Textiles and Apparel AUGUST 2012 - IBEF

 
Textiles and Apparel AUGUST 2012 - IBEF
AUGUST
Textiles and Apparel                                 2012

For updated information, please visit www.ibef.org            1
Textiles and Apparel AUGUST 2012 - IBEF
AUGUST
Textiles and Apparel                                          2012

                                 Contents
                                Advantage India

                                Market overview and trends

                                Growth drivers

                                Success stories: Raymond, Alok Industries

                                Opportunities

                                Useful information

For updated information, please visit www.ibef.org

                                                                             2
Textiles and Apparel AUGUST 2012 - IBEF
AUGUST
Textiles and Apparel                                                         2012

Advantage India

                                                                                                                                             2020E
                                  Robust demand                                        Increasing investments
                         •   Increased penetration of                              •   Over USD35 billion of                                Market
                             organised retail, favourable                              investments have been made                           Value:
                             demographics ,and rising                                  in the textile and clothing                          USD220
                             income levels to drive textile                            sector during the last four                           billion
                             demand                                                    years, with the cotton textile
                                                                                       segment accounting for
                         •   Growth in building and                                    around 75 per cent
                             construction will continue to
                             drive demand for non-
                             clothing textiles                 Advantage
                                                                 India
                             Competitive advantage                                      Policy support
                     •       Abundant availability of raw                    •   100 per cent FDI (automatic route) is
                             materials such as cotton, wool, silk                allowed in the Indian textile sector
                             and jute
                                                                             •   SITP was approved in July 2005 to
                     •       India enjoys a comparative                          facilitate setting up of textiles parks
                             advantage in terms of skilled                       with world class infrastructure
    2011                     manpower and in cost of production
                             relative to major textile producers             •   Free trade with ASEAN countries
  Market                                                                     •   will boost exports
   Value:
USD99 billion                                                                                                Source: Technopak; Aranca Research
                                                                  Notes: SITP - Scheme for Integrated Textile Park; FDI- Foreign Direct Investment,
                                                              2020 E – Estimated figure for 2020; ASEAN – Association of Southeast Asian Nations

For updated information, please visit www.ibef.org                                                                                 ADVANTAGE INDIA     3
AUGUST
Textiles and Apparel                                          2012

                                 Contents
                                Advantage India

                                Market overview and trends

                                Growth drivers

                                Success stories: Raymond, Alok Industries

                                Opportunities

                                Useful information

For updated information, please visit www.ibef.org

                                                                             4
AUGUST
  Textiles and Apparel                                                       2012

Evolution of the Indian textile sector

                                                                                              2000 onwards

                                                                 1951-2000

                                                                                                    • NTC started selling
                                    1901–50                                                           few mills to private
                                                                     • In 1999, TUFS was set          businesses in 2005
                                                                       up to provide easy           • SITP was
                                                                       access to capital for          implemented to
                                                                       technological                  facilitate setting up
                                             • Number of mills         upgradation                    of textile units with
           1854-1900                           increased from 178 • TMC was launched                  appropriate support
                                               in 1901 to 417 in 1945 to address issues               infrastructure
                                             • Out of 423 textile      related to low               • Post MFA cotton
                                               mills of the            productivity and               prices are aligned
                  • The first cotton textile   undivided India,                                       with global prices
                                                                       infrastructure
                    mill of Mumbai was         India received 409                                   • Technical textile
                                                                     • In 2000, NTP was
                    established in 1854        after partition and                                    industry will be a
                                                                       announced for the
                  • The first cotton mill of the remaining 14                                         new growth avenue
                                                                       overall development
                    Ahmedabad was              went to Pakistan        of the textile and
                    found in 1861; it
                                                                       apparel industry
                    emerged as a rival
                                                                                Notes: NTP – National Textile Policy; NTC - National Textiles Corporation;
                    centre to Mumbai
                                                                        TUFS - Technology Upgradation Fund Scheme; TMC - Technology Mission on Cotton
  For updated information, please visit www.ibef.org                                                             MARKET OVERVIEW AND TRENDS             5
AUGUST
Textiles and Apparel                                              2012

Segments in the textile and apparel
sector
→   The textile and apparel industry can be broadly divided into two segments:

    →    Yarn and fibre (including natural and man-made fibre as well as yarn)

    →    Processed fabrics (including woolen textiles, silk textiles, jute textiles, cotton textiles and technical textiles),
         readymade garments (RMGs) and apparel

                                              Key segments of the textile industry

                                                                                                                          Garment/
                          Raw                                                  Weaving/                                    Apparel
        Process                            Ginning            Spinning                                Processing
                         material                                              Knitting                                   production

                           Cotton,                                                                                           Final
                                                                                                      Processed
        Output            jute, silk,       Fibre*              Yarn                 Fabric                                garment/
                                                                                                        fabric
                            wool                                                                                           Apparel

                                         Yarn and fibre segment                                          •   Woollen textiles
                                                                                                         •   Silk textiles
                                                                                                         •   Jute textiles
                                                                                                         •   Technical textiles
                                                                                                                    Source: Aranca Research
                                                                            Note - * Including cotton, jute, silk, wool and manmade fibres

For updated information, please visit www.ibef.org                                                  MARKET OVERVIEW AND TRENDS                6
AUGUST
Textiles and Apparel                                          2012

Key Facts

→   The fundamental strength of the textile industry in India is its strong production base of wide range of fibre /
    yarns from natural fibres like cotton, jute, silk and wool to synthetic /man-made fibres like polyester, viscose,
    nylon and acrylic

→   India is the world’s second largest producer of textiles and garments

→   Indian textile industry accounts for about 24 per cent of the world’s spindle capacity and eight per cent of
    global rotor capacity

→   India has the highest loom capacity (including hand looms) with 63 per cent of the world’s market share

→   India accounts for about 14 per cent of the world’s production of textile fibres and yarns (largest producer of
    jute, second largest producer of silk and cotton; and third largest in cellulosic fibre)

                                                                                     Source: Textile Ministry, Aranca Research

For updated information, please visit www.ibef.org                                           MARKET OVERVIEW AND TRENDS          7
AUGUST
Textiles and Apparel                                        2012

The sector has been posting healthy
growth over the years

→   Textile plays major role in the Indian economy                           India's textile market size (USD billion)
                                                                 250
    →   It accounts for 27 per cent of foreign exchange                                                                  220.0
        inflows
                                                                 200
                                                                                        CAGR: 19.3%
    →   It has a share of 14 per cent in industrial
                                                                 150
        production
                                                                                                           99.7
                                                                 100
    →   It is the largest source of employment generation                      70.0           78.0
        in the country
                                                                  50

→   The size of the Indian textile market in 2011 was
    USD99.7 billion; the market had recorded a CAGR of               0
    19.3 per cent over 2009-11                                                2009           2010          2011          2020E

                                                                            Source: Technopak, Ministry of Textiles, Aranca Research
                                                                         Note: CAGR – Compound Annual Growth Rate, E- Estimated

For updated information, please visit www.ibef.org                                              MARKET OVERVIEW AND TRENDS             8
AUGUST
Textiles and Apparel                                         2012

Market share: Apparel has the larger
share

→   Apparel constitute a large share in the overall sector        Shares in India’s textile and apparel sector in 2009

       →   In 2009, while Apparel had a share of 62% of
           the overall market, textiles contributed the
           remaining 38 per cent

                                                                      38%                                          Apparel
       →   To improve technical skills in Apparel industry
           government established 75 Apparel training
           and design centre across India                                                                          Textile
                                                                                                  62%

       →   National Institute of Fashion Technologies
           played pioneering role in growth of Apparel
           industry and exports

       →   To promote Apparel exports 12 locations has                          Source: Alok Industries Limited, Aranca Research
           been approved by the government to set up                        Note : NIFT – National Institute of Fashion technology
           Apparel parks for exports

For updated information, please visit www.ibef.org                                           MARKET OVERVIEW AND TRENDS              9
AUGUST
Textiles and Apparel                                                   2012

Cotton production over the past few
years has been volatile

→   Production of raw cotton grew to 35.6 million bales in                        Production of raw cotton (million bales)
    FY12, up from about 28.0 million bales in FY07
                                                                          37.0
                                                                                                                              35.6
→   During this period, the CAGR in production was 4.9
                                                                          35.0
    per cent; annual growth in FY12 was even higher at                                  CAGR: 4.9 %
    9.5 per cent                                                          33.0
                                                                                                                     32.5

                                                                                        30.7               30.5
→   Of the total amount of raw cotton produced in the                     31.0
    country, 25 million bales were used up in domestic
                                                                                                 29.0
    consumption while 8.5 million bales were exported                     29.0
                                                                                 28.0
                                                                          27.0
                      Note – CAGR - Compounded Annual Growth Rate
                                          one Bale – 217.7 kilo gram      25.0
                                                                                 FY07   FY08     FY09      FY10     FY11      FY12

                                                                                          Source: Ministry of Textiles, Aranca Research

    • Raw cotton and man-made fibres are the major segments in this category
    • Raw wool and raw silk are the other components – their production levels are much lower

For updated information, please visit www.ibef.org                                                 MARKET OVERVIEW AND TRENDS             10
AUGUST
Textiles and Apparel                                          2012

Production of manmade fibre has also
been rising

→   Production of man-made fibre has also been on an                   Production of man-made fibre (million tonnes )
    upward trend
                                                                     1.300
                                                                                                             1.268      1.285
       →   Production stood at 1.285 million tonnes in FY11                           1.244
           with the figure reinforcing a recovery from               1.250
           2009 levels
                                                                     1.200

                                                                     1.150   1.139

                                                                     1.100
                                                                                                  1.066
                                                                     1.050

                                                                     1.000
                                                                             FY07      FY08       FY09        FY10       FY11

                                                                                     Source: Ministry of Textiles, Aranca Research

For updated information, please visit www.ibef.org                                         MARKET OVERVIEW AND TRENDS                11
AUGUST
Textiles and Apparel                                        2012

Cotton is the major segment in both
yarn and fabric … (1/2)

→   Production of yarn grew to 6.2 million tonnes in FY11                        Production of yarn (million tonnes)
    from 5.2 million tonnes in FY07, a CAGR of 4.7 per
    cent
                                                                     6.500
                                                                                                CAGR: 4.7%
                                                                     6.000
→   Cotton yarn accounts for the largest share in total
    yarn production; in FY11 the segment’s share                     5.500                                                  1.549
    amounted to 56.0 per cent                                        5.000                                       1.522
                                                                                         1.509       1.418
                                                                     4.500     1.370
                                                                     4.000                                                  1.223

                                                                     3.500                                       1.114
                                                                                         1.055       1.016
                                                                               0.989
                                                                     3.000                                                  3.490
                                                                               2.824     2.948       2.896       3.079
                                                                     2.500
                                                                               FY07      FY08        FY09        FY10       FY11
                                                                         Cotton Yarn   Other Spun Yarn       Manmade Filament Yarn

                                                                                       Source: Ministry of Textiles, Aranca Research

For updated information, please visit www.ibef.org                                          MARKET OVERVIEW AND TRENDS              12
AUGUST
Textiles and Apparel                                        2012

Cotton is the major segment in both
yarn and fabric … (2/2)

→   Fabric production rose to 62,542 million sq metres in                     Fabric production (million sq mtr)
    FY11 from 52,665 million sq metres in FY07, a CAGR of
                                                                70,000
    4.4 per cent
                                                                60,000                                                    8,278
                                                                                                             7,767
→   Yet again, the major segment is cotton yarn which
                                                                                      6,888       6,766
    accounted for 51 per cent in FY11                           50,000      6,882
                                                                                                                          22,522
                                                                40,000                                       23,652
                                                                           19,545    21,173      20,534
                                                                30,000

                                                                20,000
                                                                                                             28,914       31,742
                                                                           26,238    27,196      26,898
                                                                10,000

                                                                     -
                                                                            FY07      FY08        FY09        FY10         FY11

                                                                         Cotton        100% Non Cotton               Blended

                                                                                      Source: Ministry of Textiles, Aranca Research
                                                                                                     Notes: Sq Mtr is Square meter

For updated information, please visit www.ibef.org                                           MARKET OVERVIEW AND TRENDS            13
AUGUST
Textiles and Apparel                                          2012

Exports have posted strong growth
over the years

→   Exports have been a core feature of India’s textile and                      India's textile trade (USD billion)
    apparel sector, a fact corroborated by trade figures
                                                                   32.0
→   Exports grew to USD27 billion in FY11 from USD17.6                                    CAGR: 8.8 %                             26.8
                                                                   27.0
    billion in FY06, a CAGR of 8.8 per cent                                                       22.1                   22.4
                                                                                                               21.2
                                                                   22.0                19.1
                                                                          17.6
       →   FY11 was a particularly good year for the sector
                                                                   17.0
           with exports shooting up by an annual rate of
           19.6 per cent                                           12.0

                                                                    7.0
                                                                                 2.7      2.8            3.3       3.5      3.4          4.0
                                                                    2.0
                                                                           FY06         FY07       FY08         FY09      FY10     FY11

                                                                                                Exports        Imports

                                                                                         Source: Ministry of Textiles, Aranca Research

For updated information, please visit www.ibef.org                                                 MARKET OVERVIEW AND TRENDS                  14
AUGUST
Textiles and Apparel                                         2012

Readymade garments and cotton
textiles dominate exports

→   Readymade garments was the largest contributor to           Shares in India’s textile exports (as on December 2011)
    total textile and apparel exports from India in FY11*;
    the segment had a share of 39 per cent                                                                      Readymade
                                                                                3%
                                                                                   4%                           Garment
                                                                              3%
→   Cotton and man-made textiles were the other big                                                             Cotton Textiles
    contributors with shares of 33 per cent and 18.0 per
                                                                      18%                            39%
    cent, respectively                                                                                          Man-made textiles

                                                                                                                Handicrafts

                                                                                                                Silk & Handloom

                                                                                33%
                                                                                                                Woolen & others

                                                                                      Source: Ministry of Textiles, Aranca Research
                                                                            Note: Others include coir & coir manufacturers and jute
                                                                                                      * Figures as of December 2011

For updated information, please visit www.ibef.org                                             MARKET OVERVIEW AND TRENDS             15
AUGUST
Textiles and Apparel                                              2012

Key players in the industry

                                                            Company                           Business areas

                                                        Welspun India Ltd         Home textiles, bathrobes, terry towels

                                                        Vardhman Group           Yarn, fabric, sewing threads, acrylic fiber

                                                                                Home textiles, woven and knitted apparel
                                                        Alok Industries Ltd
                                                                                  fabric, garments and polyester yarn

                                                                                Worsted suiting, tailored clothing, denim,
                                                          Raymond Ltd
                                                                                      shirting, woollen outerwear

                                                                               Spinning, weaving, processing and garment
                                                         Arvind Mills Ltd        production (denims, shirting, khakis and
                                                                                                knitwear)
                                                       Bombay Dyeing &     Bed linen, towels, furnishings, fabric for suits,
                                                     Manufacturing Company    shirts, dresses and saris in cotton and
                                                              Ltd                         polyester blends

                                                       Garden Silk Mills Ltd             Dyed and printed fabric

                                                                                       Source: Annual Reports, Aranca Research

For updated information, please visit www.ibef.org                                                   MARKET OVERVIEW AND TRENDS   16
AUGUST
Textiles and Apparel                                            2012

Notable trends in the Indian textile
sector

                                       • The Ministry of Textiles is encouraging investments through increasing focus on
       Increasing investment             schemes such as TUFS and cluster development activities
       in TUFS                         • Investments under TUFS increased to USD600 million in FY11, with spinning
                                         accounting for the largest share

       Multi-Fibre                     • With the expiry of MFA in January 2005, cotton prices in India are now fully
       Arrangement (MFA)                 integrated with international rates

                                       • The Ministry of Textiles commenced an initiative to establish institutes under the
       Public-Private
                                         public-private partnership (PPP) model to encourage private sector participation in
       Partnership (PPP)
                                         the development of the industry

                                       • Technical textiles, which has been growing at around twice the rate of textiles for
       Technical textiles                clothing applications over the past few years, is now expected to post a CAGR of
                                         20 per cent over FY11-17

                                                                                        Source: Ministry of Textiles, Aranca Research

For updated information, please visit www.ibef.org                                              MARKET OVERVIEW AND TRENDS              17
AUGUST
Textiles and Apparel                                          2012

                                 Contents
                                Advantage India

                                Market overview and trends

                                Growth drivers

                                Success stories: Raymond, Alok Industries

                                Opportunities

                                Useful information

For updated information, please visit www.ibef.org

                                                                             18
AUGUST
Textiles and Apparel                                        2012

Strong demand and policy support
driving investments

      Growing demand                                 Policy support                                             Increasing
                                                          Strong                                               investments
                                                      government
                                                        support

                                                                                                               Growing domestic
         Rising demand in                            100 per cent FDI in                                          and foreign
              exports                                   textile sector                                            investments
                                 Inviting                                        Resulting in

                                                        Government                                              Commitment of
           Increasing
                                                      setting up SITPs                                          USD140 billion of
           demand in
                                                     and Mega Cluster                                                foreign
         domestic market
                                                            Zones                                                 investments

             Growing                                                                                              Government
                                                      Increasing loans                                            investment
         population driving
                                                        under TUFS                                              schemes (TCIDS
          textile demand
                                                                                                                   and APES)

                                                                                          Source: Ministry of Textiles, Aranca Research
                                                                      Note: TCIDS – Textile Centre Infrastructure Development Scheme
                                                                                              APES – Apparel Park for Exports Scheme

For updated information, please visit www.ibef.org                                                               GROWTH DRIVERS           19
AUGUST
    Textiles and Apparel                                         2012

Continued support to the textile sector by
the government in the FY13 budget                                         •   Automatic shuttleless looms
                                                                              fully exempted from basic
                                                                              customs duty of 5 per cent
                                                                          •   Automatic silk reeling and
                                                                              processing machinery as well
                                                           Stress on          as its parts exempted from
                                                         mechanisation        basic customs duty

•   Financial package of                                                                           •   Mega handloom clusters to
    INR38.8 billion (USD809
                                                          FY13 Union                                   be set up in Andhra Pradesh
                                                            Budget                                     and Jharkhand
    million) for waiver of loans
    for handloom weavers and                                                                       •   Power loom mega cluster to
    their cooperative societies                                                                        be set up in Maharashtra
•   INR5.0 billion (USD100          Financial                                 Infrastructure       •   Three Weaver’s Service
    million) pilot scheme           package                                       support              Centres (one each in
    announced for promotion                                                                            Mizoram, Nagaland and
    and application of geo-                                                                            Jharkhand) to be set up for
    textiles in the North                                                                              providing technical support
    Eastern Region                                                                                     to poor handloom weavers

    For updated information, please visit www.ibef.org                                                       GROWTH DRIVERS      20
AUGUST
Textiles and Apparel                                          2012

Changing demographics has also
contributed significantly to the sector

 →   By 2010, India’s population had close to doubled                          India‘s population in billions
     compared to figures 30 years before
                                                                  1.4
                                                                                                                    1.31
       →   The IMF expects India’s population to touch 1.31       1.3
                                                                                                         1.19
           billion by end-2017                                    1.2                 CAGR: 1.8 %
                                                                  1.1
                                                                                              1.02
 →   India’s growing population has been a key driver of          1.0
     textile consumption growth in the country
                                                                  0.9
                                                                                   0.84
 →   It has been complemented by a young population which         0.8
                                                                        0.68
     is growing and at the same time is exposed to changing       0.7
     tastes and fashion                                           0.6
                                                                  0.5
       →   Complementing this factor is rising female                   1980       1990      2000       2010        2017F
           workforce participation in the country
                                                                                                 Source: IMF, Aranca Research
                                                                                                           Note: F – Forecasts

For updated information, please visit www.ibef.org                                                        GROWTH DRIVERS         21
AUGUST
Textiles and Apparel                                              2012

Rising incomes and a growing middle
class have been the key demand drivers

 →       Rising incomes has been a key determinant of domestic demand for the sector; with incomes rising in the
         rural economy as well, the upward push on demand from the income side is set to continue

 →       A rising middle class has also aided demand growth for the sector; the size of the middle class is forecasted
         to rise to 550 million by 2025 from more than 50 million in 2011

               Trends in per-capita income in India                        Changing economic fortunes by income segments

 2500                                                       30%      70
                                                                            million
                                                            25%                                                         Seekers:
                                                                          households
 2000                                                                60                                              annual income
                                                            20%              Aspirers:                                INR200,000-
                                                                     50        annual                                    500,000
 1500                                                       15%               income
                                                                                                                         Strivers:
                                                                     40     INR90,000-                               annual income
 1000                                                       10%               200,000                                 INR500,000-
                                                            5%       30                                                 1,000,000
                                                                             Deprived
  500                                                                          annual
                                                            0%       20                                                 Globals:
                                                                              income                                 annual income
     0                                                      -5%      10     INR1,000,000
         2001 2003 2005 2007 2009 2011E 2013F 2015F 2017F
                                                                      0
                                                                            2005              2010     2015         2020          2025
         Per capita income, USD, LHS   Annual growth rate, RHS
                                                                                   Strivers          Seekers               Deprived

                                                                                      Source: IMF, McKinsey Quarterly, Aranca Research
                                                                                                      Notes: E – Estimates, F - Forecasts
For updated information, please visit www.ibef.org                                                                     GROWTH DRIVERS       22
AUGUST
Textiles and Apparel                                             2012

Exporters gaining from strong global
demand

 →   Capacity built over years has led to low cost of                     Growing textile exports from India (USD billion)
     production per unit in India’s textile industry; this has
     lent a strong competitive advantage to the country’s          40.0
     textile exporters relative to key global peers                                                                           34.0
                                                                   35.0                      CAGR 12.1 %

 →   The sector has also witnessed increasing outsourcing          30.0
     over the years as Indian players moved up the value                                                           26.8
     chain from being mere converters to vendor partners           25.0
                                                                                      22.2                 22.4
                                                                                                21.1
     of global retail giants                                                 19.2
                                                                   20.0

 →   The strong performance of textile exports is reflected        15.0
     in the value of exports from the sector over the years;
     In FY12, textile exports jumped by 26.8 per cent to           10.0
                                                                             FY07     FY08      FY09       FY10    FY11      FY12
     USD34.0 billion

 →   In the coming decades, Africa and Latin America                                     Source: Ministry of Textiles, Aranca Research
     could very well turn out to be key markets for Indian
     textiles

 For updated information, please visit www.ibef.org                                                                 GROWTH DRIVERS       23
AUGUST
Textiles and Apparel                                                 2012

Technical textile industry – A new arena
of growth

 →   The major service offerings of the technical textile                     Technical Textile Industry (USD billion)
     industry include thermal protection and blood-
     absorbing materials, seatbelts and adhesive tapes                  35
                                                                                                                     31.4
                                                                        30
 →   Technical textile industry market is expected to                                        CAGR: 20 %
     expand at a CAGR of 20% during FY11-17 to reach a                  25
     value of USD31.4 billion in FY17 from USD12.6 billion in           20
     FY11
                                                                        15
                                                                                      12.6
 →   Healthcare and infrastructure sector are the major                 10
     drivers of the technical textile industry
                                                                         5
 →   The government has also supported the technical                     0
     textile industry during the Union Budget of FY13 with                            FY11                          FY17E
     an allotment of USD1 billion for the SMEs in the sector
     and an exemption in custom duty for raw materials
                                                                              Source: Ministry of Textiles, Techtextil , Aranca Research
     used by the sector

                          Note: SME - Small and medium enterprises

 For updated information, please visit www.ibef.org                                                                  GROWTH DRIVERS        24
AUGUST
Textiles and Apparel                                            2012

Policy support has been a key
ingredient to growth

                                       • TUFS infused an investment of more than USD43 billion until June 2010; another
       Technology                        USD3.3 billion has been allocated for the 12th Five Year Plan
       Upgradation Fund
       Scheme (TUFS)                   • Investment was made to promote modernisation and upgradation of the textile
                                         industry by providing credit at reduced rates

                                       • The policy was introduced for the overall development of textile industry
       National Textile Policy
                                       • Key areas of focus include technological upgrades, enhancement of productivity,
       - 2000
                                         product diversification and financing arrangements

       Foreign Direct                  • FDI of up to 100 per cent is allowed in the textile sector through the automatic
       Investment                        route

                                       • SITP was set up in 2005 to provide necessary infrastructure to new textile units;
       Scheme for Integrated             under SITP, 40 projects (worth USD900 million) have been sanctioned
       Textiles Parks (SITP)           • The planned outlay for the textiles and apparel sector under the 11th Five Year Plan
                                         (20012–17) was USD2.9 billion

For updated information, please visit www.ibef.org                                                            GROWTH DRIVERS    25
AUGUST
Textiles and Apparel                                               2012

Textile SEZs in India

    Name of SEZ                    Area
                      State                          Sector                                       Details
     and status                  (hectares)
                                                                       Mahindra City is India’s first integrated business city,
                                                                       divided into business and lifestyle zones. It is a cluster of
    Mahindra City                                                      three sector specific SEZs in Tamil Nadu, for apparels and
                                              Apparel and fashion
         SEZ        Tamil Nadu     607.1                               fashion accessories; IT and hardware; and auto ancillary.
                                                 accessories
     (Functional)                                                      The business zone provides plug-n-play working spaces. This
                                                                       zone comprises a SEZ (primarily for exporters) and domestic
                                                                       tariff area (DTA) for companies targeting domestic market.
    Surat Apparel                                                      Key industrial units include Safari Exports, Venus Garments,
         Park        Gujarat        56.0             Textiles          Benchmark Clothings, P. K. International, Tormal Prints, J.R.
     (Functional)                                                      Fashion and Ganga Export.
    Brandix India
                                                                       BIAC is an integrated apparel supply chain city, managed by
     Apparel City    Andhra
                                   404.7             Textiles          Brandix Lanka Ltd. It aims to be a end-to-end apparel
        (BIAC)       Pradesh
                                                                       solution provider.
     (Functional)
                                                                       Karnataka Industrial Areas Development Board (KIADB) is a
       (KIADB)                                                         wholly owned infrastructure agency of Government of
                    Karnataka     16129.0        Several sectors
     (Functional)                                                      Karnataka. Till date, KIADB has formed 132 industrial areas
                                                                       spread all over the state.

                                                                                                               Source: Aranca Research
                                                                          Note – KIADB - Karnataka Industrial Areas Development Board
                                                                                                           SEZ – Special Economic Zone

For updated information, please visit www.ibef.org                                                                 GROWTH DRIVERS        26
AUGUST
Textiles and Apparel                                 2012

Key textiles and apparel zones in India

                                                                              EAST: Bihar for jute, parts of
            NORTH: Kashmir, Ludhiana and
                                                                              Uttar Pradesh for woollen and
            Panipat account for 80 per cent
                                                                              Bengal for cotton and Jute
            of woollens in India
                                                                              industry

 WEST: Ahmedabad, Mumbai,
                                                                                          Major Textile and Apparel zones
 Surat, Rajkot, Indore and
 Vadodara are the key places
 for cotton Industry

                                                            SOUTH: Tirpur,Coimabtore
                                                            and Madurai for hosiery.
                                                            Bengaluru, Mysore and
                                                            Chennai for Silk

                                                                                          Source: Aranca Research,
                                                                                       Note: All figures as of 2011-12

For updated information, please visit www.ibef.org                                                    GROWTH DRIVERS        27
AUGUST
Textiles and Apparel                                            2012

M&A activity up in the sector

→   M&A activity in the sector has been picking up pace over the years; in fact, within January 2000 to June 2011,
    482 M&A deals took place and the trend has continued in FY12 as well

→   The five major M&A deals* are listed below

                                                  M&A scenario — details
                                            Period: 1 January 2000 to 1 June 2012

                Top 5                                                                               Deal size
                              Acquirer Name                    Target Name
                deals                                                                             (USD million)

                  1          Madura Garments                  Pantaloon Retail                         333.3

                  2           Himachal Fibres             Balmukhi textiles Pvt Ltd                     NA

                  3       BR Machine Tools Pvt Ltd       Bombay Rayon Fashions Ltd                     721.1

                  4          Group of investors              Provogue (India)Ltd                       526.9

                  5         M C Spinners Pvt Ltd             Maxwell Industries                         8.47

                                                          Sources: “M&A,” Thompson ONE Banker, CMIE, Aranca Research
                                                                     Notes - * The value for 290 deals were not disclosed

For updated information, please visit www.ibef.org                                                                   GROWTH DRIVERS   28
AUGUST
Textiles and Apparel                                          2012

Foreign investments flowing into the
sector

→   100 per cent FDI is approved in the sector                         Trends of FDI in textile industry (USD million)

                                                                                                   190
→   Cumulative FDI in the sector was USD1115.6 million          200
    from April 2000 to February 2012                                                                      160
                                                                160
                                                                                                                  140
→   The textiles industry in India is experiencing a                                        130                          129
    significant increase in collaboration between global        120
    majors and domestic companies                                                    90
                                                                 80
       →   International apparel giants like Hugo Boss, Liz                   40
           Claiborne, Diesel, Kanz and many others have          40
           already started operations in India                          9
                                                                  0
                                                                       FY04   FY05   FY06   FY07   FY08   FY09    FY10   FY11

                                                                  Source: Ministry of Commerce and Industry, Aranca Research

For updated information, please visit www.ibef.org                                                               GROWTH DRIVERS   29
AUGUST
Textiles and Apparel                                          2012

                                 Contents
                                Advantage India

                                Market overview and trends

                                Growth drivers

                                Success stories: Raymond, Alok Industries

                                Opportunities

                                Useful information

For updated information, please visit www.ibef.org

                                                                             30
AUGUST
Textiles and Apparel                                             2012

Raymond: A long journey of success

                                                                                           JV with GAS in
        Retail                                                                               India - 2007

                                                                       Acquisition of                                      FY12
      Furnishings                                                     ColorPlus - 2002                                 USD758 million
                                                                                                                           turnover
                                                                                                     FY06
    Corporate wear                                Capacity of 40 MM
                                                        - 1996                                      USD364
                                                                                                     million
                                                                                                    turnover
  Woollen outerwear           Organic growth in
                                  textiles                                    1980
                                                                        Transformed into                       670 outlets currently
                                                                            industrial                          and plans to add
       Apparels                                                           conglomerate                         another 500 outlets
                                                                                                                     by 2015
                                                   1964
                                                 Vertical
        Fabrics                               integration in
                                               multi-fibres

                          1925 1958 1964 1968 1990             1996 2000 2002 2006 2007 2008 2010                      2011    2012

                                                                                           Notes: JV – Joint Venture; MM – Million Meters

For updated information, please visit www.ibef.org                                SUCCESS STORIES: RAYMOND, ALOK INDUSTRIES             31
AUGUST
Textiles and Apparel                                                          2012

Alok Industries: Integrated textile
solutions
                                                                                                                   Plans to enter in
                                                                                                                   technical textiles
     Polyester Yarn                                                                                                   and special
                                                                                                                    textiles market
                                                                                     JV with NTC - 2008
                                                                                                                                              FY12
      Home Textile
                                                                                                                                          USD1.8 billion
                                                            Acquisition of QS                                                               turnover

  Garments - Woven &                                          to gain retail
       Knitted                                             holding in the UK -
                                                                  2007
                                                                                                                      2007
                                                                                                                ISO Accreditations
       Embroidery                 Organic growth in
                                      textiles                                             FY04
                                                                                         USD208
     Apparel Fabric                                               1995*                   million
                                                             Financial and               turnover
                                                                technical
                                                             collaboration
       Cotton and                                              through JV
      Blended Yarn

                                  1986    1988     1990     1992     1993     1995    2003 2004 2006 2007 2008 2010                        2011     2012
                                                                                                                    Notes: NTC - National Textile Corporation
         *In 1995 Alok industries had sets up financial and technical collaboration with Grabal, Albert Grabher GmbH & Co of Austria to make embroidered
                                                                                           products through a joint venture company, Grabal Alok Impex Ltd

 For updated information, please visit www.ibef.org                                               SUCCESS STORIES: RAYMOND, ALOK INDUSTRIES                32
AUGUST
Textiles and Apparel                                          2012

                                 Contents
                                Advantage India

                                Market overview and trends

                                Growth drivers

                                Success stories: Raymond, Alok Industries

                                Opportunities

                                Useful information

For updated information, please visit www.ibef.org

                                                                             33
AUGUST
Textiles and Apparel                                           2012

Opportunities … (1/2)

                                             Private sector participation in   Proposed FDI in multi-brand
         Immense growth potential
                                                     silk production                     retail

        • The Indian textile industry         • The Central Silk Board         • For the textile industry, the
           is set for strong growth,            sets targets for raw silk        proposed hike in FDI limit in
           buoyed by both strong                production and                   multi-brand retail will bring
           domestic consumption as              encourages farmers and           in more players, thereby
           well as export demand                private players to grow          providing more options to
                                                silk                             consumers
        • For the near term (2012),
           the sector is valued at            • To achieve these targets,      • It will also bring in greater
           USD110 billion by the                alliances with the private       investments along the entire
           Confederation of Indian              sector, especially major         value chain – from
           Textile Industry (CITI)              agro-based industries in         agricultural production to
                                                pre-cocoon and post-             final manufactured goods
        • Estimates by the Alok                 cocoon segments has
           Industries Ltd put the               been encouraged                • With global retail brands
           sector market value at                                                assured of a domestic
           USD220 billion by 2020                                                foothold, outsourcing will
                                                                                 also rise significantly

For updated information, please visit www.ibef.org                                                      OPPORTUNITIES   34
AUGUST
Textiles and Apparel                                                  2012

Opportunities … (2/2)

                                                    Centres of Excellence (CoE)
            Retail sector offers growth
                                                    for research and technical                          Foreign investments
                     potential
                                                             training

        •    With consumerism and               •    The CoEs are aimed at creating              •   The government is taking
             disposable income on the rise,          testing and evaluation facilities               initiatives to attract foreign
             the retail sector has                   as well as developing resource                  investments in the textile sector
             experienced a rapid growth in           centres and training facilities                 through promotional visits to
             the past decade with several                                                            countries such as Japan,
             international players like Marks   •    Existing four CoEs, BTRA for                    Germany, Italy and France
             & Spencer, Guess and Next               Geotech, SITRA for Meditech,
             having entered Indian market            NITRA for Protech and
                                                     SASMIRA for Agrotech, would
        •    The organised apparel segment           be upgraded in terms of
             is expected to grow at a                development of incubation
             compound annual growth rate             centre and support for
             (CAGR) of more than 13 per              development of prototypes
             cent over a 10-year period
                                                •    fund support would be
                                                     provided for appointing experts
                                                     to develop these facilities

                                                                                       Notes: BTRA - The Bombay Textile Research      Association
                                                                                               SITRA - South India Textile Research   Association
                                                                                          NITRA - Northern India Textile Research     Association
                                                                                     SASMIRA - Synthetic & Art Silk Mills Research    Association

For updated information, please visit www.ibef.org                                                                                OPPORTUNITIES     35
AUGUST
Textiles and Apparel                                          2012

                                 Contents
                                Advantage India

                                Market overview and trends

                                Growth drivers

                                Success stories: Raymond, Alok Industries

                                Opportunities

                                Useful information

For updated information, please visit www.ibef.org

                                                                             36
AUGUST
Textiles and Apparel                                          2012

Industry Associations

The Textile Association (India) (TAI)
 72-A, Santosh, Dr M B Raut Road, Shivaji Park, Dadar, Mumbai- 400 028
Telefax: 91 22 24461145
Website: www.textileassociationindia.org

The South India Textile Research Association (SITRA)
13/37, Avanashi Road, Coimbatore - 641 014, Tamil Nadu
Phone: 91 422 2574367, 6544188, 4215333
Fax: 91 422 2571896, 4215300
E-mail: sitraindia@dataone.in
Website: www.sitra.org.in

Northern India Textile Mills’ Association (NITMA)
121, Gagandeep Building (First Floor), 12, Rajendra Palace, New Delhi- 110 008
E-mail: nitma@vsnl.net, nitma@airtelmail.in
Website: www.nitma.org

For updated information, please visit www.ibef.org                               USEFUL INFORMATION   37
AUGUST
Textiles and Apparel                                           2012

Glossary … (1/2)

→   BTRA: Bombay Textile Research Association

→   CAGR: Compound Annual Growth Rate

→   FDI: Foreign Direct Investment

→   FY: Indian financial year (April to March)

→   GOI: Government of India

→   INR: Indian Rupee

→   NITRA: Northern India Textile Research Association

→   NTC: National Textiles Corporation

→   NTP: National Textile Policy

→   SASMIRA: Synthetic & Art Silk Mills Research Association

→   SEZ: Special Economic Zone

→   SITP : Scheme for Integrated Textile Park

For updated information, please visit www.ibef.org                      USEFUL INFORMATION   38
AUGUST
Textiles and Apparel                                      2012

Glossary … (2/2)

→   SITRA: South India Textile Research Association

→   TUFS: Technology Upgradation Fund Scheme

→   TMC: Technology Mission on Cotton

→   USD: US Dollar

    →   Conversion rate used: USD1= INR48

→   Wherever applicable, numbers have been rounded off to the nearest whole number

For updated information, please visit www.ibef.org                                   USEFUL INFORMATION   39
AUGUST
Textiles and Apparel                                            2012

Disclaimer

  India Brand Equity Foundation (IBEF) engaged Aranca to         presentation to ensure that the information is accurate to
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  prepared by Aranca in consultation with IBEF.                  content is not to be construed in any manner whatsoever
                                                                 as a substitute for professional advice.
  All rights reserved. All copyright in this presentation and
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  The same may not be reproduced, wholly or in part in           specific products or services that may have been
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  transiently or incidentally to some other use of this          taken as a result of any reliance placed on this
  presentation), modified or in any manner communicated          presentation.
  to any third party except with the written approval of
  IBEF.                                                          Neither Aranca nor IBEF shall be liable for any direct or
                                                                 indirect damages that may arise due to any act or
  This presentation is for information purposes only. While      omission on the part of the user due to any reliance
  due care has been taken during the compilation of this         placed or guidance taken from any portion of this
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For updated information, please visit www.ibef.org                                                             DISCLAIMER   40
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