Committee. The company export its

product against advance payment or Letter of Credit.

Bank Reconciliation Statement is prepared every month.

Some of the significant accounting policies followed by Salona Cotspin Ltd are as follows:

a) Accounting Convention: The financial statements are prepared under the historical cost

convention, on accrual basis, in accordance with the generally accepted accounting

principles in India, the Accounting Standards issued by the Institute of Chartered

Accountants of India and the provisions of the Companies Act, 1956.

b) Inventories: the company does not need to hold much inventory as goods are made on

demand. Inventories are valued at lower of cost and net realisable value. Finished goods

and work in progress include cost of conversion and other costs incurred in bringing the

inventories to their present location and condition. Finished goods also include excise

duty. Provision is made for cost of obsolescence and other anticipated losses, whenever

considered necessary.

c) Revenue Recognition: Sales are recognized when goods are supplied and are recorded

net of returns, trade discounts, rebates, sales taxes and excise duties. Export incentives are

accounted on accrual basis and include the estimated value of export incentives

receivable under the Duty Entitlement Pass Book Scheme. Dividend income is

recognized when the right to receive the same is established. Interest income is

recognized on a time proportion basis.

d) Foreign Currency Transaction: Transactions in foreign currency are recorded at the

exchange rates prevailing on the date of the transaction. Monetary assets and liabilities

denominated in foreign currency are translated at the period end exchange rates.
e) Depreciation: Leasehold land is amortized equally over the lease period. Depreciation is

provided pro rata to the period of use, under the Straight Line Method at the rates

specified in Schedule XIV to the Companies Act, 1956, except for computer hardware

which is depreciated over 4 years. Depreciation in the subsidiary companies is provided

under the Straight line method over the expected useful lives of the respective assets

ranging between 3 years to 10 years.

f) Taxes on Income: Current tax is the amount of tax payable on the taxable income for the

year determined in accordance with the provisions of the Income-tax Act, 1961. Advance

tax is calculated as per the statutory requirement of law.

Accounting cycle is an important task of the account department which covers most of the

accounting activities.





The human resource is taken care by the HRD manager Mr. R.D Jat.. The duties or functions

performed by him are very important for the organization because he is the one who is taking

care of the human resource of the company. The functions include:

Recruitment: There is a recruitment team which performs the task of recruiting people. The

recruitment depends upon the requirement. While recruiting people, the team keeps in mind the

technical as well as the conceptual skills.

Modes of recruitment:

• On campus recruitment: Here a team from the HR department goes to various reputed

colleges. There they conduct aptitude tests, GD and PI. The Personal Interview is given

the priority in recruiting students.

• Vacancy: Depending upon the requirement, an advertisement is given in electronic as

well as paper media. Concerned department as well as HR department conducts interview

for the application received. And then the eligible candidate is being selected and hence


• Placement agencies: sometimes placement agencies are also contacted and recruitment is

done through them.

Training and manpower development programs:

As per requirement an employee is given training to various sections like soft skills, technical

skill etc. it is totally depending on the department of the employee and its designation. Unskilled

labours are given a training of 104-152 days training to make them skilled.

In the case of staff once a selected candidate is recruited after C.E.O. approval the employee is

on a probation period where he is send to various departments to have through knowledge of the

process. After 6 months evaluation of the employee is done and conformation letter is given after


Other training and motivational programs are being organized by the company to keep its human

resource effective and efficient. Also workshops are being organized in the campus only. These

programs and workshops prove to be very motivating/ encouraging to the employees.

Training need identification

Training calendar

Monthly Training planner

Intimation to concern dept.

Training conduct

Training attendance sheet


Training feedback


Training review

Employee well being:

For the well being of the employees, every employee is given personal counseling as per

requirement. For this purpose, every employee is observed with keen interest. Also every

employee is being rated by their respective heads. Through rating only the performance of an

employee is being analyzed. Salona Cotspin Ltd is very lenient in giving incentives to the

employees. The employees are been studied and procedures are taken corresponding to their

abilities by the heads. There is job rotation so as to keep the interests of each and every


Exit Procedure:

For an employee, who is willing to leave his job have to submit an application. The application

involves the reason why the employee is leaving the job.

There are exit interviews for the employees who all are leaving the company. After exit interview

is done the employee is given no dues clearance and the full and final settlement is done.


The operation is carried out by four departments:

i. Customer Support System

ii. Logistics
iii. Accounts

iv. Administration

The role of customer support system is to take and book the orders. After this activity,

with the help of barns, the goods are booked in barns. Next are invoices to the

warehouses. It is from warehouses, where goods are taken and dispatched to customers.

As and when goods are ready for shipment transporter is called and goods are dispatched

to the destination from various modes of transport. Like if the product is for foreign

market i.e. exports it is shipped to the nearest port i.e. Chennai.


Salona Cotspin Limited maintain strict quality control measures for complying with the
customer’s requirement. They have internalized quality control management systems and quality
improvement systems in all thier plants. They have quality audit teams, comprising of 6
individuals, reviewing all aspect of quality assurance. Apart from that a dedicated in-house
management team which undertakes review every fortnight and overlooks the implementation
and adherence to quality control policies. Each of the divisions is well equipped with most
modern quality checking and testing equipment like Tex –Cad for designing, Data Color /
Minolta Spectrophotometer, Roaches – Mini lab processing, Macbeth-light box, I-Tex EVS
Computerized Fabric Quality Check machines with 24 cameras in place for quality assurance and
functions on their philosophy of providing quality products to customers.

Quality tests

Various tests are performed on every stage of production to chech the high quality norms

established by the company.

• HVI- high volume instrument check the average length, strength and color value of fiber.

It shows mic units which shows the fineness of fiber.

• AFIS- advanced fiber information system counts the neps, neps size, length per gram of

cotton. Neps are small knots in the raw cotton fiber.

• Uster 5- this machine check the evenness of sliver and yarn.

• Wrapreel- it checks the counts of yarn. Everyday 6 bobbins of every lot are checked.

• Lee Strength Checker- it checks the strength of product in terms of Count Strength


• Friction tester- friction of yarn with metal body is calculated here. Standard is 0.18

friction value is maximum allowed. Lesser the hairiness of yarn less is the friction.

• RKM tester- checks the resistance per km of single yarn.

• Splice seamen- it is used to check the strength of splice of yarn when auto coner machine

remove defective yarn and join two ends. Minimum level of company standard is 70%.

The Organization Study, which was just after our first term was the best possible source to apply

whatever we have learned in the first term. Not only we applied our knowledge as per first term

syllabus, we also got much more info that would be beneficial for us in the coming days. The

actual picture or scenario of an organization was before us. We were to exploit the available

opportunity to the fullest.

The company that was chosen by me was Salona Cotspin Limited, Coimbatore, Tamil Nadu. It is

a spinning mill where Combed Cotton Hosiery Yarn & Knitted Fabrics are made. The

organization was of Functional type. I studied five functional departments: Marketing, Finance,

HR, Operations and Quality Control.

As far as marketing division is concerned it plays a very tough task. The whole of sales strategy

is dependent upon the Marketing department. The company is under conglomerate diversification

and thus, has a large portfolio of products. Direct and depots wise marketing is what the

organization is following. The company does not need to do much market research as it make

product according to customers specifications. Direct selling is done or performed by Salona

Cotspin Ltd. The person who was enlightening me with his knowledge in marketing field was

Mr.V.B. Arrora.

Sales department’s work is a tedious work. They take care of the objectives of marketing

department. Next comes the finance department. Here also Mr. V.B. Arrora in the finance

department cleared my doubts in finance sector.

Next was the HR part. It was handled by Mr. R.D. Jat. He explained not only the role of HR in

this branch but also in the corporate office also. He was maintaining everything quite easily and

effectively. From recruitment of people to exit of employees and training provided, he explained

whole of the procedure.

Next was the operations & Quality management. Mr. Dipendra explained the tough quality

norms followed by the company. He shows various tests performed by his team to ensure the

customers get quality product.

It is due to all these factors that Salona Cotspin Ltd is working so efficiently and going on the

path of growth and development.

As a part of conclusion, I would like to conclude the Organization Report by saying that it was

really a great experience for me to do my Organization Study in such an organization.