CLOTHS INDUSTRY

Cloth Industry
Definition of Clothing
Calico is a fabric made from unbleached, and often not fully processed, cotton. It may
contain unseparated husk parts, for example. The fabric is less coarse and thick than
canvas or denim, but owing to its unfinished and undyed appearance, it is still very
cheap.

Introduction
The Clothing Industry India is as ancient as the worlds clothing industry. In fact the first
known cotton cultivation seems to be from India followed by UK. In India, clothing
industry first of all developed in Mumbai which is also known as the Manchester of the
East. Later on the textile/clothing industry moved on to other areas in India such as
Gujarat, Tamil Nadu etc.
The Clothing Industry India is flourishing with all the modern equipments and
technologies. It is all because of the dedication and hard work of the workers, clothing
manufacturers as well as the exporters that Clothing Industry India has gained a
respectable and remarkable position in the international market. The world is looking up
to the Indian clothing industry to deliver its goods using technologies that are used and
developed elsewhere in the world, be it in USA or Japan.
Sun craft designs are a well known name in the Clothing Industry India that is known for
its latest trends, style & fashion. It is one of the clothing suppliers India that manufactures
and exports all kinds of garments like Mens t-shirts, knitted t-shirts, long sleeve t-shirts,
short sleeve t-shirts, tops and other Indian knitted garments & jackets.
Its focus has always been on offering an attractive range of garments with traditional
spirit. As a company of international repute, it has made inroads in the international
market. The success also owes to the high quality of the garments that it offers.
India has a rich and varied textile heritage, where each region of India has its own unique
native costume and traditional attire. While traditional clothes are still worn in most of
rural India, urban India is changing rapidly, with international fashion trends reflected by
the young and glamorous, in the cosmopolitan metros of India. Fashion in India is a

APGCMS, RAJAMPET. 1
 CLOTHS INDUSTRY

vibrant scene, a nascent industry and a colorful and glamorous world where designers and
models start new trends every day.
Fashion in India has become a growing industry with international events such as the
India Fashion Week and annual shows by fashion designers in the major cities of India.
The victories of a number of Indian beauty queens in International events such as the
Miss World and Miss Universe contests have also made Indian models recognized
worldwide. Fashion designers such as Ritu Kumar, Ritu Beri, Rohit
Bal, Rina Dhaka, Muzaffar Ali, Satya Paul, Abraham and Thakore, Tarun Tahiliani, JJ
Valaya and Manish Malhotra are some of the well known fashion designers in India.
Fashion in India covers a whole range of clothing from ornate clothes designed for
wedding ceremonies to prt lines, sports wear and casual wear. Traditional Indian
techniques of embroidery such as chikhan, crewel and zardosi, and traditional weaves and
fabrics have been used by Indian designers to create Indo-western clothing in a fusion of
the best of East and West.

The People Who Produce and Sell Clothing

Millions of people work to provide the materials and services that result in finished
garments. Each person involved in producing or selling clothing adds to the value of the
clothing through his work.
Farmers and ranchers are sources of clothing materials. They raise cotton, wool, flax,
and silk as well as the animals whose skins furnish leather. The rubber trees
History
In 1700, Britain banned importation of cotton cloth (or calico) from India, in an effort to
prop up British textile industry. Indian textiles were superior. The ban failed, and was
Strengthened in 1720. It almost destroyed the Indian textile industry, and India was
forced to buy British textiles.
From the Stone Age to the 18th century, all fabrication of clothing was done by hand.
Spinning and weaving machines that could be operated with the foot or with water power
were developed in the latter period. In the mid-1800s sewing machines were introduced.
For decades after their invention, however, sewing machines were used only for simple
seaming; other sewing needed.

APGCMS, RAJAMPET. 2
 CLOTHS INDUSTRY

Combined effort needed to face challenges in cloth industry

The Indian Government and domestic textile and clothing industry will have to embark
on a `combined' and a `co-operative' effort if they are to effectively respond to the
changing trading environment in this sector, according to Mr. Richard Hughes, Couns
ellor, Textiles Division, World Trade Organization (WTO).
``While the Indian Government has to be sympathetic and provide foundations in terms
of policies to create the best circumstances for efficient production, industry has to be
aggressive in aiming at becoming more competitive'', he said in his address at a seminar
on `Apparel exports in the new millennium: India's readiness to face WTO challenges'
here.
The seminar was organized by the Apparel Export Promotion Council and the National
Institute of Fashion Technology.
Mr. Hughes pointed out that India enjoyed considerable advantages when compared to
other countries in the textile and clothing industry as it can ``leverage'' on the presence of
adequate raw materials.
India will, however, also have to enhance its competitiveness if she were to counter
certain disadvantages arising on account of ``increasing number of regional trade
agreements'' which could be a market access constraint for the domestic textile and clo
thing products.
``Forget the year 2005 (by when quotas are expected to be completely abolished). The
challenges are there as of today. Start working now, otherwise you will be caught off-
guard when the changes sweep the sector after the complete removal of bilateral quo tas
and termination of the textiles agreement'', he said.
He said that as quota barriers fall and tariffs were reduced, trade in this sector would
certainly increase and the advantages would go to those who had prepared early and
prepared well. ```While the sector is bound to be affected by economic downturns a nd
setbacks along the way, in any broad or long-term consideration of textiles and clothing
trade, a positive picture emerges'', he said.
On the actual progress achieved thus far in the implementation of the WTO agreement on
textiles and clothing (ATC), he said that ``it is clear as we pass the mid-point in the 10

APGCMS, RAJAMPET. 3
 CLOTHS INDUSTRY

year transitional process, that the integration of products into WTO rules b y the US, the
European Community (EC), Canada and Norway has begun with the least sensitive areas
and with few quotas being removed.''
Both the integration of products and the application of quota growth rates, by the US, the
EC, Canada and Norway, have met the basic requirements in the ATC.
In the first stage (1995-97), while the correct volumes of products were integrated, no
quotas were eliminated by the four members maintaining restrictions, with one exception
in Canada. In the second stage (1998-2001), a number of products under quota w ere
integrated in Canada while the first few quotas were removed by the EC and the US;
none of these affected the quotas these countries (Canada, EC and the US) maintain with
India.
While India (along with many developing countries) shares the concern that the retention
of quotas to the end of the process (back loading) could lead to serious problems
including possible demands for their continued application after 2005, Mr. Hughes po
inted out that the countries maintaining quotas have reconfirmed their commitment to
``full integration'', by January 1, 2005.
``The ATC will have to be terminated by January 1, 2005 and the current agreement does
not provide for extension of application of quotas'', he said.
Mr. Hughes also urged the Government to adopt a ``wise'' quota management approach
by taking advantage of the flexibilities available in this regard.
On the various `implementation' concerns raised by developing countries, including
India, at various international forums, he admitted that the `system is far from perfect'
and said that there was an `ongoing struggle' to move towards a fair and open trading
system.
Materials
Common clothing materials include: Cloth, typically made of cotton, flax, wool, hemp,
ramie, or silk Down for down-filled parkas Fur Leather Nylon Less-common clothing
materials include: Bark Paper Rubber PVC Reinforcing materials such as wood, bone,
plastic and metal may be used to stiffen.

APGCMS, RAJAMPET. 4
 CLOTHS INDUSTRY

Clothing
Ractical functions of clothing include providing the human body protection again
Weather strong sunlight, extreme heat or cold, and precipitation also protection
against insects, noxious chemicals, weapons, and contact with abrasive substances. In
sum, clothing protects against anything that might injure the naked human body. Humans
have shown extreme inventiveness in devising clothing solutions to practical problems.
See: armor, diving suit, bee-keeper's costume, motorcycle leathers.

Involving clothing
Because clothing and adornment are closely related to ideas of human sexuality and
sexual display, humans may develop clothing fetishes. They may be strongly aroused by
the sight of another person wearing clothing and accessories they consider arousing or
sexually exciting. Sometimes the object of clothing becomes the object of arousal itself.
Fetishes have been documented in every culture and have been recorded throughout
history. Common fetishes involving clothing include...

Maintenance
Clothing, once manufactured, suffers assault both from within and from without. The
human body inside sheds skin cells and body oils, and exudes sweat, urine, and feces.
From the outside, sun damage, damp, abrasion, dirt, and other indignities afflict the
garment. Fleas and lice take up residence in clothing seams. Well-worn clothing, if not
cleaned and refurbished, will smell, itch, look scruffy, and lose functional...

21st-century clothing styles

Western fashion has to a certain extent become international fashion, as Western media
and styles penetrate all parts of the world. Very few parts of the world remain where
people do not wear items of cheap, mass-produced Western clothing. Even people in poor
countries can afford used clothing from richer Western countries. However, people may
wear ethnic or national dress on special occasions or if carrying out certain roles or
occupations. For example, most Japanese women have adopted Western-style dress for
daily wear.

APGCMS, RAJAMPET. 5
 CLOTHS INDUSTRY

Functional technology
The practical function of clothing is to protect the human body from weather strong
sunlight, extreme heat or cold, and precipitation as well as protect from insects,
noxious chemicals, weapons, and contact with abrasive substances. In sum, clothing
protects against anything that might injure the naked human body. Humans have shown
extreme inventiveness in devising clothing solutions to practical problems. See: armor,
diving suit, bee-keeper's costume, motorcycle.

MISSION
Mission Clothing represents the difference in your life, a new breath in your dressing
habits and a new point of view in your life style.
It value ethnic, cultural and life style diversity, with attitude of your self expression.
Mission Clothing brand presents a range of products, from quintessential classic, to a
classier trend in today fashion.
Our new collection will give you a classier look but a more desirable
style with a never changing quality and fashion. Trough out the design that we creating,
Mission make of today new trend fashion, we separates Man from the ordinary wearing
style. Reflecting an all day wearable trend trough out the year, we got our energies from
change stylish thanks to our production assortment.
As indicate by our collection, we set up the trend to keep up with, in every new season
with our shirt, tee shirt washed denim and print that applied to each product. Mission
clothing is determined of making its name one of the leading name of today fashion.

Vision
Indian textile and clothing industry has embarked on a vision of capturing market
worth USD 110 bn by FY 2012 - total of domestic household consumption and
exports, from USD 52 bn in FY 2006
The domestic household market potential is estimated to be USD 60 bn and FOB
value of exports at USD 50 bn by FY 2012

APGCMS, RAJAMPET. 6
 CLOTHS INDUSTRY

The above growth would translate into value of production of the industry
(including non household consumption) to increase at 16% p.a. from USD 27 bn
in FY 2005 to around USD 76 bn in FY2012
The principal drivers of growth would be-
5.7% p.a. growth in world trade in textiles and clothing from USD 479 bn in CY
2005 to around USD 700 bn in CY 2012 (USD 677 bn in CY 2011) .
India's share in the export market to increase from current 4% to around 7% by
FY 2012.
Share of clothing in India's export basket to increase to 60% by FY 2012 from
48% in FY 2006.
Domestic household market growth to be driven by increase in penetration of
organised retail, favourable demographics and rising consumption & income
levels.
Domestic non-clothing consumption growth would be driven by rising usage of
technical textiles, spurred by industrial growth, and increased activity in
construction of residential and commercial properties thereby driving demand for
furnishing items.

Problems and prospects of Indian clothing industry

India clothing firms are not globally competitive in productivity techno of machine per
apparel firm and infrastructure. Hence it is necessary to see which are affecting the
growth of India clothing industry and government remove these obstacles. The
productivity is one of the key determinants of compitutiveness.The productivity level of
India major fragment segments is compared with some of the Asian competitor as show
the data indicates that India productivity is very low as compared to china and Taiwan.
This low level of productivity could be due to poor technology small plant size and
inadequate infrastructure.
Indicate that china and Taiwan and Hon Kong have a higher number per apparel
in comparison to the Indian firms. Similarly the Indian firms have the less investment per
machine. Per machine investment in India is to be US$250 while it is US$ 1500 in china.
It suggests that India using low technology with poor infrastructure. In addition to this

APGCMS, RAJAMPET. 7
 CLOTHS INDUSTRY

India clothing industry reserved for small scale sector till 2000. the Indian government
recognize major constraint affected the growth of the cloth industry was restriction
investments by large domestic and foreign companies.
The government de-reserved the clothing industry from SSI January 1 2001 to
encourage the establishment of large scale garments market operations. The national
textile policy 2000 the initiatives including de-reservations to give impetus to the
industry. to face technological advancement technology up-gradation fund scheme started
form April 1 1999 and the government has extended again the scheme the XIth five year
plan. In addition to low productivity and technology inadequate infrastructure has
severely affected the exports of company one of the way the government has tried to
improve the infrastructure is apparel parks for boosting clothing exports
Textile sector cuts back on jobs
With rupee appreciation adversely affecting apparel export, the second largest
employment generator, the textile sector, which employs 25 million workers, has started
cutting back on jobs and laying off workers to contain costs.
The total job loss for the textile industry for this year touched five lakh and about 35,000
jobs have been lost in April alone due to an 18.25 per cent decline in exports because of
sharp appreciation in rupee, says P D Patodia, Chairman, Confederation of Indian
Textile Industry.
According to industry estimates, textiles exports have declined by 6.8 per cent during the
April-May period of 2007-08, while cotton yarn has seen a negative growth of 9.9 per
cent. Indias textile exports amounted to $19 billion last year and the target for this fiscal
was set at $25 billion.
We have demanded an increase in duty drawback rates, reduction in interest rates for pre
and post shipment credit as well as exemption from service tax. The export target of $25
billion set for the current fiscal is unlikely to be achieved with this growth, Patodia adds.
Textiles export remains slow in August
Export Import, Trade & Market
After showing positive gains in July, textile exports put up another poor performance in
the month of August when export of textile products declined by 5.55 percent as
compared to the same month last year.

APGCMS, RAJAMPET. 8
 CLOTHS INDUSTRY

Textile exports dipped to $938.436 million in August 2007 against $990.612 million in
corresponding month of last year whereas the export performance of textile products is
dismal when compared to month of July 2007 as it fell by almost five percent.
During the July-August period of current financial year, textile exports registered a
marginal increase of 1.18 percent compared to corresponding period of last year. The
nominal increase in exports during the month was due to 8.47 percent increase in textile
exports during the month of July.

Cloth industry growth high export volume

The woes of the Indian textile industry caused by fast eroding competitiveness in the face
of a rapidly appreciating rupee have reached the Prime Minister who has reportedly
assured appropriate measures to reverse the decline and ensure the industry sustained
growth.
Apprising Dr Manmohan Singh of the basic feature of the industry low import
intensity and high export volumes a delegation headed by Mr P.D. Patodia,
Chairman, Confederation of Indian Textile Industry, sought adequate fiscal and other
relief to save the industry from the threat of sickness.
The suggestions made for short-term relief include refund of all local levies (State and
municipal) amounting to 6 per cent on all exports of textiles and clothing products; pre-
and post-shipment credit to be made available at a flat rate of 6 per cent; withdrawal of
service tax applicable to all export related activities; and moratorium of one year on the
return of principal loan amount.
It is well known that the textiles and clothing industry is labour-intensive and employs a
large number of skilled and unskilled workers.

The life cycle of clothing

Used, unbearable clothing was once used for quilts, rag, rugs, bandages, and many other
household uses. It could also be recycled into paper. Now it is usually thrown away. Used
but still wearable clothing can be sold at consignment shops, Dress Agencies, flea
markets, online auction, or donated to charity.

APGCMS, RAJAMPET. 9
 CLOTHS INDUSTRY

There are many concerns about the life cycle of synthetics which come primarily from
petrochemicals. Unlike natural fibers, their source is not renewable (in less than millions
of years) and they are not biodegradable.

Industry Challenges
The Apparel Industry is growing at a very high rate but still there are some barriers,
which are hindering the growth of this industry. Some of them are:
Though the demand for garments is increasing day by day but the production rate
has still not been able to match with the ever rising demand. More production
facilities are needed to meet the demand.
Most of the raw material needed for apparel manufacturing is available in the
developing or under developed countries and these countries do not have enough
resources and manpower to explore them. These countries also do not have
finance to set up factories for clothing and garment production.
Globalization has helped the trade in many ways but due to globalization the
competition has increased and so it is not very easy for the firms to cope up with
so much competition, as they have to meet the deadlines and also maintain
quality.
The importers of developed economies are facing very stiff competition as
countries like China are producing good quality products in low prices due to
availability of very cheap labors.
Some trade laws still are very much in favor of developed countries and they need
to be reviewed, to facilitate imports from the developing countries.
As apparel industry is fashion driven, and fashion keeps changing, the firms have
to cope with the changing apparel industry trends and still complete orders in
time. Thus they usually have to work under pressure.

Future Prospects
The global apparel manufacturing industry is expected to grow more than ever in
times to come. According to an estimate, the global apparel industry will reach a value of
US $ 1,781.7 billion by the end of 2010. The apparel manufacturers are now adopting
new techniques to increase their trade. New business models and competitive strategies

APGCMS, RAJAMPET. 10
 CLOTHS INDUSTRY

are used to enhance profits and growth. The consumer is more aware and more
demanding with the development of media like television and Internet. They have more
choices in quality, price and design. This is the reason why apparel chains all over the
world are focusing more on improving the quality of the product and offering in varied
range of fashion designs. Apparel manufacturers are developing methods to keep up with
the pace of change like offering on wholesale prices to survive in the global competition.
The end of quotas in the textiles and clothing industry benefits large Asian
producers. Yet other countries also have a stake in the business. The sector plays a major
economic role in many least developed countries, especially in Africa, and in other small,
vulnerable countries. To avoid losing important business, their firms need to exploit duty-
free advantages to the full, diversify products and expand their supply chains.
WTO members abolished quotas on trade in textiles and clothing on 1 January
2005. As a result, prices are falling and major Western buyers are narrowing their
sources. On a global scale, large Asian countries with vertically integrated industries are
becoming the worlds leading suppliers. China in particular can produce virtually any
textile or clothing item at any quality and cost.
Within supplier countries, there are signs of industry consolidation. Larger
companies are increasing production capacity, often on the advice of their major
customers. Small and medium-sized firms (SMEs), on the other hand, face a shortage of
orders and some have already closed down.
It is not clear what will happen in many least developed countries (LDCs) and
small, vulnerable countries, with their low-value products, fragmented industries
resulting from past reliance on quota protection and little regional cooperation. Since
textiles and clothing account for a high proportion of merchandise exports and jobs for
example, 82% of merchandise exports in Cambodia and 83% in Haiti and Lesotho it
means changing their strategies to prevent serious economic consequences.

Clothing Industry Economic Development

1) Sales
Based on 2006 results, the sales in current prices in the textile and clothing
industry have achieved about CZK 54.7 billion, of which approximately
CZK 45 billion in the textile sector and CZK 9.7 billion in the clothing

APGCMS, RAJAMPET. 11
 CLOTHS INDUSTRY

industry. This corresponds to the decrease in 3.7 %. in TCI sales in

comparison with 2005 results. In this decline the textile industry has not
participated, as it has experienced sales increase in 0.7 %.

2) Employment
In late 2006, the employment in the TCI has re a c h e d some 60 thousand jobs level
(companies with a number of staff greater than 20 have been included only), which
represents a decrease in more than 9.4 % in comparison with late 2005 data. The number
of jobs in the textile industry has dropped to the limit of 40 thousand, which means a fall
in 7.2 %, if compared with 2005. In the clothing industry the number of jobs has dropped
to the limit of 20 thousand employees, and, it corresponds to a decrease in less than 13.6
%.
3) Wage Trend
An average monthly wage in the whole TCI has reached approximately CZK 12,800
level, which represents an increase in 5.4 %, if compared with late 2005. In the textile
industry the wage has reached approximately CZK 13,700, which is by some CZK 2,700
more than in the clothing industry.
4) Labour Productivity
The productivity measured by the sales volume per employee (in constant prices) has
reached significantly higher values in the textile industry (approximately CZK 1,200 per
employee per year) than in the clothing industry (approximately CZK 500 thousand per
employee per year). In the textile sector the productivity has risen some 10.1 %, while in
the clothing sector it has decreased in 7.9 %. The total foreign trade balance of the TCI
sector in 2006 has achieved a surplus amounting to more than CZK 1.1 billion, which is
1.5 % more than for the same period of 2005. In 2006, textile article exports according to
SKP 2 represented about CZK 52 billion, and, textile article imports represented about
CZK 49 billion. In 2006, clothing article exports according to SKP 2 represented about
CZK 24 billion, and, clothing article imports represented about CZK 25.9 billion.

Overall Assessment

APGCMS, RAJAMPET. 12
 CLOTHS INDUSTRY

As per above described, textile sector sales in 2006 have done better, if compared with
initial estimates. By contrast, clothing sector sales have done worse, if compared with
initial estimates. Clothing industry sales index decrease (in -20.1 %) has been given, in
particular, by a high 2005 reference level, where it has not been (up to now) possible to
explain by anything the amount of sales in the 1st semester of 2005. To 2006 results have
decisively mattered the following factors:
- confirmation of stagnation of imports from China, as a result of the Agreement of
Understanding adopted by China and the EU in June 2005 (volume of imports to the EU
has returned to 2004 level) - remarkable growth of imports from other Asian countries, in
particular, India and Pakistan, which has been, evidently, related to the preceding factor
- both these factors have shown themselves more dramatically in the clothing sector, and,
to a lesser extent in the textile sector.
As a result, the textile sector has retained exporters position (trade surplus), while the
clothing sector has recorded a trade deficit- Czech companies have gathered a relatively
sufficient number of orders, but the price pressure caused by China in 2005 (although
imports did not take place later on) has decreased significantly the economic efficiency of
these orders- important strengthening of the Czech crown against EUR has lowered, in
addition, the economic efficiency of the sector.
This has been partially off set by the same trend in the exchange rate of the Czech crown
against USD - a significant impact on the sector economy has also had the continuously
growing cost of power energy and gas (in the whole sector it has got a weight of about 10
% of the total costs).This factor is getting to be a proximate cause of production
limitation and stoppage in the CR.
It is necessary to realize that the only possibility, how the textile and clothing sectors
might off set both a fast growth and considerable cost items, is to reduce wages (their
total amount), as no other item of the calculation formula gives the textile and clothing
sectors such a chance - the above specified factors have forced, in particular, the textile
sector to carry out additional and important consolidation of productivity measured by
sales per employee. An associated effect accompanying such a development has been,
however, an important reduction in the number of jobs. On the contrary, nor a significant

APGCMS, RAJAMPET. 13
 CLOTHS INDUSTRY

reduction in the number of jobs in the clothing sector (-13.6 %) has prevented from the
decrease in its productivity (-7.9 %).

Clothing industry in India:

The textile industry in India (including the garment industry) is vital to the economy of
the country. It contributes to over 6 per cent of the gross domestic product of India and
earns 18 per cent of the total foreign exchange earnings of the country.
The textile industry consists of three distinct sectors, viz, spinning, weaving and
processing. The industry is the largest employer next only to agriculture which is the
mainstay of the economy. Over 50 per cent of the employees are women who help to
sustain the family income. The garment industry alone employs four million workers and
helps to support labour working in ancillary manufacturing buttons, zippers, sewing
thread, embroidery thread, metal studs, polybasic, cartons, cardboard sheets, etc.
The country follows very strict labor laws which govern inter alia safety, lighting,
working conditions, age at entry, and restriction on storage to prevent fire hazards,
emoluments, and welfare services, supervised by ever-vigilant labor officers of the state
governments.
The country has the largest acreage under cotton in the world but is almost totally
dependent on monsoon, yielding a poor 308 kgs/hectare. The country has a well-
developed textile industry of cotton as well as synthetic fibers/yarn supported by silk,
wool and jute.
The textile industry is diversified with an unorganized sector inter-mingled, with the
organized sector.
The organized mill sector of the textile industry (excluding garments) which is over a
century old is currently a decimated lot with the bulk of the production of fabrics having
been taken over by the power loom sector which purchases yarn from spinners. Each unit
of the organized cotton mill sector consists of departments ranging from the opening and
mixing of cotton, unto spinning of yarn which is subsequently reeled into larger packages

APGCMS, RAJAMPET. 14
 CLOTHS INDUSTRY

preparatory to the weaving of grey fabric for further processing in its processing section
for final finishing. Textile production of fabrics on hand-operated looms makes a
significant contribution to fabric production. The industry produces 42,000 million square
meters of fabrics, of all fibers, per annum.
While the spinning sector is very well-organized producing yarn as coarse as 6s to as
superfine as 160s, both in singles and multiples, the weaving sector, especially the power
loom sector has considerable leeway to make good with up gradation in technology. Even
as of today, the power loom sector is keenly interested in setting up automatic air-
jet/water-jet looms which are of vintage variety with a balance life-span of 10 to 15 years.
On the other hand, the organized mill sector is keen to keep in touch with the latest
technology. It is currently passing through a phase of rehabilitation partly from its own
resources and partly with the help of finances made available by government and through
public investment.
The processing sector is the weakest link in the chain of the textile industry. This sector
too has an organized as well as unorganized sector. While the unorganized sector
concentrates only on certain processes, the organized sector concerns itself wih the
processing of fabric from the grey stage unto its finished state. It may be noted that this
organized sector is independent of the sector installed by the organized mill industry.
This sector concerns itself only with processing of fabric (from start to finish).
Exports
Exports of textiles (including garments) from India are worth around US $14 billion of
which the share of garments is close to US$. 6.5 billion. The country is aiming at an
exchange earning of $.50 billion by 2010. At the current rate, the country bids fair to
reach the target. A break-up of export earnings for various arms of the textile industry is
given below:
Per capita availability
For people of a country of the size of India, the per capita consumption of garments,
even after accounting for ethnic garments consumption is barely 6 pieces per annum
whereas in countries like US (much smaller in population than India), it is close to 100
pieces per year.
Reforms and the future

APGCMS, RAJAMPET. 15
 CLOTHS INDUSTRY

The Indian textile industry (including garments) is just emerging from the shadows of a
debilitating quota system, a system which only skewed production for as long as ten
years without any reward in return.
Government of India is going full steam on economic reforms. To begin with,
government has steadily raised the ceiling for investment in plant and machinery of a
unit from Rs 1 core (i.e. US $0.23 million) to Rs 4 crore (i.e. US$. 0.91 million) for the
unit to be considered as a unit in the small-scale sector. Insofar as garments are
concerned the government, realizing its potential, has removed both the woven and
knitted sectors from the limits fixed for the small-scale sector. This has resulted in
investments flowing into this sector. Expansions of units by adding to capacity or by
mergers are in full swing.
Amalgamations are the order of the day in the woven garment sector. Backward and
forward integrations in the spinning and knitted garment sectors are in evidence, both
with the object of ensuring a steady supply of inputs as well as to add value.
Foreign Direct Investment (FDI) has been permitted in the garment sector in the shape
of joint ventures. FDI in retail is almost on the cards but, for the present, the franchise
route is favored.
Economic reforms have increased the spending power of the middle-income group
which is growing bigger by the day. Consequently, purchasing power is on a high with
malls, department stores, discount stores, all springing up in various parts of the
country.
The consumer today demands value for money. Quality is of prime importance and the
consumer is prepared to pay a price for it.
Government has been divesting of its resources sunk into various state-owned
companies and utilizing the released resources to improve infrastructure, reform rural
economy, undertake electrification of villages, provide clean drinking water to rural
folk and generally uplift the rural economy and rural agriculture. Considering the fact
that almost 60 per cent of Indias population lives in the villages, this new-found thrust
will generate a demand for goods on a scale which cannot be fathomed. Industry has to
move in syn to meet this growing demand.

APGCMS, RAJAMPET. 16
 CLOTHS INDUSTRY

Assets

Cloth
Rs. Crore (Non-Annualised) Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08

Gross fixed assets 11109.44 11328.06 11963.93 14352.59 18019.41 21132.58

Land & building 2159.04 2067.64 2246.35 2730.08 3470.35 4105.95
Plant & machinery 8264.46 8543.39 8932.59 9807.64 11137.72 13080.87
Transport & comm. equipment/infrastructure 63.52 70.99 81.01 95.25 99.17 105.71
Furniture,amenities & other fixed assets 152.61 157.8 164.96 182.49 230.08 289.36
Capital work-in-progress 442.28 462.78 592.57 1490.45 2508.09 2803.25
Intangible assets 9.48 9.35 13.98 30.24 365.42 445.23

Net pre-operative expenses pending allocation 3.11 11.68 11.13 15.52 281.18 321.6
Net lease reserve adjustment -0.06 0 0 0 0 0
Less: Cumulative depreciation 4339.57 4776.27 4972.29 5282.76 5317.13 5331.27
Less: Arrears of depreciation 14.73 17.5 14.19 5.42 5.72 6.26

Net fixed assets 6755.08 6534.29 6977.45 9064.41 12696.56 15795.05

Investments 1374.63 3979.3 3894.41 4098 4187.01 1573.54

Equity shares 1018.31 1079.16 1089.06 1284.25 1065.64 776.57
Preference shares 9.58 9.33 13.59 14.73 49.78 96.35
Mutual funds 245.87 304.13 198.49 89.35 253.22 80.9
Debt instruments 54.71 78.6 75.41 174.84 123.22 128.17
Approved securites (slr/statutory req.) 0 0 0 0 0 0
Assisted companies 0 0 0 0 0 0
Others 63.88 2575.6 2585.94 2636.59 2809.42 636.64
Less: Provision for dimunition in value of investments 17.72 67.52 68.08 101.76 114.27 145.09

Group companies 1036.67 1117.94 1129.53 1344.76 1148.42 865.47

Non-group companies 291.71 353.22 246.96 218.35 343.38 216.46

Market value of quoted investments 48.8 55.99 133.26 199.13 183.25 124.67

Deferred tax assets 139.45 358.33 59.02 75.55 85.77 197.46

Current assets 9453.59 8833.54 11034.2 14700.68 15832.25 13300.14

Cash & bank balance 497.24 590.3 1037.2 2991.06 3372.82 2248.32
Inventories 2584.37 2581.18 3064.07 3363.49 3836.6 4316.6
Receivables 6268.01 5558.55 6836.93 8188.7 8423.52 6446.49

APGCMS, RAJAMPET. 17
 CLOTHS INDUSTRY

Expenses paid in advance 103.97 103.51 96 157.43 199.31 288.73

Loans & advances 0 0 0 0 0 0

Deferred revenue expenditure 159.47 116.73 89.41 54.78 114.44 48.06
Total assets 24157.98 24556.37 27368.7 31649.82 36497.82 31589.48
No of companies 130 146 146 134 113 97
Liabilities

Cloth
Rs. Crore (Non-Annualised) Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08
Net Worth -3843.65 486.11 453.73 1857.68 7834.81 6878.23
Authorised capital 3686.61 4058.07 4142.09 4256.12 4106.34 3760.81
Issued equity capital 2640.04 2929.81 2993.21 3098.09 2895.27 2428.33
Paid up equity capital (net of forfeited capital) 2620.84 2909.47 2978.11 3083.6 2869.12 2418.42
Paid up preference capital (net of forfeited capital) 240.79 317.98 548.19 589.72 608.6 588.65
Capital contibution, suspense and application money 112.76 4029.12 3975.72 4076.95 3291.64 212.68
Reserves & surplus -6820.05 -6772.86 -7050.7 -5894.09 1063.95 3657.6
Free Reserves 3292.56 3533.17 4210.57 5026.39 5835.82 6651.5
Security premium reserves (Net of deductions) 1770.24 1765.67 2111.91 2488.81 2880.1 3254.7
Other free reserves 1522.32 1767.5 2098.66 2537.58 2955.72 3396.8
Specific reserves 386.05 343.39 344.28 399.43 392.66 449.23
Revaluation reserves 276.93 186.55 175.41 216.91 122.73 146.41
Less Accumulated losses 10775.59 10835.97 11780.96 11536.82 5287.26 3589.54
Total borrowings 18326.76 16470.54 18560.45 20700.39 20923.99 19743.71
Bank borrowings 4945.04 5224.98 6023.15 7558.55 10353.26 13569.31
Short term bank borrowings 3028.43 3077.41 3219.54 3252.68 4081.36 4593.66
Long term bank borrowings 1916.61 2147.57 2803.61 4305.87 6271.9 8975.65
Financial institutional borrowings 2003.54 1884.81 1181.24 1099.59 1138.53 1227.54
Central & state govt. (usually sales tax deferrals) 5198.88 3275.21 3416.51 3709.25 3651.23 260.2
Debentures / bonds 540.72 540.87 482.62 556.17 465.65 1079.59
Convertible 35.88 42.52 28.02 25.18 46.18 22.64
Non-convertible 502.13 495.03 451.28 529.93 401.38 830.52
Fixed deposits 76.89 83 66.71 55.98 33.01 28.92
Foreign borrowings 62.01 72.39 507.17 666.49 1044.11 1643.9
Borrowings from corporate bodies 3697.77 3303.55 3684.68 3749.39 621.42 401.98
Group / associate cos. 3559.58 3106.73 3513.51 3551.9 446 185.41
Borrowings from promoters / directors 149.69 126.91 65.63 83.93 55.58 65.49
Deferred credit 7.95 8.25 10.19 8.94 53.47 46.6
Other borrowings 1579.97 1885.37 3093.56 3178.11 3417.82 1413.03
Secured borrowings 7252.24 7170.08 8331.61 10035.93 12475.02 16325.22
Unsecured borrowings 11074.52 9300.46 10228.84 10664.46 8448.97 3418.49
Current portion of long term debt 617.64 918.8 1133.81 1411.45 845.27 767.25
Current liabilities & provisions 9423.89 7076.97 8075.36 8725.34 7299.18 4328.6
Sundry creditors 2246.97 2062.72 1847.23 1869.77 2069.78 2188.54
Acceptances 155.87 65.87 46.69 125.5 133.88 213.75
Deposits & advances from customers and employees 98.38 156.35 199.61 233.47 214.78 162.14
Interest accrued 6067.58 3977.36 5173.97 5616.53 4114.43 922.87
Share application money 1.53 0.35 7.93 0.2 0.58 0
Other current liabilities 370.51 359.34 336.08 370.58 361.72 287.65
Provisions 483.05 454.98 463.85 509.29 404.01 553.65
Deferred tax liability 250.98 522.75 279.16 366.41 439.84 638.94
Total liabilities 24157.98 24556.37 27368.7 31649.82 36497.82 31589.48

APGCMS, RAJAMPET. 18
 CLOTHS INDUSTRY

Net Worth (net of reval & DRE) -4280.05 182.83 188.91 1585.99 7597.64 6683.76
Contingent liabilities 1684.37 2313.19 2896.09 2657.54 3305.3 3113.57
No of companies 130 146 146 134 113 97

Profits

Cloth
Rs. Crore (Non-Annualised) Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08

PBT -1425.11 246.9 -650.83 280.06 844.34 1197.97

Provision for direct tax 76.36 112.14 72.3 222.36 234.27 327.9
Corporate tax 24.03 39.68 50.46 119.89 132.5 214.29
Deferred tax 56.9 77.72 53.45 115.44 126.58 206.43
Less: Deferred tax assets / credit 4.66 5.32 31.98 20.55 34.25 102.67
Other direct taxes 0.09 0.06 0.37 7.58 9.44 9.85
Fringe benefits tax 0 0 0.22 7.47 9.19 9.69

PAT -1501.47 134.76 -723.13 57.7 610.07 870.07

PAT (as reported by the co.) -1349.39 20.32 -894.65 29.55 596.99 886.78

Prior period and extra-ordinary income 279.48 4009.81 698.39 769.54 430.03 428.08
Prior period and extra-ordinary expenses 65.86 2018.92 124.76 114.92 55.85 70.59
Net prior period and extra-ordinary items -213.62 -1990.89 -573.63 -654.62 -374.18 -357.49

PBPDTA net of P&E -876.24 -791.49 -468.16 425.43 1344.47 1841.36

PBPT net of P&E -1598.84 -1525.16 -1141.39 -348.34 485.7 897.29
PBT net of P&E -1638.73 -1743.99 -1224.46 -374.56 470.16 840.48
PAT net of P&E -1715.09 -1856.13 -1296.76 -596.92 235.89 512.58

Distribution of profits
PBPDTA 0.01 0.01 0.01 0.01 0.01 0.01

Non--provisions for 147.47 175.28 111.44 159.36 227.56 443.99

Diminution in investment 0 0.76 0.71 0 0.04 0.04
Sundry debtors 11.62 51.87 50.7 47.92 47.94 39.74
Loans and advances including npas 27.81 6.67 2.78 3.97 1.37 5.97
Loans and advances to group companies 44.32 41.22 41.23 0 0 0
Interest expenses 55.1 67.92 14.35 106.01 178.21 398.24
Power expenses 0 0 0.14 0.01 0 0
Gratuity 0 2.92 1.45 1.45 0 0
Others 8.62 3.92 0.08 0 0 0
No of companies 130 146 146 134 113 97

APGCMS, RAJAMPET. 19
 CLOTHS INDUSTRY

Income & expenditure

APGCMS, RAJAMPET. 20
 CLOTHS INDUSTRY

Cloth
Rs. Crore (Non-Annualised) Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08

Total income 11834.96 15820.32 13458.2 15468.32 16241.69 19249.4

Sales 10783.7 11044.73 11957.79 13789.72 14801.96 18295.9
Industrial sales 10482.85 10607.54 11713.19 13488.89 14344.13 17348.17
Income from non-financial services 300.85 437.19 244.6 300.83 457.83 947.73
Income from financial services 728.6 723.83 740 837.98 945.04 466.35
Interest 706.69 598.69 694.94 762.57 811.1 193.75
Dividends 4.95 11.82 7.82 6.44 8.78 8.25
Treasury operations 15.59 110.31 29.73 54.54 76.1 227.98
Other income 43.18 41.95 62.02 71.08 64.66 59.07
Prior period income & extraordinary income 279.48 4009.81 698.39 769.54 430.03 428.08
Change in stock 68.63 -101.6 145.34 160.78 388.02 283.14

Total expenses 13405.06 15583.96 14326.67 15571.4 16019.64 18662.47

Raw material expenses 5933.33 5868.65 6963.8 7937.4 8680.39 10418.3
Packaging expenses 35.14 43.84 51.21 70 86.63 101.72
Purchase of finished goods 491.39 676.64 499.41 484.19 558.56 1081.67
Power, fuel & water charges 818.06 783.44 850.9 993.69 1023.03 1206.21
Compensation to employees 1284.73 1436 1021.59 1067.38 836.06 928.55
Indirect taxes 449.9 551.87 429.82 326.04 179.35 187.79
Royalties, technical know-how fees, etc. 5.68 5.77 5.61 6.55 9.33 5.77
Lease rent & other rent 22.66 24.78 31.81 37.91 64.61 107.38
Repairs & maintenance 129.67 132.9 148.6 164.73 154.13 163.74
Insurance premium paid 32.03 31.43 33.18 35.2 34.64 29.4
Outsourced mfg. jobs (incl. job works, etc.) 410.32 365.57 433.33 531.19 594.83 671.47
Outsourced professional jobs 18.14 21.87 23.97 40.03 55.64 46.72
Directors' fees 0.13 0.21 0.24 5.34 6.27 7.24
Selling & distribution expenses 371.92 349.71 386.14 425 555.79 653.9
Travel expenses 30.05 33.51 34.49 40.99 42.11 41.45
Communication expenses 12.08 12.63 11.43 14.76 16.38 16.54
Printing & stationery expenses 10.87 12.69 14.12 14.88 17.05 19.38
Miscellaneous expenses 179.95 200.37 203.09 202.98 265.49 334.83
Other operational exp. of indl. enterprises 40.34 55.53 48.76 65.67 76.6 93.06
Other oper. exp. of non-fin. service enterprises 0.74 0 0.01 0.86 0.9 0.85
Share of loss in subsidiaries/JVs,etc. 0.53 0 0 0 0 0
Lease equalisation adjustment 0.11 0 0 0 0 0
Loss on securitisation of assets/loans 0 0 0 0 0 0
Fee based financial service expenses 90.61 76.9 85 87.33 60.21 46.25
Treasury operations expenses 7.78 108.67 71.37 15.67 6 11.94
Total provisions 39.89 218.83 83.07 26.22 15.54 56.81
Write-offs 78.49 37.88 251.58 33.76 16.19 20.79
Less: Expenses capitalised -1.36 1.09 1.75 27.2 144.01 214.29
Less: DRE & expenses charged to others 0 0 0 0.19 0.67 0.64
Prior period & extraordinary expenses 65.86 2018.92 124.76 114.92 55.85 70.59

PBDITA 1341.83 2651.2 1798 2913.8 3362.81 3425.12

Interest paid 2042.8 1669.67 1774.28 1859.77 1659.51 1283.08
Financial charges on instruments 1.51 0.95 1.23 0.19 0.19 0
Expenses incurred on raising deposits/debts 0.03 0.01 0.09 0.01 0 0
PBDTA -702.51 980.57 22.4 1053.83 1703.11 2142.04

APGCMS, RAJAMPET. 21
 CLOTHS INDUSTRY

Depreciation 693.51 706.43 648.49 762.04 840.48 929.51

Amortisation 29.09 27.24 24.74 11.73 18.29 14.56
PBT -1425.11 246.9 -650.83 280.06 844.34 1197.97
Provision for direct taxes 76.36 112.14 72.3 222.36 234.27 327.9
PAT -1501.47 134.76 -723.13 57.7 610.07 870.07

No of companies 130 146 146 134 113 97

Investments

Cloth
Rs. Crore (Non-Annualised) Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08

Investments 1374.63 3979.3 3894.41 4098 4187.01 1573.54

In equity shares 1018.31 1079.16 1089.06 1284.25 1065.64 776.57
Group companies 976.49 1033.01 1047.39 1208.16 989.19 659.67
Other than group companies 41.82 46.15 41.67 76.09 76.45 116.9
In preference shares 9.58 9.33 13.59 14.73 49.78 96.35
Group companies 9.18 9.18 9.14 14.58 49.63 96.2
Other than group companies 0.4 0.15 4.45 0.15 0.15 0.15
In debt instruments 54.71 78.6 75.41 174.84 123.22 128.17
Other than governement debentures/bonds 54.62 78.54 75.35 174.78 123.16 128.11
Group companies 51 75.75 73 122.02 109.6 109.6
Other than group companies 3.62 2.79 2.35 52.76 13.56 18.51
In bonds/debentures of government/local bodies 0.09 0.06 0.06 0.06 0.06 0.06
In mutual funds 245.87 304.13 198.49 89.35 253.22 80.9
Group companies 0 0 0 0 0 0
Other than group companies 245.87 304.13 198.49 89.35 253.22 80.9
In others 63.88 2575.6 2585.94 2636.59 2809.42 636.64
Less: Provision for dimunition in value of investments 17.72 67.52 68.08 101.76 114.27 145.09
Non-provisioning of dimunition in investments 0 0.76 0.71 0 0.04 0.04
Book value of quoted investments 140.05 157.57 182.76 166.13 232.61 151.26
Market value of quoted investments 48.8 55.99 133.26 199.13 183.25 124.67
Marketable securities 337.19 456.97 364.98 253.83 409.71 222.79
Investment lodged as security 166.36 172.68 68.78 45.93 123.81 127.17
No of companies 130 146 146 134 113 97

TOOLS OF ANALYSIS

Earning Power of Industry

APGCMS, RAJAMPET. 22
 CLOTHS INDUSTRY

The earning power of industry is calculated based on

(1) Operating Performance.
(2) Financial Performance.

Operating Performance:

When the concern is rendering some services rather than manufacturing the
goods called operating cost and its efficiency is called operating performance.

EBIT
Operating performance = ----------------------
Net Asset

Financial performance:

Finance may be defined as the provision of money at the time it is wanted. The
financial performance means the procurement of funds and the effective utilization of
money.

PAT
Financial performance = -------------------------
Net worth

Cost structure:

Fixed Chargers
Cost structure= -------------------------
Value Added

Growth Rate:

Pn = Po (1 + r) n
Here P n = Current year
Po =base year
r = growth rate

Statistical Tools:

To predict the future values generally we apply trend analysis. The formulas are
as follows.

APGCMS, RAJAMPET. 23
 CLOTHS INDUSTRY

Trend Analysis:

Estimation of sales Using Y = a+bx

y = na + b x

xy = ax + bx2

Correlation:

Correlation is the degree of association between tow variables and it is

represented in terms of a co-efficient know as correlation. The range of the correlation
co-efficient it is in between -1 and +1. If the correlation co-efficient is negative, then the
variable are inversely proportional and maximum when it is -1, If the co-efficient is 0,
there is bi association between the variables are associated directly and it is maximum
when it is +1.

: - -_ _
(x- x) (y-y)
r= ------------------------
-_ - _
(x- x)2 (y-y)2

COST STRUCTURE:
Cost structure shows the percentage of cost incurred to produce a product. It is the
relationship between fixed charges and value added. Here fixed charges means (wages
+interest + depreciation), value added means sales-(raw material + power & fuel).

APGCMS, RAJAMPET. 24
 CLOTHS INDUSTRY

Fixed charges
Cost structure = ----------------------
Value added

Table no 1 showing cost structure (Rs in crores)

S. Particulars
2003 2004 2005 2006 2007 2008
No
1 Sales 10783.7 11044.73 11957.79 13789.72 14801.96 18295.9

2 Raw Material, 6306.10 6222.46 7284.28 8318.32 9037.11 10898.6

power, fuel
and water
3 Employee 1284.73 1436 1021.54 1067.38 836.06 928.55
compensation
4 Interest paid 2042.8 1669.67 1774.2 1859.17 1659.7 1283.08

5 Depreciation 693.51 706.43 648.53 762.04 840.48 929.5

6 Value added 3192.87 3386.33 3651.92 4404.02 4928.79 6468.75

(1-(2+3))
7 Fixed charges 5929.18 5762.43 6074.65 7025.23 7428.97 8681.28
(4)+(5)+(6)
8 Cost structure 1.85 1.55 1.66 1.59 1.50 1.34

INTERPRETATION:
By observing above table it is clear that cost structure of the cloth industry decreases
continuously except in the year 2005, because of fixed charges proportion to value added
is continuously decreased. It was mainly due to a large increase in sales when compared
to fixed charges. It has effected on the efficiency of cloth industry and it need to improve
its efficiency by reducing fixed charges.

OPERATING PERFORMANCE:
Operating performance shows the relationship between PBIT and net assets.
EBIT
Operating performance = -----------------
Net Assets

APGCMS, RAJAMPET. 25
 CLOTHS INDUSTRY

Table no. 2 showing operating performance (Rs in crores)

YEAR EBIT NET ASSETS OPERATING

PERFORMANCE
2003 619.23 24157.98 0.025
2004 1917.53 24556.37 0.078
2005 1124.77 37368.7 0.030
2006 2140.03 31649.82 0.067

2007 2504.04 36497.82 0.068

2008 2481.05 31589.48 0.078

Graph: 1

0.08 0.078 Operating performance 0.078

0.07 0.067 0.068
0.06
0.05
RATIO

0.04
0.03 0.025 0.03
0.02
0.01
0
2003 2004 2005 2006 2007 2008
YEARS

INTERPRETATION:

From the above table it is clear that the operating performance of cloth industry has
improved from year to year expect 2004. It was mainly because a proportionate increase
in EBIT, is more that of net assets. The more value of the proportion shows the better
operating performance the industry is very good.

FINANCIAL PERFORMANCE:
Financial performance shows the relationship between profit after tax and net worth.
PAT
Financial performance= --------------
Net worth

APGCMS, RAJAMPET. 26
 CLOTHS INDUSTRY

Table no. 3 showing financial performance (Rs in crores)

[YEAR PAT NET WORTH FINANCIAL
PERFORMANCE
2003 -1501.47 -3843.65 0.039
2004 134.76 486.11 0.277
2005 -723.13 453.13 -1.593
2006 57.7 1857.68 0.031
2007 610.07 7834.81 0.077
2008 870.07 6878.23 0.126

Graph: 2
0.5 Financial performance
0.277
0.077 0.126
0 0.039 0.031
RATIO

-0.5
-1

-1.5 -1.593
-2
2003 2004 2005 2006 2007 2008
YEARS

INTERPRETATION:

From the above table it is clear that the financial performance of cloths industry is varied
more. In the year 2005 it got more deficits because it got more losses in that year. After
2005 the companys PAT increased. That indicates the company is in better position.

GROWTH ANALYSIS

The following table shows the growth percentage of sales incurred in every year by
taking 2003 as base year

Table no. 4 showing growth analysis

YEARS SALES GROWTH %

APGCMS, RAJAMPET. 27
 CLOTHS INDUSTRY

2003 10783.7 --

2004 11044.73 2.42

2005 11713.19 6.05

2006 13488.89 15.15

2007 14344.13 6.34

2008 17348.17 20.94

Graph: 3
GROWTH ANALYSIS

20000
17348.17
15000 14344.13
13488.89
SALES

11044.73 11713.19
10783.7
10000 SALES

5000

0
2003 2004 2005 2006 2007 2008
YEARS

INTERPRETATION:
Growth percentage of sales shows major variations in the years 2006 and 2008. Cloths
industry showing good results successively in sales in all years.

TREND ANALYSIS
Trend analysis of income:
The following table shows the expected values for the next coming years:

Table no 5. showing trend analysis

YEARS INCOME

APGCMS, RAJAMPET. 28
 CLOTHS INDUSTRY

2003 11834.96

2004 15820.32

2005 13458.2

2006 15468.32

2007 16241.69

2008 19249.4

Estimated sales for 2009 23876.56

Estimated sales for 2010 27764.12

Graph: 4

30000 TREND ANALYSIS

27764.12
25000 23876.56
20000 19249.4
RATIO

15000
15820.32 15468.3216241.69
13458.2
11834.96
10000

5000

0
2003 2004 2005 2006 2007 2008 2009 2010

YEARS

INTERPRETATION:
By using trend analysis technique, we estimated the future income of cloth
industry for 2009 may be 23876.56 and for 2010 will be 27764.12

Trend analysis of sales:

The following table shows the expected values for the next coming years:

Table no 6. Showing trend analysis

YEARS sales

APGCMS, RAJAMPET. 29
 CLOTHS INDUSTRY

2003 10783.7

2004 11044.7

2005 11957.7

2006 13789.72

2007 14801.96

2008 18295.9

Estimated sales for 2009 18512.02

Estimated sales for 2010 19959.55

Graph:5

20000 TREND ANALYSIS 19959.55

18000 18295.9 18512.02
16000
14801.96
14000 13789.72
RATIO

12000 11957.7
10783.7 11044.7
10000
8000
6000
4000
2000
0
2003 2004 2005 2006 2007 2008 2009 2010

YEARS

INTERPRETATION:
The estimated sales for 2009 is 18512.02

The estimated sales for 2009 is 19959.55

CORRELATION BETWEEN SALES AND INVESTMENTS:

Table no. 7 showing correlation between sales and investments

YEAR SALES INVESTMENTS

APGCMS, RAJAMPET. 30
 CLOTHS INDUSTRY

2003 10783.7 1374.63

2004 11044.73 3979.3
2005 11957.79 3894.41
2006 13789.72 4098.1

2007 14801.96 4187.01

2008 18295.9 1573.54
Correlation between SALES Vs INVESTMENTS is = -0.5661

INTERPRETATION:

The coefficient of correlation between SALES Vs INVESTMENTS is -0.5661. This

indicates both have negative correlation. Both investment and sales are in opposite
direction.

CORRELATION BETWEEN INCOME AND INVESTMENTS:

Table no. 8 showing correlation between income and investments

APGCMS, RAJAMPET. 31
 CLOTHS INDUSTRY

YEAR INCOME INVESTMENTS

2003 11834.96 1374.63
2004 15820.32 3979.3
2005 13458.2 3894.41
2006 15468.32 4098.1

2007 16241.69 4187.01

2008 19249.4 1573.54
Correlation between INCOME Vs INVESTMENTS is = -0.60881

INTERPRETATION:

The coefficient of correlation between INCOME Vs INVESTMENTS is -0.6088. This

indicates both have negative correlation. Both income and investments are in the opposite
direction.

SWOT ANALYSIS
Strengths:

APGCMS, RAJAMPET. 32
 CLOTHS INDUSTRY

India having various traditions, each one having there own style of culture in
clothing helps development of cloth industry.
Changes in trend also help in development in cloth industry.
Increasing population helps this industry.
Government providing every infrastructure to cloth industries.
It has high supply chain management in India i.e. having more retailers in every
small town.

Weaknesses:
Competition arising from foreign imports of fashion trends.
Fast changes trend in market..
Need to implement updated technology to reduce cost of production.
Unlicensed industries are there.

Opportunities:
Considerable potential exists for setting up manufacturing units for value added
products.
There is a chance to implement modern technology and secure more results.
Lack of dominant competition.
Availability or new technology for mass production.

Threats:
Although fashion trend is going to change for day to day government need to give
support for cloth industry.

APGCMS, RAJAMPET. 33
 CLOTHS INDUSTRY

Lack of perfect cloth supply towards end user.

Sales are based on trend, cultural and festival.
Increased competition.

OBSERVATIONS
The cost structure of the cloth industry decreases continuously except in the year
2005, because of fixed charges proportion to value added is continuously

APGCMS, RAJAMPET. 34
 CLOTHS INDUSTRY

decreased. In order to get more profits we have to decrease fixed charges by

increasing production.

By observing financial performance we observed that in the year 2005 it got more
deficits because it got more losses in that year. After 2005 the companys PAT
increased. By considering the overall financial performance of cloth company, its
is in better position.

It is clear that the operating performance of cloth industry has improved from year
to year expect 2004. It was mainly because a proportionate increase in EBIT, is
more that of net assets. The more value of the proportion shows the better
operating performance over all the industry is very good.

Growth percentage of sales shows major variations in the years 2006 and 2008.
Cloths industry showing good results successively in sales in all years.

By using trend analysis technique, we estimated the future income of CLOTH

INDUSTRY for 2009 is 19766.99 and for 2010 is be 23987. Here company is
growing in positive manner. We estimated the future sales of cloth industry for
2009 is 18512.02 and for 2010 are 19959.55. Here company is growing in
positive manner.

The coefficient of correlation between SALES Vs INVESTMENTS is -0.566 and

between INCOME Vs INVESTMENTS is -0.6088. It indicates both having
positive correlation. Both are moving in same direction. It indicates both having
positive correlation. Both sales and investment are moving in same direction.

CONCLUSION:

APGCMS, RAJAMPET. 35
 CLOTHS INDUSTRY

By analyzing the cost structure, financial and operational performance, growth analysis,
trend analysis and coefficient of correlation, we conclude that cloth industry having better
performance by compared with other industries. The growth rate indicating that cloth
industry may retain its better performance in future also.

APGCMS, RAJAMPET. 36