Sitaram Textiles Limited

Amine IE/22/012
Neeraj PGP/22/34
Neha PGP/22/88
Sonali PGP/22/111
Pushkar PGP/22/359
Sneha PGP/22/386
Sudama PGP/22/389
Introduction
• Sitaram Textiles: Government-owned company located in outskirts of Trichur, Kerala
• Integrated textile mill with spinning, weaving and processing
• Product-mix consisted wide variety of cotton textile and also yarn
• Product line of fabric: Grey calendered cloth, bleaching mulls, bleached poplins, dyed varieties in poplin, dyed
cambric, dyed casement, drill and printed varieties in cotton
• Traditional distribution chain: consisted of agents, wholesalers and retailers

Sector wise production of fabrics Fabric production

25000 20000
18000
20000 16000
14000
15000 12000
Mill Sector 10000 Cotton
10000 8000
Handloom Sector Blended
6000
5000 Powerloom Sector 4000 100% Non - Cotton
2000
0 0
 Problem Identification
• Low capacity utilization in cloth production Short term Long term
• 37.25% in 1994-95 and 37.86% in 1995-96
• Company running into losses from 1993 to 1996
Need to push existing items in No large accounts and demand in
• Need to push existing items in product line
product line South Kerala
• Insufficient demand for company products
• Demand of Poplin decreasing Demand of Poplin decreasing Increase in competition from
• Stock accumulation due to low demand of poplin Low capacity utilization for organized[brands] and
processing clot unorganized[price] sector
• Geography wise less demand
• Drop in demand from agent in AP Drop in demand from agent in AP Channel arrangements for effective
distribution
• No large accounts and demand in South Kerala
• Increase in competition from organized[brands] and Stock accumulation due to low sales Need to change the current
unorganized[price] sector of poplin economic strategy
• Decline in production of cloth by 61% in entire mill sector
with increase of 317%in Power loom and handloom sector Less awareness about quality in type
• Channel arrangements for effective distribution of fabrics in retailers and customers
• Less awareness about quality in type of fabrics in retailers
and customers
• Changing consumer preferences ; Managing variety Identifying markets to push company items that
• Capability of Looms to variety with low cost in had demand
caparison to mills
• Need to change the current economic strategy Identifying products and markets for entry in
blended fabrics
 Product Line Analysis
 Product Line
 Existing product lines consist of poplins, mulls and printed cotton Domestic Yarn Cotton Products
varieties Revenues (in
 Poplins lakhs)
• Major product line of Sitaram Textiles 1994-95 454.59 632.70
• Substantial quality difference
• Not significant price difference Existing Products 1995-96 651.79 662.71
• Strong presence in South India, women in South India are the  Poplins
major users of underskirts
 Mulls
 Cotton
 Cambric
• In rural areas preference was high for well – known brands
 Casement
• Support from advertisements for branded bed sheets and lungies  Calendared
• School administrators are in favor of mill products Cloth
• Potential market for industrial workers  Drill
• Higher income groups are having greater preference for branded  Printed Fabric Channel Options
items
• Dealer preference for brand name and quality Agent – Wholesaler – Distributor
Traditional Approach
 Locational Advantage Direct supply to distributor
 Presence of Manufacturers in Kottayam & Ernakulam One distributor in an area instead of multiple wholesalers
 Ernakulam was a center for Garment Manufacturers Use of distributor chain
Direct contact with schools/ institutions
 Importance of Quality
 Kerala Consumers preferred quality products from Mills
Competitive capability of Sitaram Textiles Limited
• Processes:
• Quality of fabric is recognized by SITRA
• Good capacity utilization of Yarn
• Quality preferred by Kerala customers, Mangalore: recognized for high sales
• Appropriate quality standards taken care in processing and dyeing facilities
• Extra capacity of cotton processing which can be utilized in future

Preference for Products:

• Poplin is gaining popularity in the market and Sitaram is leveraging the market demand
• Customers are also preferring half-bleached mulls for lungi product segment hence Sitaram can gain profit
from it
 Competing products
Attribute/
Product Competition Firms place Price replacement supply/ demand
Low cost[due
to low labor
and better Decrease in Inferences:
Mulls productivity] demand • Sitaram present in Medium price
Demand for better poplin, mulls
Polyester viscose quality poplin and • Increasing demand for high quality
or (PV) 1.1 m 1.5m width 1.5m poplin
replacing poplin increased else other • Demand decreasing for mulls
Poplin (high Century mills, 1.5 m width In 38.40+10% of 0.9m . Price of quality poplin
price) Umed mills Ernakulam duty PV is 22-27/m decreased
Western India
Cotton Mills(
with low price 1.5% discount
poplins and for rs.15 lakh 24.50+duty
Poplin (medium blends in MH, and above), North Kerala, % [Also 19-
price) Gj and TN Sitaram Mangalore 20]
Seenivasa All
Procesing,Weste region[mostly
Poplin (low rn India Cotton in south
price) Mills Kerala] 18-19%
 Competing products
Competitio Inferences
Products n Firms Price Supply/ Demand Material
Demand for various products:
Ram Kumar • Unmet Demand of 40s poplin for brassieres; competition by
(28- Ram Kumar textiles
Limited Ram kumar mills (irregular 31)shifting Shortage of 40s Poplin used, PV • Lucrative areas of demand are uniform shirting[blends] with stiff
competition mills), hindustan spinning & to high price combed fabric; supplied of 1.1m also price competition
Brassier from low cost weaving mills cotton in Karnataka used (23-27/m) • Bedsheets segment can be entered with low price than higher
priced competitors with brand awareness through
Bed sheet Demand high of bed advertisements
and lungies Erode (low cost) High price sheet • High demand for blends and 1.5m poplin in underskirts[10-40%
High demand for share]
Microsoft item @ 27.5, • Variable demand in Churidar; Blends are preferred with less
poplin nightie demand PV (1.1m, 18- demand for polyester and cotton
Nighties increased 35/m) • Not much demand for nighties
• Strong competitor’s brand preference in Dhoti; Demand is also
Process house-
decreasing
20 and above Umed and Morarjee mills,
• Uniforms:
and Swiss davangeree(preferred) and
Uniform • For uniform skirts, PV and PC is preferred
cotton (24- hindustan spinning and weaving 25-27.5
shirting • For uniform trousers PV is preferred
30)[Substitute] mills ltd (preferred) +20% duty Blends
• Cotton is preferred for uniform of industrial workers
High for products from • High competition by low cost Surat and Ithchalkaranji
Uniform 20 below mills and process products
Suiting Davangeree and premier mills the mills house Consumer Segment:
• Women in kerala who wear sarees are customers of
Low price- underskirts
Strong brand loyalty towards national Limited demand for (Premier • For uniforms, School administration are major
High quality century mill's param sukh, dhotis from cotton dhotis, mills)chiffon customers
dhotis premier mills Mumbai awareness present and blend • Private schools and missionaries for fabric
Supplied for urban
Petticoat areas
Market Analysis
 Blended clothes a high growth area (Appendix 6)
 Major volume for cotton is in
 Dhoties
 Ladies dress material
 Lungies
 Bed sheets
 Major Volumes for blends
 Coating
 Suiting/drill
 Shirting
 Ladies dress material
 In cotton better quality poplins and poplins of 1.5 m width
drivers
 Demand for dhoties on the decrease
 Breakeven Analysis
Determination for target capacity
utilization of cloth
Assumption : already high capacity
products 1994-95 1995-96 utilisation of yarn (maximum)
value , assuming capacity utilisation would
value per value per unit not be decreased for yarn
quantity unit (Rs.00,000) quantity value

yarn (lakh kg) 8.21 55.35 454.49 8.41 77.50 651.79

Breakeven
value (in L) 1900[given]
cloth (lakh m) 42.42 14.91 632.7 36.32 18.24 662.71
Value from yarn 651.79

1994-95 1995-96 Value from cloth 1248.21

Total value (mn) 108.719 131.45
Volume of Cloth (L
meters) 68.40848516
Total sales including service
charges (mn) 115.992 133.047 Capacity utilisation
Service charges 7.273 1.597 required 57.01%

Current capacity
utilisation 37.86%
Increase in capacity
required 19.15%
 • Sitaram limited should consider the alternative of
going ahead with blended fabrics
Reasoning for entering into blends:
1. High demand for blends: Medium price poplin
face competition from blends and low price
poplin. Hence before other competitor’s take
Sitaram’s poplin share by blends, Sitaram itself
Recommendations should enter into blends
2. All India CAGR by of 18.49% for blends; 27.87%
in Urban; 11.89% in rural by value
3. Scaling: By large scale production of blends for
different market segments, low cost production
can be obtained to compete in market
 Distribution Channel:
1. Sitaram has only 5% share in total sale of small dealer and 3% share in
large dealer more dealers need to be contacted
2. Dealers for specific product segments skirts, trousers, Salwaar Kameez,
underskirts
3. Pushing blends in urban area through dealers
4. Enter into uniforms for skirts and trousers Dealers need to form
contracts with schools administration
5. forward information of trends from agents needs to be gathered for
entering into Salwaar Kameez
Recommendation
• For 40s Poplin used in brassieres from long term contract with branded
manufacturers as only one branded competitor is present

Advertising for Increasing Awareness:

1. The awareness of Sitaram among retailers is only 25% which needs to
be increased
2. Quality of Sitaram needs to be communicated to retailers through
agents