1. T e x T i l e s a n d a p pa r e l december 2008 www.ibef.org

2. Te xT i l e s a n d a p pa r e ldecember 2008 The indian Textile industryCovers a Gamut of activities From production of raw materials like cotton, jute, silk and wool to providing high value-added products such as fabrics and garments Wide range of raw fibres natural fibres like cotton, jute, silk and wool to man made fibres like polyester, viscose, acrylic and multiple blends of such fibres Plays a key role in the economy provides direct employment to an estimated 38 million people and contributes five per cent to Gdp www.ibef.org 3. Te xT i l e s a n d a p pa r e ldecember 2008 The indian Textile industrySignificant contributor to trade accounts for eight per cent of global trade in textiles Poised for growth exports growing at 11.8 per cent estimated to grow at 15 to 18 per cent www.ibef.org 4. Te xT i l e s a n d a p pa r e ldecember 2008 The industry is dominated by small scale players across the value chain Highly fragmented, small-scale abundant availability dominated by small and labour-intensiveof raw materials largestscale fabricators Highest loomage in the worldcotton acreage Most units fare reasonably and contributes about One of the largest polyesterwell on the technology 61per cent to the worldyarn producerscountraw materials spinningWeaving/processing GarmentKnittingManufacture accounts for about largely decentralised 22 per cent and marked by hand and of the worlds spindle independent processing units capacity second highest spindlage presence of capabilities across the entire value chain within the country reduces lead time for production and cuts down the intermediate shipping time www.ibef.org 5. Te xT i l e s a n d a p pa r e ldecember 2008 The industry has seen steady growth across segments over the past decade, helped by a few key advantagesIndias advantages5 year CaGr in production ample availability of a variety of raw materials at low costs Other20 Other5 availability of skilled labour and lowYarn6 labour costs Fabric 6 Growing demand in domestic market5% 10% 15% 20%25% 30% 0% source: www.texmin.nic.in (2006-07) Government support www.ibef.org 6. Te xT i l e s a n d a p pa r e ldecember 2008 Favourable factor conditions present a key competitive advantage for indiaAbundant & Low cost availability of raw materials india has availability of a variety of raw materials cotton, silk, jute and wool in terms of cost, india has an advantage over comparative countries This inherent strength in availability of raw materials prevents any supply-side shocks www.ibef.org 7. Te xT i l e s a n d a p pa r e ldecember 2008 Favourable factor conditions present a key competitive advantage for india Cost competiveness Cost competiveness Cost competivenessYarn: Us$ per kg of yarn Yarn: Us$ per kg of yarn Yarn: Us$ per kg of yarn Fabric: Us$ per yard of fabricFabric: Us$ per yard of fabric Fabric: Us$ per yard of fabric Open-ended yarn and fabric ring yarn and fabric Textured yarn and fabric2.681.682.352.76 1.40 2.51 Yarn Yarn Yarn 1.902.612.31 2.452.06 2.170.750.55 0.70 0.690.51WovenWoven 0.65 Woven 0.65 0.55Fabric Fabric0.60 Fabric0.660.590.61 1.22 0.18 0.06 1.210.14 0.04 KnittedKnitted Knitted1.210.200.07 Fabric FabricFabric 1.120.21 0.06n south Korea n China n south Korean China n south Korea n Chinan Braziln india n Brazil n india n Braziln india www.ibef.org 8. Te xT i l e s a n d a p pa r e ldecember 2008 Favourable factor conditions present a key competitive advantage for indiaLabour advantagelabour cost per hour (Us$) india has abundant availability of manpower with15.13 Usaskillsets across all activities of the textiles valueHongkong6.15south Korea5.73 chain0.69 Coastal China indias cost advantage over comparative countries has 0.57 india 0.34pakistan been well established and is applicable for this sector as well 15 0 5 10 20 Us$ per HourSource : http://www.ibef.org/ Textile sector presentation.October 2000Textile India: Set to spin better. Angel broking industryreports. May 2005 www.ibef.org 9. Te xT i l e s a n d a p pa r e ldecember 2008 Consumer demographics and supportive initiatives from the Government have been other factors propelling growthGrowing domestic demand national income (at current prices) disposable income of consumers has been FY 2008 (e) 939FY 2007735 rising steadily in india FY 2006651 The consuming class is expected to constituteFY 200564580 per cent of the population by 2010FY 2004576FY 2003 506 Change in consumer mind set has led to an increasing expenditure on consumption, 0 100 200 300 400 500 600 700 800 900 1000 Us$ billion including textiles www.ibef.org 10. Te xT i l e s a n d a p pa r e ldecember 2008 Consumer demographics and supportive initiatives from the Government have been other factors propelling growthGovernment Supportprivate consumption (at current prices) encouraging institutes such as niFT (national FY 2008 (e) 649FY 2007511 institute of Fashion Technology and aTdC FY 2006466 (apparel Training and design Centres) and alsoFY 2005420 engineering colleges to offer courses in textile FY 2004382engineeringFY 2003342 TUFs (Technology Upgradation Fund scheme) for 0 100 200 300400500 600 700textile sector has been extended till 2011-12 Us$ billion revival of sick mills by national Textile Corporation encouraging public-private partnerships in textiles10 www.ibef.org 11. Te xT i l e s a n d a p pa r e l december 2008 The sector is competitive and likely to see increased investment from global playersThreat of New Entrants Fragmented industry supportive policies Growing domestic and exports opportunities Supplier Power abundant supply of raw materials Well established supplier base HIGHMEDIUMLOWSource: KPMG Analysis11www.ibef.org 12. Te xT i l e s a n d a p pa r e l december 2008 The sector is competitive and likely to see increased investment from global playersCompetitive Rivalry dominated by unorganised sector Highly fragmented entry of MnC players Customer Power Growing domestic and exports demand Wide range and variety of products HIGHThreat of Substitutes MEDIUM no significant threat LOWSource: KPMG Analysis 1 www.ibef.org 13. Te xT i l e s a n d a p pa r e ldecember 2008 almost all segments present opportunities for growth Based on a combined assessment of the growth Highsourcing opportunity and supporting policy,Weaving raw material sourcing, weaving and processing appear Garmentingattractive segments for investmentprocessing spinningOpportunity Growth low lowpolicy attractiveness High and governmentincentives 1 www.ibef.org 14. Te xT i l e s a n d a p pa r e l december 2008 MnCs in india have adopted different business models1. Producer modelCommon Cutting,Weaving processing stitching andsourcing The MnC invests in processing and weavingClustersFacility Garmenting segments of the value chain Branding the- Common processing facility for yarn / fabrica set of clusters of the Model Key Features / prints with- leverage govt. schemes such the apparelas siTp, seZs and TUFsCentralised in case ofespecially in locations / statessourcing high-valuewhere there are special productsincentives for setting upprocessing/weaving unitsexample of this model: Zeiglertex-Cheslind Textile ltd, an indian JV between Zeiglertex of switzerland and Cheslind Textiles of india Source: KPMG Analysis1 www.ibef.org 15. Te xT i l e s a n d a p pa r e l december 2008 MnCs in india have adopted different business models. Garment manufacturing model Cutting, stitching sourcing andWeaving andand Garmenting The MnC invests in designing and manufacturingspinningprocessing and retailing of garments- leveragesbrand andCan have of the model Key Featuressuperior designprovides technology support toa sourcing/ technologythese units for procuring best-buying- May target bothin-class equipmentliaison domestic aswell as exportmarketsexample of this model: dCM Benetton india ltd Source: KPMG Analysis1www.ibef.org 16. Te xT i l e s a n d a p pa r e l december 2008 state-wise attractiveness for investing in textile sector some of the states that appear attractive from attractiveness andhraGujarat Tamil Kerala Haryana Karnataka Himachalof the state pradesh nadu pradesh the availability of factor conditions, as well ason the key various fiscal as well as non-fiscal initiatives parametersFactor HighHighHighMode-HighMode- Mode- includeConditions rate raterateGovernment HighHighHighHigh Mode- HighHighincentives- rateFiscalGovernment HighHighMode- High HighHighMode-incentives - rate ratenon FiscalOverall attr-VeryVeryVeryHigh HighMode- Mode-activeness highhighhigh raterate Source: KPMG Analysis 1www.ibef.org 17. Te xT i l e s a n d a p pa r e ldecember 2008 Critical success Factors for the Textile and apparel industryBased on trends impacting the industry and experiences of industry players, the following key success factors emerge scale of operations integrated, lean supply chain Collaboration with local players Brand strength and reach (For apparels)1 www.ibef.org 18. Te xT i l e s a n d a p pa r e ldecember 2008 profile of playersArvind Mills Ltd Worlds largest exporter of denim and asias largest denim producer ranks amongst the top denim manufacturers of the world also in the garment and mens shirt business under names such as newport Flying Machine, lee and arrow besides textiles, the company also has an epBax unit 1 www.ibef.org 19. Te xT i l e s a n d a p pa r e ldecember 2008 profile of playersRaymond Ltd. Businesses in Textiles, readymade Garments, engineering Files and Tools, prophylactics and Toiletries. leader in textiles and apparel in india and enjoys a prominent position internationally produces pure wool, wool blended and polyester viscose fabrics, blankets and furnishing fabrics1 www.ibef.org 20. Te xT i l e s a n d a p pa r e ldecember 2008 profile of playersAlok Industries Began as fabric traders and suppliers to the garment industry expanded into weaving, knitting, processing, home textiles and readymade garments diversified manufacturer of world-class apparel fabrics selling directly to garment manufacturers and exporters 0 www.ibef.org 21. Te xT i l e s a n d a p pa r e ldecember 2008 profile of playersVardhman Spinning & General Mills Ltd. One of the largest textile business houses in india Vardhman Threads is the second largest producer of sewing thread in india Quality producer of Grey poplin/sheeting/shirting in the domestic as well as foreign market 1 www.ibef.org 22. Te xT i l e s a n d a p pa r e ldecember 2008 profile of playersIndian Rayon (IRIL) aditya Birla Groups most diversified conglomerate second largest producer of viscose filament yarn and the largest branded apparel in india Focus areas are viscose filament yarn, carbon black, branded apparels, textiles and insulators www.ibef.org 23. Te xT i l e s a n d a p pa r e ldecember 2008 profile of playersCentury Textiles & Industries Has asias largest composite 100 per cent cotton textile mill The trend setter in cotton textiles, with a presence in yarn, denim, viscose filament, rayon yarn, tyrecords, caustic soda, sulfuric acid, salt, cement and pulp & paper. www.ibef.org 24. Te xT i l e s a n d a p pa r e ldecember 2008 profile of playersWelspun India Has interests in terry towels, lsaW pipes, pipe coating, cotton yarns, pFY, bathrobes and buttons Has ties with 12 out of top 20 retailers in the world namely Wal-mart, K-mart, JC penny and Target Majority of earnings from exports www.ibef.org 25. Te xT i l e s a n d a p pa r e ldecember 2008 profile of playersHimatsingka Seide Ltd Manufactures natural silk fabrics under a 100 per cent export oriented unit scheme produces a wide range of regular and fancy 100 per cent silk and silk blended yarns its weaving division offers yarn dyed decorative, bridal and fashion fabrics The entire operation of winding, doubling, twisting, dyeing, weaving and finishing is integrated under one roof www.ibef.org 26. Te xT i l e s a n d a p pa r e ldecember 2008 profile of playersBombay Dyeing One of indias largest producers of textiles Manufactures cotton and blended textiles product mix comprises suitings, shirtings, sarees, towels and bed linen Manufactures `Vivaldi brand of mens clothing. it is also a manufacturer of dMT www.ibef.org 27. Te xT i l e s a n d a p pa r e ldecember 2008disClaiMerThis presentation has been prepared jointly by the india Brand authors and iBeFs knowledge and belief, the content is not equity Foundation (iBeF) and KpMG advisory services privateto be construed in any manner whatsoever as a substitute for limited (author).professional advice. all rights reserved. all copyright in this presentation and relatedThe author and iBeF neither recommend or endorse anyspecific products or services that may have been mentioned works is owned by iBeF and the author. 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