WELCOME

MANUFACTURING INDUSTRY
DOVIN VINCENT NIJU VARGHESE JOY ABHILASH.A HARIKRISHNAN.R TONY GEORGE

CHEMICAL INDUSTRY CHEMICAL INDUSTRY

PULP AND PAPER INDUSTRY

PAPER AND PULP INDUSTRY

AUTOMOBILE INDUSTRY
AUTOMOBILE INDUSTRY

TELECOM INDUSTRY

TELECOM INDUSTRY

FERTILIZER INDUSTRY
FERTILIZER MANUFACTURING

SHIP BUILDING INDUSTRY SHIP MANUFACTURING

TEXTILE INDUSTRY TEXTILE INDUSTRY

ELECTRONICS INDUSTRY
ELECTRONICS INDUSTRY

GLASS INDUSTRY
GLASS INDUSTRY

PAINT INDUSTRY
PAINT INDUSTRY

What is Manufacturing Industry?

Industries which involve     Manufacturing Processing of items Creation of new commodities Application of tools

Raw materials into finished goods for sale

Evolution of the Manufacturing Industry

A single skilled artisan with assistants Household-based manufacturing Industrial revolution- Technological, Socio-Economic reforms(18-19th Century)

Manufacturing Industry divisions

Heavy Light High-tech

Heavy Industry

Perform a variety of roles  Refine minerals such as crude oil Smelt metals such as iron ore, into steel Cover a large area of land Provide the materials for many light industries use for consumer goods.

Light and High-tech Industries

They are Footloose industries -Freedom to choose a location Final products are high in value and low in weight -Easily distributed by road New factories with pleasant locations

Factors influencing the location of industry

Access to Market Access to Raw Material Access to Labour Supply Access to Sources of Energy Access to Transportation and Communication Facilities Government Policy Access to Leader industry

Importance of manufacturing in Indian Economy

Modernising agriculture Jobs in secondary and tertiary sectors Establishing industries in backward areas Export of manufactured goods expands trade and commerce

Why India A Manufacturing HUB?

Productivity of the MI in India is approximately 1/5th US. as compared to in South Korea as well as Taiwan In 2006-07, the manufacturing sector contributed almost 16% to the countrys GDP Automobiles to computer hardware Consumer durables to engineering products

Target of Indian MI within 2025

The fifth largest consumer market in the world Improving the urban infrastructure Lessening of import duties Higher education, increased investment in R&D

Growth of Indian Manufacturing Industry

List of manufacturing processes

1. 2. 3. 4. 5. Casting Moulding Forming Machining Joining

Production cycle

Indian Textile Industry

Contents
Market Overview

Government regulations & policy

Business opportunities and Advantage India

Indian Textile industry - important from perspective of overall economy

yTotal market size (2004-05): USD 38 bn
yDomestic market ~ USD 25 bn yExports ~ USD 13 bn

yStrong contribution to Indian Economy

y14% contribution to industrial production y4% contribution to GDP y16% contribution to export earnings yDirect employment to more than 35 million people

yIndustry functions in the form of clusters (roughly 70 in number) across India, producing 80% of the countrys total textile ySector is diverse, with the hand-spun and hand woven sector at one end of the spectrum, and the capital intensive, sophisticated mill sector at the other

India has a strong base in raw materials

yCotton dominates the industry

yNearly 56% of yarn produced is made of cotton yCountry produces nearly 23 varieties of cotton yIndia is the second largest player in the world cotton trade

yIndias position is strong vis--vis other countries in most raw materials

yLargest producer of jute ySecond largest producer of silk yThird largest producer of cotton, accounting for nearly 16% of global production yThird largest producer of cellulosic fibre/yarn yFifth largest producer of synthetic fibres/yarn yEleventh largest producer of wool

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

Industry fragmented and dominated by small scale units

Spinning 100% = 2922 mills
Composite mills 8%

Weaving 100% = 5.83 million units

Organised sector 2%

Processing & manufacturing

yOf the 2300 processors in India, only 200 units are integrated with spinning, weaving or knitting units yBulk of apparel and home textile manufacturing accounted for by 77,000 small scale units

Small Large independent independent units units 39% 53%

Powerloom Handloom 31% sector 67%

yThe textile industry across the value chain is largely decentralised yUnits mostly independent and small scale in nature, rather than composite units undertaking all activities together yLarge scope for entry of organised integrated textile manufacturers

Manufacturing units present at all levels of value chain

Raw materials Cotton, wool, silk, jute Fibres and yarn Grey fabric y Knitting y Weaving Petrochemicals Man-made fibre/ filament yarn* Processed fabric y Dyeing y Finishing Home textiles Garments

Production unit

Spinning mills

Weaving/ knitting units - handlooms, powerlooms, hosiery units

Hand processing units, independent power processing units, units attached to mills

Garments & home textile producers

Composite Mills

Industry experiencing high growth

Yarn production million tonnes
3.4 3.1 8% 2.4 100% non 8% cotton yarn Blended yarn 17% 20% 10% 17%

CAGR
3.6% 6.0% 3.8%

Cloth production billion sq. mtrs

45.0 38.6 100% non cotton cloth 27% Blended cloth 13% 31.5 41% 36% 15% 13%

CAGR
4.1% 8.9%

4.6%

Cotton yarn

75%

72%

73%

3.2%

Cotton cloth

60%

49%

46%

0.9%

1996

2000

2006

1996

2000

2005

yIncreased output of yarn and fabric - CAGR of 3.6% and 4.1% respectively; global market has grown at a CAGR of 2-2.5% in this period yHighest growth seen in 100% non cotton yarn and fabric, followed by blended yarn and fabric yCotton cloth continues to dominate the industry

Exports are dominated by readymade garments

800

Textile exports
100% = INR 390 bn

100% = INR 654 bn 7% 13% 55% 25%

700

600

9%

5%

500

34%
400

52%

Year 2005-06

Readymade garments Cotton yarn, fabric & made-ups

100% = INR 199 bn 4% 10% Year 1999-00 51%

300

Manmade staple fibres, yarn, fabric & made-ups Silk & woolen textiles, cotton raw, incl waste

200

35%

100

Year 1994-95
0

yReadymade garments dominate textile exports yShare of manmade textiles in overall textile export basket has risen, whereas that of cotton textiles has fallen

Dismantling of quotas has resulted in higher growth in large markets

yIn the first nine months of CY2005, US imports grew by 7% to USD 8.9 bn and EU imports grew by 3.7% to Euro 54.5 billion yIndia has been one biggest beneficiaries in post quota regime in these two markets, while countries like Mexico, South Korea and Turkey have lost share

Share in US textile and clothing market

15.0%

Share in EU textile and clothing market

9.0% 7.3% .0%

4.4%

5.2%

2004

1st 9 months of 2005

2008*

2004

1st 9 months of 2005

2008*

Going forward, exports as well as domestic market to drive growth

yDrivers of exports

Market size estimates USD bn 65

30

37
Exports 12

yRising outsourcing budgets of retail giants yIndian companies evolving from mere converters to vendor partners of global buyers yLarge outsourcing orders helping Indian companies build capacities, lower their per unit cost and become more competitive yImposition of caps on certain import segments from China by EU and US given the surge in Chinese exports has opened up opportunities for India

yDrivers of domestic market

yGrowing young population yRising household income levels yGrowth of organised retail 35

Domestic market

25

2005

2010*

Contents

Market Overview

Government regulations & policy

Business opportunities and Advantage India

Industry has witnessed a change in regulations

Emphasis on increasing scale Post 1985 Emphasis on small scale sector Pre 1985
yImportance given to cotton textiles yFavourable fiscal treatment given to powerlooms (mainly tiny and small-scale units) as compared to composite mills yMost segments reserved for small-scale industry (SSI)* yRestrictions on installation of automatic looms yMany segments (especially readymade garments, knitwear and hosiery) deserved from reservation for SSI ySchemes for technology upgradation and modernisation introduced yMultifibre approach adopted; emphasis on man made and synthetic fibres, in addition to cotton yTaxation structure made simpler

Measures aimed at improving competitiveness of industry to face a post quota regime

Several government initiatives targeted to attract investments

yScheme launched in 1999 to provide firms access low interest loans for technology upgradation and setting up new units with state-of-art technology yScheme has disbursed INR 91.61 bn till 31st December 2005

Technology Upgradation Fund Scheme

Policy related to foreign investment

yUpto 100% foreign direct investment allowed in textile and apparel manufacturing industry, with approval of the Foreign Investment Promotion Board (FIPB) y~ USD 1.02 bn of FDI in the sector approved between 1991 and 2004 yCompanies free to set up fully-owned sourcing (liaison) offices, as well as marketing operations

Upgrading infrastructure

yScheme for Integrated Textile Parks (SITP), based on public-private partnership model to build world class infrastructure facilities yProduct specific Cluster Approach targeting development of 100 additional clusters in textiles yTechnology Mission on Cotton (TMC), focusing on cotton R&D, dissemination of technology to farmers, improvement of market infrastructure and modernisation of ginning and pressing sector

Market Overview

Government regulations & policy

Business opportunities and Advantage India

India has a cost advantage vis--vis competing countries

Cost competitiveness
Yarn: USD per kg of yarn Fabric: USD per yard of fabric
South Korea China Brazil India

Open-ended yarn & fabric Yarn

Ring yarn & fabric

Textured yarn & fabric

Woven fabric

Knitted fabric

yIndia is cost competitive vis--vis competing countries in textile production, except in case of textured yarn and fabric

There are several other industry specific advantages arising out of the unique nature of the industry in India

y Large raw material base

yIndia has a rich raw material base, especially cotton which has seen improved productivity in the country under the Cotton Technology Mission yWide variety of cotton produced India, making India capable of catering to various segments of world trade yIndian industry has ability to handle different materials - cotton, wool, silk and jute with equal skill

y Positive developments in the Textile Policy

yReservation for small scale sector, especially key segments removed over last few years yFiscal anomalies in terms of excise duty structure removed

y Flexibility in production
yCapabilities across the entire value chain within the country reduces lead time for production and reduces intermediate shipping time yIndian companies have flexibility and skilled manpower to handle small orders with complex designs

y Product development and design capabilities

ySeveral institutes in India for textile development, the major one being National Institute of Fashion Technology (NIFT) ySeveral leading colleges also offer courses in Textile Engineering

Business opportunities exist for foreign players

yInvest in setting up vertically integrated large scale units yInvest in setting up retail chains (single brand) yEnter into marketing joint ventures with Indian companies yBrand licensing to Indian players

Investing in India

Sourcing from India

yPartner with Indian vendors to import from India, by nominating large Indian companies having credibility in terms of capacities and quality yReadymade garments have maximum opportunity, given Indias cost competitiveness

Export to India

yWith Indian consumers increasingly getting exposure to international fashion trends, potential exists for export of lifestyle brands of garments and accessories to India

Many foreign players have also entered India

Buying and liaison offices

yTop 10 buyers in India (Gap, Wal-Mart, Li & Fung, The Childrens Place, JC Penny, H&M, Federated, Fifth Avenue, Carrefour and Synergies India) account for 35% of total textiles sourced from India yOther major companies include El Corte, Ecko, Kellwood, VF Corporation, Tesco, Next, Karstadt-Quelle

Brand licensing/ franchising

yBrand licensing - Hugo Boss, Tommy Hilfiger, Mango, Lovable, Nike, Lacoste yMaster franchisee - Marks & Spencer, Crocodile

Manufacturing/ manufacturing cum retailing

yVF Arvind Brands - joint venture between Arvind Brands and VF Corporation to manufacture and sell latters brands in India yBenetton yLevi Strauss yReebok yCarreman Michel Thierry

Key players in India

yLarge industry conglomerate, with turnover of USD 279 million and presence in textiles, retail, engineering goods, personal care and prophylactics yTextile products - worsted fabrics, wool and blended fabrics, specialty ring colour and stretch denim fabric, cotton and linen shirting fabric, readymade garments, woolen blankets and home furnishings

yOne of the oldest textile companies in the country, having turnover of USD 231 million yProduces suitings, shirtings, sarees, towels, bed linen and mens apparel; significant exporter of polycotton blended fabrics and made ups

yOne of the largest producers of denim in the world, having turnover of USD 338 million and exports to more than 70 countries yProduces denim fabric, cotton and blended fabric, knitted fabric, voiles, apparel yOne of the largest textile business houses in India, having turnover of USD 400 million ySignificant presence in acrylic fibre, cotton, synthetic and blended spun yarns, grey and processed fabrics, cotton and synthetic sewing threads

yIndias largest exporter of readymade garments, having turnover of USD 180 million ySupplies to more than 100 retailers and fashion brands across 39 countries

Key players in India

yLeading producer of silk yarns and fabric (mainly for decorative and bridal use), with annual turnover of USD 32 million yOther businesses include retailing of home furnishings in India and manufacture of bed linen products for domestic and export market

yAmongst the top 3 terry towel producers in the world, with annual turnover of USD 132 million yOther products include cotton yarns, polyester filament yarn, bathrobes, buttons and saw pipes

yBelongs to one of the most diversified business groups in India (Aditya Birla Group) and has turnover of USD 577 million) yKey products in textiles include viscose filament yarn and branded apparel; other interests include insurance, telecom, IT, carbon black

yHaving turnover of USD 303 million, company is a major producer of polyester yarns, fabrics, garments and textiles

yHas the largest composite textile mill in India for producing cotton fabric yHaving a turnover of USD 95 million, its products include viscose filament yarn, viscose tyre/ industrial yarn, denim, cement and pulp and paper