I am using this opportunity to express my gratitude to everyone who supported me throughout the completion of this project. I am sincerely grateful to Jane Leonard for sharing her aspiring guidance, illuminating ideas and friendly advice during the project work and to complete it effectively.
Also, I express my sincere thanks to Mr. Singaravel and Mr. Rajeesh Singaravel for their part by giving their valuable time for interview and coordination on sharing the success story of ARM Exports.
Minu Sathish Kumar
Table of Contents
1.1 Market Size 3
1.2 Investment 4
1.3 Government Initiatives 4
1.4 Road Ahead 5
2. Handloom Industry And Exports 6
2.1 Key markets and export destinations 6
2.2 The handloom export promotion council 6
3. Company Background 7
3.1 Introduction 7
3.2 Vision and Mission of ARM Exports 7
3.3 Exporting Activities 8
3.4 Products 9
3.5 Quality Analysis 9
3.6 Milestones 10
4. Review of relevant literature 10
4.1 Scope of literature review 10
4.2 Challenges faced by export industries 10
4.3 Recommended practices to address the challenges 11
5. Method 11
A comprehensive analysis of the complete business operations of ARM Exports was conducted by directly interviewing Managing Partner Mr. Singaravel and Merchandiser Mr. Rajeesh Singaravel about the day-to-day activities, operations, business roadmap, future expansion plans were realized from the interview and from the organization's website, and are acquainted here. 11
6. Findings 11
6.1 Vast experience in weaving 11
6.2 Unique value proposition 12
6.3 Capitalizing the competitive advantage 12
6.4 Adoption of state-of-the-art technology 13
6.5 Developing a partner-friendly business model 13
6.6 Expansion of portfolio 13
The firm initially began its business as an exporter of Home accessories and have expanded its portfolio to include linen based products after careful study of the market demand. 13
7. Recommendations for further research 13
8. References 14
1. Indian Textile Industry
India's textiles sector is one of the oldest industries in Indian economy dating back several centuries. India's overall textile exports during FY 2017-18 stood at US$ 39.2 billion.
The Indian textiles industry is extremely varied, with the hand-spun and hand-woven textiles sectors at one end of the spectrum, while the capital intensive sophisticated mills sector at the other end of the spectrum. The decentralised power looms/ hosiery and knitting sector form the largest component of the textiles sector. The close linkage of the textile industry to agriculture (for raw materials such as cotton) and the ancient culture and traditions of the country in terms of textiles make the Indian textiles sector unique in comparison to the industries of other countries. The Indian textile industry has the capacity to produce a wide variety of products suitable to different market segments, both within India and across the world.
1.1 Market Size
The Indian textiles industry, currently estimated at around US$ 150 billion, is expected to reach US$ 250 billion by 2019. India's textiles industry contributed seven per cent of the industry output (in value terms) of India in 2017-18.It contributed two per cent to the GDP of India and employs more than 45 million people in 2017-18.The sector contributed 15 per cent to the export earnings of India in 2017-18. The production of raw cotton in India is estimated to have reached 34.9 million bales in FY18^.
The textiles sector has witnessed a spurt in investment during the last five years. The industry (including dyed and printed) attracted Foreign Direct Investment (FDI) worth US$ 2.97 billion during April 2000 to June 2018.
Some of the major investments in the Indian textiles industry are as follows:
• The Cabinet Committee on Economic Affairs (CCEA), Government of India has approved a new skill development scheme named 'Scheme for Capacity Building in Textile Sector (SCBTS)' with an outlay of Rs 1,300 crore (US$ 202.9 million) from 2017-18 to 2019-20.
• In May 2018, textiles sector recorded investments worth Rs 27,000 crore (US$ 4.19 billion) since June 2017.
1.3 Government Initiatives
The Indian government has come up with a number of export promotion policies for the textiles sector. It has also allowed 100 per cent FDI in the Indian textiles sector under the automatic route.
Initiatives taken by Government of India are:
• The Textile Ministry of India earmarked 690 crore (US$ 106.58 million) Rupees for setting up 21 ready-made garment manufacturing units in seven states for development and modernisation of Indian Textile Sector.
• The Directorate General of Foreign Trade (DGFT) has revised rates for incentives under the Merchandise Exports from India Scheme (MEIS) for two subsectors of Textiles Industry - Readymade garments and Made ups - from 2 per cent to 4 per cent.
• As of August 2018, the Government of India has increased the basic custom duty to 20 per cent from 10 per cent on 501 textile products, to boost Make in India and indigenous production.
• The Government of India announced a Special Package to boost exports by US$ 31 billion, create one crore job opportunity and attract investments worth Rs 80,000 crore (US$ 11.93 billion) during 2018-2020. As of August 2018 it generated additional investments worth Rs 25,345 crore (US$ 3.78 billion) and exports worth Rs 57.28 billion (US$ 854.42 million).
• The Government of India has taken several measures including Amended Technology Up-gradation Fund Scheme (A-TUFS), scheme is estimated to create employment for 35 lakh people and enable investments worth Rs 95,000 crore (US$ 14.17 billion) by 2022.
1.4 Road Ahead
• The future for the Indian textile industry looks promising, buoyed by both strong domestic consumption as well as export demand. With consumerism and disposable income on the rise, the retail sector has experienced a rapid growth in the past decade with the entry of several international players like Marks & Spencer, Guess and Next into the Indian market.
• High economic growth has resulted in higher disposable income. This has led to rise in demand for products creating a huge domestic market.
• Exchange Rate Used: INR 1 = US$ 0.0149 as of Q1 FY19
2. Handloom Industry And Exports
Along with the artistry of weavers, the Indian handloom industry demonstrates the richness and diversity of Indian culture. With over 4.3 million people directly and indirectly involved in the production, the handloom industry is the second-largest employment provider for the rural population in India after agriculture. Indian handloom products are known for their unique designs and finesse. The trend is to mix old designs with new techniques and create original products.
The industry has strong infrastructure, with about 2.4 million looms of varied designs and construction, indicating significant production capacity.
2.1 Key markets and export destinations
• The export of handloom products from India was valued at US$ 355.91 million in FY2017-18.
• In 2017–18, the US was the major importer of Indian handloom products, with estimated purchases of US$ 93.19 million, followed by the UK, Spain and Italy at US$ 26.14 million, US$ 21.22 and US$ 18.05 million, respectively. Germany, UAE, France, Netherland, Australia and Japan were some other key export destinations.
• Nearly 15 per cent of cloth production in India is from Handloom sector.
• Cloth production from April to November 2017 stood at 5,134 million square meters.
Production of hand woven fabric from India constitutes 95 per cent of global production.
2.2 The handloom export promotion council
The Handloom Export Promotion Council (HEPC) is a statutory body constituted under the Ministry of Textiles, Government of India, to promote the export of all handlooms products such as fabrics, home furnishings, carpets and floor coverings. HEPC was constituted in 1965 with 65 members, and its present membership is about 2,000.
3. Company Background
Arumugam Ramasamy Mudaliyar (ARM) Exports is one of the leading exporters of cotton home furnishing textiles from Karur, Tamil Nadu, India.
Management Team at A.R.M EXPORTS is very enthusiastic, dynamic, hardworking and a young lot. A.R.M EXPORTS is led by managing partners, Mr. R. Subramaniam, Mr. R. Singaravel and Mr. R. Balusamy .
However, From the interview with Mr. Singaravel, Managing Partner and his son Mr. Rajeesh Singaravel, Merchandiser of the company. It was clear that Mr. Singaravel played a major role to establish The ARM Exports from a weaving business to global textile exporting business.
The company is traditionally into weaving textiles for more than 30 years. After completing 20 years of experience as a master weaver catering to the home market, by the year 1986, they started manufacturing fabrics for supplying to exports.
A.R.M EXPORTS believes in the slogan,
“YOU NAME IT AND WE HAVE IT ALL”
They provided specific products to their customer, according to their demand and desire. This made them to stand best in the B2B global market with continuous growth in the market.
3.2 Vision and Mission of ARM Exports
The vision of the company is to be a dynamic, profitable and growth-oriented company by providing good return on investment to its shareholders and investors, quality products to its customers, a secured and friendly environment place of work to its employees and to project India's image in the international market
• To be leading producer of textile products by producing the highest quality of products and services to its customers
• To strive for excellence through commitment, integrity, honesty and teamwork
• To be highly ethical company and be repeated corporate citizen to continue playing due role in the social and environmental sectors of the company
• To develop and an extremely motivated and professionally trained workforce, which would drive growth through innovation and renovation
• To Sustained growth in earning in real terms
3.3 Exporting Activities
A.R.M exports started exporting from the year 2001. They gained a good reputation in the market for quality and consistency. In the other hand, they became a key player in the Home Made-ups, Home Furnishings, Home Textiles and Home Decor Accessories Industry. Now, they are targeting the global market to sell best quality home linen products at a competitive price. They have created a niche as manufacturers and exports of an exquisite and exclusive range of home furnishings goods ranging from Bed Linen, Bath Linen, Table Linen and Kitchen Linen.
ARM exporters extended their business in almost all the exporting destinations. They are active participant in various world trade shows and other events. Notably, The have been an active member of in different parts of India, HEIMTEXTIL at FRANKFURT and GERMANY for the past 14 years. HEIMTEXTIL is one of the largest trade fairs in the world and it happens in the month of January.
They started exporting USA later on, Canada, Italy, France, Germany, Australia, Colombia, Greece, Ukraine, Sweden, South Africa.
The company follows good communication and timely delivery of Product. Also, the commitment in delivering quality products that meet exact requirements of the buyers on time, every time.
A.R.M Exports manufacture a wide range of Home Linen made using Handloom and Power Loom. They produce Home Textile collection - Bed Linen, Table Linen, Kitchen Linen and Home Décor products such as Curtains, Cushions and Cushion covers in an attractive Check, Stripe, Dobby and Jacquard Patterns according to region they prefer to export.
Figure.3.1 Types of Products
3.5 Quality Analysis
Quality assurance is one of the greatest of A.R.M Exports. They have an in-house quality check team who ensure that only the best reaches their customers.
The way they work:
• Market Research
• Product Monitoring and Quality Control
• International Standard Compliance
• We carry out quality check in two phases. We have a regular check as well as random check.
They consider exporting globally from the year 2001 as the first milestone of their business. Also, ARM exporters won best supplier award 2001-2002 from “J.C Penny” and in many consecutive awards in the following years. They expanded their business more than 10 foreign countries and their recent customer of the year 2018 is Israel which is one more milestone ARM Exports in extending their business globally.
4. Review of relevant literature
4.1 Scope of literature review
Suitable articles that elaborate and study the Indian exports industries and Indian textile industries particularly reviewed.
The articles present a number of researches, analysis and forecasting to present a picture of a brief history of Indian textile industries, characteristics, challenges & scope of Indian exports industries, and the competitive advantage of Indian textiles exporting industries in the global market.
4.2 Challenges faced by export industries
Since, export industries exposes a global competition, they face myriad challenges to secure a global position among the firms of the world. Their challenges vary from differences in labour cost, infrastructure facilities, physical resources, technology and for industries that play a role in export of food or clothing, local climatic conditions may also become a challenge when compared to their global counterparts.
Due to this, challenges faced cannot be shortened under a few categories as they vary on a large-scale, across different geographies. However, technology could be considered one of the major and common problems faced across all export industries, and the presence or absence of which will have a greater impact on their competitiveness. Availability of technological resources, may as well overcome certain other challenges such as labour, resources, and environmental conditions up to a certain extent. Hence, the want of technology and state-of-the-art machines is one of the major drawbacks of export industries.
4.3 Recommended practices to address the challenges
As the major challenge faced by export industries is highlighted as Technology, the procurement of latest machines can address the challenge. The literature reviewed, however, gives a unanimous solution to this challenge by recommending government intervention and funding in the procurement of machineries. Such machineries would enhance the entire process specific to textile manufacturing industries, such as spinning, ginning, spinning, twisting, etc., thereby improving productivity multifold and thereby export. In particular, the Apparel Export Promotion Council of India (APEC) had recommended an investment of INR 190 billion for technology up-gradation in order to maintain the superiority of the Indian textile export industry among its global competitors.
A comprehensive analysis of the complete business operations of ARM Exports was conducted by directly interviewing Managing Partner Mr. Singaravel and Merchandiser Mr. Rajeesh Singaravel about the day-to-day activities, operations, business roadmap, future expansion plans were realized from the interview and from the organization's website, and are acquainted here.
6.1 Vast experience in weaving
In particular to the case of ARM Exports, the company had been in the textile weaving business for 20 years. During the period of time, they identified the best practices, adopted efficient process and experimented with a lot of different processes and procedures, and had well-established themselves as successful local textile weavers.
Their export business was started around 30 years after the firm's founding. They have adopted “self-selection” rather than “learning from exporting”. Self-selection is when a firm enters into an export business after successfully establishing the business in the local market, whereas Learning from Exporting is when a business chooses to enter directly into export business without any prior experience or success in the local market. It's been proven by research and backed by sufficient data that firms that enters through “self-selection” are more successful that the ones that “learn from exporting”. Thus, vast prior experience in weaving and self-selection are the major reasons for the success of ARM Exports in the exports front.
6.2 Unique value proposition
ARM Exports presents a clear and unique value proposition. It positions itself in the global market as the exported / supplier of Home decor, and furnishings, and linen products.
The unique value proposition has led them to identify the target market, their target customers and be a successful and most preferred Home accessories and linen products' supplier. In addition to their positioning, their commitment to quality and consistency has also been a key factor in boosting their presence in the global market.
6.3 Capitalizing the competitive advantage
In the global market, ARM Exports flaunt two major competitive advantages, namely labour and raw materials. India, especially south India is a region where labour costs are much cheaper than its counterparts such like China, Sri Lanka or Indonesia. The region is the holy grail of skilled labour in textile, pottery and sculpting. One of the major advantages of ARM Exports is its location in a rural town in Tamil Nadu, called Karur where there are close to 50% of skilled textile weavers. Capitalizing labour resources in its locality is one of the major strategic advantages of the firm.
Another strategic advantage is the availability of raw materials. Karur, is located in and around what is called the ‘Kongu belt' which comprises of 4 major cities that contribute majorly to the fabrication of semi-finished and finished goods. Most of the physical raw materials required for the manufacturing, processing and packaging the finished goods can be procured from the neighbouring cities, which substantially increases the investment.
6.4 Adoption of state-of-the-art technology
As observed, technology plays an important role in determining the success of Indian export industries. ARM Exports, being a global player, have invested in the procurement of the latest technology to improve its yield and distribution processes. In the initial phases, the firm has also acquired some advantages from the Government of India to establish itself as one of the major exporters across globe. ARM Exports have also adopted the procurement of technology and substantial investment in the technology-front in its short, medium and long-term business plans.
6.5 Developing a partner-friendly business model
ARM Exports are a B2B business, and so coming up with a partner-friendly business model is very crucial to its business. The firm attributes its expansion across different nations to its strong network of partner presence across the globe. In addition, the firm also has a well-thought out and transparent partnership plans and assured returns program in order to maintain and expand its partnership network.
6.6 Expansion of portfolio
The firm initially began its business as an exporter of Home accessories and have expanded its portfolio to include linen based products after careful study of the market demand.
The expansion of the firm's portfolio has exposed the firm to a number of new opportunities and audiences. ARM Exports are still working on the expansion plans and considers it one of the important business strategy to uphold its position in the global market.
7. Recommendations for further research
The matter presented is based on the analysis of only one exporter, belong to one industry. Further studies can be performed on a number of similar firms whose business span across multiple industries. Also the study takes into account of exporters from India, while detailed study can be conducted on exporters of different countries.
• Debanjan Das, J. E. H.-B., 2014. India, the next China? Analysis of the unique firm resources claimed by Indian apparel export firms. Journal of Fashion Marketing and Management, 18(4), pp. 378-393.
• Dhwani Gambir, S. S., 2015. Are exporting firms more productive in the Indian textile industry?. Measuring Business Excellence, 19(4), pp. 72-84.
• Marc Fetscherin, I. A. J. P. J. R. K. P., 2012. Export competitiveness patterns in Indian industries. Competitiveness Review: An International Business Journal, 22(3), pp. 188-206.
• Priya Ranjan, J. R., 2011. Self‐selection vs learning: evidence from Indian exporting firms. Indian Growth and Development Review, 4(1), pp. 22-37.
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