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CAGR: 9.3%
58
2011
2021P
CAGR: 10.2%
82
31
2011
2021P
CAGR: 15.9%
111.8
62.0
FY17P
CAGR: 11.1%
122
65
FY11
FY17P
Demand for Apparel (USD billions)
1.7% Growth
4.25
Robust demand
2011
Market
Value:
USD89
billion
Increasing investments
2021E
Market
Value:
USD223
billion
Advantage
India
Policy support
Competitive advantage
2000 onwards
1951-2000
19011950
1854-1900
Number of mills
increased from 178 in
1901 to 417 in 1945
Out of 423 textile mills
of the undivided India,
India received 409 after
partition and the
remaining 14 went to
Pakistan
Notes: NTP - National Textile Policy; NTC - National Textiles Corporation; ASEAN - Association of Southeast Asian Nations,
TUFS - Technology Upgradation Fund Scheme; TMC - Technology Mission on Cotton, EU - European Union
The textile and apparel industry can be broadly divided into two segments:
Yarn and fibre (include natural and man-made)
Processed fabrics (including woolen textiles, silk textiles, jute textiles, cotton textiles and technical textiles),
Readymade Garments (RMGs) and apparel
Raw
material
Output
Cotton,
jute, silk,
wool
Ginning
Fibre*
Spinning
Yarn
Weaving/
knitting
Processing
Garment/
apparel
production
Fabric
Processed
fabric
Final
garment/
Apparel
Woollen textiles
Silk textiles
Jute textiles
Technical textiles
The fundamental strength of the textile industry in India is its strong production base of wide range of fibre/yarns from natural
fibres like cotton, jute, silk and wool to synthetic /man-made fibres like polyester, viscose, nylon and acrylic
India is the worlds second largest producer of textiles and garments
Indian textile industry accounts for about 22 per cent* of the worlds spindle capacity and 8 per cent of global rotor capacity
India has the highest loom capacity (including hand looms) with 61 per cent* of the worlds market share
India accounts for about 14 per cent of the worlds production of textile fibres and yarns (largest producer of jute*, second
largest producer of silk and cotton*; and third largest in cellulosic fibre)
223
CAGR: 10.1%
143
89
70
2009
78
2010
2011
2016E
2021E
Apparel
Textile
69%
CAGR: 3.0%
30.7
29.0
33.9
35.3
33.4
30.5
28.0
FY07
FY08
FY09
FY10
FY11
FY12
FY13
Raw cotton and man-made fibres are major segments in this category
Raw wool and raw silk are other components their production levels are much lower
1.268
1.285
1.244
1.234
1.263
1.139
1.066
0.985
FY07
FY08
FY09
FY10
FY11
FY12
FY13 9MFY14
1.55
1.37
1.51
1.42
1.52
1.22
1.37
0.98
1.46
1.29
1.37
1.25
0.99
1.06
1.02
1.11
2.95
2.90
3.08
3.49
3.13
3.58
3.92
2.82
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14*
Cotton Yarn
6,882
6,888
7,769
8,135
8,468
9,283
10,065
6,766
18,812 17,923
22,438 21,663 20,567
FY07
FY08
FY09
Cotton
FY10
FY11
FY12
FY13 FY14(A)
Blended
33.3
27.8
CAGR: 11.2%
22.4
22.1
19.1
21.2
17.6
2.7
FY06
2.8
FY07
3.3
FY08
3.5
FY09
Export
3.4
4.2
5.2
FY10
FY11
FY12P
Import
Readymade
Garment
3% 4%
3%
Cotton Texttiles
39%
Man-made
Textiles
Handicrafts
Silk & Handloom
34%
Woolen &
Others
Company
Business areas
Vardhman Group
Raymond Ltd
Increasing investment in
TUFS
Multi-Fibre Arrangement
(MFA)
Public-Private
Partnership (PPP)
Technical textiles
With the expiry of MFA in January 2005, cotton prices in India are now fully integrated with
international rates
The Ministry of Textiles commenced an initiative to establish institutes under the PublicPrivate Partnership (PPP) model to encourage private sector participation in the
development of the industry
Technical textiles, which has been growing at around twice the rate of textiles for clothing
applications over the past few years, is now expected to post a CAGR of 20 per cent over
FY11-17
Competitive Rivalry
Threat of New
Entrants
(High)
Substitute Products
Bargaining
Power of
Customers
(Moderate)
Competitive
Rivalry
(Moderate)
Substitute
Products
(High)
Bargaining
Power of
Suppliers
(Low)
Focus on backward
integration
Focus on forward
integration
Diversification
Increasing focus on setting up a shop-in-shop strategy, where all shops are opened in
large retail stores, curtailing capex and risk, as in the case of Welspun India
More textile manufacturers are adopting backward integration in order to reduce their
dependence on external suppliers. Welspun India is increasing internal supply of yarn and
greige through new capacity addition
Companies entering into forward businesses through foreign collaborations for instance
Vardhaman Textiles Ltd entering into the garment manufacturing business through a
collaboration with Nisshinbo, a Japanese manufacturer of yarns
Textile manufacturers are diversifying into related businesses to attract customers, for
instance Raymond group under its group company J.K.Helene Curtis is ramping up male
grooming segment by unleashing new variants of shampoos and deos
Increasing investments
Policy support
Growing demand
Growing domestic
and foreign
investments
Rising demand in
exports
Inviting
Resulting in
Increasing demand
in domestic market
Government setting
up SITPs and Mega
Cluster Zones
Commitment of
USD140 billion of
foreign investments
Growing population
driving demand for
textiles
Increasing loans
under TUFS
Government
investment
schemes (TCIDS
and APES)
Stress On
mechanisation
FY14 Union
Budget
Tax sops and
financial
package
Infrastructure
support
Allocation of USD10.4
million for apparel parks
under SITP
A
new
Integrated
Processing Development
Scheme in the 12th Plan
with
an
outlay
of
USD1041.5 million to
address environmental
concerns of the industry
1.34
CAGR: 1.8%
1.20
1.24
2010
2013
1.03
0.85
0.69
1980
1990
2000
2019F
Rising incomes has been a key determinant of domestic demand for the sector; with incomes rising in the rural economy as
well, the upward push on demand from the income side is set to continue
12
2,000
10
Million Household,100%
1,500
1,000
50%
4
2
29%
35%
25%
12%
2%
2008
32%
40%
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014F
2015F
2016F
2017F
2018F
2019F
500
15%
26%
Income
segment
(USD)
1%
Globals (>22065.3)
Seekers (4413.1 - 11032.7)
Deprived (<1985.9)
6%
2020
3%
17%
7%
2030
33.3
CAGR: 11.6%
27.8
22.4
22.2
21.1
FY08
FY09
19.2
FY07
FY10
FY11
FY12
CAGR: 20%
17.4
FY17E
CAGR: 8.3%
5.5
3.7
2011
2016E
2021E
Technology
Upgradation Fund
Scheme (TUFS)
Foreign Direct
Investment
TUFS for the textile sector to continue in the 12th Five Year plan with an investment target
of USD24.8 billion
Investment was made to promote modernisation and upgradation of the textile industry by
providing credit at reduced rates
The policy was introduced for the overall development of textile industry
Key areas of focus include technological upgrades, enhancement of productivity, product
diversification and financing arrangements
FDI of up to 100 per cent is allowed in the textile sector through the automatic route
Technical textile
industry
SITP was set up in 2005 to provide necessary infrastructure to new textile units; under
SITP, 40 projects (worth USD900 million) have been sanctioned
The planned outlay for the textiles and apparel sector under the 11th Five Year Plan
(2001217) was USD2.9 billion
Government of India has planned an increase in the fund outlay for technical textiles
industry to more than USD117 million during the current XII Five Year Plan (2012-17)
State
Area
(Hectares)
Sector
Details
Mahindra City is Indias first integrated business city, divided
into business and lifestyle zones. It is a cluster of three sector
specific SEZs in Tamil Nadu, for apparels and fashion
accessories; IT and hardware; and auto ancillary. The business
zone provides plug-n-play working spaces. This zone comprises
a SEZ (primarily for exporters) and domestic tariff area (DTA) for
companies targeting domestic market
Tamil Nadu
607.1
Apparel and
Fashion
Accessories
Gujarat
56.0
Textiles
Brandix India
Apparel City (BIAC)
(Functional)
Andhra
Pradesh
Textiles
Several
Sectors
(KIADB)
(Functional)
Karnataka
404.7
16,129.0
West:
Ahmedabad,
Mumbai,
Surat,
Rajkot,
Indore
and
Vadodara are the key places for
cotton industry
M&A activity in the sector has been picking up pace over the years; in fact, from January 2000 to May 2013, more than 482
M&A deals took place, and the trend is expected to continue in FY14 as well
Some of the major M&A deals* are listed below:
Acquirer name
Target name
Grasim Industries
360.0
Madura Garments
Pantaloon Retail
333.3
Himachal Fibres
NA
721.1
Group of investors
Provogue (India)Ltd
526.9
Maxwell Industries
8.5
Source: M&A, Thompson ONE Banker, Grant Thornton, CMIE, Aranca Research
Note: * The value for 290 deals were not disclosed
190
167
165
160
140
130
90
129
104
40
9
FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14*
Proposed FDI in
multi-brand retail
The Central
For
To
For the near term (2012), the
It
of
a
domestic
foothold,
outsourcing
will
also
rise
significantly
With
consumerism
and
disposable income on the rise,
the retail sector has experienced
a rapid growth in the past
decade with several international
players like Marks & Spencer,
Guess and Next having entered
Indian market
is expected to grow at a
compound annual growth rate
(CAGR) of more than 13 per cent
over a 10-year period
Foreign investments
The
government is taking
initiatives to attract foreign
investments in the textile sector
through promotional visits to
countries such as Japan,
Germany, Italy and France
Notes: BTRA - The Bombay Textile Research Association; SITRA - South India Textile Research Association;
NITRA - Northern India Textile Research Association; SASMIRA - Synthetic & Art Silk Mills Research Association
Launch of the
Makers brand 2011
Retail
Furnishings
Acquisition of
ColorPlus 2002
Corporate wear
Capacity of 40
MM -1996
Woollen outerwear
Apparels
Fabrics
FY14
USD766.5
million
turnover
JV with GAS in
India - 2007
Organic
growth in
textiles
1964
Vertical
integration in
multi-fibres
1980
Transformed
into industrial
conglomerate
FY08
USD595
million
turnover
1925 1958 1964 1968 1990 1996 2000 2002 2006 2007 2008 2010 2011 2012 2013 2014
Source: Company Presentation, Aranca Research
Notes: JV - Joint Venture; MM - Million Meters
Focus on speciality
fabrics; plans to
enter in technical
textiles
Polyester yarn
Home textile
Tie-ups With
Global Retail
Giants
Embroidery
Apparel fabric
Cotton and
blended yarn
Organic growth
in textiles
1995*
Financial and
technical
collaboration
through JV
FY13
USD2.4 billion
turnover
1986 1988 1990 1992 1993 1995 2003 2004 2006 2007 2008 2010 2011 2012 2013
Source: Company Annual Reports and Presentation, Aranca Research
Notes: NTC - National Textile Corporation *In 1995 Alok industries had sets up financial and technical collaboration with Grabal, Albert
Grabher GmbH & Co of Austria to make embroidered products through a joint venture company, Grabal Alok Impex Ltd
Welspun India was incorporated in 1985, with presence in more than 50 countries. The company is the world leader in a
range of home textiles products
Global
brand
Wide
distribution
network
Terry towels
Focus on
innovation
Growth
strategy
Focused
approach
on home
textiles
Association
with top
brands and
clients
Rugs
Location - Anjar/Vapi
Location - Anjar
Location - Vapi
The company accounts for 25 per cent for bed sheet exports to the US
Welspuns key clients are retailer giants such as Wal-Mart, Target, JC Penny, IKEA Christy and Mark & Spencer
672
CAGR: 17.3%
CAGR: 21.9%
540
119
450
100
394
77
65
FY10
FY11
FY12
FY13
FY 14
FY10
FY11
FY12
FY13
FY 14
Tirupurs textiles industry stands at USD4.2 billion in FY12 and is globally famous for hosiery products
The city has more than 5,000 garment manufacturing and job work units, and is one of the most organised processing and
finishing garment clusters in India
Its hosiery hub became the first textile cluster in India to comply with zero liquid discharge guidelines
2.5
2.5
2.4
2.7
2.6
2.6
2.4
1.9
1.4
FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14E
Year
Year
2004-05
44.81
2005
43.98
2005-06
44.14
2006
45.18
2006-07
45.14
2007
41.34
2007-08
40.27
2008
43.62
2008-09
46.14
2009
48.42
2009-10
47.42
2010
45.72
2010-11
45.62
2011
46.85
2011-12
46.88
2012
53.46
2012-13
54.31
2013
58.44
2013-14
60.28
Q12014
61.58
India Brand Equity Foundation (IBEF) engaged Aranca to prepare this presentation and the same has been prepared