Textile Industry

Market size

2011: $ 89 billion, with expected CAGR from 2009-21 to be 10.1%

69% apparel and 31% textiles
14% to industrial production
4% to GDP
11% export contribution as of Feb 2014
Employment to over 45 million people
In world trade: 4.5 %, expected to increase to 8% and $ 80 billion by 2020
Textile exports to increase to $ 50 billion by 2015
Govt target for exports next fiscal year: $60 billion
Textile and apparel export grew at CAGR of 11.2% from FY06-12
Second largest producer of cotton and silk
Raw cotton: domestic consumption 27 million bales, export 7 million bales

Investments

FDI of $ 1.15 billion from 2000-2014

RIL largest producer of polyester fibre and yarn, commissioned polyester
filament yarn facility at Silvasa
700 crore in 12th Five year plan for development of technical textiles

Technical textiles industry: new growth sector

Thermal protection, blood absorbing material, seatbelt, adhesive tapes etc.

CAGR 20% during FY12-17, $17.4 billion currently

Govt initiatives and incentives & trends

To promote apparel exports 12 locations has been approved by the

government to set up apparel parks for exports, allocation of
$ 10.4
million
TUFS ( Technology Upgradation Fund Scheme ) provides plan support for
modernization of textiles industry in the form of interest reimbursement
and capital subsidy. The sectors benefited under TUFS are Spinning,
Weaving, Processing, Technical Textiles, Jute, Silk, Garmenting, Cotton
Ginning, Wool and Powerlooms. There is no statewise allocation of funds
under TUFS. In the years 2009-10, 2010-11 and 2011-12 allocation under
TUFS was Rs. 9159.18 crore and expenditure incurred was Rs. 7026.53
crore.
TUFS continued in 12th Five Year plan with an investment target of $ 24.8
billion
Zero excise duty for cotton and man made sector at yarn, fabric nd garment
stages

Reduced duty for imprtaed textile machinery from 7.5% to 5%

100 % FDI allowed in textile sector
Industry: highly unorganized and fragmented

Textile SEZs

Mahindra City, Tamil Nadu, 607 hectares

Surat Apparel Park, Gujarat, 56 hectares
Brandix India Apparel City (BIAC), Andhra Pradesh, 404 hectares
KIADB, Karnataka, 16129 hectares, for different industries

Key Players

Vardhman Group : yarn, threads, fabric

Revenue: 5171 cr, PAT: 621 cr, Exports: 1600 cr, MCap:
VTL, 2675 cr
Welspun Group: home textiles
Revenue: 3647 cr, EBITDA: 643 cr, MCap: WELSPUNIND,
3761 cr
Alok Industries: home textiles, garments and yarn
Revenue: MCap: ALOKTEXT
Raymond Lyd
Arvind Mills

M&A I tried to understand how it works but couldnt figure it out properly

BR Machine Tools- Bombay Rayon Fashions: $ 721.1 million,

Growth Drivers:

Rising demand in exports: low production cost, increasing labour cost in

China will boost Indias exports. Also favorable rupee depreciation and RMB
appreciation
Increasing demand in domestic market
Growing population : growth of young population %age. + Growth of women
workforce
Rising income
Growth of technical textiles
Increasing investments: both domestic and foreign

All of the above are being aided by positive support by govt to textile sector
including set up of SITPs (Scheme for Integrated Textile Parks), 100 % FDI,
increasing loans in TUFS(Technological Upgradation Fund Scheme), reduction in duty
for machinery etc.

2007 scenario of textile industry

Apparel Industry in India
Apparel industry worth : Rs 3270 billion in FY 2012, CAGR from 07-12 : 10%.. from
12-16, CAGR: 8.7

Indias share in Global Textiles has increased by 17.5% in the year 2013
compared to the previous year.
Currently Indias textiles exports to the world is US$ 40.2 billion. This
growth is phenomenal as the global textiles growth rate is only 4.7%
compared to India as it has registered the growth of 23% beating China and
Bangladesh which has registered 11.4% and 15.4%, respectively.
Total global textiles exports is to the tune of US$ 772 billion with India
commanding 5.2% of the share. This growth in the increase in share of the
Textiles Exports from India is largely attributed to the growth in the
Apparel and Clothing sector as it accounts for the almost 43% of the
share alone.
The Apparel Exports ranking has also improved from 8th position in
2012 to 6th position in 2013. Indias apparel exports, was to the tune of
US$ 15.7 billion in 2013, as against US$ 12.9 billion in 2012. Among the top

five global clothing suppliers except for the Vietnam; Indias Apparel
Exports growth was highest registering 21.8% growth during the year 2013.
Apparel exports from India accounts for 3.7% of share in the global
readymade garment exports.
India saw a rise in apparel exports to the US by 7.5% at 745 million square
metres equivalent (msme) for the period January-September 2014 over the
corresponding period last year

While China is becoming costlier due to increased cost of production

and higher wages, apparel exporters in India cite global compliance
issues in case of Bangladesh for such a shift, apart from issues like high
rate of inflation and currency appreciation in both the nations.

Rising labour costs have led to China reducing its focus on labour intensive
sectors like textile even to the point of off-loading export orders. According to
industry sources, costs have risen by anywhere between 25% and 45%.
On the other hand, unhealthy working conditions and recent mishaps
across textile units in Bangladesh have raised concerns among local
groups in the US thereby putting pressure on apparel importers to
look at other exporting nations like India and Vietnam.

India will be the world's No. 1 cotton grower this year, ousting China from the
top spot for the first time in over 30 years,

Domestic apparel industry constitutes five segments - men's wear, women's wear,
kids wear, unisex and uniforms. Largest being mens wear.

Value chain

Key lpayers:

Madura Fashion
Raymond Apparel
Arvind lifestyle

Export perspective Value chain of apparel sourcing to finished product

PORTERs Five Forces

Threat of New Entrants:
High, 100% FDI allowed, low
barriers of entry, low investments

Bargaining power of
suppliers:
Low Because of over supply in
the unorganised market

Threat of
competitors:
High, market
fragmented,
organized sector

Threat of Substitutes:
High, competition from
neighbouring countries like
Bangladesh and also threat from
unorganized sector

Bargaining power of buyer:

Medium, Branded apparels have
better bargaining power while
textile industry has low product
differentiation, hence worse off
Domestic customers - Low for
premium and branded product
segments.
Global customers- High due to
presence of alternate low cost
sourcing destinations