“A FEASIBILITY STUDY ON EXPORT OF DENIM PRODUCTS TO

BANGLADESH”

SUBMITTED BY:

DHARA BHATT(137690592014)

PIYUSH KATHIRIYA (137690502043)

MEHUL MAKWANA (137690592047)

BANSI PATEL (137690592072)

PAYAL RAJGOR(137690592095)

PRIYANK SHAH(137694592133)

SUBMITTED TO:PROF.URVI AMIN

PRODUCTS:

Introduction to Denim Industry:

The Indian textile industry is one of the major sectors of Indian economy which contributes towards the growth of the country's industrial sector and overall economic growth.

The Indian textile industry can be separated into a number of segments such as cotton, silk, woolen, denim, jute and handicraft

The textiles and garments industry is one of the largest and most important sectors of Indian economy, in terms of output, foreign exchange earnings and employment generation.

In the spinning segment, India has an installed capacity of around 40 million spindles (23% of world), 0.5 million rotors (6% of world). In the weaving segment.

India is equipped with 1.80 million shuttle looms (45% of world), 0.02 million shuttle less looms (3% of world) and 3.90 million handlooms (85% of world).

The organized mill (spinning) sector has recorded a significant growth during the last decade, with the number of spinning mills increasing from 873 to 1564.

CRUCIAL FACTOR AND STEP IN DECION MAKING

Strengths There is a “ready made” market for this product. Relatively low labour costs Ample available work force. Well-situated industrial estate with all major facilities available

Weaknesses The requirement of credit and/or delay of payments from customer side might

cause disturbance in the cash cycles. Very small base of available skilled machinists. Lack of trained technicians and line / middle management. Uncertain investment climate

Opportunities WAPDA/KESC will provide “off peak hour rates” and “bulk rates” for industrial

consumers to lower the electricity cost of manufacturing. Manufacturers-cum-exporters are allowed to import samples of each kind or

quality having value up to US$ 100 at zero duty rates. Two special export zones focusing on textile sector particularly in dyeing,

processing and finishing sectors will be established at Karachi and in one of the industrial cities of Punjab.

Threats Skilled operators in the denim garments are quite unorganized. Stitching expertise

is not available at the best possible level. This restricts the industry to the basic garments and only limits the entry into the manufacturing of high quality garments.

Cost of doing business may increase as the energy, raw material prices, wages and mark up rates may rise.

PORTERS FIVE FORCES ANALYSIS

Competitive Rivalry between Existing Players: Bangladesh is the 6th largest apparel and textile supplier in the US & EU market. It is shaping itself as a potential market player by providing the most quality with

the cheapest price possible. Bangladesh is putting up a show against other competitors like China and India. by

providing available cheap labor.

Bargaining Power of Suppliers Bangladesh has always been enjoying the upper hand in ordering its inputs from

its suppliers. Bangladesh has a good reputation in terms of timely payment to the suppliers. This

reputation is helping create a longer term relationship with the suppliers (foreign) and is also giving the local firms initiative to step into the supply chain

Bargaining Power of Customers Bangladeshi manufactures realize that the buyer posses more power than

themselves. Bangladesh is providing a large space of choice to the provider in terms of quality

and cost. It is offering the lowest possible production price and also work that is best in

quality.

Threat of New Entrants Bangladesh has yet to reach economies of scale in terms of production. Thus it

allows potential entrants to pose a threat to its growth. But again, if we just analyze the growth of textile and RMG sector, this threat

might seem negligible. The greatest advantage that Bangladesh has right now is its cheap labor. Cheap

labor would continue to be available until the living standards go up.

Threat of Substitutes: Bangladesh, in terms of substitutes, plays both the roles of an affected and

an opportunist. Bangladeshi products are being substituted due to lack of supplier power

and government's reputation. Bangladesh posses the ultimate weapon of cheap labor and thus at times, it

has to use it to substitute opportunities from its competitors.

PROBLEMS AND CHALLENGES OF DENIM INDUSTRY

Lack of Modernize Equipment: Increasing Cost of Production: Electricity Crisis: Tight Monetary Policy: Lack of new investment:

WINNING STRATEGIES FOR THE DENIM

The supply chain itself is a very dynamic and complex process and its goal is to be efficient and seamless.

All the activities involved in delivering a product from raw material through to the customer including sourcing raw materials and parts, manufacturing and assembly, warehousing and inventory tracking.

The apparel supply chain is a complex and intricate process with several different areas. One mistake in the supply chain causes a kink throughout the whole process.

An efficient and cohesive supply chain allows companies to keep a competitive advantage by supplying superior service to their customers and by keeping loss of inventory at a minimum.

Apparel companies now use multiple channels, new advances in technology, and streamlining in order to create a very efficient supply chain.

DENIM AND GARMENTS VALUE CHAIN:

• There are also two independent associations in the garments sector, largely following the divide between woven garments and knitwear: Bangladesh Garment Manufacturers and Exporters Association (BGMEA), •This value chain is very export orientated; about half of exports coming from knitwear, with the other half being woven garments

PROJECT PROFILE

Opportunity Rationale

During the last decade, the usage of denim garments, especially denim jeans, has been on a rise in the international as well as the local markets. This has led to a rise in the demand of denim garments.

Project Brief

The proposed project presents an investment opportunity in manufacturing of denim jeans. The project profile has been prepared for a standard five pocket jeans trouser. The proposed stitching unit will be having the potential for its own manufacturing and supply for the local market as well as for the export market. However washing will be outsourced.

Proposed Capacity

The proposed capacity of the unit is 1000 garments per day.

Total Project Cost The cost of project has been estimated as Rs.14.150 million including machinery

and office equipment.

Capital Investment: 5,981,220

working capital : 8,169,111

Key Success Factor: Surety of high consistent quality Surety of on time delivery Competitive rates Cost efficiency Better services to the customer Better communication development with customers

BANGLADESH IMPORT REGULATIONS

Bill of Entry: Examination of goods: Execution of bonds: Payment of duty: Amendment of Bill of Entry: Prior Entry for Bill of Entry: Bill of Entry for bond/warehousing:

Export procedure

Shipping Bill: Octroi exemption for export goods: Waiver of GR form: Arrival of export goods at docks: Customs examination of export goods: Examination norms:

MARKET ANALYSIS The average production capacity of majority of small and medium sized

jeans manufacturing units is about 1,000 jeans per day.

Target Customers In case of direct exports, the customers are retail chain stores, direct

distributors and wholesalers. The export can either be through buying houses and/or through direct customer.

PRODUCTION PROCESS FLOW The proposed business is stitching denim jeans. The process will involve

purchasing of raw material from the market i.e. denim fabric, which will be put through the process. Washing of the fabric will be outsourced as washing in house requires a plant which is expensive and will greatly increase the project cost. Therefore, it is recommended that the proposed project should outsource washing. Washing cost per piece is taken as Rs. 30.

Raw Material

Table Raw Material  

Raw Material Consumption/ Piece Rate (Rs.) 

Fabric (Metre) 1.30 200 / m  

 

Pocket Lining (Metre) 0.2 100 / m  

 

Stitching thread (Metre) 350 10 / piece  

 

Imported buttons 1 3 / unit  

 

4.5 YG Zip 1 15 / unit  

 

Main label 1 5 / unit  

Care and size label 1 2 / unit

Rewet per unit 6 9 / unit

Packing cost 1 15 / piece

HUMAN RESOURCE REQUIREMENTS

Production Staff Number Salary/Month Annual Salary Production Manager 1 50,000 600,000 Production Planning Officer 1 25,000 300,000 Pattern Master 1 25,000 300,000 Cutting Master 1 15,000 180,000 Cutting Helper 2 8,500 204,000 Final Table inspector 2 12,000 288,000 Finishing Supervisor 1 15,000 180,000 Rowing Inspector 1 12,000 144,000 Machine Operator 40 9,000 4,320,000 Helper (machine operator) 2 7,500 180,000 Clippers 1 7,500 180,000 Iron Presser 1 10,000 120,000 Packing Staff 2 7,500 180,000 Store keeper 1 10,000 120,000 Total 58 7,296,000

Land/Building Requirement

Space Requirement Required area (sq. ft) Fabric & Accessories inventory Store 1,000 Cutting Room 400 Stitching Room 1,250 Inspection Room 850 Packing Room 750 Finished Garment Store 850 Total factory area 5,100 Management Building 650 Total Area Required (sq. ft.) 5,750

Cost competitiveness in Indian denim sector has been restrained by limited scale operations, obsolete technology and reservation under SSI policies.

While retaining its traditional cost advantages of home grown cotton and low cost labour, India needs to sharpen its competitive edge by lowering the cost of operations through efficient use of production inputs and scale operations.

Besides, there are needs for rationalization of charges, levies related to usage of export logistics to remain cost competitive.

STRATEGIES AND RECOMMENDATIONS

Conclusion

Bangladesh majorly imports denim apparels from India India and Gujarat has the great potential to export good quality textiles and

denims to Bangladesh. Technology is the key to success in the denim industry. The Government must aim to develop processing capacity and encourage

technology up gradation funds. Gujarat government is already helping the people by giving subsidies. With the help of Vibrant Gujarat Summit Gujarat Government is making business

tie ups with various countries. In the 2013 summit Gujarat Government should eye on Bangladesh because there

is great potential market for Indian Garments and textiles in Bangladesh

This will give more opportunities to the existing players and encourage new players to start their venture in the State.

The retail boom is catching on fast across the country. The State should, thus focus on building retail opportunities in textiles &

garments to meet the growing demand in the country and abroad. Gujarat has large availability of both natural and man-made fibers as basic raw

material and non-woven fabric manufacturing base, which is the key for developing technical textiles.

Thus, the State must leverage on available resources and should focus on expanding the portfolio of technical textiles.

Increasing exports from Gujarat and India can help enhance the Indian Economy.