--Chapter I---Introduction--

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Introduction
The textile industry has a glorious history in India. It reached its peak of excellence in the period between tenth and seventeenth centuries. The Indian textiles industry is a diverse, large, colorful, yet full of complexity like the country itself. India is among worlds top producers of yarns and fabrics, and the export quality of its products is ever increasing. Textile industry is one of the largest and oldest industries in India. Textile industry in India is a self reliant and independent industry and has great diversification and versatility. The Indian textile industry has greatest presence in the economic life of the country. It is the second largest textile industry in the world after China. The textile industry contributes about 14% to the countrys industrial output and about 17% to export earnings. From the point of view of production, employment export and consumption of cotton textile industry is very important. Textiles occupy an important place in Indian economy. The industry employs about 35 million people and contributes approximately 4% of the GDP of India and 17%of the countrys export earnings. The industry contributes around 25% share in the world trade of cotton yarn. India is the largest exporter of yarn in the international market and has a share of 25% in world cotton yarn have export market. The major steps in the manufacture of textile clothes are: To harvest and clean the fiber or wool. To card it and spin it into threads. To weave the threads into cloth and, To fashion and sew the cloth into clothes. The cotton textile industry has three main divisions. They are: 1. The mill industry producing yarn and clothes. 2. The power loom factories producing clothes from mill made yarn. 3. Widely dispersed handloom units producing cloth both from mill made and hand spun yarn. Thus, an industry has an important role to play both in economic prosperity of the country and in the supply of an essential commodity for the entire population. The GTN group traces its origin to yarns. Textiles and cotton trading for more than 5 decade. Page| 2

The group has acquired in depth knowledge of various cotton growing areas in the country and overseas and developed close touch with cotton yarn market quality control is thus ensure from the raw materials to procurement stage. The group entered into manufacture of cotton yarn in 1996 and has subsequently shifted its emphasis to manufacture high quality yarns for sophisticated international markets. Today GTN group has emerged as the largest exporter of cotton yarn in the mill sector in the country. The present study of an organization like GTN Textiles, one of the leading textile Corporation units in Kerala, helps to study the organizational setup as a whole, i.e., how they adapt the strategies and structures that guide them. Organization study gives the opportunity to the students to understand the basic managerial skills and corporate culture. It enables the students to understand their skills and interest which helps in shaping the career. In addition to it, students come to know the history of the organization, its milestones, vision, mission, plans, and expectations of the organization regarding the qualities and skills of its employees. 1.2 Objectives of the Study To study the overall functions of organization and gain practical experience.

To study about the structure of the organization To make an analysis of the organizations performance.
1.3 To understand the history, growth profile, structure, & future plans of the organization. To study the quality maintenance procedures and techniques adopted for keeping the international standards To understand the duties and responsibilities performed by employee at different levels in the organization. To conduct a SWOT analysis. Scope of the Study GTN Textiles Ltd, a well-reputed and experienced company in Kerala, who enjoyed a monopoly for several years in the field of manufacturing of cotton yarns and was found to

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be a good source for me as an MBA student. The company was running under various departments and had vast hierarchies of administration, which could be carefully studied for the well understanding of how a management works practically. In addition to that, direct communication with the workers was also possible in the company. So, it was found to be beneficial in doing a project work on the organizational study in GTN Textiles Ltd. 1.4 Chapterisation

The whole study contains four chapters: First Chapter is the introductory chapter. It contains the following: Introduction Objectives of the Organization study Scope of the Organization study Second Chapter depicts the Concepts of Organizing, Organization-its Process and Structure, Departmentation and its Types, Types of Organization, and Delegation of authority, Decentralization and Centralization. Third Chapter describes the Industry Profile i.e. World Scenario, Indian Scenario and State Scenario of textile Industry and other details. Fourth Chapter deals with Company Profile that is about the detailed study of History of the Company, Products, and each Department in GTN Textiles Ltd., the SWOT analysis, plans, Findings, Conclusion of this study and Bibliography.

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--Chapter II---Theoretical---Background--

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2.1 Concept of Organizing

Organization is the process of-: 1. Identifying and grouping the work to be performed. 2. Defining and delegating responsibility and authority. 3. Establishing the relationship for enabling people to work efficiency together in accomplishing objectives. The working relationships- vertical and horizontal associations between individuals and groups- that exist within an organization affect how its activities are to be accomplishing and coordinated. Effective organizing depends on the mastery of several important concepts: work specialization, chain of command, authority, delegation, span of control, and centralization versus decentralization. Many of these concepts are based on the principles developed by Henri Fayol. 2.1.2 Organizing Organizing is the act of rearranging elements following one or more rules. Organizing plays a central role in the management process. Once plans are created, the manager's task is to see that they are carried out. Given a clear mission, core values, objectives, and strategy, the role of organizing is to begin the process of implementation by clarifying jobs and working relationships. It identifies who is to do what, who is in charge of whom, and how different people and parts of the organization relate to and work with one another. All of this, of course, can be done in different ways. The strategic leadership challenge is to choose the best organizational form to fit the strategy and other situational demands. Organizing is the managerial function of arranging people and resources to work toward a goal. The purposes of organizing include but are not limited to determining the tasks be performed in order to achieve objectives, dividing tasks into specific jobs, grouping jobs into departments, specifying reporting and authority relationships, delegating the authority necessary for task accomplishment, and allocating and deploying resources in a coordinated fashion. 2.1.3 Organization Organization is the process of identifying and grouping work to be performed, defining and delegating responsibility, and authority and establishing relationship for the purpose of enabling people to work most effectively together in accomplishing objective. Page| 6

Organizations are groups of people organized for some purpose, such as business or political activities. 2.1.3.1 Importance of an Organization Significance of the organization in any institution is explained as below: (a) It ensures optimum use of human resources: It establishes persons with different Interests skills, knowledge, and viewpoints. (b) It stimulates creativity: A sound and well-conceived organization structure is the source of creative thinking and initiation of new ideas. (c) Use of improved technology: A good organization provides for optimum use of technological improvements. (d) Co-ordination in the enterprise: In a good organization, the different departments perform their functions in a closely related manner. (e) Executive development: The pattern of an organization structure has strong influence on the development of executives. (f) It ensures cooperation among workers: A good organization promotes mutual Goodwill and co-operation among workers also. 2.1.3.2 Principles of Organization Principle means the theoretical basis on which something is build up. The theoretical basis is formulated from fundamental truth. Some of the important principles to be followed for developing round and efficient organizations are: Principle of unity of objective Principle of specification Principle of co-ordination Principle of unity of command Principle of span of control Principle of exception Principle of flexibility Principle of simplicity Principle of communication Principle of efficiency

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2.2

Process and Structure of Organization Organizing, like planning, must be a carefully worked out and applied process. This

process involves determining what work is needed to accomplish the goal, assigning those tasks to individuals, and arranging those individuals in a decision-making framework (organizational structure). The result of the organizing process is an organization a whole consisting of unified parts acting in harmony to execute tasks to achieve goals, both effectively and efficiently. A properly implemented organizing process should result in a work environment where all team members are aware of their responsibilities. If the organizing process was not done well, the results may yield confusion, frustration, loss of efficiency, and limited effectiveness. 2.3 Types of Organization

Although there are a number of variations of organizational structure, we shall discuss line and staff organizations and committee organization here. 2.3.1 Line Organization The line organization is the simplest organizational structure. It is the doing" organization, in that the work of all organizational units is directly involved in producing and marketing the organization's goods and services. There are direct vertical links between the different levels of the scalar chain. Since there is a clear authority structure, this form of organization promotes greater decision-making and is simple in form to understand. On the other hand, managers may be overburdened when they have too many duties. The following figure illustrates a simple line organization: President

Vice President Operations

Vice President Marketing

Purchasing
(Figure 2.1)

Assembly

Quality Control

Promotion

Sales

Market Research

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2.3.2 Line and Staff Organization When staff specialists are added to a line organization to "advise, "serve or support" the line in some manner, we have a line and staff organization. These specialists contribute to the effectiveness and efficiency of the organization. Their authority is generally limited to making recommendation to the line organization. Sometimes this creates conflict. However, such conflict can be reduced by having staff specialists obtain some line experience, which will tend to make them better understand the problems facing the line manager they support. Such functions as human resources management and research and development are typical staff functions. The following figure provides an example of such a structure.

President

Director Personnel

Director Research and Development

Vice President Operations

(Figure 2.2)

Vice President Marketing

2.3.3 Functional Organisation In this type of organization, the personnel and their work are organized based on the same type of work of activities. All works of the same type are grouped together and brought under one department managed by an executive who is an expert. Thus, there are separate functional departments, for the major functions of the business viz., engineering or production, purchase, sales, finance personnel etc. Each department performs its specialized function for the entire organization. For example, the purchase department deals with purchases on behalf of the entire organization, and so on. Now a day, is almost all business concerns usually follow some sort of functional plan to carry out the primary functions of business. However, it is the rare to find a pure functional organization and there is always an element of line organization mixed with it.

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President

Creative

Sales & Marketing

Accounts

Human Resource

Manager
(Figure 2.3)

Manager

Manager

Manager

2.4

Departmentation The process of classifying an organization because of departments or similar

activities, to facilitate planning and control 2.4.1 Types of Departmentation a) Functional Departmentation: - This is the simplest form of Departmentation when grouping of departments is done because of functions such as production finance marketing sales purchase etc., it is known as functional Departmentation. Further sub divisions of the functions may be formed as marketing can be divided in to advertisement sales and after sales service. Therefore, we can classify functions into two parts. Basic functions i.e. Production Marketing Finance and Personnel Secondary Functions: - These are further parts of basic functions according to the organizational needs or operations like Production: - Product planning, R&D, Quality control, and material handling. Functional Departmentation is useful where there is production of single product or similar kind of product, for example TV Computer monitor or TFT. CEO

Production

Finance

Marketing

Personnel

Advertisement
(Figure 2.4)

Sales

Market Research Page| 10

b) Product Departmentation: - When grouping of activities and departments formed are given name because of products manufactured in an organization, it is called Products Departmentation. It is applied where there is large ranges of products are manufactured. When there are several product lines and each product line consists of a variety of items, functional classification fails to give balanced emphasis on each product. Apart from this use; product or services may be made the basis of major divisions by a departmental store, a banking concern and an insurance company. Again, manufacturing and marketing departments may subdivide their activities because of products.

CEO Head TV Division Head AC and Refrigeration Head Computer

(Figure 2.5)

c) Territorial Departmentation (Geographical Departmentation): - Like the products basis, geographical regions are adopted for main division as well as for subdivision purposes. When activities of an organization are physically dispersed in different locations territorial departmentation is adopted. Units that are located at different areas are made so many self-contained divisions of the organization. Marketing activities are very often subdivided because of geographical areas. This form of departmentation can be useful where business is on national or international level. For e.g. Indian railways, insurance company use territorial departmentation. CEO Head North Zone
(Figure 2.6)

Head East Zone

Head West Zone

Head South Zone

d)

Customer Departmentation: - When departments are formed to cater different kind of customers it is known as customer departmentation this basis of classification is widely followed in sub-dividing activities of the marketing department. When the products are offered to market through various channels and outlets, it has the special merit of supplying goods in accordance with the peculiar needs of customers. Customers may be Page| 11

classified according to buying capacity or nature like wholesale, retail and export or government or public. Most departmental stores may attempt t reach customers preferring low price or higher price. Head Marketing Head Retail Head Export

( Figure 2.7)

Head Whole Sale

2.5

Authority and Delegation of Authority

2.5.1 Authority Authority is the formal and legitimate right of a manager to make decisions, issue orders, and allocate resources to achieve organizationally desired outcomes. A manager's authority is defined in his or her job description. Organizational authority has three important underlying principles: Authority is based on the organizational position, and anyone in the same position has the same authority. Subordinates accept authority. Subordinates comply because they believe that managers have a legitimate right to issue orders. Authority flows down the vertical hierarchy. Positions at the top of the hierarchy are vested with more formal authority than are positions at the bottom. In addition, authority comes in three types: Line Authority gives a manager the right to direct the work of his or her employees and make many decisions without consulting others. Line managers are always in charge of essential activities such as sales, and they are authorized to issue orders to subordinates down the chain of command. Staff Authority supports line authority by advising, servicing, and assisting, but this type of authority is typically limited. For example, the assistant to the department head has staff authority because he or she acts as an extension of that authority. These assistants can give advice and suggestions, but they do not have to be obeyed. The department head may also give the assistant the authority to act, such as the right to

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sign off on expense reports or memos. In such cases, the directives are given under the line authority of the boss. Functional Authority is authority delegated to an individual or department over specific activities undertaken by personnel in other departments. Staff managers may have functional authority, meaning that they can issue orders down the chain of command within the very narrow limits of their authority. For example, supervisors in a manufacturing plant may find that their immediate bosses have line authority over them, but that someone in corporate headquarters may also have line authority over some of their activities or decisions. The functional authority allows specialization of skills and improved coordination. Frederick Taylor originally suggested this concept. He separated planning from doing by establishing a special department to relieve the laborer and the supervisor from the work of planning. The role of the supervisor became one of making sure that planned operations were carried out. The major problem of functional authority is overlapping relationships, which can be resolved by clearly designating to individuals that activities their immediate bosses have authority over and which activities are under the direction of someone else. 2.5.2 Delegation A concept related to authority is delegation. Delegation is the downward transfer of authority from a manager to a subordinate. Most organizations today encourage managers to delegate authority in order to provide maximum flexibility in meeting customer needs. In addition, delegation leads to empowerment, in that people have the freedom to contribute ideas and do their jobs in the best possible ways. This involvement can increase job satisfaction for the individual and frequently results in better job performance. Without delegation, managers do all the work themselves and underutilize their workers. The ability to delegate is crucial to managerial success. Managers need to take four steps if they want to successfully delegate responsibilities to their teams: 1. Specifically assign tasks to individual team members. The manager needs to make sure that employees know that they are ultimately responsible for carrying out specific assignments. 2. Give team members the correct amount of authority to accomplish assignments. Typically, an employee is assigned authority commensurate with the task. A classical principle of organization warns managers not to delegate without giving the subordinate the

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authority to perform to delegated task. When an employee has responsibility for the task outcome but little authority, accomplishing the job is possible but difficult. The subordinate without authority must rely on persuasion and luck to meet performance expectations. When an employee has authority exceeding responsibility, he or she may become a tyrant, using authority toward frivolous outcomes. 3. Make sure that team members accept responsibility. Responsibility is the other side of the authority coin. Responsibility is the duty to perform the task or activity an employee has been assigned. An important distinction between authority and responsibility is that the supervisor delegates authority, but the responsibility is shared. Delegation of authority gives a subordinate the right to make commitments, use resources, and take actions in relation to duties assigned. However, in making this delegation, the obligation created is not shifted from the supervisor to the subordinate - it is shared. A supervisor always retains some responsibility for work performed by lower-level units or individuals. 4. Create accountability. Team members need to know that they are accountable for their projects. Accountability means answering for one's actions and accepting the consequences. Team members may need to report and justify task outcomes to their superiors. Managers can build accountability into their organizational structures by monitoring performances and rewarding successful outcomes. Although managers are encouraged to delegate authority, they often find accomplishing this step difficult for the following reasons: Delegation requires planning, and planning takes time. A manager may say, By the time I explain this task to someone, I could do it myself. This manager is overlooking the fact that the initial time spent up front training someone to do a task may save much more time in the long duration. Once an employee has learned how to do a task, the manager will not have to take the time to show that employee how to do it again. This improves the flow of the process from that point forward. Managers may simply lack confidence in the abilities of their subordinates. Such a situation fosters the attitude, If you want it done well, do it yourself. If managers feel that their subordinates lack abilities, they need to provide appropriate training so that all are comfortable performing their duties. Managers experience dual accountability. Managers are accountable for their own actions and the actions of their subordinates. If a subordinate fails to perform a certain

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task or does so poorly, the manager is ultimately responsible for the subordinate's failure. By the same token, if a subordinate succeeds, the manager shares in that success as well, and the department can be even more productive. Finally, managers may refrain from delegating because they are insecure about their value to the organization. However, managers need to realize that they become more valuable as their teams become more productive and talented. Despite the perceived disadvantages of delegation, the reality is that a manager can improve the performance of his or her work groups by empowering subordinates through effective delegation. Few managers are successful in the long term without learning to delegate effectively. The following additional principles may be helpful for managers who have tried to delegate in the past and failed: Principle 1: Match the employee to the task. Managers should carefully consider the employees to whom they delegate tasks. The individual selected should possess the skills and capabilities needed to complete the task. Perhaps even more important is to delegate to an individual who is not only able to complete the task but also willing to complete the task. Therefore, managers should delegate to employees who will view their accomplishments as personal benefits. Principle 2: Be organized and communicate clearly. The manager must have a clear understanding of what needs to be done, what deadlines exist, and what special skills are required. Furthermore, managers must be capable of communicating their instructions effectively if their subordinates are to perform up to their expectations. Principle 3: Transfer authority and accountability with the task. The delegation process is doomed to failure if the individual to whom the task is delegated is not given the authority to succeed at accomplishing the task and is not held accountable for the results as well. Managers must expect employees to carry the ball and then let them do so. This means providing the employees with the necessary resources and power to succeed, giving them timely feedback on their progress, and holding them fully accountable for the results of their efforts. Managers also should be available to answer questions as needed. Principle 4: Choose the level of delegation carefully. Delegation does not mean that the manager can walk away from the task or the person to whom the task is delegated.

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The manager must maintain some control of both the process and the results of the delegated activities. Depending upon the confidence the manager has in the subordinate and the importance of the task, the manager can choose to delegate at several levels. 2.5.2.1 Delegation of Authority A manager alone cannot perform all the tasks assigned to him. In order to meet the targets, the manager should delegate authority. Delegation of Authority means division of authority and powers downwards to the subordinate. Delegation is about entrusting someone else to do parts of your job. Delegation of authority can be defined as subdivision and suballocation of powers to the subordinates in order to achieve effective results. For achieving delegation, a manager has to work in a system and has to perform following steps: 1. Assignment of tasks and duties 2. Granting of authority 3. Creating responsibility and accountability Delegation of authority is the base of superior-subordinate relationship, it involves following steps:1. Assignment of Duties - The delegator first tries to define the task and duties to the subordinate. He also has to define the result expected from the subordinates. Clarity of duty as well as result expected has to be the first step in delegation. 2. Granting of authority - Subdivision of authority takes place when a superior divides and shares his authority with the subordinate. It is for this reason; every subordinate should be given enough independence to carry the task given to him by his superiors. The managers at all levels delegate authority and power which is attached to their job positions. The subdivision of powers is very important to get effective results. 3. Creating Responsibility and Accountability - The delegation process does not end once powers are granted to the subordinates. They at the same time have to be obligatory towards the duties assigned to them. Responsibility is said to be the factor or obligation of an individual to carry out his duties in best of his ability as per the directions of superior. Responsibility is very important. Therefore, it is that which gives effectiveness to authority. At the same time, responsibility is absolute and cannot be shifted. Accountability, on the others hand, is the obligation of the

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individual to carry out his duties as per the standards of performance. Therefore, it is said that authority is delegated, responsibility is created, and accountability is imposed. Accountability arises out of responsibility and responsibility arises out of authority. Therefore, it becomes important that with every authority position an equal and opposite responsibility should be attached. Therefore, every manager, i.e., the delegator has to follow a system to finish up the delegation process. Equally important is the delegates role, which means his responsibility and accountability, is attached with the authority over to here.

2.6

Centralization and Decentralization The general pattern of authority throughout an organization determines the extent to

which that organization is centralized or decentralized. 2.6.1 Centralization Centralization is said to be a process where the concentration of decision-making is in a few hands. All the important decision and actions at the lower level, all subjects and actions at the lower level are subject to the approval of top management. According to Allen, Centralization is the systematic and consistent reservation of authority at central points in the organization. The implication of centralization can be: Reservation of decision-making power at top level. Reservation of operating authority with the middle level managers. Reservation of operation at lower level at the directions of the top level.

Under centralization, the top management takes the important and key decisions and the other levels are into implementations as per the directions of top level. For example, in a business concern, the father & son being the owners decide about the important matters and the department heads carry out all the rest of functions like product, finance, marketing, personnel, and they have to act as per instruction and orders of the two people. Therefore in this case, decision making power remain in the hands of father & son. 2.6.2 Decentralization Decentralization is a systematic delegation of authority at all levels of management and in all of the organization. In a decentralization concern, authority in retained by the top management for taking major decisions and framing policies concerning the whole concern. Rest of the authority may be delegated to the middle level and lower level of management.

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The degree of centralization and decentralization will depend upon the amount of authority delegated to the lowest level. According to Allen, Decentralization refers to the systematic effort to delegate to the lowest level of authority except that which can be controlled and exercised at central points. Decentralization is not the same as delegation. In fact, decentralization is all extension of delegation. Decentralization pattern is wider is scope and the authorities are diffused to the lowest most level of management. Delegation of authority is a complete process and takes place from one person to another. While decentralization is complete only when fullest possible, delegation has taken place. For example, the general manager of a company is responsible for receiving the leave application for the whole of the concern. The general manager delegates this work to the personnel manager who is now responsible for receiving the leave applicants. In this situation, delegation of authority has taken place. On the other hand, on the request of the personnel manager, if the general manager delegates this power to all the departmental heads at all level, in this situation decentralization has taken place. There is a saying that Everything that increasing the role of subordinates is decentralization and that decreases the role is centralization. Decentralization is wider in scope and the subordinates responsibility increase in this case. On the other hand, in delegation the managers remain answerable even for the acts of subordinates to their superiors. 2.6.2.1 Implications of Decentralization 1. There are fewer burdens on the Chief Executive as in the case of centralization. 2. In decentralization, the subordinates get a chance to decide and act independently which develops skills and capabilities. This way the organization is able to process reserve of talents in it. 3. In decentralization, diversification and horizontal can be easily implanted. 4. In decentralization, concern diversification of activities can place effectively since there is more scope for creating new departments. Therefore, diversification growth is of a degree. 5. In decentralization structure, operations can be coordinated at divisional level, which is not possible in the centralization set up. 6. In the case of decentralization structure, there is greater motivation and morale of the employees since they get more independence to act and decide.

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In a decentralization structure, co-ordination to some extent is difficult to maintain as there are lot many department divisions and authority is delegated to maximum possible extent, i.e., to the bottom most level delegation reaches. Centralization and decentralization are the categories by which the pattern of authority relationships became clear. The degree of centralization and de-centralization can be affected by many factors like nature of operation, volume of profits, number of departments, size of a concern, etc. The larger the size of a concern, a decentralization set up is suitable in it. A variety of factors can influence the extent to which a firm is centralized or decentralized. The following is a list of possible determinants: The external environment in which the firm operates. The more complex and unpredictable this environment, the more likely it is that top management will let lowlevel managers make important decisions. After all, low-level managers are closer to the problems because they are more likely to have direct contact with customers and workers. Therefore, they are in a better position to determine problems and concerns. The nature of the decision itself. The riskier or the more important the decision, the greater the tendency to centralize decision-making. The abilities of low-level managers. If these managers do not have strong decisionmaking skills, top managers will be reluctant to decentralize. Strong low-level decision-making skills encourage decentralization. The organization's tradition of management. An organization that has traditionally practiced centralization or decentralization is likely to maintain that posture in the future. In principle, neither philosophy is right or wrong. What works for one organization may or may not work for another. Kmart Corporation and McDonald's have both been very successful both practice centralization. Similarly, decentralization has worked very well for General Electric and Sears. Every organization must assess its own situation and then choose the level of centralization or decentralization that works best.

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--Chapter III---Industry Profile--

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3.1 Industry profile

Modern textile industry in India has its origin in the 19th century. The textile industry occupies a prominent role in the Indian economy contribution to about 23.5% of the countrys industrial production. The textiles sector is closely linked with agriculture, handlooms, power looms, garments manufacturing and a number if ancillaries in industry and trade. India has the second largest spinning capacity in the world, after China. In fact, after the expiry of Agreement on Textiles and Clothing, a number undertaken significant expansion of their spinning capacity. of existing units have

Textile industry in India is the second largest employment generator after agriculture. Indian textile and apparel industry, contribute to 3.6% of India s gross domestic product accounts for 25% of India export. The removal of quotas has been advantageous mainly to the developing countries, which were the main exporters of textiles and clothing products. The world textile and clothing exports grew by 9.7% in 2006, to US $ 530 billion. Of the total exports, textiles accounted for US $ 219 billion and clothing for the remaining US $ 311 billion. The worlds largest exporter of textiles (excluding clothing) as a region was EU25, whereas in case of individual countries, China was topping the list with US $ 48.68 billion, followed by Hong Kong (US $ 13.91 billion), USA (US $ 12.67 billion) and South Korea (US $ 10.11 billion). India stood at the 6th position with US $ 9.33 billion worth exports of textiles in 2006. In case of imports of textiles too EU25, as a bloc, was leading the list with US $ 70.43 billion followed by USA (US $ 23.5 billion), China (US $ 16.36 billion), Hong Kong (US $ 13.98 billion), and Japan (US $ 6.18 billion) USA was the largest importer in the case of individual countries. India stood at the 14th position with regard to import of textiles by individual countries, with a mere US $ 2 billion. Developing countries were making an impressive stride in the clothing exports, as has been in the textiles exports. China was the worlds largest exporter of clothing in 2006, with the export value being US $ 95.39 billion, and constituting to around 31% of the world exports in clothing, followed by EU25 (US $ 83.42 billion), as a bloc, Hong Kong (US $ 20.39 billion), Turkey (US $ 11.88 billion) and India (US $ 10.19 billion). The leading importers of clothing were EU 25, with the import value being US $ 141.15 billion and constituting 44% of the total imports, followed by USA (US $ 82.97 billion) and Japan (US $ 23.87 billion). The developed countries were having deficits in textiles and clothing trade Page| 21

for over a decade with USA topping the list with a deficit of US $ 89 billion in 2006. EU held a huge deficit of US $ 56.95 billion, followed by Japan with US $ 22.63 billion during the same period. Such trade deficits show the low competitiveness of manufacturing of textile and clothing industry in these countries. The growth in textile and clothing exports especially by the Asian countries has been an important trend owing mainly to removal of quotas, increasing internationalization and liberalization. 3.1.1 History of Textile Industry English inventors in the 18th century began to automate textile cottage industry processes including carding, spinning, and weaving. James Hargreaves developed the Spinning Jenny, a device that replaced eight hand spinners in one operation. Richard Arkwright assembled these processes and started the first factory on the Derwent River in Cromford, England in 1771. Following the American Revolution, several founding fathers felt manufacturing should remain in England. Alexander Hamilton felt otherwise and wanted to establish a model mill village in Paterson, New Jersey. His ideas were ahead of their time. The "National Manufactory" went out of business in 1796.Samuel Slater of Rhode Island visited several mills owned by Arkwright and associates, memorized the essential features and returned to the US. In 1792, he opened a yarn spinning mill in Pawtucket, Rhode Island, the first successful automated yarn spinning in the US. In 1814, James Cabot Lowell of Boston built a factory in Waltham, up the Charles River from Boston. Later, the Boston Associates built an entire mill town on the Merrimack River, and later named it Lowell" in memory of James Cabot Lowell. 1793 - Eli Whitney and Hogden Holmes developed a simplified method of removing the cotton lint from the seed. Whitneys, and especially Holmes' saw tooth gin, revolutionized the cotton industry by dramatically increasing the productivity of cotton ginning Gins. In the early 1800s, cotton was raised in the southern United States and exported to mills in England and the north. Leaders such as William Gregg of South Carolina advocated a home-based textile industry for the south but the time was not right. Northern mills

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resisted to growth of mills outside New England. Textile machinery was built in New England. New Jersey are imported from Europe. After the Civil War, the south slowly replaced slaves with free workers. The industry remained largely in the north until after the 1880s. Leaders such as Edwin Michael Holt and family of Alamance County, North Carolina built mills in large numbers throughout the south as the 19th century closed. Glencoe Cotton Mill and mill village are preserved today. Cotton mills in New England began to decline in importance. Merchants contracted for goods through agents. The Cone family moved from Baltimore to Greensboro and brokered sales. The Belk family bought goods from Cone to sell in the dry goods stores. Merchants such as Marshall Fields of Chicago bought goods from mills through intermediaries. Later, in order to better control supply, the Cones and the Fields built mills of their own, e.g., Cone Mills and Fieldcrest Mills. Machinery was imported from the north and from Europe. World War I and the naval blockade imposed by England on German shipping, and the use of U-boats by Germany to harass English vessels brought the realization that the United States must be independent of England and Germany for machinery and dyestuffs. New companies emerged to satisfy the war effort and remained strong for several decades following the war. World War II once again emphasized the need for self-sufficiency. Following the war, however, imported machinery and dyes, especially from Germany and Switzerland, once again supplemented and eventually replaced domestic supply. American textile companies thrived with the use of imported machinery and dyestuffs. In the 1990s, a new world order began to replace the Made in the USA ideas. Buying from the lowest cost producer drove many textile manufacturers out of the production side and into imports. Manufacturing companies changed to marketing companies.

3.2 International Scenario

The textile and clothing trade is governed by the Multi-Fiber Agreement (MFA) which came into force on January 1, 1974 replacing short-term and long-term arrangements of the 1960s which protected US textile producers from booming Japanese textiles exports. Later, it was extended to other developing countries like India, Korea, Hong Kong, etc. which had acquired a comparative advantage in textiles. Currently, India has bilateral arrangements under MFA with USA, Canada, Australia, countries of the European Commission, etc. Under MFA, foreign trade is subject to relatively high tariffs and export

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quotas restricting Indias penetration into these markets. India was interested in the early phasing out of these quotas in the Uruguay Round of Negotiations but this did not happen due to the reluctance of the developed countries like the US and EC to open up their textile markets to Third World imports because of high labour costs. With the removal of quotas, exports of textiles have now to cope with new challenges in the form of growing non-tariff / non-trade barriers such as growing regionalization of trade between blocks of nations, child labour, anti-dumping duties, etc. Nevertheless, it must be realized that the picture is not all rosy. It is now being admitted universally and even officially that the year 2005 AD is likely to present more of a challenge than opportunity. If the industry does not pay attention to the very vital needs of modernization, quality control, technology upgradation, etc. it is likely to be left behind. Already, its comparative advantage of cheap labour is being nullified by the use of outmoded machinery. With the dismantling of the MFA, it becomes imperative for the textile industry to take on competitors like China, Pakistan, etc., which enjoy lower labour costs. In fact, the seriousness of the situation becomes even more apparent when it is realized that the nonquota exports have not really risen dramatically over the past few years. The continued dominance of yarn in exports of cotton, synthetics, and blends, is another cause for worry while exports of fabrics are not growing. The lack of value added products in textile exports do not augur well for India in a non-MFA world. Textile exports alone earn almost 25 percent of foreign exchange for India yet its share in global trade is dismal, having declined from 10.9 percent in 1955 to 3.23 percent in 1996. More significantly, the share of China in world trade in textiles, in 1994, was 13.24 percent, up from 4.36 percent in 1980. Hong Kong, too, improved its share from 7.06 percent to 12.65 percent over the same period. Growth rate, in US$ terms, of exports of textiles, including apparel, was over 17 percent during 1993-94 to 1995-96. It declined to 10.5 percent in 1996-97 and to 5 percent in 1997-98. Another disconcerting aspect that reflects the declining international competitiveness of Indian textile industry is the surge in imports in the last two years. Imports grew by 12 percent in dollar terms in 1997-98, against an average of 5.8 percent for all imports into India. Imports from China went up by 50 percent while those from Hong Kong jumped by 23 percent.

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3.2.1 Global factors influencing Textile Industry The history of the textile and clothing industry has been replete with the use of various bilateral quotas, protectionist policies, discriminatory tariffs, etc. by the developed world against the developing countries. The result was a highly distorted structure, which imposed hidden costs on the export sectors of the Third World. Despite the fact that GATT was established way back in 1947, the textile industry, until 1994, remained largely out of its liberalisation agreements. In fact, trade in this sector, until the Uruguay Round, evolved in the opposite direction. Consequently, since 1974 global trade in the textiles and clothing sector had been governed by the Multi-fiber agreement, which was the sequel to an increasingly pervasive quota regime that began with the Short-term arrangement on cotton products in 1962 and followed by the Long-Term arrangement. After the successful conclusion of the Uruguay Round in 1994, the MFA was replaced by the Agreement on Textiles and Clothing (ATC), which had the same MFA framework in the context of an agreed, ten-year phasing out of all quotas by the year 2005. The section that follows takes a brief look at the history of these protectionist regimes as also a more detailed look at the MFA and the ATC. 3.2.2 MultiFibre Agreement (MFA) On January 1, 1974, the Arrangement Regarding the International Trade in Textiles, otherwise known as the MFA came into force. It superseded all existing arrangements that had been governing trade in cotton textiles since 1961. The MFA sought to achieve the expansion of trade, the reduction of barriers to trade and the progressive liberalisation of world trade in textile products, while at the same time ensuring the orderly and equitable development of this trade and avoidance of disruptive effects in individual markets and on individual lines of production in both importing and exporting countries. Though it was supposed to be a short-term arrangement to enable the adjustment of the industry to a free trade regime, the MFA was extended in 1974, 1982, 1986, 1991, and 1992. Because of the quotas allotted, the MFA resulted in a regular shift of production from quota-restricted countries to less restricted ones as soon as the quotas began to cause problems for the traders in importing countries. The first three extensions of the MFA, instead of liberalising the trade in textiles and clothing, further intensified restrictions on imports, specifically affecting the developing country exporters of the textile and clothing products. Increased usage of several MFA measures tended to further erode the trust, which developing countries had originally placed in the MFA. Page| 25

The MFA set the terms and conditions for governing quantitative restrictions on textile and clothing exports of developing countries either through negotiations or bilateral agreements or on a unilateral basis. The bilateral agreements negotiated between importing and exporting countrys contained provisions relating to the products traded but they differed in the details. The restraints under the MFA were often negotiated, or unilaterally imposed at relatively short intervals, practically annually. The quotas could be either by function or by fibre. Under the MFA, product coverage was extended to include textiles and clothing made of wool and man-made fibres (MMF), as well as cotton and blends thereof. With regard to applications of safeguard measures, import restrictions could be imposed unilaterally in a situation of actual market disruption in the absence of a mutually agreed situation. However, in situations involving a real risk of market disruption only bilateral restraint agreements were possible. The Textile Surveillance Body (TSB) was set up to monitor disputes regarding actions taken in response to market disruptions. The MFA permitted certain flexibility in quota restrictions for the exporters so that they could adjust to changing market conditions, export demands and their own capabilities. The MFA also provided for higher quotas and liberal growth for developing countries whose exports were already restrained. The MFA asked the participants to refrain from restraining the trade of small suppliers under normal circumstances. In general, developed countries, under MFA, chose not to impose restrictions on imports from other developed countries The TSB ensured compliance by all parties to the obligations of bilateral agreements or unilateral agreements. It called for notification of all restrictive measures. A Textiles Committee established as a management body consisting of all member countries was the final arbiter under the MFA and worked as a court of appeal for disputes that could not be resolved under TSB.

3.3 National Scenario

The Indian textile industry is one the largest and oldest sectors in the country and among the most important in the economy in terms of output, investment, and employment. The sector employs nearly 35 million people and after agriculture, is the second-highest employer in the country. Its importance is underlined by the fact that it accounts for around 4% of Gross Domestic Product, 14% of industrial production, 9% of excise collections, and

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18% of employment in the industrial sector, and 16% of the countrys total exports earnings. With direct linkages to the rural economy and the agriculture sector, it has been estimated that one of every six households in the country depends on this sector, either directly or indirectly, for its livelihood. A strong raw material production base, a vast pool of skilled and unskilled personnel, cheap labour, good export potential and low import content are some of the salient features of the Indian textile industry. This is a traditional, robust, well-established industry, enjoying considerable demand in the domestic as well as global markets. Indias prominent role in textile production stems from its wealth in natural resources. Silk, cotton and jute, all nature-base fibre resources are available in India. The textile and clothing industry occupies a unique place in the Indian manufacturing sector. Having a highly fragmented structure, the Indian textile and clothing value chain consists of four stages: Ginning and Spinning Spinning is the process by which cotton or manmade fibre is converted into yarn. In case of cotton, before spinning, ginning is done where the impurities are removed; Weaving and Knitting Conversion of cotton or manmade yarns into woven or knitted fabrics; Processing includes bleaching, dyeing, mercerizing and printing, which results in finished fabric to be used for manufacture of clothing; Clothing manufacturing this is the final stage where the designing, pattern making, cutting, embellishing, stitching, finishing, and packaging is done for distribution. One of the key advantages of the Indian textile industry is abundant availability of raw material. Indian textile industry is multi-fibre based using cotton, jute, silk, manmade synthetic fibres and wool. India is the largest producer of jute fibre, second largest producer of cotton yarn and silk fibre in the world. Under the man-made fibre category also, India is one of the major producers in the world; second largest producer of cellulosic fibre/ filament yarn, third largest producer of viscose staple fibre and polyester filament yarn, fourth largest producer of polyester staple fibre, and seventh largest producer of acrylic staple fibre. Value of textile exports from India, including clothing, was worth US $ 17 billion in 2007-08. Textiles accounted for 48% (US $ 8.3 billion) of exports and the rest 52% (US $8.7 billion)

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was accounted by clothing. As per the data collated by WTO, for the year 2006, India accounted for 4.3% of total world export of textile products, and in the clothing segment Indias share was3.3percentage. European Union and USA are the major destinations for Indias textile and garment exports. Other major destinations include United Arab Emirates (UAE), China, Bangladesh, Saudi Arabia, and Japan. 3.3.1 Indian Textile Industry The textile industry is the largest industry of modern India. It accounts for over 20 percent of industrial production and is closely linked with the agricultural and rural economy. It is the single largest employer in the industrial sector employing about 38 million people. If employment in allied sectors likes ginning, agriculture, pressing, cotton trade, jute, etc. are added then the total employment is estimated at 93 million. The net foreign exchange earnings in this sector are one of the highest and, together with carpet and handicrafts, account for over 37 percent of total export earnings at over US $ 10 billion. Textiles alone account for about 20 percent of Indias total fore earnings. Indias textile industry since its beginning continues to be predominantly cotton based with about 65 percent of fabric consumption in the country being accounted for by cotton. The industry is highly localized in Ahmadabad and Bombay in the western part of the country though other centers exist including Kanpur, Calcutta, Indore, Coimbatore, and Sholapur. The structure of the textile industry is extremely complex with the modern, sophisticated and highly mechanized mill sector on the one hand and the hand spinning and hand weaving (handloom) sector on the other. Between the two falls the small-scale power loom sector. The latter two are together known as the decentralized sector. Over the years, the government has granted a whole range of concessions to the non-mill sector because of which the share of the decentralized sector has increased considerably in the total production. Of the two sub-sectors of the decentralized sector, the power loom sector has shown the faster rate of growth. In the production of fabrics, the decentralized sector accounts for roughly 94 percent while the mill sector has a share of only 6 percent. Being an agro-based industry the production of raw material varies from year to year depending on weather and rainfall conditions. Accordingly the price fluctuates too. India's trade in textiles and its share in world trade can be categorized as follows:

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Indias Trade in Textiles (1998) Type Yarn Fabrics Apparel Made-ups Over-all India's Share in World Trade 22% 3.2% 2% 9% 2.8%
Compound Annual Growth Rate (CAGR) of different segments

Type Yarn Fabric Made-ups Garment

CAGR (1993-98) 31.79% 9.04% 15.18% 6.795%

(Table 3.1)

3.3.1.1 Trends in Production Yarn and production has been growing annually at 1.9% and 2.7% respectively, since 2000. Yarn production has increased from 3,940-mn kg in 1999- 00 to 4,326--mn kg in 2004-05. Man-made yarn has driven much of this, showing a robust growth of 4.3% in the last five years. Spun yarn production and the cotton yarn sector have also grown, albeit less impressively, recording growths of 2.4% and 0.6% respectively.

(Figure 3.1)

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3.3.1.2 Indias Textile Industry Structure Cotton textiles continue to form the predominant base of the Indian textile industry, though other types of fabric have gained share in recent years. In 1995-96, the share of cotton and manmade fabric was 60% and 27% respectively. More recently, cotton fabrics accounted for 46% of the total fabric produced in 2005-06, while man-made fibres held a share of 41%. This represents a clear shift in consumer preferences towards man-made fabric. The Textile and Apparel Supply Chain

(Figure 3.2)

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3.3.2 Raw Material Base and Capacity in India Cotton: Cotton is one of the major raw materials for the Indian textiles industry. India is the second largest producer of cotton in the world, has the largest cultivated area of over9 million hectares and accounts for around 20% (4.8 million tons) of global production (over 25 million tons). The performance of the cotton sector has been increasing over the years and during the cotton season (Aug-Sept) 2007-08; the output recorded was 310 lakh bales (170 kg each). Even the consumption has been increasing over the years from 195.03 lakh bales in 2004-05 to 245 lakh bale sin 2007-08, by both mill and non -mill sectors. During 2007-08, India exported 65 lakh bales of cotton. Technology Mission of Cotton (TMC), Mini mission III, and Mini Mission IV are some of the developmental measures taken by the Government in this sector. The cotton sector provides employment to more than 50 million people in various activities starting from cultivation to trade and processing. Silk: In the world silk production, India is a distant - second largest producer, with a share of around15percentage, next to China, which holds a share of 82% in the world. With a total silk production of around18, 500 MT in 2006-07, India has the distinction of producing all varieties of silk, viz; mulberry, eri, tasar and muga. Mulberry accounted for nearly 90% of total silk production in India. The silk sector provides employment to around six million persons in rural and semi urban areas, and the majority belonging to the economically weaker sections of the society, including women. With Japanese technology and cooperation, Indian sericulture industry is able to evolve and popularize Bivoltine silkworm races, which can yield raw silk, matching the international standards. Wool: India is the seventh largest producer of raw wool in the world accounting for little over 2% of the world production, with about 4.2% of the total sheep population. Although the woolen textile and clothing industry is relatively small compared to the cotton and man-made fibre based textiles and clothing industry, yet the woolen sector plays an important role as it is linking the rural sector with the textile-manufacturing sector. The product portfolio is also diverse, ranging from textile intermediates to finished textiles, garments, knitwear, blankets, and carpets. Indian woolen sector has also a small presence in manufacture of technical textiles, catering to the civil and defense requirements for warm clothing. Most of the wool produced in India (around 85%) is of

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course quality used mainly in the manufacture of hand-knotted carpets, and 5% is of apparel grade, and 10% is of course grade, used mainly for production of blankets. Jute: India is the largest producer and consumer of raw jute in the world. In the year 2006-07, India imported raw jute worth US $ 25 million (over83, 000 tons). During the period April-February 2007-08, India imported raw jute valued US $ 31.6million (over 119,000 tons).Export of jute products (including floor coverings) from India was around US $ 257 million in 2006-07, which has reached to US $ 296million, for the period April February 2007-08. There are 77jute mills in India; 60 in West Bengal, 3 each in Bihar and Uttar Pradesh, 7 in Andhra Pradesh and one each in Assam, Orissa, Tripura and Chhattisgarh. Manmade Fibres: The man-made fibre industry comprises fibre and filament yarn manufacturing units of cellulosic and non-cellulosic origin. The production of man-made fibres in India has shown an increasing trend in 2007-08, a growth of around 10% over the previous year. India also imports man-made fibres and synthetic & regenerated fibres for processing and value addition. In the year 2006-07, India imported man-made fibres valued US $ 555 million, and synthetic and regenerated fibres worth US $ 97million. In the year 2007-08, during the period April-February, Indias imports of man-made filament and spun yarn amounted to US $ 578million, and Indias import of synthetic and regenerated fibres amounted to US $ 100 million.

Current Scenario
The Indian Textile Industry has an overwhelming presence in the economic life of the country Apart from providing one of the necessities of life; the textiles industry also plays a vital role through its contribution to industrial output, employment generation, and the export earnings of the country. The Indian textile industry contributes about 14 per cent to industrial production, 4 per cent to the country's gross domestic product (GDP), and 17 per cent to the countrys export earnings. The industry provides direct employment to over 35 million people and is the second largest provider of employment after agriculture. The total cloth production is increased by 10.2 percent during September 2010 as compared to September 2009. The highest growth was observed in the power loom sector (13.2 per cent), followed by hosiery sector (9.1 per cent). The total cloth production during April-September2010 has increased by 2.1 per cent compared to the same period of the previous year. The total textile exports during April-July 2010 (provisional) were valued at US$ 7.58 billion as against US$ 7.21 billion during the corresponding period of the previous Page| 32

year, registering an increase of 5.20 per cent in rupee terms. The share of textile exports in total exports was 11.04 per cent during April-July 2010. Cotton textiles has registered a growth of 8.2 per cent during April-September 2010-11, while wool, silk and man-made fibre textiles have registered a growth of 2.2 per cent while textile products including wearing apparel have registered a growth of 3 per cent. India has the potential to increase its textile and apparel share in the world trade from the current level of 4.5 per cent to 8 per cent and reach US$ 80 billion by 2020. Textiles and apparel industry exports, valued at US$ 20.02 billion (INR 963.05 billion), contributed about 11.5 per cent to the countrys total exports in 200809. Thus, the growth and all round development of this industry has a direct bearing on the improvement of the economy of the nation.

3.4 State -Scenario

The textile sector comprising of spinning and handloom is the single largest industry in the state. The textile industry is dominated by handlooms, which enjoy a huge production base and account for 10 per cent of the countrys exports. Total sales of the sector accounted for 1.8 per cent of sales by industry in the state in 2010. The handloom industry dominated by cooperative societies, accounts for 86 per cent of the looms and produces 97 per cent of the states textiles. Cotton yarn is the most popular product in the state followed by knitted garments and fabrics such as cotton and wool. The textile-processing complex at Kanjikode, the International Apparel Park at Thiruvananthapuram and the Industrial Export Park at Kochi offer walk-in-and-manufacture environments. Hardly 20% of the textiles requirement of the state is met by local production, which Comprises principally of the handloom and khaki sectors, the power loom sector (Which produces over 75% of the requirement nationally) not having been encouraged Adequately in Kerala for fear of aggravating the already problematic traditional Sectors. The Government desires to con-act this policy on the lines of the Government of Indias Textile Policy with adequate safeguards to prevent massive redundancies in the handloom and khaki sectors.

3.4.1 Profile of Textile Sub-Sectors Organised Mill Sector: As of December 31, 2007, there were over 1,700 cotton-fibre and man-made fibre textiles mills (non-SSI) in the country with a capacity of around 35 Page| 33

million spindles, and around 0.5 million rotors. Indias organized mill sector produced about 4000 million kgs of yarn and over 1700 million sq. mtrs of cloth. Power looms Sector: The power looms sector provides a wide variety of cloth, both grey as well as processed fabrics. As on January 31, 2008, there was 20.83lakh power looms distributed in over4.64 lakh units, constituting over 60% of the global power loom age. The sector also contributes around 62percentage to the total cloth production in the country, provides employment to about 50 lakh people, which constitutes around 14% of the total employment in the textiles sector and contributes 60% of the fabric, meant for exports. Handlooms: The handlooms sector has been playing an important role in creating an awareness of the Indian cultural diversity and fashion, which is unique only to the Indian textile industry. The handloom cloth production was 6536 million square meters in 2006-07 and during2007-08, the production of cloth by handlooms sector was over 7000million square meters. Readymade Garments: The clothing sector is fragmented and predominantly in the small-scale sector. It is estimated that there are over 13,000 apparel units (excluding tailoring units) in India, majority of which are in the SME sector. The total production of clothing sector was around 8 billion pieces with a value of Rs. 1 trillion during 2005-06; of which over one fourth in quantity terms are being exported. The clothing sector is concentrated primarily in 8 clusters ,viz., Tirupur, Ludhiana, Bangalore, Delhi/ Noida/ Gurgaon, Mumbai, Kolkata, Jaipur and Indore. Tirupur, Ludhiana, and Kolkata are major centers for knitwear, while Bangalore, Delhi/Noida/Gurgaon, Mumbai, Jaipur and Indore are major centers for woven clothing. Indias exports of ready-made garments, consisting of cotton, silk, man-made fibres, wool and other textile materials showed a marginal increase of 0.8%, from 2005-06 to2006-07; and it is expected toper form marginally better in the year 2007-08. Technical Textiles: Textile materials and products, which are used for industrial purposes and manufactured primarily for their technical performance and functional properties, rather than for decoration, are called technical textiles. The maximum consumption of technical textiles is in the USA, Western Europe, China and Japan. These regions account for 65% of the total consumption of technical textiles in the world. In India, the production of different items of the technical textile industry has been slowly and steadily increasing. All the twelve items are produced in India in varied

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quantities. India has also made notable contribution in the production of textiles for strategic applications viz. national security, e.g. parachute canopy fabric used for carrying human, dropping of supply, brake parachute application etc. that are indigenized and exported to othe0r countries as well. The market size and potential of technical textiles was estimated at Rs 19,130 crores in 2003-04, and it is estimated to have reached Rs 30,000 crores in 2007-08.Being an emerging field, Government of India is launching a (Rs 1000 crore) Technology Mission on Technical Textiles (TMTT) to ensure that there are necessary profitable benefits from the enduring investments. To combat the issue of technology backwardness and infrastructure issues, The Ministry of Textiles, Government of India, plans to create clusters on technical textiles, so that the necessary textiles may be produced with adequate technology, thereby making the products technologically competitive too.

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--Chapter IV---Company Profile

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4.1 Company Profile

GTN TEXTILES LTD is incorporated on August 2nd, 1962 at Aluva, near Cochin in Kerala State by G.T. Narayanaswami Naidu and commissioned in 1964; GTN Textiles was taken over by the present promoters in 1966. The company has its registered office at Erumathala near Aluva in Ernakulam district. Company has roots in the textile business for almost 100 years. The founders were from the raw cotton and yarn trading family business. The flagship of the GTN Patodia group, GTN Textiles (GTNTL) has several unique distinctions. It was the first company to export cotton yarn from India to Japan and Italy. In 1992, it exported virtually its entire production, although it is not an EOU (Export Oriented Unit). Now only 85% is being exported and the rest is sold in the domestic market because of very good growth in Indian market and the company has its sales export office at Cochin. The installed capacity of its plant at Alwaye, Kerala, has been increased from 12000 to 38600 spindles, bringing the company's total spindle age to 60340. GTN Textiles Ltd is a public limited company with both equity and preference shares. In Jan.'93, GTNTL came out with its maiden public issue to modernize the existing plants, meet long-term working capital requirements, and invest in the group's newly promoted company, Patspin India Ltd. Over the years, there has been continuous expansion of capacity and modernization of machines. In the yearly eighties, company shifted its focus domesticity to the international market and it has benefited immensely from foreign collaboration. It has followed policy of up gradation of its equipments and adaptation of state of the art technology. GTNTL is a government-recognized Export House and a Star Exporter. Perfect Spinners, a group company, also into cotton yarn, was merged with the company in Apr.'94. It is implementing an expansion-cum- modernization programme at all its units. Over 90% of companys products are fine and superfine hundred percent yarns carded and combed with counts ranging from 30s to 40s, both single and multi-fold, as well as gassed, suitable for knitting and weaving. It is one of the largest cotton yarns exporting organization from India. It exports to countries like Japan, Italy South Korea, Taiwan. Indonesia, Singapore, Malaysia, West Germany. The group export especially fine and s uperfine yarns.

GTN Exports and Packworth Udyog are subsidiaries of GTN Textiles. In 2000-2001, the company has raised term loan of Rs. 22.83 crores under Technology Upgradation Fund

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Scheme which provides for 5% interest subsidy, for marginal increase in capacity and substantial modernization /replacement of old machinery across the units, by availing worldclass technology. To foray in production of Compact Spun Yarns and to upgrade its production technology the company embarked upon TUF-II scheme for a total outlay of Rs. 40 crores. It is also focusing on product diversification, strategic marketing, cost control measures etc to perform satisfactorily. During December 2005, the company has decided to demerge its Aluva Unit along with investment of the company made in Patspin India Ltd and offices as well as its assets situated in Mumbai, Kolkata, and Coimbatore to GTN Industries Ltd. In consideration of demerger, the shareholders of the company will get One Equity Share of Rs. 10/-each of GTN Industries for every One Equity Share held in the company. Company had achieved TEXPROCIL Award winner for the last 18 years. It has units at Hyderabad, Nagpur, and Shadnagar. The Patspin India Limited at Palakkad is the sister unit. It has implemented the ISO 9001 quality standards to ensure that their products meet the standard and which have helped them improve their export market.

List of Persons / entities comprising Promoters are as follows: Sl. No. Percentage to Paid-up Capital 3.11

Name

Status

No. of Shares 362560

1.

SHRI.MADANLAL PATODIA SHRI.BINOD KUMAR PATODIA SHRI.MAHENDRA KUMAR PATODIA* SMT.PRABHA PATODIA

Individual

2.

Individual

508210

4.36

3.

Individual

742282

6.38

4.

Individual

197480

1.70

5. 6.

SMT.ANJANA PATODIA* SHRI.UMANG PATODIA

Individual Individual

257166 421310

2.21 3.62

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7.

SHRI.ANKUR PATODIA

Individual

378910

3.26

8.

SMT.MALA PATODIA

Individual

83880

0.72

9.

SMT.SWATI PATODIA

Individual

26680

0.08

10. 11.

MS.PRACHI PATODIA* MADANLAL PURUSHOTTAMDAS HUF BINOD KUMAR PATODIA HUF MAHENDRA KUMAR PATODIA HUF* M.B.CREDIT P LTD

Individual HUF

10000 121600

0.23 1.04

12.

HUF

579440

4.98

13.

HUF

556052

4.78

14.

Body Corporate

297458

2.56

15.

PATODIA EXPORTS & INVESTMENTS P LTD UMANG FINANCE P LTD

Body Corporate

320860

2.76

16.

Body Corporate

364526

3.13

17.

BEEKAYPEE CREDIT P LTD EMKAYPEE INVESTMENTS P LTD* FORWARD FINANCE P LTD* MODESTY FINANCE & INVESTMENTS P. LTD* MEGHA INVESTMENTS P. LTD*

Body Corporate

376871

3.24

18.

Body Corporate

489850

4.21

19.

Body Corporate

616708

5.30

20.

Body Corporate

120000

1.03

21.

Body Corporate

314760

2.70

(Table 4.1) * As per the Scheme of Arrangement, Shri.Mahendra Kumar Patodia and his family / representatives / nominees will swap their Shares of GTN Textiles Limited in favour of Page| 39

Shri.Binod Kumar Patodia and his family / representatives / nominees. Vice Versa, Shri.Binod Kumar Patodia and his family / representatives / nominees will swap their Shares of GTN Industries Limited in favour of Shri.Mahendra Kumar Patodia and his family / representatives / nominees.

4.1.1 History of the Company:

The Company belonging to Patodia Family GTN Group is functioning under the guidance of Shri. M L Patodia, Chairman. The Group, which was originally engaged in trading in all types of yarns as well as textiles and cotton, acquired vast experience and understanding of the various aspects of the trade over four decades. The Group, as a natural corollary entered into the manufacturing of cotton yarn with the acquisition of Aluva Unit, in 1966. Initially focusing its attention in the marketing of quality yarn in the domestic market, the group, since 1980, shifted its emphasis to the manufacture of high quality and finer count yarns for the sophisticated international markets, with a major share in countries like Japan and Italy. In 1983, GTN established another Unit at Chitkul Village, Sangareddy Taluk, and Medak District in Andhra Pradesh. The Company had acquired another Cotton Spinning Unit in Nagpur, Maharashtra during 1994-95 by virtue of amalgamation of erstwhile Perfect Spinners Limited, which was promoted by GTN Group. As late as in 1997, the Company further set up yarn dyeing and mercerizing unit at Shadnagar, Andhra Pradesh. The Company has also promoted Patspin India Limited, a 100% E.O.U as a joint venture along with Equity participation from ITOCHU Corporation, Japan and KSIDC, Trivandrum. GTN has invested 39.07% of the Paid-up Equity Share Capital of Patspin India Limited, a Listed Company, which also has cotton spinning unit in Kerala. GTN Group has over 3 decades of experience in the International Market. The Companys Aluva Unit is fully modernised by spending over Rs.50 crores with the latest technology to achieve the optimum productivity meeting the highest quality at par with the International quality standards. GTN continues to maintain its leadership in exports of fine and superfine-combed cotton yarns. The Company has been constantly focusing its efforts to cater to high priced end users in sophisticated markets and enjoys excellent relations with all of its overseas customers, which have been assiduously built over the years by strictly adhering to delivery schedules, maintaining consistent quality and providing prompt after sales service. Page| 40

In recognition of excellent export performance and leadership in the field of cotton yarn export, the Company has won the Gold Trophy from TEXPROCIL, for the last 20 years consecutively for outstanding export performance in yarn amongst manufacturer exporter mills in the Country. GTN is the pioneer Company in India to produce specialized yarns like compact yarns for high end users. GTN Industries Limited was Incorporated under Certificate of Incorporation No.U18101KL2005PLCO18062 dated 28.3.2005 having its Registered Office at Door No.VIII/911, Erumathala Post, Aluva, Kochi - 683 105, Kerala for the purpose of taking over the demerged business of GTN Textiles Limited. Pursuant to the Scheme of Arrangement, the names of GTN Textiles Limited and GTN Industries Limited were inter changed and accordingly, the name of GTN Industries Limited has been changed to GTN Textiles Limited, vide Certificate dated 27.12.2005 by the Registrar of Companies-Kerala. Pursuant to the Order of the High Court of Kerala, the Company took over the business activity of the Aluva Unit, investment of 39.07% of the Paid up Equity Share Capital of Patspin India Limited and the Offices as well as its assets situated in Mumbai, Kolkata and Coimbatore with effect from 1st April, 2005 (Appointed Date) on the Effective Date, i.e.: 19.12.2005. The principle business of the Company is manufacture and export of cotton yarn. The main objects are set out in the Memorandum and Articles of Association and interalia allows engaging in various business including those as spinners, weavers, bleachers, dyers of cotton yarn, producers of processed yarn, mercerised yarn, dyed yarn, bleached cotton yarns, etc. Vision The vision of GTN is to realize their policies and implement the contents there in letter and spirit. The market place is the driving force behind everything we do and we aim and achieve the highest level of customer satisfaction on a continuous basis in all our transactions. GTN believes in continuous up-gradation of its product quality &services by investment in the latest technology and its successful implementation

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Mission It is the mission of GTN to realize the zero defect zero accidents zero pollution and thereby to have zero losses and also implicit trust, high ethical, moral values and unswerving commitment to our customers. The exceedingly high standard we set for ourselves is the driving force behind the quality and excellence of all our endeavors. 4.1.2 Main Objects of the Company The Main Objects of the Company as set out in the Memorandum of Association are as follows: a) To carry on all or any of the businesses as manufacturers, distributors, producers, assemblers, fabricators, designers, hirers, repairers, cleaners, exchangers, alterers, buyers, sellers, importers, exporters, stockiest, agents, representatives, storers and warehouses and dealers in textile industry and other allied industries. b) To carry on the business of preparing, combining, spinning, doubling, twisting, texturising, imparting, crimping, converting, calendaring, testing, sizing, weaving, knitting, bleaching, processing, dyeing ginning, cutting, scouring, winding, mercerising, combing, printing, finishing, manufacturing, buying, selling, importing, exporting or otherwise dealing in industrial fabrics, synthetic fabrics, synthetic yarn, cotton yarn, nylon, nylon tyre yarn, tyre cord, tyre fabrics and other end products, polyester, acrylic, viscose, poly propelene cotton, linen, wool, silk, flex, hemp, jute, artificial silk rayon, canvas and other fibres or textile substances whether natural or synthetic or manmade, in any state and whether similar to the foregoing substances or not, and to treat, utilise and deal in any waste arising from any such operations and to manufacture, felted, knitted, looped and embroidered fabrics, lace and other types of manufactured, processed or decorated fabrics and to manufacture coated or laminated fabrics and readymade garments and apparels. Objectives of the Company (i) Corporate Objective a) To improve its present position in export markets. b) To satisfy its customers and shareholders c) To concentrate more on high value added processing at yarn d) To maintain long-term relationship with customers to provide then with good service and better quality products. Page| 42

(ii) Quality Objective a) To meet changing global demands for specialized yarn. b) Ensuring better quality by its commitments to social and environment needs. c) Motivating personal for ensuring quality awareness of all level. d) Continue upgradation of product quality and technology supported by research and development effects in cost effective manner. e) Highest level of customer satisfaction by meeting stated and perceived requirement maintaining consistency and timely delivery. 4.1.3 Awards/ISO Cerfication Winner of Texprocil award for outstanding exports achievement for the last 18 consecutive years. Texprocil Gold 1993-94, 1994-95, 1995-96, 1997-98, 1998-99, 1999-2000, 2000-01, 2001-02, 2002-03 Texprocil Silver 1985-86. 1986-87, 1988-89, 1989-90, 1990-91, 1991-92, 1992-93, 2006-07 (GTN Enterprise Ltd.) Texprocil Bronze 1996-97, 2002-03, 2003-04, 2004-05, 2006-07 (GTN Textiles Ltd.) The award for excellence from Birla Economic and Textile Research Foundation GTN is named the STAR EXPORTER and EXPORT HOUSE for its excellent performance in export 2003-04. GTN has the Birla award for its research and development and modernization efforts 1997-98. National export award for outstanding performance 1987-98 by Government of India, Ministry of Commerce. SIMA Diamond Jubilee, 1993-94 Shri B K Patodia, Vice Chairman. Cochin Special Economic Zone Export Excellence Award, 2000-01, 2001-02, 2002-03. In recognition of the leadership enjoyed by the company in the field of cotton yarn export, the textile export promotion council has awarded yet another gold trophy for the year ended March 98, which is being received by the company in the past nine years.

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4.1.3.1

ISO 9001&14001

ISO 9001&14001 -2004 were implemented GTN textiles limited Aluva in the year 1994 and 2004 respectively. Both these system were integrated in the year 2006 and termed as Quality Environment Management System (QEMS). The system is audited and certificate is issued by intertech an international organizational dealing with the international standards and operating in India. By integrating both these system, the company has the advantages of reducing the number if audits preparation of document. The ISO 9001 model of the quality system is built up on the principle of achieving customer satisfaction by preventing non-conformity at all stages in the supply chain. 4.2 Competitors

The major competitors of GTN Textiles LTD are Arvind Mill Ltd Raymonds Ltd Centuary Textiles & Industries Ltd Reliance Textiles Ltd Ginni Filaments Ltd Hanil Era Textile Ltd Vardhaman Spinning Co.

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Organizational Structure of GTN Textiles Ltd

Chairman & Managing Director

Chief Executive

Group Technical Advisor

Senior GM Personnel & IR

Senior GM Manufacturing

Deputy GM Technical

Sr. Mgr T&D

Mgr Personnel

Asst. Mgr Security & Welfare

Asst. Mgr Q&A Sr. Mgr Manufact -uring Asst. GM Maintenance Sr. Mgr Engineering Service

Asst GM Finance & Accounts

Sr. Officer Q&A Asst. GM Raw Materials

Deputy Mgr Finance & Accounts

Supervisor

Head Security Guard Sr. Officer Time Office Security Guards Jr. Officer Time Office

Ship InCharge

Asst. Mgr Finance & Accounts

Asst. Manager Maintena -nce

Mechanical Engineer Mgr Raw Materials

Q&A Assistants

Senior Officer

Supervisor

Time Keepers

Accounts Assistants

Electrical Engineer Store Asst.

(Figure 4.1)

Electronics Engineer

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4.3

Duties and Responsibilities of Departmental Heads

Chairman and Managing Director Overall management of the group administration and review of systems for quality, export, perspective planning, expansions, resources funding and raw materials (cotton) procurement. Defines and documents company's quality, policy, and objectives. Chief Executive Overall management of organization, administration, and review of system for quality export perspective planning and expansion. Overall management of purchase of capital equipments, spares and products effecting quality. Planning for expansions, resource funding, and control of finance department.

Senior General Manager (Manufacturing) Managing and control of production process, product identification and traceability, material handling, storage packaging and delivery. Overseas the quality Management system that is being maintained in the organization. Identify and advise motivation programs for employees. He has overall control of the worker. Senior Manager (Engineering Services) Overall control of utilities, civil, mechanical, and electrical activities. Implementing n effective scheduled preventive maintenance program for utility equipment. Repairs and services of humidification or air conditioning plant.

Senior General Manager (Personnel and Industrial Relations) Implementing systematic recruitment procedures, providing training facilities and overall development and motivation of all employees. Maintaining documentation of training programs. Ensuring safety aspects in the organization.

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Assistant General Manager (Maintenance) Implementing an effective scheduled preventive maintenance program. Repair and service of process equipment, calibration of gauges. Communication with Senior GM Manufacturing

Assistant Manager (Quality & Assurance) Establishing and maintaining inspection and test procedures for raw materials, in process and final product. Establishing and maintaining procedures for calibration of inspection measuring and test equipment. To implement research and development and quality improvement activities. Reporting on the performance of the quality management system to the management for review and as a basis for continual improvement. Communication with external bodies on matters relating to quality management system. Timely conduct to Internal Quality Audits by trained personnel. To organize and conduct management review at specified internals and initiate follow-up-actions. Manager (Maintenance) To assist Assistant Manager (Maintenance) for process equipment maintenance, repair and servicing. Responsible for maintaining and servicing of all equipment. Calibration of gauges and other measuring equipment.

Manager (Production) Monitoring of all production, packaging, and delivery activities. Ensuring good housekeeping in the organization.

Manager (Raw Material) To control the distribution of the raw material to our units.

Assistant Manager (Quality Assurance) Assist management representative in controlling of quality manual and matters related to there to. Page| 47

Assistant Manager Accounts Provides finance assistant to various departments as per the requirements Maintains the wages and salary bill of the department Helps in assisting the manager in preparation of various accounts Maintains records on the past as well as current financial figures, engages in management discussions etc. Store Assistant Maintains records of stocks and reduces wastage Supervises packaging Reports storage and delivery of finished products Informs executives in case of shortages

4.4 Various Department of GTN Textiles Ltd

1. Raw Material Department 2. Quality Assurance Department 3. Production Department 4. Stores Department 5. Maintenance Department 6. Management Information Systems Department 7. Finance Department 8. Personnel Department 9. Sales, Export/Marketing Department

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4.4.1 Raw Materials Department Introduction Cotton is the sole raw material for the manufacture of cotton yarns. Since it is a seasonal product and is available only during the months from October-March, the required quantity is purchased and stocked for the production of cotton yarn. The fiber processors seek to acquire the highest quality at the lowest price, and attempt to meet processing requirements by blending bales with different average fiber properties. Blends that fail to meet processing specification show marked increase in processing disruption and product defect that cut into the profits of the yarn and textile manufacture The cotton picked folds are ginned and taken to the factory site from the ginning centers through agents. The purchase is done on a massive scale, before which the material undergoes a series of tests. The basic sample considered should satisfy three parameters viz. Sample length, strength, and value. Once the sample clears this high volume instrument testing, the company goes for bulk purchase on lot basis. These samples again undergo the quality check which once cleared for delivery. The approval lot again undergoes HVI tests. Once cleared these lots are accepted for manufacturing. Functions: Verification of properties Finding suppliers Import of cotton Purchase of raw materials Waste management

Procedures 1. Verification of Properties Successful processing of cotton depends on appropriate management during and after harvest of those highly variable fibre properties that have been shown to affect finished product quality manufacturing efficiency. If fibre blending specific end uses and profitability, production managers in textile mills need accurate and effective descriptive and predictive quantitative measures of both the means and ranges of these highly variable fibre properties.

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The components of cotton fibre quality are usually defined as those properties reported for every bale which currently include length, length uniformly index, strength, micron ire, and yellowness (+b), and trash content, all quantified by the High Volume Instrument Line (HIV). 2. Finding Suppliers Cotton is produced from different cotton producing states of India i.e. Gujarat, Maharashtra, Karnataka, Andhra Pradesh, Tamil Nadu, Punjab, Haryana etc. The various varieties of Indian cotton are J34, S6-S4, V797, Y-1, JAYADHAR, MECH, BRAHMA, DCH, DIGVIJAY, H-4 etc. A part from these American Supima, Giza45, Giza70, Giza77, Giza76, Giza86, Giza85, and Giza80 which are imported from America, Egypt and Sudan are used for processing cotton yarns. Earlier the company used to depend solely on Indian cotton, but the quality was not up to the mark as it was contaminated with foreign particles. Later imported cotton was used and now 90% of American cotton is used. 3. Import of Cotton The company purchase more than 40% cotton raw materials from foreign countries like America and Egypt. The main reason or import is better quality and productivity. Raw material used for production is Suvin. One of the finest extra long staple cottons available in the world. Suvin cotton is superior in all aspects like fineness Staple length, silkiness, and luster. This exclusive cotton of Indian origin is a luxury and its products are considered premium and niche worldwide. a) Supima It is a superior, extra long staple variety of cotton grown in America. Yarns produced from Supima cotton are used to produce softer and more lustrous fabrics. Supima represents highest quality in cotton yarns. GTN is the first spinning company in India to obtain a Supima trademark license. b) Egypt Giza Giza cotton is a true mark of excellence with extremely superior quality in the extra long staple and long staple variety. These varieties are also renowned for their excellent fitness and feel.

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c) Indian Cotton GTN use high quality variety of MCUS and Shanker cotton known for their superiority in terms of fitness and goodness. d) Australian Cotton Medium staple contamination free, varieties of cotton and one of the best grades of raw materials from among the best suppliers. e) American sjv Acala GTN was the first Indian spinner to be given a cotton USA license. Medium staple contamination free, varieties of cotton and one of the best grades of raw materials from among the best suppliers. 4. Purchase of Raw Materials The purchase is based on the three production plan made by the departments according to the forecasted requirements for production. The production plans does not allow shortage as it can lead to heavy loss. Random samples of the purchased cotton, is tested in the quality lab for fiber quality specification. Test for fiber fitness is conducted as spinning larger number of finer fibers together results in stronger, more uniform yarns than if they hard be made up of fewer, thicker fibers. The 4 ultimate acceptance tests for fiber color, as well as for finished yarns and fabrics is the human eye. Therefore instrumental color measurement must be correlated closely with visual judgment. Since GTN has its own cotton trading division, it has great advantages of buying raw materials throughout the year. The purchase order of other companies in the group is placed by the GTN Textiles, Aluva. 5. Waste Management Long fibers are best suited for yarn production. Short fiber content is defined as the percentage of fiber less than 12.7mm the short fibers obtained as waste from processing is packed and sold.

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Key factors for success Procurement of the right quality at right at right time. Ability to procure large quantum of raw material and keep long time stock which ensures consistent quality. The GTN has an associated concern trading in cotton for the last 40 years which gives it added advantage.

Organization Structure- Raw Materials Department

Group Technical Advisor

Sr. GM Manufacturing

Asst. GM Raw Material

Manager Raw Material

Store Assistant

(Figure 4.2)

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4.4.2 Quality Assurance Department Introduction This department is responsible for the quality assurance of raw materials, quality assurance in process and quality of finished goods. The department is also responsible for implementation of research and development quality improvement activities in the organization and also tries to establish and maintain procedure for inspection, calibration of measuring and testing equipments. The department is situated inside the factory with state-of art laboratory for testing the quality of cotton yarn at various stages of production and the finished goods. Some of the machines used in the quality assurance department are USER Spin Lab excusing these machines, testing is done for the raw materials and finished goods. GTN Textiles Ltd., Aluva is ISO 9002 for quality assures in production, installation and servicing. The company has a quality manual that makes commitments to the customers that they shall comply with all their requirements for improvement in all the activities to serve them. Quality assurance department is the department where the quality is checked and there are various parameters that affect the quality of cotton fiber, some of them are length, evenness, fiber strength. These parameters are tested in the quality assurance lab. Quality Policy GTN textiles would ensure manufacturing and marketing of cotton yarn by complying with: GTN Textiles Ltd. Would achieve the highest level of customer satisfaction by meeting their slated and perceived requirements, manufacturing consistency and timely delivery. GTN 53endeavors continual up gradation of product quality and technology supported by R&D efforts in a cost effective manner. To meet the changing global demands and stay headed in competition GTN would adapt/ innovate methods in its manufacturing activities. GTN would inculcate a sense of quality awareness at all levels by using appropriate training and motivation techniques. GTN would aim at preserving the environmental conditions by adopting eco- friendly measures in its manufacturing and other activities. The main activities of QAD are:

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Raw material selection and stock Bale management Online process monitoring of production and quality 100% zero / quantum clearer UV lamp testing

Duties & Responsibilities Senior Manager: Takes care of the overall administration of the quality assurance department Assistant Manager (Quality): Takes care of process control and development of new products Supervisor: Process control is monitored by the supervisor Investigator: Inspection and testing of materials is done by the investigators Levels of inspection There are mainly three levels of inspection and each has different checking intervals Raw Materials: the inspection and testing is immediately. Both are thus quality assurance involves all those planned and systematic action necessary to provide adequate confidence that product will satisfy the given requirement for quality essential for continuous processing. In Process: during each process, random samples are taken and tested. This is to ensure the customers quality requirement. Final Products: The product has to be tested before shipping. Usually a lot may contains 7-8 tons random samples are taken from the lot and tested Quality Lab Twist per inch test: to improve the strength of the yarn, two yarns are twisted to form a single strand. To determine the number of twists in an inch the test conducted. Linear density test: in this the count of the yarn is tested. This is to ensure that the yarn has the required count. Tensile Property Test: the strength of the yarn is tested. The extent to which the fibre can elongate is tested to avoid frequent broken end.

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 Unevenness Test: the presence of short fibre result in the unevenness of the yarn. Use of uneven yarn in fabrics can cause bubbling in course of time. To avoid this, the yarn is gassed Cotton testing: cotton is tested for its fibre length, colour, and strength.

Organization Structure- Quality Assurance Department

Group Technical Advisor

Deputy GM Technical

Asst. Mgr. Q & A

Sr. Officer Q&A Operators

Q & A Assistant (Figure 4.3)

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4.4.3 Production Department Introduction Production department is the most important part of this organization. Here production is carried out in required quality at minimum cost. The production department in coordination with the marketing division does managing and controlling of the production process. Customer requirement in terms of quality, quantity, delivery, packaging are obtained an analyzed as per the sales contract from the export division. Production capacity GTN have 165000 Spindles Capacity, consisting of 30000 Compact spindles, and 135000 Ring spinning .In addition process like twisting, Gassing, Dye package winding ,knitting etc. in-house in order to server different customers requirements effectively. Product The reason for success in this competitive environment is that all the products are customized and are produced on a made to order bases GTNs Product Range GTN group manufacture 100% cotton yarn/knitted fabrics: Yarn of count 30s to 140s Two for one twisted & Ring double Knitting & Weaving yarn Gassed yarn Gassed and processed knitted yarn Knitted garments Main Counts Over 90% of products are fine and superfine hundred percent yarns carded and combed with counts ranging from 30s to 140s, both single and multi fold, as well as gassed, suitable for knitting and weaving.

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Flow Chart of Production Process

Bale Opening

Mixing

Blow Room

Drawing

Combing

Carding

Simplex

Spinning

Automatic Cone Winding

Doubling

Conditional Winding

Singeing

Conditional Yarn

Precision Winding

(Figure 4.4)

Production Process The production process is mainly going through five stages: 1) Bale opening: In this process cotton are opened, foreign matters are segregated and processed in the bale-opening machine. From this process, cotton is subject to maximum. 2) Mixing: Here different varieties of cotton are blended in define proportion. The objective of blending different varieties of cotton is to spin the required yarn economically. Unimix is the machine that is used to mix the cotton and to convert into chute. Stack mixing is the best way of doing the mixing compared to using automatic bale openers, which picks up the material from 40-70 bales depending on the length of the machine and bale size, provided stack mixing is done perfectly. Improper stack mixing will lead to shade variation problem, stack mixing with bale opener takes care of short term blending and two mixers in series take care of long term blending. Page| 57

3) Blow Room: In this, the mixed cotton is opened, cleaned and made into a continuous sheet in the wound from. This product is called Blow Room Lap. 4) Carding: In carding operation, the Blow Room Lap material is cleaned, fibers are made parallel and then wastes are extracted from fibers and assemble into a continuous strand. This strand is called Card Silver. This silver are coiled and stored in cans. There are two rules of carding: The fiber must enter the carding machine, be efficiently carded and taken from it in as little time as possible. The fiber must be under supervision from entry to exit. The purpose of carding: To open the flocks individual fibers Cleaning or elimination of impurities Elimination of dust Elimination of short fibers Fiber blending Fiber orientation or alignment Silver formation

5) Combing: The carded silver is then prepared for combing in Silver Lap and Ribbon Lap machines. The product thus prepared is called Ribbon Lap. These Ribbon Laps are then fed to comber machine. In comber, the short fibers and minute impurities are removed and the fibers are made parallel and assembled in from of Silver. 6) Drawing: In drawing process, a definite number of combed silver is doubled and drawn together to make the resulting silver more even and parallelized fibers. The silver is stored in cans in coiled form. 7) Simplex: The object of simplex or speed frame process is to attenuate the drawn silver into a finer strand, twist and wind it on a plastic tube. This product is called Roving. 8) Spinning: In Ring Spinning process the roving is attenuated with the help of drafting system and the drafted fiber strand is twisted and wound on a tube. The twisting and winding operations are performed with the help of Ring Traveler and Spindle. The yarn count is also set at this stage. The arrangement is being progress to spin the latest form of compact yarn by the employment of Elite and Com4 machines. 9) Automatic Cone Winding: In the automatic cone winding process, yarn from the Ring Frame cops passed through electronic yarn cleaners to detect and remove

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objectionable fault in the yarn. The yarn ends are joined with the splicing provision. A definite length of yarn will be wounded on cones. Waxing can also be done in this process. 10) Doubling: In doubling process, two or more single yarns are twisted together. This consists of two processors - assembly winding and twisting. In assembly, winding the required number of single yarns of definite length is wound in parallel to a single package. Twisting may be carried out either with Ring Doubling machine or two-for one twister. 11) Conventional winding: In conventional winding a definite length yarn is wounded on cones. During winding the yarn is passed through electronic yarn cleaner to detect and remove objectionable yarn fault waxing also can be done in this process. 12) Singeing: In singeing process yarn is passed through a flame at high speed to remove the protruding fibers. The object of singeing is to make the yarn lustrous, which can be used for some special end uses. The flame and speed of the fiber should be constant as any change can cause damage to the yarn. 13) Conditional yarn: Apart from gassed yarn conditioned yarn is also produced. According to the customer requirement the yarn is conditioned in a conditioning machine. The yarn is conditioned for half an hour in specific temperature and moisture. The time limit is important as over conditioning may lead to absorption of moisture by the yarn and hence may result in poor quality. 14) Precision Winding: In this process yarn is passed through a special type of tension assembly to get the package more softly so as to get the dye package directly. The softness can be increased or decreased as per the requirement.

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Organization Structure- Production Department

Group Technical Advisor

Sr. GM Manufacturing

Ship In- Charge

Supervisors (Figure 4.5)

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4.4.4 Stores Department Introduction Stores department is the department whose main service is maintaining several types of inventories. Also it functions as maintenance of materials, spare parts and general store as required. Purchase is made with reputed companies who offer good quality of products at reasonable cost. Functions: Storing of purchased raw material Issuing reorder level Material inspection Listing and selling of scrap

Procedure Storing of Raw Material It is the duty of the stores department to store the purchased raw material. All the purchases are made online. SAP is the software used for this purpose. The purchases are made through quotations for a period of six months. Quotations are received from dealers who provide maximum discount. Mainly 3 type of material are purchased and stored, Mill stores: this includes spear parts, bearings, consumable goods etc. Packing goods: these include material which is used for packing. Utility item: this include engineering items, electric items etc.

All purchases are made within the limit of 8-12 days and on the same day itself it is fed into the computer. Issuing Re Order Level All the purchase and issue of raw materials are entered in the computer and computer will show the re order level. First Release The requirement of each department is listed out by the respective department staff. This list is then sent to the department head. Page| 61

 Second Release The list prepared by the department is approved by the department head and then sent to the vice-chairman Order Placement After the second release, the requirement list is sent to the stores department, where the order is placed. The description and quantity of the product is specified in the order form. Order Release The store manager places the order with the suppliers and is known as order release. The re order time and lead time is estimated with the help of past record. Tax free goods are specified. Order Acceptance The order acceptance is the receipt of goods ordered. The quantity of the item is checked by the stores department. Material Inspection The quality of the items delivered by the suppliers is inspected by the investigators in the quality assurance department. Then the materials are issued to the respective departments. The purchase entry is also made during this time. The items received by the stores department are stocked in the stores. Monthly reports are generated. Consumption reports are generated to find out the consumption rate. These reports are also used to tally the physical stock with consumption. Listing and Selling of Scrap The scrap materials are listed out once in every six months. A call for quotation is made to find the best price that can be obtained for scrap. ABC analysis is used for regular items, which directly affect the quality like packaging materials and machinery spares. Organization Structure- Stores Department Manager Raw Materials

(Figure 4.6)

Stores Assistant

Worker

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4.4.5 Maintenance Department Introduction GTN being a manufacturing concern, the number of equipments and machines are involved directly or indirectly with production process and hence the effective functioning of maintenance department is inevitable. The objective of maintenance department includes minimizing long run maintenance cost, minimizing breakdowns to keep operations stable, providing reliable conditions for equipment to perform at specified technical conditions through service, repairs replacement and modifications. They conduct the preventive maintenance program at intervals intended to reduce the like hood of equipments conditions falling below a required level of acceptability and also modernization works are done by the department. In order to assist maintenance department, computers are provided with the details and reminder dates of the maintenance of a machine in a department and details of its services and replacement. All the machines are cleaned periodically and their functioning is checked in order to assure that the machines are working smoothly with no troubles. Other than daily checks, weekly, monthly or yearly checks are carried out. A time interval is set for all machines. A monthly schedule is prepared to see which machine is to be attended first and then at the time the concerned foreman will attend the machine. GTN Textiles being s manufacture of fine and super fine quality cotton threads, modernization has become the inevitable part of the production. Replacement of machines and machine parts also is done by this department. Good quality machines are selected according to the count rate. Functions: Minimizing maintenance cost Minimizing breakdowns of machines Replacement and modification of machine Providing safer working condition Ensure machine are working properly

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The maintenance operations are divided into two: Preventive Maintenance The manager and other concerned officers will fix the life of all machines spare parts and will replace the particular spare part at the end of the period. All the machines used in the company (Indian as well as imported ones) are under the annual maintenance contract. So the serious mechanical problems are rectified by the company, who supplied the machines. Breakdown Maintenance If any faults occur at any part of the machine, the assigned person from the maintenance department will check out the problem and repair the part. Levels of Maintenance Mechanical Maintenance To ensure the protection is carried out in a controlled condition. Electrical maintenance Ensure that process equipment or machinery are maintained and fit for the purpose. Organization Structure- Maintenance Department

Group Technical advisor

Sr. GM Manufacturing

Asst. GM Maintenance

Asst. Mgr. Maintenance (Figure 4.7)

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4.4.6 IT/ Management Information System Department Introduction About 90% of the organization is computerized. The main network is the SAP/ERP implemented within the raw material finance, export and stores department. Other applications like Payroll Software in Fox Pro and Production Control in visual basic are implemented in the organization. Functions: Maintenance: The System has to be maintained and updated according to the increasing needs of the organization Process Monitoring: The production process is completely monitored by the department. The Payroll Software is handled by the personnel department. The wage and salary calculation is done using this software. The organization provided intranet facilities for ease of access of information. The intranet is accessible by the top level management. The main server is at Cochin through which the transactions are communicated. The information regarding the transactions are shared and passed to the organization through routers.

Organization Structure- Management Information Systems Department Deputy General Manager Technical

System Analyst

System Administrator

Programmers

(Figure 4.8)

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4.4.7 Finance Department Introduction This department has to raise necessary funds, manage them, prepare finance budgets and administer its working capital. This department functions on public issue of capital, maintains records for helping the finance manager to access the appropriateness of capital structure. It provides data for the preparation of budget and various financial statements. The accounting function of the department includes the preparation of trial balance on a yearly basis. They also prepare managerial reports regarding expenditure of travelling, postal, telephone and courier transactions. Functions of Finance Department The company maintains a clear and perfect accounting system. The main activity of the finance department is working capital management. Preparation of fund flow statement, cash flow statement, balance sheet, profit and loss accounts are also the activities of finance department. Secretarial work relating to board comes under the finance department. Most of the activities carried out by the finance department are preparing to long term and short term requirement of the operation, closing purchase bill, maintaining the account contractors, subcontractors, income tax deduction, salary discrepancy, dealing with the financial institutions with import and exports Maintaining Books of Accounts like, a. Purchase Records The finance department of the company keeps the account of raw material and accounting entries are made in the books of accounts of the company. The department analyses the details of purchase afterwards. b. Salary Accounts The main function of the department is preparation and disbursement of salary of officers, office staff and workers. The department keeps salary register pertaining to each of the above said person and facilitates charges in salary due to granting of annual increment and deduction from the salary. The department is maintaining sub ledgers for deduction made in the salary such as PF, insurance premium advance and income tax. Another important function is computation of income tax.

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c. Sales and Revenue Accounts The department functions on calculation of paying sales tax and central excise duty to the concerned government every year, provision for current tax is made on the basis estimated taxable income for the current accounting year in accordance with income tax 1961. d. Cash and Bank Accounts The department does all the matters relating to the day to day cash transactions. They receive and make payment for purchase and sales. e. Cost Sheet Annual budget and cost sheet is prepared at the outset of every year and the company is following Process Costing Method. It helps the company to ascertain the cost of a product at each stage of the production, i.e. cost at each process through which the raw cotton passes through for the production of fine yarns. The total cost incurred at each stage of production is carried out to ascertain the final cost. The pricing policy adopted by GTN Textiles is Costplus-pricing and hence a certain percentage of the profit is added to the final cost incurred. f. Depreciation Department has been provided at the rates and in the manner prescribed in Schedule XIV to the Companies act 1956. Plant and machinery and electrical installation have been, on technical assessment, considered as continuous process. Accounting System The financial statements are prepared on historical cost and convention. All fixed assets are stated at cost adjusted by revaluation in case of certain land, building, plant and machinery and electrical installation, less accumulated depreciation. Long term investments are stated at cost less provision. Values of fixed assets are revalued by technicians. Valuation of investment is done at cost. Depreciation is done as per the companys act 1956.

Management of Payables and Receivables: As 90% of the sales are as exports, it takes place with the support of letter of credit or bank guarantee. Therefore, management of payables and receivables has not been a problem for the company. In this total amount, 50% of the total amount is written off as bad depts.

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Likewise 80% of the raw cotton purchased is imported. So L/C is made us here too. Local purchase is made by the company for a credit period of 30 to 90 days. The company claims to have an efficient management of both payables as well as receivables. Accounting Policies: Basis of Presentation: The financial statements have been prepared to comply with the mandatory Accounting Standards issued by the Institute of Chartered Accountants of India and the relevant provisions of the Companys Act, 1956. The financial statements have been prepared under the historical cost convention, 0 the basis of a going concern, on accrual basis. Use of Estimates: The preparation of financial statements requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities on the date of financial statements and reported amounts of revenue and expense of that year. Actual result could differ from these estimates. Any revision to accounting estimates is recognized prospectively in current and future periods. Fixed Assets: i. All fixed assets are stated at cost less accumulated depreciation. Expenditure during construction period in respect of new project/ expansion is allocated to the respective fixed assets on their being ready for commercial use. Also refer Policy G and J below. ii. Impairment of Assets the company assesses at each Balance Sheet date whether there is any indication that any asset may be impaired. If any such indication exists, the carrying value of such assets is reduced to recoverable amount and the impairment loss is charged to Profit and Loss account. If at the Balance Sheet date there is any deduction that a previously assessed impairment loss no longer exists, then such loss is reversed and the asset is restated to that effect. Investments: Long term Investments are stated at cost less provision, if any, for other than temporary diminution in the value of investments.

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Inventories: Inventories are valued at lower of cost or net realizable value. Cost of Raw Materials is computed by using Specific Identification method and for other inventories Weighted Average method. The cost includes costs of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Sales: Sales are recognized as and when risks and rewards of ownership are passed on to the buyer and ultimate realization of price is reasonably certain. Export Sales are inclusive of deemed exports while local sales are net of Sales Tax/ VAT. Borrowing Cost: Borrowing Costs attributable to acquisition and construction of qualifying assets are capitalized as a part of the cost of such asset up to the date when such asset is ready for its intended use. Other borrowing costs are charged to Profit & Loss Account. Employee Benefit: Short Term employee benefits including accrued liability for Leave Encashment (other than termination benefits) which are payable within 12 months after the end of the period in which the employee render service are paid/provided during the year as per the Rules of the Company. Foreign Currency Transactions: Transactions in foreign currency are recorded at the rate of exchange in force at the date of transactions. Foreign currency assets and liabilities are stated at the rate of exchange prevailing at the year-end and resultant gains/losses are recognized in the profit and loss account. Premium in respect of forward foreign exchange contracts is recognized over the life of the contracts. In accordance, with the AS 11 (Revised 2003) the Exchange difference arising on the contracts/transactions entered into on or after 01-04-2004 on the settlement of monetary items or on reporting monetary items at rates different from those at which they were initially recorded during the period, or reported in previous financial statements, is recognized as income or expenses in the period in which they arise. Taxation: Income Tax expense comprises Current tax and Fringe benefit tax (i.e. amount of tax for the period determined in accordance with the Income Tax Law) and deferred tax charge Page| 69

or credit (reflecting the tax effects of timing differences between accounting income and taxable income for the year). Deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognized using the tax rates that have been enacted or substantively enacted by the balance sheet date income for the year). Deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognized using the tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets are recognized only to the extent that there is reasonable certainty that the assets can be realized in future; however where there is unabsorbed depreciation or carry forward loss under Taxation laws, deferred tax assets are recognized only if there is a virtual certainty of realization of such assets. Deferred tax assets are reviewed at each balance sheet date and written down or written up to reflect the amount that is reasonably I virtually certain as the case may be to be realized. Tax credit is recognized in respect of Minimum Alternative Tax (MAT) as per the provisions of section IISJAA of the Income Tax Act, 1961 based on evidence that the company will pay normal income tax within the statutory time frame and is reviewed at each balance sheet date. Costing and Pricing: As GTN Textiles Limited is a manufacturing concern and involves a large number of processes, Process Costing method is followed. It helps the Company to ascertain the cost of a product at each stage of production, i.e. cost at each process through which the row cotton passes through for the production of fine yarn. The total cost incurred at the each stage of production is carried out to ascertain the final cost. The pricing method adopted by the GTN Textiles is Cost-plus-pricing and hence a certain percentage of the profit is added to the final cost incurred. Budget and Budgetary Control: Budgets are prepared by this department on a quarterly basis and based on this the annual budgets are prepared. The budgets can be sales budget, production budget, expenses budget and the total budget. At the month end, a comparison is made between budgets and actual right from the raw cotton procurement till the last process. The reasons for variations (if any) will be found out.

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Organization Structure- Finance Department

Group Technical Advisor

AGM Finance & Accounts

Deputy Mgr. Finance & Accounts

Asst Mgr Finance & Accounts

Senior Officers

Operators Account Assistant

(Figure 4.9)

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4.4.8 Human Resource Department Introduction Personnel Department plays a crucial role in the management of the company. The department try to create and utilize an able and motivated workforce to accomplish the organizational goal, and try to satisfy individual and group needs by providing adequate and equitable wages and incentives, employee, benefit and social security and measures for challenging work prestige, recognition security, status etc. The personal department is responsible for recruitment, selection, placement training, performance appraisal, promotion and separation. This department is headed by DGM (industrial relations). He is in charge of implementation systematic recruitment procedures for providing facilities for the overall development and motivation of all the employees. He is also in charge of ensuring safety aspect in the mill and maintaining cordials industrial relation with the workers. The categories of workers employed in GTN are permanent and temporary. The recruitment, employment, leave disciplinary actions, retirement etc are done as per the standing order. This department is also responsible for training, performance appraisal compensation, and separation. Work Shifts The company works round the clock in three shifts. 1st shift 2nd shift 3rd shift Staff shift Employees Staff : : : : : : 8 am 4 pm 4 pm 12 pm 12 pm 8 am 9 am 5.30 pm 721 109

For each shift there would be 3 supervisors: 1 shift in charge and supervisors. Functions of Personnel Department Recruitment and Selection Induction training procedure Training Evaluation Performance appraisal Wage and Salary Administration Page| 72

Procedure Recruitment and Selection GTN textile Ltd recruits its manpower resources through recruitment agencies and advertisement in leading newspapers .the other sources are from reference service and relatives of employees and from apprentices. Recruitment is done b the G.M of personnel and Industrial Relation department. At GTN textile selection is done through tests and interview. Induction Training Procedure Technical and non technical fresh recruits are given general exposure to the overall activities of the organization during initial days. There after they are given in depth training in assigned areas of work followed by on the job training Work men fresh recruits are given general exposure to the overall activities of the organization. They are given on the job training under the supervision of the jobber/mastery, guided by supervisors or deputy Manager (training).

Induction Programme

Induction Report

Training

On the Job (Figure 4.10)

Off the Job

Training Training is given to all workers for developing their skills and proficiency in work. The probationary period for all workers and office staff is six months. A formal inductiontraining program is provided for fresh recruits as per the program given in the inductiontraining manual. In addition, training is given to each worker when a new machine is installed respective to their department. Page| 73

 Evaluation On completion of training an evaluation regarding effectiveness of training received is sought from the department concerned Performance Appraisal Performance appraisal is systematic evaluation of the capacity for development. The supervisors at GTN usually do it. Check list method is used for personnel evaluation .it helps the superior or the manger to judge the honesty, sincerity, loyalty and responsibility of the employees. It is usually done in the duration of six months. The performance of each of the workers, their strengths, merits, weakness etc is discussed in detail with them and these are considered for their promotion. However at the managerial level, the through maintains the performance appraisal system, does not discuss with the officers. It is not carried out in a transparent manner. Wage and Salary Administration GTN follows time rate wage system. For this purpose the attendance records are maintained strictly also there is card punching system for recording entry and exit of the employees and workers. The remuneration for the work of service rented by the employees is paid in the form of salaries, wages or fringe benefit. Wages include both monetary benefits and non monitory benefits. The employees pay/wage includes basic pay, DT, TA, HRA, LTC, PF and ESI for 26 days. A certain percentage of the annual earning is distributed as bonus/ of the total pay 12 % is for PF and 1.75 % is for ESI. Over time work is also paid at the rate of 1.75 times that of a normal days pay. There is no PF and ESI for over time and holiday work. Employee Welfare Schemes The company provides all the statutory welfare measures as per the Factorys act 1948. There are general measures and the company also administers activities that come under non-statutory items. Employee Co-operative Society There is an employee co-operative consumer stores to cater the requirements of provisions, stationary and textile articles. They also arrange for supply of household appliances like TV, Two wheelers, Sewing machines etc on installment basis.

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 Employee Credit Society GTN Textile Employees credit society advanced loans to the employees ranging from Rs. 2000/- to Rs. 25000/- for various purposes on a reduced rate of interest. They also run recurring deposit schemes for the employees. Silver Jubilee Educational Assistance Under the silver jubilee educational assistance scheme, employees can avail benefits up to 2 children towards their educational expenses .It ranges from Rs.600/- up to VIII Std. Students, Rs. 2500/- to medical/engineering students per year. Marriage Assistance Interest free loans of Rs. 10000/ - are being given to the employees in the event of marriage of their daughter. Insurance Linked Gratuity Scheme The company has adopted insurance linked gratuity scheme for the benefit of the employees. Under the scheme, in case of death of an employee, his dependents will be eligible to receive full gratuity for the total calculated period of service including the balance of years of service after death. Holidays Each employee can avail 13 paid holidays in a calendar year. List of holidays will be notified each year. Canteen A subsidized canteen managed by the employee representatives is taken care of catering needs of the employees. Meals, Snacks, Coffee/ Tea etc. are available in the canteen during the prescribed timings. Quality Circle Quality circle activities are being organized in Aluva Unit with the effective participation of the employees. Safety Safety, housekeeping activities are arrived out on a continuous basis. A part from the statutory compliance; a safety committee is effectively working.

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GTN Textiles Employee Welfare Fund There is fund constituted for the welfare of the employees. There are different benefits like death benefit, retirement benefit, disablement benefit, loans assistance, etc. contemplated under the scheme. Assistance for the Handicapped Children There is a scheme to assist the handicapped children of employees; this includes supply of artificial limbs, aids or any other assistance to such cases. Blood Donor Group Blood Group of almost all employees has been ascertained. In case of emergency, employees will come forward to donate blood. Suggestion Scheme The company conducts suggestion scheme in the areas of productivity, housekeeping, quality, safety, etc. Employees who submit feasible suggestions are being properly rewarded Attendance Award To recognize the employees to attend word regularly special prices are being given every year. Membership in Professional Bodies The Company has membership in various professional bodies viz. SIMA, ATIRA, SASMIRA, SITRA, Kerala state Productivity Council, etc. Subscription to News Paper and Journals Various News Papers and Journals are being subscribed for the benefit of Employees. Anti Addiction Program The company provides all assistance to employees who wish to come out from their addiction habit. Worker Education through Worker In association with central board of workers education, employees are given classes in batches for a period of 2-3 months on various subjects. There are trained worker teacher who take such classes. Page| 76

 Standing Orders There is an approved Standing order, which regulates the conditions of employment. Excursion Tours Excursion tours are arranged regularly for the Staff Members and for the participation the workers education classes. Twenty Years Service Award As a token of appreciation for the continuous service put in, the employees are given memento after completion of 20 years of service. Family Planning Program Encouragement like special level of finance incentive is given to employees in the field of family planning activities. Conveyance Facility Subsidized conveyance facility is provided between Alwaye and factory for the second and third shifts. Social Activities The company take care of the need of the local people with due consideration. This includes construction of buildings, waiting shed, donation to various charitable organization etc. Steps are taken for pollution control First Aid Facilities The company has direct touch towards he nearby hospital the company can use the service of the hospital, in case of emergence. Welfare office Welfare activities are under the supervision of the welfare officer MR. Wilson Joseph appointed by the company. Health and safety There is a safety committee for looking after the safety of the workers drinking water facilities are priced at different spots inside the company.

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 Employee state insurance scheme ESI scheme is unique multidimensional self financing social security scheme in which every contributor is a benefactor and beneficiary. This integrated scheme of health insurance prides comprehensive medical cover and cash benefit in contingencies of sickness, maternity, disablement and death. Trade Unions There are four registered and one unregistered union in the organization INTUC (Alwaye Textiles Employee Association) AITUC (Alwaye Textiles Workers Union) CITU (Alwaye Mekhala District Textiles Labour Union) BMS (Bharathiya Masdoor Sangam) The unregistered union is GTN Workers (Jobbers) Association

Organization Structure- Personnel Department

Group Technical Advisor

Sr. GM Personnel & IR

Asst. Mgr Security & Welfare

Manager Personnel

Senior Manager Training

Sr. Officer Time Office Head Security Guards Jr. Officer Operators Time Office Security Operators Guards Time Keeper

(Figure 4.11) Page| 78

4.4.9 Export And Marketing Department Introduction Export Department is serving as a link between the customers. The main duties of the department includes sales enquiry conformation, sales contract, preparation of work order which in turn aids the preparation of production plan sending samples and finally shipment. Thus the export department does not have separate marketing department. Once the lot is ready the production department makes arrangements for lot dispatch. The goods are shipped in containers, which undergo house stuffing or port stuffing; the cartons are covered with Hessian Cloth and loaded in to trucks by experienced personnel under the supervision of the factory trained expert more over the truck is covered with water proof tarpaulins to protect the cartons while transportation. The containers used for transportation is of international standards, which are leased and provided to shipping line. The customer of the company include consumer who are directly use the product for further processing and trader who sell it to other customers. The company promotion efforts include MDs visit to foreign countries and participation in Textile exhibition abroad. Their major customers are Italy, Japan, China, Australia, Spain and UK etc. The payments of almost all the transactions are through the letter of credit system. The export department office is at Cochin where the transaction re carried out. The information regarding the transaction are shared and passed to the organization through routers. The main server of the company is at Cochin. India continues to be dominant supplier of cotton yarn in the world. However, Pakistanis closely following India and it may outpace India because of its advantageous factors like favorable exchange rate, cheaper power tariff and lower wages. Of late, Pakistan has started importing extra long staple cottons for manufacture of finer counts of yarn for exports. Therefore, India will have to become more cost-effective to withstand Pakistani competition in this segment. Chinas imports of cotton yarn are raising Cotton. India is now poised to become a prominent exporter of raw cotton and cotton Yarn. Export Procedure The export transaction of GTN textiles ltd starts with the receipt of an intent or order from the foreign importer. After obtaining the license and complying with the exchange regulations, they proceed to assemble the product as per the terms of the indent. Once the lot is ready, the production department makes necessary arrangement for lot dispatch and arrange the secure shipping space on convenient terms and obtain shipping order after Page| 79

complying with the customer formalities, i, e. paying customs duty and obtaining customs export pass the company goes for bill of lading certificate of origin and insurance policy. Finally, they prepare invoice showing the price, quantity and description of the product and negotiates with the bank with necessary documents for securing payment under letter of credit agreement. The procedure is:

Export Procedure Chart

Receipt of Indent/Order

Production, Packing & Forwarding of Goods

Secure Shipping Order

Customer Formalities

Obtain B/L, Certificate of Origin & Insurance

Negotiates with Bank for Payment L/C

(Figure 4.12) The GTN textiles ltd has a well established and managed export department under the control of well qualified professionals. Its strict delivery schedules, consistent quality and after sales service had given the company an important position in the textile export area. Even though there is no separate marketing department for the company the marketing, activities of the company are well performed by the export department.

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Marketing GTN Textiles Limited continues to maintain its leadership in exports of fine and superfine-combed cotton compact yarns. It has export to over 25 countries across the world selling high value and high quality products to the niche market. With a substantially large export market and a growing domestic presence, GTN certainly has its quality control measures and production standards in place. Not surprisingly the company has been the recipient of Texprocil Gold award excellence in exporting for 18 years. The company has been constantly focusing its efforts to carter to high priced end users in sophisticated markets. Apart from predominant exports of cotton yarn to Japan and Italys companys yarn has also been well received in other countries viz. South Korea, china Hong Kong, USA, Austria, Belgium, Israel, Australia, Taiwan, Malaysia, Mauritius among others. The company enjoys excellent relations with all its overseas customers, which have been assiduously built over the years by strictly adhering to delivery schedules, maintaining consistent quality and providing prompt after sales service. For the past few years, the company has been aggressively marketing its products to high end users in the domestic market who have set up downstream projects for export of high value fabrics, made-ups and garments. The tie up with Japan has not only helped in penetrating the Japanese market, but also in other parts of the world where ITOCHU, the marketing conglomerate has officers. The connection has helped the company is sewing up business opportunities. Supplier to Higher and Market: Used for shirting, stretch fabrics, voiles, velvets, velour, fine bed liner, fashion knitwear, lingerie Worldwide customer list mark & Spencer, gap, Benetton, Victorias, secret, AnnTaylor The payment of almost all the transaction is through the letter of credit system. The export department office at Cochin, where the transactions are shared and passed to the organization through routers. The main server of company is at Cochin.

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Major Markets

Sl. No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 (Table 4.2)

Markets Japan Italy Korea Israel China Hong Kong Taiwan Malaysia UK Portugal Germany Austria Australia Mauritius Chile SriLanka

% share 36 15 12 10 6 1 1 4 1 2 1 2 2 1 2 5

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Organization Structure- Export Department

General Manager (Export)

Manager (Export)

Deputy Manager (Export) Assistant Manager (Export)

Officers (Figure 4.13)

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4.5

Growth Profile 1962- GTN Textiles Ltd. was incorporated for the manufacturing of Cotton Yarn 1966- The company was taken over by the promoters, the Patodia Family of GTN Group. 1983- The company Ltd. had established a unit at Chitkul Village, Medak District in Andhra Pradesh.

1993- On 9th march 1993 company had allotted 18 lakh equity shares of Rs 10 each. 1994- The company had promoted Patspin India Limited, a 100% EOU as a joint venture along with an equity participation of ITOCHU Corporation, Japan and KSIDC, Trivandrum. 1995- The company had acquired Cotton Spinning Unit in Nagpur, Maharashtra during 1994-95 by virtue of amalgamation of Perfect Spinners Limited with the company. 1997- It further set up a yarn dyeing and mercerizing unit at Shadnagar, Andhra Pradesh. 2004- The company was ranked 63rd in the BB 100 Gross Forex listing. -The company ranked 327th in Industry 2.0's second annual listing of top 500 manufacturing companies in India. -The company had received a composite score of 12 out of a possible 15 in Industry 2.0's SCM Metrics study. 2005- GTN Industries Limited was incorporated as a public limited company on 28th March, 2005 under the Companies Act, 1956. -It obtained the certificate for commencement of business on 6th April, 2005.

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-GTN Industries Limited had changed its name to GTN Textiles Limited and vice versa through the fresh certificate of incorporation 27th December 2005, issued by the Registrar of Companies, Kerala. 2007- On 26th July 2007, company had authorized the board to borrow money for and on behalf of the company in any manner from time to time and without prejudice.

4.6

Future Plans Reduce cost of production. Sell improved quality, cost efficient products. Focus more on export of cost efficient cotton yarns and less on promotional activities. Upgrading the present quality of products to international quality standards.

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4.7

SWOT Analysis

Strength Easy availability of cotton Lower labour cost compared to developed countries Well educated supervisory staff Well educated technical & managerial skills Excellent relationship with customer in India and abroad over the last Experienced and committed personnel State of the art quality assurance department Foreign collaboration ISO 9001 & 14001 certification Highly skilled workers Latest technology Modern and automatic machines Established product Established market Decades of experience in trading cotton yarn before venturing into this line of activity Strong finance Goodwill of the company in the market Uninterrupted supply of raw materials

Weakness Many machines have become obsolete The operating expenses are on the higher side. High cost of power No full utilisation of installed capacity Poor infrastructure resulting in higher transaction cost Raw material prices are increasing

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Opportunities India bring largest cotton cultivation has a great scope in textile market. Globalization increased export opportunity for textile. Increased demand of cotton garments in India and abroad. Forward as well as backward integration. Availability of cheap labour.

Threats Growing competition from foreign brands. Rising prices of raw materials. Government policies and regulations. Climate variations affect the cotton cultivation.

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Bibliography Prasad, L.M: Principles and Practices of Management: Sultan Chand & Sons, 2007 Annual Reports of GTN Textiles Limited

Websites

http://www.gtntextiles.com/homepage.html http://www.moneycontrol.com/companyfacts/gtntextiles/history/GTN02#GTN02

http://www.india-crafts.com/textile/india-textile.html http://www.dnb.co.in/SMEstextile/overview.asp http://spg.umich.edu/about/authority-and-delegations http://www.managementstudyguide.com/delegation_of_authority.htm http://www.managementstudyguide.com/centralization_decentralization.htm http://www.allsubjects4you.com/Management-departmenation.htm http://www.openlearningworld.com/books/Organisation/Organizations/Types %20of%20Departmentation.html http://www.moneycontrol.com/annual-report/gtntextiles/directorsreport/GTN02#GTN02 http://www.bseindia.com/BSEdata/ipo_downloads/Info_memo_GTN.pdf http://www.kkhsou.in/main/EVidya2/commerce/departmentation.html

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