CHAPTER I

INTRODUCTION

1.1 Executive Summary

The Textile Sector in India ranks next to Agriculture. Textile is one of India’s
oldest industries and has a formidable presence in the national economy in as much as
it contributes to about 14 per cent of manufacturing value-addition, accounts for
around one-third of our gross export earnings and provides gainful employment to
millions of people. The textile industry occupies a unique place in our country. One of
the earliest to come into existence in India, it accounts for 14% of the total Industrial
production, contributes to nearly 30% of the total exports and is the second largest
employment generator after agriculture.

Textile Industry is providing one of the most basic needs of people and the
holds importance; maintaining sustained growth for improving quality of life. It has a
unique position as a self-reliant industry, from the production of raw materials to the
delivery of finished products, with substantial value-addition at each stage of
processing; it is a major contribution to the country's economy.

This paper deals with Global Scenario, Indian Scenario of Textile Industry.
Profile, structure and functions involved in a company. It is a great opportunity for
trainee to study the Organization and learn functions involved and make sure to
understand Theoretical concepts in Practical and Practical concepts in Theory.

1.2 Global Scenario

The Invention: English inventors in the 18th century began to automate textile
cottage industry processes including carding, spinning and weaving. James
Hargreaves developed the Spinning Jenny, a device which replaced eight hand
spinners in one operation. Richard Arkwright assembled these processes and started
the first factory on the Derwent River in Cromford, England in 1771.

Following the American Revolution, several founding fathers felt

manufacturing should remain in England. Alexander Hamilton felt otherwise and

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wanted to establish a model mill village in Paterson, New Jersey. His ideas were
ahead of their time. The "National Manufactory" went out of business in 1796.

Samuel Slater of Rhode Island visited several mills owned by Arkwright and
associates, memorized the essential features and returned to the US. In 1792, he
opened a yarn spinning mill in Pawtucket, Rhode Island, the first successful
automated yarn spinning in the US. In 1814, James Cabot Lowell of Boston built a
factory in Waltham, up the Charles River from Boston. Later, the Boston Associates
built an entire mill town on the Merrimack River, and later named it "Lowell" in
memory of James Cabot Lowell.

Development In Textile Industry:

1793 - Eli Whitney and Hogden Holmes developed a simplified method of

removing the cotton lint from the seed. Whitney’s, and especially Holmes' saw tooth
gin, revolutionized the cotton industry by dramatically increasing the productivity of
cotton ginning.

In the early 1800s, cotton was raised in the southern United States and
exported to mills in England and the north. Leaders such as William Gregg of South
Carolina advocated a home-based textile industry for the south but the time was not
right. Northern mills resisted the growth of mills outside New England.
Textile machinery was built in New England and New Jersey and imported from
Europe. After the Civil War, the global scenario slowly replaced slaves with free
workers. The industry remained largely in the north until after the 1880s. Leaders
such as Edwin Michael Holt and family of Alamance Country, North Carolina built
mills in large numbers throughout the south as the 19th century closed.

Merchants contracted for goods through agents. The Cone family moved
from Baltimore to Greensboro and brokered sales. The Belk family bought goods
from Cone to sell in the dry goods stores. Merchants such as Marshall Fields of
Chicago bought goods from mills through intermediaries. Later, in order to better
control supply, the Cones and the Fields built mills of their own, e.g., cone mills
and Fieldcrest Mills Machinery was imported from the north and from Europe.

World War I and the naval blockade imposed by England on German

shipping, and the use of U-boats by Germany to harass English vessels brought the

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realization that the United States must be independent of England and Germany for
machinery and dyestuffs. New companies emerged to satisfy the war e ffort
and remained strong for several decades following the war. World War II once again
emphasized the need for self-sufficiency. Following the war, however, imported
machinery and dyes, especially from Germany and Switzerland, once again
supplemented and eventually replaced domestic supply. American textile companies
thrived with the use of imported machinery and dyestuffs.

In the 1990s, a new world order began to replace the Made in the USA ideas.
Buying from the lowest cost producer drove many textile manufacturers out of the
production side and into imports. Manufacturing companies changed to marketing
companies.

The textile industry is undergoing a major reorientation towards non-clothing

applications of textiles, known as technical textiles, which are growing roughly at
twice rate of textiles for clothing applications and now account for more than half of
total textile production. The processes involved in producing technical textiles require
expensive equipments and skilled workers and are, for the moment, concentrated in
developed countries. Technical textiles have many applications including bed sheets;
filtration and abrasive materials; furniture and healthcare upholstery; thermal
protection and blood-absorbing materials; seatbelts; adhesive tape, and multiple other
specialized products and applications. The Indian Textile industry has been
undergoing a rapid transformation and is in the process of integrating with the world
textile trade and industry. This change is being driven by the progressive dismantling
of the MFA and the imperative of the recently signed General Agreement Trade &
Tariff. In this bold, new scenario, India has to move beyond its role of being a mere
quota satisfying country.

Leading Manufacturers In Textile Industry:

Most of the production happens in Asian countries. China and India are the
leading manufacturers in textile. Textile Industry has different sectors like Jute, yarn,
apparel, clothing and garments. Each country has its specification in respective
sectors. Coming to India, India is large manufacturer of yarn. China for silk yarn and
so on. Below table gives information regarding leading exporters & market share in
world economy.

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Table No.: 1.1 Leading Exporters & Market Share In World Economy

Country Million Us$ Share

USA 4268.45 20.38
UK 1697.35 8.11
UAE 1623.76 7.75
Germany 1607.33 7.65
France 934.41 4.46
Italy 782.13 3.74
Spain 645.54 3.08
Netherlands 537.77 2.57
Bangladesh 508.85 2.83
China 440.51 2.10
Total (Top 10) 13046.11 62.30
World 20939.80 -
Source: DGCI&S, Kolkata
Role of Asian Countries:

The Textile & Clothing trade in the global market is fast changing with the
scaling up of uses of textiles in diverse areas. Asian countries including India play a
dominant role in the international trade of the global market. China has the major
share in textile and clothing trade in the international market etc. Both Bangladesh
and Hong Kong have a significant share. However, India is still on the back seat. It is
reported that Asian counties export most of textile and apparel to Europe and North
America and USA etc.

Asian countries are gaining in textile trade due to lower costs compared to
African, European and South American countries. As per the Global Textile and
Apparel Industry: Vision 2015, World textile and apparel trade is expected to reach
US$805bn by 2015 from US$650bn in 2010. At present few countries like
Bangladesh, Thailand, Cambodia, Sri Lanka, Pakistan contribute major share in Forex
earnings of their country from Textile and Clothing trade, though their share in the
world market is not very significant.

Asian countries are facing challenges in the global market due to volatility in
price, rising input cost, energy crisis and lack of marketing initiative/exposure etc. In
addition, initiatives need to be made in the area of Research and Development, Skill

4
Development and Capacity building of the industry as a whole. Industry has to be in
demand driven mode.

It is also noticed that tariff rate in few Asian countries are extremely high,
which became a barrier to scale up the share in the international market. At present a
few Asian countries are enjoying a special status in the global market as per WTO
guidelines and able to retain share till date. But this may not last long because of
growing competition emerging from other countries. Government of the concerned
countries also facilitated the sector to grow by framing policy and keeping provision
of incentives/concessions to encourage for international marketing. However, India is
not enjoying such status and over the years. India’s contribution from textile &
clothing trade in country’s total forex earning shows a declining trend in the last
decade. Govt. of India has made a good no. of initiatives for capacity building, skill
development, product diversification and enhancing global share.

Table No.: 1.2 Important statistics and data on International Trade

Country Textile
Bangladesh 25%
Iran 120%
Turkey 24.50%
Malaysia 9%
Indonesia 9.20%
Pakistan 35%
Vietnam 9.70%
Cambodia 5.50%
China 9.50%
India 29.60%
Sri Lanka 3.60%
Thailand 7.90%
Source: NCM Dec, 2012, Jan’13, ICRIER paper and WTO statistics & data

Growth Of Leading Textile Companies During The Past 10 Years :

Textile production and consumption is an increasingly global affair as

production continues to shift to developing countries. Developing countries have seen
an explosion in the growth of their textile exports, and for many countries textiles are
a significant portion of their total exports. In response to increasing competition from

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low-value imports from developing countries, industry leaders in developed countries
have made significant capital investments in order to increase productivity and move
into advanced market sectors.

There are several trade agreements in place that impact world textile trade.
The African Growth and Opportunities Act, Andean Trade Preference Act, and Trade
Promotion Act are each designed to liberalize textile trade and provide equal market
access to both developing and developed countries. Despite the potential economic
and social benefits, the effectiveness of these trade policies is limited by special
interest politics in the developed world. The presence of a political economy in
developed countries can affect both the formation of and the adherence to
international trade agreements; industry leaders can still appeal to the World Trade
Organization or their Trade Representative to protect domestic industry.

Global Trends In Consumer Behaviour:

The textile industry in developed countries has often found itself unable to
compete with low- value goods made with cheap labour in developing nations. As a
result, textile industry jobs continue to move out of industrial countries and into
developing countries (U.S. Embassy). According to Senators Jesse Helms (R-NC) and
Ernest Hollings (D-SC), the textile and apparel industry has lost 700,000 jobs since
NAFTA’s implementation in January 1994; North Carolina alone lost 124,700 jobs.
Textile output has fallen 22.2 percent since 1994, and apparel output has declined
more than 14 percent.

However, the focus of production shifted into advanced market sectors and the
industry has maintained profitability by making sizeable capital investments in
computer and mechanization technology (Cline 56, 84). Between 1975 and 1985, U.S.
textile mills reinvested 80 to 85 percent of their retained earnings, spending $1.4
billion per year on new plant facilities and equipment. Between 1984 and 1986 this
figure rose to $1.6 billion per year. Firms invested in computer-controlled systems
and robotics in order to improve productivity while cutting labo ur costs.

Glen Raven Mills, Inc., a textile manufacturer in North Carolina, employs a

“five minute rule:” if the product requires more than five minutes of labo ur,
production is shifted overseas. As a result, domestic production concentrates on

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specialty fabrics, which continue to succeed in the domestic and overseas markets.
However, even in the specialty fabrics divisions, the fabric is produced domestically
and then shipped to China to cut and sew the fabric into finished products.

Impact Of The Recent Economic Crisis On The Global Textile Industry:

In order to achieve economic growth and development, policy makers first

encourage the formation and growth of domestic industry. Through labour force
mobilization and capital development, a country shifts its basic factors of production
from primary products, such as localized agricultural goods, to industry. In recent
years, the World Trade Organization and other multilateral institutions have
emphasized the importance of allowing developing nations to enter the world market
in order to achieve economic growth and development. Recognizing the power of
international markets, policy makers develop an export strategy based on their
comparative advantages in order to compete in an increasingly global economy.

1.3 Indian Scenario

Indian textile enjoys a rich heritage and the origin of textiles in India traces
back to the Indus valley Civilization where people used homespun cotton for weaving
their clothes. Rig- Veda, the earliest of the Veda contains the literary information
about textiles and it refers to weaving. Ramayana and Mahabharata, the eminent
Indian epics depict the existence of wide variety of fabrics in ancient India. These
epics refer both to rich and stylized garment worn by the aristocrats and ordinary
simple clothes worn by the common people. The contemporary Indian textile not only
reflects the splendid past but also cater to the requirements of the modern times.
The history of textiles in India dates back to the use of mordant dyes and
printing blocks around 3000 BC. The diversity of fibres found in India, intricate
weaving on its state-of-art manual looms and its organic dyes attracted buyers from
all over the world for centuries. India saw the building up of textile capabilities,
diversification of its product base, and its emergence, once again, as an important
global player. The Indian Textiles Industry has an overwhelming presence in the
economic life of the country. Apart from providing one of the basic necessities of life,
the textiles industry also plays a pivotal role through its contribution to industrial
output, employment generation, and the export earnings of the country. It contributes
about 14 per cent to industrial production, 4 per cent to the GDP, and 17 per cent to

7
the country's export earnings. It would provide direct employment to over 35 million
people by 2010, which includes a substantial number of people from less privileged
sections of society.

In India, weaving and yarn making was started four thousand years ago.
Industrial revolution was started in 18 th century. At the same time all the industries
were developed. In India, textile industry was started by British in late 18 th century
with large machinery and technology. Indian textile and garment makers target 15-
20% growth in FY’14.

Exhibit No.: 1.1 Structure of Textile Industry in India

Indian textile
Industry

Man-Made Silk Cotton Textile Woolen Jute

Decentralized
Sector Organized Sector

Cotton Mills
Handlooms Powerlooms (Private, Public &
(Cloth) (Cloth)
Co-operative)

Spinning Mills Composite Mills

(Yarn) (Yarn & Cloth)

Mills, power looms and handlooms constitute three independent sectors of the
Indian textile industry. The mill sector is organized, mechanized and modernized
production of yarn whereas the power loom and handloom sectors have remained
technologically backward and stagnant. Almost all the spun yarn made in India come
from the organized sector, reflecting the highly capital intensive nature of yarn
spinning.
The power loom industry produces a wide variety of cloth, both grey as well
as processed. Production of cloth as well as generation of employment has been
rapidly increasing in the power loom sector. There are 22.38 lakh power looms in the
country as on 31st December, 2009 distributed over approximately 5.03 lakh units.
This is about 60.39 percent of the total looms in the world. The power loom sector
contributes about 62 percent of the total cloth production of the country, and provides

8
employment to about 55.95 lakh persons during the year 2008-09. As an economic
activity, handloom is the 2nd largest employment provider next only to agriculture.
The sector with 60.40 percent about 35 lakh handlooms provides employment to 65
lakh persons, of which 60.40 percent are women and 35 percent belong to minority
section of the society.
The textiles sector is the second largest provider of employment after
agriculture. Thus, the growth and all round development of this industry has a direct
bearing on the improvement of the economy of the nation. The Indian textiles and
apparel industry has an unbalanced structure, 95% of the industry is the unorganized
and only 5 % is the organized. Sector consolidation process in certain segments, to
take advantage of economies of scale is necessary. This will generate more
employment, as smaller operations affect cost and competitiveness.
The textile industry is mainly a labour intensive industry as it provides
livelihood to the huge population, mainly consists of unskilled workers, and thus
plays a pivotal role in the development of any economy. As this particular industry
also comes under the basic necessities of human beings, it impacts a lot to the society
as a whole.

There has been increase in demand of textile products in last few decades
globally, mainly due to rapidly changing social and economic structure of the
countries worldwide. In past few years, especially after the removal the trade related
tariffs and non-tariff barriers in 2005, Asian countries such as India, China, Hongkong
and Japan have emerged as major players in this particular industry, Indian textile
industry contributes about 14% to industrial production, 4% to the country's gross
domestic product (GDP) and 16.63% to export earnings. Nearly 40% of the textiles
produced in the country is exported and the textiles sector is the biggest employment
generator after agriculture. The sector is expected to generate 12 million new jobs by
2012. The sector targets US$ 6 billion foreign direct investment (FDI) by 2015 to be
invested in green field units in textiles machinery, fabric and garment manufacturing,
as well as technical textiles.

India has made inroads into the markets of its key competitors which include
Asian countries such as Sri Lanka, Bangladesh, Vietnam and Cambodia. The Indian
textile and apparel industry is taking a new course by entering the Chinese market.
Most of the top global apparel retailers, such as JC Penny, Nautica, Docker and

9
Target, have their sourcing network in India. Indian textiles and apparel exports,
which is worth US$ 22 billion, is expected to register a four-fold increase to touch
US$ 90 to 100 billion in the next 25 years.

1.4 Industry & Market Analysis

The Textile Industry occupies a vital place in the Indian economy and
contributes substantially to its exports earnings. Textiles exports represent nearly 30
per cent of the country's total exports. It has a high weight age of over 20 per cent in
the National production. It provides direct employment to over 15 million persons in
the mill, power loom and handloom sectors. India is the world’s second largest
producer of textiles after China. It is the world’s third largest producer of cotton-after
China and the USA-and the second largest cotton consumer after China. The textile
industry in India is one of the oldest manufacturing sectors in the country and is
currently largest sector.

The textile industry encompasses a range of industrial units, which use a wide
variety of natural and synthetic fibre to produce fabrics. The textile industry can be
broadly classified into two categories, the organized mill sector and the unorganized
mill sector. Considering the significance and contribution of textile sector in national
economy, initiative and efforts are being made to take urgent and adequate steps to
attract investment and encourage wide spread development and growth in this sector.

It is the single largest employer in the industrial sector employing about 38

million people. If employment in allied sectors like ginning, agriculture, pressing,
cotton trade, jute, etc. are added then the total employment is estimated at 93 million.
The net foreign exchange earnings in this sector are one of the highest and, together
with carpet and handicrafts, account for over 37 percent of total export earnings at
over US $ 10 billion. Textiles, alone, account for about 25 percent of India’s total
forex earnings.

India’s textile industry since its beginning continues to be predominantly

cotton based with about 65 percent of fabric consumption in the country being
accounted for by cotton. The industry is highly localized in Ahmedabad and Bombay
in the western part of the country though other centres exist including Kanpur,
Calcutta, Indore, Coimbatore, and Sholapur.

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 The Indian textile industry is one the largest and oldest sectors in the country
and among the most important in the economy in terms of output, investment and
employment. The sector employs nearly 35 million people and after agriculture, is the
second‐highest employer in the country. Its importance is underlined by the fact that it
accounts for around 4% of Gross Domestic Product, 14% of industrial production, 9%
of excise collections, 18% of employment in the industrial sector, and 16% of the
country’s total exports earnings. With direct linkages to the rural economy and the
agriculture sector, it has been estimated that one of every six households in the
country depends on this sector, either directly or indirectly, for its livelihood.

A strong raw material production base, a vast pool of skilled and unskilled
personnel, cheap labour, good export potential and low import content are some of the
salient features of the Indian textile industry. This is a traditional, robust, well
established.

The global textile and clothing industry is estimated to be worth about US$
4,395 bn and currently global trade in textiles and clothing stands at around US$ 360
bn. The US market is the largest, estimated to be growing at 5% per year, and in
combination with the EU nations, accounts for 64% of clothing consumption.

The Indian textile industry is valued at US$ 36 bn with exports totalling US$
17 bn in 2005‐2006. At the global level, India’s textile exports account for just 4.72%
of global textile and clothing exports. The export basket includes a wide range of
items including cotton yarn and fabrics, man‐made yarn and fabrics, wool and silk
fabrics, made‐ups and a variety of garments. Quota constraints and shortcomings in
producing value‐added fabrics and garments and the absence of contemporary design
facilities are some of the challenges that have impacted textile exports from India.
India’s presence in the international market is significant in the areas of fabrics and
yarn. Industry, enjoying considerable demand in the domestic as well as global
markets.

India's Position in Global Textiles and Clothing Industry :

 India's position in the World Textiles Economy Second largest producer of
raw cotton.
 Third largest producer of cotton yarn.

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  Third largest producer of cellulosic fibre/yarn.
 Second largest producer of silk.
 Fifth largest producer of synthetic fibre/yarn.
 Largest producer of jute

India is the largest exporter of yarn in the international market and has a share
of 25% in world cotton yarn exports India accounts for 12% of the world’s production
of textile fibres and yarn In terms of spindleage, the Indian textile industry is ranked
second, after China, and accounts for 23% of the world’s spindle capacity around 6%
of global rotor capacity is in India. The country has the highest loom capacity,
including handlooms, with a share of 61% in world loomage.

Exhibit No.: 1.2 Indian Textile Exports

3
2.46
2.5
1.92
2 1.5
1.5
1 0.56
0.5 0.24
0
spinning weaving processing garmenting others
and made
ups

Indian Textile Clusters:

In India, there are three regions, South, Central and North regions. Tamilnadu,
Karnataka and Andhra Pradesh belong to South region. Maharashtra, Madhya Pradesh
and Gujarat are belongs to Central region, and Delhi, Haryana, Rajasthan and Punjab
belongs to North region. West Bengal and Orissa also contributes to the nation
growth.

Top Textile companies-

 Vardhaman Group
 Nahar
 Arvind mills
 Shanmugvel

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  Madura
 Suryalakshmi Group
 Ramalinga Group
 Lakshmi Group
 LNJ Group
 Rajapalayam

Top companies In India by Market capital:

Table No.: 1.3 Textiles – composite Mills

Company Name Market (Rs. cr)

Nahar 215.91

Maha ShreeUmaid 206.06

Mafatlal Ind 157.42
Ruby Mills 127.07
Lakshmi Mills 117.89
JCT 82.44
Raisaheb Mills 40.91
Source: Ministry of Textile, Government of India.

Table No.: 1.4 Textiles - spinning - cotton blended

Company Name Market (Rs. cr)

Phoenix Mills 2,940.36
Vardhman Text 2,290.83
Forbes Gokak 673.18
Trident 460.04
Rajapalayam 175.55
Ambika Cotton 165.06
Binny 160.36
Indo Count 139.27
DCM 120.87
Morarjee Text 92.47
Ginni Filaments 80.54
Maral Overseas 80.53
Source: Ministry of Textile, Government of India.

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India’s Textile Exports:
India’s textile and clothing industry is one of the main stays of the national
economy. It is also one of the largest contributing sectors of India’s exports
worldwide. The vision statement for the textile industry for the 11th five year plan
(2007-2012), inter-alia, envisages India securing 97% share in the global textiles trade
by2012. At current prices the Indian textiles industry is pegged at US$ 55 billon, 64%
of which services domestic demand. The textile exports basket consist of cotton,
wool, silk, jute, handicraft, coir man- made fiber textiles etc. Further, the export basket
consists of variety of items: cotton yarn and fabrics, wool and silk fabrics, man- made
yarn and fabrics, etc., of which man-made textiles and silk showed the highest growth
rate.

Key Players In The Industry:

In India, most of the companies are giant companies. All the companies are
operating their products and services internationally. Some of them are in the field of
production of yarn and some of them are in Clothing, and some companies export
their products to foreign countries. Their turnover is of minimum INR 100 million.

Arvind mills:

About the company- The Arvind Mills was set up with the pioneering effort of the
Lalbhai brothers in 1931. With the best of technology and business acumen, Arvind
has become a true Indian multinational, having chosen to invest strategically, where
demand has been high and quality required has been superlative. Today, The Arvind
Mills Limited is the flagship company of Rs.20 billion (US$ 500 million) Lalbhai
Group.

Arvind Mills has set the pace for changing global customer demands for
textiles and has focused its attention on select core products. Such a focus has enabled
the company to play a dominant role in the global textile arena. With its presence
across the textile value chain, the company endeavours to be a one-stop shop for
leading garment brands.

Fore vision and Technology has brought Arvind to be one of the top three
producers of Denim in the world, and on its way becoming the Global Textile
Conglomerate. Arvind is already making its presence felt in Shirting’s, Knits and

14
Khakhis fabrics apart from being all set to create ripples in the read y to wear
Garments world over.

Products and Services- They are in to the business of Denim, garments fabrics.
Textiles includes yarn, jute, handmade fabric and apparel.

Products offered by Arvind company are denim, fabric and garments. They
sale their products through different countries with different brand names and with
different pricing strategies.

Services includes international operations and domestic operations. Store

includes Arrow, Flying machine, US polo are the brands of Arvind. Stores are
megamart, they sale through factory outlets, Brand showrooms like US polo, Arrow,
Arvind and flying machine.

Market share- With market share of over 13%, Arvind is the largest player in
domestic market in India.

Market growth- Company has growth rate upwards. Company has turnover of Rs
1200 crore in the current year as the company is growing at a rate of 50 per cent

Key strategies- following are the key strategies

 Products are having premium quality, and they market only in hyper
market.
 They charge Premium prices on products and best suits for loyal
customers.
 Promotion done through television, Internet and Ads.
 Distribution channel includes dealers, direct showrooms, factory
outlay’s, Retail showrooms.

1.5 Environmental Study - PEST

A PEST (Political, Economic, Social and Technological) analysis is a major

part of the environmental scanning section of strategic management and it is used by
companies during market research and strategic analysis.

15
 Using a PEST analysis helps a business to understand various macro
environmental factors that they need to take into consideration when determining the
decline or growth of a particular market.

What does PEST stand for?

Political- This refers to the ways in which the government can intervene in an
economy in terms of environmental and labour laws, tariffs, trade restrictions and tax
policies. It also shows how a government can influence education and health and how
it will affect the infrastructure of a country.
Economic- This refers to how exchange rates, inflation rates, interest rates and
economic growth will impact on a business and how it can grow, develop and make
various decisions. For example if a business exports goods these operations can be
greatly affected by exchange rates and these are factors that need to be included in a
business’s strategic management plan if they are to succeed.
Social- These factors refer to how a society behavio urs culturally, how the population
rate will grow, how health-conscious people in a country are, how its range is
distributed in a country and the various attitudes that people have towards their
careers. When social trends change it can greatly affect the need for a business’s
products or services. Similarly if a society has an older population the cost of labo ur
will increase and a business will need to change their management strategies in order
to cope with these changes.
Technological- This refers to how technology can change and looks at automation,
R&D activity and technological incentives that are available. Technology can also
have a great impact on efficient production levels and influence decisions on
outsourcing. In addition to this there are some changes in technology that can affect
the costs that a business needs to meet and can improve the quality of a product or
service that a business offers.
Pest Analysis Of Textile Industry:
Political (legal) aspects- An Industry will not be able to gain success, good reputation
and trust if it will not consider legal and political sector as part of their strategy.
Political and legal sectors include the needs of the company to follow the given
policies and regulations of the government in order to be considered as legal and
authorized business company. In this manner, industry should be able to consider

16
political and legal aspects so as to show that they value the policies and regulations of
the government in any of the business operations.
 Tax policy
 Employment laws
 Political stability
 Environmental regulations
 Trade and tariff restrictions

Economic aspects- It is important that apparel must also give enough attention to its
economic stability. The economic goal of a certain industry is like an axis in which
other objectives or goals are revolving. The economic factor involves the context in
which an industry belongs, i.e. the configuration of the competition in which a
company operates the active demand of the products, general economic condition of
the nation or region, conditions in relation with other industries, and the sit uation of
the resource markets.
 Economic stability
 Economic growth
 Interest rates
 Inflation rates
 Exchange rates

Socio-cultural sector- Society and culture is an important factor that must be given
emphasis by any business, specifically those who are operating in the global arena. It
is important that the company must operate in compliance with the social systems in
order to gain good reputation and effective public image. On the other hand, cultural
aspects is equally essential, in order to understand the various needs of different
individuals that belongs to different cultures.
 Population growth rate
 Age distribution
 Career attitudes
 Consumer behaviour
 Religion and culture itself

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Technological aspects- The complexities of achieving business success through
increased efficiency, effectiveness and competitiveness, combined with innovative
applications of modern technology, has heightened the awareness of both technology
and business managers towards more strategically oriented approaches for planning
and management of any industry. Hence, it is important that industry must be able to
give consideration to the technological aspects.
 Distribution and communication channels
 Technology incentives
 Automation
 Rate of technological change
 Environmental and ecological aspect
 Barriers to entry
 Production level
 Outsourcing decisions

Here we analyse the sector's dynamics through Porter's five- factor model. The
Indian textile industry is one of the oldest and most significant industries in the
country. It accounts for around 4 per cent of the gross domestic product (GDP), 14 per
cent of industrial production and over 13 per cent of the country's total export
earnings. In fact, it is the largest foreign exchange earning sector in the country.
Moreover, it provides employment to over 35million people. The Indian textile
industry is estimated to be around US$ 52 billion and is likely to reach US$ 115
billion by 2012. The domestic market is likely to increase from US$ 34.6 billion to
US$ 60 billion by 2012. It is expected that India's share of exports to the world would
also increase from the current 4 per cent to around 7 percent during this period.
Textile industry provides one of the most fundamental necessities of the people. It is
an independent industry, from the basic requirement of raw materials to the final
products, with huge value-addition at every stage of processing. In fact, it is estimated
that one out of every six households in the country directly or indirectly depends
on this sector. Here we analyse the sector's dynamics through porter five – factor
model.

18
1.6 Market Forces - Porte r's Model:

Threat of new entrants- Indian Textile Industry is very dependent on personal contacts
and experience. The new actors would have to bring some kind of client base
along with the new establishment. Product differentiation may constitute a barrier of
entry as manufacturers are heavily dependent on references and word of mouth.
Without any established client portfolio it is difficult to attract, endure increased costs
in creating sample collections to show potential customers. Hence, in start- up phase
costs are not only associated with the manufacturing required but also with the costs
for designers and creating samples. In the sense of reference dependency, barriers of
entry are considered as very strong. As the new entrant has limited experience in
textile manufacturing and there are no built up relationships with customers, they
might experience disadvantages relative to the established competitors. Governmental
policies do affect the business environment to some extent. An example of this is
subsidies, which are offered to Companies establishing production in certain regional
areas. In addition to these potential barriers of entrance, new entrants may have
second thoughts about entering the new market, if existing manufacturers may
retaliate on new entrants. The Indian textile industry though, has such a large
population of manufacturers so any new actors may hardly be noticed by the
competition, which minimizes the risk for retaliation.

Bargaining power of customers (demand scenario)- Global textile & clothing industry
is currently pegged at around US$ 440 bn. US and European markets dominate the
global textile trade accounting for 64% of clothing and 39% of textile market. With
the dismantling of quotas, global textile trade is expected to grow (as per Mc Kinsey
estimates) to US$ 650 bn by 2010 (5 year CAGR of 10%). Although China is likely to
become the 'supplier of choice', other low cost producers like India would also benefit
as the overseas importers would try to mitigate their risk of sourcing from only one
country. The two-fold increase in global textile trade is also likely to drive India's
exports growth. India's textile export (at US$ 15 bn in 2005) is expected to grow to
US$ 40 bn, capturing a market share of close to 8% by 2010. India, in particular, is
likely to benefit from the rising demand in the home textiles and apparels segment,
wherein it has competitive edge against its neighbour. Nonetheless, a rapid slowdown
in the denim cycle poses risks to fabric players.

19
Bargaining power of suppliers (supply scenario)- India is a country where we have
numerous players in textile industry which all are varied in terms of size and power.
There has been increase in production and supply of textile products in last few
decades globally, mainly due to rapidly changing social and eco nomic structures of
the countries worldwide. In past few years, especially after removal the trade related
yariffs and non tariff barriers in 2005, Asian countries such as India, China,
Hongkong and Japan have emerged as major players in this particular industry,
mainly due to their changes on economic front and infrastructure developments.

The large number of available suppliers in India gives an initial indication of a

weak bargaining position for the supplier group.

Additionally, the supplier group lacks switching costs and has a low level of
product differentiation. This leads to great possibilities for textile manufactures to
scout the supplier group for the best terms and prices for production. As a result,
manufacturers can contact a large number of suppliers and play suppliers against each
other. Such behaviour weakens the bargaining power for suppliers and as a result
pushes prices down and makes prices similar among suppliers.

An advantage which the Indian group have capitalized on is, Due to t heir
ability to integrate forward in value added chain, they have achieve a better
bargaining towards textile manufacturing.

As previously seen, companies in the textile and apparel sector have

established forward to create vertically integrated company groups. Deep
relationships between manufacturers and suppliers illustrate how important the textile
manufacturing industry is for the supplier group. An example of this is how suppliers
and manufacturers interact in activities such as research and developme nt (R&D). By
this process the supplier obtains knowledge on what customers downstream in the
value added chain demands.

Threat of substitute products- When using such a broad terms as textile, there are
obvious reasons for identifying substitute product groups proves difficult.
Of course, there are variations in types of clothing and material. Variations in
textile segment can also be identified as trends in fashion and styles.

20
Competition revolutionary- The textile manufacturing industry has numerous
manufacturers. It is a massive sector with thousands of companies located mostly in
Asian region. High growth rate of textile exports indicates that the rivalry between
manufacturers is low. The growth rate is high in some product segments but even
negative in others. Hence, the rivalry between apparel manufacturers is diverse since
they enjoy different growth rates.
Additionally, textile as a perishable product group is in the risk of temptations
to cut prices when demand slackens. For example, when there are recessions in the
business cycle apparel prices will drop significantly in price. Both these factors
exemplify and indicate that the rivalry between manufacturers is high.
As Indian apparel manufacturers are pressured to lower prices in order to stay
competitive with companies abroad, the overall rivalry within the industry gets
companies to expand their customer base in order to keep profits up. It is therefore
reasonable to believe that such expansions may occur on the behalf of competitors if
possible, and thereby increase the rivalry in the industry.

21
 CHAPTER II

ABOUT THE ORGANIZATION

2.1 Background Of The Organization

It was in the year 1962 Mr. L.N.Agarwal started Suryalakshmi Cotton Mills,
with 6,000 spindles to manufacture world class cotton and blended yarns. It was a
giant group divided into four companies in four decades.

Suryalakshmi Cotton Mills is headquartered at Secunderabad, Andhra

Pradesh. Suryalakshmi cotton mills ltd was started in the year 1987 at Amanagallu,
Mahabubnagar (Dist), Andhra Pradesh. It manufactures Polyester, Cotton and
Blended yarn. The Mill has capacity of 61008 spindles to manufacture cotton,
polyester and blended yarn. This business accounted for 41.6% of the Company’s net
sales in 2012-13.

It manufactures Cotton yarn, Polyester and Blended yarn with well and
updated machines. Most of the yarn goes for export and includes USA, Europe and
Asia countries.

Two manufacturing units have latest machinery in every section. It has been
maintaining a Quality control lab to check the quality of sliver and yarn produced at
different levels.

The Company enjoys a high promoter’s holding of 64.22% and is listed on the
Bombay and National Stock Exchanges with a market capitalisation of INR 87.13 Cr
as on March 31 2013.

SCML spent about INR 40 Cr on modernisation of its units in the past. A

100% export-oriented spinning mill with a capacity of 10000 spindles was set up at
Andhra Pradesh at a cost of INR 70 Cr. The company exported its products to highly
quality-conscious markets like Spain and Belgium and has established its presence in
Bangladesh and Korea. In 1995-96, first phase of denim project at Ramtek,
Maharashtra, for INR 113.10 Cr was set up, and the project was financed with foreign
currency loan of INR 54.46 Cr, rupee term loan of INR 10.03 Cr and rights cum
public issue of INR 40.56 Cr in September 1996. To restructure its debt the company

22
has to issue Cumulative Preference Shares to IDBI for Rs.4.00 Cr and to IFCI for INR
2.72 Cr.

The Company’s major production comprises synthetic blended yarn,

consuming raw materials like polyester staple fibre, viscose staple fibre and raw
cotton. The raw material requirement is sourced from Reliance Industries (PSF) and
Grasim Industries (VSF). The Company sourced a majority of its raw materials from
within 400 km.

The Company maintained good relationships with customers and big brands,
nearly 50% of who have been with the Company for nearly five years.

The Company invested in cuttingedge equipment which comprised Trutzschler

blow-room lines and cards, Lakshmi high- speed combers, autoleveller draw frames
and speed and ring frames. The Company imported Schlafhorst and Murata
autoconers as well as an Elgi Welker yarn conditioning unit, which resulted in the
production of high quality yarn.

It produced 10 million meters per annum. Now it is producing 40 million

meters per annum across 15 years and has emerged as a major India Denim
manufacturer. It commissioned a one-of- its-kind garment unit with an installed
capacity of 5000 garments per day in 2007 under a subsidiary called Suryalakshmi
International Ltd. It also has a power plant Maharashtra and supplies power to Denim
manufacture unit.

SCML is recognised as an export House by the Government of India.

Manufacturing units are certified by ISO 9001:2000 and 14000.It is certified for Oeko
Tex Standard 100 product Class II to 31st December 2013.

2.2 The Mission, Vision & Corporate Goal

Mission: The mission of Suryalakshmi Cotton Mills is to empower the dominance of

the Organization in the Indian market and develop and expand strong presence in the
International market. Our products, operations and services, are globally benchmarked
against the best.

Vision: Through an integrated system of tools, techniques and training, Suryalakshmi

constantly thrives to achieve and maintain the highest quality parameters in most

23
versatile processes constant process of continuous improvement and development of
its own processes keys to the consistency of the company’s survival and success over
a period.

Corporate Goal: Suryalakshmi has a target of INR 1000 crore turn over by 2014. It
is trying to achieve a dominant position in export of yarn. Manufactures a world class
blended yarn of export quality.

2.3 SWOT Analysis

SWOT analysis is a structured planning method used to evaluate Strength,

Weakness, Opportunity and Threat involved in a business or project. It can be carried
out for product, place Industry and firm. It involves specifying the objective of the
business or project and identifying the internal and external factors that are favourable
and unfavourable to achieving that objective.

Strengths- Characteristics of the business that give it an advantage over others

 Abundant raw material

 Low cost skilled labour
 Presence across the value chain
 Growing domestic market
 Strong backward integration
 Top ten largest yarn manufacturers as well as the largest area under cultivation
 Increasing presence across entire value chain
 Cheap and skilled manpower
 Sharp reduction in borrowing costs.
 Recent Government efforts to promote the Industry.
 Truly vertically integrated from raw material to finished products.
 Steadily diversified its raw material base to include man- made fibres such as
Polyester, viscose, acrylic, polypropylene etc. as well as other natural fibres
 Flexible in terms of production quantity and lead time.

Weakness- Characteristics that place the business at a disadvantage relative to others

 Effect of historical government policies
 Cost competitiveness

24
  Tech obsolescence.
 Caters mainly to the low-end class.
 Low level of training.
 Delay in delivering the goods at the right time.
 Lack of economies of scale and advance processing capabilities.

Opportunities- Elements that business could exploit to its advantage

 Huge demand for value added goods in all major countries.
 Relocation from high cost economies.
 Large and relatively untapped domestic market
 Large Indian expatriate community. Hence there is large demand for Ind ian
Garments.
 Rate of import duties is minimal.
 Bilateral Agreements on Avoidance of Double Taxation and Prevention of
fiscal Evasion with respect to taxes on income and capital has further opened
The Opportunity for higher export for the garment sector.
 Extensive commercial interactions have greatly helped in laying the
foundation

Threats- Elements in the environment that could cause trouble for the business.
 Domination of large firms in the Industry, Threats from the new entrants
 Not well educated labours, half the machines are not upgraded.
 One machine gives only one type of yarn. If requirement is high, takes more
time to produce a specific type of yarn.

2.4 Product & Se rvice Mix

Two decades ago, use of 100% cotton yarn was high. Now-a-days, most of the
companies are manufacturing blended yarn. It is different combinations of Cotton,
Polyester and Viscose. According to requirement, they make different types of yarns.

Most important types of yarns are PC (Polyester, Cotton), PV (Polyester,

Viscose) and PY (Polyester yarn). The combination of PC is 50-50, PV is 65-35 and
PY is 96-4 percentage respectively. Manufactured yarn goes to western countries.
USA and Europe countries are clients for this yarn. Depending on requirement, they

25
manufacture different counts of yarns. The count ranges from 15’s count to 40’s count
and used for cloth and sewing and weaving.

Products- First they purchase raw material from companies and suppliers in large
quantity. Depending on orders they get from other companies, manufactures products.
Details of product specifications have given below.
 PC (polyester-Cotton) (50-50)
 PV (Polyester-Viscose) (65-35)
 PY (Polyester Yarn) (96-4)

The output of this firm is only yarn. But size of yarn is different. It depends on
our requirement. Various counts of yarn are

 15s PV, 30s PV

 26s Pc, 30s PC
 30s PY, 21s PY & 20s PY

Services- Company has customers all over the world. Most of the yarn manufactured
is of export quality. So they offer high quality of services to foreign companies on
conditions. More services of company are International operations and Indian
operations are very less because of competition.
Customers of SCML in the world are,

USA EUROPE
VF M&S
LEVI’s C&A
WALMART ASDA
PERRY ELIS GEORGE
JONES INTERNATIONAL NEXT
KOHL’S VF
DKNY MISS SIXTY
JC PENNY MANGO
CARREFOUR
SAINSBURY
MOTHERCARE
TESCO

26
2.5 Target Markets

The consumers a company wants to sell its products and services to, and to
whom it directs its marketing efforts. Identifying the target market is an essential step
in the development of a marketing plan. A target market can be separated from the
market as a whole by geography, buying power and demographics, as well as by
psychographics.

Not all products and services are meant for all types of consumers. In fact,
companies may tweak certain aspects of a product, such as the amount of sugar in a
soft drink, so that it is more likely to be purchased by consumers with varying tastes.
Creating the target market may require the use of limited product roll-outs and focus
groups, allowing product managers to get a feel for which aspects of the product are
the strongest.

Most of the yarn produced in spinning mill has export quality. So they target
only on foreign markets. Those markets are USA and EUROPE countries. The yarn
produced is of premium quality and gives a good quality of cloth after weaving.
Those markets are hyper markets and can afford to pay a premium on different types
of yarn.

In Global market, Asian countries have well reputation for their quality of
yarn and clothes. 72% of yarn from Asian countries exports to western countries.
Because quality of cotton cropped in Asian has good quality. Viscose and Polyester
also have demand in Global market. Textile industry was highly developed in south
and north regions in the world. In Europe, cotton is not a major agriculture product.
So they import yarn to weave cloth.

Advance Technology and skilled labour, low cost for manufacturing yarn are
the reasons to quote the lower price for products. So the production is increasing.
These reasons influence company to export products to foreign where the cost of yarn
is high.

Suryalakshmi Cotton Mills markets products within India and more than 20
countries Israel, Panama, Egypt, Bangladesh, Sri Lanka, Indonesia, Mauritius,
Singapore, the UK, Guatemala, Syria, Taiwan, Turkey and the USA.

27
 At Suryalakshmi Cotton, this engagement with large and prominent brands
represents the cornerstone of its strategy. Over the years, the Company has selected to
work with prominent international brands like VF Corporation, Levi’s, Wal-Mart,
Perry Ellis, Jones International, M&S, C&A, ASDA, George, Next, Miss Sixty,
Mango, Otto, Carrefour and Sainsbury, among others.

The advantage of working with these large, prominent and demanding clients
is that competition at this level is relatively limited on account of the high quality
standards required;

Besides, the space is marked by capability- led competition over price-based

differentiation; the business is marked by the ability to introduce high-end innovation
and solutions as opposed to mere product delivery. The result of this strategy was
evident in a challenging 2012-13: the Company’s average yarn realisations
strengthened 8.91% even as average denim realisations decreased 4.07% due to
volatile market conditions. Validating the point that strong customer relationships
represent an effective insulation from market volatility.

2.6 The Balanced Score Card Approach

A framework that translates an organization's strategy into a set of objectives
and measures and aligns the organization to them through its planning and control
processes.

Nine out of 10 organizations fail to execute their strategies. Research has shown that
70% of organizations that use a formal process to manage strategy out-perform their peers by:

 Growing Revenue
 Gaining Customer Loyalty
 Strengthening Employee Commitment
 Optimizing Resource Allocation
 Reducing Cycle Times
 Managing Risk

All these are reasons for the Organization to become a good Organization. This can be
analysed very well by Balance Score Card Approach. It has given below.

28
 Exhibit No.: 2.1 Balanced Score Card

Financial:
Objectives- To generate revenue of 10% more than the previous year and so on.
Company tries to become financially strong to get the things done on time.

Measures- It can be measured through increasing the sales and services. If there is a
reduction in the internal process such as rework, scraps, etc. which will help the
organization to earn more on their financials and good income.

Targets- Targets are to increase the sales of the company, expand the services of the
organization. Reduce as much as possible in the manufacturing process such as
scraps, wastages, etc. Make the required budgeting using the budgeting control
techniques.

Initiatives- If new technology is implemented it will help the organization to reduce

the cost per product produced, use of man power and methods which use to control
them, i.e. few enterprise level initiatives, if implemented would also help the
organization to grow in their financials. Increasing the distribution network would
also help the organization to grow.

29
Inte rnal Business Process:

Objectives- To implement a 100% EOU setup. Reduce defects to minimum which

will help in reducing the scraps, wastages, and rework. It is to meet international
quality standards.

Measures- To identify suppliers & reduce rework.

Targets- To implement the international process of doing things will help in achieving
the international standards and the quality of the goods, help in reducing scraps,
rework, etc.

Initiatives- To search for the world class suppliers, huge supply network, importing of
good quality machinery for enhancing the growth.

Learning And Growth:

Objectives- To become the market leader in exports of yarn in next 5 years.

Measures- Own experience of the employees from or with fellow employees will help
them to grow in the organization & to grow in the organization hierarchy.

Targets- Quality assurance department of the organization will help them to

manufacture good quality of yarn.

Initiatives- It can be achieved through expanding distribution of the goods, connecting

to new buyers in the market and manufacturing the goods through fixed international
standards.

Custome r:

Objectives- 100% customer satisfaction.

Measures- Through proper market research, through feedback form, customer

response can be recorded and can be looked upon.

Targets- To achieve customer satisfaction, to give proper quality of products and to

serve after sales and service. It is to manufacture a premium quality of world class
yarn.

30
Initiatives- Market research, Feedback form can be used to get the proper idea about
the customers. On time delivery of the goods as per the deadline allotted.

31
 CHAPTER III
THE ORGANIZATION STRUCTURE
3.1 Organization Structure – An Introduction

Organization design is not simply about mapping out an Organizational

structure, but also about how the organization is aligned with all other aspects,
functions, processes and strategies within the business. When looking at organization
design, the context within which the business exists must be taken into consideration.

An organization is ‘a person or group of people intentionally organised to

accomplish an overall, common goal or set of goals’.

Organizations are social entities that are goal-directed, designed as

deliberately structured and co-ordinated activities systems, and linked to the external
environment. On the basis of relationship, an organization may of two types—formal
and informal.

Formal organization refers to the structure of well-defined jobs, each bearing a

definite measure of authority, responsibility and accountability.

Informal organization refers to the relationship between people in the

organization based on personal attitudes, emotions and prejudices, likes and dislikes.

There are five common forms of organization structure—Line, Functional,

Line and Staff, Committee and matrix organization.

Line organization: In this, there is a chain of authority which flows from upward to
down word.
Advantages- Main advantages of this form of organization are:
 Simple,
 Fixed responsibility,
 Flexibility,
 Prompt decision,
 Unified control,
 Well-defined authority,
 Fixed channel of promotions.

32
Disadvantages- The system claims the following disadvantages:
 Unitary administration,
 Overloading with work,
 Lack of specialization
 Lack of communication
 Succession problem,
 Absence of conceptual thinking,
 Favourites,
 No co-ordination.
Functional organization: In this form of organization all activities in the
organization are grouped according to the basic functions, i.e., production, finance,
marketing, headed by a specialist. The size of each department varies according to
business needs. For example, most manufacturing organizations have a large
production department compared to the size of other functions. Some organizations
merge sales and marketing. The general point is that such a structure allows
employees with specialist skills to deploy these to their best abilities.
Functional organizational structures work best when the organization or
business unit is self- contained, such as a small company or an autonomous unit, such
as a subsidiary company. The downside of this type of structure is the easy
development of a ‘silo mentality’, by which issues escalate rather than enabling lateral
communication to be brought to bear in order to solve problems.
Advantages- Main advantages of this form are:
 Specialization,
 Large-scale production,
 Improved efficiency,
 Flexibility,
 Better industrial relations,
 Separation of mental and physical functions.
Disadvantages- Following are the disadvantages of this form of organization:
 Multiplicity of authority,
 Indiscipline,
 Shifting of responsibility,
 Lack of co-ordination,

33
  Impracticable,
 Delay in decision making.
Line and Staff Organization: In this form of organization the structure is basically
that of line organization but functional experts are appointed to advise the line
authority in their respective field.
Advantages- following are the advantages of this firm
 Advantages of the line and the functional organizations,
 Specialization,
 Sound decisions.
Disadvantages- following are the disadvantages of the firm
 Conflicts between the line and the staff executives,
 Advice of the staff executives is ignored,
 No demarcation of authority,
 Lack of responsibility,
 Uneconomical.
Committee Organization: Committee is a group of individuals formed permanently
or temporarily for a particular purpose through free interchange of ideas.
Advantages- following are the advantages of the firm
 Pooling of ideas,
 Co-ordination,
 Motivation through participation,
 Representation of interest groups,
 Easy communication,
 No concentration of power,
 A tool of management for development.
Disadvantages- following are the disadvantages of the firm

 Slow decisions,
 Divided responsibility,
 Minority tyranny,
 Other abuses.

Project or Matrix Organization: In it authority flows vertically within functional

departments.

34
 A matrix structure is one which sets out to reconcile the competing demands
of customers and the need for a strong bureaucratic and efficient functional presence.
This type of structure is commonly observed in organizations which are highly
project-based – for example, civil engineering companies.
Obviously, there are greater tensions between the requirements of different
projects and functions, but the idea is to enable employees to locate themselves within
a strongly multi-project environment.

Advantages- It emphasizes multiple inter-dependence among various functions,

horizontal relationships and operational flexibility.

Disadvantages- It is of a temporary nature.

3.2 The Present Organization Structure

Company has 8 directors. Two of them are managing directors. A typical

Organization structure of Suryalakshmi cotton mills has shown here. The
Organization has vice-president as Head. Next to him, General Manager and Asst
General Manager are there. AGM is HR in this organization.

Vice-President is common for two Mills. He also holds purchasing

department. GM maintains unit-II in the Mill. AGM and HR, both have hold by one
person.

Each department has HOD. They monitor functions involved in their

department. Next to HOD, a person In-charge takes care of work and it also has
person to maintain persons.

In production department, there are 3 departments. They are preparatory,

spinning and post-spinning. Each department has one production and one
maintenance head. Production heads takes care of production or processing.
Maintenance heads takes care of operation and functioning of machinery.

Quality control department has a manager. He directs all the staff and
technicians in laboratory. Under this department a lab has been maintaining by
manager for the quality checking of yarn manufactured. Mill has two labs in two
units. A team of 25 members are working in two laboratories.

35
 Maintenance department handles machinery. Staff involved in maintenance
department works for full day in shift basis, because machinery has to run
continuously. They check machines for every two hours.

Electrical department is very much important in this Mill. Any power

problems make production go down. To avoid leakage of power, short-circuit and
similar problems, they also work continuously.

Exhibit No.: 3.1 The Present Organization Structure

Vice
President

Gm Agm - Hr

Productio Maintena
Office Quality Electrical
n nce

Hod Hod Hod Hod Hod

Officer Officer Officer Officer Officer

Assistant Assistant Assistant Assistant Assistant

Workers Workers Workers Workers Workers

Suryalakshmi cotton mills presents only in India. Head office of Suryalakshmi

cotton mills located in Secunderabad. All operations are doing from their only. Their
units are in Maharashtra and in Andhra Pradesh.

3.3 Review of The Existing Organization Structure

A review of Organization structure and its performance is done through the

principles of management.

14 Principles of manage ment:

1. Division of work- Work should be divided among individuals and groups to

ensure that effort and attention are focused on special portions of the task.

36
 Fayol presented work specialization as the best way to use the human
resources of the organization.

In SCML, work divided into categories. Each of them work individually.

Groups will be formed according to requirement.

2. Authority- Managers must be able to give orders. Authority gives them this
right. Note that responsibility arises wherever authority is exercised.

In the factory, there are managers give order to supervisors regarding

quantity and quality of production and supervisors give order to workers.

3. Discipline- Employees must obey and respect the rules that govern the
organization. Good discipline is the result of effec tive leadership, a clear
understanding between management and workers regarding the organization's
rules, and the judicious use of penalties for infractions of the rules.

Coming to discipline, workers in the Organization are well, though they

are not well educated.

4. Unity of command- Every employee should receive orders from only one
superior.

There are different stages in production, so only one representative of each

stage gives commands to workers.

5. Unity of direction- Each group of organisational activities that have the same
objective should be directed by one manager using one plan.

Most experienced employees are working in the Organization for more

than 20 years. So they have good respect towards each other. They
follow the objective directed by manager,

6. Subordination of individual interests to the general interest- The interests of

any one employee or group of employees should not take precedence over the
interests of the organization as a whole.

37
 They take the information from all the employees, and make decisions on
their interests as a whole.

7. Remuneration- Workers must be paid a fair wage for their services.

Workers are getting good salary. But supervisors are not getting enough
salary.

8. Centralisation- Centralisation refers to the degree to which subordinates are

involved in decision making. Whether decision making is centralized (to
management) or decentralized (to subordinates) is a question of proper
proportion. The task is to find the optimum degree of centralisation for each
situation.

Decision making is centralized in most of the situations. Only few

situations like welfare of workers decision making process involves
subordinates.

9. Scalar chain- The line of authority from top management to the lowest ranks
represents the scalar chain. Communications should follow this chain.
However, if following the chain creates delays, cross-communications can be
allowed if agreed to by all parties and superiors are kept informed.

Cross communication takes place in the Organization.

10. Order- this principle is concerned with systematic arrangement of men,

machine, material etc. there should be specific place for every employee in
organization.

Systematic Order is there in the Organization.

11. Equity- Managers should be kind and fair to their subordinates.

Yes, managers are kind enough and fair to the subordinates.

38
12. Stability of tenure of personnel- High employee turnover is inefficient.
Management should provide orderly personnel planning and ensure that
replacements are available to fill vacancies.

Replacements are not available.

13. Initiative- Employees who are allowed to originate and carry out plans will
exert high levels of effort.

Employees in the Organization have no chance to originate and carry out

the plans.

14. Esprit de corps- Promoting team spirit will build harmony and unity within
the organization.

It doesn’t happens in the Organization.

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 CHAPTER IV

BUSINESS / UNIT LEVEL ANALYSIS

4.1 Purchasing Function

Materials purchased - with specifications: The firm is involved in manufacturing

and processing of cotton, polyester and viscose fibres into PC, PV and polyester yarn
with fully equipped Machinery and advance technology.

Suryalakshmi cotton Mills purchases cotton, viscose and polyester bales. They
purchase tones of cotton, polyester and viscose at a time.

Suppliers of materials: SCML purchases material from different Suppliers. They

purchase Cotton from Adilabad, Andhra Pradesh, Viscose from Karnataka, and
Polyester from Reliance India limited, Surat, Gujarat respectively.

Supplier selection procedure: The firm has following criteria to select the suppliers
of materials. They are:

 They should be able to deliver the raw material in time and in large quantity at
a time.
 They carry material from suppliers to the Mill as per the requirement and
orders given by the Head Office and Factory.
 Company gives contract to some contractors.

Purchasing schedule: The firm purchases the raw material from the large suppliers in
huge quantity. The main and important reason behind this is Textile Industry is the
big Industry in India. No. of competitors are there. If there is delay in placing an
order, we won’t be getting material when require. Good quality of material goes to
some other manufacturer in the same field.

Cotton comes in the month of January. Polyester and Viscose purchases as

they required. Customers need different types of yarns as per their requirements. So
they purchase and manufacture on the basis of order taken by company.

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Purchasing decision - steps involved and people involved:

While purchasing raw material, decision taken by head office and staff. The
purchasing decision involves following steps:

 Some are engaged in offering a wide range of Raw Cotton which is available
in the market at highly competitive prices.
 The factory manager along with his assistant undergoes the testing of the
cotton bales by keenly checking the cotton bales as they have the idea of
verities of cotton because of their experience.
 The acceptance of cotton, viscose and polyester is done if the quality of
material is 100% and if it’s below then they are rejected.
 The cotton, viscose and polyester should be dried enough for further process
and in rainy season, discount is given by suppliers as those materials contain
water in higher quantity when compared to that of other seasons.

Terms and conditions for suppliers:

The following are the terms and conditions applied for the suppliers of cotton:

Order- Once you have selected one of our products, you have to select the s ize(s) that
you wish to order. The selected product can then be transferred to your
shop/company.

 Then you have to enter your shipping address and contact information.

 After placing an order, you will receive an e- mail from us confirming that we
have received your order. Please note that this does not mean that your order
has been accepted. Your order constitutes an offer to purchase the selected
products on the basis of these terms and conditions. All orders are subject to
acceptance by us, and we will confirm such acceptance by sending you an e-
mail that confirms that the products have been shipped - the “Shipment
Confirmation”.

 The purchase will only relate to those products which we have confirmed in
the Shipment Confirmation. We will not be obliged to supply any other

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 products which may have been part of your order until the shipment of such
products has been confirmed in a separate shipment confirmation.

 Your purchase will be fulfilled by the delivery date set out in the Shipment
Confirmation. If the Shipment Confirmation does not specify any date, then
we expect to deliver within 7 days of the date of the Shipment Confirmation,
unless there are exceptional circumstances.

 A contract takes place between supplier and company for some years.

Payment- Payment can be done by,

 By credit & debit cards - Accept all major credit and debit cards. Please note
payment is taken at point of sale in rupee at your bank provider’s. Orders can
be placed via website using a credit card where billing and delivery address
match. This is to protect you from the increased threat from Internet and
Credit Card fraud.
 Payment can also be done in cash check and DD.

Inspection of purchased mate rial:

As there are not many raw materials purchased, but it goes into inspection.
Inspection is done by the factory manager of Quality Assurance department by
himself at the time of purchasing of raw material along with his assistant who helps
him in identifying the quality of cotton, viscose and polyester at the time of
purchasing.

4.2 Warehousing & Inventory Management Function (materials)

There is a separate section for maintenance of raw material. A person called

supervisor is a head of that section. He records all the details of raw material from the
time when it comes.

 How much material is used per day.

 How much material is of waste quality
 How much quantity of material is wasted.
 How much material is leftover.

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  What kind of material needed i.e. cotton, viscose and polyester has to be
purchased and stored in warehouse.
 This material burns very quickly. So they keep it away from fire.

Warehousing receipt and Issue register format:

When material stored in warehouse, receipt and issue register format from
warehouse to production department is maintained and submitted by the supervisor.
Material Handling Function:

List of material involved- In this mill, so many materials are handled by workers. First
they use large cans for storing sliver which comes as output in carding, drawing and
roving.

 Bobbins, doffs and cones are used in spinning, auto coner and in packaging.
 UV lamp is also used to cross check the final cones.
 Weighing machines are used to measure the weight of each cone.

Material handling techniques- They handle material very carefully in Mill. Trolleys
are used to carry and move material from one place to another place.

Weighing and measuring devices of material- Following are the weighing and
measuring devices of material. They are:

 For weighing bales, truck weighing machine which has the capacity of 10
tons.
 For finished product, another weighing machine with capacity in kg is there
which is used after completion cones.

Logistics for material handling within the firm- In the firm after every stage of
processing the materials are taken from one place to another place by cans, trolleys
which is set up in such a way that gives the convenience to carry on further process
and saves time and energy. Every can and trolley has wheels so that it makes easy to
work.

Risks involved in material handling- Care is taken in such a way in material handling
that there is risk in material handling. As the weather is so supportive that even
workers don’t feel restless very soon. Working conditions are made so favourable and

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the firm is worker oriented. Workers can’t speak in a Mill because sound from
machinery comes very heavily.

Format of stock register, Format of warehouse inspection record- There is format of

warehouse inspection record as the firm does maintain warehouse because there is
stage where the stock of material stored in the firm.
There is format of stock register maintained as the bales which are bought
from the suppliers on as per requirement. The quantity which is bought by the firm is
standardized and immediately undergoes processing after bought.

All the formats are written and not printed, they use a book for keeping details.

How are the machinery & equipment maintained?

Internal parts of machinery used in factory are timely checked by Maintenance

department head of each section. Every section has one maintenance head and
production head.

What kind of maintenance is implemented?

As cotton manufacturing firm needs to keep its environment clean, hygienic and fire
free, it adopts following method to keep it clean and fire free. In cotton manufacturing
unit, waste material is very less. They take it away from the unit.

Who does the maintenance?

Maintenance is done by factory maintenance department. He has the responsibility to

be in the factory whole day and check the parts of machines periodically and take care
if machines are in good condition or not. Any minute problem which come into his
notice is immediately solves for not making delay in the further production process.

What are the steps taken to increase productivity?

The following are the steps adopted to increase productivity. They are

 Best quality of raw material is used.

 Fully digitalized and automated machinery has been working for more than a
decade.
 A new unit has started.

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  Mill runs for 24 hours and 7 days to hit the target.

What are the steps taken to conserve energy / fuel?

The following are the steps taken to conserve energy / fuel. They are

 Overcapacity of production has not taken in processing which leads to over

consumption of energy at a time.
 Machinery get heat, they maintain RH to control the room temperature. So that
machinery works continuously.

What steps are taken to minimize wastes, scraps / rework?

The following are the steps taken to minimize wastes. They are:

 Continuous monitoring is done to check if there is any problem in any of the

machines and even in conveyer belts.
 Wastage is very less in yarn manufacturing, but disturbance happens from
machinery.
 Processing is a very delicate work yarn production. Wastage comes at every
stage.
 Wastage which comes from machines while processing takes into a cover and
send it back to the store room.
 There workers make this scrap/wastage into no. of pieces and mix it and again
send it to blow room.

Format of Job Card, Format of maintenance record- There is no as such format of job
card or format of maintenance record is maintained in the firm. As maintenance of the
machines and cleanliness of the firm is done on daily basis, the firm was never in the
need of keeping maintenance record.

4.3 Production Function

Production Process:

In production process, PC, PV and PY are produced in different quantity.

Different types of machines for different types of yarn manufacturing. Output is
measured in kg.

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 PC sliver is produced by machines is 32 kg/hour
PV sliver is produced by machines is 48.5 kg/hour
PY sliver is produced by machines is 58 kg/hour
Each type has different rpm, because 100% cotton is very weak compared to
blended yarns. So the different in production happens.
Production process involves 9 steps. They are
 Mixing
 Blow room
 Carding
 Drawing
 Simplex (Roving)
 Spinning (Ring frame)
 Auto coner
 Cone winding
 Packing
Each step mentioned above is explained below in detail.

Mixing- This is the first step in manufacturing of yarn in Mill. In this stage first we
open bales of cotton, viscose and/or polyester as per our requirement. A machine
called Bale Pluker is used in mixing. First we need to keep bales as open. Put them in
sequence order and opens bale by suction process. Combination of 3 raw materials
gives 3 different outputs.

Blow Room- Upon arrival at the mill the cotton bales are opened and loosened. This
helps separate and clean the cotton before it is fed into carding machines. Typically,
mills select bale mixes with the properties needed to produce yarn for a specific end-
use. Processing begins when the bales to be mixed are brought to the opening room,
where bagging and ties are removed. Layers of cotton are removed from the bales by
hand and placed in feeders. The aim is to begin the sequential production process by
converting the compacted layers of baled cotton into small, light, fluffy tufts that will
facilitate the removal of foreign matter. This initial process is referred to as
“opening”. The cleaning machines in mills perform the functions of opening and first-
level cleaning. Dust and impurities are removed and blending takes place.

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Carding- The card is the most important machine in the yarn manufacturing process.
It performs second- and final- level cleaning. The card successively work small
clumps and tufts of fibers into a high degree of separation or openness, remove a very
high percentage of trash and other foreign matter, collect the fibers into a rope- like
form called a “sliver” and deliver this sliver in a container for use in the subsequent
process.

Drawing & Combing- Drawing is the first process in yarn manufacturing that employs
roller drafting. Drafting occurs when a sliver is fed into a system of paired rollers
moving at different speeds. Drawing straightens the fibers in the sliver by drafting to
make more of the fibers parallel to the axis of the sliver. Drawing also produces a
sliver that is more uniform in weight per unit of length and helps to achieve greater
blending capabilities. Weight per unit length of a finisher-drawing sliver is too high to
permit drafting into yarn on conventional ring-spinning systems. Combing upgrades
the raw material by removing the short fibers. Combed yarn is more uniform has
greater shine smoother and pure.
Roving- The roving process reduces the weight of the sliver to a suitable size for
spinning into yarn and inserting twist, which maintains the integrity of the draft
strands. The product is now called “roving”, which is packaged on a bobbin.
Spinning/Ring Frame- Spinning is the single most costly step in converting cotton
fibers to yarn. Bobbins of roving are placed onto holders that allow the roving to feed
freely into the drafting roller of the ring-spinning frame. Following the drafting zone,
the yarn passes through a “traveler” onto a spinning bobbin. The spindle holding this
bobbin rotates at high speed, causing the yarn to balloon as twist is imparted. The
lengths of yarn on the bobbins are too short for use in subsequent processes and are
doffed into “spinning boxes” and delivered to the next process, which may be
spooling or winding. Once the yarn is spun, the manufacturer prepares a correct
package. The type of package depends on whether the yarn will be used for weaving
or knitting. Winding, spooling, twisting and quelling are considered preparatory steps
for weaving and knitting yarn. In general, the product of spooling will be used
as warp yarns (the yarns that run lengthwise in woven fabric) and the product of
winding will be used as filling yarns, or weft yarns (the yarns that run across the
fabric).

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Autoconer- In this stage, all bobbins are put in order, a drum is used to rotate paper
cone with yarn. No. of bobbins come together and gives one big cone of 2.4 kg. Those
empty bobbins go by a conveyer belt. When breakage of thread takes place auto coner
machine automatically adds two parts.
Cone Winding- Here any failed and loose cones are used to wind again to the new
cone.

TFO- It means two for one. Two yarns are used to wind to a cone at a time. Yarn
becomes strong and gives more life.

They produce different sizes of yarn. It is measured in counts. A list shows

output of production

26s PC- 747 kg/day

30s PC - 605 kg/day

30s PY – 800 kg/day

21s PY – 1300 kg/day

20s PY – 1365 kg/day

15s PV – 1680 kg/day

30 PV – 740 kg/day

Efficiency of machinery is 96.5%.

Technology adopted - Indian or foreign:

Technology adopted for manufacturing of yarn is Foreign. Hence this firm is

very old and the technology adopted by them is also foreign.

Up gradation in technology being used:

Technology is used since the beginning of Mill. Recently they constructed

new manufacturing unit beside the old unit. In new unit they are using automated
machinery and have the capacity to maintain self temperature.

Details of Machinery and Equipment used in the firm:

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The following are the details of Machinery and Equipments used in the firm:

Mixing: Bale Plucker

Blow Room: Mbo (Lb3/2), Unimix

Carding: Lmw Lc-333 (4), Lc-300av3 (23), Lmw Lc-300a & Trutzschler Dk-850

Drawing: Breaker Ld-2, Ld 0/6 (6); Finisher D-40, Lrsb851 (8)

Simplex: Lf-1400a (10, 120 Spindles), Lf-4200

Spinning: Lr 6/S (864 Spindles, 28), Lr-9axl (1200 Spindles, 36)

Auto Coner: Muratec-21c (16)

UV Lamp

4.4 Sales & Distribution Function

Sales function is not there in the Organization. This function is maintained by

Head Office located in Secunderabad, Andhra Pradesh. Orders come from other
companies, customers of SCML.

Distribution of stock done by the factory to the customer companies through

logistics. They export products to western countries and small quantity of products
distribute to companies in India.

Pricing, Promotion and Distribution Logistics:

Pricing- Pricing of yarn is done after testing it according to the quality. Samples are
also send to quality assurance board operated auctions and reserve price is given and
after bidding it is sold.
Promotion- Heavy promotion is not done but Suryalakshmi cotton Mills is bid
Company. Yarn is made aware by hosting it through seminars to states like Gujarat,
Maharashtra, Punjab.
Distribution- Distribution of yarn is done through dealers who are spread over
Gujarat, Maharashtra, and Punjab, calcutta and Delhi.
Logistics- Transportation for distribution of cotton and blended yarn is done with
lorry transport like VRL logistics, SRM and commercial cargo movers pvt ltd.

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Branding- The firm does not spend a lot in branding but does a little. First step to
building a brand is engaging the customer on their level. The second step is to
establish a relationship. Many small tea shops do an excellent job of this. The third
step is what separates experiences from brands, and that’s the ability to replicate the
experience. Most tea shops are their own brand, and the only way to replicate the
experience is to return to the shop.
Market research and after sales services:

Market research is given priority as it’s a yarn business. Here the quality is
given importance as a yarn business person knows that the best quality will
automatically attract new customers with reasonable price. Yarn has to be used for
making clothes. So the best quality of yarn go for further processing. Research and
Service after sales is not much important.

4.5 Marketing Function

Every Marketing Manager has the same work. The main motive is to promote
the brand or the product by doing various advertisement campaigns to increase sales
of the company and also make sure that the product satisfies the need of the customer.

In a textile company it won't be any different. The MM needs to understand

the needs of the retailers and the wholesalers and also he needs to understand the
pricing and promoting strategies of his competitors. And accordingly he will do his
promotional activities. If needed he will even have to map new towns and cities to see
if he can promote his product there.

Textile companies usually provide raw materials (unfinished product) to its

buyers. And the buyers are actually not the real consumers. These buyers will then
take these products and make a new product like shirt, pant etc. And then they will
sell it to the market. So the main job of the Marketing Manager (MM) of
Suryalakshmi Mills Textile Company is to identify potential buyers who will further
process their material for better product.

4.6 Human Resources Function

Mission- The Mission of Human Resource Department is ‘To recruit, develop, and
manage the human resources for outstanding performance’.

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Role Of Human Resource Department:
Providing HR related consultancy and advisory services to line managers
given that every manager is a human resource manager.
The HR department manages the employment contract by:
1. Ensuring the conditions of a contract are fulfilled i.e. offer, acceptance and
consideration.
2. Ensuring principles of natural justice are adhered to. i.e. One can only be
disciplined if he/she breeches a regulation, policy etc. One should be allowed
to defend himself, no person should judge in his own cause.
3. Ensuring terms and conditions of service are in place and followed.
To terminate service, due notice is given or payment in lieu of notice is made.
4. When HR department faces legal challenges, it consults the Legal Department.
Nature of Human Resource Management:
Have moved from Personnel Management to Human Resource Management.
HRM is the acquisition of people with requisite knowledge, skills, Attitude and
competencies and managing them in a manner that leads to the achievement of
organisational goals.
Human Resource Strategy:
Take into account corporate strategy.
Derive a strategy that provides human resource needed to corporate strategy
Organisation Strategy:
Strategic management has four elements: goal setting, strategy formulation,
strategy implementation and strategy control.
Strategy direction i.e. corporate vision, strategic goals, strategy.
Policy Human Resource strategy is a central philosophy of the way that people
in the organisation should be managed. y is a guideline for decision making.
It requires consistent and mutually reinforcing policies in all areas of human
resource management.
It usually involves descriptions of required employee behaviour and
sometimes of the culture of the organisation.
Human Resource strategy themes currently centre around quality, customer
orientation, flexibility, commitment, involvement, leadership, team working and
continuous learning.
Human Resource Planning:
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  Determine the HR needed in an organisation.
 Assess the HR that is in the organisation.
 Determine the shortfall in HR.
 Make a plan for covering the HR shortfall.
 Human Resource planning activities are all interdependent & continuous
 It deals with people; therefore planners need to plan for what is acceptable and
feasible.
 The plans cover areas such as people supply, utilisation, communications,
training and development.
 It also covers performance, appraisal, organisation, rewards, employee
relations and many others.
The HR policies:
The firm has maintained excellent Human resource. It has not taken too many
or too less human resource. Their work is well organized and everyone is expected to
do their work timely without interference in others works. Factory manager is well
responsible person who takes care of every little thing and ensure the free ongoing of
work.
The firm is completely worker oriented. Huge work force is involved around
2000 workers for this work in the Mill.
Firm has two HR’s. Senior HR for unit-I and Worker welfare HR for unit-II.
Recruitment & Selection procedure:
The firm has no as such recruitment or selection procedure because employees
are already appointed and organization always doesn’t need employees as the work is
already organized. Only the workers recruitment is done frequently which is handled
by labour welfare HR. Training department head appoints female and male workers
for factory work and explains them their duties and responsibilities.
Training & Development initiatives:
Training to the new workers is given by the training department head for 10 to
15 days. This is the best method adopted according to the factory manager as one
could explain their work in an effective way. The development of the works of new
worker is kept in notice by training department head of Mill.

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 Initially work given to the workers is very less. Then gradually after knowing
their calibre to work in that conditions they are assigned their level of works and
wages are given them accordingly.
Performance Appraisal method:
Performance of workers is crucial thing which an organization should take
into consideration which results to the encouragement of worker and make them more
work oriented. The performance of each worker and rewards them by giving them
extra pay. There is a record maintained by the manager as well as factory manager
about the performance of employees and constant notice is kept on those employees
who could work the least. They are encouraged by giving easier task and bounding
time limit to them.

Compensation and reward system:

The minimum salary for workers depends upon the type of work. Different
sections have different type of work as workers undergo for work for 8 hours per
shift.

Any male worker taking up the difficult task in the factory requires his extra
energy. Most of them are involved in maintenance and production process. Their
designation in the Mill is Supervisor. They rewarded by paying extra and encouraging
them to work effectively.

OT (Over Time) duty time depends on another person. If they do overtime

duty, compensation also depends on duration of time they spend on duty.

Transfers / Promotions / Penal actions:

Transfer of work from one worker to another is done in case of leave of the
worker, in case the worker is not comfortable in that particular working condition.
Because the firm is mould up in such a way that the work has to be done in an
organized manner (at the right time at the right place).

There is no greater scope of promotion to this organization as the workers are

appointed by taking into consideration their calibre and vacancy in the organization.

No higher penal actions are taken into practice in an organization.

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Format of all documents, such as leave application, resume, appointment order,
me mo, appraisal form etc

Firm have few documents. In any such cases, these documents are to be prepared on
the white sheet of paper and submitted to his/her supervisor.

There is no need for any resume in the factory as only physical ability of the
worker is seen. Only accountant manager’s qualification is always asked.

There is no as such appraisal form prepared in the firm. Only performance is

periodically checked by the managers and reward is given to those who perform
extraordinarily as an encouragement.

4.7 Finance / Accounting Function

Accounting Practice:

The following are the accounting practices carried on in the firm. They are:

1. Raw material purchase account. It contains types of material purchased.

2. Production account. It contains types of product manufactured.
3. Sales account. It involves types of products sold.
4. Financial accounting which is maintained by accountant manager in the firm.

Book Keeping- Bookkeeping, in business, is the recording of financial transactions,

and is part of the process of accounting. Transactions include purchases, sales,
receipts and payments by an individual or organization. The accountant creates
reports from the recorded financial transactions recorded by the bookkeeper and files
forms with government agencies. There are some common methods of bookkeeping
such as the single-entry bookkeeping system and the double-entry bookkeeping
system. But while these systems may be seen as "real" bookkeeping, any process that
involves the recording of financial transactions is a bookkeeping process

There are separate and particular books maintained in the firm. They are also
known as registers are maintained on yearly basis where purchase and sale records
from the firm is maintained and kept in the office of the firm itself. Managing director
and other directors go through those registers whenever they feel like going through
it.

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 Separate books for raw material purchased, sales, payments and receipts and
transport to and from Mill etc.

Various heads of accounts:

The following are the various heads of accounts in the firm. They are as
follows

 Purchasing register
 Process register
 Material handling register
 Quality register
 Store register
 Dispatched register
 PPD books register
 ECS books register

Budgetary technique:

Three types of budgets are being prepared by the accountant at a given period
of time. They are as follows.

 Preparing and revising budgets.

o Changes to cost will have impact on cash, creditors and purchasing
budgets.

o If there is a change to the selling price, debtors, cash, production, sales,

purchase and creditors budgets will be affected.
 Use of budget for short-term target setting

 Monitoring, budgets should be constantly monitored in order to compare

budgeted costs with actual costs, as well as to identify and explain the root
cause of variances.
 Control measures
o cutting down on waste
o looking for sources of unnecessary cost
o Increasing advertising and promotions.

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  Reliability. Every business should understand the importance of accurate,
error- free budgets and appreciate that basing budgets on inaccurate
assumptions about future costs and income could drastically affect their value.
When budgets are correct, they are invaluable as a planning tool. However,
although it is reasonably simple to identify short-term targets, it is far more
difficult to make accurate predictions when budgets cover periods further into
the future.
Working Capital Require ment:
There is always a need for working capital in order to run the day to day
activities of an organization. Though it has enough capital to fulfil the requirements of
day to day activities firm prefers to take capital from the bank every year in the
beginning of financial year.

Costing, Internal Auditing:

Costing and auditing is done by the Auditors M/s. Brahmayya & Co, audit in
the firm and he follows the same method which has been implemented in the
beginning. The methods used for costing is confidential. Internal auditing is done by
internal audit.
Preparation of financial statement:
Preparation of financial statement is done by accountant in the firm he
prepares the following by taking the registers as a source.
He prepares profit and loss account, trading account and then balance sheet of
yearly basis which is then scrutinized by managing director on yearly basis.

4.8 Enterprise level initiatives implemented by the firm

Suryalakshmi cotton mills started in 1962. Since from the date, the
management is initializing methods one after another.

The manufacturing unit is away from the city and any village, so for the
welfare of workers and employees of company they built quarters for them.

Quality Function:

Quality policy, Quality certifications received- Quality is given high importance in the
manufacturing of yarn as it goes to foreign. To not to compromise on the quality the
firm immediately send the sliver and yarn for testing, is done by technicians in

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Quality assurance department of factory under supervision of quality assurance
manager. He then decides on the quality and grade the yarn accordingly.
SCML has received so many certificates from domestic and International
Organizations.
 ISO 9001 – 2008
 ISO 14001-2004
 ORGANIC CERTIFICATE 2010 to 2011
 GOTS CERTIFICATE 2011 to 2012
 ENVIRONMENT CLEARANCE LETTER FROM MAHARASHTRA
GOVT
Techniques adopted to ensure quality:
The following are the techniques adopted by the firm to ensure the high quality of
yarn. They are:
 Care is taken that sliver from carding and drawing has to have a single sliver.
 Testing is done in each hour by collecting samples of sliver and yarn at each
stage.
 Quality checking is compulsory in Cotton mill, because fibers in sliver have to
be in parallel and have strength and elongation.
 Different counts of yarns have different thickness, so thickness, length and
twist has to be measured.
Common Procedures and Operating Procedures:
Common procedure in finding out the quality of the ultimate yarn is done by
testing it. To ensure that it is of good quality the sample is also send to the textile
industry board of India where testing is done by the board members and result is said
back to the firm.

According to the required quality the care is taken to send bales into
processing unit and the processing is done in an accurate manner according to the
capacity of the machines to carry out the processing.

Standards, deviations / non-conformity, rectification of deviations:

There are certain times when the deviations occur in the quality of yarn,
sometimes the quality is not acceptable due to inaccurate processing then the firm has
to resend those products to blow room depending on the quality and quantity.

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 Rectification of errors happens in quality assurance laboratory by lab
technicians.

Future plans to improve quality:

The following are the future plans of the firm to improve quality. They are:

 Quality can be improved by advance machinery

 Extra care will be given to make the yarn from the machine as they are
working.

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 CHAPTER V

SUMMERY OF OBSERVATIONS & CONCLUSION

Observations

 Textile Industry is the second largest Industry in India. India produces cotton
and as well as yarn. It is one of the big companies in India.
 Company has senior most work forces who are working since from beginning
and maintaining the same quality of work.
 Most of the labour in company is illiterate and non-technical. Though they are
not well educated, work done by them is of good quality.
 This study gives idea about how to maintain functions in the company & how
to deal with employees in a company and make sure them to work.
 To grow in the Industry; work continuously with a particular objective, goal,
vision, mission and Target.

Recommendations

 Company has to recruit employees who are technically good at respective

work.
 Workers should have minimum technical knowledge.
 Quarters and Premises in the factory is to be maintained good.
 Company has to follow various methodologies in HR department.
 New Employees has to be employed as it boost the production function.

Learning Outcomes

 I learnt Functions of various departments involved in the Organization,

 I learnt even with Illiterate people a company can run its functions,
 I learnt how to get work done by workers in the Organization.
 Production process, Marketing and Sales and Services are the most important
in any Industry.
 Quality function has significant impact on the Sales of Goods and Services.

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Conclusion

 Organization study makes a trainee to understand the Global Scenario, Indian

Scenario of Industry and its Profile. Textile Industry is second largest in India.
Most of the labours are working in this Industry.
 Coming to the Organization, it is one of the largest company in yarn
manufacturing sector. It plays a major role in yarn exports.
 Functions like Production, Quality, Material handling are very well in the
Organization. Sales & Distribution, Marketing functions are handled by Head
office of the company.
 Organization structure is good and it is maintained by senior officers in the
Organization. Productivity of the Organization is good.

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 BIBLIOGRAPHY

Text Books & Reference Books

Philip Kotler, Kevin Lane Keller, Abraham Koshy, Mithileshwar Jha, “Marketing
Management”, 14th Edition, Pearson Education Inc., New Delhi

Journals, Magazines & Newspapers

Web sites

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E2DF80539C5C/0/978184398132_sc.pdf (08/02/2014)

http://www.consumerpsychologist.com/dist_Channel_Structure.html (07/02/2014)

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f (07/02/2014)

http://www.legalpundits.com/Content_folder/THETEXTILEINDUSTRYREPORT29
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http://www.shareyouressays.com/116352/10- important- functions-of-

materialhandlingnotes (07/02/2014)

http://www.slideshare.net/fullscreen/Gstheproud007/pest-analysis-of-textile-
industry/7 (31/01/2014)

http://invention.smithsonian.org/centerpieces/whole_cloth/u2ei/u2materials/eitessay.h
tml (30/01/2014)

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http://www.studymode.com/essays/Industry-Analysis-Of- Textile-Industry-
176586.html (31/01/2014)

http://www.studymode.com/essays/Indian- Textile-Industry-Analysis-538493.html
(31/01/2014)

http://www.studymode.com/essays/Indian- Textile-Industry-Porter's-Five-Foreces-
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http://www.studymode.com/essays/Swot-Analysis-Oh-Indian-Textile-Industry-
382770.html (31/01/2014)

http://www.studymode.com/essays/Textile-Industry-In-India-714304.html?topic
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https://txm.vdma.org/documents/199718/952080/Indienreport%20August%202013.pd
f/1c15c087-9d94-4345-981d-9c678a8533c5 (30/01/2014)

http://en.wikipedia.org/wiki/Balanced_scorecard#Characteristics (10/02/2014)

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(07/02/2014)

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http://www.yarnsandfibers.com/preferredsupplier/reports_fullstory.php?id=659
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