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CHAPTER-INDUSTRY PROFILE1 ORIGIN OF THE INDUSTRYIndia has been well known for her textile goods since very ancient times. The traditional textile industry of India was virtually decayed during the colonial regime. However, the modern textile industry took birth in India in the early nineteenth centu...

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CHAPTER-1 INDUSTRY PROFILE

1.1 ORIGIN OF THE INDUSTRY India has been well known for her textile goods since very ancient times. The traditional textile industry of India was virtually decayed during the colonial regime. However, the modern textile industry took birth in India in the early nineteenth century when the first textile mill in the country was established at fort gloster near Calcutta in 1818. The cotton textile industry, however, made its real beginning in Bombay, in 1850s. The first cotton textile mill of Bombay was established in 1854 by a Parsi cotton merchant then engaged in overseas and internal trade. Indeed, the vast majority of the early mills were the handiwork of Pars merchants engaged in yarn and cloth trade at home and Chinese and African markets.

Between 1450 and 1800, textile production was second only to agriculture in economic importance. It employed more people and produced more profit than any other manufactured product. Production and trade existed at two levels. Everywhere peasants and villagers turned locally grown wool and flax into fabric and clothing for themselves and their neighbors. The cloth they produced was of poor quality and not designed for export to distant markets. On top of this local market sat a large and lucrative luxury trade in silk, wool, linen, and (eventually) cotton fabric, the most important of which were heavy woolens. The customers for these fabrics were wealthy landowners, government and church officials, merchants, financiers, aristocrats, and master craftsmen in Europe, Asia and the Levant. Ireland and the Baltic region supplied much of Europe's flax, although it was widely grown and available. In the sixteenth century, Venice and other Italian cities acquired silkworms and mulberry trees, and began silk manufacturing. From there, the silk industry made its way north to Holland, Zurich, Lyon, Cologne, and Spitalfields (East London), England. At the same time, cotton thread and fabric began to arrive from India and became wildly popular.

1.2 GROWTH RATE The textile and clothing sector is one of the oldest industries in India. According to the Indian Brand Equity Foundation (IBEF) it is the close linkage of the textile industry to agriculture (for raw materials such as cotton) and the ancient culture and traditions of the country, in terms of textiles, that make the Indian textiles sector unique in comparison to the same industries of other countries. The Indian 1

textile industry is estimated around 108 billion dollars and is expected to reach 223 billion dollars by 2021. This industry employs over 45 million people directly, and 60 million people indirectly. It Indian Textile Industry contributes approximately 5 per cent to India’s gross domestic product (GDP), and 14 per cent to overall Index of Industrial Production (IIP). The textile industry is also one of the largest contributes to India’s export with approximately 13.5 percent of the country's total export of 42.2 billion dollars.

In an analysis of ASSOCHAM ON “Indian Fashion Industry” it was further revealed that the Indian fashion industry accounts for barely 0.2 % of the international industry’s net worth. Currently the market for designer wear is worth about Rs.1,62,900 crore and growing at 9.5% every year. As per the estimates, Indian designer wear commands a category engagement of 66% for male customers and 57% for male customers. The category engagement in western designer wear is 5%. The per capita per annum on designer wear for men accounts up to Rs 48,627 and Rs 56,271 for women. (Source: www.ibef.org)

1.3 PRESENT POSITION OF THE INDUSTRY In the modern world of fashion, the designers often compete directly with their biggest customers by opening flagships stores around the world, and sell product online. The stores return the favor by competing with designers by sourcing and producing their own private label collections.

The retail stores often base their

private label collection on the prevailing runway looks. Magazine editors and stylists have gone on to become designers, while Hollywood actors and pop stars have gone from wearing designer clothes to creating them. The industry is comprised of emerging designers as well as seasoned industry veterans. At the outset of the twenty-first century, what defines the fashion industry has little to do with the artisan's craft of a century ago. However, the industry also continues on with many of its earlier processes and traditions.

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As always, the fashion industry pushes forward in the pursuit of profitability. As many small and multinational conglomerates rise to stardom, many others fail along the way. With competitive technology and the most efficient delivery of timely merchandise, we as an industry continue to find the next trends and meet consumer needs and desires. The Indian textile industry has the potential to reach US$ 500 billion in size according to a study by Wazir Advisors and PCI Xylenes & Polyester. The growth implies domestic sales to rise to US$ 315 billion from currently US$ 68 billion. At the same time, exports are implied to increase to US$ 185 billion from approximately US$ 41 billion currently. Indian exports of locally made retail and lifestyle products grew at a compound annual growth rate (CAGR) of 10 per cent from 2013 to 2016, mainly led by bedding bath and home decor products and textiles. (Source: www.ibef.org)

1.4 PROBLEMS/CHALLENGES OF THE INDUSTRY IN INDIA: The cotton textile industry is reeling under manifold problems. The major problems are the following:

1. Sickness: Sickness is widespread in the cotton textile industry. After the engineering industry, the cotton textile industry has the highest incidence of sickness. As many as 125 sick units have been taken over by the Central Government. Sickness is caused by various reasons like the problems mentioned below.

2. Obsolescence: The plant and machinery and technology employed by a number of units are obsolete. The need today is to make the industry technologically up-to-date rather than expand capacity as such. This need was foreseen quite some time back and schemes for modernization of textile industry had been introduced. The soft loan scheme was introduced a few years back and some units were able to take advantage of the scheme and modernize their equipment. However, the problem has not been 3

fully tackled and it is of utmost importance that the whole industry is technologically updated. Not many companies would be able to find resources internally and will have to depend on financial institutions and other sources.

3. Government Regulations: Government regulations like the obligation to produced controlled cloth are against the interest of the industry. During the last two decades the excessive regulations exercised by the government on the mill sector has promoted inefficiency in both production and management. This has also resulted in a colossal waste of raw materials and productive facilities. For example, the mills are not allowed to use filament yarn in warp in order to protect the interest of art silk and powerloom sector which use this yarn to cater to the affluent section of society.

4. Low Yield and Fluctuation of Cotton Output: The cotton yield per hectare of land is very low in India. This results in high cost and price. Further, being largely dependent on the climatic factors, the total raw cotton production is subject to wide fluctuation causing serious problems for the mills in respect of the supply of this vital raw material.

5. Competition from Man-made Fibers: One of the serious challenges facing the cotton textile industry is the competition from the man-made fibers and synthetics. These textures are gradually replacing cotton textiles. This substitution has in fact been supported by a number of people on the ground that it is not possible to increase substantially the raw cotton production without affecting other crops particularly food crops.

6. Competition from other Countries: In the international market, India has been facing severe competition from other countries like Taiwan, South Korea, China and Japan. The high cost of production of the Indian industry is a serious adverse factor.

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7. Labour Problems: The cotton textile industry is frequently plagued by labour problems. The very long strike of the textile workers of Bombay caused losses amounting to millions of rupees not only to the workers and industry but also to the nation in terms of excise and other taxes and exports.

8. Accumulation of Stock: At times the industry faces the problems of very low off take of stocks resulting in accumulation of huge stocks. The situation leads to price cuts and the like leading to loss or low profits.

9. Miscellaneous: The industry faces a number of other problems like power cuts, infrastructural problems, lack of finance, exorbitant rise in raw material prices and production costs etc. The Indian textile industry is one of the largest industries in the world. The Ministry of Textiles in India has formulated numerous policies and schemes for the development of the textile industry in India. Some of them are detailed in the following sections.

1.5 GOVERNMENT POLICIES TOWARDS THE INDUSTRY The Indian government has come up with a number of export promotion policies for the textiles sector. It has also allowed 100 per cent FDI in the Indian textiles sector under the automatic route. The key initiatives announced in the Union Budget 2017-18 to boost the textiles sector are listed below:

1. Encourage new entrepreneurs to invest in sectors such as knitwear by increasing allocation of funds to Mudra Bank from Rs 1,36,000 crore (US$ 20.4 billion) to Rs 2,44,000 crore (US$ 36.6 billion). 2. Upgrade labour skills by allocating Rs 2,200 crore (US$ 330 million) 3. Some of initiatives taken by the government to further promote the industry are as under: 5

4. The Government of India plans to introduce a mega package for the power loom sector, which will include social welfare schemes, insurance cover, cluster development, and up gradation of obsolete looms, along with tax benefits and marketing support, which is expected to improve the status of power loom weavers in the country. 5. The Ministry of Textiles has signed memorandum of understanding (MoU) with 20 e-commerce companies, aimed at providing a platform to artisans and weavers in different handloom and handicraft clusters across the country for selling their products directly to the consumer. 6. Memorandum of Understanding (MoU) worth Rs 8,835 crore (US$ 1.3 billion) in areas such as textile parks, textile processing, machinery, carpet development and others, were signed during the Vibrant Gujarat 2017 Summit. 7. The Union Minister for Textiles inaugurated Meghalaya’s first-ever apparel and garment making centre to create employment opportunities in the region. The Union Minister for Textiles also mentioned Meghalaya has been sanctioned Rs 32 crore (US$ 4.8 million) for promotion of handlooms. 8. The Government of India has announced a slew of labour-friendly reforms aimed at generating around 11.1 million jobs in apparel and made-ups sectors, and increasing textile exports to US$ 32.8 billion and investment of Rs 80,630 crore (US$ 12.09 billion) in the next three years. 9. The Clothing Manufacturers' Association of India (CMAI) has signed a memorandum of understanding (MOU) with China Chamber of Commerce for Import and Export of Textiles (CCCT) to explore potential areas of mutual cooperation for increasing apparel exports from India. 10. The Government of India has started promotion of its ‘India Handloom’ initiative on social media like Face book, Twitter and Instagram with a view to connect with customers, especially youth, in order to promote high quality handloom products. (Source: www.ibef.org)

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1.6 FUTURE PROSPECTS OF THE INDUSTRY The future for the Indian textile industry looks promising, buoyed by both strong domestic consumption as well as export demand. With consumerism and disposable income on the rise, the retail sector has experienced a rapid growth in the past decade with the entry of several international players like Marks & Spencer, Guess and Next into the Indian market. The organized apparel segment is expected to grow at a Compound Annual Growth Rate (CAGR) of more than 13 per cent over a 10-year period. The Union Ministry of Textiles, which has set a target of doubling textile exports in 10 years, plans to enter into bilateral agreements with Africa and Australia along with working on a new textile policy to promote value addition, apart from finalizing guidelines for the revised Textile Up gradation Fund Scheme (TUFS). The Indian cotton textile industry is expected to showcase a stable growth in FY201718, supported by stable input prices, healthy capacity utilization and steady domestic demand. Textile sector is the oldest and largest manufacturing sector in India. During the past decade, Indian textile industry was plagued with many issues such as regulations regarding to licensing and policy distortions which had fragmented the industry. It was a roller coaster ride for the Indian textile sector. It was not able to capitalize more on the global trade regime. Indian textile sector saw countries like China Bangladesh, Sri Lanka, and Pakistan racing ahead of it even without any significant upstream textile industry strength. Despite all concerns, the industry saw a GDP of more than 6%. The domestic sector also saw a significant growth. The Government later poised to liberalize the fragmented industrial sector. Termination of the Multi Fibre Agreement (MFA) in 2004, along with the quota expiry regarding textile, and apparel exports has caused a considerable change in the industry. Restrictions of the MFA were phased out in 2004, and with the opening of the market since 2005, Indian textile and clothing industry has been integrated into the World Trade Organization (WTO).

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Most of the developed countries will experience a decline in their textile and apparel trade, creating new opportunities for developing countries by 2020. A Technopak Report states that an additional increase of USD 360-370 billion will be created in the next decade, resulting in an additional market opportunity of USD 500 billion. Source: (www.fibre2fashion.com)

1.7 MAJOR COMPETITORS IN THE INDUSTRY 1. ARVIND LTD

:

AHMEDABAD,INDIA

2. THE BOMBAY DYEING&MFG.CO.LTD :

MUMBAI,INDIA

3. RAYMOND LTD

:

MUMBAI,INDIA

4. DOLCE & GABBBANA

:

MILAN,ITALY

:

MUMBAI,INDIA

5. ADITYA BIRLA FASHION&RETAIL LIMITED

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CHAPTER-2 COMPANY PROFILE

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2.1 HISTORY OF THE COMPANY Aditya Birla Fashion and Retail Ltd. (ABFRL) emerged after the consolidation of the branded apparel businesses of Aditya Birla Group comprising ABNL'S Madura Fashion division and ABNL's subsidiaries Pantaloons Fashion and Retail (PFRL) and Madura Fashion & Lifestyle (MFL) in May 2015. Post the consolidation, PFRL was renamed Aditya Birla Fashion and Retail Ltd

ABFRL has been founded in the belief that the first sign of success of a modern nation lies in the ability of its citizens to celebrate. India's young working population and robust economic performance has led to rising incomes which, combined with increasing global exposure, are empowering many latent wants to morph into demands. With retail expanding independently through brick and mortar as well as e-commerce, the Indian fashion consumer now deserves futuristic and comprehensive omni-channel options. The time for ABFRL to arrive was ripe.

ABFRL brings together the learning’s and businesses of two renowned Indian fashion icons, Madura Fashion & Lifestyle and Pantaloons Fashion and Retail. This will create a synergistic core that will act as the nucleus of the future fashion businesses of the Aditya Birla Group. The Company was incorporated as Peter England Fashions and Retail Limited on April 19, 2007 under the Act under CIN No. U1810MH2007PLC233901 and obtained the certificate of commencement of business on May 14, 2007. The name of the company was changed to Pantaloons Fashion & Retail Limited on April 23, 2013. The Corporate and Registered Office of the Company is at 701-704, 7th Floor, Skyline Icon Business Park, 86- 92, Off. Andheri-Kurla Road, Marol Village, Andheri (East), Mumbai- 400059, India. The registered office was changed from Regent Gateway, Plot No 5B, Doddanekundi Village, KIADB Industrial Area, ITPL Road, Bangalore, Karnataka-560048, India to Indian Rayon Compund, Veraval, Junagadh- 362266,Gujarat toA-4, Aditya Birla Centre, S. K. Ahire Marg, Mumbai – 400 030, Maharashtra.

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Pantaloons, the newly acquired business by The Aditya Birla Group, one of India's leading multinational conglomerates, is a powerhouse of fresh fashion and innovation. While weaving its magic across lifestyle segments, Pantaloons caters to the discerning and trendy Indian consumer. Pantaloons stores have an abundance of choices across categories that range from western to Indian wear, formal to party wear and active wear for men, women and kids. To further add to the customer's innumerable choices that reflect style, attitude, and comfort, Pantaloons has extended its horizons to fashion accessories like fragrances, footwear, handbags, watches, sunglasses and much more. With a chain of 71 fashion stores across 35 cities and towns, Pantaloons is constantly extending its foot-prints into the rest of modern India. Pantaloons which was previously controlled by the Future Group has now been taken over by Aditya Birla Nuvo Limited ['ABNL']. ABNL is a part of the prestigious Aditya Birla Group, a billion Indian multinational, operating in 36 countries across the globe with over 133,000 employees.

The Aditya Birla Group ranks high in the League of Fortune 500 Corporations of the world with a strong mix of talented and capable personnel comprising of 42 different nationalities, who are credited with anchoring the organization and scripting one brilliant success story after another. 2013 

Pantaloons Opens Its First Flagship Store In Chandigarh

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Pantaloons Launches Its 75th Store In Amritsar

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Pantaloons Opens Its 2nd Store In Vadodara

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Pantaloons Launches Its 1st Store In Dehradun

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Bhillai Gets Its First Fashion Retail Destination!

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Pantaloons Launches 'Woman's Wednesday'

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Pantaloons Launches 'Woman's Wednesday ‘in Chandigarh

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Pantaloons Voted India's No. 1 Trusted Apparel Retailer For 2013

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The Company has changed its name from Peter England Fashions and Retail Ltd. to Pantaloons Fashion & Retail Ltd. 11

2014 

Pantaloons Opens Its 6th Store In Bangalore

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Pantaloons Opens Its 1st Store At Hubli

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Pantaloons Launches Fashion Friday At Its New Look Store High Street Phoenix

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Pantaloons Launches Its First Store In Meerut

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Pantaloons Launches Its New Look Store In Chennai With Kollywood Diva, Priya Anand

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Pantaloons Launches Its First Store In Muzaffarnagar

2015 

Pantaloons Fashion & Retail Ltd has forayed into a commercial arrangement with Flipkart

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Pantaloons Fashion & Retail Ltd had approved the Composite Scheme, subject to the necessary statutory and regulatory approvals

2016 

Aditya Birla Fashion and Retail signs deal with Quirky British Designer wear brand Simon Carter

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ABFRL's Madura F&L launches 'Buddy' from State Bank of ...