SRI GURU GOBIND SINGH COLLEGE OF COMMERCE, DU

PGDIM(2012-2013)

PROJECT REPORT ON FINANCING OF TEXTILE INDUSTY

Project Guide : Submited By:

JASVINDER SINGH SHRUTI JAIN Roll no. 127021

CERTIFICATE

The Project entitled Financing of Textile equipments submitted by

SHRUTI JAIN to the SGGSCC, DU in partial fulfillment of the

requirement of the PGDIM Course is a Bonafide work done by her under my supervision.

All

references

and

sources

of

data

have

been

duly

acknowledged. The work has not been submitted elsewhere for award of any other degree.

JASVINDER SINGH {Project guide} 127021

SHRUTI JAIN Roll no.

EXECUTIVE SUMMARY: The Indian Textile Industry is one of the largest in India. After a decade of slow-down in the textile sector due to a variety of factors like quota restrictions for exports, high cost of cotton and low domestic demand, the industry is now on a recovery path. This has become possible due to lifting of quota

restrictions, Govt.s encouragement and incentives, higher domestic demand for branded garments and better GDP. these factors predict a rosy picture for the textile sector. All

The research has been conducted to get an insight into the size of the textile industry, size of textile machinery, new and used, and their viability .

Various recommendations have been made as per the findings of the research and survey.

During the research and survey, the details about textile machinery, their product profile, latest models, price range etc., their customers and manufacturers were studied.

ACKNOWLEDGEMENT

I extend my thanks to my mentor for his continuous support, encouragement and mentorship throughout the duration of the Project. I would like to express my gratitude to all those who have contributed in their own way for completion of the project.

TABLE OF CONTENTS

S.N o. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16 17 18. 19. 20. 21. 22.

Contents Executive Summary Acknowledgement Objective of the Study Methodology Introduction Size of the Industry The Change-over Export and Import Scenario Textile machinery status in India Used Textile Machinery status in India Foreign Textile Machinery manufacturers Indian Textile Machinery Manufacturers End-users of Textile Machinery Textile Mills Distribution in India Textile Manufacturing process Types of Textile Machinery Price Variance of Textile Machines Market Survey Company Profiles Recommendations Annexure - Birla Textile Mills Annexure - bibliography

Page Nos. 3 4 8 8 11 12 14 21 26 30 30 32 33 34 36 37 44 45 48 58 63 69

OBJECTIVES OF THE STUDY

The research study was undertaken with the prime objective of ascertaining the scope and viability of financing of Textile Machinery in the prevailing market in view of the post quota scenario.

Further, the other objective was to study the market of the textile machinery, leading manufacturers, and composition of users.

METHODOLOGY

1.

Time period

2 months

2.

Territory

New Delhi

3.

Data Collection

Both primary and secondary data

have been collected from various sources. Primary Data:-

This data is procured by the researcher by collecting first hand information from the concerned companies/persons. The

primary data was collected from: i) ii) iii) Secondary Data:This type of data is the one which has already been collected by someone else and the researcher compiles the data according to his requirements. The data of the following companies was collected: i) ii) M/s. Lakshmi Machine Works M/s. JCT Textile Mills. M/s. Spintex Pvt.Ltd. M/s. Chemtex Pvt.Ltd. State Bank of India

INTRODUCTION

INDIAN TEXTILE INDUSTRY

Textile industry today occupies a unique place in the economy of the country by virtue of its contribution to industrial output, employment generation and foreign exchange earnings.

The industry uses a wide variety of fibers ranging from natural fibers like cotton, jute, silk and wool to man-made fibers like polyester, viscose, acrylic and multiple blends of such fibers and filament yarns.

The textile industry covers a gamut of activities ranging from production of raw material to providing high value added products such as fabrics and garments.

At present the textile industry is the second largest single industry accounting for around 20% of the total industrial output and employs in aggregate around 82 million people taking in consideration all sectors of the textile industry.

Indian textile industry has inherent strengths in terms of strong multi-fiber raw base low cost of labor intellectual capital dynamic and vibrant entrepreneurship

10

The industry is extremely complex and varied in structure with hand-spun, hand-woven sector at one end of the spectrum and sophisticated capital intensive high speed operations on the other. There is also an intermediate segment consisting of

decentralized small scale power loom units.

PLACEMENT OF INDIAN TEXTLE COMPANIES VIS-A-VIS FOREIGN COUNTER-PARTS

India and China are the two countries, which are going to be benefited. However, China is going to be benefited to a greater extent than India as China has modernized the textile industry to a greater extent than India. The reason being 11

when China joined the WTO its textile industry was at a very primitive stage so very quickly they have ramped up their capacity to meet the US and EU quality standards . But in India, going by the duty regime and where sops were being given to other sectors such as IT, the textile industry was never favored. Subsequently things have changed and now they have been fairly large scale investments in spinning. However, India still lacks the required investments in weaving, processing and dying segments. Now lot of interest is being generated in these segments, as the textile industry has realised that, if they want to export garments they have to meet the global standards of quality

SIZE OF THE INDUSTRY

Indian textile industry is the second largest in the world second only to China. It accounts for 38 % of the countrys It

total exports and is therefore a very important industry.

12

also contributes to 4% of the GDP and 14% of value addition in manufacturing sector. The industry has witnessed a phenomenal growth during the last decade in terms of spindle-age, production of yarn {both spun and filament}, output of cloth and its per capita availability as also exports. The official statistics of India provided by DGCI&S show that the textile exports amounted to $ 6812.53 millions as against $ 6242.30 million during the same period in the previous year, showing an increase of 6.04%. Indias imports continued to record growth. Imports were

worth $ 918.83 millions as against $ 684.36 millions recording a growth of 34.26%. The above position and statistics indicate that the country is now on the path of speedy recovery and is determined to compete internationally in all aspects of growth.

FEW FACTS ABOUT THE INDIAN TEXTILE INDUSTRY

13

1. There are approximately 1200 medium to large textile mills in India. 20% of these are located in Coimbatore (Tamil Nadu). 2. Indian has 34 million cotton textile spindles for manufacturing cotton yarn. Cotton yarn accounts for 70% of Indias textile exports.(China has 40 million cotton textile spindles) 3. Of the Indian textile yarn exports, almost 80% comes from coarser Yarn. Consequently, there is a need to upgrade the technology. 4. For the past few years a significant slowdown in the cotton spinning segment mainly due to the spiraling prices of cotton was seen. But now the situation has stabilized. 5. The domestic knitting industry is characterized by small scale units, which lack adequate facilities for dying, processing and finishing. 6. The industry is concentrated in Tirupur (Tamil Nadu) and Ludhiana (Punjab). Tirpur produces 60% of the countrys knitware exports.

14

Knitted garments account almost 32% of the exported garments. The major players include:i) Nahar Spinning Mills Ltd., ii) Arun Processors and iii) Jersey India.

THE

CHANGE-OVER

FOR

THE

TEXTILE

INDUSTRY:

Various factors that have accelerated the growth of the textile industry have been discussed below. The Textile industry, after a decade of recession is now recovering. External

factors like, abolishment of quota and internal factors like the TUFS are contributing to the growth of the industry.

QUOTA LIFTING

Quota based curbs for textile exports to US and European Union nations were lifted on 1.1.2005. With the restrictions

15

off and globalization in full swing, the Indian industry is now exposed to global competition. Indian manufacturers and

exporters now have to compete with the global players and also face emerging tariff and non-tariff barriers.

AGREEMENT ON TEXTLES AND CLOTHING

For the last four decades, the textiles trade was governed by the Multi-fibre Agreement (MFA) which imposed quota

restrictions and relatively high tariffs for international trade. This has been preventing countries, like India from

penetrating to lucrative global markets.

Agreement on

Textiles and Clothing (ATC) aims to integrate the textile sector into the WTO.

As per ATC, member nations of WTO would have to do away with all the quantitative restrictions on textiles / clothings from Ist January,2005 and the global textile and clothing industry is expected to undergo the following revolution :-

16

Production

bases

would

shift

from

developed

to

developing countries Cross-border trade would get simpler, efficient and extremely dynamic. International apparel prices would decline significantly.

Advantages: Removal of quota restrictions will increase outsourcing of textiles from low cost manufacturing bases like India and Indian textile industry has the potential to double its share in the global market to 6% by 2010. A significant surge in exports is unlikely in the first year and it may take 3-5 years for the country to increase the capacities and improve the infrastructure to capitalize on its true potential. Garment sector is the largest in the industry and it is

expected to contribute exports of around $ 23 billion by 2010 with major international players making clearing intentions to source the apparel from the Indian market. The country is a larger player in the cotton textiles market and the sector stands to gain significantly from the higher derived demand from rising garment exports.

17

Indias share in import of man-made fibres by US has been stagnant at 3% and quota removal offers huge opportunities.

Challenges: On removal of quotas, the textile exports have to cope up with new challenges like growing regionalization between blocks of nations, child labour, anti-dumping duties, etc. India has to take on competitors like China, Pakistan, Bangladesh etc. Indias man-made catered to the fibre industry market has pre-dominantly share of In in

domestic

and the

synthetics in textiles export basket is very low. contrast, China has well established presence

synthetics and in quota free regime they will leverage on its strong presence to significantly increase share of its synthetic exports. If the industry do not attend to the very vital needs of modernization, quality control, technology upgradation, etc. it is likely to be left behind.

18

TECHNOLOGY UPGRADATION SCHEME 1999 {TUFS}

The objective of the scheme is to provide funds for technology upgradation of the existing units and setting up new units with the state-of-the-art technology. Interest incentive (5 %) on term loans, reimbursement of exchange fluctuations (up to 5 %) and foreign currency

loans and capital subsidy (20%) on small scale power loom units upto a cost of Rs.60 lacs are provided. Launched from 1.4.1999 for 5 years, the scheme has been extended upto 31.3.2007. Original outlay of Rs.25,000 crores, additional funds of Rs.435 crores allocated. Till 30.9.2004, loans aggregating to Rs.9000 crores have been sanctioned. Rs.7500 crores have been disbursed.

(project cost Rs.15570 crores)

EXPORTS AND IMPORTS SCENARIO

19

The export size of cotton yarn constitutes around 70% of the Indian textile exports. The garment exports from India are also growing and there is a good scope in this sector. The export and the import scenario of Garments and cotton yarn have been discussed . The demand for the next ten years has also been projected.

GARMENT EXPORTS
Crisil research expects garments exports for India to grow at a CAGR of 11-12% to $ 16 billion by 2009-10. The growth will be significant in view of the lifting of quota restrictions w.e.f. January.2005. The quota liberalization has prompted many into

international retail giants like Walmart etc. entering

long term supply agreements with many leading garment manufacturers. The domestic sale of readymade garments is expected to grow at a CAGR of 10-11% to $ 24 billion by 2009-10. Continuous

GDP growth of 8% for the last three years is expected to further boost the sales of garments. coining garments specially branded

This has prompted the leading manufacturers in their dedicated brand outlets. Further, Govt.s

20

impending policy of allowing FDI in retail is likely to boost domestic sales. Further sub-segments including cotton yarn and man-made fibres are likely to witness high growth

COTTON YARN EXPORTS

The cotton yarn demand growth primarily depends on growth of the end-user industries apparel {clothing} and home textiles {non-clothing). The direct yarn exports growth

depends on the growth of the clothing and non-clothing industries of the country where the yarn is exported. Crisil researches analysis expects the demand for cotton yarn to increase at a CAGR of 7.3% from around 2420 million kgs. in 2005-06 to 3446 million kgs. in 2010-11. The demand derived from clothing and non-clothing sales would witness a CAGR of 7.8% during 2005-06 to 2010-11,

whereas the demand derived from apparel, made-ups, and fabric exports is expected to grow at a CAGR of 14.2% during the same period. Direct yarn exports would witness a

negative growth of around 2% per annum till 2010-11.

21

COTTON YARN : SEGMENT WISE DEMAND GROWTH

(in Million Kgs) 200506 Demand derived 1123 576 161 92 59 408 2420 1569 902 391 141 74 369 3446 6.9 9.4 19.4 8.8 4.5 -2.0 7.3 201011 CAGR (in %age) from -Domestic clothing -Domestic nonclothing -Clothing Exports -Non-clothing exports -Direct fabric

exports -Direct yarn exports TOTAL DEMAND YARN

{ Source- Crisil INFAC.}

22

TEXTILE MACHINERY IN INDIA

The textile machinery industry is reviving after a decade of recession due to quota restrictions on exports from India to the US and EU countries. The Governments measures to restructure the debts of textile mills and make them viable have propelled the investments in the machinery.

The

total

demand

for

textile

machinery

soared

to

Rs.7,178 cr.

The market is projected to grow at an average nominal growth rate of 6%.

The demand for textile machinery is mainly from endusers in the cotton textiles, knitting, dyeing, processing, finishing, man-made fibres and wool units textile sector.

23

Approximately 120 companies manufacture the complete range of textile machinery.

Imports constituted 45%

of the total textile machinery,

Approximately USD 80 million of Indian textile machinery is exported to other developing countries.

MAJOR PROBLEMS OF THE INDUSTRY

1. 2. 3. 4. 5.

High cost of finance Inadequate design and engineering capability High cost of raw material and components Demand constraints Competition from foreign countries as a result of lowering of import duties on textile machinery.

6.

High quality of imported textile equipments

24

IMPORT MARKET SHARES

The total market for the imported textile machinery is large. There is a growing demand for imported machinery, owing to their good quality and technological superiority. The distribution of country wise imported textile machinery has been summarized below:

CHINA 18% 5% 20% JAPAN US SWITZERLAND 15% 6% 7% 6% 20% 3% KOREA ITALY UK GERMANY OTHERS

25

EQUIPMENT MARKET SIZE

Out of the following machines used:

Carding Machine Winding Machine Warping Machine Sizing Machine Ring Frames Looms

Ring frames and looms hold the largest share of textile machines, quantity-wise, in a textile company. Therefore, the market for these two machines is more lucrative.

26

IN

INDIA

CARDING

MACHINE

MANUFACTURERS

DO

NOT

MANUFACTURER CARDS

This is a very high precision area. It needs to have mechanical engineering, textile and service skill sets to manufacture these card clothing. So the conflict has always been that whether to concentrate on manufacturing the card clothing or carding machines. Generally, the carding machine manufacturers manufacturers, work e.g in tandem with the card clothing acquired

Now,

Trutzschler

have

Hollingsworth GmbH in Germany

Historically, there were 3-4 card machine manufacturers in India- Lakshmi Machine Works, Mahindra Machinery Company (MMC), Mafatlal Engineering Industry (MEI).

There are 6-7 global players based in US (Hollingsworth), UK (English Card Clothing), Switzerland (Graf), Germany

27

(Tuchler), Japan (Kanai) and in India there are two players. One is ICC and the other is Lakshmi Card Clothing. All the other major players except ICC, LCC and UK based companyECC are represented in India through agents. ECC has its own manufacturing facilities in India. Besides these players, there are also quite large number of smaller players who are fairly regional or local.

STATUS OF USED TEXTILE MACHINERY

Industry analysts note that textile prices are increasingly competitive world-wide as more and more developing

countries enter the global textile trade e.g. entry of Bangla Desh, Taiwan, Pakistan, Sri Lanka. To maintain, if not increase, its global market share, the Indian Textile industry must procure modern, low cost

machinery so that it can high quality textiles and garments for exports at competitive prices. It is in this context that market for used textile machinery is viewed as very promising. Used textile machinery permits India to incorporate

technology at low cost. Since for the past many years, market has been in a recession. As a result, market players have become very cost conscious and price sensitive. However, the future looks bright for the

28

used textile machinery. This market segment is likely to grow faster than the broader market. The major factors that are

likely to produce for this chapter include 1. A world-wide increase in demand for Indian textiles and garments 2. Lowering machine 3. Reduced Government restrictions on import of used capital goods 4. Reduced cost of used equipments which make textile manufacturing operations more viable. of customs duties on imported textile

MARKET-SHARE
The market share for used textile machinery is approximately 20% of the total market for the textile machinery. The industry prefers to install quality used textile machinery in anticipation for growth in global demand. This is expected to accelerate the demand for used textile machinery.

COUNTRY-WISE IMPORT MARKET SHARE OF USED TEXTILE MACHINERY

29

Others 30% Korea 15% Japan 10%

Germany 20% Switzerlan d 25%

Germany Switzerland Japan Korea Others

(Source Industry Consultants)

DISTRIBUTION OF TYPE

IMPORTED USED MACHINERY BY

1996.97

2009-10

Winding/reeling machine

20.0 %

25.0 %

Weaving machines

14.5 %

18.8 %

30

Textile spinning machines

12.5 %

22.2 %

Carding machines

5.5 %

11.0 %

Others

34.0 %

38.4%

(Source Industry Consultants)

TEXTILE MACHINERY - BEST PROSPECTS

Textile winding or reeling machines Textile spinning machines Weaving machines Carding machines Air jet looms 31

Auto coners Texturising machines Ring frames

(Source Consultants)

Industry

FUTURE MARKET USED TEXTILE MACHINERY

Almost 90% of demand for used textile machinery is likely to come from private sector, the Govt. owned National Textile Corporation {NTC}, which acquired approximately 140 failing textile units, is the only prospective end-user in public sector. Open-end spinning units and auto-coners are likely to be the most demanded pieces of machinery.

32

Future demand for used textile machinery is projected to grow at approx. 15%.

LIST

OF

MAJOR

FOREIGN

TEXTILE

MACHINE

MANUFACTURING COMPANIES

Sr.N o. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Name

of

the Country ITALY ITALY JAPAN JAPAN GERMANY GERMANY ITLAY UK GERMANY UK CHINA TAIWAN KOREA KOREA SWITZERLAN D GERMANY GERMANY GERMANY GERMANY

company CORGHI CAIPO FILOPIU TSUDOKAMA MITSUBISHI REITER TRUTZSCHLER MESDAN BENTLEY ENGG SULZER DORNIER SOMET CTMTC YANTU HANSHIN SANGYONG CROSROL VOLKMAN SCHLFHORST ZELL STORMAC

33

LIST

OF

MAJOR

INDIAN

TEXTILE

MACHINE

MANUFACTURING COMPANIES

Sr.No. 1 2

Name of the company LAKSHAMI MACHINE WORKS (LMW) KTTM {a joint and venture

City COIMBATOR

E between BANGALORE

Kirloskar 2 3 4 5 6 7 8 9 10

Toyota

Corporation, COIMBATOR E COIMBATOR E MUMBAI AHEMDABAD AHEMDABAD AHEMDABAD COIMBATOR E

Japan.} TEXTOOL LIMITED TRUMAC ENGG NEW STANDARD ENGG. THE INDIAN CARD CLOTHING CO. RJK KINARI WALA RB ENGINEERING JUPITER ENGINEERING RAJESH INDUSTRIES RADHIKA ENGG.

34

11 12

AMRIT LAKSHAMI PRASHANT TEXTILES

Name of the company RAYMOND Ltd. DCM TEXTILES S.KUMARS RELIANCE INDUSTRIES MAFATLAL INDUSTRIES ARVIND MILLS Ltd. NAHAR SPINNING JCT FABRICS GINNI FILAMENTS MAHAVIR SPINNING CENTURY TEXTILES LNJ BHILWARA GROUP - RAJASTHAN SPINNING - BHILWARA MELBA DE - BSL LTD - BHILWARA SPINNERS - MARAL OVERSEAS LTD GTN INDUSTRIES GTN TEXTILES ABHISHEK INDUSTRIES BOMBAY DYEING Location

COIMBATOR E AHEMDABAD

MUMBAI NEW DELHI CALCUTTA AHMEDABAD MUMBAI AHMEDABAD LUDHIANA PHAGWARA AHMEDABAD LUDHIANA MUMBAI BHILWARA BHILWARA BHILWARA BHILWARA BHILWARA BHILWARA HYDERABAD HYDERABAD LUDHIANA MUMBAI

MAJOR END USERS OF THE TEXTILE MACHINERY

35

NUMBER OF COTTON/MAN MADE FIBRE TEXTILE MLLS (NON SSI) AND ITS INSTALLED CAPACITY AS ON 3101-2010)

Sr

State/

Spin ning

Com

Tota

Spindle s

Rotor s

Loom s

Knit Mch.

No UT . 1 2 Andhra Pradesh Gujarat

posit l Mills 102 112

Mills e 101 58 Mills 1 54

215633 5 289884

6036 40648

520 20833

1 20

36

6 3 4 5 6 7 8 9 10 11 12 13 14 15 Haryana Himachl Pr Karnataka Kerala. M.P. Maharasht ra Orissa Punjab Rajasthan Tamil Nadu U.P. West Bengal Pondicherr y 76 17 47 32 40 130 16 78 45 814 55 22 9 2 0 7 4 12 64 1 4 8 26 10 9 2 78 17 54 36 52 194 17 82 53 840 65 31 11 393446 546248 100648 5 841284 124658 0 467625 7 367440 162150 8 135791 2 134958 56 162337 8 955083 188656 74800 3979 8848 1960 16260 38136 3904 39096 19616 11976 5 9592 2400 2888 135 0 1162 1064 2175 25155 1048 1168 826 6317 5374 4645 1136 3 5 0 0 102 26 0 12 55 177 0 0 0

37

TEXTILE MANUFACTURING PROCESS

PROCESS

PRODUCT

COTTON

STEP 1

GINNING

GINNED COTTON

38

STEP 2

BLOWING BLENDING

SORTED COTTON

STEP 3

CARDING PROCESS

SLIVER

STEP 4

COMBING

COMBED SLIVER

STEP 5

STEP ROVING

ROVE

STEP 6

SPINNING

YARN

MAJOR TYPES OF MACHINERY USED IN THE PROCESS

1. BLOW ROOM MACHINE

The main purpose of this machine is to open up the fibres and remove the impurities.

2. CARDING MACHINE It is further used to purify the raw material and remove the short fibres. Slivers are formed at this stage

39

3. DRAW FRAME MACHINES

These machines combines the slivers by mixing them and bringing in homogeneity in them.

40

4. SPEED FRAME MACHINES

The slivers that are fed are \reduced in diameters and twists are given to the thread.

41

5.RING FRAME MACHINES

These machines helps to give further twist to the threads and the yarn is made

42

6. WINDING MACHINES

These are used to connect the bobbins to carry out the loom process. A continuous length of thread is produced.

43

7. WARPING MACHINES

Different threads are put in parallel sheets, wounded on the beam. Threads of longer lengths are produced.

44

8. SIZING MACHINES

These machines enable the application of blue or starch or some strengthening material to the threads to give them strength and prepare for the weaving process.

45

9. PROCESSING MACHINERY

DYEING MACHINES PRINTING MACHINES

PRICING

Sr No..

Name of the textile Equipment

Approx. Price range (excluding duties) {Rupees in lacs } 46 Tax &

1 2 3 4 5 6 7 8 9 10

BLOW ROOM MACHINE CARDING MACHINE DRAW FRAME SPEED FRAME RING FRAME WINDING MACHINE WARPING MACHINE SIZING MACHINE SECTIONAL WARPING LOOMS

40 17.5 to 43 18.5 24 19 38 13.2 9 11-12 100 11 .50

MARKET SURVEY

A market survey was conducted to study the financial needs and expectations of textile companies and suppliers of textile machinery. A questionnaire was designed and administered to them. Details about their equipment, tie-ups with financial

institutions (FIs), details regarding existing loans (term loan), future needs and their perception about ABN AMRO BANK was collected. The details are as follows:

47

Further,

other banks rates of interest, their

marketing

strategy in regard to textile mills was also gone through e.g. the recent sanction of term-loan and working capital loan to M/s Birla Textile Mills at Baddi was studied.

From the survey, the following findings emerged :-

TEXTILE MACHINERY:
i) The average life of textile machines is around 10-15 years.

ii)

Quantity wise, ring frame machines are needed the most and thus this is a vital part of a textile unit.

48

iii)

The market for second hand machinery is quite large and in the post quota scenario, where small textile units are expanding, the demand for such machinery is likely to rise.

iv)

There has been no significant upgradation in Dyeing and Printing Machines in the recent years.

v)

The

machines

that

need

to

be

most

frequently

replaced are the carding machines.

vi)

For quality finished products, high-tech machines are not manufactured in India, instead they imported by the users. are being

vii)

Some users are opting for upgradation in the existing machines by certain additions/alterations.

The suppliers of textile machinery based in Delhi were visited were also studied to understand their product profile, the price range of the textile machinery customers. offered and their

49

The major suppliers which were studied included M/s Chemtex Pvt. Ltd. , M/s Spintex Pvt. Ltd. Following are the findings : i) In the present post quota abolition scenario, there is al-round expansion by the existing companies.

ii)

The Govt.s scheme of Technology Upgradation Fund is being extensively utilized by the companies in which they are expanding, upgrading their machines to produce quality and value added products with an eye on exports.

iii)

At present, State Bank of India, Bank of Baroda, Corporation Bank, HDFC, ICICI are actively involved in financing the plant and machinery of the textile companies.

iv)

Suppliers were of the view that by offering attractive terms, ABN AMRO Bank can also enter the financing of this sector.

FOLLOWING PROFILES :

ARE

THE

INDIVIDUAL

COMPANY

50

COMPANY PROFILES

M/S CHEMTEX TECHNOLOGIES PVT. LTD

D-1/25, 2nd Floor, Janakpuri,N.Delhi-110058. Phones: 28525801 E-mail : chemtext@eth.net Contact person : Mr.Yogesh; 9312481095

This company deals in trading of textile machinery for Indian and foreign manufacturers. The company also deals in used / second hand machinery of Indian and foreign origins.

The companys brochure for various machinery and its price is as follows:51

Sr,No . 1

Machine with features RAISING MACHINE Roll width 2000 mm Raising Rolls 24 in no. Model RA 3

Price US $ 35000

2 3

HIGH SPEED RAISING MACHINE SHEARING MACHINE` (HYDRAULIC TYPE) (ROLL WIDTH 21MM) WITH EXTRA BLADES, AUTO METAL DETECTOR AUTO DEVICE SEAM DETECTING

US$ 74000 US$ 68000

4 5

-DOSECOND HAND DYEING MACHINE MODEL AM OHD 300 MAX.CAPACITY KG WIDTH 2600 MM TO 250-300

US $ 35000 US $ 78000

SECOND HAND

US $ 53000

52

SINGLE JERSY AUTO STRIPPER CIRCULAR KNITTING MACHINE T-SHIRTS 500 PCS PER DAY

US $ 68000

CHENILLE MACHINE YSY 706 THREAD YARN PRODUCT NO.OF SPINDLES 20 6 SETS OF USED YSY 706 US $ 6500

CUSTOMER BASE

1 2 3 4

M/s Classic Apparels Pvt Ltd., Pallachi, India M/s SCM Textile Processing Mills, Erode, India. M/s Kudu Knitwear,Ludhiana M/s Concorde Textiles,Chennai.

M/S SPINTEX PVT. LTD

Contact person : Mr.A.L.Khurana, 9899375240

53

301, Harsha House, Karampura Commercial Complex, New Delhi-110015 Tel.: 91-11-25920530, 25920531, 25920532 Fax: 91-11-25920536, 25920537 E-mail: spintex@del3.vsnl.net.in

This company deals in trading of textile machinery for Indian and foreign manufacturers. beginning in 1972, today the

Spintex group is specialized in the marketing of Textile machinery projects catering to Spinning, Weaving and Knitting industry. With four companies under its belt, each specializing in different spheres of Textile Industry, the Spintex Group is marching ahead with a vision- to make the international technology available to Indian manufacturers.

Spintex has entered into joint venture with technological giants across the world and what has taken Spintex to the pinnacle is a motivated and dedicated work force

Spintex Group of Companies.

-Spintex Pvt. Ltd.

54

(Spinning - Machinery & Accessories Division)

-Spintex Corporation (Knitting - Machinery & Accessories Division)

-Indo Seo Jin Overseas Ltd. (Knitting - Machinery Division)

-Spintex Impex Pvt. Ltd. (Industrial Product Devision)

Activities of the company

Spintex Group is specialized in the Marketing of Textile Machinery products catering to spinning, Weaving, processing

55

& knitting Industry. Our motto is the TOTAL CUSTOMER SATISFACTION.

Credibility of the company Spintex Group has served the Textile Industry for the last over 30 years quite successfully and has a name in the Industry. Today, its turnover is above Rs. 30.00 crores with a vision to increase the same to Rs.100.00 crores in the near future. 1. Consistency in the service. 2. Timely and Quality supply of products. 3. Complete customer's satisfaction. 4. Company has qualified and technical staff to handle the sales & services. 5. Covers all the territories as the company has its head office at Delhi with Regional offices at Mumbai, Chandigarh and Tirupur and Branch offices at Panipat, Ludhiana, Indore and Bangalore. 6. Company is having world renowned foreign associates whose products are being handled successfully.

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The companys brochure for various machinery and its price is as follows:-

Sr,No . 1 2

Machine with features BLOW ROOM MACHINE CARDING MACHINE

SUPPLIERS LMW TRUMAC TWIZZLER REITER LMW, TRUMAC

DRAW FRAME

LMW/TRUMAC REITER

4 5 6

SPEED FRAME RING FRAME WINDING MACHINE

TWIZZLER LMW, ZINSER LMW KTTM RJK KINARWALA RAJESH INDS.

WARPING MACHINE

RADHIKA ENGG JUPITER ENGG. RB ENGG.

SIZING MACHINE

AMRIT LAKSHMI JUPITER ENGG RB ENGG AMRIT LAKSHMI

57

SECTIONAL WARPING

PRASHANT GAMMA TEXTILES JUPITER ENGG.

10

LOOMS

TECHMECH PICANOL SOMET SMITH CTMTC SULZER WAMATECH

CUSTOMER BASE 1 M/s Classic Apparels Pvt Ltd., Pallachi, India

2 M/s SCM Textile Processing Mills, Erode, India.

3 M/s Kudu Knitwear,Ludhiana

4 M/s Concorde Textiles,Chennai.

M/S JCT MILLS LTD

NAME :

JCT MILLS LTD, PHAGWARA, PUNJAB DELHI OFFICE : THAPAR HOUSE, JANPATH. N DELHI 58

E-mail Website

jctadmin@jctphg.com www.jcttextiles.com

JCT Mills, Phagwara is a established name in the field of textiles in Northern India with two composite mills Phagwara in Punjab and and Sriganganagar in Rajasthan. at

Modernisation of the plants has resulted instate-of-the-art manufacturing facilities in Spinning, Weaving and Processing. Its mills produce wide range of 100% cotton and blended, woven grey and processed fabric in varieties of weaves and finishes.

DETAILS OF THE LATEST GENERATION MACHINES ARE AS UNDER:S.No. 1. 2. 3. Name and particulars of the Machine Ring Spinning for Open End Spinning Blow Room Lines Cards, Combers, Drawframes Supplier LMW Trumac Simplex 59

4. 5. 6. 7. 8.

Ring Frames Open End Spinning Carding machines Post Spinning Autoconers Weaving Warping,Sizing Crosrol

LMW

Crosrol Schifhorst

Benninger,Stormac,Zell 9. 10. 11. 12. 13. 14. Looms Processing-Singeing & Desizing Chainless Merceriser Continous Dyeing Range Printing- Rotary printing Sueding Benninger Monforts Stormac Sucker Muller Sulzer Pyrex

Companys products (approx. Million meters per annum) with 50 cm width are available in weaves like Twills, Satins, Broken Twills, Canvasses, Tussores, Dobbies, Bull Denim, Lycra and finishes such as Dyed, Yarn Dyed, Prints, Bleached and fabrics including camouflage for Defense forces.

RECOMMENDATIONS

1) In the changed scenario after quota lifting, higher national demand for value added/branded garments, FDI in retail, ever

60

increasing middle class in India and strong GDP growth, there is huge scope for expansions in the textile sector in India. Further, in view of the recent and impending tie-ups between the manufacturers and giant retail chains of the world like Walmart, etc., there is ample assurance that the Indian

companies are in for a rich harvest.

The GOI is providing several and fiscal and financial incentives to promote textile projects which are export oriented. USD 5800 The

million TUF Scheme has been approved by the

Govt. with the objectives of modernizing and technologically upgrading textile and jute industries to enhance their viability and competitiveness. are available to Under the programme, adequate funds all techno-economically viable

finance

projects.

It is easier to acquire funding for export oriented units (EOUs) under TUF programme and favourable loans are easy to obtain for companies in textile industry.

Banks like, SBI, OBC, are offering attractive interest rates for

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- Term loans TUFS) - Working Capital loans

(SBI 2.5%

OBC 3.5% under

(SBI 9% OBC 9.5%)

With the progressive removal of discrimination against the organized sector {quota lifting} , TUFS have picked up significantly during the recent years. The loan amount of Rs. 14.261 cr. disbursed so far represents an investment of around Rs. 30,000 cr. And investment outside TUFS is likely to be higher than this.Thus ,ABN AMRO BANK can and must allocate funds for financing the textile units to broad-base its advances portfolio.

2) As regards assessing the technical viability of the textile machines, the following institutions can be consulted :-

-Northern India Textile Research Organiation, Ghaziabad -South India Textile Research Association (SITRA) -Ahemdabad Textiles Industries Research Association(ATIRA) -Bombay Textiles Research Association (BTRA) -IIT Delhi -Technological Institute of Textiles, Bhiwani (TIT

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3) The ABN AMRO BANK can start its full-fledged Textile Finance Division with the following companies to target, which are on the threshold of expansion :-

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15.

JCT Mills Phagwara, Punjab (Corporate Office, New Delhi Ginni Filaments Sangam India Ltd. Birla Textile Mills Abhishek Industries Ltd. Alok Industries Ltd. Rajasthan Spinning Ltd. Banswara Syntex Ltd. Shree Rajasthan Syntex Ltd. Shri Bharwa Textile Mills,Banswara Soma Textile Ltd. Arun Processors Ltd. Hissar Spinning Mills KTTM LMW

4) ABN AMRO Bank should concentrate on the textile units in Northern India especially in Bhilwara, Banswara {Rajasthan},

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Ludhiana (Punjab) Panipat, Faridabad (Haryana), Baddi, (HP) besides other parts of the country e.g. Gujarat, Tamil Nadu, Maharashtra and Madhya Pradesh/

5) The replacement demand for carding machines is generated depending on the type of carding machines, for e.g. for old carding machines it takes 3-4 years, whereas for new carding machines it takes about 18-24 months, due to very high volumes. So even if one new machine is replacing four old cards, replacement is needed every 18 months. Generally mills which are quality conscious, change cards at timely intervals as this has a direct impact on the quality of the yarn. Other machines have a life of around 10-15 years.

ABN AMRO BANK can focus its portfolio of advances by targeting such units.

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6) Regarding the perception of ABN AMRO BANK, the suppliers responded that though their customers are not yet exposed to the Bank, but they will certainly like to avail the financial products of the bank provided they offer competitive interest rates and prompt financing. The Bank should aggressively target such companies through these suppliers, keeping in view the impending bright prospects of the industry in national / international markets.

7)

A recent loan proposal cleared by a leading

bank to a

textile unit (M/s Birla Textile Mills, Baddi, Himachal Pradesh) for its expansion programme under TUFS studied during the research process, is given at Annexure A. It can be useful for the ABN AMRO Bank in formulating a financing pattern for a prospective borrower.

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ANNEXURE

BIRLA TEXTILE MILLS , BADDI (HP) Expansion Project - 28800 Spindles - 100% Grey Cotton Yarn Summary of Machinery Requirement Tot Department al Make

Ring Frame with Auto Doffers (1200 Spindles ) Simplex Frame Draw Frame with Auto leveller Comber Lap Former Draw Frame Card Blow Room Chute Feed- Cotton Bale Blucker Autoconers with FF Channels

24 10 10 20 4 6 30 2 2 10

LMW LR-6 LMW LF1660 RSB-851 LMW LK54 LMW LH10 LMW DO-6 LC-300A LMW LMW SAVIO OROIN-L

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Cheese Winding-140 Drums T.F.O (VJ-150 HS-180 Spd.)

4 24

RJK/PEASS VEEJAY LAKSHMI

67

BIRLA TEXTILE MILLS, BADDI Expansion Prioject - 28800 Spindles - 100% Grey Cotton Yarn SPIN PLAN 20/1 COUNT ACTUAL COUNT NO. OF R/F NO. OF SPINDLES (1200 SPD./ R/F) 1600 SPINDLE SPEED UTILISATION TM TPI EFF. GRAMS/SPD./DA Y TOTAL PROD/DAY LESS H.W 1% SPEED FRAME (LFS-1660) PROD REQD/DAY ROVING HK SPINDLE SPEED TM TPI UTI & EFF. PROD/SP/DAY 5697 0.8 1000 1.4 1.25 85 1842 4 2279 0.8 1000 1.4 1.25 85 1842 4 271 2 0.8 100 0 1.4 1.25 85 184 24 904 0.8 1000 1.4 1.25 85 1842 4 356 8 0.9 100 0 1.4 1.33 85 154 41 714 0.9 100 0 1.4 1.33 85 154 41 657 0.9 100 0 1.4 1.33 85 154 41 896 1.1 100 1793 1.1 192 20 0 98 3.6 1600 0 98 3.6 165 00 98 3.6 17.6 1650 0 98 3.6 180 00 98 3.6 19.7 2 90 595 349 7 346 2 180 00 98 3.6 19.7 2 90 595 699 692 175 00 98 3.8 20.8 1 90 548 644 638 175 00 98 3.7 23.4 1750 0 98 3.7 CH 20 5 6000 20/2 CH 20 2 2400 24/1 CH 24 3 360 0 24/2 KH 24 1 1200 30/1 CH 30 5 600 0 30/2 CH 30 1 120 0 30/2 KH 30 1 120 0 40/1 CH 40 2 240 0 40/2 Tota CH 40 4 4800 l 24 288 00

16.10 16.10 88 88 949 5583 5527 949 2233 2211

4 17.64 89 89 753 265 8 263 1 753 886 877

0 23.40 92 92 373 878 870 373 188 1757 1739 35 186 47

0 1000 1.45 1.45 1.52 1.52 85 85 110 68 1103 33 3

BIRLA TEXTILE MILLS , BADDI (HP) Expansion Project - 28800 Spindles - 100% Grey Cotton Yarn Pre-Operative Expenses S.No . Particulars Amount (Rs in Lacs) 1 Interest during construction 400 500 Lacs for 8 months 1200 Lacs for 7 months 1600 Lacs for 6 months 1700 Lacs for 5 months 2200 Lacs for 4 months 1300 Lacs for 3 months 2 3 Salary for six months Wages for four months Travellling & other misc. 4 exp. 69 35 0 840 0 960 0 850 0 880 0 390 0 8.33 17.50 20.00 17.71 18.33 8.13 90 22 63 Amount (Rs in Lacs)

L/C Opening, EPCG License Insurance during

25

construction Total

40 ___ 275

BIRLA TEXTILE MILLS , BADDI (HP) Expansion Project - 28800 Spindles - 100% Grey Cotton Yarn

Interest Calculation 200 Particulars 6-07 200 7-08 200 8-09 200 9-10 201 0-11 201 1-12 201 2-13 (Rs. in Lacs) 201 201 201 3-14 4-15 5-16

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On Working A Capital (@ 9%) On Term B Loan (@ 2.50%) 213 (850 0) 213 (850 0) 209 (834 1) 198 (791 6) 183 (733 1) 162 (648 1) 137 (547 2) 105 (419 7) 69 (276 3) 27 (106 3) 198 (220 0) 198 (220 0) 198 (220 0) 198 (220 0) 198 (220 0) 198 (220 0) 198 (220 0) 198 (220 0) 198 (220 0) 198 (220 0)

G.Total

411

411

407

396

381

360

335

303

267

225

* Term Loan repayment in graded 32 quarterly installments commencing after two year from Commercial Production. ANNEXURE

Webliography:

www.indianindustry.com www.txcindia.com www.indianinfoline.com

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www.crisil.com www.rjkgroup.com www.fibre2fashion.com www.rediff.com www.texmin.nic.in www.texprocil.com www.aepcindia.com www.greenbusinesscentre.com www.infomat.com www.alibaba.com www.lakshmimachineworks.com

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