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Section C: Textile Industry

The Indian textile industry is one of the largest manufacturing sectors and contributes significantly to the economy in terms of industrial output, employment generation and export earnings. Apart from being highly-fragmented, the industry is characterised to be vertically-integrated across the whole value chain and interconnected with various operations. The industry has both the organised and unorganised segments. The organised textile segment consists of spinning mills and composite mills and the unorganised segment consists of handlooms, powerlooms and handicrafts among others. Cotton, blended, silk, wool and man-made textile are the major sub-segments of the textile industry. The textile players majorly deal in readymade garments, suiting and shirting, shirts and trousers, fabrics, bed linen and embroidery work.

Some highlights of the textile companies based in Mumbai are as follows:

Characteristics of the textile companies in the Mumbai cluster

Ownership pattern

Most textile companies surveyed in the Mumbai cluster are private limited companies that constitute 40% of the total sample, followed by partnership and proprietorship companies that account for 27% and 20% of the sample companies, respectively.

Year of incorporation

All the companies covered in the survey were incorporated during the period 1975-2005. Around 40% of these companies were incorporated between 1985 and 1995.

Registration

According to the survey results, approximately 57% textile companies in the Mumbai cluster are registered under the DIC/ SIDO and other state schemes.

Nature of operation

As per the survey results, around 63% of the companies surveyed were standalone manufacturers of textiles whereas 10% of the companies were contract manufacturers. The remaining 27% of the companies manufactured textiles on both standalone and contract basis.

Segment-wise classification

The textile industry is a large industry with many sub-segments, but for the purpose of this study, we have divided the industry into the following sub-segments: cotton, man-made fibre, blended fibre, wool, silk and jute.

As per the survey, cotton and man made fiber emerged as the most prominent segments in the industry.

Value chain

As per the survey, the respondent SMEs in the textile sector are involved in multiple value chain processes. Within the entire value chain, manufacturing of garments, along with other activities, was the most common activity among the companies in the Mumbai cluster.

Operational analysis

Revenue classification

Approximately 47% textile companies that took part in the survey had a turnover in the range of Rs 10-100 mn; besides, 26% companies have a turnover below Rs 10 mn and 17% companies have a turnover between Rs 100-250 mn.

Exports

As per the survey results, approximately 73% of the respondent companies in the Mumbai cluster were involved in some kind of export activity. Among them around 60% of the respondents marketed their products under a brand name.

Approximately 26% of the total companies surveyed derived over 50% of their revenues from exports. Among these companies around 62% companies were solely export oriented units and derived their 100% revenues from exports.

AS per the survey results, Europe and America were the most favoured export destinations for the textile companies in the Mumbai region, followed by the Middle East and Asia.

Production details

Capacity utilisation

Approximately 53% respondents covered in the survey had a capacity utilisation in the range of 80-90%. Among the remaining companies, around 30% had a capacity utilisation of over 90%.

Majority of the respondent companies (about 57%) worked in single shifts while among the remaining companies 30% companies worked in double shifts.

Source of raw materials

According to the survey around 42% respondents procured raw materials from within Maharashtra itself. Out of the remaining companies, 16% sourced materials from the overseas market.

IT adoption among SMEs

Majority of the respondent SMEs (76%) in the textile industry have implemented IT in their businesses. Desktops, printers and scanners are the most prominently used hardware, while customised software is the preferred option for all companies.

Share of IT in total expenditure

According to the survey results, 70% respondent SMEs in the textile industry spend less than 1% of their total expenditure on IT whereas the remaining 30% SMEs spend 1.0-2.5% of their total expenditure on IT. Approximately 70% of the surveyed companies do not plan to increase their IT spend over the next 2 years.

Challenges faced by companies in IT adoption

The survey reveals the various challenges encountered by the respondents while adopting IT in their business. Almost 38% of the respondents cited lack of funds as one of the challenges in IT adoption whereas approximately 34% of the respondents cited high cost of implementation as one of the challenges faced while adopting IT.